Back when my fiancée’ and I first discovered that we were expecting our first, we were living in an apartment with our large Labrador retriever. We quickly realized more room was necessary and immediately began our search for our first home to raise our family.
As a young lawyer, living in an apartment, I never took the home buying process as seriously as I probably should have. It’s hard to believe, I know, considering clients came into the law office everyday, wide-eyed, excited, nervous and full of questions – and I helped them through the conveyancing process.
The experience seemed pretty straightforward to me having seen many transactions, of varying complexities, but all similar in their own way. But, for whatever reason, it never really dawned on me that this really is the biggest purchase you’re going to make (at this point in your life, anyway) until I found myself crunching the numbers, doing those daily drive-by’s and waiting eagerly to take hold of those keys.
What I Learned From Buying My First Home
The stress, excitement and nervousness – as a first-time home buyer – is totally understandable!
Fast-forward past the meeting with our bank and the hours spent searching the MLS online, to when my fiancé and I realized we actually had a chance, and better act quick to give our realtor the go ahead to put in an offer. The process was an eye opener. I was a pit bull on detail, nervous on timelines and I just about lost it when I realized how quickly dandelions can get out of control on your lawn.
Given this enlightening experience, I figured that I would try to provide some insight, for other first-timer home buyers. By talking about the role of different professionals, and what to expect, in the process of buying a home, I hope this life changing process can be a little more certain, understandable and fun. Let’s look at:
- A Realtor’s Role
- How Lawyers Protect Your Asset
- The Value of a Home Inspection
- Costs and Finances
The Value of Having a Real Estate Agent
Unless you really are the do-it-yourself type, use one! I cannot stress, enough, how effective a good realtor (with a track record of local experience) can be. Tell them your qualified price range, what kind of place you’re looking for, what your plans are (e.g. Do you want to rent the basement?), etc.
A good realtor will take this into account and help you to find the place that fits you. Don’t know one? Ask your friends or family for referrals. Realtors love these. Ask us. We know lots of great realtors. But, like most experiences in life, find a realtor whose personality matches yours to get the best results.
The Role of a Lawyer in What is Likely the Biggest Financial Purchase of Your Life
I should almost have brought this up first. Lawyers are an important part of the process and can play an important role early on. Not only will the lawyer process the transaction by transferring title, pay the seller’s lawyers and pay out a previous lender (if it’s not your first home), but – the lawyer can help protect you.
Too often we see contracts drawn up and signed by all parties before we have had a chance to discuss the transaction with our clients. In some cases subjects already removed or to be removed very shortly. If there are issues this does not give you much time to react. We strongly recommend having your lawyer review the contract terms prior to signing or certainly before removing subjects.
Your lawyer will help you draft certain conditions into the contract, to help protect you, in situations where the house may not be what it seems or if you’re unable to secure adequate financing to proceed with the transaction.
A lot of realtors will recommend that you have your lawyer review the contract before signing, but this is not necessarily universal. It’s a good idea. Lawyers will also review the title to the property to make sure there are no surprises such as discovering you bought a home with a lien or unexpected easement registered on the property!
Home Inspections are Worth the Cost
I really need to stress this one. As a first-time home buyer in the lower mainland, we could only afford to buy something quite a bit older than us. I’m no handyman, either. So, unless you are or unless you really want to take on a lot of projects (the list can be limitless) spend the money on a home inspection using a qualified, home inspector.
A home inspector is worth their weight in gold. Not only will you learn so much more about your future home, you may also learn that it’s not worth buying at all.
You may have a home inspection condition in your contract, for purchase and sale. This means that if you’re not satisfied on the outcome of the inspection, you can walk away and keep your deposit money too. If you retained a lawyer with the contract review/drafting you will almost certainly have this clause in the contract.
The other thing about home inspections is that it allows you to go back to the seller with items that need to be repaired. These can be adjusted between the parties, or if you’re lucky, like we were, the seller may simply decide that he or she will repair these items at no cost to you! You never know, if you don’t ask.
Another inspection you may want to have done is a septic inspection, if your future dream home isn’t on city sewer. Again, this is money well spent. In Langley, if you have water well service, you will want to have experts check the flow rate of the well and also the quality of the well water. You’re probably grasping the theme that I didn’t want any unpleasant surprises.
Be in the Know for Costs and Finance Options
I can hear my parents, my grandparents, my past teachers, etcetera, all laughing at me right about now. The process of buying a home is expensive. It would probably surprise some people that the lawyer costs are, actually, pretty nominal in the grand scheme of things. And, to be honest, the fees lawyers charge for a typical residential home conveyance in the lower mainland are all fairly similar. I’m sure there are exceptions, but it certainly isn’t a cash grab.
Many lenders actually offer a credit to home buyers for lawyer fees, so shop around. Many mortgage brokers and realtors are willing to help out their clients on lawyer fees as well. Ask them. It won’t hurt. If you are using a mortgage broker, talk to them to see what they can offer. A good broker can really help to match your needs with the best lender for your circumstances. They have a good grasp of your lender options and can assist with programs such as the new British Columbia First Time Homebuyers Program (stay tuned for Ewan’s blog article about the program coming soon).
From experience, many of the other costs a first-time home buyer needs to consider in the purchase price are:
Property Transfer Tax
This one often shocks first-time buyers. 1% on the first $200,000 and 2% on the balance and 3% for properties in excess of $2,000,000. This number is significant for properties in the lower mainland with a value beyond $500,000.00 for first-time home buyers.
Property Tax Adjustments
You own your home now, but you still need to pay annual property taxes. This is really a no brainer, but you need to budget for this and make sure you’re covered.
Buy good quality insurance. Now that you have a new home, and a big mortgage debt, you may also want to consider life and disability insurance. Particularly, if you’re a single-income family. Consider insurance on mortgage loans provided by the lender.
So long as you stay in your home, for a long period, the cost of insurance will usually be less than the appreciation in value of your new home, especially a detached home.
You can’t ask your landlord to fix the leaky faucet anymore. If you’re buying an older home, like we were, you can count on things hitting the end of their useful lifespan at some point. Budget for repairs. For example, our hot water tank went on us not to long after moving in. It was the same age as the house if not older. Our technician was helpful to give us the form to send to Fortis for a rebate as we qualified with the ENERGY STAR® Water Heater Program.
These can escalate very quickly, so unless you have an army of family and friends who want to help…
My favorite topic. We have declared war on the weeds in our backyard, but it’s a slow battle. You just bought a shiny new home, so you probably want to look after your yard. Trust me, your neighbours probably want you to as well!
Making Your First Home Purchase
So, I’ll conclude by wishing all new home-buyers the best of luck this summer. The lower mainland property market is, at the best of times, frustratingly expensive for first timers. But there are, no doubt, deals to be had for those who are persistent, hard lookers.
Use these bits of wisdom, and experience, to your advantage and give us a call. We can help protect your home asset with your best interest in mind.
Never hesitate to send me an email at email@example.com or give our Real Estate and Land Law Group a call at 604.546.6345 . We’re here to help you through the complete process!
Matt is a lawyer with MacCallum Law Group practicing in the areas of Real Estate and Land Law, Corporate and Commercial Law and meets with many of our mortgage clients. If you have any comments or questions for Matt on being a first-time home buyer, you can reach him at firstname.lastname@example.org.
Keywords: First-time Home Buyer, Mortgage Broker, Real Estate Agent, Conveyance, Home Inspection, Property Transfer Tax