How a newcomer should navigate the housing market

A broker or banker will let you know exactly what you can afford and what you can’t

The best way to learn is by doing, and buying a home is no exception. Only experience can teach the ins and outs of navigating the real estate market, but for first-time buyers, a firm grasp on the basics is essential. Here, Elli Davis, a Toronto real estate agent with more than 30 years of experience, and Lindsay Strom, a Newmarket-based real estate agent, answer the questions first-time buyers ask. How far in advance of looking at houses should I begin the mortgage approval process? “I would get pre-approved before you even start looking,” Strom says. “The mortgage broker or banker will let you know what you can afford and where you should stay in that range to be at your comfort level.” As a buyer, will I pay commission to a real estate agent? “Usually the agent is paid by the seller,” Davis says. “I have done transactions where the buyer pays on an unlisted property which I’ve approached.” “If it’s a commission-free situation and the seller is not willing to cooperate or provide remuneration to the agent, then the buyer can be on the hook for it,” Strom adds. How much research should I do before I start looking? “It always helps an agent if you have an idea of what you want or where you would like to be so they can show you relevant listings,” Strom says. “Looking on MLS, Google Map searches, and driving around and talking to people in different communities are all good starts. Working with a local agent is important; they can speak to amenities, transit, schools, and other things that important factors when choosing location.” Besides my down payment, what other costs are associated with buying a home? “Land transfer tax, which in the city of Toronto is both municipal and provincial. So in Toronto, you’ll pay double what they pay in the 905 areas,” Davis says. Land transfer tax is determined by the selling price of the home, ranging between 0.5 and 3 per cent. “Plus you’ll need a lawyer to close the deal and you may need a home inspector.” Strom also recommends consider- ing the costs of setting up utilities, which may require upfront deposits. Plus, she adds, there may be adjustments in closing costs. “For example, if the seller has prepaid taxes until June 30 and the closing date is April 14, there will be an adjustment in the sellers’ favour,” she explains. How do I decide how much to offer for a house? “It would depend on past sales in the area and your affordability,” Davis says. “It’s what you believe the house is worth based on your education from looking around … but also think about what the house needs. If it needs a new roof or a new furnace, you have to take that into consideration.”

“If you are in competition,” Strom explains, “it becomes more emotional — how badly do I want the house and what am I willing to do before I do not want it anymore?” What happens if my offer is rejected? “You can re-offer or walk away,” Davis says. “If it’s my listing, I always try to get the sellers to sign it back (with a new number).”

A home inspection isn’t mandatory, but it sure is a great idea if you’re planning on buying as it will reveal issues

What happens after my offer is accepted? “If there are conditions, they must be completed within the conditional time period and then either fulfilled or waived,” Strom says.

“The deposit needs to be dropped off within 48 hours to the brokerage in trust.” Is a home inspection mandatory? “No, but it’s a great idea,” Davis says. A home inspection will reveal any issues such as mould or structure damage a non-expert may not notice. How is a closing date decided upon? “Generally the seller puts their desired date on the listing and then it’s discussed. Closing dates can move after the deal is done, with mutual agreement,” Davis says.

“If you are coming from a rental, you will want to give your landlord the 60 days required to break the lease; aim to be closest to that date as to not have to double pay rent and mortgage,” Strom adds.

“If in competition, you usually want to meet what the seller wants or as close as possible to help make your offer more attractive.”