As a first time buyer, you're likely to have many questions about selecting, financing and buying your first home. How do we start looking for a home? How much money will we require to purchase the home? How much will the mortgage payments be each month and can we afford it? How does the home buying process work and what can we expect along the way? These are just a few of the questions you're bound to have at the beginning of your exciting journey to buying your very first home!
- As a buyer, your Realtor, Tom, will:
- Help you determine the type of property you need and can afford.
- Help you find available properties and make appointments to view them.
- Advise you about market conditions and provide information about the community.
- Explain the forms used in a real estate transaction and help you prepare an offer to purchase.
- Present your offer to the seller and negotiate on your behalf.
- Recommend other professionals, such as a certified home inspector or lawyer/notary.
- Help you understand agency relationships.
There are many costs that homebuyers incur, especially upon purchasing your first home that you should expect to pay. Some of the expenses related to buying a home are one-time costs, while others are continuing costs.
Your largest cost at the beginning is your down payment. As a first time buyer, this would likely represent only 5 - 10% of the purchase price. However, you should be prepared to pay for additional costs, such as:
Additionally, once you have purchased your home, you will incur regular expenses on a monthly, quarterly or yearly basis. Some of these costs include:
- Legal Fees & Disbursements
- GST and PST (if applicable)
- Property or Land Transfer Tax
- Adjustments (reimbursed to the vendor)
- Property Taxes
- Utility Payments
- Strata or Condominium Fees
- Estoppel certificate fee
- Survey Fee
- Home Inspection Fee
- Water quality and quantity certificate
- Appraisal Fee
- Mortgage broker's fee (if applicable)
- Mortgage Loan Insurance Premium (if only 5% down)
- Mortgage Loan Insurance Application Fee (if only 5% down)
- Moving Expenses
- Renovations and repairs
- Furniture, paint, carpeting, window coverings, etc.
- Service and Utility Hook-up Fees
- Property/Condominium Insurance
- Mortgage Application Fee
- Deed and/or Mortgage Registration Fee
- Mortgage Payment
- Water and/or Sewer Payments
- Electricity and Gas Services
- Cable and Telephone Services
- Property Taxes
- Strata or Condo Fees
- Repair/maintenance Expenses
- Homeowner's Insurance
How to Make an Offer
When you have found a home you are interested in buying, your Realtor, Tom, will walk you through the process of drafting an offer to purchase. Tom will communicate the offer to the seller or the seller's real estate agent for you. Some properties are in demand and you will not be the only interested party making an offer and Tom will assist you in generating an offer that is reasonable and protects your interests using specified terms and conditions.
An offer can be drafted with or without conditions; an offer without conditions is known as a firm offer and one with conditions is known as a conditional offer. A conditional offer represents the party with the placement of certain conditions on the purchase. Some of these conditions could be "subject to financing approval", "subject to the strata council allowing pets", "subject to the buyer's house selling", "subject to an approved home inspection", among many others.
The seller may accept your initial offer, reject your offer or present a counter-offer. The counter-offer may differ from your original offer in respect to price, conditions, the closing date or any other items. Offers can be countered back and forth between the parties until one of you accepts or rejects, ending the negotiations.
There are many components of an offer that you should be aware of and understand. Your Realtor, Tom, will answer your questions and explain the entire process to you so that you are comfortable with the steps involved.
- Terms An offer includes certain "terms", which specify the total price offered and how: the financing will be arranged, such as if you will arrange your own with a financial institution or mortgage broker or if you wish to take over the seller's mortgage (assumability).
- Inclusions and Exclusions: These are specifications within the offer that detail the items to be included or excluded from the purchase of the property. Typical inclusions are appliances, window coverings, fixtures and decorative pieces.
- Deposit: A deposit is usually given from the buyer to the seller as a token of the buyer's assurance and intention to buy the property involved. The deposit is applied against the purchase price of the home once the sale has closed. Tom can assist you in proposing a certain and appropriate amount for the deposit.
- Conditions: Items that are usually put in place to protect a party's interests upon selling or buying the property and refer to things that must occur or be in place before the sale closes.
- Possession or Closing Date: This is usually the date that the legal ownership of the property transfers from the seller to the buyer and, unless otherwise noted, when the funds for the purchase are concluded.
- Purchase Price: This is the amount that the buyer is offering to pay for the property. The price is usually dependent on market conditions and may differ from the seller's current asking price.