Buyers Guide - A Primer on Everything You Need to Know
Buying a condo involves many moving parts and critical decisions. The following is a primer that’ll give you a strong sense of what to expect and ultimately help you secure the right condo. I define the ‘right condo’ as one that’ll prove to be a strong financial investment and have the most positive impact on your quality of life.
Mortgage Pre-Approval
Your approval amount will have the greatest influence on which condos and neighbourhoods you can consider.
I’ve had so many clients over the years tell me they know they’re approved for a certain price point, only to later learn they’re actually qualified for less (or on occasion more) than they had originally thought.
This miscalculation typically occurs when people use an online mortgage calculator. You must be officially approved by your bank or a mortgage broker, as most online calculators don’t take into account crucial details about you, such as your credit score, your employment situation, your existing debt, or your savings.
Quick tip: consider hiring a mortgage broker, as a good one will shop around multiple lenders on your behalf. They’ll typically find a better rate than your bank will, and are compensated for their services by the lender you choose to go with. A good mortgage broker will also chart out a number of financial scenarios for you, so you know exactly what your monthly payments will look like at different price points.
Hire a Realtor
Like most professionals, realtors are not all created equal. There are some who act as salespeople and push their clients to make a quick sale, and others who act as objective advisors. Realtors in the latter category will give you the pros and cons of each property, present you with your best options for every decision along the way and move at your own pace.
Buying a home will in all likelihood be the single most consequential purchase of your life and who you choose to aid you in the process can have a significant impact on the outcome.
When hiring a realtor, it’s necessary to hire someone who knows the intangibles of the area; Does the neighbourhood have a high crime rate? Does a building have a special assessment or lawsuit against it? What kind of amenities are nearby? Is the building in a flight path? A good realtor will make you aware of these details so you can make the most informed decision.
Quick tip: don’t make the mistake of hiring your best friend or aunt who works in St. Catherines. They may be an incredible agent in their respective area, but there are nuances to the local condo market that you simply cannot know if you’re not engaged in the market full-time. Hire a local agent you can trust and the odds are greater that you find the right property (and avoid a lemon).
The Search Begins
You’ve discussed your criteria in detail with your realtor and distinguished between your ‘must haves’ and ‘wish list’ items. Now the search begins!
Some quick tips you should know:
From what I've always observed with my own clients, it typically takes about 3 - 5 property viewings to develop a strong sense for how far your budget will go. The more properties you view, the better you’ll be able to understand how much value each property offers.
Try to look at the bones of each property during viewings. Some will be occupied by messy sellers or renters and will show poorly, while others will be staged to look like model suites. It’s easy for buyers to fall in love with staged properties! I often have to remind my clients, though, that the tasteful artwork, furniture and accessories do not come with the property.
Pay attention to the space, as you’re paying for each and every square foot (in both the purchase price and your condo fees). That 80-square-foot corridor leading to the living room is not a good use of space, and a good realtor should point that out for you, among other details.
Take the list price with a grain of salt if a condo has a set offer submission date. Many condos in Toronto — particularly those in lower price points and higher demand buildings — will sell in competition above the offer price. Your agent should tell you if a property has an offer date (usually 7 - 10 days after the property goes on the market). When a condo does, the list price is just a placeholder number. Your agent should research the most recent sales in the area and building to determine the true value of the property (or where the price will likely land).
Making The Offer
You’ve found the condo of your dreams (or one that’s pretty close) and you’re ready to submit an offer!
There are exceptions to every rule, but typically, the first step is for your realtor to do a “comparative market analysis,” which is a fancy way of saying they need to appraise the property.
They’ll do this by reviewing the most recently sold properties that are (ideally) very similar to the one you intend to purchase. The agent wants to determine whether or not the list price reflects fair market value. How the property is priced will greatly influence your opening offer, but there are many other details to consider.
How many days has the property been sitting on the market? What time of year is it? How much competition is there currently within the local market? How many similar units are currently on the market? How many (if any) conditions will your offer include?
These are just a handful of the considerations an experienced realtor will look at when assessing your negotiating power.
You submit the offer and the negotiating begins! This isn’t always for the faint of heart, so here are some tips to help you along the way:
Negotiations can go on for up to 48 hours, or longer if there are unique circumstances such as an estate sale or divorcing sellers.
When the seller makes any amendment to your offer, you are no longer bound to the offer. In a sense, it’s as though the seller is drafting a new offer and submitting it to you for your consideration. During this period the seller cannot entertain any other offers, until their offer expiry period (also known as the “irrevocable”) is reached.
In addition to price, other details that are typically negotiated are the closing date, the deposit amount and the conditions your agent has included (and in case you weren’t aware, sellers don’t like conditions).
Make sure the deposit amount is accessible to you (i.e. your cash in the bank is not tied up). Traditionally, the deposit must be provided to the listing agent within 24 hours of the offer being accepted.
Usually, the deposit goes into the listing brokerage’s Trust Account (escrow). That money is not released to the seller until the closing date — the day title is transferred to you and you can move in.
While negotiating can be stressful for both parties, your realtor should alleviate as much of the stress as possible. When they have any new information, they should present it to you immediately, and should provide you with the best options available to you. You can then make the final decision on how you’d like to respond.
Realtors who negotiate by justifying your price (and terms) in a calm, measured and diplomatic manner are significantly more likely to succeed on your behalf than realtors who simply email your offer without any context or explanation. Realtors who act more aggressively during negotiations are particularly less likely to be successful. The more your agent can skillfully convey that your offer is fair and reasonable, the greater the likelihood the seller will perceive it as a ‘win-win’ and accept your offer.
You Bought a Condo!
Congratulations! By all means, celebrate your achievement, but know that there’s still more to be done. It’s time to find a knowledgeable lawyer who knows the local market. Your lawyer will finalize your mortgage, make any arrangements necessary, notify you of any federal credits and rebates, assess the seller’s title to confirm it’s clean, and ensure (along with your realtor) that the conditions of the sale are satisfied.
Most realtors will book two additional visits to the property. I highly recommend going for the 2nd (final) visit a few days before closing, to confirm the property is in the same condition as when you bought it. If there are any new deficiencies, such as a broken appliance, your realtor should notify the seller’s realtor right away so the deficiency can be addressed before closing. You’d also want to arrange for another visit to verify the deficiency was adequately addressed.
Otherwise, the visits are a great opportunity to take some measurements or show off your new home to close friends and family.
Closing Package Options
Full disclosure: this is more of a personal plug than a standard part of the process. I meet many of my clients through Strata.ca, and while I work hard for each and every one of them, I appreciate their business very much and want to offer as smooth a closing as possible. To help with the transition into their new home, I offer a choice of one of three complimentary closing packages:
Option 1 - Handyman for a Day
New homeowners are often met with a litany of minor repairs and details to address; whether it’s a loose light fixture, painting over the seller’s green “accent” wall, a leaky faucet, or just some new caulking, it’s reassuring to have a professional at your disposal. Your own handyman for a day is exactly what it sounds like: I’ll send you a handyman (or woman) for the day to take care of all your minor fixes.
Option 2 - Professional Detail Cleaning
On the closing day your home should be left in “broom swept condition,” however it’s always a good idea to have your new home professionally cleaned and disinfected before moving in. This also provides you with peace of mind that any old allergens and bacteria have been removed. Our cleaners come with their own supplies, so you don’t need to lift a finger. Your new condo will be sparkling when they’re finished.
Option 3 - Interior Designer for a Day
I’ll set up a meeting for you with a highly skilled interior decorator, who, after determining your aesthetic tastes, will advise on everything from paint colours to furniture proportions and even optimal room layouts. Afterwards, you’ll be provided with a summary of the details discussed and links to suitable furniture items.
If you’d like to set up a no-obligation discussion about your criteria or to book a showing, call me at 902-719-9121 or send an email to jenelle@strata.ca. I’m always happy to help!
