As the saying goes – it takes a village. Even when embarking on your home purchase, it’s essential to put together a dream team of mortgage professionals to make the process as smooth as possible.
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.
Here’s a list of the pros you can expect to work with during the buying process, and what you should know before hiring them.
Your Guide to Mortgage Professionals
The Mortgage Broker
What they do
Mortgage brokers navigate the lender marketplace on your behalf to find you the best mortgage rate. 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 take your personal budget and credit standing into account to find a mortgage product truly suited to your financial needs.
The mortgage broker will also act as the middle man between you and the lender or bank when negotiating your financing.
What it’ll cost you
- Nothing! Brokers are paid on commission from lenders when they close your mortgage deal. So they make money from the lenders, not you.
Where to find them
- Rate comparison websites like RATESDOTCA
- Trusted referrals from friends or family
Pros
- They get access to exclusive rates offered by various lenders, so they can likely find you a better deal.
- They provide professional support and act as the middle man when negotiating your financing with the bank or lender of your choice.
Cons
- Because brokers are paid by lenders once they secure your mortgage, certain lenders may give brokers financial incentive to promote their rate over another lenders, even if it isn’t the best rate. So it’s important to do your own research and know what’s generally offered by all lenders in the market, even when working with a broker. This is why it may be best to check rate comparison sites like RATESDOTCA first.
Be sure to ask
- What lenders are you directly affiliated with?
- Will you show me rates from other lenders as well? This ensures you are fairly give rates from across the board, and not just limited to the lenders who are paying to promote their own rates.
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 house hunting, making offers, negotiating prices and conditions, and ultimately, closing the deal.
What it’ll cost you
- Nothing up front. As a buyer, a real estate agent provides their services for free. But once you close the deal on a home, they are entitled to receive a cut of approximately five to seven per cent of the sale amount as commission. This commission is generally split between the selling and buying agent. For example, if you put an offer on a $300,000 home and your offer is accepted, approximately five to seven per cent of that $300,000 is going to the buying and selling agent.
Where to find them
- Open houses
- Realtor.ca
- The Canadian Real Estate Association
- Trusted referrals from friends or family
Pros
- They are well informed about housing market conditions, the best and worse neighbourhoods, average property value, and what features you should and shouldn’t be looking for in a home.
- They get exclusive access to available listings as soon as they hit the market.
- Their expertise can come in handy when negotiating in the closing process (i.e. in bidding war situations when emotions and costs may run high).
- They 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
- Real estate agents will require you to sign a Buyer Representation Agreement, meaning only they alone can represent you in the home buying process for a period of time. And depending on your agreement, they may be entitled to receive commission even if you find a home on your own - without them. This is why 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 is the number of times the agent has successfully negotiated a home price below what was listed, which is 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. This includes reviewing your status certificate (if you’re a condo buyer), doing a property search to ensure there aren’t old mortgages or liens on the property, and drafting your mortgage contracts. A lawyer can also help you apply for buyer rebates, acquire 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 to $2,000 in legal fees, and between $500 to $800 for out-of-pocket costs such as title searches or registering your mortgage.
Where to find them
- The Law Society of Canada
- Trusted referrals from your mortgage broker, agent, friends or family
Pros
- A real estate lawyer will help you navigate the dense pages of legal jargon you’ll encounter during your property transaction.
- They’ll ensure you are fairly represented as a buyer, and will assist in establishing and enforcing buying and financing conditions 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 as well.
Be sure to ask
- Can you give me an all-inclusive quote? This ensures all charges associated with your lawyer services are spelled out up front, including registration costs, taxes – even courier costs.
Home Inspector
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 that 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
- $350 to $600
Where to find them
- Canadian Association of Home and Property Inspectors (CAHPI)
- Canada’s Commercial and Home Inspector Association (CanNACHI)
- Trusted referrals from friends or family
Pros
- A good home inspector can provide you with the peace of mind that you’re not accidentally buying a lemon. They will locate any structural or system 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. Of course, sellers and agents are financially benefitting 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.
Are you buying a home for the first time? As many already know, purchasing a house isn’t as simple as purchasing milk from the corner store. Naturally, buying any home – let alone your first home – is a process that involves a substantial amount of decisions, paperwork, and money. The entire process can become fairly overwhelming, which is why we created the First-Time Home Buyers Guide. We’ve got you covered from the open house to closing the deal.
This post has been updated.
