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The Decision
Buying a property is one of the most important financial decisions you will make. Whether it’s your first purchase or you’re an experienced buyer, this decision must be made carefully.
Why do you want to buy? Are you tired of paying rent? Have you decided to pay your own mortgage and not your landlord’s? Are you looking for an investment portfolio? Are you looking for a rental property? Do you want a larger yard? Would you prefer to live in another area? Do you want to shorten your commute? Having a clear idea of your reasons for buying will help you choose the right property.
Has your income increased? A property is an excellent investment, whether you are looking for the house of your dreams, a rental property or you want to expand your investment portfolio. Owning real estate is one of the least risky ways to build capital or get a better return on investment.
Getting Ready for A Purchase
Before you start shopping for your property, it’s a good idea to prepare.
Build your green file. a folder that contains all your important financial documents. You will need it to finance your property. The typical green file must contain:
- Financial statements
- Bank accounts
- Asset statements
- RRSP, education savings statements, life insurance, stocks, bonds, mutual account information and other investments
- Credit cards
- Car loans
- Recent pay statements
- Last two tax returns
- Copies of leases for investment properties
Check your credit rating. Your credit score will have a huge impact on the type of property you can buy and at what price. It is recommended that you first check your credit rating with an experienced credit institution so that we can determine what you can afford. The lender will look for your credit ratings from the two credit rating agencies: Equifax and Transunion. We will be pleased to recommend experienced and competent lenders in the fields of residential real estate, construction, trade and investment.
Be careful with you finances. Now is not a good time to make sudden career changes or large purchases. You want to approach your property purchase from a position of financial stability.
Choosing Your Real Estate Agent
The broker’s role is to help you negotiate the purchasing terms.; this is where a good broker has true added value. . . If they do their job properly, the return on investment is high for the client.
Today, multiple offers occur frequently. It’s your broker’s role to help you navigate and get your hands on the property. They can also help you withdraw from an offer in the event of developments unfavourable to the client’s interests.
Buying a property requires making many important financial decisions, understanding complex issues and completing a lot of paperwork. It helps to have an expert at your side when making such an important purchase.
You will want to be accompanied by a trusted agent who is fair, effective and will work for your interests.
« A sharp tool with a kid glove! »
The Initial Agreement
It’s essential to understand that a compliant agreement is a legal agreement between a potential buyer and the seller of the property.
Some important tips to keep in mind to streamline the process: :
- Keep written records of everything. For better transparency and clarity, it would be extremely useful to transcribe all verbal agreements, including counteroffers and addenda, and convert them into written agreements to be signed by both parties. An agent helps you write all the documents for your purchase and makes sure you have copies of everything.
- Stick to the calendar. Now that you have made your offer, the buyer and the seller have a calendar to mark every step of the closing process of the deed of sale. Compliance with the deadlines will ensure that negotiations are conducted more smoothly so that each party involved does not breach its agreements. During the process, the agent keeps you informed of developments, so the client is always ready for the next step.
The notary will search for the entire recorded history of the property to ensure that the title is free of all charges on the closing date and that all new charges are correctly added to the title. Some properties are subject to restrictions that limit various activities such as construction or parking restrictions. There may be registered easements and encroachments, which limit the rights to use your property.
Inspections. Once your offer is accepted by the seller, you will need to ask a licensed real estate inspector to inspect the property within the time frame agreed upon during promise to purchase. If you buy a commercial property, you may need to have an environmental audit if requested by lending institution.
Depending on the outcome of these inspections, three things can happen:
- Each condition is successfully completed and contingencies are removed, bringing you closer to the closure of the sale;
- The purchaser, after reviewing the property and documents, requests a renegotiation of the terms of the Promise to Purchase (generally the price).
- Buyer can withdraw if not satisfied with results.
Assessment and Loan. It’s imperative to stay in close communication with your lender to determine when additional documentation is required to approve the loan application. If the promise to purchase is contingent on financing, the property will be evaluated by an approved appraiser to determine the value for the lending institution, via a third party. This is done so that the lending institution can confirm that their investment in your property is accurate. Appraisers are specialists in determining the value of properties, based on a combination of square footage, construction costs, recent sales of comparable properties, operating revenues, etc. The loan will run smoothly and on time. This step is crucial; several transactions fall through as the applicant or property is denied funding.
Home Insurance. When a loan is obtained, the lender requires a certain insurance on the property. The value will depend on the lending institution and the purchase price of the property. It is recommended to obtain more than one quote as you may be able to save hundreds of dollars a year on home insurance by shopping for best premium and insurance coverage.
We will be happy to recommend an experienced and competent insurance agent for each type of property.
Consider a higher down payment. Raising it by a few hundred dollars can make a big difference to your premium. Ask your insurance agent for discounts. You may get a lower bonus if your home is equipped with security features such as deadbolt locks, smoke detectors, an alarm system, storm dampers or fire-resistant roofing materials. People over 55 or long-term customers can also benefit from discounts.
Closing Day
D-Day! If you have gotten so far, it means that it’s almost time to congratulate you, but not yet. Don’t forget to seal the last elements.
Final inspection. This is a formality takes place the day before or the day of closing. You will visit the property to check that everything is in working order, that everything is the same as the last visit of the property, that there are no additional items left and that all inclusions are still at the property.
Signature of the deed of sale. The notary provides all parties with a detailed summary of the financial transactions concluded during the process. The buyer, the seller and the notary sign this declaration, certifying its accuracy. If you receive funding, you will need to sign all relevant documents required by the lending institution. If you cannot attend the signing of the deed, arrangements may be made depending on the circumstances.
