In: Real Estate News30 May 2011
“How do I buy a home in Canada” might seem like a silly question, but if you are a first time home buyer, this is where you start. Of course, if you have never bought a home before, the process may seem like a mystery. Here are a few steps to take to buy a home in Canada.
Step one: Financial Analysis
The first step is to examine your own financial situation. You will need to examine how much money you have for a down payment. The minimum down payment in Canada is 5%. If you have 20% of the purchase price for a down payment, you will avoid paying CMHC fees. CMHC charges a fee on all down payments less than 20%.
In addition to your down payment, you will also need to budget approximately 3-5% of the purchase price for land transfer taxes, legal fees, and other costs. As a buyer, you do not directly pay real estate commissions. These fees come out of the seller’s pocket.
As part of your financial analysis, you will need to examine your take home income and also know your debts. If you have student loans, card payments, credit card debt, or lines of credit, this will reduce the amount of money you will be able to borrow.
Action: The first action set when looking for your first home is to find a mortgage broker or bank and get a pre-approved mortgage. After you have a pre-approved mortgage, you will know how much money you can spend to buy a home.
Step two: Build your team
In addition to a mortgage broker, you will also need a lawyer, and, most likely, a real estate agent. Since this is your first home purchase, it’s best to use the experience of professionals with experience. Make sure to talk to friends about their experiences and see if they can point you in the direction of a quality real estate professional. Make sure your lawyer is located close to you and is specialized in real estate transactions. Also make sure that they are not too busy to spend time with you, and conversely, not too desperate that they will say and do anything just to get you as a customer.
Action: 3 Quotes from each
A good tip is to call and interview 3 agents and 3 lawyers. Be sure to ask lots of questions. Ask you real estate agent if they offer a buyer’s rebate. Your agent will most likely to be collecting 2.5% commission if you purchase a home with them. If you are doing all the looking (on mls.ca and propertysold.ca), then you most likely deserve a commission rebate. Even if you received a 1% rebate, this could be equal to 3-5K. Make sure to get this rebate in writing before buying a home.
Step 3: House Research
You will be looking for homes on MLS and on PropertySold.ca. Get your agent to set you up for automatic buyers alerts so that you are emailed new listings each day. You can also set yourself up for automatic updates on PropertySold.ca
Action: Visit homes
The best advice is to visit as many homes as possible in as many neighbourhoods as possible. The saying goes that real estate is about “location, location, location”. 1st time home buyers should not be rash about buying a home. It’s a big step and the more homes you look at, the better educated you will be. Think about how you will be using the home and which rooms you will be spending the most time in. Are those the nicest part of the home you will buy?
Step 4: Making an Offer
Your financing is in place and you have found the home of your dreams (in your budget). Now is the time to make an offer. This is where the real estate agent might be of some help (but remember the conflicting interest that the agent gets paid when you buy). Make sure the agent shows you all the recent homes sales in the area, and come to a conclusion of fair market value. You can listen to the agent, but the best advice is to make the decision yourself. You are buying the home, you are paying the money. You will have no one to blame but yourself, so don’t let anyone talk you into or out of buying a home.
It is very smart to put in conditional clauses into the offer for home inspection and financing (plus any other clauses you deem necessary). The will allow the buyer the opportunity to walk away from the home if they do not like information uncovered in the home inspection. Plus it lets you review the pre-approved mortgage with the bank to make sure that they will lend you the money.
Action: The best action is to do your research, visit lots of homes, know what you want, and then you find it, pay the fair market value for it.
Step 5: Moving in: Closing date.
After your offer was accepted and conditions. You will be taking the accepted offer to your lawyer. You will also be providing this offer to your bank/mortgage broker. The banks and the lawyers will handle most of the other details related to closing the home. Your real estate agent or lawyer will provide a list of utilities to contact. You will also need to get ahold of your cable or internet company: Especially if you are moving in when the Vancouver Canucks are in the Stanley Cup Finals!
Go Canucks Go!
For all of your real estate questions please call PropertySold.ca Inc. today at:
1-855-900-SOLD and speak to a customer service representative. We have licensed real estate professionals on staff ready to take your call right now. List your property for sale by owner today. New! We now accept real estate listings from real estate agents and new home builders & developers. More Information »
Real estate news in Canada including buy and sell information, local market updates, guides, tips for Canadians in the real estate market.