The Steps To Purchasing a Property (First Time Home-Buyer Edition)
So you’ve worked your butt off, cut out the $4 latte 3 times a day and have put your pocket change in your piggy bank. You’re now ready to buy a property! There’s a systematic order to this, and it seems like it can often be a daunting task to comprehend, so I’m going to break down the way my clients and I operate. I mean after sacrificing those $4 latte’s and drinking nabob packets, you want this go as smoothly as possible, right?!
The first job, of course, is to connect with a realtor. This can be tricky.. Yes, your uncle/aunt, nephew/niece, cousin, friend… the list goes on, but yes they may be a realtor.. But there’s a big difference between part-time agents (I’ll make some money on the side) and full-time (this is all that I do) realtors.. The Toronto Real Estate market has undergone some pretty INTENSE shifts in the past year or so. I myself, couldnt imagine trying to keep up with the pendulum swing by only doing this part-time. So my personal suggestion would be to find a realtor who is passionate, fully committed and knowledgable in the market you are looking to get into. It also helps working with someone who has been in the business for some time, actively.. I’ve noticed when agents work together often, coming to a consensus on negotiations flows more fluently and is less difficult. I can speak from personal experience, as I’ve had client who I’ve had great relationships with, who have asked me to help them buy property out of the GTA i.e. Waterloo Region, Hamilton. Im a true believer that every 25km you go in each direction, business is done differently. Of course, I was still able to produce high quality results for my clients in these regions, but it is more difficult. so find someone who does business where you want to live!! Often times hear people say, if I buy or sell a property I’ll do it myself, why would I use a realtor?! Well my confused friend, on the buying side a realtor costs you absolutely nothing, the commissions are paid by the seller. I think everyone likes free, dont they!? Also, only licensed real estate sales representaive’s have access to crucial confidential information regarding recent sale history, selling strategies etc… When it comes to sellers working on their own… when I see FSBO’s (For Sale By Owners) I know my buyer client can take advantage of their lack of knowledge of the market. I can honestly say that I’ve never seen a FSBO’s property sell for more than a property which was listed appropriately by a full service realtor. Last but not least, once you find the realtor you are convinced has your best interest at heart, you will want to sign a Buyers Representation Agreement with that individual (or team). This makes sure that you’re interests are looked out for by the home team. There is a lot of unethical behaviour amongst agents in the industry (unfortunately), and people will try to suade you in a open house to buy through them because “you’ll get a better deal” but what you will get is someone with their eyes on the paycheque of double ending, and a divided interest in buyer and seller…. If I’m negotiating for 2 people (buyer vs. seller) and I’ve worked with one of them for 10 years, and the other has just walked into my open house, how do you expect a level playing field in negotiations?
Once you’ve connected with a realtor, the next key is to chat with your mortgage advisor, broker, bank, what-ever you want to call them.. They are going to be the one who see’s your $4 latte sacrafice and decides whether you are qualified to borrow hundreds of thousands of dollars. You dont have to go dressed sharp, its not an interview! They strictly look at your debt/equity ratio, along with income and expenses to decide whether you qualify for a $5,000,000 Bridle Path home, or a $350,000 bachelor condo on Yonge St. So make sure that once you connect with your realtor, you dont get too ahead of yourself with fantasies of 1,000 sq/ft hard lofts and such… Becuase you may, unfortunately, be let down.
Next is to find a lawyer. No, this isn’t where your property search turns into an episode of SUITS.. Your solicitor (lawyer) is going to be the next person in your corner aside from your realtor, and mortgage broker. When it comes to purchasing property, or selling.. You MUST have a legal representative to transfer the deed and funds, there is no way around this. If you’re purchasing a condo, the lawyer will review the status certificate (see past blog if you don’t know what this is) amongst several other factors to see if the condominium corporation is a good place to park your $4 latte money! They will also inspect the deed to see if there are any leans against the property on behalf of the city, taxes not paid, law-suits, that the stated owner actually owns the unit. Last but not least they do the money/deed exchange. You should have strong communication with your lawyer during the entire period of searching and closing on a property if they are hard to get a hold of, fire them. Plain and simple. This is hundreds of thousands if not millions of dollars on the line… There’s no place for complacency.
It’s important to work with reliable sources.. go with your gut feeling on your team, and dont be pressured into continuing with a realtor, mortgage broker or lawyer who you are not pleased with. You can terminate the relationship at anytime!