Buying a home can quickly become overwhelming.
Let us walk you through the home-buying process, and help you make the right decisions before putting an offer on your dream home. It is tailored for all home-buyers in Quebec, but these tips can be very useful no matter where you are in the world.
Step 1: Understand the Role of the Real Estate Broker
During the purchase of your home, the real estate broker that you choose becomes your best friend. Why? Because they help you through the entire process and are legally obligated to act in your best interest.
Before you choose your broker, it’s necessary to understand exactly what they do and how they can help you get the best bang for your buck.
Brokers have the following duties and obligations toward their clients:
(1) Inform & Verify
All information that a broker gives their client must be accurate. Some examples of information they will provide to you are the area of the property, municipal and school tax amounts, and details of any leases by the seller.
The broker also has the responsibility to identify and report any factor that may affect the home.
(2) Act with Transparency
Brokers have an obligation to keep all parties informed of anything that could affect the transaction.
For example, the buyer and the seller should both be aware if the property has ever been used to grow cannabis, even if it has since been rehabilitated. We don't want anybody hiding anything.
Brokers must avoid placing themselves in a situation with any conflict of interest. If anybody that the broker knows, including themselves, holds interest in the property, it is best if they back away from the property and let another broker handle the transactions.
Conflict of interest also arises when a broker receives a benefit of any kind for referring you to a third party (i.e. a financial institution, etc.).
(4) Be Loyal to You
Real estate brokers must promote your interests at all times, presenting you with every home that matches your criteria. They must be in it for you and nobody else.
(5) Give Proper Advice
This one seems obvious, but is really important to keep in the back of your mind. Brokers have the obligation to advise and inform you objectively.
They have to explain all clauses you may need to sign, and make informed recommendations to you during each step of the transaction. They should ensure that you understand every step of the process and ask plenty of questions.
(6) Be Available
Your broker must be available to represent you on a schedule that works for you. They must take appropriate action and follow-up on all communications received. If, for example, they don't answer their calls for 48 hours, it's a big red flag.
(7) Protect your Interests
A broker’s duties and obligations are all aimed at one thing: protecting your interests during the transaction. They act as a sort of property-lawyer for you, ensuring that your interests are protected at all costs.
Chances are that the broker that you choose has very valuable experience that will definitely be used to your advantage. Among many other things, your real estate broker will:
Help you find your ideal home.
Help you make an offer on a home.
Negotiate on your behalf to get you the best possible price.
Give you neighbourhood expertise.
Help you with the inspection process of your new home.
Put simply, the real estate broker’s role is to make the purchase of your dream home as easy, effortless, and satisfying as possible for you. If that is not their intention, you might want to start looking for another broker.
The real question is: how you know which brokers will act in your best interest and which ones are just there for the sweet commission?
Well, you’re in luck! The next step in our Home Buyer’s Journey series will guide you on how to choose the best broker.
Step 2: Choose Your Broker
Sometimes, you know right away if a real estate broker will be a good fit. Some people get strong gut-feelings about working with a particular broker that just doesn’t go away. This is a good thing, and often your gut is right!
Others, however, may be on the fence. These people must absolutely get informed about brokers and their responsibilities before choosing one.
Before deciding on a broker, it’s imperative that you have the following questions answered:
(1) Does the broker have a valid OACIQ license?
Brokers in Quebec must have a valid OACIQ broker license before working with clients. Though almost any broker you choose is likely to have a license, it’s always important to ask before working with a broker, because it ensures that the rights and obligations of you and your broker will be legally respected.
(2) Does the broker have positive or negative online reviews?
It’s always important to check for testimonials from others who have worked with a broker before you make any decisions. Imagine booking a vacation at an all-inclusive resort, only to later realize that it has a one-star average on TripAdvisor. Now apply this feeling of shock and disappointment to what might be the biggest purchase decision of your whole life. Yes, it’s that important to make sure your broker has had past successes.
Feel free to ask your broker for testimonials too! Most successful brokers would be happy to prove themselves to you with testimonials and referrals. The most popular real estate broker review platforms are Rate My Agent, Rank My Agent, and Yelp.
(3) Has the broker been subject to disciplinary action?
This may take a number of Google-searches, but if a broker has had disciplinary action against them, it’s probably the best idea to look elsewhere. Similar to the previous question, it’s key to look at a broker’s past history to predict how well they will work for you.
(4) Are they knowledgeable about your area of choice?
No real estate broker in Quebec is completely knowledgeable about every city and neighbourhood in the province. Even brokers in the city of Montreal have areas of expertise. So, if you know which neighbourhoods you are looking at, it’s a great idea to seek out brokers who specialize in these areas!
(5) Is your broker available when you need them (nights and weekends)?
Brokers typically work with multiple clients at the same time, which can easily fill their schedule. Your broker, however, must be working in your best interests at all times. This means that they must be available to address any question and concerns you may have, whenever you have them.
Obviously you shouldn’t expect them to be available at 4 AM, but getting immediate responses will make you more comfortable with their work, and make the whole process smoother.
(6) Does your broker work alone or as part of a team?
There are definitely pros and cons of brokers working as part of a team. Where a broker in a team might make the process of buying a home go by faster, they may be harder to communicate with. The relationship one has with their real estate broker is key, so you should keep this question in mind.
(7) How do they differ from other brokers?
What things jump out at you about a particular broker? Everything from the way they present themselves to their history to the way they communicate with you must be taken into account. Are they more expensive or less expensive than others? Why?
(8) How many years of experience does the broker have in your specific neighbourhood of interest?
This question is just re-emphasizing how important experience is in real estate brokers. Don’t just look for reviews and testimonials, but how many years of experience they have had. Where young brokers might give you the energy and enthusiasm you love, wiser and more experienced brokers may help you get the best home for the best price.
(9) Does the broker specialize in transactions for the type of property you want to buy?
Contrary to popular belief, brokers tend to work with some property types more than others. Where one broker might have experience with helping people buy mansions, others might focus more on condos.
Make sure that your broker deals with your property type on a regular basis and is used to dealing with any transactions that arise from them.
Once you choose your broker, you have to choose your property. Of course, real estate brokers will help you with this process, but there are definitely questions you need to be asking when searching for the perfect property.
Step 3: Choose Your Property
Now that you have decided on a real estate broker to help you with buying a home, you have to decide on which criteria to keep an eye out for.
We created a list of questions that will help you get a clear idea of which home would best suit your needs and interests:
(1) What type of property are you looking for?
Of course, before choosing your property, you should have an idea of what property type you’re looking for. Do you want a single-family property (belonging to only one family)? An income property (property purchased for the intention of generating income)?
Ask yourself if you would prefer a new property or a resale too. You can certainly be interested in many property types, but you should get an idea of which types best suit your interests.
(2) What type of neighbourhood are you looking for?
Many home-buyers already have an idea of what neighbourhoods they are interested in. In fact, this is usually one of the first things that buyers think about when deciding to move. However, it would be beneficial to learn about all the neighbourhoods that might suit your needs.
For instance, if you know you want to live in the suburbs, do some research of which specific neighbourhoods best fill your specific needs. For instance, there is a big difference between living in Beaconsfield vs living in Dollard-Des-Ormeaux. Look into schools, parks, local businesses and restaurants, and transit to the city.
(3) What are some of your must-have nearby services?
Continuing from the previous question, you should think about which services you need close to you. If you have children or are planning to, you should definitely look at the proximity and quality of local schools. If you do not work from home, think about how easily you could travel to and from work every day.
This research might be tedious, but it’s absolutely essential in making sure you are satisfied in a new neighbourhood.
(4) What are some of your must-have home features?
Now that you have chosen the right neighbourhood(s) to look at, you need to think about at-home essentials. Think about the number of bedrooms and bathrooms you require, amount of storage space for all your belongings, the amount of natural light you would like to have. You should also consider what type of heating you need (electric, gas, oil, dual energy).
Condominiums for example, would you like a washer and dryer connection in your unit? How about a balcony or patio? All of these are things to take into account before you start selecting homes to tour.
(5) Are you willing to do some renovation work?
Many homes out there require at least a little renovation work. Whether it be replacing kitchen tiling, or replacing utilities, or painting things in a way that best suits you, renovations in new homes are totally normal. While some homes may require renovations to suit your needs, some new homes may be perfect as is.
(6) What exterior aspects are important to you?
While considering homes, many buyers tend to forget the importance of the home’s exterior. Some properties have gorgeous interiors, but once you walk out the door, it looks like you stumbled onto the set of the new Mad Max movie.
Don’t just think about cleanliness, but about which aspects of the exterior best suit your needs. Think about parking accommodations for your vehicle(s) and whether or not you need a garage. You should also think about the size and layout of the yard, and whether or not you would like a pool or hot tub.
(7) Do you plan to operate an office or business on the property?
This question does not apply to everybody, but if you are planning on opening a business on the property, there are many factors that you need to consider. Look into local by-laws and guidelines for establishing business in neighbourhoods. Also look around the neighbourhood for competitors.
(8) Will your parents be living with you?
The Quebec government defines intergenerational properties as single-family units that hold independent units for privacy. Think of this like converting your basement into a small apartment-type unit for your parents or grandparents. If this is the case, look out for properties that allow spaces to be sectioned off or that already exist.
Step 4: Establish Your Borrowing Capacity and Budget
(1) Get a mortgage pre-approval
In order to know how much you can borrow for a home, you need to get a mortgage pre-approval. Although it is not mandatory, it will make the home buying process much easier and will also give you the following benefits:
You will know the maximum amount that you can borrow for the purchase of a house.
You will be able to lock down a mortgage rate that is based on your current financial situation and the amount you decide to put as a down payment.
It shows your legitimacy as a potential buyer. It can come in handy when the purchase of a specific property is very time sensitive due to a high number of potential buyers. The time required to get that mortgage pre-approval might be the time it takes for someone else to buy the home. When house-hunting, time is of the essence.
(2) Know your monthly housing budget
This value is to pay for your mortgage payments, property taxes, and heating costs. You can calculate this amount with the following formula:
Net Household Income - (Debt + Current Expenses) = Monthly Housing Budget
Taking into account:
Your net household income (Gross Income - Income Tax);
Your debts (student loan, car loan, etc.);
Your current expenses (food, clothing, insurance, miscellaneous expenses, etc.)
While most people haven’t used math like this since high school, having an estimate for your monthly housing budget is essential for organizing your finances.
This amount must cover your monthly mortgage payment (principal plus interest), property taxes and heating costs (and, if applicable, 50% of your co-ownership fees). We recommend looking at the OACIQ website to know more about balancing your finances.
(3) Calculate the best down payment
You will have the choice to put a down payment as little as 5% of the value of the home. For example, if you are purchasing a home valued at $300,000:
Choosing a 5% down payment → $15,000
Choosing a 20% down payment → $60,000
Depending on the amount you choose to put as a down payment, the size of your mortgage payments will be directly affected. You must also keep in mind that if you decide to put a down payment smaller than 20%, you will need to have insurance for your mortgage loan.
The amount of this insurance will vary depending on the level of risk a financial institution is taking by giving you a mortgage loan.
If, for example, you have a lot of money saved up but do not expect to have steady cash flows in the future, a larger down payment may be best. Think hard about your earnings in the future to best plan for the purchase of your new home.
(4) Consider the 'Home Buyer's Plan'
If you are a first-time buyer, the Home Buyer’s Plan may be a solid option for you. This plan allows you to withdraw up to $35,000 from your RRSP to use for your mortgage. You can pay back this amount over 15 years and must start repaying it 2 years after the withdrawal.
Step 5: Sign The Exclusive Brokerage Contract To Purchase
The exclusive brokerage contract clearly states the terms of the agreement with your broker. Although it is not mandatory to have, it is extremely useful, as it avoids any possible conflicts between you and the broker over misunderstandings you may have.
As stated in steps 1 and 2 of our home-buying process, choosing a good broker is key, but it occasionally happens that there are conflicts between the two parties. Among other details, The Exclusive Brokerage Contract specifies:
The essential and additional features of the home (i.e. the type of construction, the number of rooms desired, number of bathrooms, etc).
What your desired purchase price range may be
The decided remuneration for the broker as well as the obligations of both the broker and the buyer for the duration of the contract.
If you need to sell or buy a home, a Qube REALTOR® can help you navigate the market safely and with professional insight. Qube supports Quebec residents by providing full-service real estate experiences with incredible rewards: sellers save thousands in commission and buyers receive cash back when they purchase a home with one of our REALTORS®. Visit our website here or call 1-877-410-7823 to learn more.