Finding your new home can be stressful and overwhelming, but it doesn’t have to be. The best way to avoid anxiety is by knowing the step by step journey into your new home. Finding the perfect property is not about perfection at all; it’s about finding the perfect balance between your ‘wish-list’ and the realities of the market.
Step 1: Pre-Qualification
With the recent mortgage changes, being pre-qualified for a mortgage is integral in your home buying process. It’s important to know how much your lender is willing to give you towards the purchase of your new home. Put it this way, would you go to the airport without a destination in mind? Real estate is quite similar; you have to know your budget so you can plan accordingly. You never want to be in the situation where you thought your purchasing power was $1,000,000, but it turns out to be $800,000, and you realize you wasted all that time. You can speak to the broker at your bank, or to an independent mortgage broker. They’ll ask you for your income, debts, down payment, and credit history. The great part about a pre-approval is that it usually locks you into a certain interest rate for 120 days, which is great if rates are looking to hike.
Step 2: The Wish List
The house hunting process can be long and stressful, but there’s a way to stay organized. I advise all my clients to create a wish list of what they must have, what they want, and what they want to avoid. When creating this list, try to think about your current needs, future plans, and your lifestyle. This will allow you to narrow down your search quite a bit to properties that match your criteria. When creating your list don’t forget to include neighborhoods that you’d like to be in, and neighborhoods you’d like to avoid.
Step 3: Choosing a Realtor
Finding the right realtor is a difficult choice but it plays the most important role in your home buying or selling process. Results speak louder than words so you need to check out their past sale successes and marketing techniques. Your chosen realtor should, not only, show you homes, guide you through the buying process and negotiate a deal but they should be an advisor, consultant and expert negotiator.
Step 4: House hunting
A lot of your house hunting will happen before you even leave your home. Although Realtor.ca is a great tool to find properties, your real estate agent will be able to see when new listings come up. They will also be able to give you insight about properties, which are about to hit the market. With this information, they can send you a custom list of homes that best reflect your criteria. This is the time where you can really explore neighborhoods and get a feel for what they are, as well as refine your wish list. A key thing to remember is to not let the physical imperfections turn you away. If the home has hideous wallpaper in the bathroom, but meets your needs in terms of location and size, then it’s something to consider.
Step 5: Making an Offer
Once you’ve found the property you want, it’s time to buckle down and buy it before someone else does. You rather sleep in it, than on it. The offer process can be super exciting, but also quite nerve racking. We start with the Agreement of Purchase and Sale which is a legally binding document that includes everything from the price you’re willing to pay, inclusions you want (Fridge, TV, etc), the perfect closing date (possession date), and conditions that must be met for the deal to be completed. You may find yourself in a negotiation having to compromise on certain things, but a good realtor will work diligently to get you what you want. Make sure to review the document prior to signing, and don’t be scared to ask questions.
Step 6: Deposit & Conditions
Conditions are found within the agreement, and are requirements that must be met to complete the transaction. Your offer may include a condition for financing, inspection, or due diligence. Don’t forget that upon acceptance of the deal a deposit is handed over to the listing brokerage in the amount of up to 5% of the purchase price, which is held in trust until closing. Once the conditions are met, the deal becomes firm, and you should start packing!
Step 7: Closing
This is the day you legally get possession of your home. It is an exhilarating time! It takes place when the legal and financial obligations have been met. It is now time to congratulate you on your new home!