Even with the new mortgage rules that came out in 2018, or the pandemic of 2020, the process for buying a house is the same.
And it’s simple. From a very high level overview, it’s about finding a home seller and then signing a contract with that seller to buy that house. That’s really all there is to it.
Despite the fear mongering that the realtor association did when airing some TV commercials a few years ago, when I look back at my two previous purchases, there are 2 key points that you want to make sure you have before entering into a home purchase deal, and a realtor was not one of them.
I’m not saying a realtor is not needed, I actually used a realtor for my previous home purchases and sale because that’s what is marketed and taught. But, without these two key points below, your sale can go bad easily, more so than not having a real estate agent.
- A real estate lawyer
To me, these are the two key things to have ready when buying a house.
However, I would definitely use a real estate agent if I was moving to a new province or country. I think it would be good to use an agent for a first time purchase as well.
For me, the key is to find a good mortgage broker (or lender) and real estate lawyer first despite the impression I believe is out there that you should get a real estate agent first when buying a house.
There are plenty of realtors out there. You probably get their snail mail ads all the time, I do. So, that’s not the problem. They’re always in your face.
Finding a good lawyer and lender or mortgage broker is much more work.
The best risk management would be to find your lender or mortgage broker, and real estate lawyer independently so that that you reduce the chances of collaboration to push a deal through so the realtor gets their commission.
Let’s look at the high level view first and that’s about finding a home seller.
Finding a Seller
Finding a seller is not too hard, there are websites and realtors to show you tons of sellers who are selling their home.
Below are some websites you can use for your home search:
Signing the Contract (Using a Real Estate Lawyer)
Physically getting and signing the contract is easy too. You can get a contract from one of the websites above, download one, or ask a real estate lawyer. What’s potentially difficult is making sure the deal goes smoothly, and taking steps to protect yourself from a bad seller.
The most important step to me in signing your contract is to have a good lawyer go over the contract so that you understand what you’re getting into. The title transfer and deed are key here and a real estate lawyer is best suited for this. The key points in this contract is usually, what’s included in the home purchase (appliances, furniture, fixtures, etc), when you officially own your home, and how and when you deliver the money to the seller.
Before that signing though, it’s all about making sure you have your financing and selecting the right home.
Getting Financing (Using a Mortgage Broker or Direct Lender)
There are only two situations about financing your home: You either have all the money now to buy the home or you need money from somewhere else to buy your home. Even if you have all the money, but, it’s not soon enough for when the seller wants it, then essentially you still don’t have all the money and you’ll need financing. If you have all the money now, you’re almost done!
If you need financing, I suggest reading about a mortgage broker and checking out my directory of mortgage brokers. Even if you have no idea about where and how you can get all the money, a quick call to a mortgage broker can solve that. They’ll be happy to assist. And they can assess your situation at no charge. If they want to charge you to assess your current situation, run away!
If you don’t want to use a broker, then you can go directly to a lender.
Selecting the Right Home
This is the hard part. There are so many factors to look at. So many people may want to help including realtors, family and friends. You may be considering schools in the neighbourhood, transit, grocery stores, and many other things, ultimately, it all ends up to you. Write down all the factors and create a checklist when checking out each potential home.
Some things you may want to look at:
- Ahead of “location, location, location”, I would consider a home inspector. In Ontario, I would read more about home inspectors here. Comfree, one of the websites I listed above also has a good article on home inspection.
- We’ve all heard this one: Location. Do you like the location on the street, in the neighbourhood, proximity to transit, grocery stores, highway, school district, etc.
- Esthetics: Does the home look nice from the outside and inside. Inside, do you like the floor plan and layout? Outside, is there a driveway, sidewalk, a fire hydrant on the lawn, etc.
- Does the number of bedrooms and bathrooms meet your needs?
- Wooden floors vs carpeting?
- Wooden Stairs vs carpeting? Railings?
- Is the kitchen the way you want it? Granite countertops? Quartz countertop? Wooden floor or tiles? Backsplashes?
- Is there enough closets and storage?
- Is there good natural lighting throughout the home?
- Internet, cable and electrical outlets
- Water pressure from showers and faucets
- Working toilets
- Blinds and window coverings
- Light fixtures
After you have all this then you just need to negotiate with the seller. Your real estate lawyer can obtain an offer letter or you can just download one off the internet. After you’ve negotiated and agreed to the sale, your real estate lawyer can draft the final sales contract. When that has been signed, inform your mortgage broker or lender for the financing if needed.
If you are using a real estate agent, they should be able to advise and coordinate for you on the process. They will also do the offer and negotiation for you.
First Time Home Buyers
First time home buyers may be eligible for some extra money from the government.
RRSP Home Buyers Plan
This plan allows you to withdraw up to $25,000 for a new home.
You can get all the information from the Government of Canada website:
First Time Home Buyers Tax Credit
You can claim up to $5000 of your home purchase and receive up to $750 as a tax credit.
This credit relates to line 369 – the Home Buyer’s Amount in your tax return.
You can get the information from the Government of Canada website:
GST/HST New Housing Rebate
You can receive a rebate from the federal government on a new home.
Find the information here from the Government of Canada website:
If you have comments, feel free to write them below.