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First Time Home Owners

Posted by Daniel Hobden on July 13, 2017
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First Time Home Owners

Buying your first home is an exciting time. You’re looking to make one of the largest financial purchases you will ever make, and the Hobden Real Estate Team would like to help simplify the process. Below we have laid out some general steps from start to finish when purchasing your new home.

1. Get Pre-approval

The first step and often an overlooked step is to get pre-approved for a mortgage. We suggest either speaking with your bank, or with a local mortgage broker who will be able to pre-approve a maximum value for a mortgage. This is an important first step as you don’t want to be limiting your property options if you are approved for a higher value, and you also don’t want to be looking at homes that would be higher than your approved total.

2. Talk to the Hobden Real Estate Team

Once you’re approved we advise talking with the Hobden Real Estate Team. Buying a house can be a challenging experience, thankfully it doesn’t have to be that way. Mette Hobden and Daniel Hobden provide a quality and professional Real Estate service and will always put your needs first. We would love to help you find your dream home, so contact the Hobden Real Estate Team today!

3.  Find your Dream home

Next is the process of searching for a property. This process can vary depending on the current market you are searching in. The real estate market fluctuates over time between a Buyers market and a Sellers market. Below we have discussed each market in depth and small strategies for finding a house in each one.

Fast Market (Sellers Market)

When we say the market is fast we usually mean that average days on market (DOM) for a listing gets shorter and often this can mean the average price gets higher (You can see this on our Cowichan Valley June Update). This is also known as a Sellers market because when the DOM is shorter it often means there is low inventory. As the inventory decreases and the number of Buyers increases, the prices go up, creating an advantage for home sellers. So how can a Buyer purchase in this market?

  • Be Quick: When you see a listing that fits your criteria become available, book a showing as fast as you can.
  • Prepare for multiples: Depending how fast the market is, and how much interest there is in the property, you may go into a multiple situation. We explain this process further down.
  • Be Persistent: In a fast market it’s not uncommon to put in offers on 5 or 6 properties before getting the perfect one. Try not to get deterred because if it doesn’t work out with one property, it usually means there’s a better one out there.

Slow Market (Buyers Market)

While a market is considered to be slow, there is usually an increase in the number of houses on the market. This increase in inventory usually levels prices out, or brings them down slightly, as demand is not as high. This is now considered more of a Buyer’s market as supply goes up, demand goes down, and prices drop slightly. Below we have listed some tips for Buyer’s in this market:

  • Use Comparables: In a slow market where you will not often be competing with multiple offers, make sure you are using local comparables for similar properties that have sold in the last few months. These comparables will help with the negotiation process and will ensure you are not overpaying for a property.
  • Know what you want: With the increase in inventory it can be difficult to decide which house you like best. Just remember that even though the market may be slow, houses will still sell. If you see a house that checks all the boxes, then be sure to still move on it as you don’t want to let it slip away.

4. Putting in an offer

So you have now found the perfect home. It checks all the boxes and is within the price range that you think is fair. Now it’s time to make an offer. Below we have listed some of the key steps in the process:

  • Purchase Price: What is the property worth? This is a discussion you will have with your Realtor when the time comes. There can be many factors that will affect what a house sells for. This can include: type of market, # of comparables, Buyers motivation, Sellers motivation, # of days on the market, etc. We usually advise using comparable listing that have sold recently as a benchmark for the original offer.
  • Subjects: These are conditions that are often written into the contract for the protection of either the Buyer or the Seller. Some common subjects include finance, insurance, inspection, etc. Your Realtor will discuss each of these subjects in depth with you, to make sure you are protected.
  • Completion and Possession Dates: These dates can be crucial in the negotiation process because everyone has their plan of when they would like to either be in or out of the property. If the dates do not matter to you, then be sure to find out which dates the Seller wants to help make your offer stronger.
  • Included Items: Most common included items are Fridge, Stove, Dishwasher, Microwave, Washer, Dryer, Window Coverings. As you view the property, if there are other items such as central vacuum or hot tub that you are interested in keeping, then be sure to write these into the contract to.
  • Multiple Offers: This occurs when 2 or more parties would like to put in an offer on the same property. This is often a good situation for the Seller, and a tough situation for the Buyer. Each party is given the opportunity to put in an offer that will be competing with everyone else. Some tactics for winning a multiple include increasing the purchase price, limiting the number of subjects, and aligning the dates with what the Seller prefers.

5. Complete and Remove Subjects:

Once you have an accepted offer, the next step is to complete the subjects that have been written into the offer. Below we have listed some of the common subjects used and gone into detail about each one.

  • Building inspection: A building inspection usually costs around $500. It is usually advised to have a building inspection because the inspector has the knowledge and skills to advise you of any major concerns that may result in you not wanting to purchase the property.
  • Finance: Prior to looking for a property you should have been pre-approved for a mortgage. Now that you have an accepted offer, you must be approved for that specific property. Unless you are a cash Buyer, the subject to finance is there to protect you in case the bank will not give you a mortgage, or if the property appraises low and you are not able to cover the difference.
  • Insurance: Depending on the age and condition of the property you are hoping to purchase, getting insurance can be easy or it can be quite difficult. They will ask questions such as does it have copper wiring, is the plumbing poly-b, how old is the roof. These are questions that you will often ask your inspector if your listing agent does not know.
  • Strata: With any strata, there will always be strata documents. Make sure to get a copy of these documents including Form B, the financial records, bylaws, and minutes for the last 2 years. Read through all these documents and confirm that you are ok with key items such as the contingency fund, and any changes to current bylaws. Once you have completed all the subjects listed on your accepted offer, you can now proceed to make the contract unconditional and hand in your deposit.

6. Find a Lawyer or Notary

Often one week prior to completion you will meet with you lawyer/notary to discuss the statement of adjustments and go over legal paperwork. This meeting is to settle any financial differences between your mortgage and the purchase price of the property, as well as confirm all the legal paperwork is correct.

7. Prepare moving trucks for possession day

Final step is to prepare for moving day. Below is a list of key items to prepare:

  • Send change of address cards to family, friends, and be sure to update important contacts such as the bank and government
  • Call utility companies and be sure to get service on completion day
  • Book a moving truck and movers if necessary
  • Celebrate your new purchase!!

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