First-time buyers are flooded with information as they make the first tentative steps towards home ownership. The Ottawa market is no exception as the region grows and expands. With this expansion, the number of Ottawa homes listed for sale has nearly doubled in the last year. With so much to choose from, the home buying process can be overwhelming. Having some basic understanding of the process will make it a more enjoyable experience.
Here are 5 things you should know before you get started.
- Understand what you need and want in a home. Many first-time homebuyers have a picture in their head about what their dream home is; however they don’t establish a clear idea of what they need versus what they want before they start their home search. Many uninitiated buyers have champagne taste with a box-wine budget. If you’re a young family with children, you may put more emphasis on the number of bedrooms and the amount of living space, where a single career-motivated person may be better served by a location that is closer to a urban center. Weigh the differences between what you want in a house and what you absolutely need, this way you can see what is absolutely necessary when it comes to budgeting for your big purchase.
- Research the marketplace. This is important for all buyers but more so for young families as they are often looking at more than just the house they are moving into. School-age children will impact the decision making process. Questions such as what are the schools like, what does my daily commute to work look like, is there shopping and other amenities close by, etc. matter. You need to answer them before making a decision about location. Location can also impact the price of the homes in the area. So seeing if you can afford to live in a specific neighborhood will factor into the final decision-making process.
- Fully understand what you can afford. In 2012, TD Canada Trust did a survey of first-time homebuyers. Although they reported that most homebuyers do a lot of research, there were some common regrets associated with the home-buying process that a majority of new homebuyers experienced. 60 % thought they could have been “more thorough when budgeting and accounting for all of the costs of home ownership.” 60% wished that they had made a “bigger down payment.” A new and/or inexperienced homebuyer can easily overlook some of the expenses associated with the purchase of a home, such as land transfer tax, moving expenses, HST, mortgage fees and lawyers’ fees. Homebuyers can easily expect to spend approximately 5% of the purchase price of a home just for the costs associated with finalizing the sale. When you are getting your financing in order, you should consider what you would do if mortgage interest rates go up. The mortgage landscape in Canada has changed in the last few years. Interest rates have been at historic lows and eventually rates will start to creep up. An interest rate increase of 1 or 2% can end up adding hundreds of dollars to your yearly mortgage payment total. A higher down payment made at the start will prevent excess unneeded spending later.
- See what the home can be for you. It can be difficult for first-time buyers to look past the details of a home and make a life-altering decision. Those personal pictures painstakingly hung block the homebuyer’s view of what the home can be. The lovingly worn furniture that defines a space can limit our view of what the space can become. Those kids’ toys rapidly stuffed into a closet are signs that a home is lived in. Sometimes a homebuyer with some additional vision can find the best home for them by looking past what is right in front of them and seeing what can be. Even the most seasoned homebuyer struggles to see past someone else’s clutter. A potential home buyer wants to see themselves inside a home, which is why a professional home stager can work to your benefit. They will reduce clutter, as well as introducing some neutrality to your home, allowing those interested in purchasing the home to see what they could add to their potential new home.
- Make an offer. Up to this point the home buying process should be reasonably stress free. However, the offer process can be intimidating for some home buyers. You can’t always avoid competitive bidding situations but getting into a bidding war will usually result in paying a premium price for the home. Regardless of whether the bidding is competitive, you should remain prepared for some volleying with regard to your initial offer to purchase.
Buyers are looking to maximize their real estate dollars. They will often come in with a price under what the seller is asking for. The seller has one of three possible options when this happens: they can accept the offer at face value, sign it back to the buyer at a different price or refuse the offer. A buyer may not be able to get all the concessions they want from the seller and may need to give in a little to get the home they want.