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Welcome back to part 2 of our mini series on all things first time home buying. If you missed part 1, you can find it here .
You've found your dream home, now what?
When you’re ready to put an offer on a house, we will draw up the necessary paperwork, this is called an Agreement of Purchase and Sale.
We will work together to draw up an offer at a price that you are comfortable and guide you through which conditions to add as well.
Expect to negotiate. There typically is always some back and forth.
Different market conditions require different approaches – a seller’s market might mean lots of competition, requiring you to come in at or over asking price with few conditions, while a buyer’s market means you likely have choice and time is on your side. We will guide you through this.
Once your offer is accepted you typically have to drop your deposit off within 24 hours after the signed agreement. The deposit shows the seller that you’re serious about buying the home and have your finances in order. A typical deposit is 5% of the purchase price.
What about conditions?
You will likely be adding in some conditions with the help from us. At this point if the offer is accepted by the seller this is know and “sold conditional”. There will be a specific time period to fulfil the requested conditions.
Common conditions you will see added will include:
Purchase conditional on financing: This is a common condition for first-time homebuyers. It requires the sign-off of the mortgage lender for the deal to go through. you will have a few days to get this, and the process will include a home appraisal. If the lender does not agree to finance the property, we will notify the seller, and the offer becomes null and void.
Purchase conditional on home inspection: A professional home inspector will examine the structure, roof, plumbing, heating and electrical systems to ensure the house is in good condition. If the home isn’t up to par, this condition allows you to return to the seller and request repairs, a reduction in the price, or you can rescind the offer entirely.
If one of the conditions are not fulfilled and could not be negotiated with the seller you have the option to back out of the sale and have your deposit returned IF the conditions are written correctly. It is important that your conditions are worded correctly, so you don’t have any surprises.
If everything is fine and the conditions have been fulfilled, the offer will become firm and binding and you cannot back out of the deal at this point. If you change your mind, you risk losing your deposit and possible litigation.
A real estate lawyer will be involved throughout the home buying process – you can find your own or we can provide some referrals.
What happens during closing?
The closing period for your transaction is typically 30-60 days, however it can range depending on the agreed upon terms in the Agreement of Purchase and Sale.
After any adjustments or repairs have been done to your satisfaction, we will finalize the deal and your lawyer will process the paperwork, including the mortgage documents with your lender.
Closing day is an exciting time but can feel stressful. It’s when you finally get to take legal possession of your new home.
The final signing of paperwork generally happens at your lawyer’s office. You will give your down payment (minus the deposit) to your lawyer along with the closing costs. Your lender gives the mortgage instructions to your lawyer. Your lawyer pays the seller, registers the home in your name and gives you the deed and keys to your new home!
A quick but important note on closing costs
Your down payment isn't the only thing you need to save for! Don’t confuse the down payment with closing costs.
Expect to pay between 1.5-4% of the total cost of your purchase price at closing (on average). So for a home that costs $1,000,000 this could be $15,000-40,000.
That was a ton of information, Congrats if you made it this far!
If there was anything that you would like more information on please do not hesitate to reach out to us in whichever way you prefer – email, phone, social media – all are great!