BUYING REAL ESTATE?
Forget the fluff. Here is what you need to know!
Your deposit cheque must be a bank draft or certified cheque, and it should be given to the listing brokerage’s office within 24 hours from when your Offer is accepted. The greater the deposit cheque, the more negotiating room you will have with your Search Realty Agent.
For example, let’s say that you buy a home and it’s sold firm (all the conditions are waived), but then you decide that you don’t want to go through with the purchase of the property. In this case, you would lose your deposit cheque to the seller. That’s why it’s important to have a higher deposit cheque, as it will demonstrate your seriousness to purchase. Remember, however, that the deposit cheque goes toward your down payment, so if you have the cash on hand, you should put it toward your deposit cheque to ensure that you get the best final price.
Closing dates can make or break a deal, which is why it is important to let your Search Realty Agent know your desired closing date, your reason for the date and if it’s flexible in any way. Even if both the buyer and seller agree on a final price, if the closing date is not agreed upon, the deal will likely fall apart.
For example, if you find a home that is vacant and we tell the seller that we don’t want to move in for another six months, the seller will immediately think, “Wow, that’s another six months of mortgage payments.” This could mean an additional $6000 in extra fees for the seller. Your Search Realty Agent will then be able to negotiate for a lower price knowing your flexibility on the closing date.
Knowing When to Submit an Offer
During showings, we guide our clients on how to decide which home to submit an Offer on. After a while, all the homes you view will become a blur. Our advice is that for every home you see, give it a rating from 1-10, with 10 being the most liked and 1 being the least liked. Then, write down notes on what made the house stand out to you. This might include hardwood floors, an open-concept kitchen, pot lights or other items that stand out. Then ask yourself the following questions:
1. Can I afford it? Hopefully, you have already talked to a Search Realty preferred Mortgage Agent and you know what the banks are willing to lend you and make sure you are comfortable with the monthly payments.
2. Does it meet my criteria? Examples of this might be a finished basement or brightly lit family room. Small families would need three bedrooms and two bathrooms, while single people would need just one bedroom. Ask yourself: what’s your criteria?
3. Do I like it? As soon as you walk into a home, you will know right away if it’s the right home for you. There’s no cryptic formula to this by any means -- if you like it and the first two points check out, ask your Search Realty Agent to submit an Offer!
The following standards typically apply:$200,000 - $300,000:
$5,000 deposit cheque is the minimum$300,000 - $450,000:
$10,000 deposit cheque is the minimum$450,000 - $600,000:
$15,000 deposit cheque is the minimum$600,000 - $800,000:
$20,000 deposit cheque is the minimum$800,000 - $1,000,000:
$35,000 deposit cheque is the minimum, depending on current market conditions$1,000,000 +
is done on a case-by-case basis. A $50,000 minimum is usually sufficient, depending on current marketing conditions.
“Low Ball” Offers
Anytime you find a home you like and want to submit an Offer, your Search Realty Agent will research what comparable homes are sold for in the area. If the home you want to buy is listed for $400,000, and after research we find that a nearby home with a similar layout was sold for $350,000, we’ll use that to our advantage. Then all of a sudden your low ball offer is not so low anymore. Consult your Search Realty Agent for more details.
When Should We Buy a Home?
This is a common question. The common answer would be: “The best time to buy real estate was yesterday.” This is because here in the Greater Toronto Area, we are fortunate enough to reap the rewards of great appreciation. The longer you wait to buy a home, the greater loss of savings you will have, as house values are constantly on the rise.
In our region, real estate appreciates at a rate of 26.3% ROI over a 5-year period. If you do not buy a property today listed at $400,000 and decide to wait until next year, that home will be worth $420,000—a loss in savings of $20,000 should you decide to wait a year to buy. This is why we always encourage everyone to buy and not rent. Why waste money on rent when you can be paying the same monthly amount and be a proud home owner.