Low rates of interest and also the desire to have more living space in a remote-working world have encouraged some Canadians to stop renting in major cities and begin buying property in smaller towns and cities.
That exodus helps keep your country's housing market buoyant – so much in fact that the Canadian Real Estate Association is predicting a rise of seven.2% in national home sales this season.
But as markets outside the major cities heat up, homebuyers is going to be competing against multiple offers, bully offers that go well over the selling price, and wondering if they should put in firm offers with no requests for home inspections. Now more than ever before, it is important for first-time buyers to be savvy when entering the real estate market. Here's what you need to know when purchasing the first home.
Choose your team carefully
You desire to be dealing with the best of the best when making the largest acquisition of your life. Don't go cheap with your realtor, lawyer, or home inspector because that may lead to expensive regrets in the future. A great real estate agent, for example, knows the area, trends in market swings, the sales good reputation for neighbouring properties, and they may also check on such things as recent renovations and upgrades to homes on the market.
Understand all costs involved
The price of the house is just the beginning, says Nasma Ali, the founder of property firm One Group. Other fees you can expect to encounter when buying the first home include settlement costs, taxes, utilities, and perhaps expensive home repairs. “If your lover is really a first-time buyer and you are not, are you currently on the hook for the full land transfer tax? Will you have daycare costs as well in 2 years? Budget properly,” she says.
Stay within your budget
Bob Pichut, a realtor for Sutton Group-Heritage Realty Inc., says bully offers and multiple bids could make first-time buyers frustrated and sway them into making an offer they can't truly afford. He recommends looking at homes below your budget in case you want to create a bully offer.
Be financially prepared
Make sure your credit report is strong, get preapproved for your mortgage, and have your deposit ready. This provides you the flexibility to make an offer and progress your closing date in the event that can help seal your bid.
Have liquid deposits
Ali recommends having cash obtainable in your bank account for that deposit to secure the home so you don't have to fuss with anything complicated. “When you are making a deal in this competitive market you need to have the bank draft inside a maximum of 24 hours of the accepted offer,” she says. “The standard is a minimum of 5% from the cost.”
Most lenders won't provide you with a mortgage without showing evidence of property insurance. (This really is different from mortgage insurance, which isn't mandatory if you can think of a 20% down payment.) Home insurance will protect you and your home from damage. If you buy an old home, check the wiring since many insurers won't cover knob-and-tube wiring.
Look for stains
When you are looking at buying a classic home, Pichut recommends buyers look up at the ceiling and down at the floorboards. “Look for stains in the ceiling that may indicate a leak, markings around cupboards that may suggest insects, or a new splash of paint round the baseboards [that might hide water damage],” he says.
Use your imagination
Hate the colour scheme? Dislike the curtains? Ali encourages first-time homebuyers to appear beyond the finishes, clutter, and paint shades. “Very few buyers can easily see past these and recognize the potential,” she says. “If you are one of the few, this could help you save a ton of money. Be willing to complete what most won't. Don't run after the shiniest object available on the market which will garner 20 offers and inflate the price.”