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THE STEP BY STEP HOME BUYING PROCESS
Mortgage Pre-Approval – Before we meet to discuss finding you a new home, it’s important you get pre-approved for a mortgage. This way, you’ll know exactly how much house you can afford, so that you don’t fall in love with a home and then find yourself unable to get a mortgage. Read my ’Why get pre-approved for a Mortgage?’ article below to learn more about this home buying tip.
Interview – We will have an initial meeting to discuss your “wish list” (needs/wants) and timing etc. then I will illustrate all of the services I will provide to you through this process. We will then sign a Buyer Representation Agreement (BRA) so you and I are both committed to finding you the right home. Read my ‘Sign a BRA. Protect your interests’ article to learn more about how the BRA will benefit you.
Listings – I will notify you of any suitable properties by email and with your feedback we can narrow down our scope of properties.
Appointments – Once we establish which properties you are interested in, I will arrange appointments to show them to you.
Property Tour – I will give you a tour of each property and answer any questions you have about the property and area.
Final Selection – Once we have found a property you are interested in purchasing, I will provide you with all the necessary recent sales information and plot our offer strategy.
Offer – I will present your offer on your behalf and handle all negotiations with you best interests in mind while guiding you through the process. Read my article titled ‘The Offer Process’ below to learn more.
Acceptance – Once your offer is accepted I will ensure your Lawyer has all the documents and I will track the deal and handle all matters concerning any conditions and final paperwork.
Closing – The day has arrived! You will now meet with your Lawyer to sign all the closing documents and receive the keys to your new home!
As your Realtor, I am committed to learning about your wants and needs and providing you with the finest, most reliable service, while guiding through the home buying process step by step. My objective is to find the best possible property for you for the best possible price within your time frame with the least inconvenience to you.
THE OFFER PROCESS
You’ve found the house you’ve been looking for. Now it’s time to submit an offer. Here are the scenarios you may face, important facts about and how I will guide you through the offer process so you are well informed before you submit your offer.
Know Your Position
Elements of an Offer
When I draft the legal purchase documents, there are five main elements to keep in mind:
Price – this does not have to be the same as the Seller’s asking price but it usually helps, unless there’s more than one offer, in which case you should be bidding higher than the asking price! I will advise you what price you should offer based on your budget, the comparable sales and how many offers are involved.
Deposit – shows your good faith and will be applied against the total price you are paying for the home when the sale closes. This must be a certified cheque or bank draft and should be at least 5% of the purchase price. In a multiple offer situation, a strong deposit may help strengthen your offer.
Offers can be firm or conditional. A firm offer is usually considered to be stronger than a conditional one because it doesn’t offer an ‘out’ for the Buyer and in turn, for the Seller. It means you’re prepared to buy the home as-is with no conditions. A conditional offer means you have placed one or more conditions on the purchase meaning that the home is not actually sold until all the conditions are satisfied or waived by you within a period of time.
Conditions – Standard conditions can include subject to home inspection, subject to you obtaining financing, or subject to you selling your existing property. A condition can be anything however, Sellers obviously don’t like to have their homes effectively ‘off the market’ while they wait for conditions to firm up (to be satisfied), so the shorter the conditional period (i.e. 3-5 business days) the stronger the chances are that the Seller will accept your conditional offer. As mentioned above, in multiple offer scenarios, some Sellers may prefer to accept the ‘cleanest’ offer, meaning with few or no conditions. Of course, before you submit an offer and you know you will be faced with competition, all the better if you are able to pay for and proceed with a home inspection ahead of time so you can make your offer without that condition. The risk here is that if you lose in the bidding competition, you lose the money you’ve invested for the home inspection.
Inclusions/Exclusions – Your offer may be contingent on including or excluding certain items in the sale, such as appliances, fixtures, and decorative items. I will review all these with you when drafting the offer.
Closing date – The Seller will often specify the date or date range they’d like to close on the property so your offer should closely match this. The closing date is the day the title of the property is legally transferred to you and the funds are paid to the Seller. This is also the day you receive your keys and are free to move in.
In a market like we’re in now, a Seller’s Market, with very little product available for sale, a Seller’s agent may suggest they price lower than market value and set an “offer date” to allow the most exposure and hope to instigate multiple offers to get a higher sale price. This means the Seller has communicated they would like to hold back on seeing any offers until the date stated. Of course, this strategy will not always result in success for every property so it depends on the location, demand, condition and comparable sales at the time.
What do you offer? I will help you determine what market value is by showing you what comparable houses nearby are selling for, expertly assessing the condition of the house, and judging the type of competition you may face. I will discuss with you a price range to offer, which gives you the best chance of winning the bid without outbidding other people by too much! Once we’ve strategized on the price you’re prepared to offer, and any conditions that may need to be in your offer, I will draft this legal document and go over all the details with you.
When I present the offer to the Seller’s agent on your behalf, I’ll use all my expert skills and experience as a negotiator to make sure you get the best possible deal!
How else can you be prepared to win out in a multiple offer situation?
Most Sellers would rather accept a firm deal over one that has conditions. So definitely make sure your financing is in place with a pre-approval from a lender before submitting your offer! Other deciding factors, all things being equal, are the purchase price, a substantial deposit and a closing date that matches the Sellers’ needs. Of course, your strategy will depend on how many offers are being submitted for consideration and I will guide you through this process.
If the Seller gets several offers all within a close range, the Seller’s agent may instruct the various Buyer agents to go back and improve their offers, so you might have a second or even a third chance to improve i.e. remove any condition or offer more money. Though this is common, it doesn’t always happen. The Seller’s agent is representing the Seller and if the Seller decides they want to take an offer upon first presentation, they have every right to do so, so a good home buying tip is to make your best offer first in case you are not given the chance to improve! This is where our initial and collective strategizing comes into play.
Sometimes, despite a holdback date on the listing, a Buyer’s representative can submit what’s known as a ‘bully’ offer – an offer to purchase submitted before the holdback date. ‘Jumping the queue’ can be an effective strategy if your offer is strong enough that you feel the Sellers will accept it even before their holdback date. Tell me about your real bottom line for the house and ask me how to best handle this situation – whether it’s worth presenting an advance bid. On the other hand, if you’re interested in a home and you want to wait till the stated holdback date to put in your offer, rest assured I’ll be in contact with the Seller’s agent to find out how much interest there is in the house and whether anyone else might be likely to jump the queue. That’ll give you the chance to follow suit if you wish at which time strategy is once again critical.
If there’s only one offer on a property and it’s yours, one of the worst things you can do is offend the Seller with a lowball offer, which is an offer significantly lower than the price the Seller is asking for (in the current market, for a $500,000 home, anything less than $475,000 would be considered a low-ball offer). In the case of a low-enough offer, the Seller will often be insulted by your offer and could prefer to give the house to almost anyone else, even if you deliver a slightly higher offer later. Be careful if you do attempt this as this may not benefit you in the long run.
The Seller’s Options
Once the Seller has looked at your offer, they can choose to accept it, reject it, or sign it back in the form of a counter offer. For instance, if you have offered $500,000 and they sign it back with a price of $525,000 or they make other changes to your stipulations, there will be an irrevocable date on the offer – the date by which you must counter-offer or accept or the deal will be null and void. Together we’ll look at the signback, keeping your goals uppermost in mind while I negotiate with the Seller’s agent to reach a win-win outcome for all parties.
Rest assured, when you work with me I will guide you through the home-buying process and make it as stress free as possible by explaining step-by-step what may occur and what options you have along the way. My goal is to represent you and your best interests in any offer presentation while securing the property for the best possible price. Together, we can face any offer scenario and succeed!
We hope these home buying tips will help you find the home that’s right for you. Please contact me to discuss buying a home in Toronto in person.