Hiring professional help during the home buying process

by Marcia Luke

Most people agree that buying a new home is the biggest decision you'll ever make. So why do it alone? Friends and family can only get you so far until their expertise runs out. But thankfully there are professionals trained in the art of new home buying who will help you make sure that you get what you want.

Mortgage brokers, real estate agents, lawyers-many negative associations are attached to these professions. But the truth is that these professionals are a beneficial, if not necessary, part of the new home buying process. To feel comfortable with them, you need to know what they do, what they charge, and how to choose the right one for your new home or condominium search.

Commonly, the first step is to get pre-approval for a mortgage in order to know how much you can afford and to be ready to make your purchase. You can shop around yourself to find out what rates and conditions banks will offer you, or you can enlist the help of a mortgage broker, who will put in this time and effort for you. Mortgage brokers have connections at a variety of financial institutions and are experienced in dealing with them. The bonus is that your bank will pay your mortgage broker on your behalf, so this service is provided at no cost to you.

The next person you'll likely go to is to a real estate agent. A real estate agent will help you search for the right new home to fit your budget, desired location, and ideal size. Real estate agents don't cost a buyer anything (only the seller) and they have a wealth of information at their fingertips that will help to ensure you get the best deal possible on your new home. Anita Rapp, sales representative at Royal LePage in Toronto, helps many people, mostly young, first-time home buyers.

Rapp says that most of her clients find her through referrals or open houses. She conducts a consultation to find out what the buyer is looking for in terms of price, location, and size, three of the most important factors in home buying. "I communicate daily," says Rapp. "I send an email out if something appropriate is available and then the home buyer can email back when they see something interesting."

Rapp will also tell you that it's important to get pre-approved before seeking the help of a real estate agent. "That's where a lot of people make mistakes. They don't have their finances in order first." Then Rapp goes out to visit potential homes with her clients. "A real estate agent has the right information and asks the right questions. It doesn't cost you anything to have an agent. We have more information and it narrows down your search. When you hire somebody you trust, it's like going with a parent or friend, and we get to know your tastes, too."

Once you've found the right home, your real estate will help you to negotiate your purchase agreement. This is when most buyers would hire a lawyer. You can get referrals through your real estate agent or a friend, but if you don't already have a lawyer, how do you begin the difficult task of sorting through them? Max Cohen of Cohen Barristers & Solicitors has a few easy tips. "It's best to shop around; the lowest price isn't always the best value. If you can get them to speak to you, then it's a good sign."

Cohen says that lawyers should tell you what they're going to do for you and what they'll charge, but you need to understand the total costs involved. These could include disbursements in addition to or included in the lawyer's fees. "A purchaser will probably spend anywhere from $1,300 to $2,000 for legal fees and disbursements," says Cohen. Add to that land transfer tax, which is determined as a graduated percentage of the purchase price of your home, starting at 0.5 per cent and going up to 2 per cent as the purchase price rises. Something else to consider is that first-time new home buyers are eligible to receive a partial refund of their land transfer tax, just for buying new.

So just what does a lawyer do? Cohen advises that a lawyer is required to search title to the property, determine if there are any other parties interested in the property, and make sure the seller has valid title to sell the property. "We may suggest that the homeowner obtain a title insurance policy, protecting against mortgage fraud down the road." Then, on closing, the lawyer prepares documentation for the purchaser to sign, including all the mortgage documentation, and confirms their identification to prevent against fraud.

"I advise purchasers that on their last visit before closing, they need to make a very detailed inspection of the house for their Tarion warranty." If anything is missed during this pre-delivery inspection, then it might not be eligible for the warranty should it be noticed later on. Cohen also prompts buyers to get an insurance policy, as it's a requirement for home purchases (with the exception of condominiums), and tells them when to arrange for telephone, cable, and other utilities.

The most important thing that lawyers provide is peace of mind. They will review and explain your purchase agreement in addition to your closing documents to make sure that everything is in order. They also arrange to register the deed to your property and your mortgage, the final step in completing the purchase. Cohen's closing words are sound advice for new home buyers: "Negotiate your mortgage early."

Finer details such as these are welcome tips from people you trust. It's comforting to know that there are professionals trained to help you make and carry you through one of the most important decisions of your life.

Closing the deal

It's a good idea to plan ahead so that you know how much you'll need to set aside when your home or condo closes. Max Cohen of Cohen Barristers & Solicitors has provided a list of costs you might consider or investigate when budgeting. Remember, there are always extenuating circumstances and every home purchase is different. If you have any concerns, ask your real estate agent, mortgage broker, or lawyer for help. You can trust them!

Closing Costs Tips

The lawyer's fee: Most real estate lawyers quote a flat fee that may or may not include disbursements-find out which when you're budgeting your closing costs.

Disbursements: Include the title search, the cost of registering the deed and mortgage, courier and bank costs, etc. Land transfer tax: You may be eligible for a partial refund on your land transfer tax if you're a first-time home buyer of a new construction. This cost is calculated using a graduated percentage of the purchase price of your home.

Adjustments: Include taxes, oil left in the tank, remaining hydro bills, etc., that are split between the buyer and seller based on how much time each has spent in the house (sellers may still have bills to pay after they leave, but not necessarily the entire amount).

Common fees: Include paying for meter installation on your street if you're in a new development, contributing to common area expenses in a condominium or gated community, paying to have trees planted, etc.