Purchasing a new home is an exciting milestone for any Canadian. To help make the experience as seamless as possible, it’s a good idea to get familiar with the different stages of buying a property before you get started. To help you familiarize yourself with the process, we’ve outlined the 5 Stages of Buying a Home below.
1. Choosing an Agent
Picking the right real estate agent is crucial to making your home search a success.
Your agent should be experienced, full-time, and always put you first. They should consistently search for new listings to show you, act as a voice of reason while giving you advice, and expertly negotiate to get you the best deal. It’s helpful if your agent has experience in the specific area you’re looking to purchase in, or has past experience working with buyers who have had similar needs to yours. Be sure to interview potential agents and ask about their experience and service, and obtain references from previous clients.
Once you’ve chosen an agent, you will need to sign a buyer’s representation agreement to get started.
Tip: Buyer’s Representation Agreement, also known as a BRA (the Buyer’s Representation Agreement), is a contract between the buyer and the agent that they hire to exclusively represent them during a set period of time. Once under contract, your agent is legally bound to follow your instructions, maintain confidentiality, and provide their honest opinion and advice. If you choose to buy a home during the period of your agreement you must purchase it with the agent you’ve contracted – otherwise, you may be required to pay them a fee. If you don’t purchase during the time period of your BRA, you will typically not be required to pay your agent.
2. Researching and Planning
Research what you need, want, and can afford—from your housing costs to closing costs. Consider your current budget and lifestyle, and how they might change in the next five years.
Things you should consider during your home search:
- Your ideal home
- Your preferred neighbourhood
- Your budget
- Your savings for your down payment
Work with your agent to:
- Walk through the process so there are no surprises
- Determine your future needs
- Discuss neighbourhoods and housing types that meet your needs and maximize return on investment
- Connect with a reputable mortgage broker
Begin thinking about financing
During your research period, it’s important to understand how much you can afford. The best way to decide your budget is to speak with a mortgage broker, who will take you through the pre-approval process, including:
- Giving you a pre-approval with the maximum home price you can afford
- Explaining what your monthly mortgage payment would be
- Locking in an interest rate for 90–120 days
- Helping you get the mortgage that best meets your needs
- Discussing any homebuying incentives that you might be eligible for
3. Finding a Home
Based on the criteria you gave, your agent will hand-select homes for you to view. While you should see homes quickly, as they can sell rapidly in popular neighbourhoods, you should also assess them carefully to determine whether or not they suit your needs. Also, keep in mind that listing photos can be deceiving, so viewing properties in-person is very important.
Your agent may suggest new neighbourhoods that you’re not familiar with, so spend some time in any neighbourhood you’re considering to be sure it’s right for you. Taking a walk in the community, visiting local parks, checking out shops and restaurants, and driving by at different times of day are a great way to get a sense of the area.
Even if you’re hesitant, it’s a good idea to view all homes that your agent has suggested, if they match the criteria you’ve given them. Your agent has experience viewing homes and may find hidden gems that will surprise you!
4. Making an Offer
When making an offer, there are many terms to consider. In competitive markets you will need to be strategic about which conditions to include, and you may need to move quickly to submit an offer. Having a plan can help you be prepared to negotiate on your terms.
While making an offer, you have to:
- Name your price and terms
- Understand your current and future financial position
- Be ready to make a firm offer when required
Your agent will:
- Analyze comparable properties with you
- Work with your mortgage broker on a financing plan and risk assessment
- Advise you on how to reach your desired outcome in the current market
- Present your offer to the listing agent or seller
- Negotiate the best deal for you
Your mortgage broker will also confirm whether you can get financing for your chosen property and price.
5. Closing the Deal
Once your offer has been accepted, the final steps in the purchasing process can be overwhelming and tedious – but they are important and time-sensitive. Each person plays an important role, including your real estate lawyer.
You will:
- Visit the home a few days before closing for a final inspection
- Purchase home insurance
- Sign legal documents
- Pay closing costs and down payment (less deposit) via your lawyer
Your agent will:
- Arrange and attend your final home visit
- Help you arrange insurance, lawyers, movers, utilities, cable, and anything else you need
- Handle any issues that may come up that risk closing
- Begin planning your budget for monthly carrying costs
Your mortgage broker will:
- Discuss mortgage insurance options
- Remit mortgage money to your lawyer
Your real estate lawyer will:
- Explain legal documents to you
- Conduct title search and purchase title insurance on your behalf
- Handle fund transfers
- Register the property in your name and hand you your keys!
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