Questions About Buying or Selling in Newfoundland?
Buying a Home
Step 1: Deciding to Buy
When is the perfect time to buy a home? The answer is that there is not really a right time that works for everybody. Whether the market is up or down the right time is always "whenever you are ready". Market conditions aside, the important things to consider are your current financial situation and your long-term goals. Making sure you have a down payment and are able to get approved for financing are the biggest initial factors in deciding to buy a home. We would also recommend putting money aside for closing costs, moving expenses, and repair/maintenance of the property. We have a Closing Cost Estimator sheet available upon request.
Step 2: Getting Pre-Approved
You're going to want to figure out your budget. Unless you are paying the full amount in cash you will most likely need financing. Instead of guessing, we strongly recommend meeting with a mortgage advisor and getting a pre-approval. This will save you from headache down the road if you find out that the home you fell in love with is unatainable. It can also help when negotiating a sale price with the seller if they know you have financing lined up already. You will need to meet with your mortgage advisor/lender and submit this information anyway before the sale closes so you might as well get a head start.
Step 3: Separate Your Needs and Wants
It's easy to get overwhelmed and lose focus when searching for a new home. Sometimes you may find yourself looking at a new property that you absolutely love but it doesn't have space required for your growing family. That's why it is so important to keep a list of needs and wants. This will keep you on track and remind you of what's important and what you can live without so you don't waste your time looking at homes that don't suit your needs. Create a list of homes that have the mandatory items (needs) first and then you can start narrowing it down by the features you like (wants).
Step 4: Selecting an Agent
Picking the right real estate agent is an important step in finding the perfect home. A good agent will know the market, area, and have experience in negotiating deals in your favour. Having a quick response time is important because there may be other buyers interested in the same property. And just as important, you'll want somebody that is personable and makes the home buying process fun.
Step 5: Viewing Homes
As members of the Newfoundland and Labrador Association of REALTORS (NLAR) we can show you any home that is listed on the MLS and anywhere else, including private sales. When you find a home that you would like to see, just call us and we will set up an appointment to view the property. When viewing the property you should be looking at certain things such as the layout, condition of the home, which repairs need to be made, and if there is enough space for you and your growing needs. If you have any questions while viewing the home just ask us and we will find the information if we don't already have it.
Step 6: Making an Offer
Once you find a home that you like it's time to place an offer. But before we do, we should probably do some research and find out what the home is worth. Just because someone is asking $300,000 for their home does not mean the home is actually worth $300,000. We don't want you to overpay for your new home. Our job is to try to get you the best price. An experienced agent will know local property values and will be able to advise you on whether a home is priced high or low. Once we figure out an offer price we will write up the offer. There are a few forms you will need to fill out at this point:
- Agreement of Purchase & Sale - This is where you will make the actual offer to purchase the property. You will have an offer price, amount of deposit and how much is being financed, closing/possession dates, and conditions (described below)
- Agency Disclosure Acknowledgement - This creates the agency between the agent and the client and outlines the duties and responsibilities of each.
- Property Condition Disclosure Statement - The seller has to make certain disclosures about the property, such as such as a crack in the foundation behind drywall, as well as a few other disclosures about the property. You will receive this disclosure statement and sign it to show that the proper disclosures have been made.
Step 7: Counter-Offer and Negotiation
Sometimes the seller accepts the first offer. Other times the seller will come back with a counter-offer where they have changed or modified some of the terms or conditions. This happens quite often and most often it is the purchase price that is being negotiated. This could go back and forth several times before there is an agreement. Once the seller and buyer have come to an agreement both parties will sign the contract and we have a pending sale. Usually you will need a deposit delivered within 24 hours. A typical deposit might be around $5,000 depending on the price of the home. This deposit is held in a trust account on behalf of both the seller and the buyer and is only released under specific conditions. If the sale finalizes then the deposit will be used towards the purchase price of the property. If the deal falls through then the money is usually returned to the buyer unless there is a legal dispute over the funds (for example: if the seller thinks the buyer illegally backed out of the contract).
Step 8: Subject/Condition Removal
There is a good chance you will have conditions in your contract, such as obtaining financing or being satisfied with a home inspection. You will also have deadlines to be satisfied with these conditions and to remove them. For example, if you have a financing condition you will set up a meeting with your mortgage advisor and have them approve your mortgage. You should get a letter from your lender stating the details of the mortgage and you can notify the buyer that you have satisfied this condition. Once all conditions are removed you now have a "firm deal" and then you just simply wait until the closing/possession date.
Step 9: Closing/Possession
The Closing day is when ownership is actually transferred to the buyer and the possession day is when the buyer can take possession of the property. These are typically on the same day. Your agent will hand you the keys and you can begin moving into your new home.