While at your side each step of the way, I will make the process of purchasing a home easier, more enjoyable, less time-consuming, and less expensive than if you undertook this challenge on your own. I will help you prepare so that sellers perceive you as a preferred buyer, help you locate and assess properties for sale that match your specifications, and help you through the myriad of details attending the actual purchase.
1. Identify Your Wants and Needs
By understanding your wants, needs and timeline, I can suggest your best plan of action. You will be delighted knowing that I am ready to help you secure the best home at the price and terms that are suitable to your budget.
2. Pre-Qualification Process
Upon request I will suggest a lender that would be most suitable for your needs. Working with lenders will guarantee you search for and find a home in the price range that is best for you. You get full access to Royal LePage's private on-line network of Medicine Hat properties that fall in your price range. I notify you as new listings become available.
3. Organize Home Showings and Provide Information on Target Markets
You can access properties on-line at the same time real estate professionals do. Together we will select the right homes to view at a time that is most convenient for all. When there are changes to your search criteria or changes to one of the listings, you receive immediate e-mail notification. I can show you the homes as soon as they come on to the market.
4. Offers Written In Plain English With The Terms And Conditions You Want
Once you find the right home and make the decision to purchase it, you'll want to move quickly. With my help, your offer is written on your terms. With professional guidance, your offer is correct and all conditions you require are included. If you need it, you will get the time to consult with banks, appraisers, building inspectors, and family - without any pressure from me. With these conditions written in for your protection, you can move quickly and confidently to secure the home you desire..
5. Real Estate Professional Represents You During The Presentation Of Offer
Most people list their homes expecting to negotiate. Usually room for negotiation is available. Knowing a property's selling time on the market and neighborhood prices is valuable when negotiating. I can assist you through the entire buyer experience making sure you have all the information at hand to make the right decisions. You get the best purchase price for your new home.
6. Organize Financing and Building Inspection
Always make sure what you think you are buying is indeed the property you are buying. As odd as this sounds, feeling comfortable with your purchase is a vital part of the home buying experience. Feeling comfortable has to do with securing the right financing. The right financing can save you thousands of dollars over the life of your mortgage.
The other factor contributing to your comfort is hiring a professional home inspector. Having the right professional is the way to gain peace of mind and guard your pocket book. A proper inspection will cover all areas of the house both structurally and mechanically and give you an objective view of the property. A qualified home inspector will provide you with a written report indicating areas of concern and the estimated cost of repair. Financing and inspection are just a part of the Buyer Services that I offer.
7. Assist and Coordinate Physical Moves
Through my strategic alliances, I offer you reliable and professional contacts with local lawyers, movers, mortgage brokers, appraisers, builders, and other skilled experts to help you find and secure the new property for your family. As part of your transition into a new home, I will coordinate all required services. That makes your part a whole lot easier. My top priority is to make sure that your home buying experience is pleasant, cost-efficient, and successful.
Why Use A Realtor ®
The process of buying a house is complex, and most people find it's easiest to get through with a Realtor® by their side. Paperwork will be flying around like a small tornado, and it can be helpful to have someone familiar with the process to deal with it. Other parts of the transaction will be happening quickly too -- hiring inspectors, negotiating over who pays for needed repairs, keeping up good relations with the sellers (through their Realtor®) and more. All of this is second nature to an experienced Realtor®. What's more, experienced Realtors® usually have contacts with good inspectors, mortgage brokers, and others who can make your buying process easier. And they know what's considered appropriate behavior and practice in your geographical area.
One of the best reasons to hire a Realtor® is that the sellers are likely to use their own Realtor® -- and you want to keep that Realtor® from taking over the process. In fact, the seller's Realtor® may pressure you to let him or her represent both of you, in a "dual agency" relationship that primarily benefits the seller. (The less scrupulous sellers' Realtor® don't make it clear that they're working for both people, but if only one Realtor® is involved in your transaction, it's fair to assume that the Realtor’s® loyalties are with the seller.) It's better to have your own Realtor® than settle for dual agency.
Your Realtor® can assist you in the selection process by providing objective information about each property. Realtors® have access to a variety of informational resources. Realtors® can provide local community information on utilities, zoning, schools, etc. There are two things you'll want to know. First, will the property provide the environment I want for a home or investment? Second, will the property have resale value when I am ready to sell? A Realtor® can provide you with valuable insight into the market, they will help you find the perfect home quickly, and they provide you with expertise in contract writing, negotiation, and closing assistance.
Your Realtor® can help you negotiate. There are myriad negotiating factors, including but not limited to price, financing, terms, date of possession and often the inclusion or exclusion of repairs and furnishings or equipment. The purchase agreement should provide a period of time for you to complete appropriate inspections and investigations of the property before you are bound to complete the purchase. Your agent can advise you as to which investigations and inspections are recommended or required.
Most mortgage lenders take the guess work out of applying for a loan by figuring out for you the amount you can afford to borrow. Then, they give you a printed document stating the maximum mortgage amount you qualify for based on your particular finances and income.
Mortgage pre-approval establishes your price range and strengthens your buying position by letting the Seller know that you have already been approved for the loan. It can also ease time constraints once the purchase agreement in signed between Buyer and Seller.
Consider these Scenarios:
You're out looking at homes. Your Real Estate Broker never mentions that you should get pre-approved and just ballparks what you can afford. Of course, the more house he shows you, the better he usually comes out. You find the perfect house and work out a deal with the Seller. Three weeks later, the lender informs you that the house is $10,000 over what you qualify for and does not approve your loan. The Seller has already bought another house. You've given notice where you're renting and told all your friends about the great house you bought. And then, there's the money you've already spent on inspections on a house you can't own.
You and your Realtor ® have been working diligently finding that "perfect" home. A new listing comes on the market that's priced right and has got everything you've been looking for. You write an offer. Your Realtor® takes it to the listing Realtor ® and is informed that another offer is coming in and will have to present both offers simultaneously to the Seller. The other Buyer is pre-approved for his loan. Whose offer do you think the Seller will negotiate first?
Should You Get Pre-Approved for a Loan First?
Question 1: What price home can I afford?
As a "rule of thumb" you can afford to buy a home equal in price to twice your gross annual income. More precisely, the price you can afford to pay for a home will depend on six factors:
- Your income.
- The amount of cash you have available for the down payment, closing costs and cash reserves required by the lender.
- Your outstanding debts.
- Your credit history
- The type of mortgage you select
- Current interest rates
Lenders will analyze your income in relation to your projected cost of the home and outstanding debts. This will determine the size loan you can borrow. Your housing expense-to-income ratio is determined by calculating your projected monthly housing expense, which consists of the principal and interest payment on your loan, property taxes and hazard insurance. The sum of these costs is referred to as "PITI."
Monthly homeowner association dues, if you're purchasing a condominium or townhouse, and private mortgage insurance are added to the PITI. Your housing income-to-expense ratio should fall in the 28 to 33 percent range. 28 percent of your gross monthly income is allotted toward PITI. 33 percent of you gross monthly income is allowed for PITI and all long term debt. Some lenders will go higher under certain circumstances.. Your total income-to-debt ratio should not exceed 34 to 38 percent of your gross income.
Question 2: How do I find out about the condition of the home I'm considering?
Buying a home may well be the largest financial investment you will ever make. Naturally you will want to know as much as possible about the property before you finalize the purchase at closing.
It's important to hire a knowledgeable, independent home inspector for advice on the overall condition of the property. The purchase contract usually requires specific time periods for each inspection, and it's critical that these time frames be met. Usually the cost for any and all inspections and re-inspections are paid by the Buyer. Prices can range from $350 to $500 for whole-house inspections.
Some examples of common inspections are:
- Structural - Defects caused by poor construction, soil movement, water or drainage conditions, settlement, fire, etc.
- Environmental Hazards - Including asbestos, lead-based paint, radon gas or any other toxic material.
- Roof - Can include framing members, decking and shingle condition.
- EMP - Electrical, Mechanical and Plumbing - Should include electrical and plumbing systems, built-in appliances, heating and cooling systems, swimming pool/spas, sprinkler systems and security systems.
- Termite - Report would show any visible infestation or visible damage caused by and wood destroying organism (termites, water damage, and wood rot).
Many companies specialize in only one area of inspection, and others will group several together and offer a package price. Whichever route you go, assure yourself you're getting the inspections you need. Many can be found in the yellow pages or your Broker can provide a list of several of each to choose from.
The Listing Contract also asks sellers to note the presence of environmental hazards, walls or fences shared with adjoining landowners, any encroachment of easements, room additions or repairs made without the necessary permits or not in compliance with building codes, zoning violations, citations against the property and lawsuits against the seller affecting the property.
Also look for settling, sliding or soil problems, flooding or drainage problems.
People buying a condominium must be told about covenants, codes and restrictions or other deed restrictions, if the homeowners association has any authority over the subject property and ownership of common areas with others. Be sure to ask questions about anything that remains unclear or does not seem to be properly addressed by the forms provided to you.
Question 3: How low can I consider offering?
There are always some sellers who for some reason must sell quickly; however in general, a very low offer in a normal market might be rejected immediately. In a strong buyer's market, the below-market offer will usually either be accepted or generate a counteroffer. If few offers are being made, an outright rejection of offers becomes unlikely. In a strong seller's market, offers are often higher than full price. While it is true that offers at or above full price are more likely to be accepted by the seller, there are other considerations involved:
- Is the offer contingent upon anything, such as the sale of the buyer's current house? If so, such an offer, even at full price, may not be as attractive as an offer without that condition.
- Is the offer made on the house "as is," or does the buyer want the seller to make some repairs before the close of escrow or make a price concession instead?
- Is the offer all cash, meaning the buyer has waived the financing contingency? If so, then an offer at less than the asking price may be more attractive to the seller than a full-price offer with a financing contingency.
- Are there any requests for seller concessions, such as asking the seller to contribute towards points and/or closing costs? If so, the offer is not really full price.
Question 4: How and what do I negotiate?
Different sellers price houses very differently. Some deliberately overprice, others ask for pretty close to what they hope to get and a few (maybe the cleverest) underprice their houses in the hope that potential buyers will compete and overbid. A seller's advertised price should be treated only as a rough estimate of what they would like to receive.
If possible try to learn about the seller's motivation. For example, a lower price with a speedy escrow may be more acceptable to someone who must move quickly due to a job transfer. People going through a divorce or are eager to move into another home are frequently more receptive to lower offers.
Some buyers believe in making deliberate low-ball offers. While any offer can be presented to the seller, a low-ball offer often sours a prospective sale and discourages the seller from negotiating at all. And unless the house is extremely overpriced, the offer probably will be rejected anyway.
Before making an offer, also investigate how much comparable homes have sold for in the area so that you can determine whether the home is priced right.
Question 5: What about my down payment, should I put more or less down, if we can afford it?
Various types of loan programs exist. Some require a minimum of 3 percent down payment (FHA Loans) or 5 percent on conventional loans. Veterans can purchase with no money down (VA Loan).
Putting down as little as possible allows buyers to take full advantage of the tax benefits of home ownership. Mortgage interest and property taxes are fully deductible from state and federal income taxes. Buyers using a small down payment also have a reserve for making unexpected improvements. It may be more prudent to make a larger down payment and thereby reduce the amount of debt that must be financed. Once a buyer puts twenty percent or more as a down payment on their desired home, they will waive the requirement for mortgage insurance.
Mortgage insurance is a requirement on all loans, with the exception of veterans guaranteed loans. That means a full years premium for the insurance is collected "up front' at the closing of escrow, plus you will be paying monthly as part of your PITI, principle-interest-taxes-insurance.
Question 6: What is title insurance?
Title insurance is a form of insurance in favor of an owner, lessee, mortgage or other holder of an estate lien, or other interest in real property. It indemnifies against loss up to the face amount of the policy, suffered by reason of title being vested otherwise than as stated, or because of defects in the title, liens and encumbrances not set forth or otherwise specifically excluded in the policy, whether or not in the public land records, and other matters included within the policy form, such as lack of access to the property, loss due to un-marketability of title, etc. The title policy form sets forth the specific risks insured against. Additional coverage of related risks may also be added by endorsements to the policy or by the inclusion of additional affirmation insurance to modify or supersede the impact of certain exceptions, exclusions or printed policy "conditions." The policy also protects the insured for liability on various warranties of title.
In addition, the policy provides protection in an unlimited amount against costs and expenses incurred in defending the insured estate or interest.
Before it issues a title policy, the title insurance company performs, or has performed for it, an extensive search, examination and interpretation of the legal effect of all relevant public records to determine the existence of possible rights, claims, liens or encumbrance that affect the property.
However, even the most comprehensive title examination, made by the most highly skilled attorney or lay expert, cannot protect against all title defects and claims. These are commonly referred to as the "hidden risks." The most common examples of these hidden risks are fraud, forgery, alteration of documents, impersonation, secret marital status, incapacity of parties (whether they be individuals, corporations, trusts or any other type), and inadequate or lack of powers of Realtors® or fiduciaries. Some other hidden risks include various laws and regulations that create or permit interests, claims and liens without requiring that they first be filed or recorded in some form so that the potential buyers and lenders can find them before parting with their money.
Question 7: What steps should I take when looking for a home loan?
It is strongly recommended that home buyers are prequalified or pre-approved for a loan as their first step in the process. By being prequalified, a buyer knows exactly how much house they can afford. They can make more informed decisions in the market place. This does not mean they will definitely get the loan because their credit reports, wages and bank statements still need to be verified before you can receive a commitment from the lender for the loan.
Almost all mortgage lenders prequalify people at no charge. Many of them will even do it on the internet. In order to be pre-approved, an application will be taken. For a fee, your credit report will be pulled, your employment and income will be verified, your checking and savings accounts will also be verified. In other words, all the necessary documentation will be completed in order for you to obtain a loan. The only things remaining will be for you to find a home, obtain an appraisal on it to prove its value to the bank and perform whatever inspections you may want on the property. This process considerably shortens the time frame to closing.
Question 8: Is it possible to negotiate interest rates?
Compare the mortgage charts published in most newspapers.
Occasionally some lenders are willing to negotiate on both the loan rate and the number of points. This isn't typical among many of the established lenders who set their rates. Nevertheless, it never hurts to shop around, know the market and try to get the best deal.
The interest rate is much more open to negotiation on purchases that involve seller financing. Generally, these are based on market rates but some flexibility exists when negotiating such a deal.
Question 9: Fixer-Uppers - Are they good or bad?
Distressed properties or fixer-uppers can be found everywhere. These properties are poorly maintained and have a lower market value than other houses in the neighborhood. It is often recommended that buyers find the least desirable house in the best neighborhood. You must consider if the expenses needed to bring the value of that property to its full potential market value are within your budget. Most buyers should avoid run-down houses that need major structural repairs. Remember the movie " The Money Pit?" Those properties should be left to the builder or tradesman normally engaged in the repair business.
Question 10: Can you borrow the money to repair?
CMHC provides mortgage loan insurance for the purchase of a home and the cost of any immediate renovations, or for refinancing where funds are used to make improvements which increase the market value of the property.
- Available for Purchase or Refinance Transactions
- Used when the loan includes improvement costs that are less than or equal to10% of the property's estimated as-improved value. One easy transaction - once approved, Approved Lenders can advance funds as without requiring CMHC authorization
Benefits of CMHC Purchase or Refinance with Improvements:
- Flexibility - Ideal for small scale renovation projects financed in conjunction with a home purchase or a refinance transaction.
- Competitive Interest Rates - Access to CMHC insured financing, and as a result, competitive interest rates.
- Availability - Available coast-to-coast-to-coast with no set maximum loan amount.
Question 11: Is there a good "return" for my efforts?
Remodeling a home improves its livability and enhances curb appeal, making it more salable to potential buyers. Some of the popular improvement projects are updated kitchens and baths, enlarged master bedroom suits, home-office additions and increased amenities in older homes.
The resale market is often difficult because you are competing with new construction. You need to give your home every competitive advantage you can if you are selling an older home.
Home offices are a relatively new remodeling trend. Adding one to a house often recoups 58 percent of the costs, according to a survey found in a report called "Cost vs. Value Report" in Remodeling Magazine.
Question 12: Are foreclosures good or bad ideas?
The incidence of foreclosures is cyclical, based on national and regional economic trends.
Buying directly at a legal foreclosure sale can be risky and dangerous. The process has many disadvantages.
A Realtor® is well versed on how Foreclosure Sales work. They will be able to guide you through the process. In particular, most Foreclosure Sales are sold "As Is". This means that the lender who is selling the property has no knowledge of the condition of the property and will not be responsible for any defects.
It is important to secure a property inspection and seek legal advice as to ramifications of purchasing a Foreclosure property.
8 Mistakes To Avoid When Buying A Home
You've been saving for awhile, weighing your options, looking around casually. Now you've finally decided to do it-you're ready to buy a house. The process of buying a new home can be incredibly exciting, yet stressful, all at once. Where do you start?
It is essential you do your homework before you begin. Learn from the experiences of others, do some research. Of course, with so many details involved, slip-ups are inevitable. But be careful: learning from your mistakes may prove costly. Use the following list of pitfalls as a guide to help you avoid the most common mistakes.
1. Searching for houses without getting pre-approved by a lender:
Do not mistake pre-approval by a lender with pre-qualification. Pre-qualification, the first step toward being pre-approved, will point you in the right direction, giving you an idea of the price range of houses you can comfortably afford. Pre-approval also makes negotiations with the seller much easier.
2. Allowing "first impressions" to overly influence your decision:
The first impression of a home has been cited as the single most influential factor guiding many purchasers' choice to buy. Make a conscious decision beforehand to examine a home as objectively as you can. Don't let the current owners' style or lifestyle sway your judgment. Beneath the bad decor or messy rooms, these homes may actually suit your needs and offer you a structurally sound base with which to work. Likewise, don't jump at a home simply because the walls are painted your favorite color! Make sure you thoroughly investigate the structure beneath the paint before you come to any serious decisions.
3. Failing to have the home inspected before you buy:
Buying a home is a major financial decision that is often made after having spent very little time on the property itself. A home inspection performed by a competent company will help you enter the negotiation process with eyes wide open, offering you added reassurance that the choice you're making is a sound one, or alerting you to underlying problems that could cost you significant money in both the short and long-run. Your Realtor® can suggest reputable home inspection companies for you to consider and will ensure the appropriate clause is entered into your contract.
4. Not knowing and understanding your rights and obligations as listed in the Offer to Purchase:
Make it a priority to know your rights and obligations inside and out. A lack of understanding about your obligations may, at the very least, cause friction between yourself and the people with whom you are about to enter the contract. Wrong assumptions, poorly written/ incomprehensible/ missing clauses, or a lack of awareness of how the clauses apply to the purchase, could also contribute to increased costs. These problems may even lead to a void contract. So, take the time to go through the contract with a fine-tooth comb, making use of the resources and knowledge offered by your Realtor® and lawyer. With their assistance, ensure you thoroughly understand every component of the contract, and are able to fulfill your contractual obligations.
5. Making an offer based on the asking price, not the market value:
Ask your Realtor® for a current Comparative Market Analysis. This will provide you with the information necessary to gauge the market value of a home, and will help you avoid over-paying. What have other similar homes sold for in the area and how long were they on the market? What is the difference between their asking and selling prices? Is the home you're looking at under-priced, over-priced, or fair value? The seller receives a Comparative Market Analysis before deciding upon an asking price, so make sure you have all the same information at your fingertips.
6. Failing to familiarize yourself with the neighborhood before buying:
Check out the neighborhood you're considering, and ask around. What amenities does the area have to offer? Are there schools, churches, parks, or grocery stores within reach? Consider visiting schools in the area if you have children. How will you be affected by a new commute to work? Are there infrastructure projects in development? All of these factors will influence the way you experience your new home, so ensure you're well-acquainted with the surrounding area before purchasing.
7. Not looking for home insurance until you are about to move:
If you wait until the last minute, you'll be rushed to find an insurance policy that's the ideal fit for you. Make sure you give yourself enough time to shop around in order to get the best deal.
8. Not recognizing different styles and strategies of negotiation:
Many buyers think that the way to negotiate their way to a fair price is by offering low. However, in reality this strategy may actually result in the seller becoming more inflexible, polarizing negotiations. Employ the knowledge and skills of an experienced realtor. S/he will know what strategies of negotiation will prove most effective for your particular situation.
Buying A Home: What Expenses To Expect
Budgeting for a new home can be tricky. Not only are there mortgage installments and the down payment to consider, there are a host of other-sometimes unexpected-expenses to add to the equation. The last thing you want is to be caught financially unprepared, blindsided by taxes and other hidden costs on closing day.
These expenses vary: some of them are one-time costs, while others will take the form of monthly or yearly installments. Some may not even apply to your particular case. But it's best to educate yourself about all the possibilities, so you will be prepared for any situation, armed with the knowledge to budget accordingly for your move. Use the following list to determine which costs will apply to your situation prior to structuring your budget:
- Purchase offer deposit.
- Inspection by certified building inspector.
- Appraisal fee:
Your lending institution may request an appraisal of the property. The cost of this appraisal is your responsibility.
- Survey fee:
If the home you're purchasing is a resale (as opposed to a newly built home), your lending institution may request an updated property survey. The cost for this survey will be your responsibility and will range from $700 to $1000.
- Mortgage application at your lending institution.
- 5% GST: this fee applies to newly built homes only, or existing homes that have recently undergone extensive renovations.
- Legal fees:
A lawyer should be involved in every real estate transaction to review all paperwork. Experience and rates offered by lawyers range quite a bit, so shop around before you hire.
- Homeowner's insurance:
Your home will serve as security against your loan for your financial institution. You will be required to buy insurance in an amount equal to or greater than the mortgage loan.
- Land transfer (purchase) tax:
This tax applies in any situation in which a property changes owners and can vary greatly.
- Moving expenses
- Service charges:
Any utilities you arrange for at your new home, such as cable or telephone, may come with an installation fee.
- Interest adjustments.
- Renovation of new home:
In order to "make it their own," many new homeowners like to paint or invest in other renovations prior to or upon moving in to their new home. If this is your plan, budget accordingly.
- Maintenance fees:
If you are moving to a new condominium, you will likely be charged a monthly condo fee which covers the costs of common area maintenance.