Monday, November 15, 2021

3 Key People When Buying a House

This is post is mostly geared to first time homebuyers (or more precisely, those looking to be first time homebuyers). You have looked at the market, you are worried about the way prices are going up, you have some savings that you can put towards a down payment, and now you are thinking of buying a house. Who are three most important people that will help you with this?

1. Your mortgage agent / finance person

Contrary to most assumptions, the first person you should consult is your finance person. You can start by contacting your bank, and speak to a mortgage specialist. They will take all your numbers (your salary, your spouse's salary, your savings and the down payment amount etc.) and then tell you how much loan they can sanction you for. This will give you a rough idea of the price you can look at. After this, look for a trusted mortgage agent. I advise almost NEVER to go through a bank's agent as they can only give you rates from their bank, whereas a mortgage agent can compare and contrast and give you the best deal from multiple sources. They may often have means to qualify you for a higher price.

A word of caution: like any industry there are some people who do shady business. Never falsify papers or your income etc. to try and qualify for a higher loan.

2. Your realtor

When you are buying a property, your realtor becomes very important. The higher a selling price of a house is, the higher the commission of the realtor. Hence there is actually a conflict of interest - your realtor when you are buying should be trying to get you the lowest price, but if the price is higher it is actually better for him or her. So it becomes very important to seek a realtor whom you trust, especially in a market like today. Talk to your realtor about your budget (you have the numbers from the bank), what you are looking for, and where. Your realtor should be able to give you an idea of what you will find. You may have to compromise on certain things, but again this is where a trusted realtor becomes very important.

A way to gauge a good realtor is word of mouth. If your friends have used a realtor's services and have highly recommended the person, that's a good sign. Another sign is how the predictions of the realtor match the result. For example you see a property, and then your realtor should be able to give you a narrow range of what this property will go for. After that, if you are not putting an offer on that property, watch it (you can use House Sigma app, for example). When it finally sells, see the price it went for and compare with what your realtor said. Whatever questions you need to ask about the whole process, your realtor should be able to answer it.

3. The lawyer

When you have put an offer on a house and it is accepted, it is time to get the mortgage paperwork done (this is where your finance person / mortgage agent comes in). Once the paperwork and mortgage is secured, the next (and final) important person is the lawyer.

He or she will be in charge of making sure the property legally becomes yours. About two three weeks before the closing date, they become active. They will exchange paperwork with the lawyer from the seller's side, have meetings with you where they walk you through all the paperwork, have you sign what is needed and explain what's going on. The lawyer is very important because they have to properly transfer over every title deed to you. Not only for the house, but they have to ensure all other things with the property, such as hot water unit rental if it's there, or title insurance, or other conditions, etc. are all taken care of. The bank will be sending the cheque to your lawyer, and you will also be giving (wiring) the deposit to your lawyer. It will be held in trust until all the closing is done. Once again, you need someone who is good, capable and experienced to be taking care of every little detail. Some properties, for example, have two PINs instead of one (this is a legal term). Both should be transferred over to your name. So look for a good lawyer (again, word of mouth very important). Your realtor may also be able to suggest one for you.

Hopefully this post will help you know what to look for when you search for these three people. I have left out lots of other folks such as the cleaning crew, movers etc. as that all happens after closing. Good luck!