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WATERLOO REGION HOME BUYING AND WATERLOO REGION HOMESELLING FAQ
The two don’t really compare at all and we always say, if you have the opportunity to buy instead of rent you should definitely take advantage!
The one advantage of renting is being free of most maintenance responsibilities. But by renting, you lose the chance to build equity, take advantage of tax benefits, and protect yourself against rent increases. Also, you may not be free to decorate your home without permission and may be at the mercy of the landlord for housing.
Owning a home has many benefits. When you make a mortgage payment, you are building equity. And that’s an investment that will benefit you long term. Owning a home also qualifies you for tax breaks that assist you in dealing with your new financial responsibilities - like insurance, real estate taxes, and upkeep - which can be substantial. But given the freedom, stability, and security of owning your own home, they are definitely worth it.
When owning you win double. First off all of your payment go towards bringing your mortgage down instead of going towards rent payments. What is often overlooked is that you will also gain long term as the value of your property appreciates, resulting in equity directly to your pocket!
The lender considers your debt-to-income ratio, which is a comparison of your gross (pre-tax) income to housing and non-housing expenses.
Non-housing expenses include such long-term debts as car or student loan payments, alimony, or child support. The lender also considers cash available for down payment and closing costs, employment history, etc. when determining your maximum loan amount.
Lastly, the lenders also take into account your credit score. Having a clean and strong credit score can often result in a better rate from the lenders and having poor credit can unfortunately often disqualify you from obtaining a mortgage. Generally speaking, 680 and higher is considered to be a good credit score.
There are several closing costs that you must budget for.
When buying a home, your closing costs mainly consist of legal fees, which will likely include title insurance in most cases, and land transfer tax. If you are a first time home buyer, you will likely be eligible for a credit on your land transfer tax!
You also might have to pay mortgage default insurance if you are putting down less than 20% in your downpayment, but this is something that your mortgage agent will factor into your approval. It will be a part of your mortgage and not paid for separately at closing.
When selling a home, your closing costs mainly involve legal fees and realtor fees. It is also important to speak to your bank or mortgage agent/broker to see if there are any costs related to terminating or porting your mortgage.
In addition to comparing the home to your minimum requirement and wish lists, you may want to consider the following:
- Is there enough room for both the present and the future?
- Are there enough bedrooms and bathrooms?
- Is the home structurally sound?
- Do the mechanical systems and appliances work?
- Is the yard big enough?
- Do you like the floor plan?
- Will your furniture fit in the space?
- Is there enough storage space?
- Imagine the home in good weather and bad – will you be happy with it year round?
- How far is the commute to get to your work? Does the drive make sense to you?
- How do you feel about the neighbourhood?
Take your time and think carefully about each house you see. Ask your real estate agent to point out the pros and cons of each home from a professional standpoint.
Many of your questions should focus on potential problems and maintenance issues. Does anything need to be replaced soon and which components of the home require ongoing maintenance (e.g., paint, roof, HVAC, appliances, carpet, etc...)? Which items are rentals (e.g., hot water heater, water softener, etc...)?
Also ask about the house and neighbourhood, focusing on quality of life issues. Be sure the seller’s or real estate agent’s answers are clear and complete. Ask questions until you understand all the information they’ve given.
Making a list of questions ahead of time will help you organize your thoughts and arrange all the answers and information you receive.
Definitely not! When our clients are in a position where we need to make an offer without a home inspection condition we still include many clauses and warranties to ensure that they are protected from situations such as hidden defects, deficiencies, appliances not working, etc... The seller is still legally obligated to hand over the property at the closing date in as good of a state as possible. The difference in this situation is that they would not have a home inspector going through every room of the home, testing electrical, plumbing and other components in depth.
Buying a home "as is" would be a situation where you do not have these clauses or warranties to protect you. You must always be extremely cautious and must definitely have investigated thoroughly if every purchasing a property "as is".
An inspector checks the safety of your potential new home. Home Inspectors focus especially on the structure, construction, and mechanical systems of the house and will make you are aware of any repairs that may be required in the short, medium and long terms.
The Inspector does not evaluate whether you’re getting good value for your money. An inspector checks: the electrical system, plumbing and waste disposal, the water heater, insulation and Ventilation, the HVAC system, water source and quality, the potential presence of pests, the foundation for possible leaks or cracks, doors, windows, ceilings, walls, floors, and roof. Be sure to hire a home inspector that is qualified and experienced.
It is ideal when possible to have either a pre-inspection before offering on a home (e.g., in a case of multiple offers where a home inspection may prevent you from being the winning offer) or a regular inspection as part of the conditions in your offer when possible. This will give you the peace of mind that this important purchase that you are making is in fact a safe and logical decision.
An inspection clause gives you an out on buying the house if serious problems are found or gives you the ability to renegotiate the purchase price if repairs are needed that are substantial that may not have been evident at the time of offer. A clause can be added via amendment if necessary when removing the home inspection condition, ensuring that the seller make the necessary repair(s) prior to the closing of the property.
It’s not required, but it’s definitely a good idea to be present if possible. During the inspection, the home inspector will be able to point out relevant areas of discussion regarding your home, how to maintain, what to expect, etc... and it is definitely worthwhile to be there. Much of this will also be captured in the home inspection report but being there in person allows you to ask any questions that may come up. Following the inspection, the home inspector will also answer other questions that you may have and discuss any possible areas of concern.
This is also an opportunity to hear an objective opinion on the home you are planning to purchase, and it is a good time to ask general and maintenance questions.
There isn’t a set number of houses you should see before you decide. Visit as many as it takes to find the one you want. On average, homebuyers see 15 houses before choosing one. Just be sure to communicate often with your real estate agent about everything you’re looking for. It will help avoid wasting your time.
Your real estate agent will assist you in making an offer which will include the following information:
- Price you are offering
- Proposed move-in/closing date
- Amount of deposit to be delivered
- Expiry/length of time the offer is valid
- Conditions to the offer (if any)
- Complete legal description of the property
- Proposed closing date
- Details of the deal (inclusions, exclusions, etc...)
Remember that reaching a sale commitment depends on having a realtor that is able to negotiate the best possible deal between both parties. Making an offer is just one of the first steps, but in certain competitive markets you can expect to offer on several properties prior to being able to purchase.
Listen to your real estate agent’s advice, but follow your own instincts on deciding a fair price.
Calculating your offer should involve several factors. The most difficult thing to do for a new buyer is ignore the list price and focus on the recently sold prices. The list price is completely arbitrary and what determines the price of a home yet to be sold is, how much others were willing to pay for a home of similar size, finishings, neighbourhood, etc... Your realtor should be able to help you to analyze this data to use price logic in determining how much you will offer.
Other factors to consider are the home’s overall condition, how long it’s been on the market, how much interest the home seems to be receiving (you always have to think of what it will be like for you when the time comes to sell your home!), financing terms (perhaps you have access to a great mortgage pre approval that makes buying now the perfect opportunity?) and the seller’s situation/motivation. By the time you’re ready to make an offer, you should have a good idea of what the home is worth and how much you can afford.
Be prepared for give-and-take negotiation, which is very common when buying a home. The buyer and seller may often go back and forth until they can agree on a price.
The deposit is money put down to demonstrate your seriousness about buying a home. In our region the typical deposit tends to be 2% rounded to the nearest multiple of $5,000 and it is to demonstrate good faith to the sellers. It is due within 24 hours of an offer being accepted. In other regions such as the GTA, they may be accustomed to deposits as high as 5% of the value of the property.
Generally speaking, we only provide a deposit upon acceptance of an offer. If your offer is accepted, these deposit funds will become become part of your down payment or closing costs. If your offer is conditional, if you do not remove your conditions you will generally receive your deposit back in full without deductions (depending on how your realtor structured your offer).
If for some reason you don't close on your purchase, you may forfeit your deposit plus you may incur additional legal costs and implications, so it is crucial to be sure that you are in a position to close before becoming firm on a purchase.
Home warranties offer you protection for a specific period of time (e.g., one year) against potentially costly problems, like unexpected repairs on appliances or home systems, which are not covered by homeowner’s insurance.
Home warranties are becoming more popular because they offer protection during the time immediately following the purchase of a home, a time when many people find themselves cash-strapped.
Pre-qualification is an informal way to see how much you may be able to borrow. You can be ‘pre-qualified’ over the phone with no paperwork by telling a lender your income, your long-term debts, and how large a down payment you can afford. Without any obligation, this helps you arrive at a ballpark figure of the amount you may have available to spend on a house.
Pre-approval is a lender’s actual commitment to lend to you. It involves assembling financial records and going through a preliminary approval process. Pre-approval gives you a definite idea of what you can afford and shows sellers that you are serious about buying.
Start with the basics. Fix all minor mechanical issues (such as loose doorknobs and leaky plumbing), clean everything well, keep the yard maintained, and put fresh pine straw or mulch in the flower beds. Power wash decks and other surfaces if needed.
Check with a lender first to learn if this is an option. Ask yourself if you are willing and able to carry two mortgages and deal with the stress that comes from physically and financially maintaining two homes. An experienced agent should be able to guide you to a good decision.
It will take longer, on average, to sell a home yourself. And 80% of FSBO – for sale by owner – sellers end up turning to a real estate agent anyway.
An experienced Waterloo Region real estate agent can lead you through the listing and selling process with ease. Aside from improving your quality of life during your family’s transition, a real estate agent may help you net more money for your home.
Real estate agents know the market, proper pricing and how to achieve a faster sale. Often, owners who sell their own home are asked by potential buyers to discount the commission rate that would be given to an agent. In that case, you have all the work, all the complications and none of the financial rewards.
This topic is often frustrating for sellers. Few real estate agents are excellent at communicating and keeping their sellers informed. If you want to have information on the status of your home’s marketing and any progress notes, you will need to establish that schedule with your individual real estate professional.
If you list with Team Pinto you will have access to our personal cell phone numbers, emails and we’ll communicate in any other way you prefer. For example, some of our clients have preferred to stay in touch via Facebook, and we’re fine with that.
The one thing you can be sure of is that we will always keep you informed and answer every question imaginable about selling your Waterloo Region home.
The seller must disclose all pertinent facts about the home that are not easily seen. A good rule of thumb: if you are compelled to ask “should I disclose this?” – the answer is yes. The Seller’s Property Disclosure Statement must be filled out honestly and completely to help protect you.
Most definitely not! As the prices due continue to rise in the Waterloo Region, there are still many great opportunities and staying on the sideline and waiting while renting will often push buyers out of the market as they continue to wait. We have seen this happen many times, where a buyer feels that the market prices have gone up and that they will wait until a future year prior to buying. What has been happening is that by the time this buyer is ready to purchase, the amount of home that they are able to purchase within their budget is significantly less than what they would have been able to buy if they would have purchased their first time. Nonetheless, you always have to purchase when the time is right for you!