by Teri Conrad
You’ve been flirting with upgrading for a while now. You keep driving around the neighborhood and it’s perfect. You’ve spotted a few properties with ‘For Sale’ signs and you may even have called ‘just to see’ what their asking price is. You go home…crunch a few numbers and you say to yourself “You know what, I think we can afford it!”
So now what? Well I’m hoping by now you know to give your Realtor a call! Remembering that the Listing Realtor’s first interest is the Seller….you need someone investigating and negotiating on your behalf, and protecting YOUR interests (but that’s another blog post!)
There are a few things you need to have ready to go before you fall in love with the house of your dreams.
Whenever you make an offer on a property, there is always a ‘cash upfront’ deposit required (usually 5% of the agreed price) written directly into the contract and held in trust with the listing brokerage. It will be released upon completion and be put toward the purchase, but you must have access to this money upfront. Don’t count on it being a part of your mortgage. (One thing to remember – if you have more than 20% you can avoid paying CMHC insurance!)
2. Pre-Approval from a Mortgage Broker
Visiting a Mortgage Broker before you start shopping is the smartest thing you can do. You may think you can afford the house, but the lender may not. They will weigh your income against all of your other monthly debt (debt service ratio). They will also look at your Beacon Score which measures how well you stay on top of your debt…do you pay your bills on time? Etc. The better your score ~ the more you may qualify for. Your Mortgage Broker can help position you to be in the right place when you’re ready to qualify.
When you visit your Mortgage bring:
* A letter from your employer confirming your employment and current wage
* If you’re self employed – 2 years of tax assessments indicating income
* Social Insurance Number
3. Have A Lawyer
Often times, in the middle of negotiations, your Realtor will advise that you show the offer to your Lawyer. It really is prudent to have one ready to go and to follow your Realtor’s advice.
4. Remember additional costs
In British Columbia we have a few fun ones: We have PTT is the big one! (Property Transfer Tax – 1% on the first $200,000 and additional 2% on the balance) as well as HST (Harmonized Sales Tax =12%) on new development only, however, there is a partial rebate on new homes up to $425,000.00. Please discuss all costs with your Mortgage Broker.
5. Property Inspector
Remember ~ when we’ve written an offer and we have 5 business days to remove subjects, you don’t want to put off making an appointment early with your Property Inspector. I appreciate that a Property Inspector can be an additional $500 (appx) cost and what if you discover something and decide not to proceed with the purchase? It does happen. However, just think of what the costs MIGHT have been. Also please consider that most homes have some wear and tear. The Property Inspection is to discover any MAJOR immediate problems with the property. It is not meant to be a negotiating tool after you’ve agreed on a price. If there is a substantial problem, then yes we may want to open up the contract and re-negotiate, but that’s only after a discovery of something REALLY wrong.
Stress Free Buying
Having all ‘Your Ducks In a Row’ will allow for less stress and a smoother transition during the Buying Process. Check with your Realtor, he/she will likely have referrals for you and save you the search.
About the Author
A modern Realtor® for 4 years, Teri is passionate about and embracing Web 2.0, utilizing online marketing initiatives and social media to maximize exposure and sell properties! She earned a diploma in Radio Communications from British Columbia Institute of Technology (BCIT) which positioned her well with the knowledge and experience to anticipate the new media and new technology world. Teri’s background is in marketing and selling radio advertising for Rogers Communications Inc.
Teri founded the Fraser Valley Social Media Meetups to share her knowledge and facilitate learning and networking in her community of Langley, BC, as well as sits on the Communications and membership committees of the Langley Chamber of Commerce. Teri also consults with clients who need guidance with their social media strategy and content management. Most recently, Teri was asked to speak at Inman’s Agent Reboot Conference in Seattle and Portland. Known as @TLCHOME on Twitter… Teri is happily married and has 2 great sons and a step daughter.