My Message And Commitment To Buyers
Home buyers who take the time to put together a home buying plan are much more likely to find the home they want at the price they want to pay. Your home is likely going to be the largest single financial investment of your life, and I’m here to help you make the most of it. Your home is also the building block of wealth, stature, and security for you and your family. It is my goal to guide you through the process of finding the right home, and ensure that your experience is both enjoyable and rewarding. I offer all my services to buyers free of charge, so let’s get started!
Best regards, Peter.
“Always The Right Move”
Is Home Ownership Right For You?
Whether you already own a home and are moving, rent, or are buying your first home, there are many considerations to take when assessing the status of home ownership. While home ownership builds equity and affords many freedoms, there are also more responsibilities that come associated with it as well. There are finances that need to be made secure, there is the maintenance of the home and property to be considered, and in general the level of commitment made through ownership increases. For the most part though, the added benefits far outweigh the considerations, which is why so many strive to own their own home.
What is your biggest motivation to own a home? ____________________________________________
What Can You Afford?
The best place to start is figuring out what you can afford. There’s a no more demoralizing experience than to think that you’ve found your perfect home, only to discover that you don’t have the funds available to pay for it.
The Down Payment
The first consideration is the down payment, and usually the difference between being able to own your own home or not. Down payments normally start at a minimum of 5%, and increase from there depending on either your level of savings or equity brought over from another property. The level of down payment may also have an impact of CMHC mortgage financing insurance required, so be sure to discuss this with your mortgage advisor as well. If you are a first time home buyer, there may also be some options available though government approved first time home buyers plans to extract money for RRSP savings you may have. If you have a financial planner they would be your best source of advice here. If you don’t have a financial planner, you can rely on banking professional to lend a hand during the mortgage pre-approval process, which we’ll review a bit later. Whatever your down payment strategy is, it’s key to remember not to commit all your available funds to a down payment as there are expenses in other areas that will need to be covered as well. I’ll explain those in greater detail in the next section.
I have saved a down payment of $________________________
The Closing Costs And Expenses
As mentioned earlier, you can expect a variety of other fees and expenses that are over and above the actual purchase price of the home. Which ones and to what extent are largely determined by your specific circumstances and the nature of the deal that you eventually make. A very rough rule of thumb is that the total amount of closing cost and other expense can range from 1.5% to 4% of the price of your home. In some cases certain fees and taxes can also be rolled in to the mortgage, so while you technically are still paying for them, you don’t notice their impact nearly as much. Between your conveyance lawyer and financial institution, they will allocate the expenses appropriately on your behalf. Below are some common closing costs.
- Land transfer tax in BC is 1% on the first $200,000 and 2% on the balance for Canadian residents. There are exemptions for people who’ve never owned land before and new construction purchases, so be sure to assess if you qualify for an exemption.
- Property tax may be due to the seller if they have paid up in full for the balance of the year that you occupy the home.
- GST applies to all new home or substantially reconstructed homes, but again there are rebate programs available to reduce some of this expense. More info is available from the Canada Revenue Agency.
- Appraisals are sometime required by lending institutions and can range in price around $500.
- Mortgage loan insurance is required for down payments of less than 20%, and can range from 1.80% to 3.85% of the purchase price of your home.
- Site surveys are sometimes required by lenders, and if not available from the seller can cost upwards of $800. A more cost effective solution is Title Insurance which can range from $100-$300 depending on the value of your home.
- Home safety and inspection for defects is always a good idea and can also start at around $400.
- Lawyer and notary fees range widely depending on the complexity of the deal, but usually can be obtained for around $1000.
- Other miscellaneous expenses like service charges for hooking up utilities, moving companies, cleaning, and landscaping are also very common when turning a new house in to your home.
- You can expect ongoing expenses to cover things like the mortgage, strata or condo fees, property taxes, insurance, phone/utilities/TV, maintenance and repairs.
*Down payment plus estimated onetime expenses should not be more than your cash on hand.
For most people once the initial costs and fees are covered, the only major long term commitment comes in the form or granting a mortgage on their property thought a lending institution. A mortgage is basically an agreement to pay back borrowed funds over a specified period of time, and there are many companies out there willing to work with you to arrange financing. While there are several considerations to make when mortgage shopping, the most common is length of term and mortgage rate. The more secure and longer term the financing is, the higher the interest rate is and vice versa. The bottom line is to do your homework on the products and services that are available. Take time and get expert advice to assess your risk tolerance for the mortgage markets, and select the product that makes the most sense for you. Contact a mortgage broker or financial institution and they will be more than happy to provide you with a no cost, no obligation pre-approval on a mortgage so you know exactly where you stand. And one last thing; be prepared to share your financial history and current earnings and debts of all involved in the buying. The more complete and accurate you are now, the less the chance of being disappointed when it comes time to commit to an actual loan approved for both you and the house you choose.
I have worked with a lender and been pre-approved for $____________________________________
The Right Home For You
OK, so you’ve worked out your budget and know how much you can spend on a home, and how much it’s going to take to maintain it each month. Now comes the fun part, finding the right home, in the right area, with the features and attributes you are looking for. The best thing to do now is create your wish list.
The Wish List
Sit down with all those involved in your home buying decision and start creating a list. It’s going to be a long one, but that’s good. Many wishes will be the same across the board and be classified more as “needs”, and others considered less of a necessity and more like “wants”. Either way, start with the basics and build out from there. Here are some considerations:
Number of bedrooms, bathrooms, floors, and parking spaces. Close to work, school, parks, grocery store, and shopping, public transit. Do you want a yard, fence, garden, view, pool, air conditioning, security, easy access, workshop, privacy, sun exposure, adult oriented? Your wish list will always be unique to you, but by simply thinking about what you like about the place you live now and what you don’t like about the place you live now, will bring to surface what you truly desire.
I have completed my wish list and it looks like________________________________________
The Type Of Home
Once completed and prioritized, your wish list will guide you through the rest of the decisions you need to make about your new home. For example, if you had on your wish list that you wanted 3 parking spaces, a fenced yard and a garden, you probably wouldn’t be shopping for a condo. You get the idea. The most common types of homes are single family, multi family, condo, and mobile.
The type of home that suits me best is_________________________________
The Style Of Home
There are many home styles to choose from, but some of the most common in this region are:
- Rancher or bungalow – single level family home on a slab or crawlspace
- Split entry – stairs leading up and down immediately upon entry
- Split level – multilevel home connected by short staircases
- 2 story – entrance on the ground floor with bedrooms up
- Level entry – entrance is on the main upper level with a basement exit
- West coast contemporary – irregular shapes with large windows and open spaces
- Townhouse – separate entrance multi level row housing sharing interior walls between residences
- Patio home – similar to a townhouse but only 1 level
- Duplex – 2 family multilevel home each with separate entrance
- Quadplex – 4 family multilevel structure each with separate entrance and access to only 1 level
The style of home that suits me best is___________________________________________
The Location, Location, Location
Of all the things about your home you can’t change, it’s the location. It is where it is. For this reason is absolutely critical that you assess the desirability of the area in terms of services, amenities, reputation, security, and affluence. Consider all aspects not just for today, but in terms of where the area is headed in the next year, 5 years, and 10 years. Doing this will ensure not only your satisfaction living in the area today, but also in maintaining the value of your investment over the long term.
The area of town and location that suits me best is______________________________________
Searching For Your Home
Now we can begin to actually search for your home. You know what you can afford, the type of home that suits you best, and the area you want to live in. This is where you can rely on your real estate agent to save you time and effort narrowing down what homes to spend time viewing. Your agent will employ many techniques to profile your needs against the housing inventory that is available, and then begin to show you homes that match.
Your agent will also suggest you take advantage the many “self serve” methods of searching for a home. They include the on-line MLS listings found at www.realtor.ca, numerous print publications and real estate newspapers, and personal customizable internet accounts that keep you up to date and informed with e-mail alerts of the properties that meet your search criteria. These are called Personal Client Services or PCS accounts and are a must for the serious home shopper. Call to have your PCS account activated today!
When viewing homes and lots, view things objectively. Look for lots that are sized to your preferences based on how willing you are to maintain the yard or garden. Try to avoid outdated features in a house unless you are willing and able to make updates. While you should be very wary of structural defects like cracked foundations and water damage, don’t let little things scare you. A fresh coat of paint and a few new fixtures might be all that’s needed to modernize a home and refine it to reflect your personality and tastes.
It is important to understand that finding the right home isn’t really about selection; it’s more like a process of elimination. The best strategy is to maintain a master list of all the homes that have been viewed, and rank them. Continue to eliminate houses until it becomes apparent which house is the best choice. If there is no best choice, then the process begins over again. Re-assess your price range, style of home, and location, and begin the search again. Be patient and don’t get frustrated, it’s all about making sure you make the right move.
The Right Home
Ah yes, you knew it from the moment you pulled in to the driveway. Your heart started to race. You opened the front door and stepped inside…it just felt right. You can already feel how proud you are to live here and call it home. But now what?
Your agent will guide you through the process of making a formal written offer. Offers are legally binding contracts detailing what you are willing to pay in exchange for gaining possession of the home. While this may be a daunting and stressful experience to go through alone, this again is another way in which your agent’s experience and advise will make the most of the current market situation and make it work for you. Make sure you and your agent are clear on the strategy you are going to use when making the offer, as there are upsides and downsides to each one. Your motive, emotional attachment to the home, and market conditions will dictate what strategy is best for you.
Be prepared for some negotiating back and forth. Most often negotiations are done between the buyer’s agent and seller’s agent, but they are of course based on direction that you the buyer give. For the most part this is why you have hired a professional, to negotiate the best deal possible and keep your best interests represented. It is quite common for offers to be rejected and countered, and this process continues until one party either accepts an offer, or quits negotiating and walks away. Keep in mind that it’s the perception of your ability to walk away that gives you a position of strength and power when negotiating.
The details of the offer will again be determined by the specifics of the home and the buyer’s personal situation. You will have to determine, the price, how much of a deposit to make (usually 3-5%), the terms of financing, and any extras you want included, the closing and possession dates, and most importantly any conditions to the offer.
Conditions or subjects are there to protect the best interests of the parties to a contract. The more common subjects used are, the buyer securing financing, obtaining house and title insurance, having a site survey, searching title charges, reviewing the property disclosure information, and completing a home inspection. Again, your agent will advise what subjects are important to your situation and how to go about taking the steps necessary to satisfy the conditions and remove them. Once you have taken all the steps and are completely satisfied, all the conditions of an offer can be removed. At that point you just bought yourself a house. Congratulations!
Often times there is a lag time between the acceptance of an offer and actual change of possession of the home you bought. This is purposely done for the benefit of all involved to allow for the logistics and preparation behind a move to take place, both physically and on paper. During this time there is a lot going on both in the forefront and behind the scenes. You will meet with your conveyancing lawyer to discuss details of the tile transfer and taxes that need to be paid. Your financing is being finalized. You’ve made arrangement to change over the cable, phone, and other utilities. Your insurance is up to date, and all fees and adjustments have been made and paid. You’ve started cleaning and packing….
The Big Day
It’s the big day, the day on which all the legal and financial arrangements set out in the offer are fulfilled by the lawyers and financial institutions. Your lawyer pays the seller, the home gets registered in your name, and your real estate agent delivers the keys to your new home. It’s been a long journey, but with the support of family and friends and a lot of good professionals, you’ve made it. Welcome home.