A Shocking Number Of Canadian Home Buyers Don’t Know These 4 Things

Dated: August 16 2021

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A Shocking Number Of Canadian Home Buyers Don’t Know These 4 Things

 Taking the time to educate yourself about the buying process and being patient in a market that fluctuates regularly may seem counterproductive. However, it is far more dangerous to dive headfirst into a process that you don't completely understand, in hope that your finances won't collapse under your weight, than to gain a basic understanding.

 Choosing the Right Realtor/Mortgage Broker:

Realtor in Surrey

Choosing a realtor or a mortgage broker can be nerve-wracking. The job can seem overwhelming with so many different types of companies and services to choose from. But the right real estate agent or mortgage broker can help you achieve your goals and keep your cash in safety.

Here are the three most important tips to help you find an excellent real estate professional;

 1.       Stay away from Part-timers- While part-time agents and brokers might be all over the place these days, the number of deals they close on are very few, meaning they do not have enough experience to give solid, professional, advice. It is much better to work with an experienced, highly reputable individual, in order to get the best service and to satisfy your needs.

2.      Find someone who is open to feedback- Your relationship with your realtor should be one where you can give constructive feedback to one another, without taking it the wrong way.

3.      Stay local- When it comes to real estate, there are many factors that separate each area from the other. This is why it is best to work with a realtor who works in the area you are looking to buy in.

Setting Expectations Too High:

Realtor in Surrey

Unfortunately, in real estate the main expectation people have is that they can get their dream home within their ideal price range. Although this is possible, it is extremely rare. This is why it is important to analyze the current market and do your research on the selling price of other similar homes in the area, in order to set fair expectations for yourself.

 It is also important to determine what features are actually essential to you rather than having a page-long checklist of “must-haves,” as this makes finding a home that fits your needs and your budget much easier for you and your realtor.

Making An Offer: Terms and Conditions

 Realtor in Surrey

Many buyers are faced with a dilemma when they put in a bid: either add conditions, which makes their offer much less attractive, or put in an unconditional offer, which is much more appealing to the seller.

Previously, only buyers in competitive markets like Toronto and Vancouver would make unconditional offers, but now it's a common tactic.

In addition to waiving conditions that call for property inspections, some buyers also fail to put in conditions that can protect them if financing falls through.

Not having protection can be detrimental to the buyer’s financial situation, and can even ruin their chances of owning a home. Although it may seem unlikely, problems do occur often to those who are unaware and unprepared. Things like accidentally putting in an offer for an amount that is higher than what your lender approved you for or finding out

that your mortgage was not fully approved after placing an offer can be extremely taxing and harmful, without protection.

“You’ll forfeit your deposit because you can’t close the transaction,” says Taylor from Vancouver Sun. “That can be 10, 15 years’ worth of people’s savings in today’s market that they’re gambling on a property meeting their expectations or not needing a tremendous amount of additional work.”

Scheduling and Budget:

Realtor in Surrey

When it comes to timing, buyers tend to have somewhat of a schedule in mind with their realtor/mortgage broker. What they don’t realize is that lenders play a huge role in the buying process and that their schedule might not be in line with yours.

“An offer with a very quick closing can be very, very difficult to actually complete in time,” says Taylor from Vancouver Sun. “There are legal requirements around lenders: due diligence for income verification, source of down payments, money laundering FINTRAC requirements. That doesn’t happen overnight.”

Keeping the market peak in mind, buyers also need to be prepared for a correction in prices.  Buyers often panic or are bullied into overpaying for a home, just because of the current market, but the most important thing to remember is your limits. Getting into the market doesn’t have to mean overspending or putting yourself at financial risk.

Finally, let's talk about mortgages. Although there are benefits of security in a fixed mortgage rate, overall it is much better to go with a variable-rate mortgage. Mortgage rates are so low right now that even once price corrections occur, variable-rate will still be better than fixed-rate.

“The number one risk facing the housing market at this point is if the Bank of Canada waits, and waits, and waits, and then starts raising interest rates very quickly in a panic

– let’s say in 2023; that would be very devastating for the housing market, if you have a rapid-speed increase in interest rates,” said CIBC Deputy Chief Economist Benjamin Tal, last month.

“So the hope is that they will move early, and slowly, and by doing so, you actually limit the damage in the mortgage market and the housing market. I think that the fact the Bank of Canada is telling us that they will be moving in the second half of 2022, which is much earlier than expected just a few months ago, that’s a very positive sign.”

To learn more about the real estate market and how the buying process works, book a free, no obligation buyer consultation meeting with Ravi Bhindi, a realtor in Surrey.

Ravi Bhindi

604- 825- 8881

Market analysis is an absolutely crucial stage in the home buying process and allows you to start figuring out your budget, and what homes are value for money.

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