11-Step Home Buyers Guide

Real Estate
Written By Nick Ortolan

Step 1 | Make sure you are ready for home ownership

Buying a home is a big deal and requires some serious thought. Not only is it a significant financial investment, but it also comes with a boatload of responsibilities and lifestyle changes. So, let's make sure these three factors line up so you are ready to take the plunge.

Are you ready for the responsibility?

Owning a home means you're the boss, and with great power comes great responsibility. Regular maintenance and upkeep are just a couple of the tasks that come with owning a home. You'll also need to be prepared for potential lifestyle changes, like spending your weekends at Home Depot instead of the beach.

Are your finances in check?

Before committing to homeownership, it's essential to take a good look at your finances. Buying a home means more than just making a mortgage payment every month. You'll also need to consider property taxes, insurance, and ongoing maintenance and repairs. You don't want to be stuck with a fixer-upper if you're not ready to take on the task…or foot the bill.

How about the timing?

Timing is everything, especially when it comes to buying a home. Markets can be unpredictable, and the state of the housing market can make a big difference in your decision. Make sure you do your research and understand how interest rates, housing inventory, and economic trends can impact your decision.

Remember…a long term investment can protect you from short term highs and lows, so what is arguably more important than todays market, is having a plan and knowing your goals going into the home hunt.

Step 2 | Find a realtor who is right for you… and a dream team to go with them!

So you are ready to buy a home…but it’s a big step, and a large investment. You want to make sure you have the right people on your side to guide you through the process.

Arguably, the most important person on your team is your real estate agent. But how do you find the right one, and who else should be on your dream team?

Let’s first understand how REALTORS® have your back

Licensed REALTORS® are members of their local real estate board, a provincial association, and The Canadian Real Estate Association, all of which help to make sure that you get top-notch service and are protected through the process. The REALTOR® Code of Ethics has got their back, and yours, so you can be confident that you will be represented legally, ethically, and with your best interest prioritized.

Understanding the agency relationships

When it comes to real estate in Canada, an agency relationship is serious business. This is the relationship between the client and the brokerage, and there are three main types.

Seller Agency - The brokerage is exclusively representing the seller’s interests in the transaction, and has a fiduciary duty to act in their best interest at all times. In addition, the brokerage will provide various services, with a goal of getting the seller the best possible offer on their home. The brokerage holds the responsibility of being honest and upfront, and is required to divulge any information they can gather about potential buyers - including the amount they are willing to pay.

Buyer Agency - The brokerage is exclusively representing the buyer’s interests in the transaction, and has a fiduciary duty to act in their best interest at all times. The brokerage will provide various services including finding properties that match the buyer's criteria, providing the buyer with market data and property information, negotiating on the buyer's behalf, and facilitating the closing of the transaction. The agent owes the buyer loyalty, confidentiality at all times, and commits to providing full disclosure of all material facts uncovered about the property.

Dual Agency - The brokerage has a fiduciary duty to represent the interests of both the buyer and the seller in the transaction. Before entering in to a dual agency relationship, the brokerage must receive consent from all parties, and provide full disclosure prior to moving forward. Don’t worry, restrictions apply to how information is shared between parties.

How should you find a REALTOR®?

Buying a home is a personal process, and working with a REALTOR® that you are comfortable with is an important start. Social media and websites are great ways to find out if a realtor might mesh well with you. Open houses are fantastic for meeting face to face, and friends and family often have a suggestion on hand.

Look for someone who understands your needs and goals. Interview the agent, and if he or she is not the right fit, keep looking.

Don’t forget, if you are moving a distance, check with your local realtor first. They know you well, and may be able to help narrow down the options for where you are looking to move to.

Should you use the same realtor for the sale and the purchase?

Definitely! Your realtor is already familiar with your needs and wants, and can save you both time and energy by building a comprehensive plan to suit your short term and long term goals.

What is a ‘dream team’?

Build a professional team to support you, including a mortgage broker, lawyer, and home inspector. Other experts like plumbers, roofers, and gardeners may also be necessary. A reliable realtor can assist in assembling this team, ensuring a successful home ownership experience from the start.

Step 3 | Find out what you can afford

One of the most crucial steps in the home buying process is determining how much you can afford. Setting a realistic budget helps you narrow down your options and find a home that aligns with your goals, and also falls within your financial capabilities.

What are the costs of home ownership?

Owning a home comes with costs, both one-time and ongoing. Let's break it down:

One-time costs: These happen when you buy the house and include things like down payment, closing costs, inspection, appraisal, and moving expenses. It's a chunk of change upfront, but it's a one-time deal.

Recurring costs: These are the ones you'll be dealing with regularly. They include mortgage payments, property tax, insurance, HOA fees, utilities, maintenance, and any improvements you want to make to the property. They're your monthly bills, homeowner edition.

So, how do you figure out what you can afford?

Remember that dream team? Well this is where your lender comes in with their pre-approval magic. They'll consider your income, debts, and all those costs we mentioned. They'll crunch the numbers using calculations like Gross Debt Service Ratio and Total Debt Service Ratio to determine your budget. This pre- approval will help set you on course to finding home that suits your personal and financial requirements.

Remember, owning a home is exciting, but it's important to budget wisely. Knowing your costs upfront will help you navigate the homeownership journey with confidence and a little extra cash in your pocket.

Don’t worry, we will go over the finalization of your lending in more detail in step number 8.

But how much down payment will you need?

Saving for a down payment is an essential aspect of buying a home. Consider how much you can comfortably put down upfront. A larger down payment often results in better loan terms and reduces the loan amount, which affects your monthly mortgage payments.

A 20% down payment is a typical target that many buyers aim for in order to avoid CMHC Mortgage insurance, but it is not required to purchase a home. In fact the requirement to qualify for CMHC Mortgage insurance can be as little as 5% down.

It is a tiered system, and requires 5% down for the first $500,000 and 10% down for the remaining balance up to $1,000,000. Mortgages of $1,000,000 or more cannot be insured through CMHC, and often require a 20% down payment.

Step 4 | Determine what you are looking for

When it comes to real estate, there is so much variety to choose from. So let’s narrow it down to determine what you are looking for.

Where do you want to live?

Urban City Centre Living: Vibrant, convenient, and connected. Ideal for those seeking the excitement of a bustling atmosphere, abundant amenities, and diverse communities. When buying real estate, it offers the widest array of options, ensuring a more immersive living experience.

Suburban Neighbourhoods: Spacious properties, a strong sense of community, and a relaxed pace of life. With excellent schools, recreational facilities, and convenient access to urban amenities, they provide the perfect balance for those seeking a suburban lifestyle.

Rural Communities: Expansive landscapes, peaceful surroundings, and a slower pace of life. With the opportunity for larger properties, farming, self-sufficiency, and outdoor activities, rural living provides a serene escape from urban hustle.

New Build or Pre-Owned?

With new build homes, you can customize the property to suit your preferences, choosing the floor plan, finishes, and upgrades. These homes come with modern amenities, energy-efficient technologies, and adhere to current construction standards. Additionally, they require less maintenance and repairs, providing a hassle-free living experience. However, its important to keep in mind that construction delays are possible and could keep you waiting for your move in day longer than expected.

Pre-owned homes offer affordability and charm in established neighbourhoods with existing amenities. However, thorough inspections are necessary as repairs and renovations may be required. Assessing the property's condition is crucial due to varying maintenance standards of the previous owners. You don’t want to be caught by surprise when the beautiful trees you love in the backyard have to come down because they are interfering with the septic tank!

What style of property are you looking for?

  • Standalone houses are perfect for families who want their own space and a little more privacy.

  • Perks of ownership without the hassle of maintenance. Pay those monthly fees and enjoy.

  • The best of both worlds with your own entrance and shared walls.

  • Invest in rental potential with multiple units under one roof

  • Share ownership by owning shares in a building - Monthly fees included

What should you look for in a home?

  • Think about the daily commute and nearby amenities

  • Determine the right amount of space for your family’s needs

  • Modern of traditional? Open floor plan or separate rooms?

  • Want a yard, patio, or balcony?

  • Decide on the extras you can’t live without. Maybe a fireplace or a pool?

  • Ready to move in or ready to renovate? Choose your adventure.

By considering these factors, you'll find a house that fits your lifestyle. Take your time, make an informed decision, and soon you'll be settling into your dream home.

If all of this seems overwhelming… don’t worry, that is what your realtor is for! Your realtor will help to navigate the possibilities, identify your needs, and find your dream home!

Step 5 | Start shopping

It's time to dive into the house-hunting process with your realtor and discover the place that feels like home. Let the shopping begin!

Utilize all available resources… Especially www.realtor.ca

Start by utilizing online listings and virtual tours to explore properties conveniently from home. Filter your search based on preferences like location, price range, and desired features. These tools help create a shortlist of properties that catch your attention, saving time during the viewing process.

Welcome to the open house

Attending open houses is a great starting point to explore properties, get a feel for the neighbourhood, and envision yourself living there. Take the opportunity to walk through rooms, assess the layout and condition, and don't hesitate to ask questions. Open houses offer valuable insights to get a sense of what is available on the market, and narrow down your options.

Work from a checklist

Work with your realtor to create a checklist for your home search. Set your budget, preferences, and desired features. By doing your homework and utilizing the checklist, you can spend less time and energy viewing homes that are not a good fit, and more time focusing on the homes that are.

Don’t settle… but remember it’s just paint

It’s important to strike a balance between current needs and customization potential. Don't settle for a home you don’t like, don’t get carried away with fancy finishes, and don’t get taken back by a bad paint selection. Focus on location, layout, and potential, not just cosmetic details. Look for a home with the right bones to transform into your ideal space.

Happy house hunting!

Step 6 | Time to sell

Buying a new home is exciting… But what happens if you already own a home? Do you have to sell? When should you sell? How should you sell? Let’s explore the basics, but make sure you check out my 10 steps to selling for a more in depth guide.

To sell? Or to keep?

When buying a home, selling your current property is usually necessary. However, you may consider keeping it as an income property. Your Realtor can provide guidance on your options and assess the advantages and disadvantages of each.

Buy then sell? Or sell then buy?

Selling your current home before buying provides financial flexibility for a competitive offer and avoids the burden of owning two homes simultaneously, while buying first allows more time to find your dream home without added pressure. Your realtor can assist in navigating these decisions, from conditional offers to aligning closing days or negotiating extensions, ensuring you're supported throughout the process.

What does the market say?

In a seller's market, high demand and limited inventory favour sellers, making it a good time to sell your home. In a buyer's market, there is more inventory than buyers, giving buyers more options and the negotiating power.

These market conditions can influence when to sell your current home while purchasing another. In a seller's market, consider selling first to benefit from high demand and potentially secure a better price. In a buyer's market, you hold more negotiation power, and can utilize it to help buying first. Seek guidance from your realtor to understand current market conditions and make an informed decision.

Timing the market…

When selling and buying a home, timing the market becomes less relevant as the selling price and buying price tend to balance out. Whether you sell low and buy low or sell high and buy high, market fluctuations mitigate the impact, making personal circumstances and priorities more important considerations.

Step 7 | Make an offer

You're prepared for home ownership: realtor acquired, dream team assembled, requirements set, shopping complete, and you found your dream home. Now, it’s time to make an appealing offer to make it yours.

The Terms

Navigating a real estate transaction can be overwhelming, especially when faced with unfamiliar terms. Here's a quick list of offer terms to help you understand the process. For a more comprehensive review, explore my Real Estate Dictionary.

  • This is you!

  • The current owners

  • A legally binding contract that contains the terms and conditions agreed upon for the purchase of the property

  • The amount of time you give the sellers to review and accept your offer (typically 24-48)

  • Money provided by the buyer as a commitment to purchase the property, held in trust until closing

  • Requirements that need to be satisfied for the offer to be binding. Think mortgage financing, satisfactory home inspection, or review of condominium documents

  • Moveable personal property that are excluded from the sale unless specified otherwise

  • Items that are permanently attached or built-in to the property and are included in the sale unless noted otherwise.

  • Closing day, when ownership is transferred, the purchase price is paid… The day the house becomes yours!

  • The process of verifying property ownership and identifying liens or encumbrances through examining public records. Your lawyer will handle this.

Writing and submitting the offer

When writing an offer, you have two choices: go in firm or make it conditional. A firm offer is a commitment without conditions, while a conditional offer allows for specific conditions, like financing or home inspection.

With a conditional offer, the house is not sold until the conditions are either met or waived. Your realtor will help you weigh the pros and cons of each option, and help decide which one suits your needs and the property.

What next?

When the sellers receive your offer, they have several options to consider. The irrevocable time, which is the deadline you set for the seller's response, allows the seller to accept, reject, or counter the offer. If the offer is not satisfactory, the seller can decline it outright. Alternatively, they can counteroffer with revised terms, such as a different price or conditions.

Your realtor will work this negotiation process back and forth in your interest until both parties reach an agreement or decide to walk away. The seller's options provide flexibility in responding to your offer and finding common ground.

Step 8 | Finalize your funding

Time to lean on that dream team again…

Finalizing your funding is a crucial step in the home buying process. It involves working with your lender to complete the necessary paperwork and ensure that your mortgage terms align with your financial goals.

Here is what to have ready

If not already provided during the pre-approval stage, your lender will require the following information to proceed with a mortgage application… so make sure you have it handy!

  • Provide our full name, contact information, Social Insurance Number (SIN), and date of birth.

  • Request a letter from your employer which states your employment details such as your job title, salary, and length of employment. Gather recent pay stubs to help verify.

  • Gather details about your assets (bank accounts, investments, properties, and owned items of value) and liabilities (loans, credit card debts, and other financial obligations).

  • You will need to provide valid identification documents, such as a government-issued ID or passport, to verify your identity.

  • You will have to provide permission for the lender to obtain a copy of your credit report including information about your credit score, payment history, and any outstanding debts or loans.

  • You will need to provide details about the property, including the purchase price, address, and other relevant information.

The terms you will want to know

  • The percentage of the loan amount charged by the lender as the cost of borrowing. It determines the amount of interest paid over the life of the loan.

  • The process of gradually paying off the mortgage loan through regular payments, typically over a fixed period, usually expressed in years. Typically 25-40 years.

  • The specified period during which the mortgage agreement and interest rate remain in effect. At the end of the term, the mortgage is usually renewed or refinanced.

  • The initial amount of money borrowed for the mortgage, excluding interest and other fees.

  • Insurance sometimes required by lenders for borrowers who have little down payment.

  • A type of mortgage where the interest rate remains constant throughout the term of the loan, providing stability in monthly mortgage payments.

  • A type of mortgage with an interest rate that can fluctuate over time. The monthly payments can vary as the interest rate changes.

How Much down?

A larger down payment is generally preferred as it reduces the mortgage and monthly payments. However, it's crucial to consider additional closing costs. Avoid using all your liquid cash for the down payment to ensure you have funds available for moving day and other expenses.

First time buyer?

So you are a first time buyer… here’s how that can help you in your purchase.

  • Helps increase down payment for first-time buyers, making home ownership more accessible. The incentive is an interest-free loan of 5% for an existing home and 5% or 10% for a new home. It must be repaid upon property sale or within 25 years, based on the property's value at that time.

  • The HBTC provides a non-refundable tax credit of up to $750 to assist with closing costs for first-time homebuyers.

  • First-time homebuyers in Ontario may be eligible for a refund of up to $4,000 on the land transfer tax, helping to reduce the overall cost of purchasing a home.

  • Allows eligible individuals to withdraw up to $35,000 from their Registered Retirement Savings Plan (RRSP) to use towards the purchase of their first home. They have 15 years to repay what was borrowed starting two years after the the withdrawal.

What happens once you are approved?

Once formally approved, ask your lender questions, and negotiate to secure favourable mortgage terms / interest rates. Stay organized and proactive to ensure funds and mortgage terms align with your financial goals. Your lender will prepare the mortgage documents for signing at closing.

Remember, your mortgage isn’t your only expense when purchasing a home. Make sure you also have funds ready for closing costs. See step 10 for a review of what you can expect for closing costs. And check out my detailed guide to closing costs here

Step 9 | Home Inspection

It's easy to get swept away by the emotions of buying a home. Thats why home inspectors act as your personal detectives, uncovering hidden issues you might miss. They'll assess everything from electrical systems to plumbing, providing you with peace of mind and saving you from potential headaches down the road. Let the experts do their job before you say “I do" to your new home.

Your dream team is starting to come in handy… am I right!?

Should you join in on the fun?

Absolutely! Attending the home inspection is an invaluable opportunity to become acquainted with your new home and observe any issues directly. But if you can’t make it, rest assured that your realtor will be present on your behalf.

How about a new build?

Even though new build homes claim to be flawless, let's be real—they're not always. Don't be fooled by the shiny facade. A home inspection is your secret weapon to uncover any hidden flaws or dodgy construction, so don’t skip this step. Besides, even if issues are found, Tarion likely has your back. So, you've got nothing to lose and everything to gain by getting that inspection done.

What will you get?

Your trusty home inspector will provide you with a detailed report summarizing the condition of the home, including any identified issues and potentially their estimated repair costs. You and your realtor can use the report to determine how you want to proceed with the transaction, be it negotiating a reduced sale price, negotiating repairs, or walking away from the deal.

Step 10 | Close the deal

You have an accepted offer, finalized your funding, and completed your home inspection…now your realtor and lawyer will work with you to close the deal.

Here’s what you need to do

  • Begin satisfying any conditions asap. Your realtor will help handle the documentation.

  • Pass on all information to your lawyer. They will get the title search process moving.

  • Secure homeowner's insurance for the property. Provide proof of insurance to your lender or they won’t be able to provide funding on closing day.

  • Give notice to your landlord if you are currently renting.

  • Book your movers, rental vehicles, and call on your friends.

  • Ensure that all necessary funds for closing are ready to be transferred, including the down payment and closing costs.

  • Complete a final walkthrough of the property to verify that it is in the agreed-upon condition. Your realtor can help make sure any negotiated repairs or improvements have been completed.

  • With the help of your lawyer, arrange for the transfer of utilities into your name, including electricity, water, and gas. Don’t forget about phone and cable!

  • Update your address with relevant parties, (post office, banks, credit cards, drivers license, health card, subscriptions, etc)

  • Meet with your lawyer to signs all closing documents

Working with professionals like your real estate agent and lawyer ensures a smooth and successful closing process. On closing day, you'll sign legal documents, transfer payment to the seller, receive the keys to your new home, settle any outstanding closing costs, and celebrate becoming a homeowner!

What other closing costs can you expect?

Don't get caught off guard! Anticipate those sneaky closing costs and budget wisely for a smooth closing financially. Brace yourself and be prepared to pay for some of the following items.

  • Inspection

  • Survey

  • Appraisal

  • Remaining Downpayment

  • HST/GST (possibly required for new builds)

  • Land / Property Transfer Taxes

  • Legal Fees

  • Title Registration

  • Title Insurance

  • Mortgage Insurance Premiums

  • Mortgage Interest Adjustment

  • Statement Adjustments

Explore my comprehensive guide that details additional expenses homebuyers can expect both on and after closing day here.

Step 11 | Moving In

Moving into a new home can be a chaotic process, but with proper planning and organization, it can be a smooth and enjoyable experience. Lets take a look at some tips and tricks to help make your move-in day as stress-free as possible.

Start Packing Early

The first step in preparing for your move is packing up your belongings. Start early to avoid the last-minute rush. Begin by sorting your items into three categories: keep, donate, and throw away. Pack items that you use less frequently first and label each box with the contents and the room they belong to. Use sturdy boxes, packing paper, and bubble wrap to protect your fragile items.

Prioritize the organize

Once you've packed your belongings, it's time to organize them for the move. Create an inventory list of all your items, including their condition, to ensure that nothing gets lost or damaged during the move. Decide on a system for unpacking, ahead of time. Maybe start with the essentials and then move to the non-essential items. Colour codes and labels can come in very handy… just make sure your movers know what they mean!

Prepare the essentials

Make sure you're prepared with a few essential items. Snacks, water, cleaning supplies, and a first-aid kit are a great start. Make sure your movers have clear instructions on where each box should go, and make sure they have access when needed. Remember… you might not get your keys until the evening.

Budget for moving day…and the weeks that follow!

Don’t forget to budget for the moving costs and the costs of settling into your new home.

Moving Costs

  • Moving Company

  • Packing Supplies

  • Vehicle Rentals

  • Move in/out building fees

  • Additional expenses

Settling-In Costs

  • Locksmith

  • Professional House Cleaning

  • Painting

  • Odds and ends repairs

  • Government ID Updates

  • Furniture

Congratulations! You've made it through the final step of the home buying process - moving in. Now it's time to start making your new house feel like a home. Unpack, decorate, and enjoy your new space. After all your hard work, you've earned it.

Nick Ortolan
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