An Informative Guide to Buying a Home

The average price of an Edmonton home is over $400,000. Yet, nearly 3,000 homes were sold in May 2021 alone. Since COVID, the market has skyrocketed. If you are buying a home as a first-time buyer, navigating the market can be challenging. 

Even if you are an experienced buyer, a refresher can't hurt.

Keep reading for tips on the buying process. 

First Steps in Buying a Home

Before you buy a house, there are multiple steps you should take before you start looking. It is a long process, and proper preparations are a must.

The first step to buying a house is determining what house is best for you and your loved ones. For example, a condominium might be an excellent option for a young couple or a single professional, but is it the best place to raise a family?

You will need to determine how long you are planning to stay, planning to expand your family, or looking for a home that can house an in-law suite for parents. 

How Is Your Credit Score?

The minimum credit score in Canada is 680, but the bare minimum does not give you the best interest rates and therefore increases your monthly mortgage payments.

Your credit should be between 800-900 to get the best interest rates. There are multiple ways to increase your credit score. Don't be afraid to ask for an increased credit limit and pay your bills on time.

Calculate Your Budget

Perhaps you have heard the term "house-poor." You will want to avoid this when you are buying your home. The term means that you have no money to pay for the miscellaneous bills after your mortgage payments.

Keep in mind that you will need to keep some money to repair and maintain your home, including property taxes, insurance, utilities, and personal bills. A bank may lend you an amount that you cannot afford when all the costs are added up.

Pre-Approved Mortgage

Before you put in an offer on your dream house, it is a smart idea to become pre-approved for a mortgage. 

There are several advantages to a pre-approval. Firstly, it can help set your budget and know what price range you can shop in. Secondly, a seller might be more willing to accept an offer knowing that the financial conditions are likely to be waived. More on that later!

Find a Trustworthy Real Estate Agent

It is essential to note the difference between a real estate agent and a REALTOR®®. A REALTOR®® is a member of the National Association of REALTOR®s® and adheres to a code of ethics. To be part of NAR, a REALTOR®® needs to have an impeccable record. 

You can research the agent of your choosing. Keep a close eye on the reviews and reputation. An agent should have ample availability to help you find your dream home.

Yeg is Moving has several top-notch REALTOR®s® to meet your needs. 

Commissions Explained

In Alberta, the average commission for real estate is usually about 7%. The commission is divided between the seller's agent and the buyer's agent. Agents do not get paid for showings or open houses, and the commission is based on the sale of the home.

There is usually some confusion as to who pays the commission fee. Typically, the amount is calculated in the asking price, so the agent takes a cut from what the seller ultimately receives.

Start Browsing Your Real Estate Market

There are several ways to view houses. We will go over some of the pros and cons of each option and what to look out for.

Open Houses

Open houses are great if you do not want to feel pressured by the seller. Usually, the seller is not home, and you can take your time investigating the house. However, a downside is that you won't ask questions you might have if it is busy.

Of course, you can make an appointment with the agent later to acquire the information and answers you need.

Private Showings

Private showings allow you to inspect the house thoroughly with your agent close by. You can ask questions and get the information you need.

Contrary to open houses, you will need an appointment for private showings. You can not simply show up and start looking around. 

Red Flags

There are a few red flags to look out for when viewing houses, such as infestations, water damage, and cracked foundations. However, these are major red flags, as these are difficult and costly to fix. 

Click here for a complete list of red flags.

Buying Your Dream Home

You have found your dream home; now, onto the buying process! Be diligent with your inspection when you are buying a home, don't leave anything to chance!

Home Inspections

Many sellers will update the cosmetics of the house to attract more buyers. Yet, they may be unaware of the underlying issues of structural defects. Therefore, it is essential to hire a professional to inspect the home for the "bones" of the house.

If the inspection does not pass, do not buy! Unless you can negotiate a lower price for the house or put in the conditions that the seller repairs the damages. 

Home Appraisal

The lender will want you to conduct a home appraisal to see if your future home is worth the asking price. This is for the benefit of both the buyer and the lender. First, it protects both parties from making a bad investment.

Mortgage Options

If you have been pre-approved for a mortgage, that is great! You will have gone through the process of having your financial statements checked.

You will need to be transparent with your bank about your financial situation. They will check items such as credit score, debt-to-income ratio, employment information, and payment history. 

Don't be afraid to shop around for the best rates in your area. Your personal bank might be a good option, but it might not be the best. 

Negotiations and Conditions

Negotiating the price is standard practice. Your agent will help you put in the right offer for the house. However, there are several conditions that you will need to include. 

Each sale is dependent on the state of the house. Some buyers only have a financial condition, while others will want inspections and repairs to be included.

Some common conditions include:

• Home inspection
• Appliances
• Closing Costs 
• Closing Date

If you are a homeowner, the sale of your current house needs to be included in the conditions. 

Recently, the market has become a "Seller's Market" where most sellers have the choice between several offers. As a buyer, it might be in your best interest to keep the conditions to a minimum, as it is unlikely to have an offer accepted with multiple conditions.

First Time Home Buyers

There are a few benefits when you are buying your first home. First, you require a smaller downpayment, usually 5%. Secondly, you may be eligible for the First-Time Home Buyer Incentive.

What's Next?

Congratulations on buying your new home! You have settled in, all the boxes have been put in the recycling, and you have met the neighbors!

Home Insurance

You most likely already have home insurance; most lenders require coverage to protect the investment of your home. Home insurance will not only cover the lender, but it will protect you as well.

There are several types of home insurance; shop around for the one that fits best for your home and budget.

Maintenance

Regular maintenance checks are a must if you are a homeowner. In addition, you will need to take preventive measures to avoid major repairs.

For example, there is a small leak in the kitchen sink. It could be a rubber seal that generally costs less than $10. If you let it leak, you might be looking at mold, insects, and a whole host of problems you could have avoided. 

Keep Saving

Regular maintenance might not be enough to avoid unexpected repairs. Instead, keep a "rainy day fund" for significant expenses such as a new roof, a new water heater, or a new furnace. 

Are You Ready to Take the Plunge?

Buying a home can stir up all sorts of emotions, anxiety, excitement, happiness, you name it! We hope that this guide has eased some of the negative emotions and prepared you for what is to come in this exciting journey.

We are here every step of the way to find your dream home; start looking today!