I’m planning to buy my first home this year. What steps should I take before getting started?

Congratulations. Buying a home is a very exciting event in your life, and there are lots of things to think about before you buy, whether it’s your first home or you’ve bought and sold several properties over the years.

To help you make smart decisions, here are a few tips to consider.

Know your needs and wants. Are you looking for a house, a townhouse or a condo? Do you want something that’s ready to live in and low-maintenance, or are you prepared to take on minor repairs, or even major renovations?

Keep budget top of mind. Talk to your lender about getting pre-approved for a mortgage (a loan specifically for real property). Remember that you will have to put down a deposit and a down payment (do you know the difference?), pay closing costs and possibly mortgage insurance, as well as moving costs and legal fees.

Also be aware of any recurring costs for your property, such as property taxes, utilities, furnace and/or hot water heater rental fees, and condominium maintenance fees, and make sure you account for these in your budget. Be careful to know and not to exceed your financial limits. If your offer is greater than the lender’s appraised value of the property, you will have to pay any amount above what you have been approved for by your lender for mortgage financing.

Look for a good fit. You’ll want to work with a real estate professional you are compatible with. A good place to start is by asking friends and family for referrals, and it may be wise to meet with several candidates to find the right fit. Research candidates on RECO’s Real Estate Professional Search Tool to confirm they are registered and in good standing. Real estate salespeople and brokerages offer different approaches and services, and it is up to you to ask questions before selecting one to work with.

Read before you sign. When a salesperson presents you with a representation agreement to sign, ask them to walk you through it line by line so you understand what you’re signing – your rights and your obligations. You may also want to have a real estate lawyer review it.

Set ground rules. The ongoing “hot” real estate market in Ontario has led to tactics like bidding wars and pre-emptive (bully) offers. Get advice from your salesperson and a mortgage professional as you determine your best offer. If you do encounter a bidding war, enter with a strategy. Set ground rules in advance for what you’re willing to spend and what conditions must be met. Keep a cool head.

Protect yourself. Consider including terms and conditions in your offer that will best protect your interest, such as those about mortgage financing, a home inspection, the sale of your existing home, or whatever terms are important to you. When there are competing offers it can be tempting to waive these protective conditions but understand the implications and risks of doing so.

Some other things to consider. Ask your real estate professional about the age and condition of the home, including the major systems – heating, cooling, plumbing, electrical, etc. Outline the items you expect to be included with the sale and understand the difference between chattels and fixtures.

A real estate professional can help you navigate the many steps and decisions involved in the home-buying process. If you stick to your plan, you will eventually find a property that you are happy with.

Best of luck in your search.


This column is for general information purposes only and is not meant as legal or professional advice on real estate transactions.

Joseph Richer is Registrar of the Real Estate Council of Ontario (RECO). He is in charge of the administration and enforcement of all rules that govern real estate professionals in Ontario. You can find more tips at reco.on.ca, follow on Twitter @RECOhelps or on YouTube at http://www.youtube.com/RECOhelps.

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