Information for Buyers
Making the decision to buy a home is very exciting but can also be quite stressful. The initial list of questions may also grow as you go along but it is important to have the answers before you decide on a home.
- How to begin the search for a home?
- Where to search?
- Can we even afford to buy and if yes, what can we afford?
- Is this a good time to buy?
- Are there any programs to help first time home buyers?
- Where do we ask for help?
- Which realtor would represent us best?
- What are the initial expenses besides the downpayment?
You may need to take a deep breath, get a cup of tea or coffee and relax. Take your time to evaluate your situation, your personal and family needs, your future needs. While 2 bedroom home or condo may be fine now, will the situation be the same in 2 years? 5 years? Each Buyer, each family, will have individual answers to the above, so take your time to get this right. There is no standard home buyer template, no one answer fits all here.
Now, learn to separate your needs from your wants! Maybe make 2 lists, what you absolutely need and what you would like. They are definitely not the same. You may need 3 bedrooms but you may also want a pool. Is the pool an absolute need? Not for most buyers but your situation may be different. Consider your needs and wants and set some priorities. A talk with family members or a reliable realtor may help at this stage as we can help you along by answering some of your questions and offering helpful tips.
Having a proper and thoughtful conversation focused on your plans, goals and dreams is absolutely essential. Buying a home or condominium property without doing the initial Buyer consultation and formulating simple steps for success is a mistake.
As a realtor for over 20 years now, and serving The GTA community in all aspects of real estate buying and selling, I developed simple procedures and plans that will work for you. They are a part of my Total Real Estate Service program and the Real Estate Simplified plan.
Please feel free to ask any questions you may have. I am here to help.
There is 7 basic steps to home ownership.
- Make the Decision to Buy. Find your reasons and your needs, as described above.
- Seek Professional Guidance. Real estate purchase can be as hard or as easy as you make it. Getting professional advice from a realtor, lawyer, mortgage consultant and a host of others will make it easier. Don’t try to do this alone. We are here to help.
- Obtain Proper Financing. Get your mortgage preapproved and find out about all the terms and conditions from the lender. This step will help with the next step.
- Set Your Price Range. You know what downpayment you have, plus the amount that you qualify to borrow and what do you have? No, not your price range. You do however have a number with which to work. Don’t forget to budget for Closing Costs and other potential expenses. Remember, you don’t have to buy as high as you qualify for, try to stay below the max that you can afford. You can thank me later 🙂
- Find Your Dream Home. You can search the MLS on your own, spend countless hours basically searching the web. Not the most productive time spent! We make it easy! You can use our Hot New Listing service and have listings in your inbox daily! Hire a realtor, we do make the process simple.
- Showings and Negotiations. Be prepared to act when listings that match your needs come on the market. You have to make yourself available to view properties. Once a week just doesn’t work in a busy market. And you have to be ready to negotiate when the right home is listed. Your realtor will lead the way, book appointments and negotiate on your behalf.
- Close and Move In. Once a deal is negotiated and any conditions removed, your lawyer will advise you on the Closing Costs and will prepare transfer and close the deal on your behalf. Exciting time, time to Move In!
Please check my blog for upcoming posts on the above points.
First Time Buyer Advice.
While I will devote a number of future blog posts to First Time Buyers, the main advice I would give here is to do your homework. Information is power. Knowledge is power. Read carefully the writeup on the page above. Read the “Steps To Ownership”. Search the web for informative posts. Use the Free Tools as offered on this site to do the calculations, til you fully understand and are satisfied.
Most of all, find a realtor that will give you great advice, will listen to your questions and concerns, and most of all, will give you the time you need to find the right home, for you! This is not the time for rushed judgement or rushed decisions! If you don’t feel that the realtor is doing that, if there is lack of trust, change the realtor, assuming the one you hire will let you. Please read Total Real Estate Service on this site for more information.
Should you have any specific questions or need my assistance, please reach out here. I am here to help.
Quick rundown on Closing Costs.
Closing costs can vary quite a bit between transactions but they will mostly be part of some or all of the costs listed below.
- Legal Fees. Your lawyer will handle the legal aspects of the purchase, will prepare transfer documents, will perform title search and other duties. Your lawyer will also be the one that will give you the final figure on all costs of the transaction, including many things listed below.
- Adjustments. These are figured out by the lawyer and added or subtracted from your costs. What these basically represent is any partial payments already made or still outstanding on things like property tax, maintenance fees etc. For example, if the Seller already paid property tax til the end of the year but your closing is in November, you would owe the Seller a portion of the property tax. Lawyer will make the “adjustment” on your behalf and it will be figured into your closing costs.
- CMHC Fees. If you are buying with less than 20% down, you will need to obtain CMHC Insurance and pay the application fee and applicable taxes. While the “insurance” portion can be incorporated into the mortgage payments, the application fee will most likely have to be paid up front.
- Land Transfer Tax. This tax is calculated on a graduating scale based on your purchase price and location (if you bought a property in Toronto). Please use my “Free Tools” to figure out your LTT payable. There are government programs offering discounts to First Time Buyers. Your lawyer will figure out what you need to pay and will make that part of the legal service.
- Government! Yes, let’s not forget that some of the fees mentioned will have HST payable. Again, that should be part of the final closing cost.
There are other costs associated with buying a home but they are not on this list because they will need to be paid up front and will not be part of closing costs as figured by your lawyer. They may include home inspection, utility hookups, survey fee, appraisal fee, property insurance, mortgage broker’s fee, Status Certificate (condominium properties), new home warranty and of course there will be at least some moving costs.
As a general rule, please budget about 2% of the purchase price for the above costs. While you should come in comfortably below the 2%, it is better to have the money put aside than to be scrambling last minute to secure additional funds.
Exciting times! You are making an offer!
While there are many steps taken to get to this point, like arranging financing and looking at a number of properties, this step will definitely need excellent cooperation and understanding between you, the Buyer, and the real estate professional representing you in this process. High market activity means that most properties will sell quickly and in multiple offer situations. You may be required to make some quick decisions and make some sacrifices if you are bidding on a house with multiple offers.
The offer will be prepared by your realtor on terms that you decide on. Your offer will also be negotiated on your behalf by your realtor, either face to face or by other legal ways, including email.
There are 2 basic offer possibilities.
- Conditional Offer. It means that there are some conditions that need to be fulfilled before the sale can become “firm”. Most common would be Condition on Financing approval or Home Inspection. There could be many more. Conditional Offer protects you, the Buyer, in case some problems are discovered during the “conditional” period. Should one of the conditions in the offer not be satisfied, you and your deposit are protected.
- Firm Offer. Favourite of the Sellers but may leave the Buyer exposed. Firm offers basically state that you are buying the property at certain terms and if accepted by Seller, the deal is basically done. Very simplistic explanation but that is basically it.
What can happen once your offer is presented for negotiations? Basically, 3 things can happen.
- Acceptance. Means you are almost a home owner.
- Rejection. Your offer will not be accepted and if it was rejected during multiple offer situation, there is no going back.
- Signback or Counter Offer. Means you are potentially in the running and have to consider the response from the Seller. Now you have to take one of the 3 options and accept, reject or counter offer on the Seller’s proposal.
This is an overly simplistic explanation and you will need a competent realtor to guide you through the process and all the legal implications.