Steps to Buying your New Home

Let Team Neumann take you through the steps of purchasing a home:

1. The Offer

For some, this is a stressful experience. After all, you and the seller may not be able to come to an agreement and you won’t get your dream home. There are 8 basic elements to an offer and there are various offer strategies that you may want to use during your negotiations.

When you’ve found your home, you will make a formal written offer to purchase. This is a legally binding contract outlining what you will give (a combination of price and terms) in exchange for the home. Your associate will probably use a pre-printed form covering all of the legalities and will modify it to cover what you want to offer. Remember, everything is negotiable. You should ask for what you want, but keep in mind what you’re willing to give up. Your RE/MAX associate will put everything in writing. Of course, the more conditions in your offer, the less attractive it will be to the vendor. In a buyers’ market, that’s OK.

The seller may counter your conditions with an escape clause. For example, they may wish to continue showing the house and if another offer is received; you will have the option of backing out or removing your conditions.

The Offer Can be Firm or Conditional

A firm offer means that you are prepared to purchase the home without any conditions. If the offer is accepted, the home is yours.

Although a firm offer to purchase is usually preferable to the seller, if you are unable to close you will lose your deposit and may get sued.

Take time to confirm your financing and to think twice about the investment.

A conditional offer to purchase; on the other hand means that you have placed one or more conditions on the purchase.

For example: subject to home inspection, financing or sale of your existing home.

The home is not sold until all the conditions have been met and removed.

2. Acceptance of the Offer

Your offer to purchase will be presented as soon as possible. Once the seller has reviewed the offer, it may be accepted as is, rejected or returned with a counter offer.

The counter-offer may be in reference to the price, the closing date or any number of variables. Offers can go back and forth until both parties reach an agreement or one ends the negotiations.

It is best to know your absolute upper limit before you begin negotiations, so that in the heat of the moment you don’t end up with a home you really can’t afford.

3. The Closing

A day filled with nervous anticipation! This is the day on which all of the legal and financial promises in the offer are fulfilled. It is the day when you get the keys and begin a new phase of your life!

Your RE/MAX agent and your lawyer will give you all of the details on steps and timings. All of the small details will be taken care of ahead of time, so in most cases it will be just a day of waiting by the phone.

Also, remember it’s a hectic day for the seller too! Very often it’s moving day and they’re trying to gather all of their belongings to leave while the you are trying to move in.

In brief, here’s what takes place before the actual closing day:

  1. A copy of the offer has been forwarded to your lawyer’s office. Your lawyer will have reviewed the conditions of the sale and you will have made your lawyer aware of how you, and any co-buyers, will be registered on the title of the property.
  2. All of the conditions in the offer to purchase must be satisfied by the closing date.
  3. Financing details will have been finalized and ready to fall into place on the closing date.
  4. If the vendor did not have an up-to-date land survey, you’ll have had one done. Your lender will insist on it.
  5. The lawyer will search the title of the property to ensure that you can purchase the home without any legal problems.
  6. Your lawyer will also make sure that tax payments have all been made and there are no liens on the home or the personal property the vendor has agreed to sell as part of the deal.
  7. Make sure that you’ve contacted all of the utility, cable, and phone companies to ensure an easy transition of service and billing.
  8. Your lawyer will prepare a statement of adjustment. This confirms the selling price, adjustments, and the balance (less the deposit you provided with the offer). Your lending institution will draw up a certified cheque for your lawyer to hold in trust.
  9. You will need to pay additional settlement charges:
    • Your lawyer’s fee and disbursements
    • Condo and co-op fees (Remember to ensure there is an adequate Reserve fund in place and that the condominium has a proper Technical Audit and Reserve Fund Study completed by competent professionals.)
    • Tax and utility adjustments; if they have been pre-paid, you’ll have to pay the vendor for the portion of the service you assume
    • Land transfer tax; based on the price of the home, this fee ranges from 0.5% to 4% of the selling price
  10. You’ll want to make sure your homeowner’s insurance policy will be in place to cover your new home and property once the deal is closed. Your lawyer will need a copy of the policy before closing.