Before you start shopping for your home, why not give some thought to your lifestyle, the features you need and want, affordability, and the neighborhoods you prefer. With the information you’ll come closer to finding your perfect home – sooner!
- Before shopping for a home, take the time to develop your budget, considering monthly expenses and unexpected items.
- When you develop a needs, versus a wants list, you’ll come closer to finding a home that meets most of your needs, while staying within your budget.
Consider your present and future lifestyle
- A home must meet your needs now, and for years to come.
- Location, access to services and surrounding area are just some of the items to evaluate before you purchase a home.
- When you purchase a home, a team of professionals is standing by to assist you: Realtor, contractor, appraiser, lender, mortgage broker, lawyer, home inspector, insurance broker. This article explains the important role each of these people play.
RRSP can help first time home buyer
- Under the federal Home Buyer’s Plan, first time home buyers can withdraw up to $20,000 in RRSP savings to finance a down payment on a first home.
CMHC – helping with the Canadian dream
- You may be able to purchase a home for as little as five percent down. Canada Mortgage and Housing Corporation (CMHC), provides insurance to individuals with less than 25% of the down payment.
9 biggest relocation mistakes and how to avoid them
- By planning ahead you can avoid some costly and frustrating errors. Here are some suggestions on making your next relocation smooth and problem-free.
How to make the most of your move up
- Coordinating closings, selling a home first, and making improvements on your existing home are just a few of the ideas presented so your move up goes smoothly.
- Did you know you should never buy a home alone? Here’s an explanation of how buyer agency can assist you in getting a quality home at a good price.
Solid reasons for investing in real estate
- When compared to other investments, real estate offers steady returns with low-risk. In addition, you’ll reap the benefits of building equity, having a place to call your own, and ensuring your financial future.
- The Internet has changed the way we communicate and conduct business in many areas of society. Real estate is no exception. The latest research indicates that many Canadians are using the Internet to gather home buying information.
When you prepare a budget, you’ll know what resources you can allocate to mortgage payments, living expenses and other financial situations. Everyone involved in financial decisions should also be involved. Your Realtor can assist you in helping you establish a budget, review financial qualification guidelines established by financial institutions, and even suggest some ways to obtain financing, either through traditional lenders, or another institution.
You’ll need a down payment. This can be as little as 5% of the purchase price. However, this type of purchase requires a high-ratio mortgage and insurance. Fortunately, Canada Mortgage and Housing Corporation helps Canadians purchase their first home this way, through a federal insurance program. Your Realtor can provide details on this program.
Collect the following to prepare your plan:
- Monthly rent or mortgage payments
- Utility payments (gas, water, power, telephone)
- All other monthly expenses (such as food, child care, dues, etc.).
- Annual or semi-annual expenses (such as insurance, car repair, taxes).
- Non-fixed expenses (for example, medical expenditures) for the last year. This will give you an estimate of average expenses of this type. Records or an estimate of personal expenses (entertainment, travel, etc.)
- Credit card statements
- Allow for unexpected items such as medical emergencies, travel and education.
Subtract expenses from income. Could remaining funds be directed towards a mortgage, debts or additional savings? How will a home purchase fit into your budget? Also consider items like insurance, taxes, repairs and maintenance.
What Can I Afford?
There are two types of costs in buying a home -- the initial amount you will
need for your purchase and the ongoing costs
of paying back your mortgage along with monthly operating costs. The largest
one-time cost is the down payment. It usually represents 5-10% of the total
price of the property.
Typical One-time Expenses:
- Mortgage application and appraisal fee
- Property inspection (optional), due at time of inspection
- Legal fees, due at the time of closing
- Legal disbursements, due at the time of closing
- Property survey (sometimes provided by seller), due at the time of closing
- Land transfer, deed tax or property purchase tax, due at the time of closing. (in Quebec within three months following signing)
- Mortgage interest adjustment (if applicable), due at the time of closing
- Home and property insurance, at closing and ongoing
- Moving expenses, due on the date of move
- PST on High Ratio mortgages
- Realty Tax Holdback
Typical Monthly Expenses:
- Mortgage payments
- Maintenance (this could be condominium fees, or allocated maintenance fees)
- Property and content insurance
- Property taxes
- Utilities
Read More
1. Determining your needs
Learn:
- Your Lifestyle
- Location, Style and Cost
- why is location important?
- Choosing a Neighbourhood
- Your Housing Needs
- Types and Styles of Homes
- What Can I Afford?
- Your Team and Their Roles
- Agents
- Contractors
- Appraisers
- Lenders
- Mortgage Brokers
- Lawyers/Notaries
- Home Inspectors
- Insurance Brokers
Plan:
- Neighbourhood Features Checklist
- Monthly Expenses
- Your Team of Professionals Worksheet
Do:
- Home Features Checklist
- Home Hunting Worksheet
2. Arranging a mortgage
3. The offer
4. Closing
5. The move
Similar to the list you develop to purchase groceries, why not develop your own list of needs and wants in a new home. This doesn’t mean you can’t have what you want in your home, but rather, that you have a priority list of the most important features. You may not be able to obtain all the “want” items on your list, within your budget. You may have to compromise on a few items to stay in line with your budget.
Here’s a review of needs versus wants,
NEEDS
- Adequate square footage for comfortable living.
- Sufficient bedrooms for your family
- Sufficient bathrooms
- Comfortable eat-in kitchen
- Garage or basement for storage needs
- Backyard for children’s play area
- Easy access to school
WANTS
- Specific carpeting, paint, exterior color
- Pool
- Jacuzzi
- Hardwood floors
- Bay windows
- Built-in entertainment center
- Brass lighting fixtures
- Skylights
- A pretty view
Try finding a happy medium of NEEDS and WANTS. That is, you’ll want to look for a home that includes all of your needs, with as many wants as practical, while remaining within your budget. Once you have this information in hand, your needs will be clearly defined from your wants. Having this knowledge will establish a clear direction for your new home shopping.
Consider your present and future lifestyle
Before you begin shopping for you’re a home, reviewing your lifestyle, both now and in the future will make a big difference in the type of home you may need. You’ll save time. You’ll define your goals. You’re likely to find the home you want, quicker, because you won’t waste your efforts viewing homes that don’t meet your criteria.
Look at your lifestyle right now. Are there some areas you would like to change? Consider your lifestyle a few years from now? Will it remain the same? Will your needs increase or decrease? Will you need a small or large home to meet your lifestyle needs? Perhaps the attic or basement can be converted into additional living space.
Do you have preschoolers? In a few years they will be teenagers, perhaps looking to move out and establish their own home. Perhaps your children have already left and you don’t need a large home. Do you have an idea of how long you’d like to stay in your home? Two years? Five years?
Where do you spend the most time? Kitchen? Basement? Kitchens and family rooms are often gathering places. Be sure these areas are large enough.
What about entertaining? Do you need extra space to accommodate family functions? Could you convert the basement into a family area? Do small children need a play area, or teens need a recreation area?
How many bedrooms do you require? Some people like smaller spaces for children, a home office, or frequent guests.
Bathrooms are among the busiest place in the home. Can the bathroom handle the traffic?
Think about your employment situation. Will you be changing jobs, or accepting a promotion with another company in another location? If you are transferred, could you sell your home quickly? On another work-related matter, how much time do you want to spend driving to and from work each day? Do you rely on public transportation?
While it might take some thought to answer these questions, the effort translates
into a home more flexible and suitable to your needs. The answers could also
affect your resale value when it comes time to sell or upgrade. Or, if you are
planning to remain in your home for a while, a different home may be more suitable.
How is your maintenance-quotient?
Also look at your lifestyle compared to homeownership. That is, how much time
do you have to spend on maintenance. Are you a gardener? Do you enjoy puttering
in the garden, mowing laws and maintaining flower beds? Are you a person who
enjoys fixing things around the house? While homeownership is a desirable and
wise decision, it does come with responsibilities. To maintain the value of
your home, and protect your investment, you’ll want to ensure your home is in
good condition. This means careful attention to items that need to be fixed.
Often, fixing them right away is easier then waiting for an accumulation of
items.
Based on the age of the house, and an opinion from a professional realtor, plus a home inspection you can get a good idea of future maintenance and repairs based on the age of the house. If you don’t want the maintenance, a newer home, or perhaps a condominium, may be an option.
On the other hand, perhaps you enjoy painting, fixing, decorating and all the assortment of items needed to maintain a home? You might find an older home in a great neighborhood that’s well below market value because it needs some work. This could be a great home improvement project, along with increasing the value of your home.
However, before you decide that this project will translate into your “dream home,” be sure to realistically evaluate the situation. Will you do the work on weekends, after work? Will you hire someone, and for how much? Can you live in a mess while you renovate, or can you afford to move in after it is completed? Sometimes people move into a home thinking they will complete the work in stages. Sometimes the work gets done. Other times it doesn’t. Prior to purchasing the home, prepare a detailed list of the work that needs to be completed, along with a realistic estimate of the cost. You probably won’t be happy with a bargain home that translates into a money pit.
Instead of a money pit, perhaps a home in better condition is a wiser choice. For example, suppose you purchase a home in good condition. This costs $10,000 more than a fixer upper. At today's mortgage rates, assuming, and staying within your monthly budget, the nice home costs you only about $65 per month more than the fixer-upper. With the fixer-upper, you’ll spend considerably more than $65 each month to bring it into good condition.
Review the big picture
Buying a home represents one of the biggest investments you will ever make.
But that investment goes beyond financial considerations. You’ll want to give
some careful thought to your lifestyle needs, both now and in the future. In
addition, the time and money you have available for maintenance also is an important
consideration for choosing the right home. Take a look at the entire picture
before you purchase.
A good way to truly evaluate which home is right for you, outside of price, is to consider what you absolutely must have and what you can live without. Be sure to read the article Home Buying Needs and Wants. This article will help you develop a shopping list. Before you go house hunting, prepare a list of 'can't live without' features and a list of 'would be great if...' features.
You’ve established your budget. You’ve been pre-approved for a mortgage. You’ve contacted a Realtor to assist you with the purchase of a home. Now the fun, and evaluation begins. You’ll probably be looking at a few homes before you decide on the perfect one for your family. Before you decide to purchase that home you’ve absolutely fallen in love with, be sure to be objective in your decision. On appearance alone, the fireplace, the new flooring, paint job and new carpeting create a warm and inviting feeling. Yet, is the home really that perfect? Take a deep breath. Take some time to think about the bigger picture of the home in terms of your needs. Carefully consider whether this home offers the features that will last beyond the first impression. Here’s are some essential factors to consider:
Location is a significant factor in your choice of home. An established community, with a good reputation, a low crime rate and well-maintained homes, maintains home values. A garbage dump, industrious buildings disposing bad odours, and major freeways surrounding your neighborhood are unattractive and disruptive to a peaceful lifestyle.
Also consider availability and cost of access to public transportation, major roads and highways.
Also consider the condition of public areas such as streets, sidewalks, parks and recreational facilities.
Public services should also be established including street cleaning, snow removal, garbage collection, and emergency services.
You’ll also want efficient access to medical services including hospitals, doctors and dentists.
Be sure that schools, and related school services, are also within easy access.
Recreational, shopping and entertainment needs should also be considered.
When you are buying a home there is an entire team of professionals ready to assist you in the many details that need to be completed for a successful real estate transaction. This article explains these key people and the roles they will perform during the process.
Real estate agent
A real estate agent is a professional trained in all aspects of real estate.
This person can save you time and trouble. They may even save you money. That’s
because a realtor has access to all of the homes available for sale, via the
MLS. All licensed realtors use this national system. A home listed on the MLS
is available to any realtor in Canada. This is the number one place where buyers
and sellers meet. More than 90 percent of homes available are sold through MLS.
Due to their training, experience, and industry connections, realtors are an invaluable resource. They have access to resources, and possess experience most people lack. They know the detailed steps involved to assist you in finding a home that meets your needs. They are also good negotiators who work on your behalf, to get you the best price.
Here are the valuable services your realtor will conduct on your behalf:
- Clarify your wants and needs so you don’t waste time
- Preview properties for ones that most closely meet your needs
- Arrange appointments and showings
- Put you in contact with a network of resources for additional needs you might have, including mortgage brokers, lawyers, home inspectors, appraisers
- Tour the homes with you, and offer advice based on solid experience and understanding of the industry
- Keep you informed of factors that influence your buying decision
- Assist you with all closing details, ensuring all items are handled smoothly and professionally
Contractors
If you are planning on making some improvements to your home prior to move-in,
or sometime in the future, you’ll want to enlist the help of a credible contractor.
This person can provide you with a price estimate on the work you’d like completed.
A good place to start looking for a reliable contractor is with your friends, business associates and your realtor. You could also check with a home builder or hardware store. When you have collected two or three names, arrange for estimates. Ask for references and a sample of the work they have previously completed. When you speak with former clients, ask about price, length of time to complete the project, communication during the project and satisfaction with the completed project.
When meeting with the contractor, ensure that he or she understands your needs and budget. They should inspect your home prior to giving you an estimate. If the project is being completed from architect’s drawings, be certain that the contractor has the specific details required.
When you have completed the three estimates, review each one carefully. If there is a large difference between each price, get more explanation. A low price doesn’t mean you’ll get the best work. Or on the other hand, the same could be said of the highest price. There are many factors to consider in a home renovation. A low price might mean that the contract has quoted low to get the work. Once the project is in progress, he might request payment for additional items not covered in the initial price. With a high price, the contractor may have factored in higher quality materials and higher workmanship. Prior to signing, be sure you understand the specific details of the contract including hours of work involved, type of products installed and quality of finishing work completed.
Here are some guidelines to help you evaluate a quotation:
Details – are all aspects outlined
Costs – are all costs clearly stated
Extra costs – is there a provision for going beyond stated price
Project cap – the project cap should be clearly stated
Timeline – can the work be reasonably completed by the specified date
Inspections – will all inspections be handled in a timely manner
Bookkeeping – ensure you keep all material receipts
Subcontract – will any of the work be subcontracted, by whom and how long will it take
Appraisers
In many cases, you may not have to hire an independent appraiser. Your lender
usually requires an appraisal from their approved professionals, prior to the
purchase of a home. Your realtor will also prepare a CMA, "Comparative
Market Analysis" for you, to establish a value range. If the home is unusual
in some aspect, there are huge discrepancies between the realtors and the bank’s
appraisal, you may want to consider an additional appraiser.
Lenders
A lender is anyone (a bank, your mother-in-law, a credit union, an institutional
lender) who lends you money. As this financial commitment determines your future
for many years to come, you’ll want to ensure you have a good relationship with
this person or institution, with beneficial rates.
You can conduct your own search for a lender. First, get a copy of your credit history, available through Equifax. Then review the newspaper and other real estate publications and you’ll see the varying rates for institutions and banks. When you’ve got all the details established (employment history, credit history, price of home, etc), make an appointment and negotiate your best deal.
Mortgage Brokers
A mortgage broker could save you time and money. They do the legwork in finding
the institution or lender which offers the mortgage terms and conditions that
are best for your situation. This person works for you, not any particular lender,
although they do have access to all available lenders. The lender will pay the
mortgage broker a finder’s fee. Some, mortgage brokers, however may charge you
a fee for these services.
Lawyers/Notaries
A lawyer understands the legal documents and other aspects of buying a home,
from both the buyer and seller position. They work on your behalf, ensuring
that all documents are properly prepared and you are protected. These legal
details must be completed prior to possession date.
Home Inspectors
A professional home inspection could save you money, and headaches in the future.
In a few hours this person will provide a complete, written review of your home,
citing areas which are in good, fair or poor condition. With this report, you’ll
have a good idea of repairs which will be required in a few years.
You can make the purchase of the home conditional upon a satisfactory home inspection. If the home inspection reveals some defects, you could cancel the contract, renegotiate or require that repairs be completed by a specified date. Your Realtor can recommend a skilled home inspector who has the background and knowledge to provide you with an unbiased review. The $300 – 400 you pay for this service is definitely a good investment. Scrimping on this detail, or thinking you don’t need an inspection, could cost you in the future.
Insurance brokers
For your safety, and to protect your belongings, you’ll need to ensure you have
insurance on your home and valuables. You can shop for insurance yourself, by
phoning several insurance companies and asking for a quotation. Or, a broker
can save you time and money, as they have access to information from insurance
companies. Since your home is used as collateral against your mortgage, the
bank insists you have full insurance to cover the property.
RRSP can help first time home buyer
A federal program is in place to assist first time home buyers with the purchase of a home. Under the federal government’s Home Buyer’s Plan, you can use up to $20,000 in RRSP savings ($40,000 for a couple) to finance a down payment on a first home. You are then required to repay your RRSP over 15 years.
The RRSP funds must have been deposited for at least 90 days. A signed agreement to buy a new or resale, qualifying home is also required.
Depending upon your situation, it might be to your advantage to access savings through the Home Buyers’ Plan. For example, if you had already saved $20,000 for a down payment - and assuming you still had enough "contribution room" in your RRSP for a contribution of that amount you could move your savings into a registered investment at least 90 days before your closing date. Then you could withdraw the money through the Home Buyers' Plan.
Your $20,000 RRSP would then count as a deduction for the year. You could also use any tax refund you receive to repay RRSP or other home buying expenses.
Prior to making any major financial decision, check with your financial advisor, lawyer to tax specialist. These professionals can determine whether this strategy is practical for your financial situation.
CMHC – helping with the Canadian dream
As the Government of Canada's national housing agency, Canada Mortgage and
Housing Corporation (CMHC), plays a major role in Canada's housing industry.
The agency offers numerous housing services including research services, market
evaluations, and access to affordable financing choices. Programs include aboriginal
housing, residential rehabilitation assistance, home adaptation for seniors
independence, public and private partnerships, and numerous grants and awards.
For many people, especially first time home buyers, saving the necessary down
payment is a challenge. Additionally, with less than 25% of the purchase price
to put down, a lender requires mortgage insurance for protection against any
payment defaults. CMHC makes it easier for Canadians to obtain a home, by providing
mortgage loan insurance. By providing this insurance, CMHC limits the lenders’
risk, allowing the lender to finance up to 95% of the purchase price of a new
home. You can purchase a property with as little as 5% down. If the cost is
$150,000, you only need a down payment of $7,500.
You can become a homeowner, even if you don’t have a large down payment put aside. You just need to meet the following conditions and home ownership can be within your reach.
- The home must be located in Canada and considered your principal residence.
- You must have a down payment of at least 5% of the purchase price.
- Your home-related expenses must not exceed 32% of gross household income
- Your total monthly debt load must not exceed 40% of gross monthly household income
- You must be able to pay closing costs equal to at least 1.5% of the purchase price.
An affordable form of insurance
The premium you will pay for your CMHC mortgage insurance is calculated as a percentage of the loan and is based on your down payment as a percentage of your home’s purchase price. Fees range from 0.5% to 3.75%; a .50% surcharge is added to the premium if multiple advances are required. You can pay this premium in a single lump sum, or it can be included in your monthly payments, along with the application fee.
| Loan Size | Single | Multiple |
| % of purchase price | advance | advance |
| Up to 65% | 0.50% | 1.00% |
| Up to 75% | 0.75% | 1.25% |
| Up to 80% | 1.25% | 1.75% |
| Up to 85% | 2.00% | 2.50% |
| Up to 90% | 2.50% | 3.00% |
| Up to 95% | 3.75% | 4.25% |
Note: A multiple advance may be necessary in a new home purchase or mortgage plus home improvement type loans. E.g. $100,000 for house, $10,000 for improvements.
How much can you afford?
Work through the following worksheet to see what you can afford.
Calculating Gross Debt Service (GDS)
With this calculation, you can estimate the maximum home-related expenses you
can afford to pay each month. The total should not be over 32% of your gross
monthly household income.
Example:
| Monthly mortgage payment | $750.00 | ||
| (principal and interest) | |||
| Property taxes | $180.00 | ||
| Heating costs | $105.00 | ||
| Total monthly payments | $1,035.00 | ||
| Gross monthly household income | $4,500.00 | ||
| GDS = Total monthly payments (x
100) ----------------------------------------------------- Gross monthly income |
= 23% | ||
| $1,035.00 (x 100) ------------------------ $4,500 |
= 23% | ||
Calculating Total Debt Service (TDS)
This calculation allows you to estimate the maximum debt load you can carry
each month. The TDS should not be over 40% of your gross monthly household income.
Example:
| Total monthly housing costs (as noted above) |
$1,035.00 | ||
| Other debts, (personal loans, car loan, Credit cards, etc) |
$450.00 | ||
| Total monthly debts | $1,585.00 | ||
| Gross monthly income | $4,500.00 | ||
| TDS = Total monthly debts ----------------------------------------- Gross monthly income (x 100) |
= $35% | ||
| $1,585 (x 100) ----------------------------- $4,500 |
= 35% | ||
Your monthly mortgage payments
To calculate your monthly mortgage payments, consider the amount borrowed, the
interest rate and the amortization. Use our handy mortgage calculator to calculate
your monthly payments.
Simply multiply (x) by the mortgage amount. Eg. $90,000 x 5.67 = $510.30
($90,000 mortgage, amortized for 25 years (5.67) )
Cost Per Thousand Dollars Borrowed
| % | 10 years $ | 15 years $ | 20 years $ | 25 years $ |
| 4.00 | 10.11 | 7.38 | 6.04 | 5.26 |
| 4.25 | 10.23 | 7.50 | 6.17 | 5.40 |
| 4.50 | 10.34 | 7.63 | 6.30 | 5.53 |
| 4.75 | 10.46 | 7.75 | 6.44 | 5.67 |
| 5.00 | 10.58 | 7.88 | 6.57 | 5.82 |
| 5.50 | 10.82 | 8.14 | 6.84 | 6.10 |
| 5.75 | 10.94 | 8.27 | 6.98 | 6.25 |
| 6.00 | 11.07 | 8.40 | 7.12 | 6.40 |
| 6.25 | 11.19 | 8.53 | 7.26 | 6.55 |
| 6.50 | 11.32 | 8.67 | 7.41 | 6.70 |
| 6.75 | 11.44 | 8.80 | 7.55 | 6.86 |
| 7.00 | 11.56 | 8.94 | 7.70 | 7.01 |
| 7.25 | 11.69 | 9.07 | 7.84 | 7.16 |
| 7.50 | 11.82 | 9.21 | 7.99 | 7.32 |
| 7.75 | 11.94 | 9.35 | 8.14 | 7.48 |
| 8.00 | 12.07 | 9.49 | 8.29 | 7.64 |
| 8.25 | 12.20 | 9.63 | 8.44 | 7.80 |
| 8.50 | 12.33 | 9.77 | 8.59 | 7.96 |
| 8.75 | 12.45 | 9.91 | 8.74 | 8.12 |
| 9.00 | 12.58 | 10.05 | 8.90 | 8.28 |
| 9.25 | 12.71 | 10.19 | 9.05 | 8.45 |
| 9.50 | 12.84 | 10.34 | 9.21 | 8.62 |
| 9.75 | 12.98 | 10.48 | 9.36 | 8.78 |
| 10.00 | 13.11 | 10.63 | 9.52 | 8.95 |
| 10.25 | 13.24 | 10.77 | 9.68 | 9.12 |
| 10.50 | 13.37 | 10.92 | 9.84 | 9.29 |
| 10.75 | 13.51 | 11.07 | 10.00 | 9.45 |
| 11.00 | 13.64 | 11.22 | 10.16 | 9.63 |
| 11.25 | 13.78 | 11.37 | 10.32 | 9.80 |
| 11.50 | 13.91 | 11.52 | 10.49 | 9.98 |
| 11.75 | 14.05 | 11.67 | 10.65 | 10.15 |
This article compiled with information obtained from CMHC. This information contained in this article is believed to be accurate, but not warranted to be so.
The 9 (nine) biggest relocation mistakes and how to avoid them
On one hand, moving to another city can be an exciting adventure. On the other hand, it could be a stressful time if things go wrong. This report explains the 9 (nine) most common mistakes when people relocate. When you plan ahead, you’ll avoid these pitfalls and ensure your move is handled smoothly.
1. Lack of information
Contact the chamber of commerce, tourism department, municipality, or library
in your new community. At the same time, compare salaries, cost of living, taxes
and housing prices.
2. Home not priced and ready for showing
Before you sell your home, complete repairs. Often, it’s the little things,
like chipped paint, worn caulking and sticky doors that potential buyers notice.
Have your home cleaned, including carpets. Have a Comparable Market Analysis
(CMA) completed by one or two realtors to ensure a competitive price.
3. Not planning for temporary housing between destinations
You may need to set up temporary housing arrangements until the closing of your
new home. This could take from a few days to a few months. If you need interim
housing for a few days, perhaps staying in a hotel is the simplest solution.
For housing longer than a month, you may want to consider an apartment with
a short-term lease.
4. Not being pre-approved
Sellers are usually eager to negotiate with someone who has immediate buying
power.
5. Not completing a professional home inspection
This applies for both the home you're selling and the one you're buying, although
who pays for the inspection (buyer or seller) is negotiable in each separate
contract.
6. Insufficient time to handle children’s concerns
During relocation a child could feel lost, sad, angry or confused. Sometimes,
under the stress of completing so many details, the temptation is to get settled
as quickly as possible so everyone feels at home. Talk to your children during
the process. They’ll feel safe, cared for and comfortable. Acquaint your children
with the new neighborhood. If possible, have them meet new teachers and other
children in their new school before moving. Try not to move in the middle of
a school year.
7. Not being prepared for culture shock
Sometimes, when people move from familiar surroundings to a new community, culture
shock can manifest. Symptoms can range from headaches, stomach aches, impatience,
sleep problems to anger. These feelings are all normal, and do pass over time.
It may be helpful to incorporate the old with the new. This could include taking
classes, joining clubs, and pursuing activities you once enjoyed. It takes about
six to ten months, for someone to feel “at home” in a new community.
8. Not using local, licensed professionals
Every area is different. Understanding the communities that make up your destination
city, a realtor can find you a home that matches your needs. You’ll save time
and energy by having a professional do the work for you.
9. Not reading your employer's relocation policies
Read your employer's relocation policies carefully, for the amount of reimbursement.
Keep good records and copies of your receipts, as moving expenses are deductible
under certain conditions established by Revenue Canada.
How to make the most of your move-up
When you’re buying a first time home, the process is usually straight forward. However, when you’re moving to a second or third home, other issues arise, making the process more complicated. You’ll need to consider financing, and selling your home at the right time. This way, you won’t have the added responsibility of paying the mortgage on two homes. You’ll also want to coordinate closings, so you can plan your move most efficiently. Here are some of the most effective things you can do to make the most of your move up.
Save your feet and your time
Many people spend much time shopping for a home, only to be disappointed because
it has either sold or is beyond the budget. This hit and miss strategy is time
consuming and very frustrating. A better alternative is to use the services
provided by a professional realtor. As a client, you have access to a Buyer
Profile System/House Hunting System. Your realtor will provide you with regular
updates on all available property that match your needs. You’ll stay on budget,
save your feet, and come closer to finding the home of your dreams, faster
than trying to shop yourself.
Make improvements on your existing home
A home that shows well, and in good condition always gets the highest price.
A home in less favorable condition is less appealing to a buyer. You’ll easily
reap the rewards of completing minor repairs to your home. Also, make these
improvements prior to putting your home on the market. You’ll want to present
you best to get the best!
Sell your present home first
The easiest and wisest strategy is to sell your home before you buy. This way,
you won’t be at a disadvantage at the negotiating table, or feel pressured to
accept a below-market value, to meet a purchase deadline. With your home already
sold, there will be no strings attached on your next one. When you do find a
new home, you have the option of putting a subject to on the contact. You can
give yourself time to find a new home in plenty of time. In a slow market, perhaps
you could rent your home and put it on the market later. However, with this
option, check with your lawyer, tax advisor and accountant to ensure all legal,
tax and financial aspects are considered.
Some professional realtors offer a Guaranteed Sale Trade-Up Program. With this service, the realtor guarantees the sale of your current home before possession of your next one. If you’ve found the home of your choice, and your current home has not sold, the realtor will buy the home from you. You’re free to make your move without stress and worry.
Get mortgage pre-approval
Pre-approval is your green light and your maximum power. In a short time, you’ll
know how much you qualify for, when moving up to a larger home. When you find
your new home, you can present an offer immediately. A seller will often view
your offer more favorably when financing arrangements are established.
Co-ordinate closings
With two major transactions there are double the details of mortgage experts,
appraisers, lawyers, loan officers, title registrations and home inspectors.
A professional realtor can assist you in ensuring all the logistical details
of your transaction are handled correctly, and on time.
In an ideal world, every party in a transaction would be fairly represented.
When it comes to real estate, however, this may not be the case. The seller
and buyer, depending upon the type of agreement with the realtor, may not be
represented equally.
Many people believe that the agent they are working with automatically represents
them and their interests. Yet, without specific disclosures this is not true.
Unless otherwise stated, the agent represents the seller in transactions for
the sale of a home. This agent, as part of his or her fiduciary duty, must ensure
his loyalty protects the seller’s position throughout the entire process.
This is true of the “listing agent” who puts the home up for sale, and the agent
who finds the buyer. The agent – who helps the buyer find the right home – works
for the seller as a “subagent” of the listing agent. With this system, all agents
are legally bound to represent the seller. The buyer has no representation.
Example 1: You respond to a home advertised in a newspaper,
a home magazine, or the Internet. The agent is friendly and informative. He
or she tells you what you believe to be everything about the house. However,
the agent represents the seller, not you.
Example 2: You are working with an agent who shows you 10
homes in a weekend. He buys you lunch twice. You tell him your two children.
However, he does not offer Buyer Agency. As you feel comfortable with this person,
you easily offer personal information. However, without Buyer Agency, this realtor
is really representing the 10 sellers. Any information you reveal to the agent
must be relayed to the sellers.
As this realtor represents the seller, he or she cannot reveal certain things
to you, as the buyer:
- The reason for selling (unless the seller specifically authorizes it)
- Any concessions, in price or otherwise, that the seller may be willing to give up.
- Any conversations between the agent and the seller
- Any information that could be detrimental to the seller, or give you, the buyer, an advantage. This would include a CMA (Comparable Market Analysis) that could put the seller at a disadvantage.
Buyer’s agency ensures you get the best deal
In recent years changes to the real estate industry have been made to allow
for a more equitable arrangement. Buyers are not alone. In fact, with a realtor
working on behalf of a buyer, as a buyer’s agent, a buyer receives a full range
of professional services. A buyer’s agent commits to a home buyer and provides
undivided, confidential representation. This real estate professional has the
tools, knowledge, industry connections, negotiating skills and seasoned experience
to work for you. Many people lack these essential skills to ensure they don’t
pay too much for a home.
How does a buyer's agent help you?
A buyer’s agent must work in a professional, ethical manner, ensuring the purchaser
is treated with care, confidentiality, full disclosure and accurate accounting.
A buyer's agent will also show the buyer available homes, point out the property's
features, provide financing information and submit the offer to purchase. If
a Buyer's Agency agreement is struck between you and the Agent, it is you, rather
than the seller, who has the representation from the Agent with whom you are
working. Working under the agreements of Buyer Agency, you get the following
benefits:
Loyalty
The real estate agent must act in the best interest of the buyer.
Professionalism
The agent must act in accordance with the lawful instructions of the principle
(buyer)
Disclosure of all material factors such as:
- Seller's financial condition
- Properties true worth
- Strengths and weaknesses of the property
- Commissions split with other brokers
- Legal effects of important contract provisions
- Information about property value trends that may influence your decision about a certain area
- CMA information. A buyer’s agent can develop a Comparable Market Analysis, revealing at what price similar properties in the area have listed for and sold for.
- Existence of other offers
- Relationship between agent and other parties
Reasonable care skill and care
- Determining and advising the buyer of a reasonable purchase price
- Discovering any facts that would affect the purchase of the home, and advising the buyer
- Ensuring all details and facts of the sale are correct
- Ensuring all money handled between parties is accounted for
Most importantly, you can ask a buyer's agent for advice and assistance in
setting your offer price and structuring other terms of your offer. What's more,
you'll have peace of mind knowing an advocate is working on your behalf to help
you buy at the best possible terms.
The important thing is to understand your options, so that you don't unintentionally
accept less representation than you want. When you are looking to make the biggest
investment of your life, it is not hard to understand why it is important to
be represented exclusively.
Solid reasons for investing in real estate
If you invest in the stock market, which includes an assortment of equities, bonds, mutual funds and options, you’re in for a rocky ride. 2002 will record the third straight year of losses for North America’s stock market indices. Many financial advisors suggest that if investors can’t stomach the rapid rises and falls of a stock, they might want to consider investing elsewhere.
Stocks are not for the faint at heart. It takes a great deal of stamina to survive the roller-coaster ups and downs of an investment that is heavily dependent upon economics.
What about real estate? Has it done better than the stock market? Let’s take a look at Bill and Marsha, who each have received a $10,000 inheritance. They’re not sure where to invest their proceeds.
Conservative Bill invests his $10,000 in the stock market. With interest in the Internet still growing, he puts it into a S$P 500 index fund.
A renter, and inexperienced in the stock market, Marsha uses her $10,000 as a down payment on an $80,000 condominium. Fast forward – 12 years. Who did better on their investment?
Bill’s return
Since 1990, the S&P 500 more than tripled. From his initial investment of
$10,000, Bill made about $22,000, pre-tax. During the same period, the value
of the S&P 500 quadrupled, so Bill's gain was roughly $30,000, pre-tax.
Marsha – reaping the benefits of home ownership
What about Marsha? During the same period, home values increased roughly 4 percent
per year nationally. At that rate, Marsha’s $80,000 condominium is now worth
about $126,000. If she sold it, her profit would be about $46,000, tax-free.
On average, most Canadians invest and earn more in their homes than they invest and earn from their savings accounts, stocks, bonds and other investments. Gordon Pape, recognized Canadian author and financial advisor, suggests that home equity remains a cornerstone of most families’ wealth.
Real estate is a solid, familiar investment
In addition, there are several other solid reasons for investing in real estate:
Forced savings. Contributing towards a mortgage automatically forces a family to save. Rather than paying rent, these monthly payments contribute to future security.
Appreciation. By nature of the demand and supply, home prices rise. According to the Edmonton Real Estate Board, a home purchased in January 1997 for $123,530 now sells for $167,000.
Tax-free profits. When your home is your principal residence, and you sell it, you will not pay tax on any of the profits. This is one of the last and greatest advantages for building wealth left in Canada.
Equity build-up. Your home will naturally rise in price, according to the market. In addition, you’ll be contributing to the reduction of your mortgage. The difference between what is outstanding on your mortgage and what your home is valued at, is your earned equity. Your equity is a valuable commodity that can be used to obtain additional financing, obtain a second mortgage, or move-up to a larger home.
Real estate has long been recognized as an inflation-resistant investment, providing homeowners with a tangible incentive to save. Buying your own home, or investing in one, is widely accepted as one of the soundest financial commitments you can make.
According to a March 2002, Ipsos-Reid study, 75% of Canadians now have Internet access. Most importantly, for REALTORS, the study found that over 40% of online Canadians have used the Internet to search for home buying information. Other key findings of the study include:
- 43% of online Canadians have used the Internet to search for prices, listings and other home buying information
- 4 million users in fall 2001 searched for information online regarding housing
- 39% visited a house they first saw online
- 25% bought a house they first saw online
- 21% of buyers and 8% of purchaser “intenders” contacted an agent they first found online
- 24% of buyers like the convenience of viewing online pictures of the property without having to leave their home
- 23% like being able to customize their search on the Internet
- 21% like the large amount of listings and data available
- 7 in 10 of Canadians surveyed said if they were looking for a house they would seek information online