Buying A House – The Process
Martin would love to help you buy your next home in the Markham, Unionville and Stouffville area and the following information will help you understand some of the major steps involved so you’ll be better prepared when making your next move!
OBTAIN A MORTGAGE PRE-APPROVAL
The first and most important step is to obtain a pre-approval from your bank/lender or mortgage broker. I can recommend a mortgage broker for you if needed. This step is very important for a number of reasons. First, you’ll need to know exactly how much money you’ll be able to spend. The last thing you want is to fall in love with a home that you can’t buy.
Second, you’ll want to make sure there are no blemishes or mistakes on your credit history. If there are, you can address them now before it’s too late. Lastly, when you find the right home and submit an offer, you will likely have 5 days or less to satisfy a finance condition. If you find yourself competing against other offers, you may also feel pressure to remove your finance condition altogether. Obtaining a pre-approval first will speed up the process with your lender and and give you the confidence to eventually satisfy or waive your condition when the time comes.
Once you have your pre-approval, make sure your credit situation doesn’t change before the completion date of your new home. For example, if you’re also planning to buy a new car, wait until after the closing of your new home. Also, be sure to make all your payments on time and don’t take out any large amounts of credit.
SORT OUT YOUR FINANCES
As you likely already know, buying a house is expensive. You’ll want to make sure you are well prepared along the way. When you eventually submit an offer on your house, you’ll be expected to provide a “good faith” deposit. This deposit will be due either with the offer or within 24hrs of an accepted agreement. These funds are normally payable by a certified cheque or bank draft and is typically expected to be around 5% although that amount can range and is negotiable. Therefore, if your funds are tied up in investments or elsewhere, you’ll need to make sure your deposit is available on a moments notice.
Your deposit will be held by the listing brokerage in their trust account and will be returned to you, in full and without penalty if you do not firm up your offer by satisfying any conditions we may have included. Once the deal is firm, you’ve officially bought your house and your deposit will go towards your overall down payment. In Ontario, the minimum down payment needed to buy a house is 5% although the more, the better. Any amount under 20% will require mortgage loan insurance which can be added to your mortgage amount. For the latest rates, visit www.cmhc.com
Lastly, you’ll need to be prepared for closing costs. Typically, it is recommended to have at least 1.5%-2.5% of the purchase price available upon closing although the more, the better. Aside from your deposit and loan insurance, closing costs can include legal fees, land transfer tax (two taxes if buying in Toronto), home inspection, status certificate (condos), home insurance, adjustments, appliances, moving expenses, window treatments and other miscellaneous items.
DISCUSS YOUR HOMEBUYING PREFERENCES
Finding the perfect house is a process; sometimes it can happen very quickly and sometimes it can take a long time. Either way, the more I know about your needs and wants, the better I can help. Finding the right house is all about prioritizing your wish list and sorting out which criteria matters most. When you find the perfect house, you’ll know, it’ll just feel right! If you’re not already receiving MLS listings that match your criteria, be sure to fill out your home buying preferences to receive free daily e-mails of new MLS listings. As we view homes together, I’ll gain a better understanding of your personal tastes and we can adapt and strategize as we move forward.
ESTABLISH A BUYER REPRESENTATION RELATIONSHIP
It is every Realtor’s legal duty to present buyers with a form called, “Working With A Realtor” at their earliest possible convenience. That form is included on my website for you to read which explains how agency relationships work. It is important to know who’s working for you. If you decide to work with me, you have the choice to be my client or customer. Naturally, I prefer to work with clients as I believe this is the best situation for everyone involved. As my client, I am legally bound to pursue your best interests while keeping your financial situation, motivations and any other pertinent information confidential. I must do everything I can to negotiate the best deal possible for you.
To establish a “client” relationship, we must complete a “Buyer Representation Agreement” which I have included on my website. This agreement signifies that for a specified period of time, I will work exclusively to find you a property while pursuing your best interests. In exchange, you authorize my brokerage to receive a fee for the services provided. 99% of the time, the commission fee is provided by the sellers, even with private sellers. If by chance a seller is not providing an appropriate fee, I would let you know before seeing the property and if you decide to buy that property, the commission would be written into the deal and you would never have to pay anything out of pocket.
MAKING THE OFFER
Once you’ve found your ideal home, there is still lots to do. First, I will provide you with comparable sales and analysis on current market conditions so that we can establish our opinion on fair market value for the property. Next, I will contact the listing agent to open the lines of communication and begin negotiations. My main goal here would be find out if the listing agent will “give up” any pertinent information or disclose anything not mentioned in the listing.
Next, we will complete the offer and discuss all the appropriate terms, conditions and price. As far as conditions go, I will always recommend making your offer conditional on a satisfactory home inspection and financing. These conditions are normally 5 days but can vary depending on the situation. Once the offer is accepted, you will have to provide me with a certified deposit or bank draft which I must bring to the seller’s brokerage within 24hrs, assuming we didn’t already include the deposit with the offer.
During this time, you must also provide your bank with a copy of the agreement so that they can provide you with a commitment to provide the funds. Additionally, I will schedule a home inspection which typically takes 2-3 hours depending on the home. Your inspector will inspect every aspect of the home including electrical, plumbing, mechanical components and structure to make sure there are not major repairs needed. Every inspection will yield a long list of deficiencies as no home is perfect, not even new homes, but we’ll want to make sure that there’s nothing major that would affect your decision to buy the home. If, for any reason, you are not satisfied with your lender or the inspection report, you may back out of the agreement and receive your deposit, in full and without any deductions.
Assuming you are satisfied with your conditions, I will have you complete a form called “Notice of Fulfillment” which will then firm up your offer. Congratulations! You just bought a house!
SELECTING A LAWYER
If you haven’t already done so, you must now decide on a lawyer to complete the transaction for you. If you need a recommendation, I can provide one for you. I will ensure that your lawyer receives all the necessary paperwork on your behalf. Your lawyer will then perform important tasks including:
- Perform a title search.
- Make arrangement for payment with your lending institution.
- Contact the utility companies and tax departments to determine closing adjustment, if any.
- Obtain title insurance.
- Review with you and have you sign all required documents.
- Exchange document, funds and keys with the seller’s lawyer on closing.
CONTACT UTILITY COMPANIES
At this point, you’ll want to contact all relevant utility companies and inform them of your move so that they can either transfer or set up your new services.
MAKE MOVING ARRANGEMENTS
On my website I’ve included a moving checklist. Moving can be very exciting yet very stressful at the same time. Be sure to use the checklist so you’ll be well prepared along the way.
On your closing day, you will receive a phone call from your lawyer’s office to come and pick up your keys. This call usually comes in the afternoon so all moving arrangement should be made for the evening or the following day. In most cases, the appliances and mechanical components are guaranteed to be in working condition on the completion date but not afterwards. So be sure to check everything right away!