When considering the prospect of becoming a homeowner, especially in the current climate, it can be difficult to know where to start. And while it may feel overwhelming at times, we're here to share our favourite steps. The seven steps outlined below will help you navigate the buying process with as few hiccups as possible.
1. Evaluate - is now the right time?
When deciding whether or not it is the right time to buy a property, it is essential to sit down and ask yourself a few important questions. Go over your plans for the future; where do you see yourself in five years? Do you have a stable income? A lot of important life events such as having a baby, moving to a new city, or organizing a wedding consume not only a lot of time but also money.
Go over the pros and cons of renting vs owning. Rent adds up significantly over time, but it also allows for greater flexibility if needed. On the flip side, there are several advantages to buying versus renting in the long run. By laying out a roadmap of your future, both personally and financially, you’ll be able to make a more well-informed decision. Check out our blog post on our Urban Upgrade site: Advantages of Buying vs Renting
2. Get pre-approved for financing
Once you decide to move forward with buying a home, make an appointment to speak with a mortgage broker. Gather all of your financial documents and bring notes of things to cover during your initial discussion. Topics to discuss would be the different types of interest rates (fixed vs variable), the different kinds of mortgages (open vs closed), the varying term lengths (1/2/3/4/5 yr terms) and the implications of each.
Next, get a rate locked in. It is usually a bit higher than the current rates, but this will be your “fallback” standard in the event that rates go up, giving you the security of a guarantee. Plus, you can still take any current rate available when you buy, so it is a win-win. Following that, using all of the information at your disposal, establish a ‘max’ purchase price as well as an ‘ideal’ purchase price. This will allow you to have some level of flexibility without overspending on a home and being “house poor."
3. Determine your communities of interest
Location, location, location. It may sound cliche, but the area in which you choose to shop for a home can greatly impact your purchasing power. Do you want to be close to downtown with quick access to all amenities, or is a quiet suburban area close to parks a better choice for your lifestyle? Deciding where to call home should be determined by a number of factors such as your lifestyle, your job, your mode of transportation, your entertainment preferences and of course your required access to specific amenities like hospitals or schools.
Where you work, where your friends live, and what you like to do in your free time are all things that need to be brought into the equation. Take some time to go over your priorities and consider how living near/far from these things would change your day-to-day life.
4. Consider what type of property you need
Similar to step three, knowing what you are looking for within the context of your budget will help you narrow down your search and ultimately aid in the decision-making process. Determine your WANTS versus your NEEDS: Wants = things that would be great, but you can live without, needs = items you are not willing to compromise on - think number of bedrooms, total square footage, backyard space or parking. Take note of what is most important and where you are willing to compromise.
5. Locate an Agent
Once you have a better idea of what you are looking for, you should begin to interview different real estate agents. There are many places that you can go to seek out potential agents; various online outlets, referrals from trusted friends, inquire on online listings, etc.
Hiring a good agent is important, so make sure to do your research! Look into prospective Realtors' qualifications and online reviews to get a full scope of their experience and what they cover in their service. Set up interviews with a few that appeal to your needs, and compare them before making a decision. The biggest factor is what is important to you and making sure that the agent you choose will deliver that need, whether that be customer service, expertise, or responsiveness.
6. View Homes
It can be tempting to jump into the market and begin checking out all of the open houses that are advertised, but opting for private showings with your Realtor allows for confidentiality and the benefit of taking your time. Your agent can book and plan “tour days” in which you can view and compare multiple homes while they are fresh in your mind. It may also be beneficial to return to your favourite properties more than once, going at different times of the day so that you get to experience what the house and neighbourhood are like overall.
One thing to consider with the new infill market is many homes will still be under construction and not available for viewing. In this case, your Realtor will be able to obtain marketing documents from the builder/seller, such as floorplans, spec lists, etc. so you can gauge the layout and styling of the home. If you commit early enough in the process, you might even get to make some design choices, at the discretion of the builder. We recommend driving by the lot to get a feel for the location and size before making any final decisions, but once you commit, it can be a lot of fun watching your dream home come to life.
7. Evaluate Your Top Picks
Once you have narrowed down your choices and are ready to make an offer on a property, make sure to gather as much information on the property as possible beforehand. Details such as how long the property has been listed, if the price has been reduced, and if there is any other interest can provide important insight into how you prepare your offer, and determine your negotiation strategy. Don’t worry, this is where your Realtor comes in!
Your agent should be able to provide you with a market evaluation of the home and pull a title for your review and due diligence. Both of these things will give you information on what the property is likely worth, and bring up any points that may be concerning and need further investigation.