STEPS TO BUYING
Buying a home is a big deal as it’s probably the most expensive purchase you’ll ever make. For this reason, it’s important to have a plan in place, whether you’re a first-time condo or home buyer, looking to move to a larger house or wanting to downsize.
By following these eight simple steps, you’ll ensure a successful and (virtually) stress-free experience, and, most importantly, become an empowered buyer.
Decide to Buy
Before you begin the home-buying process you need to commit to it. This doesn’t mean you ‘must’ make a purchase. Rather, it’s about having the proper mindset. Finding the right home is a big undertaking that will require time, endurance and patience. Recognizing this from the get-go and deciding to fully engage yourself in the process will set you up for a successful outcome.
Find the Right Realtor
With more than 50,000 licensed Realtors in Toronto alone, finding the perfect fit can seem daunting. However, a little effort will go a long way as a Realtor can save you thousands of dollars through the negotiation process, as well as offer peace of mind, confidence and guidance in making what’s likely your largest financial decision.
To narrow down your options, do some research and then choose at least a few to interview. Meet face-to-face and ask them questions, evaluate how well they listen and communicate (a quality Realtor will ask you questions, too) and gauge your general level of comfort (after all, you’re going to be spending a lot of time together). Don’t feel compelled to make a decision on the spot and when you do, remember that the services of a Realtor typically come at no cost to the buyer — the fee is paid for by the seller once the property sale is final.
Know your Budget
Work with a mortgage advisor/broker to find out how much money the bank will lend you. When getting pre-approved for a mortgage, a lender will look at your income, debts and down payment. Once pre-qualified, this will tell you what price range of homes you should be targeting before you actually start looking. It also means that you are financially qualified to purchase your new home when the opportunity arises.
That being said, just because you’ve been pre-approved to borrow a certain amount of money doesn’t mean you should spend it all. Take some time to tally up all the costs of homeownership and then settle on a budget that’s in your comfort zone. Additional expenses to keep in mind include land transfer taxes (provincial and municipal if living in Toronto), appraisal fee, home inspection, property insurance, legal fees, title insurance, moving expenses, and ongoing maintenance and unexpected repairs.
Develop your Wish List
Establish and prioritize your must-haves, nice-to-haves and absolutely nots for your new home and neighbourhood. This list will focus your wants and needs, guide you and your Realtor through the home viewing process and is critical to keeping you on track. Naturally, there will be trade-offs, most often involving property size, finishes, location and price; however, the list will help you know when to compromise and when to hold firm and continue the property search.
Hunt for Homes
With your Realtor, start touring homes that meet your specific needs and wants (and budget) as closely as possible. After each showing, talk about the property (pros and cons) and assess it against your wish list to determine how it ranks. This is a good way to refine and narrow the property search to zero in on ‘the’ one. If you like the property, this process will also help determine how you want to move forward, for instance, with a second showing or offer. Before either, drive around the area at both day and night to get a better feel for the neighbourhood as it will play a pivotal role in your life and impact resale value of the property.
Make an Offer
Once you’ve found the right home and are ready to make an offer, your Realtor will review recently sold properties in the neighbourhood and compare current market listings to your selected home to assist you in formulating a price you’re comfortable paying. You’ll also discuss your ideal closing date (usually between 30 and 90 days after the offer date), the inclusions you want (like the new washer/dryer), and specific terms and conditions (such as financing and a home inspection) that need to be met for the deal to go through. Your Realtor will then prepare the offer and walk you through each page of the paperwork, explaining any legal language and deciphering the fine print, so you understand every aspect and are confident moving forward.
Once submitted, the seller can accept it, reject it or sign back a counter offer. The latter can result in back and forth negotiations where you may need to compromise on small things, but a quality Realtor will work to achieve what you want.
Close the Deal
The offer has been accepted, so now it’s time to submit a deposit (if you haven’t already). The deposit, typically 5% of the purchase price, is held in trust (normally by the listing brokerage) until close when it will be applied against the purchase price of the home. You’ll also need to fulfill any conditions included in the offer in order to move forward with the sale.
Once the conditions have been met, the agreement is firm and the actual closing process begins. During this time, you’ll be in close contact with your mortgage advisor/broker and lawyer to complete and finalize the paperwork. You’ll also need to provide a certified cheque for the balance owing (down payment less your initial deposit), and another to cover closing costs associated with the sale. Common expenses include lender fees, legal fees, land transfer taxes (if buying a property in Toronto, you will need to pay a municipal land transfer tax in addition to the provincial one) and adjustments (the seller may have pre-paid property taxes, utilities or other expenditures past the closing date that you will need to reimburse). First-time home buyers will receive some financial relief by way of government programs that can save thousands of dollars in closing costs.
Move In
Before you pick up the keys to your new home on the closing date, which will likely be released by your lawyer sometime in the afternoon, you’ll need to arrange for movers or a rental truck to transport your possessions, unless you have minimal and can DIY. If moving to a condominium, you may also need to reserve the elevator with the property’s management company. Taking these steps well in advance will go a long away to ensuring a smooth move, allowing you to enjoy this exciting time in your life.
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THINKING ABOUT BUYING?
Want to know what properties are selling for in a particular neighbourhood? Or have you been browsing for a while and you’re ready to take the next step? Fill out the form below or contact me. I’d be happy to help with your home search, in whatever capacity that may be.
