7 Ways to Prepare to Buy a House

Toronto real estate has always been a challenging market. That’s one of the few truisms in life that we can always count on. Nevertheless, there are distinct advantages to owning the space you live in. If nothing else, you can look forward to becoming mortgage free one day and never having to worry about your largest expense.

If you plan to buy your first home, move up to a more luxurious home, or downsize to something a little more convenient and manageable, planning is your first step. A thoughtful buyer is a successful buyer, especially in an unpredictable landscape.

Armed with the right information, you can be well on your way to finding the perfect fit at just the right time. To help you in your search, we’ve put together a list of seven key house-hunting tips. Let’s go!

What is it like to buy or sell a house in Etobicoke? Find out in Your Top Questions About Real Estate Answered.

1. Be Financially Savvy and Ready

You probably already know a house is one of the most substantial investments you’ll ever make, but are you fully aware of all of your options and the costs involved? Our mission is to help you avoid the heartbreak of finding a home you can’t stop thinking about but just can’t quite afford.

First things first, we’ll help you prepare a realistic budget. Start by adding up all of your debts and expenses. Now, assess how much money you have saved in your various bank accounts and investments. If you already own a home, be sure to factor in its equity. That alone could be more substantial than you realize.

Next, visit a mortgage broker or lender and get a pre-approval for a mortgage. This is a fairly accurate estimate of how much you can borrow to buy your home. With this number in hand, you can break down the cost of owning a house by month. If you have the income to cover it and then some, you can proceed confidently toward the next steps. Financial readiness provides a solid foundation for every other aspect of your buying experience.

A word of caution: If you’ve already been pre-approved in the past, for example, within the last six months, don’t assume that it still stands. Banks can be stringent, and their guidelines could have changed. If you’ve since taken a new job or made a large purchase on credit, you will want to reconfirm your approval amount before placing offers.

Do you want more help planning your home-buying strategy? Check out the resources below:

2. Be Aware of Appraisal Values

Bank appraisals can trip up many otherwise organized and well-prepared home buyers. Here’s why: imagine you have obtained a mortgage pre-approval for $1 million. By all appearances, you’re in an excellent position, especially if you search for homes a little under that amount to cushion your budget.

Now, let’s say you place an offer on a house for $900,000. You might be tempted to think you have $100,000 to spare from your million-dollar approval. However, what happens if the bank comes back and appraises that property at only $850,000?

Even though you technically qualified for $1 million, the lender is going to base your mortgage on the appraised value of $850,000. If you’re caught off guard, you could have to cover the gap out of your own pocket. Inattention to bank appraisals is one of the primary reasons a transaction can fall through. It’s also why it’s a good idea to use a condition of financing in your offer whenever possible. This step protects you and your deposit.

3. Never Underestimate the Value of a Home Inspection

Some markets make it almost impossible to attach conditions of any kind to an offer. If a seller receives multiple bids, they’ll take the one that suits them best, and that usually means going in unconditionally.

However, the condition of a home inspection is the last one you want to drop, even then, only under the careful guidance of a real estate agent. A positive report from a qualified inspector gives you peace of mind. You can rest assured that the beautiful appearance of a home you’re considering isn’t hiding a crumbling foundation or other critical flaw. At the very least, a less-than-stellar report could give you some wiggle room with price.

Searching for houses for sale in Etobicoke? Our featured listings may have your perfect dream home.

4. Negotiate Fairly and in Good Faith

A real estate transaction represents a massive change for the buyer and the seller, and both are likely dealing with some level of anxiety throughout the purchase. For the deal to happen, both parties need to feel as though they are being treated fairly.

Effective negotiations create a win/win scenario for everyone involved. Granted, the buyer might have to make concessions in a seller’s market and vice versa. However, if one party feels as though they are being treated unfairly, they’re likely to walk away from the negotiations.

As with any business transaction, there is usually some give and take. Talk to your real estate agent about what power you have in the current market. From there, you can decide on what is most important to you and when to hold firm.

That said, small concessions on other terms can make it easier to work with the seller. If you end up with a house you love at a price that makes you happy and at favourable terms, it will primarily be due to skillful negotiations.

5. Decide What to Do About Your Existing Home

Owning an existing home gives you an advantage in the Toronto real estate market. You have a valuable asset to your name, and the equity you’ve accumulated can go a long way to covering your next purchase. However, you do have some decisions ahead of you.

One of the biggest is whether you sell your house before you start looking or secure your next property before listing yours. This age-old question does not have a simple, straightforward answer, but current market conditions will definitely factor in.

For example, if houses are selling fast, multiple offers happen frequently, and prices are going up, it might be a good idea to buy your house first. That way, you can be sure that you have a place to go when your existing home sells.

However, remember that there are never guarantees in real estate. Just because the market is on fire doesn’t mean your house will sell before you need to close on your new transaction. If there’s a gap, you may need to cover two mortgages or acquire bridge financing.

When the market is slow, it’s often better to sell first. That way, you’ll know for certain you will have those funds available. Plus, you’ll have an exact amount that will help you budget effectively. Before you decide, be sure to talk to your real estate agent so you know the risks and potential upsides to each path.

Do you want tips on how to get the best results when selling your house? Start by reading the posts below:

6. Plan for the Long Term

Toronto real estate has always had its ups and downs, and no one can predict the market. If you buy for the short term and hope to sell soon at a profit, there’s a good chance you could lose money. Even seller’s markets have corrections, which means a house could depreciate in value shortly after you move in.

If you buy during busy conditions and then the market changes, short-term losses are possible. Take comfort in the fact that, over the long term, housing prices have always increased, at least so far. Selecting a home now that you can be happy in for several years gives you the best chance of seeing positive equity growth.

7. Work With a Local Neighbourhood Expert

When looking for the right person to help you with your search, it’s always a good idea to work with someone who knows your target area inside and out. A local expert will be able to identify homes that represent good value for your money.

They have a deep, intuitive feel for the area, and will know which neighbourhoods have the best opportunities for you. They are also well-known and connected, which gives them early access to any listings that might soon hit the market. If you’re looking for that hidden gem, a neighbourhood expert is your best bet to find it!

Thinking of buying your next home? Our Etobicoke real estate agents are here for anything you need. Reach out today at 647-282-7653 or email contact@sileckythompson.com with any questions or to get started.