Buying your first home can be exciting and overwhelming at the same time. That's why it's a good idea to work with a qualified real estate broker who can guide you through the process, schedule appointments, and prepare the forms. Realtor assistance in the buying process is free and there is absolutely no commitment.
STEP-BY-STEP GUIDE TO BUYING YOUR FIRST HOME IN QUEBEC
1. GET PRE-APPROVED
Meet with a mortgage broker before you start shopping so you don't waste your time looking at homes that you can't afford. Pre-approved buyers are often favored when several offers are presented to the sellers simultaneously. Shop around for the best interest rate. Start with your bank, but ask your real estate broker if they know any good mortgage brokers who may be able to get you a better deal. Your realtor can offer different scenarios of what your monthly payment will be depending on the down payment and amortization that you choose. If you put less than 20% down payment, the Canadian Mortgage and Housing Corporation (CMHC) will add default insurance into your mortgage. Also, keep in mind that disability and life insurance may be added into your payments. Ask the mortgage specialist to educate you on any possible penalties if you end up breaking your mortgage early. Penalties for fixed mortgage rates can be much higher than variable. You will likely have the option to transfer your mortgage if you sell and buy a new property. The mortgage specialist will help you find a financial option that suits your lifestyle.
2. CONTACT YOUR REALTOR
Shop around for a realtor. Start by asking your friends, family and colleagues for a recommendation. You can also find realtor reviews online. Interview a few agents to see who is knowledgeable about their market, who responds quickly to your messages and who you are most comfortable working with. Once you have chosen your realtor, you have the option of signing a buyers contract with them.
In order to have that realtor represent you, you will need to let them contact the listing broker and arrange the visits on your behalf. Most buyers don't realize that, if you contact the listing broker yourself and visit the property with them, the listing broker has the right to not allow your realtor to assist you through the buying process on that home.
Communicate your needs and wants to your realtor: type of home (house, condo, plex), price range, location, parking, # of bedrooms, # of bathrooms, fireplace, pool, square footage, move-in date, fixer-upper vs. turn-key, etc. Don't be shy to offer as many details as possible. It helps the broker understand your preferences.
3. START SHOPPING
Your realtor will do a detailed search on MLS and email the listings to you. You will then chose several preferable homes that you would like to see and the broker will arrange the visits depending on your availability. He or she will walk you through each home pointing out the concerns and benefits of the property. Remember to overlook aspects that can be easily changed such as paint or carpet.
4. MAKE AN OFFER
When you find the perfect home that feels right, go for it. Don't rush but don't wait too long. In a hot market, several offers may be presented to the sellers within a few days of the home's appearance on MLS. Your realtor will assess and research recently sold comparables in order to advise you on the appropriate amount to offer. Sellers often overprice their home to cover renovations and closing costs. The value of renovations may not match the fair market value to the property. Every situation is unique. This is where a broker's knowledge of market conditions plays an important role in your buying process.
Ultimately, you need to decide on a price that you are comfortable with. Your realtor will then prepare all the contracts and explain the details to you.
The seller may accept your offer but, most likely, there will be a counteroffer. Sometimes the negotiation process will go back and forth. The average offer takes 2 to 8 days before acceptance. Negotiations are based on price, inclusions, exclusions, repairs, and occupancy date. If you can cater to the seller's desired moving-date, it may make your offer stronger. Most importantly, try to avoid letting emotions colour the perception of the counter offer. Know when to walk away.
6. ONCE THE OFFER HAS BEEN ACCEPTED
Once the seller and buyer have agreed on a price, the offer will be contingent on certain conditions that must be met within a specific time frame. Those conditions are usually a building inspection and final mortgage approval. Other stipulations may be that the offer is conditional to a pyrite test, pool inspection, chimney inspection, the buyer selling his/her home first, or, when buying plexes, verification of all leases/documents and a walkthough of the entire building.
Contact a licensed building inspector. Ask your friends and family if they have had a good experience with any. Your realtor can also recommend someone. When shopping around, ask the inspector to send you a sample report. Also, inquire as to what kind of tools he uses (i.e. humidity detectors, floor levelers, etc). The inspection normally takes place within 10 days of an accepted offer and typically costs $300 - $800 (costs vary depending on the type of property). The inspector will investigate the foundation, roof, electrical, plumbing, heating, windows, doors, etc. You will be given a full report with pictures. If the inspector identifies deficiencies, you can either back out of the offer, renegotiate the price, or demand the seller repairs the problem.
FINAL MORTGAGE APPROVAL:
Contact your mortgage broker and tell them that you have made an offer. Your realtor will send him or her the appropriate documents.
The bank may decide to send an evaluator to verify if the property is worth the agreed-upon price. If the evaluator determines it is of fair market value, the bank will sign the final mortgage approval.
You must contact an insurance broker before you move in. It's best to stay with a company that you are already with in order to get discounts. Property insurance begins on the closing day of the transaction, which is the date that legal ownership of the property transfers from the vendor to the buyer.
7. NOTARY APPOINTMENT
When all conditions have been met, your real estate broker will arrange the notary appointment. You may choose your own notary or ask your realtor if they have a few to recommend. The selling broker will send all the documents to the notary. All you have to do is show up to the appointment with your checkbook and a bank draft for the down payment. The notary will make the adjustments for any prepaid expenditures, such as taxes and condo fees, which will be payable either by check or factored into the bank draft. You will also need to write a check to the notary for his or her services. Notaries typically charge $1150 - $1600.
8. TRANSFER TAX
Approximately 30 days after your occupancy date, the city will send you a "Welcome Tax", otherwise known as the "Transfer Tax". You will have 30 days to pay it.
Please refer to my "Welcome Tax" blog for the calculations or ask your realtor what amount to expect.
9. SETTLE IN AND ENJOY!
Now it's time to reap the rewards of your investment. No more wasting your money on rent! You can paint and renovate to suit your tastes. Sit back, relax, and settle in to your new home...BECAUSE IT'S YOURS!
And don't forget to invite your realtor over for the housewarming!
SUMMARY OF EXPENSES:
- Building Inspection
- Deposit (if applicable)
- Notary Fees
- Adjustments (for municipal taxes, school taxes, condo fees, etc)
- Welcome Tax
- Moving expenses
- Utility connections
- Mortgage (if applicable)
- Default mortgage insurance (if downpayment is less than 20%)
- Mortgage life and disability insurance (if applicable)
- Condo Fees (if applicable)
- Municipal and School Taxes
- Home Insurance
- Gas and water (if applicable)
- Utilities (phone, cable, internet)