Steps to Home Buying
The first step to buying a home is deciding if you are ready to become a homeowner and start building equity for your future. There is a lot to know when it comes to buying a home in Edmonton. Whether you are buying your first condo, moving to a bigger house or downsizing, our in-depth 5 step home buyers Guide will take you through all the steps.
- First: Get pre-qualified for a mortgage and choose a financial lender
- Second: Choose the best Buyers Agent or Edmonton
- Third: House hunt like a real estate professional online and in-person
- Submit an offer with confidence by understanding Alberta Real Estate contracts
- Fifth: Be prepared for other costs associated with buying a home in Alberta
STEP 1: Financing - Pre-approval and choosing a financial lender
Not all financial institutions are the same. If you choose to use a who works at your personal branch, keep in mind, most persons who work in a bank get paid by the hour, unlike a mobile mortgage specialist who only gets paid when they have completed, processed and get your mortgage application approved. For a list of mortgage brokers, contact us.
The first step to buying a house or condo in Edmonton is finding out how much your bank is willing to lend you based on the lenders' rules. Keep in mind with the change of Canada's new mortgage qualifying rules. You must qualify at two per cent higher than what your current interest rate will be.
Your lender will look at your income, your debts, your down payment and your credit rating. Having a verbal or online pre-approval is a waste of time and is not a real pre-approval. Your lender/Mortgage Broker will ask for a list of items to be provided including a recent bank statement, pay stubs, job letter, last 2 years of T4's for a true pre-approval.
A mortgage pre-approval will be in writing which is normally valid for 90 or 120 days. Pre-approvals will also include an interest rate guarantee - get this in writing from your lender to ensure you have documentation in the event interest rates rise prior to purchasing your new Edmonton home.
LEARN MORE ABOUT MORTGAGES
Our Edmonton Real Estate Agent Team is here to help you. We have several mortgage brokers we deal, feel free to reach out and ask us for a list of mortgage specialists.
STEP 2: Choosing the Right Buyers Agent
If you are like most people, you want to find a Realtor who is a good fit. Both real estate agents and Realtors have had to undergo a certain amount of training in order to qualify to help you buy or sell real estate. However, in Canada, in order to be considered a Realtor, a real estate professional must be a member of the Canadian Real Estate Association (CREA). There are several Realtors in Edmonton who choose not to work with buyers, while others choose to work solely with buyers. These Realtors are known as Buyer Agents.
There are several ways to find a buyers agent who will be a good fit. Most Realtors in Edmonton have their own websites. Some of these websites are very generic, while others provide personalized extensive real estate information. Some Realtors will also specialize in a specific part of Edmonton or have a real estates speciality such as condominiums, luxury homes, relocation moves or acreages. Another great way to find a buyer's agent is to visit open houses. However, if you fall in love with the house, it is in your best interest to seek out a different agent.
Interview a few different Realtors before signing a commitment called a "Buyer Brokerage Agreement". Remember this agent will be helping you make the biggest investment of your life and you should make sure they have your best interests in mind. Below is a list of questions which may help in the interview process when buying.
- How long have you been a REALTOR?
- Do you have any other real estate designations?
- How much commission do you charge?
- Will you show properties that are at a lesser commission offered?
- How will you keep me informed on new properties which meet my search criteria?
- What is your real estate niche or speciality?
- Do you have a list of references I can contact?
- How many homes are you willing to show me (If this number is less than ten - move on to another agent)
- If I cancel my agreement, is there a fee?
- When are you available to show me homes (Note* Part-time Realtors may not be able to accommodate your schedule)
To book an appointment for your personalized Edmonton home buying consultation, contact us.
STEP 3: House Hunting like a Real Estate Professional
Let's face it. You have been house shopping for your home online and have seen a few "bad real estate photos", or a property with no photos or wonder why a particular house has been on the market so long. The reality is, there may be great homes, but the sellers chose the wrong agent to market their home.
When you come across those bad real estate photos, try to look beyond the photographer, the horrific lighting and the messy house with clothes on the floor, pets or worse yet, the seller's children in those photos. If the selling agent has not taken the time to properly market a home, the sellers are not happy and want their home to be sold.
When there is only one exterior photo on a property, read the comment section. Odds are, this home is tenant occupied, or not in show-able condition (Very messy) or the sellers have chosen really ugly paint colors for the walls. These homes are usually fantastically priced properties that need a little TLC and some cleaning. If you are looking for a home in a particular area, learn to calculate the absorption rate to make the best financial purchase and make a great real estate deal.
Don't be fooled by pretty homes. Both a Seller and the Sellers Realtor want as many potential buyers into their home, but don't be fooled by how lovely it looks inside with that sparkling granite counter-top, cutest little girls rooms or awesome man cave. Take a deep look at the finishing. This is the best indicator for how well the home has been built and taken care of. A great buyers agent will point out imperfections they notice.
Don't overlook homes which have been on the market for a while. These properties may have had several price adjustments, especially in Edmonton's real estate market and may now be below or at the proper market value. Take a second look. There may also be other reasons which factor in a long time on the market which can include the property was "tied up" a few times with other offers which have fallen apart on financing or an inspection. Remember, when a pending offer is on a home, it can be conditional for a few weeks at a time. Another reason, a property may be longer on the market could be due to a "lis pendens", probate, civil enforcement or other government enforcement contingencies.
STEP 4: Submitting the Offer
Normally there are two basic (three when purchasing a condominium or more with rural properties and acreages) conditions or "subject to's" when purchasing a home in Edmonton.
- Financing: Although you have completed your pre-approval, this does not mean you have been qualified to purchase that dream home. Once an offer has been accepted, your financial institution will need to submit your offer to the underwriter and your credit will be checked again. Do not go out and purchase any major items which would require financing such as a new vehicle during this time frame. If you are obtaining a CHMC Mortgage, the credit check will be done for a minimum of the last seven years.
- Inspection: Hire a certified residential property inspector with a good reputation and credentials. The cost in Edmonton for a certified residential home inspector usually costs between five to six hundred dollars. No matter what type of home you are buying, including foreclosed properties to new builds. This small fee can save you thousands of future dollars.
- Condominium Documents (Condo purchases): Always double check you have received all condominium documents and review them. If you do not understand the legality or do not have the time, have your real estate lawyer review them for you. There is a lot of information in the condominium documents and you do not want to be surprised with a $30,000 special assessment when you move in.
- Rural and Acreage: Septic inspections are beyond the scope of a standard home inspection but when purchasing acreages in Alberta, they are crucial. Other conditions you should add to your rural purchase agreement include satisfactory water well, water flow, water quality tests and pumping equipment inspections
STEP 5: Buyer Beware & Other Closing Costs
Calculating the cost to purchase a home in Edmonton is pretty simple. Calculate your total down payment plus add one and a half per cent of the total purchase price of your home. For example on a $300,000 home, with a five per cent down payment, you will need a total of $19,500. Your financial institution will ask to see this additional amount to ensure you have enough money for closing costs such as lawyer fees, title transfers, mortgage application, and appraisal fees. Additional mortgage fees like CHMC can be added into your mortgage or can be paid upfront.
If you have added certain terms into your purchase agreement, such as "Seller to repair a broken window, steam clean carpets, remove dog faeces from the backyard, etc, you may also want to add an additional clause
"Seller will allow the purchasers to complete a satisfactory walk-through regarding the terms of the property prior to possession"
In Alberta, the transfer of real estate titles is processed a bit different than other provinces and keys do not get released until monies have been received by the Sellers lawyer. In the event and terms were not completed, it is more difficult for remediation this after.
Note* If you are purchasing a foreclosure, keep in mind, that this property is sold "As Is, Where Is".
If you have any other real estate question about purchasing a home in Edmonton or the surrounding area, contact us by email.