Embarking on a home purchase? It’s time to put together your dream team. Connecting with a real estate agent is step one for many prospective buyers, but there are a number of pros you’ll need to connect with along the way before calling that home your own – and it’s up to you to hire them.
The Mortgage Broker
What they do: The mortgage broker’s role is to find you the perfect mortgage rate. This pro will navigate the lender marketplace on your behalf, and will be your point of contact with the bank when negotiating your financing. Brokers have access to a number of rates offered by various lenders, and can likely score you a better deal than you would have found on your own. They also work with your specific budget and credit standing to find a mortgage product truly suited to your needs.
What it’ll cost you: Nothing – brokers are paid by commission from lenders when they close your mortgage deal.
Where to find them: Rate comparison websites, The Canadian Association of Accredited Mortgage Professionals, word of mouth.
Pros: You’ll have insider access to the mortgage market – brokers often have the scoop on special rates not publicly advertised by the banks. You’ll also have professional support during every step of the rate negotiation process, and you’ll know your mortgage rate is the best option for your financial situation.
Cons: Because brokers are paid by the lenders, they may have financial incentive to connect you with those banks over others. It’s important to be an informed buyer and know what’s offered by all lenders, even when working with a broker.
Be sure to ask: “What lenders are you directly affiliated with? Will you show me rates from other lenders as well?”
The Real Estate Agent / Realtor®
What they do: A real estate agent is an accredited professional who is licensed to aid in the buying and selling process of commercial and residential real estate. A real estate professional who is a member of the Canadian Real Estate Association is referred to as a Realtor®, and is bound by a professional code to act in your best interest. These pros are well-informed about housing market conditions, and guide buyers through the house hunting, offer, negotiation and closing process.
What it’ll cost you: Nothing up front. As a buyer, a real estate agent provides their services for free, but they will receive a cut of approximately 5 – 7% of the sale amount as commission. This commission is generally split between the selling and buying agent.
Pros: Real estate agents actively guide you through the buying process, from finding the perfect home and neighbourhood, to closing the deal. Their expertise is instrumental when negotiating a sale, especially in bidding war situations where emotions and costs run high.
Real estate agents are also required by law to indicate in writing which party they represent, and must disclose whether any additional incentives are present when closing a deal.
Cons: Nothing comes without strings attached; a real estate agent will require that you sign a Buyer Representation Agreement, meaning they alone can represent you in the home buying process for a period of time. Should you locate a home without your agent’s assistance during this period, they may still have legal claim to commission on the sale. it’s important to meet with several real estate professionals from different companies before committing to one in writing.
Be sure to ask: “What is your average list-price-to-sales-price ratio?” This means the number of times the agent has successfully negotiated a home price below what was listed – an indicator of whether they’ll be able to net you a great deal on a home.
Real Estate Lawyer
What they do: A real estate lawyer manages all of the legal paperwork associated with your mortgage, from establishing offer conditions to closing the deal. After your purchase, they’ll conduct a number of tasks and searches on your property, including: the review of your status certificate (if you’re a condo buyer), a property search to ensure there aren’t old mortgages or liens on the property, and the drafting of your mortgage papers. A lawyer can also assist with applying for buyer rebates, arrange for home title insurance, and will also hold your new keys for pickup.
What it’ll cost you: Fees can vary, but expect to pay approximately $1,000 – $2,000 on legal fees, and between $500 – $800 for out-of-pocket costs such as title searches or registering your mortgage.
Where to find them: The Law Society of Canada, referral from your mortgage broker, word of mouth.
Pros: A real estate lawyer will help you navigate the dense pages of legalese you’ll encounter during your property transaction. They’ll ensure you are fairly represented as a buyer, and will assist in establishing and enforcing any buying and financing conditions you may have before the deal is officially finalized.
Cons: Time is money – and a lawyer’s time is charged at a premium. Many buyers are tempted to cut costs by bringing a lawyer in only when the deal has been closed, despite the assistance they can help during the offer process.
Be sure to ask: “Can you give me an all-inclusive quote?” Ensure that all charges associated with your lawyer services are spelled out up front, including registration costs, taxes – even courier costs.
What they do: A home inspector thoroughly checks the condition of your prospective home prior to closing the deal to ensure it is safe to dwell in, and all systems are functioning correctly. The home inspection is one of the most important aspects of your pre-purchase, as it can unveil issues that can be very costly to fix later on.
What it’ll cost you: Between $350 – $600
Pros: A good home inspector can provide peace of mind that you’re not accidentally buying a lemon; they’ll locate any structural or systems issues that may cost you an arm and a leg once you’ve assumed responsibility as homeowner.
Cons: Not all home inspectors are created equal, and it’s important to thoroughly vet your pro during the hiring process. Ensure they are a full-time inspector, are accredited with a governing organization, and have experience inspecting the type of home (historical, semi-detached, multi-unit, etc.) you are buying.
Buyers should also be wary of home inspectors referred by the seller or listing agent; they may be receiving financial incentive from the home sale, and may be less likely to identify any features that would prevent the sale. Always bring in your own pro.
Be sure to ask: “Do you have Errors and Omissions Insurance?” This coverage is carried by some home inspectors, and covers the associated costs should your pro miss something or make a mistake during the inspection.
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