First Time Buying a Home in Calgary? Here are Five Things You Need to Know
Now, there are definitely more than just five steps to buying a home in the Calgary! Today though, we are focusing on the 5 essential things that you need to know before you make the decision to spend a lot of money.
You will see that we have created an easy to follow infographic below, this post will guide you through the steps in more detail so that there is a good understanding of what the steps are prior to making a home purchase.
Step 1: Get Pre-Approved
This may seem like it is pretty straightforward, and it is, but you’d be amazed how many people think that figuring out what they want to spend instead of what they can spend, is the priority.
Securing the funds to buy a home is a little more involved than just visiting your banker, calling a mortgage broker over the phone or getting onto a big banks mortgage calculator.
Here’s what you’ll need to get to your banker or mortgage broker for pre-approval:
- At least two years of Notice of Assessment from CRA (If you’re self employed it could be 3 years)
- Recent Pay Stubs
- Employment Letter
- Release allowing a credit check
- Proof of downpayment in your account or RRSPs
- Closing costs associated with purchase in your account as well
There is a lot here to get into your lender before they decide to give you any money. So keep in mind, if you go into the bank and they don’t A.) Ask you for any of this stuff or B.) Don’t at least check your credit, they are not doing a pre-approval. You are getting a pre-qualification, I did a video on the difference a few years back that has over 13,000 views.
Step 2: Do Your Research
Not all REALTORS® are created equal, do your homework. Ask your friends and family, the people you cherish and trust the most, to recommend who they have used in the past, someone that gave them excellent service.
There are many questions that you should be asking that agent that you found on a website like this one, we are breaking a few of them down for you here:
- “How will we work together to find me a home?” Great question and if the only part of that answer is, “I am going to set you up on an e-alert”, then you should find a new agent. You want someone that is going to scour our database and multiple sources to find the right fit.
- “How long have you been an agent?” Now this question doesn’t necessarily always give you the right answer. What I mean is, an agent that is new in the business might have a ton of experience in real estate already. Maybe as a flipper or investor to start. Ultimately you want someone with experience, don’t let the length of the license turn you off
- “How do I know if I am getting a good deal? I don’t want to overpay” If the answer to that question isn’t, “I will do a market evaluation on the property BEFORE we even write an offer” then I think you know what to do. You have to know where the listing agent got their pricing from, there are many properties on the market right now that are overpriced and need reductions.
Of course there are many more questions you should ask, we feel that these are some of the most important.
Step 3: The Lifestyle
Often times home buyers don’t consider the type of lifestyle that they lead prior to looking for a home. More importantly, they don’t consider how that lifestyle might change in 5 years time.
Why 5 years? Typically people in Calgary will sell their home every 5 years and usually it is a significant life change that has happened. I did a video on how to not make your home buying experience suck, I covered lifestyle quite a bit in that one.
For example, maybe there are kids in the picture now and that townhouse style condo is no longer big enough for 3 or 4 people. These are events that may not have been planned out 5 years previous.
We know it’s hard to look into your own future especially when you’re single, but if you are married, engaged, or even still dating, you need to consider where you will be in 5 years time.
Once you take your current lifestyle needs and project into the future, you will find that your criteria in a home will change drastically from when you first started the planning process.
Step 4: Make a Clean Offer
First off, what is a ‘Clean Offer’??
A clean offer means that you don’t have a lot of terms and conditions attached. It means that you have a good deposit. It means that you are willing to negotiate on things like possession day.
If you have worked diligently with your Agent, you know the area that you are about to buy in (meaning you and your Realtor® have done your homework and you know what the stats show) and you have seen the property 2-3 times then you should be prepared to write an offer that is specific in what you want.
Some examples of a clean offer would be:
- Strong deposit (My personal rule of thumb, any home listed under $300k, a $5000 deposit should be sufficient. $400-$$550,000 would need $10,000 deposit. $550,000-$800,000 would need $20-$30k deposit and anything over $800k is subjective, meaning the difference between $1M and $2M is going to be significant.)
- Negotiable Possession date
- Be specific in how much you are putting down…5%, 10%, 20% etc.
- Ask for what is being offered in the MLS, don’t get greedy
- Terms are things that you would like the seller to do and what you’d like the seller to allow. I always ask for a walkthrough 24 hours prior to possession. If you are asking the seller to do something like get the property professionally cleaned then make sure to ask for a receipt from the cleaning company 48 hours prior to possession day.
- Conditions are standard, some of the more commonly used ones are financing and a home inspection, don’t try and be creative with conditions and know the difference between a term and a condition
The cleaner the offer, the better off you will be during your negotiations.
Step 5: I’ve Bought, What’s Next
These items should be communicated to you prior to you even looking for a home, thing is, you will likely forget and will ask the question again anyway.
After you make the offer you will:
- Negotiate price, possession, terms, conditions
- Come to agreement and sign the offer to purchase
- Have a home inspection completed
- Secure full approval from the lender and get letter stating it is ok to waive your conditions
- Waive conditions
- Arrange to meet with the lawyer your agent recommends up to 2 weeks prior to possession
- Switch out your utilities, cable, internet to the new address
- Forward all your mail and do an address change
- Book movers (meaning your friends, bribe them with beer and pizza, works every time!)
Remember, this process is supposed to be fun, informative and should not be a stressful time in your life.