Your Guide to Buying a Home
Step 1 - Learn Everything You Can
A vital first step is learning more about the real estate process and industry. Buying a home is one of the most significant investments in most people's lives; taking the time to read up on what is involved in purchasing a home and how the industry works will help you in the long run. You can find a lot of information on:
The Internet – While you should take things you read on the internet with a grain of salt, there can be a lot of helpful tips and tricks to understanding the process of buying a home.
Libraries or Bookstores - Real estate books line the bookshelves, and you can find one that will cover any topic you desire. Don't forget to try your local library for an accessible foray into the topic of real estate. Look for books that discuss real estate in your country or area, since laws and procedures can vary from region to region and country to country.
Request a Meeting with your real estate agent – Getting an experienced agent to discuss the current real estate market and how it will affect your buying wants can be beneficial.
Step 2 – Initial Consultation or Meeting
After choosing an agent, you should schedule a time to meet with them in person, if possible.
This is a step you don't want to miss. You should take the time to discuss your needs and unique situation so that your agent is well equipped to represent you properly. The real estate market constantly changes, and you need to be ready to deal with everything that comes your way. After you've talked with your agent about your situation and what you're looking for, you can discuss goals and create an action plan to move forward with confidence.
Step 3 – Find Out How to Pay
There are many options when it comes to financing your next home, but a good practice is to have some idea of how you plan to purchase your next home before starting to look. Below are three primary sources of financing you could consider:
Traditional Banks – If you have a great relationship with your current bank, this may be an excellent option for you. You may be able to find a great deal on your mortgage.
Mortgage Brokers – Mortgage Brokers offer the most options when it comes to financing. They can use many major banks and other lenders if needed. They can tailor the financing to your unique situation.
Creative Financing – With a significant number of options, this could be a good pick, especially for investing, or if you cannot gain a mortgage with a mortgage broker or through your bank.
Step 4 – Begin Searching
This is the fun part! Now you're at the point where you know what you're looking for AND how much you can afford. Your real estate agent will typically set you up on a property search (usually via email) so that you can be notified when a new property that matches your criteria for price and wants enters the market. Once you have a list of properties that meet your wishlist, you can go out and start looking.
Be sure to keep the goal you set with your agent at the beginning in your mind during this process; this will make it easier to say 'yes' or 'no' to houses you see that aren't in line with your goals. This will make the process less stressful overall and allow you to look at houses for what they truly are. If you find a home that aligns with your goals, you can add it to a shortlist or tell your agent to write an offer. Quickly identifying homes that meet your requirements means you won't have to view hundreds of homes or get discouraged.
Step 5 – Write an Offer
Once you've found a home that meets your needs, you can prepare to present an offer. Here are the steps that should be taken whenever you write an offer:
Property Research – Your agent can take a look into the previous selling history of the home and see how the price matches up to the current market. This assessment of all the current properties on the market, along with any recently sold properties that are similar to the one you're buying, will help you determine the best price to offer.
Terms – Terms are what clauses make up a contract. These are items that are agreed upon and must be upheld so that there isn't a breach of contract. Along with the standard terms for review when preparing an offer, you can add in anything else you may need, but be sure to note that anything is up for negotiation.
Conditions – Conditions are clauses in the contract that need to be fulfilled in order for the transaction to move forward. Typical conditions include a home inspection or that the buyer must be approved for financing. Buyers or sellers are allowed a few days to fulfill the conditions listed (usually around 7 to 10). This is why what happens when you see a property listed as pending (P) or conditionally sold (C/S). If the buyer or seller aren't happy with the results of the attempt to satisfy any conditions, they are allowed to walk away from a contract at no cost or obligation (deposit cheques are returned). Typically, the conditions are for the buyer, but seller's conditions happen as well.
Deposits – You will need to have some available money and a cheque for a deposit in order to write an offer. During a transaction, this is a show of good faith. The money is refundable if the conditions on the purchase are not fulfilled. Once conditions are met and fully removed in writing, the deposit is then a non-refundable seller's security that will be used to complete the purchase.
Price – Price and terms are the only two negotiable things in a real estate transaction. After you know what kind of terms and conditions you're willing to accept on a contract and have done research on your property, you can now determine what the best offer price will be. What your offer price will be can be affected by the property's current status: How many offers have been made on the house? How long has it been on the market? What terms are we looking for? Etc. Think about how you can meet the seller's needs while still achieving your original goal. This doesn't always involve price, but the price is a good place to start.
Presenting Your Offer and the Acceptance Procedure – Once an offer is written and signed, your agent will present it to the seller. This usually happens in one of two ways:
First, the agent can present the offer in person directly to the seller or the owner of the home. This is an effective way to meet the seller and for your agent to present your case more effectively and in a personal way. The listing agent will be there representing their client as well during this offer process.
A second method is your agent faxing their offer. For this option, you will need to be accessible by phone for any negotiations. Whenever you receive a counteroffer, or are notified that the offer has been accepted, all parties will have to sign documents.
Step 6 – Satisfy Conditions
After an offer is accepted, you have to move forward to satisfy all the conditions from Step 5. This usually involves having a home inspection performed, gathering all personal and property information and getting to your bank or mortgage broker, or just doing due diligence when researching or gathering any information needed prior to closing on the house. Real estate agents are here to make this process as smooth as possible and help gather information and schedule any necessary arrangements to help ensure everything is done within the timeframe given.
Once all the information has been gathered and verified and the home has been inspected, a decision must be made on whether to proceed (or not) with the sale. A notice is then provided in writing to the seller and seller's agent to inform them of the decision. After any conditions are removed, a sale is considered "firm." At that point, the property is changed to "sold" in advertisements.
Step 7 – Preparation for Possession
Possessions typically last anywhere from 30 – 60 days, but these can be much, much quicker. You'll need to finish the following checklist items as quickly as possible:
Lawyers – If you haven't chosen a lawyer by now, you will need to do so as it is mandatory to know which lawyer will handle the transaction. After a lawyer is chosen, they'll need to be given all required paperwork before you meet with them. Your agent will typically handle this step to ensure that nothing is missed. About a week before you take possession of the home, you'll meet with the lawyer. You'll need your insurance information, payment of fees, the balance of your down payment, sign documents, payment of any adjustments or taxes, and will need to finalize anything else outstanding that is required prior to you owning the home.
Down Payment – Make any necessary arrangements to obtain your down payment if it's not currently and readily available. If you need to transfer money, move any money or cash in stocks or bonds, you can do so. Liquidating some assets can sometimes take nearly 30 days or more, so be sure to discuss it with your mortgage broker or bank and know your timelines.
Movers – Book your professional movers early if you plan on using a service as their schedules fill up quickly. Possession dates commonly fall on the 1st, 30th, or 15th of each month.
Insurance – While meeting with your lawyer, they will likely ask for a copy of your insurance, which is a requirement of a mortgage. If you don't have insurance, you won't get the money for your mortgage. Be sure to bring a copy of the listing available with all specifications of the home listed out. You may also have to answer questions about the age of the house, systems like the furnace or electrical, and the state of the roof, as well as general questions such as home features and square footage.
Utilities – It's important to change all of your utilities to your address in advance when you take possession of your newly bought home. Make a list of all your utilities, including internet, water, power, phone, cable, and gas. Don't forget to cancel the utilities from your previous address as well.
Mailing Address – While this step may be the least liked, it is necessary. Take stock of all of your tax information, statements, bills, healthcare, any automatic payments, subscriptions, clubs or organizations, etc. Making a list of these items early on will help you in the long run. You may remember a few that you had forgotten in your first list. Once you have it completed, either pick up the phone and update everyone on your new mailing address and the date you will move in or take possession. You can also go online and update them for some of your accounts. A final step is to have your mail forwarded through the post office to make sure nothing is missed.
Step 8 – Possession Day
Meet us about half an hour before the possession time, on the day of, at the property (usually 11:30 am) for a final, complete walkthrough of the home. During this walkthrough, we can view the property, making sure that everything agreed to in the contract was completed satisfactorily. Typically, we'll look for damage from previous tenants moving and any items that aren't how we agreed on them to be (appliances, furnace, etc.).
Because we take that time to walk around the property prior to noon, we are able to notify lawyers of any problems before any keys change hands. Keys will still change hands, even if there are problems, however, the seller will need to take reasonable action to remedy the problem once it is in your possession or be in breach of the contract, which the buyer could pursue legal action for.
Step 9 - Final Follow Up
The transaction is complete after you take possession of the home. However, there are always questions that may pop up after the fact, like: Who should I contact about this? Or what should I do about that? After you've had time to settle into the property, we'll have a follow-up call to make sure all is in order and to address any of these questions in a few days. Be sure to write down all the questions that you have to bring them up during the follow-up call.
Finally, you can enjoy your new house!
Contact us for more information about buying real estate in Chestermere, Alberta.
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