Buying a home is a big investment, so make sure you do it right! Here are 7 things you should do before writing an offer on your dream home:
- Find out what your budget is!
Get pre-approved by a mortgage lender. This is a great exercise as it gives you an idea of just how much home you can afford and it forces you to find all the documents you’ll need for the mortgage approval process. If you wait until offer time to get your financials in order, you’ll have the added stress of a deadline to contend with. Plus, you may be wasting your time – and that of everyone involved – on a home you won’t get financing for.
Getting pre-approved doesn’t mean that you are bound to a particular mortgage lender. When the time comes to apply for your mortgage, you can work with another bank or even with a mortgage broker to get the best rates. Ask your real estate broker for a contact. Even if you work with a specific bank, real estate brokers can often get you a better rate through their personal contacts.
Getting pre-approved not only helps speed up the final mortgage approval process during the promise to purchase, but often, in a multiple offer situation, if two offers are close in price and conditions, vendors will pick the buyer offer with a pre-approved mortgage over one without.
- Wish List!
Make a wish list of important features you want in your new home. How many bedrooms? How many bathrooms? Do you have to have a finished basement? Do you want a house that’s move-in ready or are you willing to do some work? Some items are must-haves and some are would-likes, but write them all down. Just be realistic; if this is your first home you may not be in a position to have that indoor pool and sauna!
- Work with a real estate broker!
A real estate broker is a trained professional who spends his or her days selling homes. An experienced broker will have seen almost every situation that can arise during the buying process and can help you avoid potential problems. Brokers are also bound by a code of ethics and overseen by a government board, the Organisme d’autoréglementation du courtage immobilier du Québec (OACIQ)1.
Another important point is that brokers have access not only to all of the MLS listed homes, but also the ‘pocket listings’ that are held in their office and/or network. A top local agent will often know what homes are coming on the market before they are listed, giving you an advantage.
- One Broker, not 10!
Once you’ve decided on a real estate broker, it’s in your best interest to stick with them. Your broker will get to know your tastes and what is important to you, and you’ll get to know and trust their opinion. A good broker can save you hours of home visits by narrowing down the field for you.
- Location, location, location!
The saying really is true. Houses can be renovated and changed, but a location cannot! Remember, you are not buying the seller’s décor, so look past dated wallpaper and ugly furniture to the structure and the setting of the house. If you like a house, take a drive to familiarize yourself with the area. Is it a quiet street? Does the area offer added value? Homes in less desirable locations will be less expensive than similar homes in a better location. If you don’t mind the train tracks and want the bigger house, then buy it, but understand that the tracks will be there when you go to sell, and be prepared to sell for less than comparable homes further away.
- Look at homes priced below what you think you can afford!
Don’t tie up all your money in a house! Being house poor is not the way to go through life. Do you want to be able to travel or buy a car or go out to dinner? If the answer is “yes”, you’re better off buying a home that’s a little less expensive so that you have a cushion for all the extra costs and the inevitable curveballs life will throw at you. Interest rates are low presently but if, in 5 years when your term is due, they have jumped by 2% or even 4%, your monthly mortgage payment could increase substantially. Will you be able to afford your payments then?
- Don’t make emotional offers!
Be informed. Even if you fall in love with the first house you see, visit a few more to compare prices. With your broker’s input, compare homes that sold recently in the area to the home that interests you, to see if it is priced right for the present market. Your broker will have all that information. Make sure the house is priced within range of the comparable sales. But if it’s your dream home and you plan to live there for 10-20 years, don’t walk away from it because it is priced slightly higher than it should be based on comparable homes. You will most likely recoup your money in the long run. However, if you are planning to live there 3-5 years, you might want to think twice about the price. Here in Quebec prices take time to climb, unlike our neighbours in Toronto and Vancouver.
Shopping for a home is an exciting – and stressful – experience. Armed with the right information and expectations, and with the right professionals by your side, the process can go smoothly.
**The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.**
1 The OACIQ “ensures the protection of members of the public who enlist the services of real estate and mortgage brokerage professionals governed by the Real Estate Brokerage Act.”