15 Steps to makes you an expert at buying Real Estate in Toronto
1. Get Your Finances in Order
The first thing you need to do is get your finances in order. This means that you have spoken to a mortgage broker and/or financial advisor to figure out whether you are in a position to buy Real Estate. Have you saved enough money for a down payment? Have you checked their credit score? Do you have outstanding debts that you need to clear up? These are all questions that need answers before you start thinking about a huge purchase like a new home.
Once your finances are in order, and get pre-approved by a mortgage broker, any homebuyer will need to talk to a lender and get prequalified, unless you are paying all cash. You need to know how much you can afford before you start looking for a new home. You don’t want to waste anyone’s time looking at homes out of your price range. And you certainly don’t want to fall in love with a house you can’t afford.
2. Research what neighborhood you want to live in and what type of property you want
Make a list of neighborhoods you are interested in and what things are most important in the area they’re interested in. Make a priority list. If you are unsure which neighborhood you want to live in, ask your Real Estate Agent for help. When deciding on a neighborhood, I always suggest spending a day in the neighborhoods you are considering and setting up showings on various streets to get a sense of the properties and community.
Sit down and decide on the type of property you want (some examples):
-
Freehold (detached, semi-detached, row home, townhome, cottage, etc.)
-
Condo (condo, apartment, loft, condo-townhome, etc.)
What things in the home are most important, what things would be nice to have, and what things are negotiable? This will help you and your agent narrow down their search parameters and not waste time looking at properties that are not the right fit.
3. Be Realistic
Decide what’s most important first and what is negotiable. The perfect dream house is sometimes out there, but this is rare. You will need to know where your flexibility lies as not every property will meet all your needs. Think of the three-sided triangle concept, the triangle has three sides: price, features, and location. You are more likely to find a home that meets two sides, but you cannot expect to find a home that meets all three criteria of the triangle.
4. Work With an Experienced Real Estate Agent
This should be a given, it’s important for you to work with a professional who understands the ins and outs of a real estate transaction and market. Know that the process can be complicated, and full of legal contracts and deadlines, so you want to ensure you have a Real Estate Agent that can guide you through it.
It is always good practice to interview at least three agents before you make a decision on who would be the best fit for you. Trust me when I say it will cost you more money to go with a Real Estate Agent with a lack of knowledge, there are many transactions that happen when the buyer is advised to overpay for a property and then they lose money once it is time to sell.
5. Choose Your Moving Timeline
You need to establish a realistic timeline for moving. Are you looking to move in the next 30,60,90 days? they’re going to have a difficult time making that happen. Some sellers have predetermined move-in dates, so there will sometimes need to be flexibility.
6. There’s No Right Time to Buy
The market is always up and down, but long term, real estate is the best investment and has always shown resilience in the Toronto market. You may have concerns about the economy and housing market, but don’t let the media turn you away from purchasing now. The number of times I have had buyers wish they had purchased or sold sooner or si countless. The truth is there is no perfect time to buy and no perfect time to sell. Always follow this famous quote by Will Rogers “Don’t wait to buy Real Estate, buy Real Estate and wait.
7. Think Long-term
Real estate is more than just buying a house. It’s an investment that can provide leverage against financial hardship, so it’s important to understand how investing in real estate works.
Are you starting out and looking for a starter home to upgrade after a few years? Or are you looking for a forever home? The type of home you are looking for will determine how you should think about the investment.
No matter what type of home you are looking for, real estate is a long game (most of the time). Make sure to understand that real estate isn’t a quick get-in-get-out investment. It can take time to earn your money back. So prepare to stay in your home for at least three years.
8. Make Sure to Get a Home Inspection or Status Certificate Reviewed
No matter what type of home you decide to buy, it is highly recommended to get a home inspection (this can change at times depending on the market). The home inspector’s job is to give the buyer a full spectrum analysis of the home, checking for things they can’t necessarily see on the surface. They will check for foundation, roof, plumbing, and electrical issues to make sure your home is worth the money your clients are offering to pay for it. In essence, it’s a $500 investment in peace of mind.
A status certificate is a home inspection but for condos - it is a long document that outlines the condo corporation's financial and legal situation, whether there are liens against the property if the maintenance fees are paid, whether there are issues in the building, or any special assessments. This is extremely important for a lawyer to review as it can become costly for a buyer if the condo corporation is in financial and legal trouble.
9. Don’t Negotiate Yourself Out of a House
True market value = what someone will pay. That’s it.
It’s the saddest thing to watch clients entrench themselves in the negotiation phase of the transaction and end up losing a home they love. Many homebuyers, especially first-time homebuyers, have been taught to believe you shouldn’t offer the asking price on a home. They have learned from somewhere that you should haggle to get the best price possible. But this is not always the case, and why hiring the right Real Estate Professional to help you is extremely important.
If you love the home but are hesitant to offer the full asking price, you should remember what’s most important in mind—the fact that you love the house. You should understand that if you’re not willing to pay the full asking price on the home, there’s most likely another buyer out there who is which will set the market value for all similar houses in that area to slightly higher than the previous house.
Again, this is not ALWAYS the case - it depends on the market and whether or not the property is priced accordingly. When the market is down or the house is overpriced, then yes, negotiating is possible. It is our job as Real Estate Agents to educate you on the pricing of the homes in order to make the most financially sound decision.
10. Closing Costs
Your mortgage broker will make sure (usually) to incorporate these fees when purchasing, but it is always important to know that there are closing costs, make sure to ask your mortgage broker for a list of them. Typically, there are lawyer fees, land/property transfer tax (municipal and/or provincial), and inspection fees.
Also, always be prepared for additional costs after closing. The house may end up needing some small repairs so be sure to have a little spending money once you move in. There will inevitably be a few things that need to be addressed before and after closing. There are clauses that can be added in to ensure that all appliances are in working order before closing, you will have an opportunity to test all of them out and flag any issues to be fixed before possession is taken.
11. Be Ready to Make a Decision
The real estate market these past few years has really forced buyers to be ready to make a decision more quickly than in the past. But as the market cools, you’ll be faced with buyers who hesitate to make that commitment. Be ready to say, “Let’s make an offer,” when you see a house you love.
When you start to back-pedal and say things like, “Well, let’s keep looking,” you are letting fear come through. Take a moment and ask yourself, “If you found your soulmate, would you keep dating?”
12. Bid Based on the Market
The property is listed in three ways; under-ask, over-ask, or at market value. Your Real Estate Agent will advise you based on the current situation of the market.
13. Keep Contingencies to a Minimum
Alleviating as many contingencies as possible before putting an offer on a home will make your offer stronger. When the seller’s market is hot, there are many buyers who put no contingencies whatsoever (sometimes buyers will opt out of home inspections/status certificate clauses to get their offer accepted). As a Real Estate Agent, it is our job to make sure you are organized and set up to submit an offer with the least amount of contingencies. Want to know more about the different types of contingencies?
14. Your Offer was Accepted!
Woohoo! You found a property and your offer was accepted, now what? Typically, you have 24 hours to provide your deposit (usually 5% of the purchase price). This brings us back to the importance of step 1, getting your finances in order. You would have been advised to have cash readily available for withdrawal towards your deposit. Once your deposit is dropped off, the property is sold firm unless there are contingencies to settle, and then it goes firm once those are removed.
Now, it’s time to organize yourself, send all the required documents to your lawyer, and take advantage of your buyer visits so you can test the appliances, take measurements for furniture, and gather inspo for design.
15. Closing Day
Your lawyer will email you to let you know that the deal was closed successfully, this typically happens in the late afternoon but can happen sooner. The keys will be ready for you in a lockbox on the property and a code will be provided to you once the deal is complete.
Now it is time to enjoy your new humble abode!
