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Determine
what you can afford
Buying a home involves both one-time costs and more
regular monthly expenses. It's important that you take
both into account when you're figuring out how much
you can spend on a home.
The largest one-time cost is the down payment, which
usually represents upto 25% of the total price of the
property. Then, in addition to the actual purchase price,
there are a number of other expenses that you may be
expected to pay for.
Typical One-Time Expenses
- Mortgage application and appraisal fee (paid
at time of application)
- Property inspection (optional) (paid after inspection)
- Legal fees and expenses (paid at closing)
- Property survey (sometimes provided by seller) (paid
at closing)
- Property Transfer Tax (paid at closing)
- Mortgage interest adjustment andtake over fee (if
applicable) (paid at closing)
- Mortgage insurance (and application fee if applicable)
(paid at closing)
- Home and property insurance (paid at closing
and on-going)
- Connection charges for utilities such as gas, water
and electricity (paid on date of move)
- Moving expenses (paid on date of move)
Other costs may include landscaping, decorating, furnishings,
appliances and repairs. Typical monthly costs include
mortgage payments, maintenance, insurance, condo fees,
property taxes and utilities.
Understanding
market conditions
The real estate market is always changing, and it
helps to understand how market conditions can affect
your position as a buyer. Your agent can provide you
with info on current conditions and explain their impact
on you.
Buyers' market
The supply of homes on the market exceeds demand.
Characteristics
- High inventory of homes
- Few buyers compared to availability
- Homes on the market longer
- Prices tend to drop
Implications
- More time to look for a home
- More negotiating leverage
Sellers' market
The number of buyers wanting homes exceeds the supply
of homes on the market.
Characteristics
- Smaller inventory of homes
- Many buyers
- Homes sell quickly
- Prices usually increase
Implications
- May have to pay more
- Must make decisions quickly
- Conditional offers may be rejected
Balanced market
The number of homes on the market is equal to the number
of buyers.
Characteristics
- Sellers accept reasonable offers
- Homes sell within an acceptable time period
- Prices generally stable
Implications
- More relaxed atmosphere
- Reasonable number of homes to choose from
Types of
home ownership
What type of home is right for you?
There are three categories of home ownership: freehold,
condominium and cooperative. Each has its benefits and
drawbacks - speak to your Royal LePage agent to figure
out which type will work best for your needs and your
lifestyle.
Freehold
Freehold homes offer two significant benefits: freedom
of choice and privacy. Since you own the structure and
grounds, you're free to decorate and renovate whenever
and whatever you want. However, all maintenance (indoors
and out) is your responsibility - be prepared to spend
time and money taking care of your home.
Condominiums
Condominiums are typically less expensive to own than
a detached house. With a condo, you own (and are responsible
for) the interior of your unit. Upkeep of the building
and grounds is handled by the condominium association,
which is funded by monthly fees collected from tenants.
The down side? Condo residents enjoy less privacy than
residents of detached homes, and often have to adhere
to strict rules regarding noise, use of common areas,
renovations, etc.
Cooperatives
Co-ops are like condominiums, except instead of owning
your unit, you own a percentage of shares in the entire
building. One drawback to living in a cooperative is
that if you decide to sell your shares and move out,
the co-op board has the right to reject your prospective
buyer.
Working with
Mark
Let your real estate agent do the searching for you.
The best buys aren't in the newspaper ads; most great
opportunities are on "hot sheets" that are
available every morning to salespeople with access to
MLS information.
An agent's job is to:
- Provide information on the property and the area
- Negotiate a price and terms that are agreeable to
both buyer and seller
- Help arrange a source of financing
As a homebuyer, you must work with your agent to find
the home that's right for you. Communication is key
- tell your agent what you want, and be specific.
- Offer a detailed description of your property needs
and wants. If you will absolutely not consider a house
without a hardwood floor, say so. And if air conditioning
is a "nice to have" rather than a "must
have," communicate that, too.
- Be specific about where you want to live. If you
refuse to live outside a certain area, it might take
longer to find you a home, but your agent will know
not to waste your time with anything not in your chosen
neighbourhood.
- Tell your agent what you can afford. He or she can
help you get a pre-approved mortgage so you know for
sure what your price range will be.
- Communicate your likes and dislikes for each property
you see. It will help your agent narrow down the possibilities.
- Commit to one salesperson.
- Respect and perform the terms of the purchase agreement.
- Keep an open mind. Agents know about those charming
little areas that you've never even heard of. You
might find your dream home in a completely unexpected
place.
Making the
offer
When it comes time to make an offer, your Royal LePage
Real Estate Professional will provide current market
information and help you draft a suitable offer. He
or she will then communicate the offer to the seller
(or the seller's representative) on your behalf. Sometimes
there may be more than one offer on a property coming
in at the same time. Your agent will guide you through
this process.
An Offer to Purchase
An Offer to Purchase is a legal document which specifies
the terms and conditions of your offer to purchase the
home. The offer can be firm or conditional.
Firm Offer to Purchase: preferable
to the seller because it means you are prepared to purchase
the home without any conditions. If the offer is accepted,
the home is yours.
Conditional Offer to Purchase: means
that you have placed one or more conditions on the purchase,
such as "subject to home inspection," "subject
to financing" or "subject to sale of buyer's
existing home." The home is not sold until all
the conditions have been met.
Acceptance of the Offer
Your Offer to Purchase will be presented as soon as
possible. The seller may accept the offer, reject it,
or submit a counter-offer. The counter-offer may be
in reference to the price, the closing date, or any
number of variables. The offers can go back and forth
until both parties have agreed or one of you ends the
negotiations.
Closing the
Deal
Closing day is the day you become the official owner
of your home. However, the entire closing process usually
takes a few days.
Typically, you visit your lawyer's office to review
and sign documents relating to the mortgage, the property
you are buying, the ownership of the property and the
conditions of the purchase. Your lawyer will also ask
you to bring a certified cheque to cover the closing
costs and any other outstanding costs.
Once your mortgage and the deed for the property are
officially recorded, you become the official owner of
the property and your lawyer will call you to pick up
the keys to your new home. |
