Choosing Your Team
You’ll want to have a team of professionals at your service when buying your home. You decide exactly who is on your team, but there are a few professionals without whom buying a home is nearly impossible. For example, just about every homebuyer needs a mortgage, so you’ll have to find a lender. Also, it’s a practical and useful idea to have a lawyer to protect your interests.
What to Expect from your Team Members
Real Estate Representatives
A good real estate representative should be able to save you time and trouble. When discussing your needs with a representative, be as specific as possible about the kind of home you’re looking for and your price range. If you’re not certain, set aside some time for your representative to help you determine these.
He or she will know what is on the market, in which neighborhoods and at what price, and can save you time by pre-screening home listings — screening out the ones that don’t meet your needs or budget. Then he or she can make appointments for you to see the homes that suit you.
A real estate representative can also assist you in making an Offer to Purchase. Representatives are aware of current market conditions, what price offers are realistic and what conditions to include in any offers.
You may wish to have an independent appraisal completed on a property before you make any offer or make the offer conditional on completion of an appraisal. It can protect you from paying more than the market value. If the appraised value is lower than the agreed price, you may be able to renegotiate a lower price; therefore having an independent appraisal could save you time and money.
The appraisal will include an unbiased assessment of the property’s physical and functional characteristics, an analysis of recent comparable sales and an assessment of current market conditions affecting the property. This information provides you with an expert independent opinion as to the property’s market value.
The key to finding the right lender is to shop around. Many different institutions lend money for mortgages, including banks, trust companies, credit unions, caisses populaires, pension funds, insurance companies and finance companies.
You can even find private lenders listed in your local newspaper. It will save you money to speak with more than one lender in each category because the terms and options of each will vary.
Some lenders, such as credit unions, deal only with members. But don’t be shy about approaching new institutions. For example, if you’d like to get your mortgage at a trust company, you don’t need to have a savings account there.
Mortgage brokers don’t usually lend money but rather put you in touch with others who do. For example, brokers are aware of private lenders that you may not be able to find on your own.
Brokers are independent, which means that they are not affiliated with any specific lending institutions. Their role is to find the lender with the terms and rates that will best suit you.
Ask to see a resume or portfolio, depending on the profession, and ask for references.
Lawyers / Notaries
Hiring a lawyer (or notary in Quebec) is one way to ensure that your legal interests are being protected when you buy your home. Your lawyer will review any contracts you need to sign, especially the Offer to Purchase.
If you make an Offer to Purchase that is accepted, your lawyer will be responsible for many of the closing arrangements.
Lawyers fees range widely and depend on the complexity of the deal, but will probably cost a minimum of $500 plus disbursements. You can check for a lawyer referral service in your community or call the local law association for the names of lawyers who specialize in real estate law.
One of the best ways to understand about a home’s condition, habitability and safety is to hire a professional home inspector. A properly trained home inspector will review your house as a system, looking at how one component of the house might affect the operability or lifespan of another. Home inspectors will go through the property and perform a comprehensive visual inspection to assess the condition of the house and all of its systems. They will determine the components that are not performing properly as well as items that are beyond their useful life or are unsafe. They will also identify areas where repairs may be needed or where there may have been problems in the past. Inspections are intended to provide the client with a better understanding of property conditions, as observed at the time of the inspection.
There is presently no requirement for home inspectors to take any courses or to have passed any tests. Anyone can say that they are a home inspector. That is why it is important to choose an inspector wisely.
Reputable home and property inspectors generally belong to a provincial or industry association. In Canada, there is generally one recognized association for home inspectors in each province. To become a member of these associations, an inspector must meet professional and educational requirements followed by a review. Members of these associations are also required to have errors and omission insurance, just as other professionals are required to.
An insurance broker can provide you with all your insurance needs, including property insurance and mortgage life insurance. Lenders insist on property insurance because your property is their security for your loan. Property insurance covers the replacement cost of your home, so premiums vary depending on your homes worth.
Ask them to specify precisely what services you are getting and how much they will cost.
Your lender may also suggest that you buy mortgage life insurance. This is often available through your lender, who then simply adds the premium to your regular mortgage payments.
But lender-supplied insurance can be more expensive than from a broker. Don’t confuse property or life insurance with mortgage loan insurance which is mandatory for high-ratio mortgages.
As you consider all the possibilities, keep track of what you consider to be the strengths and weaknesses of each candidate.