If this is your first time purchasing real estate, you may have no idea where to begin. Even if you’ve purchased before the process may still confuse you. Below is a simple "hand drawn" diagram that goes through the home buying steps and makes the whole process more "first timer" friendly!
The Home Buying Process
Before Offer Acceptance After Offer Acceptance
The purpose of this is:
For us to meet to see if we are compatible and if we can work together.
For me to understand your needs and wants and to identify areas, prices, terms and conditions that you require.
For me to explain the buying process and the various agency options you have.
Lender Interview
Having your finances in order is crucial to owning a home. With a simple visit to a mortgage broker or your bank branch the reality of home ownership becomes much closer. The pre-approval process is a lot like a physical from the doctors (without the touching). They’ll look at your financial health and if it meets their standards, they’ll pre-approve you for a mortgage. If you currently don’t meet their requirements, they’ll give you great advice on how to improve your financial health. I recommend all my clients get pre-approved before we start looking for houses. The purpose here is:
For you to be aware of the various financing options, (High ratio, Conventional, etc.) and the benefits and cost of each to you.
To understand and explore the potential of using your RRSP (current and past) as part of your down payment.
To identify the right price range of homes you qualify for and that would fit into your budget.
To protect you should interest rates rise.
To minimize the trauma of not knowing whether or not you qualify.
Ahhh the fun part! Now you know how much you can afford and where you want to live. The next step is:
To show you what homes are available in your price range.
To educate you on properties, areas and prices.
To find the home and community that is right for you.
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Once we've found that dream home, we'll want to put an offer on it before some other party beats us to it. Here we'll be:
Presenting the owner of the property an offer you have chosen with written terms and conditions under which you are prepared to purchase the property. This is done using a standard form called an Agreement of Purchase and Sale. As your real estate agent, I prepare this document for you and explain what the terms and conditions mean. I'll also insert and explain the necessary clauses and conditions to protect your interests.
top [+]Everything is negotiable, especially in real estate. My job during the negotiation is to get you the home you want at the best price and terms possible.
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If the offer is firm - with no conditions, and both parties are pleased with the negotiation then we have an accepted offer. For the most part my job is done, and the other professionals will assist you in completing the deal (lawyer, bankers etc.).
If the deal conditional - certain things must take place in order for the deal to be firm, then the process takes a bit longer. Typically a real estate deal would be conditional on home inspection, financing, or even status certificate. The buyer is responsible for having these conditions waived. Once all the conditions on the contract are waived we have a firm deal. This is when we crack open the bottle of champagne and celebrate - you've bought a home!
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The purpose of a home inspection is to ensure that the home you choose is in good repair and is structurally sound. I strongly recommend that all of the homes I sell have a "Home Inspection Clause" in the Agreement of Purchase and Sale. This clause gives my purchasers the right to have the home inspected by a professional home inspector and to ensure that the mechanical, electrical, plumbing and structural portions of the property are in sound condition. Purchasers are permitted to accompany the inspector and to ask questions. After the inspection is completed, they will receive a written report itemizing any areas of concern. If repairs are required the seller can be asked to make them in accordance with the provisions in the sales contract.
top [+]An appraisal is done to insure that the home has been purchased at fair market value or below. This appraisal is conducted by a certified appraiser sent by your mortgage company. If the property is appraised for the price you purchased it for, then the transaction becomes firm and binding. Paying for the appraisal is usually negotiated between you and the mortgage company.
top [+]Your real estate lawyer will do a title search to ensure that the property is legally owned by the owner and that there are no debts or restrictions owing against it that would prevent you from enjoying the use of your home.
top [+]This is the date set aside where the purchase is completed. The lawyers meet; funds are exchanged for the title and keys to the property. The transaction is recorded at the registry office. Once this has occurred, the property is yours. At this time you have taken possession (ownership) of the property.
Before the Date of Closing
Your lawyer will tell you how much money you will have to bring by way of a certified cheque, since all funds are coordinated through your lawyer. The signing of final documents is done at the lawyer’s office.
On the Date of Closing
Both lawyers will have staff attend the land registry office for the purchaser's lawyer to update his title search, and for both sides to exchange documents and register them. Most lawyers now do this online.
top [+]You should check to ensure that all items listed in the offer are left on the property. If there are any problems, you should contact your lawyer as soon as possible. Later, your lawyer will send you a reporting letter, along with copies of various documents that you have signed. These should be kept in a safe place. You'll need them once you're ready to do it all over again!
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