06 Mar The home buying process, simplified
The home buying process can be complicated, stressful and confusing, even for seasoned buyers. Especially when the real estate market moves at the speed we are seeing now. And it’s not just in Guelph, but Kitchener, Waterloo and Cambridge are all setting records in terms of price and how fast the homes sell. The good news is that the process doesn’t have to be that daunting. The complete buying process can be broken down into 6 steps, and if you hire a good Realtor® at step 1, they will guide through the other 5 steps. Stress and Confusion eliminated 🙂
Step 1. Find the right REALTOR® (aka Real Estate Agent)
Partnering with a great local real estate agent should be your top priority. A good realtor® will provide you with helpful information on homes and neighbourhoods that might not be easily accessible to the public, and negotiating on your behalf to get you the home of your dreams at the best possible price. A good real estate agent will be in your corner the whole way through. Best of all, in most cases, a buying agent does not cost you anything, as we’re paid by the sellers. It’s a no-brainer to get a great realtor® working for you. I know one, but I’m biased 😉
Step 2. Mortgage Pre-Approval
Before we start looking for a home, you need to know how much you can afford. Getting your pre-approval for a mortgage is the first step in the buying process! Not only it will re-affirm what is your purchasing power is, but it might also strengthen your position when you’re ready to submit an offer. Sellers like the assurance that the offer is from a qualified buyer and a pre-approval letter can boost your offer in a big way, especially in a competitive situation. If you are already working with a mortgage professional that is great. A mortgage specialist will look at your complete financial situation and pre-approve you for a mortgage. Be sure to get your pre-approval in writing. If you don’t have someone to help you with this process, I’m happy to introduce you to one of my preferred mortgage professionals. A mortgage pre-approval will typically be valid for 3-4 months. Some lenders will also hold the rate, so if the rate happens to go up during you’re pre-approval period the lender will honour the original lower rate.
Step 3. Create your home wishlist
The next step is to determine all your wants and needs. There are a lot of factors to consider such as the desired neighbourhood, school district, style of home, bedrooms and bathrooms, parking and so much more. During our first meeting, we will go over all of the above and more, simply and clearly.
Step 4. Previewing Homes
The Fun part begins. I will search and filter out homes that meet your search criteria. Homes that are not in the right price range, neighbourhood or don’t have the right size or features typically will not make the cut. I say typically because sometimes the perfect home is just outside the search criteria. If your perfect home is just a street over or 20 sq.ft less than you originally desired I’m sure you’d still like to know. Sometimes thinking outside the box can mean finding that perfect home faster and/or for less.
Step. 5 Making an offer
Once we find a home you are in love with its time to put in an offer. We will review comparable properties currently for sale, previous sales in the area, the current real estate market, and the property’s condition, to come up with a strategy for our offer. Because an offer is made up of price, deposit amount, conditions, clauses and closing dates it has a lot of moving parts that can play to a buyer advantage. It’s not only the final price, and it will be my job to figure out which advantage we can use to get you into your dream home.
What goes into the offer?
- Offer Price – This is the total purchase price you wish to pay for the home
- Deposit – A deposit is “good faith money” that is put down by the buyer upon a successful (or firm) agreement of purchase and sale of a home. This deposit forms a part of your down payment. The deposit shows the seller that the buyer is serious about purchasing the home, and it protects the seller, to an extent, should the deal not close due to a buyer’s breach of contract. A deposit is typically around 5% of the purchase price but it can range from 2%- 7%. In a multiple offer situation, a bigger deposit might strengthen the offer enough so that it wins against other competing offers.
- Closing/Completion Date – This is the date that you take possession of your new home and do a happy dance.
- Fixtures & Chattels – Certain items are automatically included (fixtures) in the sale price unless specifically excluded by the seller. Typically these include anything that is permanently attached to the home, such as curtain rods, built-in shelves etc. Chattels are items that are typically not included in the purchase price unless specifically listed as inclusions. Appliances area good example. They are excluded (in most cases) unless specifically asked to be included in the purchase. When submitting an offer, we will list items you wish to include or exclude from your purchase.
- Offer Conditions – A condition is a clause in the offer that makes the agreement contingent on the condition being fulfilled or waived. Conditions typically protect the buyer, and the most common conditions are financing, home inspection, lawyer review and status certificate review (condos only). I will advise you which conditions might be appropriate so that we have a strong offer while protecting your best interest.
Step 6. Closing
Once the offer is accepted and all the conditions have been fulfilled or waived we have what is called a “pending sale”. This means the home is technically sold, but ownership has not changed hands yet. The closing date is the day when that happens. A lawyer is required to facilitate the closing, and what the lawyer will do is perform the necessary checks needed, make sure the mortgage gets registered and that the title gets properly transferred to the new homeowners. If you don’t have a lawyer I can recommend a few good ones for you to choose from.
- Closing Costs – Closing costs are expenses associated with actually completing the transaction and getting your title (the closing). These typically include lawyer costs, land transfer tax, home inspectors, appraisals fees, title insurance, surveys and more. Sometimes not all of these are required, and this varies on a case by case basis. The costs average around 1.5% to 3% of the purchase price.
Hopefully, this little guide has shed some light on the buying process. The process doesn’t have to be stressful or complicated, and if you have any questions you know where to find me.