First Steps

First Time Home Buyer Need-to-Know

One of the things we learned in the process is that the seller pays the realtor commission. It is generally 5%, where the buyers realtor gets 2.5% and the sellers realtor gets 2.5%. However, in a few of the houses we looked at while we were in the market, the seller decided they did not want to follow this and made a decision to only offer our realtor a lump sump (say $1,500). Keep in mind, that if you choose to buy a house where the sellers do not agree to pay the percentage fee, you will have to pay the difference that is owed to the realtor.

For example: on a $400,000 house both realtors would make $10,000. However, if the seller only offers your realtor $1,500, you will be expected to pay the remaining $8,500 which you will have to be prepared to pay along with the downpayment and closing costs.

For this reason many realtors do not like to show their clients houses that are listed like this. The realtor is able to go back with a request for more commission, but this could also affect your bargaining power, so keep that in mind.

Another decision we had to make was whether to buy a condo or a freehold. I was very strongly against buying a townhouse that is within a condo management. Condo vs. freehold is a decision that each person has to make depending on what they are looking for in a house. Buying a townhouse within a condo management, you do not have to worry about replacing your roof if there is a storm, or in some places snow removal is done for you. However, at the same time, if the condo board decides they want to paint your front door purple, than they can do just that. As well, if you choose to buy a townhouse in a condo expect to pay condo fees. This is what covers any damages and the outdoor work that is completed for your unit. From my research, the older the building, the higher the condo fees which is most likely due to the fact that older buildings require more maintenance work.

I wanted a home that was freehold because I want to make my own decisions on what colour my front door is. I also am not interested in paying a mortgage, plus condo fees. It is an extra expense that you have to budget for that I was not willing to do. Of course, with owning a freehold comes complete responsibility if the shingles on your roof come off in a storm. You will have to pay for the repairs yourself and hire someone to do the job. As well, I was looking for more space inside and out. We decided to go with a semi-detached, because I have lived in a centre unit of a townhouse before and I could not handle the lack of windows. Because it’s a centre unit there are only a few windows at the front of the house and at the back, and depending on which way your house faces, you may never have the sun shine in your house.

As a first time homeowner, I suggest you put a clause in your agreement for financing approval which ensures that the agreement is only accepted once the bank agrees to provide you with a mortgage.

As well, our home had a wood burning fireplace so we had to get a WETT Inspection. A WETT Inspector is a professional who will come in to your home and inspect the chimney and the fireplace to decide if it is up to code and safe to use. When you apply for house insurance, they will ask you if you have a wood burning fireplace and if it is safe so you will have to have this inspection in order to get the insurance.

I would also strongly suggest you put a clause for a home inspection. The home inspector will come to the home and spend an hour or two looking through the house to see how it is structurally, and ensure all of the toilets, showers and appliances are working. They will go up on the roof to see the condition of the shingles and eaves troughs and inspect the furnace and basement structure. Once the inspection is complete, they will review everything they have found and give their advice on the condition of the home. Depending on the results of the inspection, you can choose if you will accept the house or you can make the decision to back out of the offer.

If you choose to continue on with the sale, you can use the findings from the inspection to adjust the offer price on the house and you can go back with a new offer for the sellers.

There is a lot to plan for, including the items I mentioned in my previous post. Once you are really sure you have mastered all of these issues, and are aware of exactly what you want, then you are far more prepared to put in your offer.

I’ve added some supplementary articles here – to continue your learning 🙂

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