It’s My First Time…(Buying a Home)

 

This is going to be a long blog post with a great deal of information. I hope you find it informative and helpful! You may wish to print this bad boy off and keep it with you if you’re thinking about buying a home. Oh also, this isn’t just a bunch of recycled information! I think you’re going to find what is said in here pretty darn helpful.

So, you have spent the past who knows how many years saving up your pennies and scratching together whatever you can so that you have a down payment. You’re finally ready to enter the exciting world of home ownership…but where the heck do you start? Maybe you don’t even have a down payment yet but you want to start looking around so you can “see what’s out there” and get an idea of the market.

Well, before you get out there and start looking you may want to consider the following the tips which are applicable to any home buyer, not just those of you looking for the first time:

GET SERIOUS

One of the most disappointing and disparaging things that can happen to you during your search for a home is finding the right home and not being able to move on it.

Let’s say that you decide to go and check out some open houses one weekend. You find the perfect condo but you don’t have a down payment saved up yet. So you race home and put a plan in place to save up your down payment but a week later the condo sells. You tell yourself “That’s no problem, another one just like that will come on the market soon.” Let’s say it’s another three and a half years before a condo in that building comes on the market again and this one only has one bedroom instead of two. How do you think you are going to feel about the buying process after that?

The moral is to save up your down payment before you start looking or at least have a plan in place, such as an RRSP that you can draw from, because you never know when you are going to find the right home.

GET PRE-APPROVED

One of the most important things you can do to assist yourself with buying a home is to get pre-approved for a mortgage. This can be done through your financial institution or through a mortgage broker (such as the in-house financing we offer here at Macdonald Realty!). Once you are pre-approved they can provide you with a pre-approval letter that shows you have met with them about a mortgage and been pre-approved for one. Usually this will also lock a certain interest rate in for you for a certain period of time.

This helps to show sellers that you are serious about purchasing their home and that you have the financial capacity to do so and this assists with negotiations. It also saves you a headache of trying to scramble for financing once you find an appropriate home.

Look at it this way: if you were selling a home who would you rather sell to; someone who you know has the money to buy and has been pre-approved or someone whose financial picture is a mystery. The choice seems pretty clear to me.

The other added benefit here is it helps you know what you can afford when you go looking for your new home.

GET OBJECTIVE

Look at any homes you are viewing through an objective looking glass. Don’t fall for the rose coloured glasses. First impressions are usually the most influential factor guiding the purchase of a home. It’s a trap! Don’t be suckered in because someone lives a messy lifestyle or, perhaps, an affluent lifestyle. Pay attention to the things that are important to you – the actual features of the house. The couches and piles of clothes don’t matter. What matters is whether the actual home itself is right for you.

GET DECISIVE AND ON THE SAME PAGE

One of the most important questions to ask yourself before you start looking for a home is “If we find the right home today are we ready to buy it today?” The answer to this question should be yes before you go out and start your search for a home. Having that decisiveness will help when the time comes to put an offer in on a home.

Make sure that if you are buying with someone that you are on the same page with what you are looking for. If you both have completely different expectations then you will never find the right home. Narrow down the aspects that are most important to both of you and come to a consensus.

At the end of the day you may have to compromise in order to purchase your first home. The question you have to ask is would you rather make that compromise, purchase a property, live there and build equity and eventually sell that home to purchase a home that has all of the features you want, or would you rather continue renting until you can afford your dream home?

One mistake many first time buyers make is that they are too picky about what they are looking for. Like I said above – would you rather be building equity in a home that you own that may not be perfect now, or would you rather continue to pay someone else to live in their house? The choice is yours.

One final thought on being decisive. When you find the right home, move on it. Don’t wait and have a look at a bunch of other places because the place you like may not be on the market that much longer. Do yourself a favor and avoid that heartbreak.

GET A REALTOR®

This links back into getting serious about buying a home. But I mean why get a REALTOR® when you are buying a home? You’re a savvy consumer. You have access to the interwebs (I mean hey, you’re reading this blog you savvy consumer, so good on you!). The benefits of working with a REALTOR® are numerous and I will outline some of them here for you.

Fiduciary duties

What are fiduciary duties you ask? That’s a funny word that I have never heard before. Why would I care about these fiduciary duties? Well you should.

Essentially fiduciary duties make it so that we, as REALTORS® act in the best interests of our clients at all times. It’s the same duty that a lawyer owes to their client. The fiduciary duties are outlined in the Working With a REALTOR® Brochure and break down as follows:

  1. Provide undivided loyalty to the client which includes negotiating on your behalf and disclosing to you all known facts;
  2. Obeying your lawful instructions;
  3. Maintaining your confidential information; and
  4. Using reasonable care and skill while performing their duties.

The above are fairly self-explanatory, but if you need further definition or information feel free to contact me and we can discuss them.

You should know that these fiduciary duties are only applicable when you are working under Designated Agency with your REALTOR®. If you are not you are owed very limited duties. There is a document called a Buyer’s Exclusive Agency Contract that outlines these duties (among other things) and helps to spell out the contractual relationship with your REALTOR®.

REALTORS® negotiate the best price on your behalf. We are aware of current market trends, sales in the area and historical trends. We pull together all of the data so that you can make an informed decision on what the right price is for the home you are looking at.

On that point, REALTORS® also provide you with helpful advice and tips not to mention that REALTORS® have access to quick searches for properties and can easily put together a list of homes that meet your criteria.

REALTORS® are also familiar with contracts and how to properly word and implement them. We know what subject clauses should be used in certain situations and when not to use others. This goes back to negotiation and helping you buy your new home.

GET A HOME INSPECTOR

Alright so you and your REALTOR® have gone out and looked at four places. You have found one that is perfect for what you are looking for right now and you’re ready to make an offer on it.

You do and it’s accepted! Congrats! Now, one of the subject clauses in the contract that your REALTOR® had you put into the offer is a Subject to Home Inspection Clause. Your REALTOR® recommends that you get a Home Inspector in the house asap to make sure there is nothing wrong with the house. He gives you three names, you pick one, you call them up and set a date and time for the home inspection.

The inspection is complete and the inspector sits down with you and your REALTOR® to go over the details. It turns out there are some minor deficiencies in the home that aren’t noticeable to the naked eye. While they aren’t anything major the repairs will cost about $5,000.00. Thankfully your REALTOR® had planned for this eventuality and repairs have already been spelled out in the contract.

A Home Inspection can be incredibly important in making sure that there are no defects with the home. At the end of the day you need to know what kind of shape the home is in, avoid unexpected repairs down the line and have a full picture of the situation of your new home.

GET HOME INSURANCE

Not much to say here. Home insurance is a requirement of mortgage providers. Make sure you get approved for home insurance before you move in. Once subjects are removed and the offer is finalized is the best time to start looking so you aren’t scrambling at the last minute.

CLOSING TIME

You don’t have to go home but you can’t stay…wait no. Let’s go to your new home. That’s why you bought it, right!?

Well, before things are finalized make sure that you are familiar with the additional costs associated with buying a home.

These costs include, but are not limited to: Conveyancing/lawyer fees, home inspection fees, GST (on new homes), property transfer tax (which if you are a first time home buyer probably will not apply to you) and property taxes for the year (depending on when the home is purchased).

As you can see, buying a home is a complicated and delicate process. Do your homework. Meet with a REALTOR® and make sure you understand what you’re getting into.

If you are looking to buy a home please feel free to give me a call. I would love to sit down with to explain the process and help you find the right home.