Get all your first-time home buyer questions answered, so you avoid costly mistakes.
Owning a home may be your dream, but in order for the purchase to be the happy and satisfying experience it was meant to be, you need to ensure that you are financially and mentally prepared for the responsibilities that come with it.
- 11 Questions to Ask When Hiring a Realtor
- 10 Questions to Ask About the Cost of Buying Your First Home
- 5 Questions to Ask When Searching for a Home
1. How do Realtor fees work? How much do you get paid?
Typically, the fees for both the listing and purchasing Realtors are paid for by the seller. The fees are determined at the time the home owners sign the listing agreement. The fees can vary depending on the type of service you’re receiving. What this means is there are different types of services that different Realtor and brokerages offer. Ask your Realtor what their fees are.
2. Is real estate your full time or part time job?
Your Realtor should be a full time agent. Like any professional you work with you want them to have the most experience possible and competently immersed in their profession. Full time Realtors see more properties, know the market and are going to be there when you need them most.
3. Are you a licensed REALTOR?
This might seem like an odd question, but there have been a few instances over the years of people claiming to be Realtors, when they really weren’t. Realtors complete educational requirements, obtain criminal background checks and are required to complete ongoing mandatory education to maintain their license. Realtors are also overseen by a governing body that has specific rules, regulations and protocol to foster a standard of excellence which helps serve home buyers and home sellers better.
Although anyone can say they are a real estate professional, you want to see proof of a current license to ensure you’re working with a qualified agent. It’s recommended that you check the provincial real estate governing body website, where you can search for the Real Estate Agent’s name to make sure they are licensed.
4. What additional professional designations do you have?
Outside of obtaining a real estate license there is continuous education that is available for Realtors to take. Increase education means increased skill, knowledge and proficiency. For example, if you are selling your condo, ask your Realtor if they have their Certified Condominium Specialist / CCS, certificate.
Not only does this show that the Realtor has taken more courses than required, it also shows that the REALTOR takes their profession and clients’ needs seriously.
Other designations include:
- Accredited Buyer's Representative / ABR
- Seller Representative Specialist / SRS
- Certified Condominium Specialist / CSS
- Seniors Real Estate Specialist / SRES
5. Do you work independently or as part of a real estate team?
Having a team with support staff such as an assistant, or additional Realtor can be a great asset. The benefit to having a team work for you in buying a home or selling property is that you have more than just one person talking care of your needs.
6. How much of your business is repeat or referral business?
This question will help you determine how many of the Realtor's clients enjoyed their experience enough to recommend them to someone and use them again. According to a study completed by National Association of Realtors (NAR) in 2020, 47% of home buyers were referred by a friend, neighbour or relative. You can also ask for references from previous clients so that you can check how others felt about using that Realtor.
7. Do you do a Buyer Consultation to explain the home buying process?
If you are a first-time homebuyer, buying a home can be scary and overwhelming. Before jumping into the car and looking at homes, ask your Realtor if they do a Buyer Consultation.
A Buyer Consultation is a great time to discuss with your Realtor what costs you need to know about, how you will find a home, what’s involved when writing a purchase contract, conditions like house inspection and much more. In today's world, a Buyer Consultation doesn't have to be in person. A zoom call can be a great way to get all your questions answered.
A survey by the Real Estate Council of Ontario (RECO) says 32% of first-time homebuyers reported that they did not feel prepared and knowledgeable about the process.
Ask lots of questions. Your Realtor is there to educate and inform you so you make the right decisions when purchasing home.
8. Do I need to be pre-approved or pre-qualified for a mortgage before looking at homes?
Being pre-qualified for a mortgage is the step before being pre-approved.
- Pre-qualified Simply means that based on general information you provide a bank or mortgage broker, like annual income, credit and debt, they will suggest the amount of the mortgage you can afford.
- Pre-approved. You want to be pre-approved before looking for a home. Pre-approved is a guarantee in writing by a lender to grant you a loan up to a specified amount (subject to receiving full documentation). A pre-approved mortgage is not a guarantee of being approved for the mortgage loan. With a pre-approval you will know exactly what you can afford when looking for a home, and when you find the right home you will be one step closer. Sellers will find any offer you make more attractive if you are pre-approved for a mortgage. In addition, having a pre-approved mortgage will allow you to take advantage of the best interest rates.
9. How will you help me find a home to purchase?
Your Realtor will know the right questions to ask you to help figure out what your wants and needs are in a home. How many bedrooms do you need? If you want four bedrooms, is that because you have three kids, or you have two kids so a three bedroom home with a den will do. What kind of parking facilities do you need? Do you need a home that can accommodate different stages of life or different generations? Do you need public transportation? Schools in the neighbourhood? Do you want a new home or previously-owned home?
10. How many homes do you sell each year?
Ask how many homes your Realtor sold last year? How many sold this year? Find out how much business your Realtor does.
11. What haven’t I asked that I need to know?
Sometimes there are questions that you don’t know to ask, because well… you just don’t know. This is a great question that allows your Realtor to cover any topics that they feel are important for you to know.
12. What will the Down Payment be?
A down payment is the part of the home price that does not come from the mortgage loan. The down payment comes from your own money. You can buy your home with a minimum down payment of 5%, if you have mortgage loan insurance from CMHC. You need a down payment of at least 20% for a conventional mortgage.
13. How much is the deposit?
The deposit is paid when you make an Offer to Purchase to show that you are a serious buyer. The deposit will form part of your down payment with the remainder owing at time of closing. If for some reason you back out of the deal without having covered yourself with purchase conditions, such as financing, home inspection, etc., your deposit may not be refundable and you may be sued for damages. The size of the deposit will vary depending on the price of the home and market conditions.
14. What is Home Loan Insurance?
To purchase a home you must have a minimum 5% down payment. If your down payment is under 20% it is considered a high ratio mortgage and you must account for home loan insurance, provided by the Canadian Mortgage and Housing Company (CMHC) or Genworth Financial.
Insurance fees typically range from 1-3% of the mortgage principal and depend on the borrowing amount and percentage of down payment. Insurance fees can be added to the principal of your mortgage and paid monthly or paid upon closing.
15. What are the Legal Fees?
When you buy a home, you need a lawyer to complete a title search, ensure all the documentation has been accurately completed, register your mortgage and register you as the new owner of the property. Legal fees The amount of these costs will vary, depending on where you live and what kind of home you’re buying.
16. What is the Appraisal Fee?
Your mortgage lender may ask you to pay for a recognized appraisal in order to complete a mortgage loan. An appraisal is an estimate of the value of the home. Appraisal fees vary.
17. What is the Property Inspection Fee?
A home inspection a condition is typically a condition on your Offer to Purchase. A home inspection is done by a qualified home inspector to provide you with information on the condition of the home. The Property Inspection fee will range (approx. $400-$800).
18. What is the cost of Title Insurance?
Your lender or lawyer may suggest that you get title insurance. This will cover loss caused by defects of title to the property. Title Insurance fees varies with properties and price range.
19. What about Prepaid Property Taxes?
Property taxes are charged by the municipality where the home is located. They are based on the value of the home. The seller may have already paid property tax or other expenses that apply to the time after the house passes into your hands. You will need to pay the seller back.
20. What is the cost of Property Insurance?
The mortgage lender requires you to have property insurance because your home is security for the mortgage. Property insurance covers the cost of replacing your home and its contents in case of loss. Property insurance must be in place on closing day.
21. What are other costs to consider when buying a home?
Depending on your situation, you may have some other initial expenses to consider such as moving expenses, renovations or repairs, condominium fees, utility fees - telephone, gas, electricity, cable TV, Internet etc.
22. Should I think about resale before I purchase my first home?
It’s so exciting buying your first home, sometimes you don’t think of where you will be a few years down the road. The average first-time home buyer only stays in a home for four years, so if you purchase a home that is very specific and not appealing to a general audience it may be hard to sell later on.
23. How should I search for my new home?
Don’t limit your home search to the Internet and Open Houses. When working with a Realtor you will have access to properties before they go on the public real estate sites, as well as, property information not available to the public. A Realtor can help you avoid missing out on the property you really want.
24. What do I want in a neighbourhood?
Make a list of all the amenities you would like in the neighbourhood you want to live in. Do you want access to public transportation, recreational facilities, shopping or schools? Do I want a vibrant urban community or family-friendly suburban community?
25. Should I consider schools before buying?
If you have children, before you buy a home you should contact the designated school(s) for the neighbourhood(s) you are interested in. Do they have space for your children? Will they need to take the bus?
26. As a first-time home buyer, how can I make the buying process easier?
The home buying process will be easier if you can narrow down the type of home you want to see. Remember you are not looking for the perfect home. If you are always looking for the perfect home, the process will be frustrating. The best rule of thumb is to satisfy 85% of what you are looking for. Which means what 15% can you live without?
When you are a first time home buyer, the best advice is to ask lots and lots of questions. You want to do your homework and become informed. Work with a Realtor you trust, who can help you make no regret real estate decisions.
Posted by Marnie Campbell on