Ask An Expert: Real Estate Salesperson
"As a first-time buyer, what should I know about making an offer on a home I love?"
For many first-time homebuyers, the process of making an offer to purchase a home can be complex. Knowing what to expect, up front, is one of the best ways to reduce stress and find the right house, at the right price. Real estate salesperson Dominique Allard of Royal LePage in the Greater Toronto Area offers these recommendations to help first-time buyers make a sound purchase decision.
If you're in the process of planning and saving for a home, but you're still a few years away from buying, be sure to establish a good credit history before applying for a mortgage. For example, don't miss any regular credit card, loan or utility payments. The better your credit record when you have your first mortgage pre-approved, the smoother the process will go for you.
Look at homes that are priced well within your comfort level. A good rule of thumb is to consider homes priced at about 85% of the maximum price you can afford. If you were to make an offer on a home that is priced at the upper limit of what you can pay, you would have little room to maneuver when negotiating with the seller, resulting in stress and disappointment. On the other hand, if you have the financial leeway to increase your offer, if necessary, you'll be more likely to close the deal and get the right home at the right price. Remember too, that if you pay too much for your first home, you could find yourself "house poor", i.e. paying so much for a home that you find yourself strapped for cash.
When saving for a home, be sure to consider closing costs of 1.5% to 3% of the purchase price - or more, on some homes - for land transfer tax, legal fees and other closing costs.
