Home Buying Process
So you’ve decided its time to buy a house. Whether it’s your first house or your third, its still an exciting time!
With the new mortgage approval process now in place, it is probably in your best interest to be pre-approved for whatever dollar limit you will be looking to pay for a house. This comes in very handy when dealing with a ‘multiple offer’ situation.
1. The Search for Your New Home – Private or Working with a Realtor®?
The search for the perfect home can be fun, but can also turn into a nightmare. You have to decide if you want to buy privately or through a real estate professional. Just remember, if you’re buying privately you’ll be dealing directly with the seller, and their goal is simply to sell their house. If you work with a real estate professional you know that their goal is to help you find what you’re looking for – even if it takes numerous viewings of many houses!
Working directly with the seller doesn’t always save you any money. You may even pay more than market value for the home if you don’t have a professional that can research market values in the applicable neighbourhood.
Working with a real estate professional, like myself, will potentially save you time, money and uncertainty. A fully trained and educated real estate professional will be working for you as a buyer representative. I look forward to finding you the perfect home and I thank you for your trust in me.
2. The Offer
So the legwork is now done and you’ve found the right house. Here’s where the paperwork and negotiations begin.
– The first step is to put in an offer to purchase (Agreement of Purchase and Sale).
– The offer will indicate the address of the house, the offered purchase price, the date you take possession of the house, the list of chattels included, and the Schedule A which will have the conditions of the sale.
– The conditions will vary for many purchases, but most standard offers will contain the following:
– this sale is conditional on the buyer securing financing; having a home inspection; getting insurance (used more for older houses); selling their home first; and ensuring that the water and the septic system are ok (for homes not on municipal services). NOTE: for offers that are conditional on the buyer selling their house first, see Section 6 below for further information.
– When an offer is presented to the seller we give the seller a certain amount of time to be able to respond to the offer. This is called the ‘irrevocable date’ – this is the date and time that you, the buyer, can’t change your mind and take back your offer to purchase. So the seller then has until that date and time to respond to you. (Example: Irrevocable till 5pm on November 15, 20XX. You should get either a counter offer or a confirmation of acceptance of your offer before this deadline goes by.)
3. The Counter Offer
The Seller has decided to ‘counter’ your offer, which means they make changes to it. The changes can be to the price, the close date, the things included with the house, or any of the conditions. Both parties can actually counter back and forth a few times until the parties finally agree on all the terms of the sale of the house.
4. Hurray! An Accepted Offer
So the last person to look at the counter offer and agree to all of its terms is the person that will acknowledge with a signature their ‘Confirmation of Acceptance’ – that person is then making this transaction a Conditional Sale (conditional because there are usually conditions to fulfill, but if there are no conditions, then it,s a firm sale and the ‘sold’ sign goes on the property – but very few deals fall in this category).
The deposit cheque is then given to the real estate agent and it will be cashed. In the event that the conditions are not met or waived and the deal falls through, the deposit amount will be returned to the buyer in full without deductions.
5. Fulfillment and Waiver of Conditions
As soon as this offer is accepted you must begin working on your conditions.
Financing: you need to get financing approved by whatever time and date set out in the offer. You’ll get a copy of the fully executed Agreement of Purchase and Sale to give to your bank. They’ll then get the financing condition completed for you. NOTE: If you can’t get your financing in place by the deadline date that you have set in your offer, as long as the seller is agreeable, you may be able to write up an amendment to extend the financing portion of the conditions. You should continue to show good faith and work on achieving the remainder of the conditions in your offer.
Home Inspection: home inspections are done for almost all homes these days. It’s up to the buyer as to whether they want one, but very few houses are sold without one. The home inspection is booked usually once you know that you’ve got your financing, as you will have to pay money for a home inspector (the price can range anywhere from $200 to $400 and you’ll be provided with a written report from most inspectors). Just remember that the home inspection isn’t your ‘out’ for this deal, but rather its so that you know what minor or major issues may be associated with this house. You then decide whether you can live with the issues, afford to repair/replace/fix some of the issues, or if they’re really large enough, we tell the seller that you’re not going to sign the notice of fulfillment of conditions but will put in another offer at a reduced price – they may suggest that you put in an amendment to the current offer to address the issues, or, they may not want to reduce the price and this deal dies. In most cases larger issues in a house are already taken into account when first setting the list price of the house.
6. But I Have to Sell My House First!
As is the case for many homebuyers, they already have a house and must sell theirs first. Depending on many factors surrounding your home, this could possibly take some time, so if you have this condition in your offer, the seller will want to be able to have other people continue to look at the house. If another offer comes in that is acceptable to the seller you’ll be notified in writing to remove your condition of the sale of your home from your offer if you still want this house.
In the initial negotiation your real estate professional would have made sure that you were given enough notice to decide if you can remove the condition of the sale of your house or not. NOTE: very few people today will remove this condition and risk the chance of owning two homes at the same time – this is why many people won’t even try to buy a house without theirs already being sold, or why many sellers won’t even accept offers with this clause in it in. Buying a house is always a very emotional time, so to go through this entire process only to loose the house is very hard to take.
In the event that your condition of selling your home is accepted in the offer, and your timeframe to sell is approaching, and no other activity has taken place on the house you’re buying, the seller may sign an amendment to extend the date to continue to let you work on getting your house sold.
So once you have sold your home and/or waived or fulfilled all of your other conditions, the ‘sold’ sign goes on the house that you put the offer on. Congratulations!
8. Visit Your Lawyer
A copy of the entire accepted offer will then be forwarded to your lawyer. They will arrange to meet with you and discuss the completion of this sale. At this point the real estate professional has completed their mission to find you your perfect home! The keys to your new home will be given to you by your lawyer.
9. It’s Moving Day!
At this point all I can say is thank you for trusting me to assist you in purchasing the most expensive investment of your life. I hope the transaction has been a smooth one and I would be very happy to help you in any future real estate matters you may wish to discuss. I always appreciate referrals and you can be assured that I will give anyone you refer to me the same professional, dedicated and courteous service that you received. Thank you and enjoy your new home!