Thinking
How do I prepare to buy a home?This section offers detailed information to help you as you
prepare to buy a home. You'll find helpful tips and details on
everything from talking to your potential Royal LePage REALTOR
® to getting your finances organized.
The more prepared you are as you start looking for a new home, the
easier and more enjoyable the process will be. Thanks to the wide
variety of services offered by Royal LePage, we've got you covered
every step of the way.
Looking for a quick way to figure out how much you can afford to spend on your home? Try our Mortgage Affordability Calculator.
Needs vs. Wants
What features do I want in a home? What features do I need in a home?
Looking for a new home can seem overwhelming at first. There are
so many things to think about, so many choices, and often not enough
time.
A small investment of time and effort right at the start can pay
tremendous dividends. Take the time to organize your thoughts and think
seriously about what sort of home you want before you start looking. It
will simplify the process, save you time, and help lead you to the
right home for you.
Make sure that you talk to a REALTOR® before you start
your search to help you get organized, answer your questions, and also
to raise important questions to ask yourself, such as:
- Where do I want to live? (community/general area)
- How much should I expect to spend on purchasing a home?
- Are schools a factor?
- Do I want an older home or a new one?
- What style of home do I prefer? (ranch, colonial, split-level,
multi-level, town home, condominium, multi-family, bungalow, other)
- How much renovation and remodelling am I willing to do?
- Is being close to public transportation important?
- Do I have special physical requirements, such as wheel chair access?
- Do I have pets to consider?
- What sort of lot would I like? (small yard, large yard, fenced, garage, patio/deck, other buildings)
- How many bedrooms do I need? How many would I like to have?
- How many bathrooms do I need? How many would I like to have?
- How big a house do I want? How many rooms? How many square feet?
- What features are important? (air conditioning, carpeting, ceramic
tile floors, hardwood floors, eat-in kitchen, separate dining room,
formal living room, family room, den, library, basement, separate
laundry room, fireplace, workshop, other)
Your Team Connect REALTOR® Can Help
Good REALTORS
® save
you time and money. They know your community, they know what is
important when buying and selling a home, and they know all the
intricacies of the process, from finding a home, to negotiating a
price, to closing a deal.
A Team Connect REALTOR® will:
- Screen the available homes in your neighbourhood to make sure that the houses you look at fit your budget and your requirements
- Give you important information on local real estate values, taxes, utility costs, services, and amenities
- Guide you through the viewing process showing you features you may not have noticed and problems you may not have spotted
- Advise you about your legal and financial options
- Recommend expert help when needed, such as home appraisal, home inspection, and contracting services
- Manage your offers and counter-offers, and use his or her skills
and experience as a negotiator to make sure you get the best deal
possible
How do I know if I have found the right REALTOR® for me?
You are going to be working very closely with your REALTOR
®.
You need to be confident that you are working with someone who
understands what you want, knows the real estate market, and can give
you the advice and guidance you need. We encourage you to interview
several REALTORS
® before choosing the one you want to work with.
To help you choose a REALTOR®, here are some questions to consider:
How can you help me find the right home?
Good REALTORS® will impress you with their knowledge
of the local market and their ability to appreciate what you are
looking for in a home. They should be able to show you what is
available in your price range, and how the features and benefits of
specific homes and neighbourhoods fit your requirements.
Given our particular circumstances, what advice would you offer?
Every family is different and a good REALTOR® appreciates this. He or she should be able to advise you on how to meet your unique circumstances and lifestyle.
Why should I work with just one REALTOR®?
If you don't have an exclusive agency agreement with your REALTOR®,
you're not legally obligated to work only with him or her to find your
next home. It may, however, greatly benefit you to do so. Talk to your
prospective REALTOR® to find out his or her position and then determine what's best for you.
What happens when you are not available?
REALTORS® work extremely long hours and try to be
available whenever and wherever you need them. However accommodating
they try to be, they are not always available.
Ask your prospective REALTORS® what arrangements they have in place when they are not available.
What makes your real estate service special?
Every REALTOR® tries hard to give top-notch service, but what distinguishes really good REALTOR® from the rest? Ask them. You may be surprised at what they have to say and, just as importantly, how they say it.
When the interviews are over it's time to make a choice. Think about what the REALTOR® told you, and ask yourself:
- Did they seem trustworthy and honest?
- Were they realistic when discussing your home purchase?
- Did they communicate well? Were you on "the same page"?
- Were they committed, motivated, and experienced?
We think you'll agree that Team Connect REALTOR® are the REALTOR® of choice – motivated, experienced, and dedicated to the highest level of service in the real estate industry.
Your Mortgage
Find out about your mortgage options before you start looking.
There's nothing more frustrating that falling in love with a home, only
to find out you can't afford it.
Pre-qualifying for a mortgage is the best way to find out how much
you can afford. Your financial institution will look at your income,
expenses and debt to determine how much they will lend you. Combine
that amount with the money you have for a down payment, and that's your
budget.
Once you have pre-qualified, consider applying for a pre-approved loan. Then, when you find the home you want to buy, it will speed up the purchasing process. For more information about planning your mortgage, see Organizing Finances.
Want to get an idea of how much you can afford? Try our Mortgage Affordability Calculator for a quick estimate.
Mortgage options
Mortgages are
available through a number of financial institutions; your bank is only
one option. Shop around for competitive rates and options.
HLC Home Loans Canada offers
a wide range of mortgage products and home financing solutions. Whether
you're buying your first home, considering a renovation, or looking
into your next purchase, HLC Home Loans Canada has the options, choice
and flexibility to meet your specific needs.
Why buy?
Two out of three Canadian
families own a home – that's one of the highest rates of home ownership
in the world. And for good reason.
It's a great investment. And with with increasing house prices, it's
all the more important for first-time buyers to get a foot on the first
rung of the property ladder.
Did you know that...
- Homeownership is the single largest source of savings for Canadian households.
- Unlike other investments, which can be quite volatile, the increase
in the value of homes is relatively steady. The average house price in
Canada has increased every year since 1998.
- The return on your investment in your home can be substantial. In
2004, the average house price in Canada rose to a record $227,210 – a
9% increase in just one year and a 27% increase over four years.
- Homeowners can use the equity in their homes as security for other loans.
- Building equity in your first home is the first step on the
property ladder. It gets you into the market, keeps you in touch with
increasing house prices, and puts you in a good position to trade up to
bigger and better houses as your circumstances allow.
Looking
Viewing Homes | Neighbourhoods | Market Conditions | Types of Ownership
There are a lot of homes out there. How do you figure out which one
is right for you? Start by getting familiar with the market. Drive
around the areas you're interested in and get an idea of what's
available. Talk to friends, use the Internet, check out community
newspapers and catalogs from local real estate companies – and don't
forget your REALTOR®. That's why you have one.
Your Royal LePage REALTOR® will work with you to expand
your choices, making you fully aware of what your home-buying dollar
will buy in various communities. Then she or he will help you separate
good options from those that are less-than-optimal, educating you on
the features and benefits of specific homes and their neighbourhoods.
What should I look for when viewing a home?
You pull up to the curb and there it is – the home of your dreams.
Calm down. Take a deep breath and start again. The hardest thing to
do when looking for a home is to remain objective. It is easy to fall
in love with a home's appearance, but it's very important to look
beyond the window dressing.
Here are some things to consider when looking at a home:
General upkeep
First appearances do count. Is the home dirty and cluttered? Are the
lawns uncut? Are the walls chipped and in need of paint? If the owner
hasn't bothered to keep the house looking clean and attractive, what
problems are lurking below the surface?
Water leaks
Water can do a lot of damage to a home. It rots wood, undermines
foundations, and leads to mould and mildew. Reshingling a house, or
repairing a cracked foundation to stop water leaks, can be extremely
expensive.
It takes an expert eye to find most water leaks (which is why we
recommend you have a house inspected before you buy). If you spot
stains, bulges and other signs of water damage on ceilings or walls,
make special note that there could be a problem.
Appliances and fixtures
Test the lights, faucets, toilets, furnace, air conditioning, and all
major appliances that are to be included with the home. Make sure
everything is working as it should.
Floors
Floors should be smooth, even, and solid. Soft springy sections,
excessive squeaking, and unevenness are all indications that expensive
repairs may be needed.
Doors and windows
Check that doors and windows fit snugly and operate smoothly. Look for flaked paint and loose caulking. Check for drafts.
Drainage
Walk around the yard looking for areas where water might collect. Soggy areas near the foundation indicate poor drainage.
Grout and caulking
If the grout and caulking around bathroom and kitchen tiles are loose
and crumbling, there is a good chance water is finding its way into the
wall or under the floor.
Structural
Look for deep cracks in the foundations or loose mortar and bricks.
Furnishings
If you are not planning to replace all of your furniture (and not many
people are), make sure it will fit into the rooms of the new house. Be
sure to bring a measuring tape. Rooms can be deceptive.
Storage space
Make sure your new house has enough storage space for all your
belongings. And that means more than just your clothes. Think of all
the things that need to find a home – tools, gardening equipment, old
toys, sports equipment, and all those wedding presents that are still
in their original boxes. Check the size of the closets, the attic, the
basement, and the garage. Rule of thumb: there's never enough storage
space.
Inspection
You should take a long
hard look at a house before you put in an offer to protect yourself
from disappointment down the road. But, nothing can replace the expert
opinion of a qualified home inspector. Inspectors can spot problems
that the average person would never find and they can usually advise
you on how much it will cost to make the repairs. A home inspection can
help you determine whether or not you are going to make an offer on a
house, and if you decide to go ahead, just how much that offer is going
to be.
What should I look for when viewing a neighbourhood?
As Canadians, we're fortunate to have livable cities, neat and
attractive subdivisions, and neighbourhoods that are ideal places to
live, work and play. When it comes to finding the right community for
you, it's not so much a matter of finding a good community as picking
the best of many.
Your REALTOR® has a wealth of knowledge about the
communities in their cities and towns. He or she can help you choose
the one that is best suited to you and your family.
Here are just some of the things you may want to consider:
Environment
Ask your Realtor about any known environmental issues in the area.
Check with neighbours and the local media about air, water, and soil
quality. Environmental issues can be detrimental to your health and to
property values.
Appearance
Explore the neighbourhood keeping an eye open for signs of neglect,
such as overgrown lawns, tired and worn houses, and litter in yards and
alleys. No matter how diligent you are at keeping your property in top
shape, a run-down neighbourhood will drive your property value down.
Crime rate
Check with the local police department to find out if the home you are
considering is in a safe neighbourhood. Police may be able to provide
statistics regarding break-ins and other crimes.
Schools
If you have children, education is one of the most important
considerations in finding a new home. Are there schools within walking
distance or will your children have to take the bus? How do the local
schools compare to other schools in the area? If your children need
them, are there religious or special training educational facilities
nearby?
Talking to neighbours with school-aged children can be helpful. In some
areas school boards can provide important information to help you
determine the quality of schooling in a particular neighbourhood or
community.
Transportation
Convenient public transportation, good access roads, and major highways
nearby can mean the difference between a pleasurable and
not-so-pleasurable commute to work.
Amenities
Take a look around for all the amenities that you will need: shops,
grocery stores, dry cleaners, restaurants, medical and dental offices,
parks, and recreational facilities. Having a vibrant community with all
the modern conveniences can make life a lot easier.
Property values
Property values are a pretty good indicator of how well a community is
perceived. Your Realtor can tell you how property values have changed
over the past few years and how they compare to equivalent communities
in nearby areas.
Utilities and taxes
Avoid unpleasant surprises by finding out about municipal taxes and
utility costs before you decide to purchase. Fees for water,
electricity, cable TV, phone, and gas vary greatly by region.
Noise and nuisances
First impressions are not necessarily the most accurate impressions. It
is a good idea to come back to the neighbourhood at different times of
day and different days of the week. Listen for traffic noise, barking
dogs, low-flying airplanes, and any other noises that could indicate
problems.
Market Conditions
|
Market conditions |
Characteristics |
Implications |
Buyer's market
The supply of homes on the market exceeds the demand. |
High inventory of homes. Few buyers compared to availability. Homes are on the market longer. Prices tend to drop. |
More time to look for a home. More negotiating leverage. |
Seller's market
There are more buyers looking to buy a home than there are homes on the market. |
Smaller inventory of homes. Many buyers. Homes sell quickly. Prices usually increase. |
May have to pay more and make decisions quickly. Conditional offers may be rejected. |
Balanced market
The number of homes on the market is equal to the number of buyers. |
Sellers accept reasonable offers. Homes sell within an acceptable time period. Prices are generally stable. |
More relaxed atmosphere. Reasonable number of homes to choose from. |
What type of home ownership is right for me?
There are three broad categories of home ownership:
1. Freehold
The owner owns the house and the grounds.
Freehold homes offer the most privacy and freedom of choice of any type
of home. Homeowners are free to decorate and renovate as they please.
They are also responsible for all the maintenance both indoors and out.
Freehold is the most common type of home ownership.
2. Condominium
The homeowner owns the unit and shares in ownership of common elements.
Condominiums are usually apartment buildings, but also include
townhouse developments and developments of detached buildings on
private roads.
The homeowner is responsible for the interior area of the unit
(everything from the plaster in). The condominium association is
responsible for the up-keep of the exterior of the building, common
interior elements (halls, elevators and parking garages, for example)
and the grounds. All condominium owners pay a monthly fee to the
condominium association to cover maintenance costs and common utility
fees and taxes.
Condominiums often have strict rules regarding noise, use of common
areas, and renovations to units. Condominium residents often enjoy less
privacy than residents of detached homes.
Condominiums are usually less expensive than freehold houses.
3. Co-operative
Co-operatives (or co-ops) are similar to condominiums but instead of
owning your unit, you own a share in the entire building or complex.
Co-op residents pay for maintenance and repairs through monthly fees
and are subject to the rules and regulations of the co-op board.
If you decide to sell your shares and move out, the co-op board has the right to reject your prospective buyer.
Purchasing
Making an Offer | Negotiating | Inspections & Appraisals
Once you've found the home you're interested in, it's time to make
an offer. Deciding what to offer is one of the most difficult decisions
to make. Offer too little and you stand a chance of losing the house
(particularly in a seller's market). On the other hand, nobody wants to
pay more for something than it's worth.
Your REALTOR® can help you enormously by showing you what
comparable houses are selling for, helping you assess the condition of
the house, and judging the type of competition you may face. Once you
have decided on the price you are prepared to offer, the REALTOR® will draft the offer and explain the details to you.
Your Royal LePage REALTOR® will communicate the offer,
sometimes known as an Offer to Purchase (a legal document specifying
the offers terms and conditions) to the seller, or the seller's
representative, on your behalf.
The offer can be firm or conditional.
Firm Offer to Purchase: usually
preferable to the seller, because it means that you are prepared to
purchase the home without any conditions. If the offer is accepted, the
home is yours.
Conditional Offer to Purchase: means
that you have placed one or more conditions on the purchase, such as
subject to home inspection, subject to financing, or subject to the
sale of the buyer's existing home. The home is not sold until all the
conditions have been met.
Making an Offer
When you're making an offer to buy a home, there are six main elements to consider:
- Price
The price you offer reflects your opinion
of the value of the house and is determined by the condition of the
property and local market factors. You can make any offer you like. It
does not have to be the same as the seller's asking price.
- Deposit
The deposit shows your good faith and will be applied against the
purchase of the home when the sale closes. Your Royal LePage Realtor
can advise you on an appropriate amount.
- Terms
Include the total price offered and the financing details. You may
arrange your own financing or ask to assume the seller's mortgage,
especially if it has an attractive interest rate.
- Conditions
Conditions are items that must be completed or fulfilled prior to an
offer being concluded. These can include subject to home inspection,
subject to you obtaining financing, or subject to you selling your
existing property.
- Inclusions and exclusions
Your offer may be contingent on certain items being either included or
excluded in the sale. These might include appliances, fixtures, and
decorative items, such as window coverings or mirrors.
- Closing or possession date
The closing date is generally the day the title of the property is
legally transferred and the transaction of funds finalized, unless
otherwise specified (except in Manitoba and Quebec). In British
Columbia the possession date is legally one to three days after closing.
Negotiating
Once your offer to purchase has been drafted, it will be presented
to the seller as soon as possible. The seller can accept your offer,
reject it, or make a counter offer.
Acceptance
An accepted offer means the seller has agreed to all the terms and conditions exactly as set forth in your offer to purchase.
Rejection
A rejected offer means the seller did not agree with any of the terms and conditions set forth in your offer to purchase.
Counter offer
A counter offer means the seller agrees with some of the terms and conditions of your offer, but not all of them.
The seller then makes a counter offer. The counter offer may change the price, the closing date, or add or delete conditions.
Once you have received a counter offer you have two choices. You can
accept the new terms and conditions or reject them. If you reject them,
you can choose to start the whole process over again.
Inspections & Appraisals
Buying a home is probably the biggest single investment you will
make. A home inspection prior to making an offer will protect you and
your investment.
A qualified home inspector will give your house a thorough
examination, checking the heating and cooling system, plumbing and
electrical systems, the roof, attic, walls, ceilings, floors,
windows, doors, foundation, basement, and visible structures of the
home.
The inspector will point out the need for major repairs, identify
areas that may need attention in the near future, and explain what
maintenance will be necessary to keep the house in good shape. But, it
is not all negative. Most inspectors are more than happy to tell you
about the home's good qualities as well.
Home inspections are relatively inexpensive considering the size of
the investment that you are about to make. Many people consider this a
small price to pay for peace of mind.
Your Royal LePage REALTOR® can provide you with a list of reputable, qualified home inspectors in your area.
Appraisals
An appraisal is a report containing an estimate of the value of the
property. Appraisals are conducted for the purpose of mortgage lending
by certified appraisers. The appraisal should not be confused with the
home inspection or the market analysis.
Closing
What does the term closing mean?
Closing refers to the preparation for the transfer of ownership of a property from the seller to the buyer.
There is no standard method for closing. In some places, "round table"
closings bring all parties together at the closing table. In other
areas, buyers and sellers complete the process through separate,
individual appointments with their lawyer.
Your Royal LePage REALTOR
® will tell you what is customary in your area and help lead you through the process.
What happens on closing day?
Closing day is the day you become the official owner of your home.
Typically, you visit your lawyer's office to review and sign documents
relating to the mortgage, the property you are buying, the ownership of
the property, and the conditions of the purchase. Your lawyer will also
ask you to bring a certified cheque to cover the closing costs and any
other outstanding costs.
Once the mortgage and the deed for the property are officially
recorded, you become the official owner of the property and your lawyer
will call you to pick up the keys to your new home.
Congratulations! You've just bought a home!
Costs
When you buy a home, you will be asked for a down payment, usually
between 5 and 25% of the total price of the property. You might also
have a number of other fees and expenses to pay.
Some of the most common expenses are listed below. These expenses may vary, depending on your area:
|
Expense |
Paid |
|
Mortgage application and appraisal fee |
At time of application |
|
House inspection (optional) |
At time of application |
|
Legal fees |
Closing |
|
Legal disbursements |
Closing |
|
Deed and/or mortgage registration |
Closing |
|
Property survey (sometimes provided by the seller) |
Closing |
|
Land Transfer Taxes by province |
Closing |
|
Property tax adjustments |
Closing |
|
Fuel adjustments |
Closing |
|
Mortgage insurance |
Closing |
|
Title insurance |
Closing |
Land Transfer Tax
Purchasers in most large Canadian centres can add Land Transfer
Taxes to their list of closing costs. Unless you live in Alberta,
Saskatchewan, or rural Nova Scotia, Land Transfer Taxes (or property
purchase taxes) are a basic fact of life.
Land Transfer Taxes, levied on properties changing hands, are the
responsibility of the purchaser. Depending on where you live, the taxes
can range from 0.5% to 2% of the total value of the property.
Many provinces have multi-tiered taxation systems and these can be
complicated. If you purchase a property for $260,000 in Ontario, for
example, 0.5% is charged on the first $55,000; 1% is charged on $55,000
to $250,000, and 1.5% is charged on $250,000 to $400,000.
Land Transfer Taxes by province:
British Columbia
Property Purchase Tax
Up to $200,000 X 1% of total property value
From $200,000 up X 2% of total property value
Manitoba
Land Transfer Tax
Up to $30,000 N/A
From $30,000 to $90,000 X 0.5% of total property value
From $90,000 to $150,000 X 1% of total property value
From $150,000 up X 2% of total property value
Ontario
Land Transfer Tax
Up to $55,000 X 0.5% of total property value
From $55,000 to $250,000 X 1% of total property value
From $250,000 to $400,000 X 1.5% of total property value
From $400,000 up X 2% of total property value
Quebec
Transfer Tax
Up to $50,000 X 0.5% of total property value
From $50,000 to $250,000 X 1% of total property value
From $250,000 up X 1.5% of total property value
Nova Scotia
Land Transfer Tax
Halifax Metro: 0% to 1.5% on total property value
Outside Halifax County: Check with local municipality.
