Buyers

First Time Homebuyers

Whether you've decided to buy a house or you're still thinking about it, there are many benefits to consider. Financially, owning your own home just makes sense. Why pay rent and coat someone else's pocket when you could be coating your own pocket? Owning a home is basically like living rent-free when you really think about it. If you rent a house for three years and decide to make a move, does your landlord hand you back all the money you paid him in rent? It would be nice, but unfortunately that's not the case. When you buy a house you are making an investment. As long as it holds its value (fluctuations would result from changes in the current market or general upkeep of the home and property itself), you will come out even when and if you decide to move. If you make any improvements or upgrades, chances are that its value will increase and you will make money when you decide to sell!

Why Use a Sales Representative?

Realtor Logo Buying your first home can be overwhelming. You could easily drown in all the legal jargon and paperwork, unless you have a skilled sales representative to do the work for you. A licensed real estate sales representative can help take the stress out of your real estate transaction. They know all the rules and can help you find the house of your dreams. With the market moving so fast, it's easy to lose out on the house you want if you don't have someone keeping an eye on the market for you, informing you whenever something new comes up that fits your criteria.

The best part about being a first time homebuyer is that there is absolutely no charge to have a real estate sales representative represent you. They are paid from the commission from the sale of the home that you are purchasing, which means no money out of your pocket.

A sales representative will bring a wealth of knowledge and experience to your buying or selling process as well as negotiating skills and an on-going education program that keeps them up to date on the latest trends, skills and responsibilities to the Buyer or Seller. A sales representative will explain exactly what you can expect from the buying and/or selling process, from start to finish.

sales representatives are members of the Canadian Real Estate Association (CREA) and as such adhere to a strict Code of Ethics and Standards of Business Practice. This enables sales representatives to achieve the highest professional standards in order to better serve you, the consumer.

Your sales representative works with your best interests in mind. By signing a Buyers Agency Agreement, you have, in fact, created a contract between yourself and the sales representative in which the sales representative owes you, the client, loyalty, obedience, confidentiality and full disclosure of all pertinent information regarding the purchase or sale of your property.

A sales representative also has the access to the best tool of all - the Multiple Listing Service (MLS) which lists the properties currently for sale in your area.

One of the most important responsibilities of a sales representative is to negotiate to obtain the best possible deal for you while at the same time offering advice and perspective.

Most sales representatives will also help to obtain information regarding financing. Many sales representatives have Mortgage Brokers "in-house" to help you with qualifying and obtaining a mortgage at the most competitive rates and terms.

Why would you not use a sales representative?

Click here for an explanation of "Agency Relationships"

Before the Search

Before you begin your search, there is much to consider. What type of neighbourhood do you want to live in? One with lots of children for your kids to play with? Close to schools? Mature? Quiet? How about bedrooms? How many will you need? When buying a home, it is important to look ahead and think about how long you plan on living in this house. Will you eventually be having children? Are your children nearly grown and moving out? What will you do with the extra space when they leave? Asking yourself these questions will help narrow down your options to reveal exactly what you're looking for. Make a list of all the things you would like in a house. Break it down into "must have" and "would like to have" categories. If you give this list to your real estate sales representative, it will give them a clear idea of exactly what you're looking for and you won't end up wasting time going through homes that don't suit you.

Click here for a list that can help you get started.

Getting Pre-Approved

Once you've made your list, you may want to consider getting pre-approved for a mortgage. This will give you a clear idea of how much you can comfortably afford or what should be done in order to qualify for a larger amount. A licensed mortgage consultant can help you. The lending institution that gives you your mortgage pays the mortgage broker with absolutely no cost to you! However, there are closing costs that need to be considered. By getting pre-approved, you are getting off to the right start and saving yourself both time and money. You can search for the right home at the right price, knowing that you will successfully qualify for the mortgage. This puts you in a very strong position when negotiating with a seller.

Click here to determine the amount of mortgage that you can qualify for*

*This calculation is an estimate only and is to be used only as a guideline. Your qualified mortgage amount is subject to approval by your lending institution.

The Offer

When you've found your home, you will make a formal, written offer to purchase. This is a legally binding contract outlining what you will give (a combination of price and terms) in exchange for the home. Your associate will probably use a pre-printed form covering all of the legalities and will modify it to cover what you want to offer.

Remember, everything is negotiable. You should ask for what you want, but keep in mind what you're willing to give up. Your RE/MAX sales representative will put everything in writing. Of course, the more conditions in your offer, the less attractive it will be to the vendor.

The vendor may counter your condition with an escape clause. For example, the vendor may wish to continue showing the house and if they receive another offer, you'll have the option of backing out or removing your conditions.

The Offer Can be Firm or Conditional

A firm offer means that you are prepared to purchase the home without any conditions. If the offer is accepted, the home is yours. Although a firm offer to purchase is usually preferable to the seller, if you are unable to close you will lose your deposit and may get sued. Take time to confirm your financing and to think twice about the investment.

A conditional offer to purchase means that you have placed one or more conditions on the purchase, such as subject to home inspection, financing or sale of your 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. After the seller has reviewed the offer, it may be accepted as is, rejected, or returned with 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 ends the negotiations.

It is best to know your absolute upper limit before you begin negotiations, so that in the heat of the moment you don't end up with a home you really can't afford.

*This section on Offers is courtesy of RE/MAX Ontario-Atlantic

Closing Day

It's a day filled with nervous anticipation. This is the day on which all of the legal and financial promises in the offer are met. It's the day when you get the keys and begin a new phase in your life. Your RE/MAX sales representative and your lawyer will give you all of the details on steps and timings. All of the small details will be taken care of ahead of time, so in most cases it will be just a day of waiting by the phone.

Also, remember that this is a hectic day for the seller, too! Very often it's moving day and they're trying to gather all of their belongings to leave as the purchaser is trying to move in.

In brief, here's what takes place before the actual closing day:

A copy of the offer will have been forwarded to the office of your lawyer. Your lawyer will have reviewed the conditions of the sale. You will have made your lawyer aware of how you, and any co-buyers, will be registered on the title of the property.
All of the conditions in the offer to purchase must be satisfied by the closing date. If one of the conditions in your offer was a house inspection, it should have been completed by the closing date, and you should be satisfied with the report.
All of your financing details will have been finalized and ready to fall into place on the closing date.
If the vendor did not have an up-to-date land survey, you'll have had one done. Your lender will insist on it.
Your lawyer will search the title of the property to ensure that you can purchase the home without any legal problems. Your lawyer will also make sure that tax payments have all been made and there are no liens on the home or the personal property the vendor has agreed to sell you as part of the deal.
You'll want to make sure that you've contacted all of the utility, cable, and phone companies to ensure an easy transition of service and billing.
Your lawyer will prepare a statement of adjustment. This confirms the selling price, adjustments, and the balance (less the deposit you provided with the offer). Your lending institution will draw up a certified cheque for your lawyer to hold in trust.
Additional settlement charges will have to be paid:
- Your lawyer's fee and disbursements
- Condo and co-op fees (if applicable)
- Tax and utility adjustments; if they have been pre-paid, you'll have to pay the vendor for the portion of the service you assume
- Land transfer tax; based on the price of the home, this fee ranges from 0.5% to 4% of the selling price
You'll want to make sure your homeowner's insurance policy will be in place to cover your new home and property once the deal is closed. Your lawyer will need a copy of the policy before closing.

*This section on Closing is courtesy of RE/MAX Ontario-Atlantic

Closing Costs

When buying a home, it is very important to remember that you will have to meet other expenses besides the price of the property. These may include:

Appraisal fee

Required by the lending institution to establish the value of the property. The cost is approximately $175-$185 plus GST

Home Inspection

In most cases when the home that you are purchasing is older, your sales representative will suggest that a property inspection be done. This usually costs between $250 and $300.

Mortgage insurance premium

(can be added to the mortgage amount)

Legal fees & expenses

These fees include the lawyer's fees for service plus any disbursements. Legal fees vary depending on the lawyer and will cost approximately $1,000 - $2,000. It is best to ask your lawyer how much he will be charging you before you agree to hire him.

Title Insurance

Title insurance replaces the need for a survey and other certificates required to close the purchase of your home. It can be obtained by your lawyer for a cost of approximately $175-$225. You'll need to ask your lawyer for further details.

Home Insurance

You are required to obtain home insurance on your home to cover anything from fire to other damages.

GST

(if not included in the purchase price)

Survey

The lending institution requires a survey to ensure the home is situated on the lot within legal restrictions. You can usually obtain a survey from the previous owner. Be sure to put that in your offer as a new survey can cost anywhere from $800 or more.

Land Transfer Tax

This fee is required on every sale. Your lawyer pays it to the government on the closing date. In most cases, this tax is equal to 1% of the purchase price minus $275.00

Adjustments

You are responsible for paying any adjustments, such as property taxes which have already been paid in advance by the previous home owner, as well as any other costs that the home owner has already paid for services which would be payable by you once you move in.

Addition expenses that you may incur could include:

Moving expenses
Appliances for the new home
Furniture etc.
Maintenance equipment

Frequently Asked Questions

Many buyers do not fully understand the home buying process and what role a real estate sales representative plays. The following are some of the most frequently asked questions that buyers ask or don't fully understand.

What does it cost as a buyer to use a sales representative?

The compensation that a sales representative receives typically comes from the seller's proceeds. In other words, there is no cost for a buyer to use a sales representative in a traditional sales representative/buyer relationship. In a buyer agency agreement, there may be some cost to the buyer, but even these agreements are usually worded so that the sales representative is compensated from the seller.

Can my sales representative give me information regarding properties from other companies?

Yes, if that other company is a member of Multiple Listing Service (MLS) - which most real estate companies are. For Sale By Owner (FSBO) properties are not listed in MLS so a sales representative likely would not be able to provide information regarding them. However, with a buyer agency agreement, your sales representative may be able to help you purchase a FSBO.

What if I find a property on my own?

You should contact your sales representative and not the property owner or the sales representative listing the property. Having the address or the MLS number is very helpful and will assist your sales representative in gathering information regarding the property.

What type of information will my sales representative need from me?

A sales representative will need any type of information regarding the property you are looking for that is important to you. For example, number of bedrooms, garage size, price, location and number of bathrooms are common criteria. Other considerations include the school district, type of home (ranch, tri-level, etc) and room sizes. Keep in mind that a search that is too specific may narrow your list of properties too much while one that is too broad may give you more properties to look at than you have time to go through!

A sales representative may also ask you for other information such as hobbies or activities you enjoy, children's names, birthdays, etc. This type of information fosters more of a "friend" relationship than a "business" one and makes the home buying process much less stressful.

Can I go to open houses without my sales representative?

You can go to open houses without your sales representative. However, you need to make sure that you indicate you are working with a sales representative already. If you don't, your sales representative might not be able to help you write an offer on that property in the future.

How can I find out about new properties?

Your sales representative should be able to accommodate your particular situation whether it be via e-mail, phone calls, etc. Clients with e-mail capability can receive automatic updates from the MLS system as soon as new listings are entered.

What if I am unhappy and want to switch sales representatives?

Let the first sales representative know that you are unhappy and the reasons why. See if you can work out the issues with them. If not, tell the sales representative you no longer want to work with them and find another sales representative.

Summary

When purchasing real estate, a sales representative can be an invaluable resource if you remember your responsibilities:

Work with just one sales representative
Make sure you tell your sales representative everything
Always tell other sales representatives you are already working with a sales representative
Consider your sales representative a friend

Info for Buyers