Attention First-Time Home Buyers!
Being a first time home buyer can be a very stressful process, but there is a right way which we see accomplished thousands of times a year. If you do your due diligence it can be rather comfortable. Before you begin to look at specific homes you need a game plan. You need to hone in on your area to determine the general price point. Figure out the specific factors that reach your goals for location and the property itself. How much space do you need? Do you need a large backyard? Do you have kids? Are you thinking about kids? Is having a school nearby important? How is transportation or transit in your area? What are the area amenities? Are you close to work? How is traffic in the area? Is there good shopping nearby? Once you’ve determined every factor about sizing and location, you can proceed to choosing your preferred area.
The next step we highly recommend is getting an independent mortgage advisor. They essentially do all of the research for you, and you don’t need to pay them as their fee is paid by the lender they get the mortgage from. This is more advisable than going to the bank in most cases, as they might not offer the best plan for you because the blue bank won’t tell you if there is a better rate and terms at the red bank across the street. Independent mortgage advisors have access to hundreds of lenders across the country. They will let you know how much financing you can be approved for and inform you of what you’re monthly obligation will be which includes the property tax and condo fees (if applicable). They will also tell you about all of the upfront costs, including the Toronto and Ontario land transfer tax; both of which you can get a rebate on if you spend $400,000 or more as a first-time home buyer.
Utilizing a certified home inspector is something we strongly advise. They test the entirety of property with specialized tools to ensure that everything is structurally sound. A home inspector will tell you if anything from the windows to the furnace needs to be updated and when. If something doesn’t meet your criteria you have the option to negotiate for a better deal or back out of the sale if the offer is conditional. The cost of their services is about $500.
The next person we advise for your team is a buyer agent specific to the area you’re looking in. The Greater Toronto Area is approximately 75 km, so you want someone who knows the subtleties of the micro markets you’re after, which there is approximately 250 of. Any large city has their own different pockets which you must be aware of, a specified realtor for that area will have the necessary information to understand the actual property value. Ask them for a list of the types of homes you are interested in that have sold in the last 90 – 120 days. Comparing prices is the best way to determine true market value. You can then get a list of everything that is available for sale in your area. We would advise looking at homes 9 – 5 on Monday through Friday as that’s when your team is most available, the sellers aren’t home so you get more privacy while going through all of the fine details of the property and you get to avoid the real estate “rush hour” of buyers at peak busy times.
The fourth person we highly recommend is a lawyer specific to real estate rather than a general practitioner. Ensure they operate within the province, preferably within the area you are looking to purchase as they will be better informed to assist you. Getting your real estate lawyer early on is important as they may want to make changes to the Agreement of Purchase and Sale which can be done ahead of time rather than last minute. They charge a one-time fee rather than by the hour. Their fees and disbursements are typically $1800.
After the team is in place you are ready to go shopping. You need to look at your location, as that effects pricing and that’s where you will be residing. The layout is also important as it can’t be moved around, look at the size of the principal rooms, this also determines the price of the property. Don’t get caught up in the cosmetic things like the wallpaper or the smell, those are things that can easily be changed and are rather inexpensive. Those are actually things you can utilize to negotiate a better deal as it’s not up to par with the neighbouring homes. Some sellers use the strategy of pricing it low to attract more offers. Asking price is truly irrelevant, it always comes down to what comparable homes have sold for. After you’ve found a home you’re interested in your buying agent will draft an Agreement of Purchase and Sale, which we advise be conditional upon mortgage financing, home inspection and lawyer’s review of the condo status report (if applicable).
Once the financing, legal and inspection process are all complete then you send a waiver of fulfillment of conditions to the seller. This states that you are pleased with everything and you can proceed with the final sale. Being conditional gives you the opportunity to back out obligation free if you aren’t pleased with something. After you’ve gone firm on the deal, you can move in on the specified date and you now own your very own home.
Congratulations!