Buying your next home can feel like an overwhelming task, especially if it’s your first real estate experience. As this will likely to be the largest financial transaction you will ever make, it is best to be prepared and do it right.
Here are our top tips for buyers:
1. Do proper research and preparation
First things first, review your family’s finances and needs. We always recommend speaking to a mortgage broker first to get pre-approved even before getting started with the house hunt.
Research Neighbourhoods – remember you’re not just buying a house; you’re also buying the location. It’s important to research the quality of the schools, commute times, crime levels and any upcoming construction or development in the area. Also spend some time in the community, if possible, and see if the online profile matches your expectations in real life. An experienced agent will know the neighbourhood and will be able to answer these questions.
2. Choosing a Mortgage
To find out how much house you can afford – you can’t simply go to the mortgage calculator on the bank’s website and assume you’ll get a loan for that amount. There’s a big difference between what the banks advertise that they can lend you and what they actually will. We recommend also speaking to a mortgage broker as well; they have access to a range of lenders and finance products.
To be in the best negotiating position, it’s essential you have your loan pre-approved (not just pre-qualified) before you start house hunting, especially is Toronto’s fast moving market.
3. Being influenced by “The Market”
Waiting for the right time or for the bubble to burst, is possibly pricing yourself out of the market. The media is usually 3 months behind what is actually happening in the market, and it’s best to not be influenced by the market more than by your own needs. If you know your budget, have your financing in order and know your current and future needs, then you should rarely let short term market conditions influence what will be a long term lifestyle decision.
4. Going over budget
Spending more than you can afford can leave you exposed financially. You should also allow room in your budget for changes in your future circumstances. Of course the more expensive house is more appealing, but is it worth being house poor? If you have bigger house goals, talk to your real estate agent about your plans and they can walk you through how to move up the property ladder by building equity over time.
5. Don’t fall in love
The Toronto Real Estate market is tough, especially at the lower price points. Be prepared to lose out on a few homes before you succeed in securing a home. A wise home buyer knows there’s lots of houses out there – and the right one, at the right price, will be there at the right time.
6. Consider the value, not the price.
Don’t base your offer on the seller’s asking price. The value of a home should be based on recent sale prices of homes that are comparable to the desired property. There are a number of factors that affect market value from house to house, such as supply, demand, renovations, bedrooms, bathrooms, lot size, square footage, quality, age, location and more. When making your offer, it is important that you consider comparable sales to determine the value of the house and what you are willing to pay.
7. Know the additional costs
Many homebuyers fail to budget for the full costs associated with the purchase. These costs include lawyer fees, land transfer tax, appraisals, surveys, tile Insurance, applicable taxes, home inspection, home insurance and moving costs. Make sure to budget for these extras. Also, budget for ongoing upkeep and carrying costs.
8. Don’t Settle
Searching for a new home can be fun and exciting at first. But if you are not successful after months of looking, and constantly being outbid, it can get frustrating. This is not the time to settle and buy a home just for the sake of buying something. Home buying is an expensive process and this is a decision you may regret.
Rather than buying out of frustration, stop looking for a while, or better still get a buyer’s agent on your side to save you time, to search in the nooks and crannies you wouldn’t have thought of to find options for you – even exclusive, off-market properties.
9. Work with a Buyer’s Agent
Real estate agents are friendly people and in the course of shopping for a house, you will meet a lot of them. The agents you meet at open houses are working for the sellers. Don’t be mistaken – a selling agent can’t work in the interests of both the buyer and the seller. In fact they’re legally and morally obliged to work for their client – the seller.
The sellers have an agent protecting them, looking after their interests and advising them, so make sure you have someone on your side who knows the ropes and is in your corner protecting you.
Good luck in your search and give Parker Group a call if you have any questions about the buying process.