Buying a Home Should be Stress-Free
Here’s an Easy to Follow How-To Guide
Buying a home follows a predictable script. If you know what comes first, second and last, you’ll get the house you deserve at a price you can afford. Stumble off script, and you might end up disappointed.
To help you out, I’ve put together a how-to guide for buyers in Regina. Find the answers to the most common questions I get from the average buyer.
I’ve written this as a list and arranged it in a (somewhat) chronological order so you can easily find what you’re looking for. Enjoy!
How To Buy a Regina Home
YOU: When can I start looking at homes?
ME: When your pre-approval is complete, you can start looking at homes. Not before. If you aren’t in a position to buy, it’s unfair to take a REALTOR’S® Saturday afternoon and doubly unfair to have the seller clean their home and leave for an hour if you have no intention of buying.
YOU: How do viewings work?
ME: You tell me what homes you want to see then I book appointments with the sellers. If a home is vacant, we might be able to go immediately, but if the owner lives there, we’ll need several hours’ notice. If a home is tenant-occupied, we need twenty-four hours’ notice. It’s best if you let me know what homes you want to see the day before.
YOU: I want to see ten houses today!
ME: That’s too many. By the time we get to house seven, you won’t remember house two. Make a list of three or four and take it from there. Catch your breath, think about what just happened and make a plan for the next time out.
YOU: How long does a viewing take?
ME: I schedule my appointments thirty minutes apart. If you don’t like a house, there’s no sense standing around—let’s move to the next one. If you love a house, we may stay longer.
YOU: How many homes do people usually look at before buying one?
ME: The average is somewhere around ten. I’ve worked with people who buy the first one they walk into and others who look at fifty.
REALTORS® are free when you buy a home. Our commission is supplied by the seller of the home you buy.
YOU: I found a house I like, what now?
ME: Write an offer. When you find something that fits your needs and is within budget, write the offer.
YOU: How will I know there isn’t something better out there?
ME: You won’t. If you’ve found a house you like, in the area you want, and the price makes sense, make an offer. Don’t dwell on what might be. If you really can’t decide, maybe it’s time to reconsider buying a home right now and sit on the bench for a while.
YOU: What are the main ingredients in an offer?
ME: Terms and conditions. Terms are what the parties agree on, and conditions are events that must occur before the terms take effect. Typical terms are price, possession date and inclusions. Typical conditions are inspections and financing. All offers have terms, and most offers have conditions but don’t need to.
YOU: Ok, let’s write an offer. What now?
ME: We get together at my office, your place, Tim’s, or on the phone, and I go through all the details. Writing an offer can take between thirty minutes and several hours. I’ll also need to see your ID and ask for a deposit cheque.
YOU: I need a cheque—say what?
ME: A deposit cheque (or etransfer) will always accompany your offer—you can’t write one without it. The deposit is usually in the range of $5000.
YOU: Why do I need a deposit? I have lots of money.
ME: It shows a seller you’re a serious buyer and, more importantly, assures them you will complete the sale. If no money was involved and an irresistible new deal came along, there would be little incentive to honour the first deal. With a non-refundable deposit at stake, buyers are unlikely to walk away.
YOU: Is my deposit the same as my down payment?
ME: No. The deposit is money that accompanies your offer, and the down payment is the total you are paying upfront for the home (the rest is a mortgage). If your offer is accepted and you remove conditions, your deposit forms part of your down payment. If you don’t finalize the sale, your entire deposit is refunded without penalty.
YOU: How do I know how much to offer?
ME: You don’t. And I don’t know how much a seller might take. Every seller has different priorities and reacts to (what is) a stressful situation differently.
YOU: Pffftt…well, yer not much help.
ME: Ok, here’s what I do know: When a home is new on the market, sellers will usually look at something in the range of 5k less than asking. More than one month, and it goes to 5-15k less than asking, and some sellers will look at more than 15k less if the house has been for sale for two or more months.
YOU: But how will I know if I’m over-paying?
ME: You can make an educated case. You’ll already know what the competition is asking because you’ll have viewed several other homes for sale. We can also look at what has recently sold in the area to see the actual sale numbers. Keep in mind that there is no way to determine an exact value. In the end, value is subjective. What one person values and will pay more for, another won’t.
YOU: Do “lowball” offers work?
ME: No. Well, just about never. All you do is make the seller mad. The seller may not have set a reasonable price in your mind, but in their mind, they have. Once you have insulted the seller, they often choose not to deal with you at any price.
The seller sets the list price, not the Realtor. Some sellers are reasonable, and some are not. If a home seems overpriced, it's not the one for you.
YOU: OK, we found a nice house at a fair price and wrote a decent offer. What happens now?
ME: I’ll send your offer by email to the seller’s Realtor. I also call them and explain the offer and tell them how awesome you are.
YOU: Awe, thanks, but why would they care?
ME: People deal differently with people they like. If I shine a light on you—loves the neighbourhood, has two cute kids, loves gardening—the seller may be more receptive to your offer.
YOU: Really? I don’t know about that…
ME: It’s true! I see it all the time. The first question sellers ask when they get an offer is how much it is. The second question is who’s it from. When a buyer’s agent comes in aggressively with a list of things wrong with a home, sellers get defensive. They react negatively. If we tell them we love the home, they sit up straight and smile, which plays into our hands. Of course, this isn’t always the case, some people just want the bottom line, but if I can make you look great, we have a leg up.
YOU: I’ve heard of conditionally sold homes. What does that mean?
ME: A buyer and seller have come to terms (agreed) in writing, and the sale is now subject to the conditions written into the offer. The buyer will now work to satisfy the conditions by carrying out inspections and arranging financing. If a buyer can’t satisfy conditions, the sale doesn’t proceed, and the home goes back on the market. This happens from time to time.
YOU: What conditions should I put in my offer?
ME: Financing and inspections. There can be others, but these are the most common. I’ll go through a list with you.
YOU: Wait, one of my conditions is financing? But I’m pre-approved.
ME: The lender looks at you one more time. They also review the property you’re buying to make sure it’s worth what you’re paying.
YOU: So, my main conditions are inspections and financing. How long do I have to satisfy them?
ME: In most cases, ten days. This is plenty of time to complete your inspections and get financing finalized.
YOU: I might need more time than that. Can we make it three weeks?
ME: Not usually. You are trying to get your offer accepted by the seller. If you request a long conditional period, the seller will wonder why you aren’t working hard to satisfy conditions in the usual timeframe. This creates a negative impression of you in the seller’s mind–we need them to like you!
Make sure you are fully committed, both financially and emotionally, before making an offer on a home.
YOU: Should I get a home inspection?
ME: Yes. It’s your last chance to look at the home before possession day.
YOU: If I’m buying a condo, should I still get an inspection?
ME: Probably, but not necessarily. Depending on the size and style, there’s usually less to inspect in a condo, but you still need to be comfortable. If you feel good about the present condition, you can leave the inspection out of your offer.
YOU: How do home inspections work?
ME: I let the home inspector in, and he looks at the home for around three hours. We all meet at the house when he’s finished and review his report. You’ll get a copy of his report to keep as a PDF or in a binder.
YOU: Are home inspections expensive?
ME: They run around $425.
YOU: Shouldn’t the seller pay for the inspection? It’s his house.
ME: No. I get asked that from time to time. The home inspection is for you, and you should pay for it.
YOU: What does the home inspector look for?
ME: Defects. Your inspector will climb into the attic, go on the roof, slip into a crawl space, test the appliances and report on the present condition of all of the systems, including plumbing, wiring, structure, and foundation.
YOU: So, my inspector will tell me if it’s a good house?
ME: No, the inspector won’t recommend a house—they just tell you what condition it’s in. It’s up to you to decide if it’s a good house. Also, they won’t comment on workmanship unless it’s a structure or safety issue. The homeowner doing a lousy job installing laminate flooring (common) isn’t something a home inspector will comment on.
YOU: Do I have to hire a professional inspector?
ME: No. If Uncle Wilf knows a lot about houses and works for beer, give him the job. As long as you trust the person, it’s good enough.
YOU: Is there anything a home inspector doesn’t do?
ME: Be aware that home inspectors are not usually electricians or plumbers by trade. Still, they know enough about a home’s systems to alert you if further investigation is required. Unless there is a clear reason for concern, rely on your home inspector to look at the home and give you his report. If he feels you need to get a certified trade in for a look, then request further inspections from the seller.
YOU: What if the inspection result is terrible?
ME: You don’t have to buy the house. Keep in mind, though, that every house has problems, even new houses. A house starts dying the day it is born. You have to balance the price range with the home’s overall condition. If you have $250,000 to spend, you’ll have to deal with a few things. That doesn’t mean you can’t find a safe, sexy house—you just need to decide what you can live with and without.
There are two types of basements in Regina—ones that are cracked and ones that will crack. That's a joke, of course! (or is it, sigh).
YOU: What are the seller’s options when reviewing my offer?
ME: A seller can do three things with your offer: accept it as written, let the time frame for acceptance pass and the offer is dead, or send a counteroffer to change one or more terms or conditions.
YOU: Sellers usually accept offers, right?
ME: Nope. Very rarely does an offer just get signed straight away, as written. If the home is well priced and shows A+, the offers will come in early and close to the asking price, so one might get signed as written. However, most offers have a counter involved.
YOU: When will I know if they accepted my offer?
ME: We insert a deadline into the offer for the seller to decide. It’s usually later in the day if it was written before 6 pm or noon the next day if you wrote your offer in the evening.
YOU: Let’s assume my offer was accepted or we agreed on a counter—what now?
ME: First off, congrats! Now that you’ve agreed on terms, you have a conditional offer in place. You now have ten days to satisfy your conditions. In that time, the bank reviews the home, runs your numbers again to approve (or reject) your loan, and you conduct inspections.
YOU: Alrighty. So, we’re conditional, what should I do now?
ME: Some of this is on me, and some on you. I’ll get all of the purchase documents to your lender and babysit the financing end of it for you. I don’t have any influence with the underwriter (bank official in another city), but I’ll communicate regularly with the mortgage specialist here in town to ensure we get it done on time and without hiccups. You will need to book the inspections.