Are you thinking about buying a home in Ottawa? Our ultimate guide will outline the steps to help you make the process as seamless and easy as possible.
Before making a final decision to purchase, you must understand the cause of your anxieties towards buying a property. Current and future job stability, how much you’ve saved up, your relationship prospects and whether you have access to financial dependance from family members are all things that could play a factor in your ability to purchase a home in today’s market.
Many prospective homebuyers have received financial pre-approval to purchase but the significant financial strain that would be placed on quality of life creates major hesitation. Some buyers have tried to make reasonable offers but get outbid by thousands of dollars beyond what they can comfortably afford.
It’s important to consider the many reasons you’re considering purchasing a home in the first place. Making a large financial investment like this will certainly pay off in the long run. Considering the growth that the Ottawa market continues to see, it’s even more likely that this will be the case. The appreciation that you’ll earn on the home could give you the headstart you need to upgrade to a bigger one in a few years.
This post will lay out the process for those who have decided to move forward with a purchase. If you’re continuing to work hard to achieve the goal of homeownership, we hope this guide may serve as a good resource to prepare and inform you for a smooth buying experience when the time comes.
Step #1: Buyer Consultation
You’ve decided to pursue the goal of homeownership. Purchasing a home is a huge decision and likely the biggest financial transaction of your life. Therefore, it’s critical that you’re well prepared and informed throughout this process. Utilizing the services of a licensed real estate professional will provide you with the knowledge and comfort level needed to help navigate this complex and at times, challenging process. At SERNO Realty, we remove the stress that comes with purchasing a home to make your buying experience one to remember.
In order to get started, getting in touch with our team will help kickstart your home buying journey and allow you to better understand what you can expect in the coming days, weeks and months. Keep in mind that for you as a buyer, utilizing our services typically comes at no additional cost to you as it’s the sellers’ (listing brokerage) who are responsible for paying out the commission to the agents on each side of the deal.
Prior to beginning the home search process, you will meet in person, by phone or through a video call with us for the first time in order to get to know your agent and to discuss key information related to your needs, wants and expectations. This includes:
- Your timeline for a potential move: approximate purchase and move in time frame
- Your approximate budget: your low and high end price points
- Neighbourhood identification: specific parts of Ottawa that you’re most interested in and are best suited for your unique needs
- Property type and desired home features that you’re specifically looking for
This initial consultation will allow us to help optimize the search and help you narrow down exactly what you’re looking for. During this time, we’ll ask you a few questions about your financial situation including whether or not you’ve spoken with a bank or mortgage advisor regarding a pre-approval. If you have yet to do so, we’ll direct you to our preferred advisor who will be able to help you determine your level of affordability – this will help guide your search. If you’ve already received financial pre-approval, please skip to step #3.
Step #2: Financial / Mortgage Approval
Before you begin to identify properties that you have interest in, it’s important to know what your target price range will be. By speaking with a bank or mortgage advisor, they’ll be able to help you determine this figure based on a number of key factors. If it’s your first time buying a home in Canada, you will likely be eligible for the First Time Home Buyer incentive, which offers you between 5 and 10% of a home’s purchase price to use towards a down payment.
If you’re paying for less than 20% of the home’s purchase price through a down payment, you’ll also be required to purchase mortgage loan insurance through CMHC. This is offered by the lender and built into your monthly mortgage payment. Your advisor will want to know how much money you plan to put down at the time of purchase – the higher the amount that you’re able and willing to put down will lower the potential purchase price as well as the monthly mortgage payment.
In determining the pre-approval amount, your advisor will need to present information about your finances to a financial institution. This includes your current employment status and income, whether or not you’re planning to purchase with a significant other as well as any debts that you currently have owing. A credit check, which demonstrates your ability to pay bills on time also impacts this process. All of these factors will allow a lender to determine your pre-approval amount based on the level of perceived risk that you pose to them. This amount will help you and your agent guide the home search process.
There are several benefits to completing this important step in the home search process. A pre-qualification comes at no additional cost to you and simply locks you into a rate that is valid for up to 120 days. To be clear, you’re under no obligation to move forward with that particular lender nor are you required to purchase at the rate you’re quoted at.
When you have an accepted offer to purchase a home with a mortgage, it generally takes up to a week for the bank to review your request and approve your financing before this condition can be waived. By obtaining the pre-approval, you’ll have the peace of mind in knowing how much you’ve already been approved for, giving you added comfort before you make a conditional offer. At SERNO Realty, we’re proud to refer our clients to Karen Lemieux from Mortgage Brokers Ottawa. Karen has been in the mortgage industry for 25 years and has worked for two of Canada’s largest financial institutions. Her experience and attention to detail with clients is second to none and has seen just about every scenario when it comes to home financing.
Step #3: Daily Listing Alerts / Home Search
Now that you’ve decided to purchase a home, have been in touch with your real estate agent and have received financial pre-approval to determine your approximate budget, you’re ready to begin the home search process. From this point forward, you’ll spend the coming days, weeks and even months exploring new inventory as it comes on the market.
At this point, our team will set up a specific home search tailored to your desired criteria through the MLS system. This search will allow us to filter homes based on a number of factors such as location, price range, dwelling type, # of bedrooms, specific features and much more.
Since new properties are coming on the market all the time, your search will enable you to receive listing alerts that get sent straight to your email inbox when a property matches your criteria. The frequency of these emails can be sent to you daily or at a slower pace like a few times a week or even once a week. In today’s competitive market, it’s important to remember that you’ll likely need to move pretty quickly if you’re interested in a property that comes up on your search as inventory does not last for long.
As new listings come in, your agent will closely monitor new inventory that may be of interest to you. Throughout the home search process, communication between you and your agent will be frequent and continuous. There will be some homes that, despite matching your search, will be ruled out almost immediately.
During this process, your agent will help you navigate the inventory and provide additional insight into various properties that you may be interested in, such as the home’s features, location and nearby amenities. They will also be able to provide you with historical price trends for homes in specific neighbourhoods. Your agent will have a good understanding of the market and be able to help you understand what a specific home may sell for in order to advise whether you should see it in person or even make an offer.
It’s important to remember that when demand is high, a home’s list price may not be a realistic indicator of its final selling price. Sometimes, a home will be priced lower in order to appear more attractive to buyers. This results in more demand and more offers to drive up the price. Alternatively, in a more traditional market the list price will be set towards what the sellers believe is its true value. Typically, this signals that a seller is looking for an offer around the list price.
Step #4: Home Showings & Tours
As you and your agent browse new inventory, there will be properties that come up on your search that you’ll want to see in person. As previously mentioned, in a competitive market, you’ll likely need to move quickly if there’s a home that you’re seriously interested in. In a more traditional market, this process can be much more relaxed and not as urgent. It has been quite some time since Ottawa’s real estate market has been considered “traditional”, however.
Your agent will play an instrumental role before, during and after a showing. When a property comes up on your search that you’re interested in seeing, we’ll coordinate with you and the listing agent to find a time to see the home that will work for both parties.
The standard length of time for an in person showing typically ranges from 15 to 30 minutes depending on the viewing schedule that has been setup by the listing agent. It can sometimes be shorter or longer depending on availability and the buyer’s schedule.
During the showing, you’ll have the opportunity to thoroughly tour the property with your agent while they provide you with additional insight and information that you should be made aware of. Your agent will also bring along a copy of the MLS listing page which is provided by the listing agent.
When we begin to work with a new client, we explain to them the value that showings provide. Whether you decide to write an offer on a particular property or not, showings can be extremely beneficial for a number of reasons. As a home buyer, they allow you to see the types of properties that you’ll be considering and will give you a sense of the homes on the market at that particular time. When it comes time to make an offer, you’ll understand what the perceived value of a home means to you at a given price point since you’ll now have various reference points. It’s very difficult to be inclined to make an offer without having seen it in person, given the significant financial commitment you’ll be making. Showings are a time to build rapport with your real estate agent as well as an opportunity to ask them questions and build trust.
Step #5: Writing an offer
After getting a sense of the market, visiting a number of properties and zeroing in on a home that you love, the time will come to make an offer. Everything your agent has done for you up until this point has prepared you for the offer process and to enhance your home buying experience.
The offer process is when you will benefit the most from having a licensed real estate agent managing this critical step. As a home buyer, the offer process can appear daunting and overwhelming. At SERNO Realty, we try to make it as seamless and easy as possible for you. There are a few key documents you will need to sign off on and understand. We’ll outline a few of the main ones below.
Buyer representation agreement (Form 300)
Before an agent is allowed to write an offer on your behalf, a formal written relationship must be established. When you decide to work with a real estate agent, you’re technically agreeing to work with their brokerage, or the company the agent represents. For instance, I’m Curtis Sernoskie, a licensed sales representative with Royal LePage Team Realty. The buyer representation agreement that you’re signing gives Royal LePage Team Realty the exclusive right to represent you in negotiating the agreement for any property that you wish to purchase during an agreed upon time period. For example, an agreement is signed for (January 15th to March 1st) – this would mean that any property you wish to place an offer on will be done with Royal LePage Team Realty representing you. During this time period, you cannot be signed with another brokerage to perform the same services. The agreement will also state what you’re seeking to buy and where; for example a condominium in the greater Ottawa area.
Working with a REALTOR (Form 810)
Before you write an offer with an agent, you’ll also need to sign a document which clearly identifies the nature of your relationship with the brokerage. As a home buyer, you can either be a client of the brokerage or simply a customer, in the form of a customer service agreement. As a client, everything about you and a transaction is protected by way of confidentiality and your best interests are being represented – this is not the case in a customer service relationship. Form 810 also discloses any instances of multiple representation where a brokerage is representing both the seller and the buyer on the same transaction.
Agreement of Purchase & Sale (Form 101)
When writing an offer, the most significant and important item is the agreement of purchase and sale. This comprehensive document outlines the proposed terms of the purchase. Throughout a negotiation process, the agreement of purchase and sale may get revised several times before the buyer and the seller have agreed to terms. Each time the document gets revised, signatures are required by the two parties to acknowledge the changes are being accepted. There are a few key items that have the biggest impact on the strength of an offer. These include: the purchase price, the deposit amount, the closing date and any conditions in the offer, such as approval for a mortgage or a home inspection.
Confirmation of Co-Operation Agreement (Form 320)
The confirmation of co-op is a document that is signed alongside the agreement of purchase of sale and its main purpose is to clearly define the relationship of the brokerages with respect to the buyer and sellers involved in the transaction. The document also indicates the compensation for the co-operating brokerage. (selling agent).
Depending on the listing agreement set out by the listing agent and the homesellers of a particular property, the time at which an offer can be made may vary. There are typically two scenarios for offer presentation:
- Conveyance of offers: set date and time when offers will be presented AND the option to entertain a pre-emptive or “bully offer” in advance of the set presentation time
- No conveyance of offers: set date and time when offers will be presented and no consideration for pre-emptive offers
Typically, if a buyer is looking to submit a pre-emptive offer it will need to be a strong one in order to be seriously considered. Usually this involves a high offer price, well above the asking, a strong deposit and little to no conditions (likely a firm offer).
Throughout the offer process, your agent will walk you through every step of the negotiation, handling all of the legwork on your behalf including the creation of the offer and any revisions. You’ll be in constant communication with your agent to strategize and make decisions as well as receive guidance and advice with respect to your offer.
On offer day, your agent will prepare the agreement of purchase and sale on your behalf and complete any other related documents that may be required. Once you’ve signed off, your agent will submit it to the listing agent for presentation to the sellers. On the day of the offer presentation, the listing agent will provide updates throughout the day to selling agents with regards to how many offers they’ve received. Shortly before the offer presentation time, the agent will send out a final message to those who have submitted an offer, asking if they would like to revise their offer. Upon finding out that a buyer’s offer will be competing with others, in consultation with their agent, they will often decide to re-submit at a higher buying price or remove a condition in order to have a stronger position.
Step #6: Closing the deal
You made an offer, and it’s been accepted… now what? An offer is accepted once the agreement of purchase and sale has a confirmation of acceptance that has been signed by both sides of the deal. Even with acceptance, there are still a number of tasks that need to be completed to ensure a smooth and successful lead up to closing day.
One of the first tasks to be completed is making the deposit. Your agent will provide you with the instructions you’ll need to make the payment to the listing brokerage. Typically, this is done by way of a bank draft or by sending it through online banking.
If the accepted offer is a conditional sale, your agent will be working with you over the coming days to ensure these conditions are fulfilled. The date in which each of the conditions must be met is outlined in the agreement of purchase and sale.
Some of the usual conditions include: securing a mortgage (can take several business days), the completion of a home inspection (we have an inspector on call), or a status certificate review for a condo (typically takes a few days for a lawyer to complete).
You’ll require a lawyer in order to complete the closing process as they’ll be the one who completes the title transfer on your behalf, giving you ownership of the property on closing day. If you don’t currently have a lawyer, we have several contacts that we can recommend to you.
After the sale occurs, there is other additional paperwork that our office will need to complete pertaining to your transaction and your agent will be in touch to collect all of the necessary information from you.
It’s also common for the buyer and their agent to have the opportunity to see the property one more time before closing day. The ‘final walkthrough’ ensures that the home is in proper condition and has no outstanding issues prior to moving day. If there are any remaining issues, the buyers lawyer will work to rectify the issue and come to a resolution.
In the weeks leading up to closing day, there are a few additional administrative things that will need to be taken care of. We send all of our buyers a checklist of items to serve as a reminder. This may include – registering and purchasing home insurance (especially amongst first time buyers), transferring the rental agreement for the hot water tank, arranging moving services, etc.
Right up until move in day, our team works closely with you to ensure a smooth closing and are here for you at all times throughout this process.
In Summary
Deciding to purchase a home in Ottawa is a huge decision. At SERNO Realty, we know just how stressful and overwhelming it can feel as you begin this journey.
Our goal is to make the process as easy and seamless as possible from the first time we meet right up until move in day and beyond. We pride ourselves on being there for our clients at every step of the way with 24/7 support and customer service to give you the comfort and peace of mind that you need.
If you’ve made the decision to purchase a home or condo, let’s connect to discuss how we can help you. Our experienced team knows what it takes to help you achieve your real estate goals and it would be our pleasure to assist you!