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Know how much you can afford
You must have a budget before you begin your search for a new house. Your budget will not just help you find a home you can comfortably afford, but also will dictate how much you would be willing to offer.
Unless you are a cash buyer, the best way to know your budget or the amount you can afford is to get pre-approved before you start your search. This will make it more transparent to you what you can afford and avoid the misery of falling in love with a property that is out of your financial reach.
Don’t ignore your agent
Your agent will be a big help when it comes to making an offer. With their experience, they will evaluate the market and do a price comparison of the property you are interested in based on the value of similar properties sold in the same area in the recent past.
Additionally, they will offer their professional advice on what they think would be a fair offer. Furthermore, your broker will help you out if they are aware of other offers on the table that would meet your needs. Therefore, be very careful with your choice of agent and always listen to them.
Understand that your offer is not just about the price
You should have in mind that sellers sometimes don’t consider offers alone when considering who to sell to. It is possible for a seller to turn down your offer, even if it was the highest and opt for a lower offer.
For instance, if your offer has too many contingencies or you are not preapproved for financing, the seller may be attracted to a lower offer with fewer contingencies and which has been pre-approved for financing. A higher offer is not necessarily a good offer. Strive to get preapproved first, then get your contingencies to the minimum if you want to present a strong offer.
Real estate sales in Canada has a very close relationship with the household credit growth. The past few years have seen the consumer credit go up, and this is mostly attributed to the low-interest rates. With the first interest rates hike in years, stats by the Bank of Canada shows that there is a deceleration in credit growth and this will have a significant impact on consumer spending, with the residential real estate sector being one of the most affected industries.
Recession and Deceleration of Debt
Debt deceleration may be a good thing, only that it will always have a spillover effect from the debt binge experienced when the boom lasted. In Canada, a significant portion of economic activity has always been linked with the increase in growth of the household debt.
Though this may not be a bad thing, it creates a dent on the road to prosperity for many families, especially those keen on taking up on huge investments such as investing in real estate. Any slight changes in how people spend will always have an impact in industries closely linked to debt growth, with real estate being one of them.
Though it is not possible to predict the future with absolute certainty, there are well-tested approaches which can be applied to trends and used to predict what is likely to happen after a few years. One of the most common methods, and which is heavily used by the Bank of Canada, is to compare short-term trends versus long-term trends. If the short-term trends are higher than the long-term trends, then a possible spike in growth may be witnessed. However, if the short-term trends are below the long-term trends, then a potential shrink may be in the offing. Currently, Canadians are looking at a 3-month annualized trend for the short term and a 12-month annualized trend for the long term.
Mortgage credit growth is without a doubt the largest aspect of household credit. It is also the component that is most important and relevant when talking about the real estate industry. The 3-month annualized trend for October 2016 was at 5.4%, and this was a 14.28% drop when compared to the trend at the same time in 2015.
There is also a decline in the 12-month trend which was recorded at 5.6%. The slowdown in the mortgage credit growth could be due to the new mortgage rules set to take effect in 2018 and which are anticipated to cause a further shrink in the growth.
A deceleration in consumer credit growth is not necessarily a bad thing for the economy as corrections are also expected, but it will have a substantial negative impact on the household’s ability to acquire new property. Additionally, the deceleration in growth is anticipated to lead to the loss of close to 12,000 jobs in various industries, implying that if the trend is to continue, then Canadians should brace for tough months ahead.
To help you get the documentation right
Just like buying a resale, buying a pre-construction home in Toronto comes with a lot of paperwork. Most buyers, especially those buying real estate for the first time, usually find the documentation overwhelming and they are prone to making mistakes that could prove to be costly down the line. A licensed sales agent have experience in dealing with such documentation, and under their guidance, you are guaranteed of a better experience compared to going it alone.
For instance, they are well versed in the building plans and will quickly identify if the preconstruction has all the amenities as indicated. They will also advise on issues such as assignment on the property, where a buyer may or may not have the right to sell the property between the interim and full registration. The builder has these kinds of arrangements at their discretion, and you may not be aware of them unless you use the services of an experienced and licensed agent.
The agents have a duty to protect you as a client
By virtue of you being their client, real estate agents have a duty to protect you. It’s not just huge sums of your cash that will be on the line, but also you will desire to have a good property you will be proud of investing in many years down the line.
Based on your discussion with them and your particular preferences, they will know the right kinds of preconstruction that will mostly fit your needs. Additionally, they also have access to property that might not have been released to the public and which they can potentially help you access if they happen to be what you want