7 STEPS TO HOME BUYING SUCCESS

That Canadians Need to Know

Thinking of buying a home? Fantastic! It may be your first home, or perhaps your fifth, but no matter how many times you’ve been through the process, one thing remains the same: It’s a big job, involving a great deal of effort, time, and of course, money. But you’re not alone — lots of Canadians are doing it! According to Statistics Canada’s National Household Survey, 69% of Canadian households own their home.

Every buyer has unique needs when it comes to buying a home, but the steps to Canadian home ownership remain the same.

STEP 1: DECIDING WHAT YOU WANT

Logically, the first step to finding the right home is to determine what you’re actually looking for. There are a lot of homes on the market at any one time, and looking at them all is not the best way to spend your time. To make your home search more efficient, ask yourself these three focus questions:

1. Where do I want to live?

This is your first decision. What communities or neighbourhoods do you want to consider? Is it important to be near schools, shopping centres, recreation facilities, places of worship, hospitals, or other amenities? Will you require public transportation?

2. What type of home do I want?

What style of home is best for you? It could be a detached, a semi-detached, a bungalow, a split-level, a two-storey, a duplex, a townhouse — the options are endless! You may also want to consider your ideal lot size and the age of the home.

3. What are my must-haves and deal-breakers?

What are the most important features for you in a home? A basement? A garage? A pool or a fireplace? How many bathrooms? Bedrooms? Do you have family members with special needs? What do you absolutely not want in a home?

STEP 2: GET PRE-APPROVED FOR A MORTGAGE

When it comes to buying a home, getting pre-approved for a mortgage is a very important step. Not only does it help you understand exactly how much you can afford to spend on a home, but it often allows you to lock in an interest rate for a period of time which could potentially save you thousands of dollars for years to come. Here are 4 simple steps to a mortgage pre-approval:

1. Talk to a mortgage specialist. 

Whether it’s your bank mortgage specialist or an independent mortgage broker — talk to someone with expertise who can help you compare rates and terms as there are hundreds of options to choose from. Note: A 2014 report by the Canadian Association of Accredited Mortgage Professionals suggests that more home buyers are choosing fixed-rate mortgages for their purchases (74%, compared to 20% who had a variable or adjustable rate, and 6% who had a combination mortgage rate)

2. Complete an application to find out how much you qualify for.

There are many factors that go into determining your eligibility for a mortgage. Two of the primary practices are calculating your GDS (Gross Debt Service) and TDS (Total Debt Service) ratios. These factors determine how much you can comfortably afford to spend based on your down payment, income and other financial obligations. 

3. Gather your financial information to finalize pre-approval.

Your bank or mortgage professional will require documentation to support your application such as income and down payment verification to finalize the pre-approval process.

4. Get a copy of your pre-approval.

This is a powerful negotiating tool. It’s extremely frustrating for sellers to lose a sale because of financing. A pre-approved buyer means sellers have one less thing to worry about. Even though many offers are conditional on financing, the seller of your dream home will see you as a more attractive buyer when they know you are pre-approved. 

STEP 3: AGENT OR NO AGENT?

Most buyers today work with a real estate agent rather than go at it alone for many reasons. In most cases, your home is your most valuable asset, and it makes sense to use a professional. A great real estate professional will provide key market insights, sound advice and save you endless hours of time and money — all while helping you reduce the stress of a large purchase so you can truly enjoy the experience of buying your dream home. 

Top 5 Reasons Why Most Homebuyers Choose to Work with a Real Estate Professional

1. It’s free. In almost all cases, commission is paid by the seller so having an agent working for you is essentially free. 

2. You avoid overpaying for a home. If you’re like most buyers, you want to know, with certainty, that you are paying a fair price. Quite often, sellers overprice their homes to “see what happens.” A great real estate professional will educate you on the price of current competitive properties as well as similar homes that have been recently sold to help you make an informed decision on how much to offer for your dream home. 

3. Representation and protection of your interests as a buyer. In any transaction, it’s important to understand that the seller’s agent is bound by contract to work in the best interests of his/her sellers. As a buyer, you also need representation (an agent), someone to work exclusively in your best interests. Engaging the services of a real estate professional to assist you in the home buying process means you now have someone to work solely in your best interests to provide you with:

• Confidential advice that addresses your needs first.
• Loyal and diligent “full disclosure” care, FREE from any conflicts of interest.
• Access to all listings including MLS®, bank-owned properties, distress and estate sales, even homes that were previously on the market where the seller might still be interested in selling.
• Expert advice on useful clauses such as home inspections and financing to protect you fully.
• Expert negotiation of the offer to purchase, to achieve the best possible price and terms.
• Expert advice on market value, inclusions, location, as well as help you decide when you should walk away.
• Discovery and disclosure of all information about the property including liens, warranties, disclosures, seller’s purchase price, market and planning activity in the area.

4. NEGOTIATION of the best price and terms of your most valuable asset. Negotiating requires expertise and skill, period. A great real estate professional is a masterful communicator with expert negotiating skills whose job is to help you decide what to offer, what to include, what to give up and most importantly, when to walk away if reasonable terms cannot be reached. 

5. Manage the countless details and mountainous paperwork. Ensuring the i’s are dotted and t’s are crossed and that no balls are dropped from start to finish (and after) is a heavy load off any buyer’s plate. From the moment of engagement, your agent will ensure smooth sailing and guide you effortlessly through any obstacles along the way.

STEP 4: START SEARCHING

Now the fun begins! Most searches begin online. In fact over 90% of buyers start their home buying process on the internet. The most comprehensive website for property searches is Realtor.ca, a Canada-wide database of all active properties for sale, also referred to as the MLS® or Multiple Listing Service. This website allows you to narrow your search to a specific area, price range, key features and even displays the properties on a map. 

The internet can be very helpful for you to get a sense of what’s available but keep in mind, it’s not a complete picture of the market or all potential properties available. A great agent, working on your behalf, will do an in-depth needs analysis to find all the properties suitable for you, set up a time to view the homes and guide you through the selection process. 

STEP 5: MAKE A SMART OFFER & NEGOTIATE

You have found a house you love. Fantastic news! Here’s how the offer process typically works:

Decide on price, terms and conditions. Your agent will conduct a Comprehensive Market Analysis (CMA), complete with comparable active and expired listings, recent solds, and other historical data to determine the market value of the home. This is extremely helpful when it comes to negotiating a fair price. You also need to decide on a closing date and if there will be any conditions of the offer such as home inspection, appraisal, water tests etc. Your agent will guide you. 

Prepare the offer. Your agent will create a legal document (Agreement of Purchase and Sale) that protects you, follows your instructions, and matches your schedule and needs. Of note, many tech savvy, eco-friendly agents today are using the convenience of paperless transactions. E-signatures are becoming more and more common today for their ease of use and online, secure document storage. 

Review the offer. Your agent explains the details and terms of the offer, and suggests options for specialty clauses so that you know exactly what you are agreeing to.

Present the offer. Your agent will present and negotiate the offer on your behalf. What happens next? One of three things:

1. The seller accepts your offer. Congratulations! 

2. The seller rejects your offer. This isn’t common, but it can happen and your agent will work to find out why.

3. The seller countersigns. Changing the terms of the offer, and presents the offer to back to you. Your agent will continue to negotiate on your behalf to reach agreeable terms. Your agent will also advise you if it’s clear that an agreement cannot be reached and it’s time to walk away. 

STEP 6: CONDITION REMOVAL & INSPECTION

Okay, you have agreed on the price and terms and now have a firm or a conditional offer in place. If you have conditions, now is the time to start the process of satisfying them in order to meet the deadline and firm up your purchase. 

One of the most common conditions of an offer today is home inspection. Home inspections allow you to scrutinize the details of the home and potentially save you from any unpleasant surprises. 

HOME INSPECTION TIPS

• Choose a qualified professional. A member of an association can reassure you are getting an experienced, knowledgeable professional.
• Ensure the home inspector checks for visible issues with plumbing, electrical systems, roof, insulation, walls, ceilings, floors and windows, and the condition of the foundation. They can also check that the home includes chattels like furnaces and air conditioners, are in working order.
• Ensure your home inspector gives you a close and personal look at your new home. It takes about three hours to go through all the systems, and if there are any problems, you will see them with your own eyes. They will also give you maintenance tips and easy fix-ups, if necessary.
• Ensure that in the end, you receive a detailed report that summarizes the condition of your home.

STEP 7: PREPARING FOR CLOSING DAY

Typically you will have anywhere from 30 to 90 days before closing day. The closing date can be the same as your move-in date, however, this is not always possible. Check with your lawyer or agent to find out when your keys will be available on the closing date. It is normal that the exchange of money and title be complete before keys are released which could be late in the day. Remember, this is an exciting time! Being organized well in advance will pave the way for a much more enjoyable journey. Here are a few details to take care of before your closing date:

• Legal Stuff and Paperwork. You and your agent will need to provide your lawyer with all the necessary documentation for your purchase. Your agent usually takes care of the agreement, waivers, survey and any other purchase documents. However, you may need to provide your lawyer with some additional information: insurance, down payment information, adjustment payments, and other signed documents your lawyer may request.
• Down Payment and Closing Costs. Make the necessary arrangements to have these funds available a week prior to closing or when the lawyer has requested funds.
• Moving Arrangements & Change of Address. Whether you are using professional movers, renting a truck, or getting a bunch of friends together, plan and organize it early.
• Property Insurance. Arrange for home insurance before closing and request a proof of insurance at your financial institution in advance. Provide your insurance agent with the listing information and details such as age of the house, pool or no pool, type and condition of the roof, condition of the furnace, electrical and type of exterior.
• Utilities. Contact the local utilities to coordinate the change of billing on closing. Including phone, internet, cable, gas, electricity, water, and any rental agreements. Don’t forget to cancel the services at your old address.
• Schools. Inform your children’s old and new schools about the move and arrange any necessary record transfers.

AN EXPERT BY YOUR SIDE

Buying a home can be an exciting and rewarding journey — if you do the right things. That’s where I can help.

If you would like to discuss buying a home home, please feel free to give me a call. Having this initial conversation puts you under no obligation to hire me as your REALTOR®.

So let's talk. Find out how you can sell your home quickly and for the best price possible.