Here in Toronto we’ve got a lot of pent up demand for houses and I don’t think that it’s going to change anytime soon. There’s only so much land and so many homes and there has to be a place to go for people when they outgrow their condo. There`s also a lot of people moving to Toronto each year (I`ve heard 100,000+) and they need places to live too.
Choosing a neighbourhood and deciding on the features you want in a home (house or condo), are really just preliminary steps in your home search. There are other more important things that need to be done if you want your offer to be taken seriously….
First and foremost get pre-approved for a mortgage. You may think you know what you can afford, but since you probably need a mortgage, you’ve got to find a lender who’ll lend you the money. Only then will you really know the price of the home that you can afford.
Second, work with a Buyer Agent. In fact, it’s best to sign a Buyer Agency Agreement (B.R.A.) so that he/she can act as your real estate consultant. It’s a binding legal agreement that defines the business relationship between you and your agent. If you commit to them, they’ll commit to you.
Third get to know what money you’ll need to close. I typically tell my clients that they should budget about 2.5% for all the closing costs on the home. It may be a little more, or it may be less, but this typically covers it. In Toronto we’ve got both a City and a Provincial Land Transfer Tax, and to you’ll also be paying for a Lawyer and a number of adjustments and other items. It really adds up fast.
Fourth, make sure that you have the money for the deposit. This is not your down payment, it’s the money that is held in trust before you get the keys to your new home. In my experience here in Toronto the typical deposit is about 5% of the selling price of the home. The best way to convey your deposit to the seller is to make sure that your agent has a Bank Draft or Certified cheque when they present your offer.
Fifth, think of the conditions that you’d like to have in your offer. Typical conditions are on Financing and Home Inspection, others include being able to obtain insurance and the sale of your existing home. Including any condition in your offer makes it less risky for you, but more risky for the seller. You`ve got to find a balance.
Finally, there`s Price. Price is usually the big one here. Ask your Buyer Agent to prepare a report showing you the comparable properties that have sold in the neighbourhood recently, and have a discussion with them.
Yes, there are other things in a typical offer, but these are the big ones…
If you’re thinking of buying or selling property in Toronto, just pick up the phone and call me at 416-671-5775.