The Home Buying Process: A Basic Overview
Finding and purchasing a home involves the general steps outlined in the following section; however, most homebuyers and real estate investors have unique financial, property and personal requirements that demand advice from a real estate advisor with specialized expertise.
Step 1: Secure Financing
Before starting your home search, it’s important to evaluate your financial situation, confirm your budget, familiarize yourself with mortgage options and secure pre-approval from your lender. This will help you conduct your search with confidence and negotiate your desired home successfully.
> Establish Your Budget
As a general guideline, total monthly housing costs for your primary home, including mortgage payments, taxes, maintenance fees, insurance, interest charges and utilities, should not exceed 32 per cent of your gross monthly household income.Many financial advisors also suggest that total monthly debt, including mortgage payments, credit card and car payments, should not exceed 40 per cent of your gross monthly income.
> Confirm Downpayment
If your downpayment amount is less than 20 per cent of the total purchase price, you will need to purchase mortgage loan insurance that guarantees the debt against default. In most cases this will be added to the mortgage loan.
> Check Your Credit Rating
Your credit report plays an important role in your mortgage approval process and in determining the interest rate and other loan terms that a lender offers you. Contact Trans Union of Canada: 1-800-663-9980 or Equifax Credit Information Services Canada: 1-800-465-7166 for more information.
> Optimizing Your Mortgage
Work with your lender to optimize your mortgage payment schedule for your unique situation. If you are purchasing real estate solely for investment purposes, other considerations such as tax implications come into play. Consult your real estate and financial advisor for assistance.
> Get Written Pre-Approval
In markets where there is high demand and a low volume of the type of home you wish to purchase, written pre-approval is essential and will give you the competitive edge in securing your desired home.
Step 2: Define Your Goals, Needs and Budget
Prior to meeting with your real estate advisor, it’s important to clarify your budget, personal property preferences, and any anticipated life stage and lifestyle requirements that may impact the purchase of your home. As a starting point for your consultation, Steven Hill can provide a worksheet and help review it that includes important requirements such as: Budget Range, Preferred Property Type and Features, and Lifestyle. Contact Steven Hill directly today.
Step 3: Select Your Realtor
A REALTOR® represents your interests when purchasing a home, one of the most significant financial investments you can make. For this reason, it’s essential to select an advisor with in-depth knowledge of your local real estate market and specialized experience in the property types you are interested in.
> Local Expertise
Steven Hill offers in-depth knowledge of your local real estate market, from advice on the homes and developments with the best potential return-on-investment, to insight into the properties and neighbourhoods that best match your life stage and lifestyle.
> Exclusive Access
In some areas, many homes are sold within hours and days of being listed on MLS. Other properties are marketed exclusively and privately within the Sotheby’s International Realty network without ever being made available to the public. Steven Hill's connection to over 16,000 associates worldwide gives you direct and priority access to real estate opportunities that would otherwise be difficult to view.
> Global Connections
With a network of over 730 offices in 56 countries, Sotheby’s International Realty provides unparalleled access to the global real estate market. We have the experience and contacts to facilitate international real estate transactions and to assist clients who wish to buy Canadian real estate from abroad.
> Real Estate Specialization
I assist clients in the purchase of real estate in more than a dozen real estate categories: single-family homes, condos, townhomes and multiplexes, as well as properties that demand specialized knowledge such as waterfront real estate, luxury real estate, golf properties, ski resort properties, rural real estate, vineyards and islands.
Specifically, Steven Hill has expansive real estate experience and knowledge with certifications from CCS (Certified Condominium Specialist), ABR (Accredited Buyers Representative), SRS (Sellers Representative Specialist) and a richly awarded career.
> Professional Service and Discretion
I commit to providing you with confidential, knowledgeable and responsive service. I guarantee discretion, monitor and promptly deliver listings that meet your criteria, facilitate viewings and property tours according to your individual needs and schedule, and facilitate the negotiation and purchase of your home professionally.
> Seamless Sales & Marketing
If buying a home depends on the sale of your current one, I make the process efficient and seamless. My real estate marketing program reaches the most targeted and qualified buyers through exclusive international, national and local publications, as well as online marketing that generates over 1 billion annual media impressions.
Step 4: Conduct Your Home Search
Once Steven Hill of Sotheby’s International Realty Canada has an understanding of your budget and property preferences, you can expect him to provide you with.
> Automatic Property Updates
As soon as a property that meets your desirable home criteria is posted on MLS, Steven Hill will send you an email alert to direct you to that listing.
> Advance Access to Exclusive Properties
In some neighbourhoods, homes are sold within days, or even within hours, of being listed on MLS. Others are marketed and sold within a real estate company’s network without ever being made available to the public. In some cases, your REALTOR®, Steven Hill, may be able to arrange for advance access to properties that are represented within their professional and company network.
> Property Tours
Your real estate agent, Steven Hill, will schedule walk-throughs of properties matching your preferences and needs. You may also review properties on realtor.ca, on sothebysrealty.ca or by visiting open houses, then contact Steven Hill to schedule a private tour, should there be one that matches your needs.
> Evaluation of Options
It can be challenging to determine the fair market value of a home and to assess whether it is “good value” for its listed price or for your budget. Variables that impact the value of a home or property include its location, neighbourhood, community plan, proximity to amenities, lot attributes, views, property size, interior and structural condition, construction type, age, unique features, and the state of the local real estate market.
Step 5: Submit Your Offer
It’s important that you sit down with Steven Hill to prepare your offer. Real estate laws vary widely from region to region, and it’s essential that you protect your legal interests and account for any specific contractual contingencies that are unique to your area and desired property. Some general considerations include:
> Legal and Contractual Obligations
In Canada, an offer commits you to legal and contractual obligations as soon as the other party has accepted it. Prior to submitting an offer, ensure you are clear on the legal obligations you are undertaking, should the offer be accepted.
Prior to writing your offer, Steven Hill, your Sotheby’s International Realty Canada associate can provide you with information on recent area sales, local market information and background on whether there are competitive bids, which will help you determine your initial offer as well as your target price for this specific home.
> Background Research
With some investigation, Steven Hill may also be able to assess your seller’s background and objectives for selling, which may assist you in crafting a competitive offer.
> Offer Details
The details of an offer typically include: your legal name and that of the vendor, the legal civic address of the property, the price you are offering to pay, inclusions (items in or around the home that you think are included in the sale should be specifically stated in your offer, such as appliances, lighting fixtures or window coverings), amount of your deposit, dates you take legal and physical possession of the home, legal “subjects” or “conditions” upon which the contract becomes final (such as satisfactory home inspection report or financing approval), and the date the offer expires.
> Professional Inspection
Your REALTOR®, Steven Hill can advise you as to whether a professional inspection should be conducted prior to or after submitting your offer. This will depend on the property age and type, and whether competitive bids are anticipated.
> Time Frame
Ensure that any time frames indicated in your contract are realistic, particularly if your offer is still subject to securing a mortgage loan, a situation we advise against by ensuring you secure pre-approval in advance. Increases in market activity as well as increased vigilance by lenders may mean that mortgage approval requires more time. Consult Steven Hill, your Sotheby’s International Realty Canada associate and your lender for more information.
Step 6: Negotiate Successfully
After submitting an offer, you should be prepared to negotiate, not just on the initial price, but on all key factors impacting the sale of the home including deposit, inclusions, dates for completion and possession, and deadlines for subject removals. Ensure you know your budget and requirements prior to submitting your offer so you don’t commit to additional costs in the heat of the process.
> Multiple Offers
In high-demand, low-inventory areas, you may find yourself bidding against other buyers. Whether you are anticipating competition or not, you should be preapproved for your mortgage prior to your home search and well in advance of writing an offer. In a multiple offer situation, this will impact your ability to negotiate successfully, particularly if others making an offer are already preapproved. It also lets you know the maximum you can afford in what may be a stressful situation.
> Potential Responses
You can expect one of three responses to your offer:
Accepted as is: the deal is complete and once signed by the seller, the offer becomes a binding legal contract.
Counter offer: the seller may make changes to your offer, such as adjustments to the price, closing date or conditions. You may accept the counter offer and close the deal by signing the document. Or, you may make another counter offer back to the seller.
Rejection of the offer: the seller may choose to reject the offer and the sale will not go through.
> Offer Acceptance
Once both parties come to an agreement, negotiations conclude and you move on to the next steps in the buying process. You will have a set period of time in which to satisfy the legal conditions (“subjects”) agreed to in your contract, such as completing a satisfactory home inspection report or securing financing. Only after your subjects/conditions are removed do you have a legally binding document.
Step 7: Close the Deal
The closing or completion day is the day you take legal possession or your new property.
As this day nears, your REALTOR®, Steven Hill, and lender will monitor the progress of your transaction to ensure there are no last minute issues that need to be dealt with.
> Completion (Closing) Day
On completion day itself, legal property ownership is transferred to your name. The mortgage amount is provided to your lawyer or notary by your lender and you will receive a Statement of Adjustments with costs payable, including: balance owing, legal fees, property transfer taxes and other completion costs. Your lawyer or notary will pay the seller, complete necessary documents and register your home at the Land Titles Office in your name.