Let’s face it, buying a house or condo in Toronto, especially if you’re a first time buyer, can be a daunting, intimidating and generally nerve-wracking pursuit. And it doesn’t help that, for most of the past decade, it’s been more of a seller’s than a buyer’s market (throughout most of the GTA at least!).
Buying a home is the largest investment you’ll likely ever make. That’s why we’ve compiled this handy comprehensive guide to walk you through the process step by step. So settle in, put your feet up, and let’s get started!
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DEFINE YOUR MUST HAVE’S & WOULD LIKE’S
GET PRE-APPROVED
This one is big, and we recommend that you do it first before anything else in the home buying process. We’re always surprised when we come across buyers who have spent hours and hours looking at properties online and going to open houses before having an actual pre-approval in place from a lender.
What if you’ve overestimated what you’ll be pre-approved for and have been looking at homes under your budget? Or even worse, over your budget? We’re not saying there’s no benefit to doing research before starting your search (there is) but when you’re ready to go then – trust us – speak to your bank and a mortgage broker (we recommend doing both) and get a pre-approval in place to eliminate any surprises down the road.
PRE-QUALIFICATION VS PRE-APPROVAL?
There’s a big difference. Getting pre-qualified involves supplying a lender with basic information about your income, assets, and debts so that they can give you a general idea of your borrowing power and the maximum amount of mortgage that you can carry. It’s a starting point but typically none of the information you’ve provided is verified at this point.
A pre-approval, however, is a written commitment that’s issued by a lender that’s based on the verification of your employment status, income, assets, debts and your credit score. It’s not an ironclad guarantee and likely will be conditional on something (the property appraising out, mortgage insurance approval, etc) and that there’s no material change in your financial situation are the most common). They’ll include an interest rate guarantee and are valid for up to 120 days.
Humble Brag: We have our very own kick-ass in-house Mortgage Team who has access to over 40 different lenders, executive rates and the ability to fast track approvals and appraisals at lightning speed. We also have access to the very best in-house mortgage representatives at all of the major banks. What does that mean for you? That you’re guaranteed to find the best rates and terms FOR YOU.
HIRE AN AGENT
Once you’ve received your official pre-approval certificate, the next step is to find an agent. And not just any old agent, you want to make sure that whoever you hire has the expertise and resources to give you the best experience possible, throughout the home buying process. Because you deserve it.
Referrals from friends and family is one great way to find candidates for the job, but unless someone blows your socks off to such a degree that you’re certain no one else can come close to doing a better job we recommend interviewing at least two agents before making a final decision. Some questions that you should be asking during the interview are:
- What type of experience do you have in the property types and neighbourhoods I’m interested in?
- What is your experience and strategy when dealing with multiple offers?
- What is your sales style? (pushy and aggressive is not what you’re looking for we assume)
- Who will show me properties if you’re not available?
- Will you preview properties of interest to save me time?
- Are you full-time or part-time agents and do you have any other jobs?
- Do you have a response time guarantee?
- Can I speak to some of your current and past clients?
You also want to make sure that whoever you choose has a satisfaction guarantee that allows you to cancel your representation agreement with them if they fail to deliver on their service promises. And they should put that in writing.
Humble Brag: We always, ALWAYS, do a thorough Needs Analysis with all of our potential buyers. Why? Because we’d rather ask you 100 questions and show you 10 vetted homes that you’ll love than only ask you 10 questions and end up showing you 100 homes (most of which won’t fit the bill).
CHOOSE YOUR NEIGHBOURHOOD
Finding a neighbourhood that best suits your needs can be a daunting task, especially in a city like Toronto where there’s 240 neighbourhoods to choose from!
Things to consider are proximity to schools, day care, parks, shopping and transit along with the general vibe of the neighbourhood and safety. Not sure which neighbourhood is right for you? We’ve taken the liberty of putting together a Top 3 Neighbourhoods in Toronto list (in no particular order) based on safety, school ranking, etc.
RIVERDALE
Located East of the Don Valley to Jones Avenue and South of the Danforth to Lakeshore, Riverdale is a community with lots of character from the older Victorian style homes to the large luxurious parks it provides.
In addition to the beautiful parks, Riverdale Farm is another beloved destination that families have been visiting since the 1800’s (when it was originally called the Riverdale Zoo). With many schools, parks, grocery stores, libraries, shopping and public transit available, you’ll have everything you need right at your doorstep, making it one of the best Toronto neighbourhoods!
Public Schools: Withrow Avenue Junior Public School, Jackman Avenue Junior Public School, Frankland Community School
High Schools: Riverdale Collegiate Institute
Catholic School: Holy Name Catholic School
Private Schools: Montcrest School
TTC Stations: Broadview, Chester, Pape
Parks: Riverdale Park, Withrow Park, Kempton Howard Park
BLOOR WEST VILLAGE/HIGH PARK
Located on Bloor Street West from Jane Street to Parkside Drive and south to The Queensway, Bloor West Village/High Park is one of the most sought after and best Toronto neighbourhoods in the city.
High Park itself is adored by many, especially children. The park consists of: a large pond, large playground and a small zoo! In addition to the park, the community itself gives off a smaller community feel that keeps locals as well as guests always feel welcome.
Public Schools: Swansea Junior and Senior Public School
TTC Stations: Keele, High Park, Runnymede, Jane
Parks: High Park
THE BEACHES
Located from Woodbine Avenue to Victoria Park Avenue from Kingston Road to Lake Ontario, The Beaches have always been considered one of the best Toronto neighbourhoods to live in for people of all ages.
The main attraction, of course, is the beach itself with its fabulous boardwalk and bike trails located right next to the water. The locals say some of their favourite things about living in the beaches are its schools, the shopping available on Queen Street and the activities that are available for the whole family year round.
Public Schools: Adam Beck Junior Public School, Balmy Beach Community School, Kew Beach Junior Public School, Kimberley Junior Public School, Norway Junior Public Schools: Williams Road Junior Public School, Glen Ames Senior Public School
High Schools: Malvern Collegiate Institute
Catholic School: Neil McNeil Secondary School, Notre Dame High School
TTC Station: Woodbine, Main, Victoria Park
HUMBLE BRAG: Not only do we have a team of specialists who know every Toronto neighbourhood like the back of their hand but we’ve also spent countless hours putting together a comprehensive Neighbourhood Guide to give you the inside scoop on everything from properties for sale in each neighbourhood to where to find the closest subway station.
DEFINE YOUR MUST HAVE’S & WOULD LIKE’S
We always recommend that you have an idea of your “Must Haves” and “Would Likes” before you start seeing too many homes in person. Not only does this give us a great starting point for honing in on the best properties for you but it will also help provide clarity to you on the necessary features of your new property that should make your search easier.
Questions to ask yourself during this step in the home buying process are: how many bedrooms and bathrooms do I need, do I need a dedicated parking space, is open concept a must, how far away can my new property be from where I work, do I need parks, amenities or transportation nearby, am I okay to do renovations or do I want something turnkey?
You’ll also need to figure out whether you want a freehold property, a condo apartment or a condo townhouse. This will likely depend largely on your budget but will also depend on your wants and needs as well.
CONDO APARTMENTS & TOWNHOUSES
One of the distinct differences between a freehold property and a condo apartment/townhouse is that with the former you’re responsible for all repairs and maintenance whereas with a condo apartment or townhouse typically the condo corporation covers all exterior work, window and roof repair etc. They’ll also typically cover anything behind the walls like plumbing.
Unless you’re buying in a boutique condo building or loft with no amenities, you’ll also have access to a concierge, pool, party room, etc. depending on the building. Condos are definitely a lower maintenance option BUT you’ll have to pay condo fee a.k.a. maintenance fees (this is usually the biggest con to this property type) which could range from $400/month upwards of $1,500+ /month depending on how large your unit is, how many amenities are in your building and whether you own a parking and locker as both of these have fees associated with them.
A few others things to note: almost all condo buildings have ‘condominium rules’ which are created by the condo board. These range from pet restrictions to requiring approval for major renovations. Some of these rules may not agree with your day to day life and will put restrictions on things you can and cannot do in the building as well as in your own unit.
PRE-CONSTRUCTION
Sure, the thought of buying a new condo at a cheaper price sounds great, but it’s not as easy as it seems. Every day people invest their savings into new condos that are being built in the GTA not knowing the financial risk and potential losses they may encounter.
There’s a general misconception out there that pre-construction will cost you less to purchase than a similar re-sale unit. That used to be the case many moons ago but these days you’ll actually be paying more on a price per square foot basis for pre-construction than re-sale the majority of the time. Also, at the time of closing, there are usually additional costs that people don’t account for such as connection fees, reserve fund fees and taxes that are on average 1.5% of the purchase price. That’s why it’s in your best interest to get a cap on these fees at the time of signing your Agreement of Purchase & Sale (these are things your agent should be doing for you).
When you pay your down payment on a new build, unlike re-sale homes you don’t need to provide all of the deposit at once. There’s an amount owed every 30-90 days until 10-25% of the purchase price has been paid. Benefits are that if you don’t have all of your downpayment ready upfront you’ll have some time to collect it. Drawbacks are that you likely won’t be getting any or much interest on your money which will be sitting in the builder’s lawyers trust account for as many years as it takes the building to be completed.
Once you’ve paid your deposit and signed your contract, you’ll be informed of your ‘occupancy date’ which could vary greatly depending on when you signed your purchase contract in relation to when construction will be finished. You’ll be paying phantom rent a.k.a occupancy fees to the builder between the completion date of your unit and when the building registers, which could be anywhere from a few months to worst case scenario a few years.
Also, when buying pre-construction in Toronto, don’t forget that HST is added to the list price. If you’re living in the unit you’re eligible for a full rebate which is received after the final closing. If you’re renting the unit, however, you’ll only get about half of your rebate back, the rest comes out of your pocket. So remember, if you’re looking for an income property buying new construction is going to cost you more in taxes!
Sales people who work directly for the builder will give you all of the dazzling features and perks of living in their new construction project but none of the downsides. Remember: they’re not working for you, they’re working for the builder. Make sure you have your own Realtor working for you, not someone whose job it is to get the highest price and best terms for the builder!
HUMBLE BRAG: Our new construction specialists have access to VIP pricing before units go on sale to the public which could save you thousands of dollars on your purchase. They also know about projects you should avoid, the best and worst builders and tons of other useful info that you won’t get from a builder’s representative.
SEE PROPERTIES
We’re big fans of seeing properties in person instead of vetoing them online. If the listing agent has done a poor job of marketing the property (cell phone pictures anyone?) don’t dismiss it and move on as it could be the home for you. In fact, we’ve had many buyers over the years purchase the home that they dismissed online – so keep an open mind.
Realtor.ca is a great place to start doing preliminary research on homes and areas but keep these two crucial things in mind:
- It’s 24-48 hours behind real time so a lot of the properties listed on the site are already sold (especially in a seller’s market where the best properties could be gone on Day One)
- It’s only giving you the list price, which could be very different than the price that property actually sells for so you may be in for a rude awakening.
Humble Brag: Our home search tool is second to none and alerts you IN REAL TIME the moment a listing is put on the MLS system. In a fast seller’s market this kind of time advantage could mean the different between securing your dream home or not even being able to see the property before it sells.
Are you tired of searching through new listings yourself, since many may not fit the bill? Then take advantage of our Cherry-Picked Properties option. We’ll scour available listings daily and only send you the ones we know you’ll love.
PUT IN AN OFFER
Congratulations, you’ve found your perfect property; it’s in your ideal neighbourhood, meets your Must Have list and is in your price range! Now comes the exciting and equally nerve wracking part: preparing an offer.
The strength of your Realtor, their attention to detail, understanding of real estate paperwork & clauses and their negotiating ability will mean the difference between compromising, losing your shirt or coming out of the negotiation process with as many of your needs and wants as possible.
Humble Brag: We take the negotiation part of the home buying process very seriously and will go to bat for our clients. Every. Single. Time. We’ll never, ever pressure you to do anything you’re not comfortable with. Is the seller asking too much money? Are the terms unreasonable? We have your back and will always give you our honest advice. Not sure what to expect? We’ll walk you through everything you need to know, in plain language, so that you aren’t left scrambling when it comes time to submit your offer.
Once you have an accepted offer you’ll need to submit a deposit that will be held in Trust by the listing brokerage until closing. That deposit is due within 24 hours of an accepted Agreement of Purchase and Sale so have the funds available before you start looking at properties. If you’re in competition for a house you may need to have the deposit on hand for your Realtor to present in person.
You may include a conditional period in your offer for conditions such as home inspections, financing or, in the case of condo’s, the condominium status certificate. Once the conditions are met, your purchase is now firm. Congratulations!
HIRE A LAWYER
Selecting the right lawyer is as important as choosing your Mortgage Specialist or Realtor. You’ll typically find a lawyer once you have an accepted Agreement of Purchase and Sale. If your purchase isn’t standard than you should hire a lawyer to review your Agreement of Purchase and Sale paperwork BEFORE submitting your offer.
This is typically what your real estate lawyer will need from you:
- A copy of the Agreement of Purchase and Sale.
- The full names of each person to take title to the property and their marital status, and the dates of birth of each person on title.
- Confirmation if one or more of the buyers are “First Time Buyers” meaning that they have NEVER owned property anywhere in the world, and have not been legally married to someone who has owned property anywhere in the world, while they were married.
- Arrange the mortgage well in advance of closing so that they are provided mortgage instructions with sufficient time to arrange for signing.
- When going to sign your closing documents, you’ll need two pieces of ID acceptable to the Canadian lender (usually a Canadian driver’s license and passport or SIN card).
- Obtain home insurance prior to closing and ensure that your Mortgage Lender is listed as the mortgagee on the policy. They will require an “insurance binder” from the insurer to be faxed to them just prior to closing.
- Your real estate lawyer may require a blank cheque from a Canadian Bank Account for the mortgage lender to make withdrawals of your mortgage payments.
- Your real estate lawyer will ask you to bring to your appointment a certified cheque or bank draft payable to their company, ‘in trust’ for the amount they require to complete your transaction. Typically, they won’t know this final number until shortly before closing. Once they know your mortgage amount and they receive the Statement of Adjustments from the Seller’s lawyer.
Humble Brag: We work with the best real estate lawyers in the business and are happy to introduce you. They have an eagle eye for detail, years of experience and treat our clients like gold. What does that mean for you? That you can rest easy knowing that you’re working with the best. We’ve even organized for them to courier your keys to you on closing to save you a trip to their office.
Get your writing hand ready because in the week before your property closes you’ll be signing a lot of paperwork! This is when you’ll be signing the closing paperwork, getting a certified cheque and providing it to your lawyer and the best part – picking up your keys!
MOVING
With all the anticipation leading up to a home purchase many buyers forget about everyone’s least favourite activity – moving! We all move at least once in our lifetime (unless staying in your parent’s basement is cool with your spouse!) but it never seems to get any easier. That’s why organization is key. Here are our most important moving tips so that you’re not pulling your hair out:
- Don’t wait until the last minute to pack. Make a commitment to start packing for an hour or two each day a few weeks prior to your move, then moving day won’t seem so stressful and you won’t be up past your bedtime frantically packing the night before.
- Purge: How many of us have moved stuff we should probably throw in the trash and eventually do but only once we get in into our new space? GUILTY! There’s no sense in moving stuff that you don’t use or like anymore – your upcoming move gives you the perfect opportunity to go through all your stuff!
- Hire a moving company: Most of us don’t have a 20 year old son or brother and a group of his friends who will help us out and the last thing you want to do is injure your back before something soft to lie on (ie. your coach or bed) makes it into your new home!
- Pack an overnight bag: Yes, we all start out on moving day ready to go go go, but moving is draining and you may not unpack all your belongings in the same day. So pack a separate bag or box (clearly labeled!) with your toiletries, pj’s and a change of clothes. That way you’ll feel refreshed the next morning when you finish unpacking!
HUMBLE BRAG: We know that moving is right up there with taxes and divorce in terms of the joy that it brings to your heart. In other words, it can suck. That’s why every client of ours gets the FREE services of our in-house Client Care Specialist to help you source and organize movers, packers, de-clutterers and anything else that you’ll need to make your move hassle free.
Must-Read’s for Buyers
There’s so much to know when buying a house or condo in Toronto! Check out the links below for our must-read blog posts:
Our Buyer Services
Getting Pre-Approved For A Mortgage
What Do The New Mortgage Rules Mean For You?
Home Buying Q&A
Are Condos A Good Investment?
Mortgage & Land Transfer Tax Calculator
What Is Title Insurance?
Are Real Estate Lawyers Really Necessary?
Are you thinking of buying a house or a condo? We’re here to help! Just call us at #416-291-7372 or email us at hello@christinecowern.com
