The information below is meant to give you an overall picture of the steps involved in purchasing a home. For more detailed information, please contact me – I will be happy to answer any of your questions.
Before your search for a home starts, you should have an idea of how much money you are able to spend on the investment.
The three major issues to consider in this calculation are:
- the amount of your down payment (usually between 5-25% of the purchase price)
- the total of your closing costs
- the total mortgage amount required and what your payments will be (mortgage calculator)
There are mortgage specialists who can help you calculate this information. Remember to shop around to get the best rate and the right terms for your situation. Many financial institutions offer incentives in this competitive market.
Finding an Agent
You may meet an agent at an open house, have your friends refer an agent they know, or interview several to find one who can best work with you.
You will likely be spending a lot of time and making a lot of decisions with your agent, so it is important to find one who you feel listens to your concerns and understands them. Finding your home is a team effort between your and your agent.
The first duty of an agent is to explain to you the different types of relationships you might have with him/her. To help explain this, agents in Nova Scotia have a publication called “Working With a Real Estate Agent” which should be explained thoroughly to you at your first meeting.
An agent should be able to advise you on local market conditions, characteristics and amenities of various neighbourhoods, pinpoint homes which fit your needs and caution you about potential problem areas.
An agent should also be able to connect you with the various other professionals you may need, such as lawyers, appraisers, house inspectors, financial specialists, or insurance agents.
Your agent will help you find a home and become your negotiator when you make an offer or receive a counter offer. He/she will advise you on fair market values based on other sales in the area.
Many agents require that their clients sign a Buyer Agency Agreement. This is a contract between the buyer and the agent outlining their relationship and duties.
Working with a dedicated agent will save you time and money and will ensure that you see properties as soon as they come on the market.
After you have decided what you are looking for in a home and what you want to spend, your agent will assist you by advising you of properties as they come on the market.
Agents may find properties on the MLS (Multiple Listing Service, a database of properties maintained by co-operating brokerages), through contact with other agents, or through private sales. A licensed agent can show you any properties listed on the MLS, regardless of which brokerage has them listed. Once you have a dedicated agent, call him/her if you see a property you think you might be interested in.
Your agent will arrange viewings and accompany you to properties of interest to you. He/she can also help you by getting information on heating costs, property taxes, lease arrangements, material condition, and the sales history of a property. An agent can also provide you with information on comparable properties so that you can make an informed decision on the fair market value of any property you may want to purchase.
Once you have found a home that you are interested in, your agent can provide you with information on comparable properties so that you can make an informed decision on the fair market value.
Your agent will assist you in the writing of the offer and will present your offer to the listing agent. In some cases, an agent or brokerage may represent both the buyer and the seller – this is called limited dual agency and must be agreed to by both the buyer and the seller.
The main elements of an offer are the price, the deposit, conditional clauses (regarding financing, house inspection, and house insurance), the possession date, and any items the buyer may want included in the price. There may be more than one offer presented on a property – your agent can offer advice on the best course of action if this is the case.
An offer is open for acceptance by the seller for a limited time. The seller may accept the offer as it is written, counter any element of the offer with a written counter offer, or reject the offer. If there is a counter offer, your agent will help you consider your options and negotiate on your behalf.
Once an offer is accepted, you will be asked for a deposit as a show of good faith; the deposit will eventually form part of the purchase price and will be credited to your down payment at closing. A deposit is made out to the listing broker in trust and is held by the brokerage.
Bring in the Experts
When your offer is accepted, it is important that you arrange to complete all of the conditions in the offer. These conditions usually involve confirmation of your ability to: obtain a mortgage for the property, get insurance for the property, arrange a property inspection with which you are satisfied, and obtain approval of the agreement from your lawyer.
Your agent can assist you by providing you with information on mortgage companies, insurance companies, home inspectors, lawyers, and any other professionals you may need to ensure that the property is suitable for you.
Your agent will help you arrange an appointment for the home inspection (usually within 5 days of acceptance of the offer) and will accompany you to the inspection. Should any problems arise from the inspection, your agent will help you consider your options.
You agent will also co-operate with the other professionals working with you by providing lawyers, insurers and financial institutions with any information they may require. Because time is of the essence, this will be done in a timely manner.
The length of time between your offer being accepted and moving day may be anywhere from two weeks to several months.
During this period, you may have questions or concerns – your agent may be able to help you through this time with advice on everything from moving companies, “to do” checklists, or referrals to any number of services a home owner may need.
As closing day approaches, you will want to meet with your lawyer to ensure all closing costs are calculated and paid and that your mortgage is in place. A meeting with your lawyer usually takes place a day or two before you take possession.
On the day of closing, your agent will accompany you on a pre-closing viewing of the property. This is to ensure the property is in the same state of repair as it was when you made the offer and that everything requested in your offer has been fulfilled. If you are satisfied with the property, your lawyer is informed and the transfer of money and keys takes place between your lawyer and the seller’s lawyer. You will then be given the keys and can move into your new home.