For those of you who have started to consider, search, or are actually in the process of buying a house, townhouse, condominium, loft – whathaveyou – congratulations! Gone are the days for many 20-something Torontonians when it was so easy to fulfill the dream of owning that beautiful three-bedroom property with a backyard large enough to accommodate children, pets, and garden parties that somehow indicated success and advanced levels of adulting.
Because prices still appear to be unattainable for most of us, you will find quite often that we have to make the decision from the following, “pocket-friendly” options:
- Condominium-living that entails a smaller space and being somewhat close to work;
- Moving +45 minutes drive away from work for that sweet and “cheaper” detached option;
- Staying at home “till the market crashes” (who knows when and if this will happen);
- Staying at home and saving enough for a down payment and then some more (who knows how long this will take), or;
- Working multiple jobs – insert burnout/exhaustion + less social life – to make your dreams come true or make ends meet.
So if you don’t have the $$$ for the type of house you dream of, but you really want to move out and renting is not an attractive option (you just want to own, really), the first thing to ask yourself is:
Which of the above options is right for me (and whoever I plan to move in with)?
Think about what you are willing and resistant to give up. For myself, I have lived at home all my life, and I’m at the stage where I need to leave the nest, become fully independent/freer, and hopefully start a family. I work challenging 12-hour shifts (more than 13, actually, when you count pre-work prep and transit), so living more than a 45-minute drive is not something I’d like.
When my boyfriend and I started to seriously consider moving out, we toggled between the idea of a townhouse and a condo. Mind you that this was a couple of months ago, when house prices skyrocketed, bidding wars ensued, and people bought like no tomorrow. A fear lingered that prices would only go up, up, up – like in Vancouver and Hong Kong. So one thing to remind yourself is:
Do not get caught up in the moment.
When you’re at that age when you hear your friends, acquaintances, and people you “know” around you buying houses, getting married, and making babies, and when it makes you think “I think it’s the right time for me too” – try to resist. Is it really the right time for you for these things? “No” is a totally okay answer. All these take resources. And you’ll need quite a bit of time to prepare and think ahead because you don’t want to be the one who has to live paycheque to paycheque trying to pay your mortgage, survive, and also have some fun.
Long story short, we eventually settled on a condominium and purchased a 650 sq. ft. unit for about $430k this past May (this is what I mean by Toronto prices soaring – we pay a fortune for a box). At first I thought I wanted a bigger home, but I’ve come to accept and really like the idea of living modestly and to live with no clutter.
Some of the things I’ve learned in my time in the thought process, searching, and purchasing (of a new condo, not sure how it is with other properties such as houses and those for resale) that were of help to me and that I just want to throw out there include:
- Sign up/subscribe for updates. By registering for updates on developers’ websites (which you can find through websites like buzzbuzzhome) and even real estate agents who promote new condos (the ones that occasionally pop up on Facebook if you’ve been house-hunting, even though you’ll get tonnes of emails from them), you’ll get so much insider information it’s not even funny. You can get details on the floorplans, price lists, proposed amenities, and other information. You can even find out when they will conduct the first day of sales (which by going you can get special first-day-of-sales/friends-and-family discounts). All you have to do is sign up, even if you do so noncommittally.
- If it’s in a prime location, line up early. We went on the first day the units were being released and sold, and even though we stayed a good eight hours we had to return the next day to pick up a copy of the signed documents.
- If you’re going to buy new, buy early. You have no idea how much prices increase a couple of weeks into sales. Just 12 days since the start of sales and the suite we bought already underwent a $30k increase in price!
- Maintenance fees per square feet (usually) do not include your balcony. I was not aware of this initially and this was one thing I was so glad to find out.
- Have enough oomph in your bank account to meet the changes in maintenance fees. Always consider the fees for maintenance as a modest estimate, because the true value of how much it takes to care for the property will come about and increase in later years.
- Even if you have a realtor, do also go to the developer’s sales events. Yes, you will feel like a traitor. Though keep in mind that signing up with a realtor may not get you the floorplan or the floor you want. Often times the developer allots a certain number of units to a number of realtors, and the realtors submit their worksheets (your 1st, 2nd, and 3rd floorplans/units of choice) a couple of days after sales have begun. At least by directly going to the sales office, you know how many units are left (and thus, a rough estimate on how many units the developer would distribute amongst the many real estate agents). Whether you will buy without your realtor is entirely up to you.
- When your down-payment gets deposited varies on the builder and developer. In Ontario, it is highly suggested we meet a 20% down-payment in order to avoid unnecessary “difficulties” (ie. the bank may see you are unable to meet this and it may increase your estimated mortgage loan interest rate). Some developments may require you to pay a monthly deposit. In our situation, we paid $5k on signing and then the remaining 5% in 30 days, 5% in 120 days, 5% in 450 days, and then 5% on interim occupancy (which is 20% altogether).
- Selection and purchase is fast-paced; paperwork is what takes the brunt of your time. Unit floorplan – chosen. Floor – chosen. Owner(s) – identified. Document-related tasks – many hours later… To get to the ‘documents’ phase faster, it’s good to have 1st, 2nd, and 3rd options in hand. The higher the floor, the more expensive it is. Lower floors may be cheaper but consider the smells and noise and traffic from the streets… If they don’t bother you, then good on ya!
- What is this 10 day cooling period they speak of? It is exactly that – a period when you excuse yourself from this heated, exhilarating whirlwind of (condo) shopping. You ask yourself if this property is really for you and if you’re 100% serious; otherwise, you can withdraw and get your deposit back in full amount. Waste no time at all; after signing the agreements, it is highly suggested you:
- Read through the developer and builder’s package. It is like a novel. It has a lot of jargon. And it is quite boring. Nevertheless, try to understand as best as possible and highlight areas you need more explanation on. Some areas that would be of interest are the rules and by-laws, which may include the number of pets, colours you can use for your blinds, renting your unit, etc.
- Find a (real estate) lawyer. Not only do they help explain and clarify whatever it is in your agreement package that confuses you (such as a $250 penalty for things like incorrectly filling out a down payment cheque), they will also help you in the legal process and finalization of your name on your property when the time comes (for us, we have about two years left till we get to this).
- Get a mortgage pre-approval. This really should be step #1. It is quite handy to have one prior to scouring and inquiring the web and streets for homes, as it is an assessment to see how much you can really afford. Some banks may not be able to provide you with a pre-approval if the tentative completion date is quite a fair bit of time away. If you are in Toronto, I would suggest the Royal bank of Canada – we merely brought our documents (T4, builder package, 90 day banking history, and whatever accounts you have money in/letters for monetary gifts), made an appointment, and then and there we received an approval letter immediately from their mortgage specialist.
Other things I’ve learned and should be considered are:
- Know your limit, and play within it. This Ontario Lotto and Gaming Corp. motto holds truth, especially when it comes to getting that property you want and bidding wars you may encounter (especially since it is a tactic these days to lower selling prices so that it gains interest and people bid against each other).
- Get a professional home inspection. New or old, no property is immune to human error – poor workmanship and failing to notice the way certain things are put together. And don’t get drawn in by “warranties”, especially if it is a new property. It is better to protect yourself and your home, because it is one of the biggest investments you will make.
Do take my suggestions with a grain of salt: I’m no real estate guru, and at this point my boyfriend and I are still at the waiting/construction period, so it sucks to say that my experience has only taken me this far in the real estate game. Through our process of purchasing a new condo however, I found these were very helpful for us.
Most importantly though is that I’d like to hear from you.
Have you any essential tips (for us newbies) on purchasing your first home? Anything to be cautious of in the “pre-process” of owning and living in a home? What was your experience like in the search of your humble abode, or signing your life away, or even the troubles of where to get the funds to fund this life investment of yours?