Changes help 1st time home buyers – but OMG where do I start???
Monday, February 24, 2020
In the blink of an eye – the government changes to the mortgage stress test have put you in the home buying market months, maybe even years, before you thought you could afford it. Now is the time to start on the road to getting your new home. But where do you start???
The dream of home ownership is now becoming a reality. But what is it you need to do to make it happen? There is a pretty solid 3 step process that is guaranteed to get you a home, if you follow it to the letter.
Step 1 of the Buying Process – Getting off the couch and into action
- Always start with a pre-approval. You need to know what you can afford. I recommend going to a mortgage broker first – then using their rates and terms (both are important) to go to your bank and see if they will match or better it. Ironically, in 20 years of real estate – I can count on one hand the number of times that bank has matched or bettered it. There is no cost to using a mortgage broker and if you need the name of one – I have some excellent recommendations.
- Pay off any excess credit card debt and don’t do anything financially harmful – like buying a car and taking out a loan in this interim period.
- Watch your spending during this period – make your own coffee and use a re-usable water container. Don’t go out to eat as often. You will be happy for this extra cash to be able to buy a few décor items when you move in.
- It is a very volatile market right now and your only chance of getting a home is with a professional real estate agent. Make sure you choose one that works at it full time (ask them if they have another job- if they do, they aren't committed to real estate) and has lots of experience. Real estate can happen morning noon or night, 7 days a week and a professional, full-time agent will always be ready to seize on an opportunity quickly. They don’t have to be the very top agents, but you do want to be dealing with someone in the top 15% or so of Toronto Regional Real Estate Board agents.
- You will sign a Buyer Representation contract. This assures that your agent is working for you and is trying to find you the most suitable property and get you the lowest price and best terms for the property. They will verify that there are no issues with the property or area. They are doing the best job for you. An excellent agent – that is sure of their track record and confident with their abilities to do the job in an exceptional manner – will offer a Buyer Cancellation Guarantee, letting you out of the contract if they are not living up to your expectations.
- The best Buyer Agents will ask you a ton of questions about your needs, your lifestyle, your dreams, your plans (ex. Starting a family in the next year or two) etc. They should make detailed notes of your answers.
- Based on your needs and wants – the agent should set you up on a property search so that you automatically get the new properties coming out on the market each day they come out. New properties coming on the market for sale are called listings. This is great and a real time saver for you. There will be no missed listings when you are too busy to check each day or are away on vacation.
- Once you see a listing that looks good on paper – contact your agent to ask about it. Some listings are priced unrealistically low to stimulate a bidding war. With more than one offer – it acts like an auction driving the price up. A house that is listed in you price range may actually not be in your price range. A good agent will let you know about it before you go to see a house you can’t afford and get your dreams dashed.
- When you come across a property that looks good online – arrange to go see it with your Buyer Agent. Some Buyers think they can get a better deal buying directly from the Seller’s Agent. If we think about it – the Seller’s Agent is representing the seller and has signed a contract saying they will get the highest price and best terms for the seller. How does that help you - the buyer? At best, when dealing with the seller’s agent – you come out with a compromise. Remember – a Buyer’s agent represents only you in this transaction and will negotiate hard on your behalf.
- After seeing some properties – you will get a better feel for what you like and what is really important to you. Eventually, you find one you like and decide to put in an offer.
- This process can take weeks and even up to a year or more for some buyers - you need to have patience and keep the end goal in mind. Contact Kelly at kellykoselek.com to get the information on the next step(s) of this process. Or check back for the next blog posting.
Step 2 – Putting in the offer
Step 3 – They accepted my offer – now what?