Condo and Real Estate Advice For First Time Buyers
Buying your first home is a very intimidating and stressful process. Over the last sixteen years and working with thousands of first time home buyers, here are my recommendations to anyone thinking about jumping into the condominium market for the first time.
Be definitive about buying
(i.e. you have decided you are going to buy a home).
Get qualified for a mortgage.
It is extremely vital that you know exactly what you can qualify to buy and what you're comfortable borrowing.
This is difficult and time consuming. Either spend the time it takes to be an expert or hire one. Real Estate representatives can offer you a certain crash course in your preferred real estate in a few hours. The best part is that it is free. Buyers don't have to pay a sales representative a fee, the seller does.
Hire a Real Estate representative who is an experienced, qualified, and an educated sales expert.
Since you've already found our website, you don't need to look any further.
Know all the hidden and exposed extra costs.
When buying a resale or existing condo, you need to be aware of certain closing costs. Below is a list of all the possible costs:
- land transfer tax
- bank appraisal fee
- mortgage broker or application fee
- legal fees
- high ratio mortgage insurance fee
- prepaid tax reimbursement
- prepaid condo fee
Remember your first mortgage payment is due one month after your transaction closes.
Condo fees are always due on the first of every month.
Property taxes are due in installments (usually 4 per year) or can be paid for you by your bank or mortgage lender on a monthly basis.
It is quite possible that you will purchase a new condo from floorplans, you will have all the closing costs above except for the last item on the list.
- educational levy
- development charges
- law society of Ontario fee
- 2 months of condo fees
- parks levy
- discharge of developer's mortgage fee
- heat pump rental fee
- prepaid occupancy fee payment
Remember that when you buy a new condo from floorplans, your first closing is when you occupy the suite. At this point you do not yet own the unit, you are known as an occupant. You pay the Developer an occupancy fee until the building registers with the City of Toronto. Currently 6 months is a typical occupancy period. A sample occupancy fee is calculated below:
Simple interest on the unpaid balance of your purchase price (calculated at a legislated rate) + Your estimated monthly taxes + The monthly condo fees = Occupancy Fees
Do not rush into anything but do not drag your feet either.
Currently, and for the past nine years the real estate market in Ontario and the rest of Canada has been very strong.
Rushing into buying before you have seen four to eight properties or have been very well schooled by a knowledgeable and honest real estate representative is foolhardy.
Equally foolhardy is wasting everyone's time by dilly dallying when the right property comes your way. Be decisive and make your move. My observations have shown that indecision usually costs a buyer more than making an educated decision.
What to offer?
I'm sorry that there is no rule book on what to offer. Do not listen to any advice that tells you that there is a standard discount from an asking price. I have seen 25% discounts and 25% premiums. Too many factors are at play to offer you a rule. My best advice is for you to look at past sale comparables before making an offer and listen to your Real Estate representative advice. This advice is the most important input you will ever get. If you have selected your sales representative wisely they will know exactly what to do.
Make an offer
Just do it!
Everyone except for sociopaths get cold feet. It's expected and it's ok. If you've followed steps 1-7 you'll be ok. Proceed with confidence.
Do not chicken out!
I could tell you hundreds of stories of first time buyers that lost their nerve. Every single one of them was worse off for it, and most of them ended up realizing this fast and deeply regretted their decision to bail.
- Brad J. Lamb