DECIDING TO BUY
Buying a home is one of the most exciting (and important) moments of your life! Your home is not just the roof over your head, it’s where you live, eat, sleep, play, and grow; it’s also one of the most important investments you will ever make. Whether this is your first purchase or you are an experienced buyer, this decision must be made carefully.
WHY DO YOU WANT TO BUY?
There are many reasons to buy a property. Maybe you are tired of paying rent or have outgrown your current home. Perhaps you would like a larger yard, a shorter commute, or simply to live in a different neighbourhood. You could even be looking for an investment or rental property. Whatever the reason, having a clear sense of why you want to buy will help you choose the right property.
HAS YOUR INCOME GROWN?
Property ownership is an excellent investment; whether you are looking for your dream home, a rental property, or to expand your investment portfolio. Owning real estate is one of the least risky ways to build equity or obtain a greater return on your initial investment.
PREPARING TO BUY
Before you start shopping for your property, it is important to first make some preparations.
BUILD YOUR GREEN FILE
A green file contains all your important financial documents. You will need it to secure financing for your property. The typical green file should contain:
Recent pay stubs
Tax returns for two years
Copies of leases for investment properties
TFSA, RRSP, life insurance, stocks, bonds, and mutual account information.
Getting pre-approved for a mortgage means just that – knowing in advance, before you even begin your house hunting, exactly how much you qualify for in mortgage financing. This is a critical step. Too many buyers begin shopping without a pre-approval and end up heartbroken; they lose out on a home they loved, and maybe even made an offer on, because they didn’t qualify for adequate financing.
Avoid this mistake by making pre-approval one of your first steps. Once you’ve completed your financial health check and put together your green file, you should begin to look for a lender. You may choose to go to the bank that they do most of their business with, while others choose to ask for a referral from their Realtor’s sphere of influence. Both of these options have separate pros and cons and should be evaluated accordingly.
BE SMART WITH YOUR FINANCES
It’s important to be honest with yourself when you do your own financial review. If you underestimated your household expenses to make your financial picture look brighter than it actually is, your mortgage representative will probably expose a more realistic view.
It is also important to be careful with your finances. Now is not a good time to make sudden career changes or large purchases. You want to approach your property purchase from a position of financial stability.
CHOOSING YOUR REALTOR
Buying a property requires making many important financial decisions, understanding complex issues, and completing a lot of paperwork. It helps to have an expert in your corner when undertaking such a large purchase.
It’s key that you find someone you feel completely comfortable with, who you can trust, and who listens to you and respects your views. Real Estate professionals have the market knowledge and expertise, but at the end of the day, it’s your home and your investment, so you must be able to work well with your Realtor.
Here are some factors to consider when choosing your real estate professional:
Look for a full-time agent – one who has experience completing transactions similar to yours.
Choose an agent who is experienced in the changing market.
Ask how much time the agent will have for you and if they are available at night and on weekends.
Does the agent return your calls promptly? Time is money when attempting to buy a property.
Request a list of references including past buyers.
Choose an agent who listens attentively to your needs and concerns; someone with whom you feel comfortable.
FINDING YOUR HOME
Once the initial preparations are out of the way, it is time to find the right property for you.
TAKE A DRIVE
Get to know the neighbourhoods, complexes, or subdivisions, of interest. Tour the area to get a feel for what it would be like to own a property there. Start getting a sense of the properties available in those areas. Take advantage of the power of the online world to further examine your prospective neighbourhood – not just for potential homes to buy, but for other features and amenities in the area.
NARROW YOUR SEARCH
Once you have selected the general area to buy in, you can narrow your search further by taking a critical look at specific homes. We suggest you view a number of homes, but it is better to select a few different types in a range and narrow your search after assessing strengths and weaknesses.
Make notes about each property you see and record what you like and love about the property, what you don’t like about it, and any concerns you have. This will help you to make an accurate record of the features and attributes of each property. Recording this information will allow you to objectively compare each property rather than ranking purely from memory.
TIME TO BUY
After weeks or months of planning, preparing, and searching, you’ve finally found a property on which you’re ready to make an offer. This is an exciting time, but also one where emotions can easily come into play. It is helpful to work with a qualified Realtor to make sure you are making decisions that benefit yourself in the long run.
MAKING AN OFFER
THE PROCESS, STEP-BY-STEP
Once you have picked out the property you want to purchase, your agent will work with you to draft a fair offer that gives you an advantage over another offer. Team Hawke Realty’s agents are committed to negotiating deals with your best interest in mind.
THE INITIAL AGREEMENT AND DEPOSIT
An effective agreement is a legal arrangement between a potential purchaser and the property’s seller.
Some important tips to keep in mind to streamline the process:
KEEP WRITTEN RECORDS OF EVERYTHING
For the sake of clarity, it is always better to make all agreements, including counter-offers and addendums, written agreements to be signed by both parties. We will assist you in drafting all the paperwork for your sale and make sure that you have copies of everything.
STICK TO THE SCHEDULE
Now that you have submitted your offer, you and the seller will be given a timeline to mark every stage in the process of closing the real estate contract. Meeting the requirements on time ensures a smoother flow of negotiations and also ensures that each party involved is not in breach of their agreements. During the process, we will keep you updated so you are prepared for the next step.
When you have completed a purchase and sale agreement you will be required to provide a deposit. This provides security for the Seller as an act of good faith that you the buyer have a financial stake in the agreement. Most deposits can be sent as a cheque, money orders, bank drafts, E-transfer, or direct deposits. You will need to confirm with the seller’s agent what is accepted.
The listing brokerage will hold the funds in a Real Estate Trust Account. If the offer is accepted the funds will go towards the purchase price; and if the offer is rejected, it will be returned to you.
WHAT TO EXPECT ONCE YOUR OFFER HAS BEEN PRESENTED
RESPONSE # 1
The seller accepts your offer. The deal is concluded and you move on to the next steps in the buying process.
RESPONSE # 2
The seller makes a counteroffer. The counter-offer might ask for a higher price or different terms. You can sign the offer back to the seller, offering a higher price than your original offer, but lower than the seller’s counter-offer. If the seller accepts the counteroffer, the deal is concluded.
RESPONSE # 3
The seller makes a counteroffer, asking for a higher price or different terms. If a counteroffer is returned to you at a higher price, ensure that you know exactly how much you can afford before you start negotiating. You don't want to get caught up in the heat of the moments with costs you can’t afford. You can reject the counteroffer because the price is still too high, or you can’t agree to the conditions. The sale doesn’t go through, and your deposit is returned.
Once your offer is accepted by the seller, you will want to have a licensed property inspector inspect the property within the time frame that was agreed upon in the effective contract to purchase. You may elect to have different inspectors inspect the property if you wish to obtain professional opinions from inspectors who specialize in a specific area (eg. roof, HVAC, structure). If you are purchasing a commercial property, then you will need to have an environmental audit done on the site for the lending institution. We can recommend several different inspectors.
Depending on the outcome of these inspections, one of two things may happen:
1. Either each milestone is successfully closed and the contingencies will be removed, bringing you one step closer to the close, or
2. The buyer, after reviewing the property and the papers, requests a renegotiation of the terms of the contract (usually the price).
APPRAISAL AND LENDING
It is imperative that you keep in close communication with your lender, who will let you know when additional documents are needed to approve your loan application and fund your loan. If the agreement is conditional upon financing, then the property may be appraised by a licensed appraiser to determine the value for the lending institution, via a third party. This is done so that the lending institution can confirm their investment in your property is accurate. Appraisers are specialists in determining the value of properties, based on a combination of square footage measurements, building costs, recent sales of comparable properties, operating income, etc. When you are within two weeks of closing, double-check with your lender to be sure the loan will go through smoothly and on time.
If you are obtaining a loan, you will be required by your lender to purchase a certain amount of insurance on the property. The value will depend on the lending institution and the purchase price of the property. You may be able to save hundreds of dollars a year on homeowners insurance by shopping around for insurance. You can also save money with these tips.
- Consider a Higher Deductible - Increasing your deductible by just a few hundred dollars can make a big difference in your premium.
- Ask your Insurance Agent about discounts - You may be able to get a lower premium if your home has safety features such as deadbolt locks, smoke detectors, an alarm system, storm shutters, or fire-retardant roofing materials. Persons over 55 years of age or long-term customers may also be offered discounts.
- Insure the house, not the land under it - After a disaster, the land is still there. If you do not subtract the value of the land when deciding how much homeowner's insurance to buy, you will pay more than you should.
Team Hawke Realty can recommend experienced knowledgeable insurance agents for every property type.
REMOVING THE CONDITIONS
Once all the conditions are met, the deal will be firm and you now can prepare for your move.
PREPARING TO CLOSE
Closing day is the day when you finally take legal possession and get to call this house your home. But before you close, you have a few more steps to consider.
FINAL WALK-THROUGH INSPECTION
More of a formality than anything else, the final viewing takes place a day before, or the day of the closing. You will visit the property to verify that all is in working order, everything is the same as when you last viewed the property, that there are no extra items left behind, and that everything included in your purchase is still at the property.
HOME SERVICES AND UTILITIES
You will need to contact your current home service and utility providers to let them know of your upcoming move. Schedule a date for the services to be turned off at your current address and installed at your new home.
We are ready to assist you should an unforeseen glitch pops up, even at this last stage. Something at the property breaks down, or some other minor detail – no need to worry. We have encountered these problems before so we know how to handle them efficiently and in a stress-free manner.
Not only is the closing day when you get the keys to your new property, but there are also a few more things that will happen first.
Your lender will give the mortgage money to your lawyer.
You must provide the down payment (minus the deposit) and the remaining closing costs to your lawyer.
Your lawyer will pay the seller and register the home in your name. Then provide you with the deed and keys to your new home.
Whether it’s weeks or months between finalizing the deal and actually moving in, it is now just a matter of planning your move: hiring a mover or renting a truck and doing it yourself; arranging services such as electricity and cable, rerouting your mail; and other moving essentials.
After that? Congratulations! Time to move into your new home and celebrate the next part of your journey, and know that your Team Hawke Realty agent will continue to be there for you.
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