I was once a first time home buyer and I can recall my experience to be a little overwhelming even with the help of an experienced real estate agent and mortgage specialist. So if you feel the same way that’s perfectly normal and don’t worry, you will get through it.
First you would want to find out what you can afford. You need to contact your financial institution and find out how much they will lend to you as a mortgage. Be careful not to let them pull your credit report as the more times they do, it can hurt your credit score. I suggest acquiring your credit report yourself, it cost around 45 dollars and it does not affect your score. Bring it with you to the meeting and they will have no reason to pull your report. It is also important to discuss how interest rates will affect how much you will pay to the bank over time and what options you can get to pay down your mortgage faster.
Now you have a number in mind as to how much you should be looking for. Should you buy new or pre owned? There are good reasons to buy either way and I will summarize. Buying new is really about being able to pick and choose how your property will look and feel like. New home sellers usually offer a variation of styles and sizes to choose from usually in a subdivision or condo. Then you can customize your property at a design centre usually at great cost. New homes usually means newer and better technology and materials and more modern designs. The potential draw backs are you don’t know your community.
As its new there is nowhere to drive or walk around to see your neighbours or schools etc…to get a feel of where you are living. Even after you have moved into your new home, there could still be construction going on for years, and the new home owner has to deal with dust, noise and the settleing of the new home. There is a Tarion warrantee that helps protect the new homer for defects of the new home. The home owner still has to take time off from work to be around for the home builder to come by and fix what is broken which may not be too convenient. Renovations to the property usually have to wait for the home to settle or you may risk voiding warrantee.
Resale homes offer the new home buyer many more advantages than new home sale. Firstly the buyer can physically research the neighbourhood they are looking to buy into. They can walk the parks; visit the schools, shopping malls and hospitals. There is a saying in the business, location, location, location. It’s a fact that all the most desirable places to live have already been developed. Perhaps the new home owner prefers to live close to the city centre or to the lakeshore. Or maybe they need to be close to the subway or GO station. My point is buying resale can get you into a neighbourhood that is more convenient to live in and is probably a better investment for when the home owner would like to move on and want to sell.
Outdated exteriors and interiors can be spruced up and even renovated to reflect the home owners styles and tastes…and usually cheaper than if they were to have bought a new home and customized it at the design center. If the home owner does not like the layout, walls can be removed to create an open concept feel so long as structural elements are not ignored. Older properties are usually larger so back yards can be used for greater entertaining or putting in a pool or deck.
Buying resale has its draw backs too. Dealing with renovators is not always easy. Monetary and time cost of retrofitting outdated roofs, windows, electrical, plumbing and HVAC can be expensive to make the property more efficient and able to handle new appliances etc… But consider the purchase price of a resale home in Toronto can be easily $700,000 and the cost of retrofitting it might only be $30,000 which is only just a small fraction of the purchase price. After the retrofit is done, think about the increase in the value of the home because of it and one can see it might not be as bad as it seems.
Making a list of needs and prioritizing them is very important and often over looked by the first time home buyer. I can’t stress enough how making a list can help in keeping the search for a property on track as shopping for a property can be daunting. The first time property buyer also has many styles of homes(Detached, semi-detached, Town home, condo, bungalow and side split etc…) to choose from and from many different communities.
I highly recommend enlisting my services because as a real estate agent it is my business to know things that the everyday person would not know about real estate. Regardless if I’m chosen or not the agent’s job is to understand the buyer’s needs, show them appropriate listings, help the buyer to negotiate the purchase price, act as an advisor regarding any questions the buyer might have, be able to refer the buyer to lawyers and home inspectors and pretty much look after the buyers best interests.
When viewing potential properties it is my advice to view only during the day where potential defects or problems might be more visible. Take your time when browsing the property and follow a pattern for which to keep track of what may need to be fixed or what features might be of interest. I generally start looking at the ceiling, then move down ending at the floors. You might do the reverse, but the point is having a system of inspection keeps things more organized and you’re less likely to miss things.
Once the buyer has found that just right property they want to own, then preparing the offer to purchase comes next. The realtor will provide options as to how much to offer based on their knowledge of comparable properties that have sold and which might be currently on the market. Ultimately it’s the buyers choice as to how much to offer, but they should consider any counsel from their representative.
A clause is inserted to the offer of purchase that allows for an inspection to be conducted of the property before closing. This clause may or may not be negotiated in or out but I always put it in the contract for the client’s best interest. At the same time there might also be another clause allowing the buyer to first find suitable financing and if the buyer is not able to they can get out of the deal. These offers can get quite complicated so I won’t get into every situation, but once again the buyer should rely on their representation for advice and clarification. Be prepared for negotiations to go back and for several times before the acceptance of the offer to buy in accepted. A deposit which is negotiable is required at acceptance and commonly its $5000 - $15000 where the higher the deposit is the more serious the offer.
During the time after acceptance of the offer and the closing date, the buyer and seller has specified times to complete the clauses. This also is a time for the buyer to meet with their lawyer who will check for any outstanding liens and verify ownership and other legal concerns are in order. They do this at a fee for which the buyer will have to pay as part of what is known as the closing costs. Other closing costs can be surveying cost, Title Insurance, Land Transfer Tax, Disbursements, Statement of Adjustments, Home Insurance, Mortgage application and appraisal fees and CMHC insurance premiums.
All that’s left is to take possession at closing. Make sure to do a final inspection of all appliances as this is the last time you will have any recourse at the vendor as the warrantee ends that day. I hope this summary helps any of you first time home buyers and if you would like to discuss how I might be able to assist you please don’t hesitate to contact me at email@example.com or call 416-993-TLEE.