Home Buying 101

If you’re reading this, chances are you’ve made a big decision this year: You want to buy a House, Condo, or Townhome! Congratulations on completing Step 1 of the Home Buying Process: Deciding to Buy. If you are in Calgary or surrounding areas, you could not have picked a better time. This is your market! 

Real Estate is an ever-changing industry, in this blog we are going to review the steps involved in purchasing your home, the order in which to carry out those steps from beginning to end, and we are going to brush up on some of the terminology you will be hearing throughout the transaction to ensure that you are confident, educated and prepared for buying that beautiful place to call yours! 

Step 1: Find a Realtor 

Finding a Realtor whom you can trust (such as the one writing this blog post), is a crucial step when it comes to buying (or selling) a home. A Realtor brings a wealth of knowledge and experience to the transaction. In fact, a licensed real estate professional provides much more than the service of helping you find the home that is most suited to your wants and needs. We are expert negotiators, seasoned financial advisors, and superb navigators around local neighborhoods. Transactions in Real Estate can often be time consuming, are accompanied by loads of meticulous paperwork, and require a vast understanding of the industry in its entirety. Realtor’s take all of that stress off of your shoulders. In addition to having someone guiding you through the process to ensure you are making the wisest investment decision for you and your future self, you gain a life-long friend, as well as somebody you know whom you can always rely on for all future transactions to come. The best part is! As a buyer, your Realtor’s services will not cost you a CENT. Generally, the seller pays the commission to Realtors. However, that doesn’t affect their dedication or the spirit of hard work that they will put into helping you find and buy the perfect home. 

Step 2: Talk to a Mortgage Broker & Get Pre-Approved

Getting preapproved is a crucial step to home ownership because it provides you with a realistic budget in which you can work within. This helps your Realtor immensely with the search for your most suitable home. Mortgage brokers hugely add value to a home buyer as they are able to give you advice on how best to save for a down payment if you have yet to do so, how to reconcile some debts in order to appear better on your credit, review the different options of mortgages to decipher which is most suiting to your needs, and so much more. If you do not have your own mortgage broker, your Realtor should be happy to supply you with a list of trusted ones whom they would gladly recommend. I would be more than happy to supply you with a few of my personal recommendations. 

What is a Mortgage & How Does It Work? 

A mortgage is a loan that is used to purchase property in Canada. It requires regular payments to the lender, consisting of principal payments (paying off the loan amount) and interest. Your mortgage may also bundle in your property taxes or home insurance payments.

Mortgages start off having a large amount of the payment go toward interest costs compared to the principal, but over time, more of your payment goes toward the principal. There are many different terms, amortization periods, interest rates (fixed or variable), and overall types of mortgages available. I won’t get into all of the logistics of the mortgage world in this blog as it is vast, but If you would like to go further into detail about those, feel free to reach out to me, or get in touch with your favorite mortgage broker or ask me for mine.

How Much Do I Need for a Down Payment?

The minimum down payment for a home under $500,000 is 5%. For example, a $380,000 detached home in Calgary would require a down payment of $19,000. Many first-time home buyers get their foot in the door to home ownership by first purchasing a condo, as typically the purchase price of them is lower, they require zero maintenance, and they require a lower down payment. A condo for $180,000 would only require a down payment of $9,000. For home’s valued above $500,000, the required down payment is 10% down.  * If you’re a First-Time Home Buyer, ask myself or your mortgage broker about the First Time Home Buyer Incentive (FTHBI) *

Step 3: Look at Various Homes

Once you have chosen your Realtor, typically they will set you up with what is often called a “Market Search”. They will take all of the criteria you have given them, including neighborhoods of interest, style of property, budget, etc, and they will send you numerous listings for you to look through to decide which ones you want to see. The largest benefit of a Market Search is that it takes the leg work out of it for you. We all know scrolling through Realtor.ca can be very time consuming, this saves you the hassle. You will also receive brand new listings directly to your inbox the moment they hit the market. (this gives you an upper hand amongst some of the other buyer competition). Once you’ve hand selected your properties of interest, your Realtor will organize dates and times to go view the properties with you and go through the homes with you answering any and all of your questions. Having a trusted Realtor there can often benefit you in the sense that they may see some “red flags” about a property that may have otherwise been over-looked. 

Step 4: Present Your Offer

This is a big step. Once you’ve found the home that checks all your boxes, it is time to present a competitive offer immediately. Your Realtor should have extensive experience in contract negotiations, & will ensure you get what you want for a fair price. A Realtor’s mandate is to always act in your best interest, and in turn ensure the transaction is in your best interest.

What Goes On the Offer?

The offer consists of the Price which you would like to offer, the Date of which you would like to take possession, the Deposit amount you would like to provide to the sellers brokerage in order to secure the property (this forms part of the down payment and is not an additional fee), & the Conditions you would like to have put in place to protect you and your deposit money. Again, we won’t go into the full details of the offer in this blog, so if you have any questions please feel free to reach out & I’d be happy to answer those for you!

Step 5: You Go Under Contract: 

When the seller accepts your offer, the home goes under contract. You want to make sure every detail is handled accurately and immediately. This can be a high stress time, and working with a Realtor will ensure your home closes properly and on time, & that all conditions are being met.

Step 6: Inspections

Final details are handled and inspections are performed to ensure the property is in good health. Contract details are further negotiated, and then we head to closing!

Step 7: Closing

Congratulations, at this point you have secured your home and you are going to closing! At the point of closing, you will need to work with a lawyer who is efficient in real estate transactions. The Realtor, Mortgage Broker, and Lawyer will all communicate and every document and piece of information will be supplied to the lawyer. From there, the lawyer will handle everything for you, including the transfer of the land title from the seller’s name to yours. If you do not have a lawyer, your Realtor should be happy to supply you with a few trusted names they have worked with before. I would be happy to put you in touch with one, and please be prepared to bring your checkbook to the closing procedure. Typically, it is a safe bet to appoint 1% of the purchase price of your home to the cost of the lawyer fees. (On average, lawyer fees in Calgary tend to be around $1500-$2000). 

In Summary

The buyer’s market is your bread and butter, and Calgary is fully submerged in it right now. Homes that were once out of your price range, may now be in your price range. You’re receiving more home for a lower price. Resale in a peak market would mean reaping the benefit of potentially thousands of dollars in increased value for your home! Feel confident in your decision to buy now knowing that today’s market caters directly to your benefit.

This has been a brief outline of the home buying process, and I hope you found some value in it! If you have any questions, or would like to have a chat about starting up the process of your 2020 home purchase, please feel free to reach out to me at anytime! I’m more than happy to do everything I can to help you reach your real estate goals. Cheers to a new, huge milestone in your life this year!   

Sincerely,
Kaitlin Gourlie
YYC REALTOR
403-473-4536
kgsoldit@outlook.com