Buying a home in Winnipeg is likely the largest investment you will ever make. It’s a very involved process, meaning that a lot of professionals are part of the process. You will need a lawyer, real estate agent, home and life insurance experts, home inspector, moving company and more.
Step 1: BUILD A STRONG FOUNDATION FOR YOUR QUEST
Just like the property itself, your quest for buying a home in Winnipeg (whether its a condo or a house) should be started on a firm foundation. This means that you should select the person who is involved in pretty much every step of the buying process. Most buyers know that being pre-approved for a mortgage is very important, so you might think the first person to contact is a mortgage professional?
Not so….. the most important person in your home-buying process is actually your Real Estate Agent!
Plus, a well-connected REALTOR® will be able to make recommendations for a qualified home inspector, a trustworthy moving company, and a great life insurance expert for you.
But you might be thinking, “Why would I need a real estate agent? I can find homes for sale on my own!” Lets take a look at the answer to this very important question:
WHY YOU SHOULD WORK WITH YOUR OWN REALTOR®
While it is true that buyers can certainly ‘find’ homes online, and check them out by either going to Open Houses or calling the Listing Agent to show the property directly, there are a number of very valid reasons for buyers to work with their own REALTOR®.
Having your own real estate agent, who is looking out for YOUR interests, and treats you as a CLIENT comes with many advantages. You (as the buyer) can same a lot of time, money and aggravation by simply working with wone agent in your quest for buying a home in Winnipeg.
HOW TO SELECT THE RIGHT REALTOR®
As mentioned above, your real estate agent is involved in nearly every part of the home-buying process. Therefore, selecting the right agent is of ultimate importance. Here are a couple of things you can do:
- ASK YOUR FAMILY AND FRIENDS FOR RECOMMENDATIONS
Chances are, someone close to you has just gone thru the process of buying a home in Winnipeg, and can give you feedback about their experience with their REALTOR®. If they had a great experience, get the name and consider him/her for the job.
- ONLINE REVIEWS AND RECOMMENDATIONS
Check the agents name on google, and also check to see if he/she is listed and accredited by the local Better Business Bureau.
Some basic tips
Step 2: Selecting Your Mortgage Lender
Here is what NOT to do: Call a bunch of banks, credit unions and mortgage brokers, and say “Hi, whats YOUR best mortgage rate?” Why not?
Because it is a useless exercise! Mortgage lenders reserve their best rates for their best customers, and as they have no way of knowing if YOU fall into that category, they can not possibly give you an accurate rate over the phone.
Oh, they’ll quote you rates alright, but whether or not you actually qualify for that rate will depend on your credit rating, which requires a credit check.
Here is number 2 on the ‘Don’t Do This’ List: Don’t go to 4 lenders and ask them all to pre-qualify you. Why?
Each time a lender checks into your credit history, your rating actually takes a little negative hit!
Here is another reality: Most lenders are fairly competitive, and the actual difference between their rates quite often boils down to fractions of a percent. (Yes, over the life of the mortgage that CAN add up to thousands of dollars, but I’m here to suggest that there are other factors that may actually be of greater importance). What could be more important than a few grand? Well, for one thing, the penalty a bank or lender charges when you try to get out of a mortgage early!
Watch those penalties
Mortgage Lender penalties for getting out of a mortgage early will charged $30,000 for closing the mortgage out a couple of years early. Ask THOSE home-owners whether the 0.15% they saved on the mortgage payments was actually worth it.
Why would you close out early? Although you may not think so when you are buying the house, a lot can happen in a 5-year span (possibly the length of the lock-in mortgage). Maybe you get transferred with your company, or maybe there are cut-backs and you get laid off, having to sell your home. Or maybe marital separation, death or illness pop up.
Fact remains that a lot of unforeseen circumstances can come up within 5 years, and if you have to get out of a mortgage early, make sure it wont cost you an arm and a leg to do so.
So what is the right way of selecting a lender? Lets look at some of the major differences:
Brokers pride themselves of having access to the largest selection of mortgage products possible. If the lowest rates still ARE your primary concern, rates by mortgage brokers are often unbeatable. But….I recall a bumper sticker in the 1970’s which read : Ass, Gas or Grass…….nobody rides for free
And so it might be with the ultra-low rates. Most often, your lender is someone in another province, with whom you’ll never be able to talk or meet. And again, watch those closing-out penalties before you sign
THE BIG BANKS
The large banks used to get business based on their names and reputations. You had to give up any kind of convenience, have you tried PHONING a branch lately…grrrr), but people felt safer and secure that their mortgage was with a ‘too-big to fail’ type of institution.
Nowadays, some of the banks, notably The Royal Bank and TD Bank, have hired and trained Mobile Mortgage Specialists. As the name suggests, these mortgage experts come to your home or work to meet and discuss. In my experience, they even take phone calls from their clients after hours, adding to the convenience factor. And in most cases, their rates are fairly competitive.
Credit Unions offer a mixture of some of the best of both of the above. Very competitive rates at a local establishment. Easy access and friendly knowledgable staff. Best of all: Many credit unions allow their branches to make the mortgage decisions. So once you are pre-approved by the branch, they will NOT have to check with a head office in Vancouver, Toronto or elsewhere, (as is the case with the big banks). Credit Unions offer a great alternative.
Step 3: STARTING THE SEARCH FOR YOUR HOME
Now that you’ve been pre-approved, it’s time to start the fun stuff. Set up an appointment with your real estate agent and bring your pre-approval letter (if the lender gave you one). Together, you will set up a search for your perfect home. Winnipeg REALTORS® use a computer program called “Keystone Matrix” which makes buying a home in Winnipeg a lot easier.
With this program, you can search (and receive automated listings) for your specific type of property. Only want bungalows in Transcona? No problem. Only want condos with at least 2 full bathrooms and a minimum of 1,100 sq feet? Done!
Just remember, like any computer program, Keystone Matrix is very precise. If you specify ‘a minimum of 4 bedrooms’, you will NOT receive homes with 3, even if you decide that you can add a 4th bedroom to the basement. This is why, if you change your mind or alter your requirements, you must let your agent know so that he/she can also change the search parameters.
You will receive emails on a regular basis, which will deliver links to all the available homes in your search. The information on these listings is also very detailed. It will include tax info, room measurements, property measurements, and an abundance of photos to help you narrow down the list of potential properties to view.
VIEWING THE HOMES
You’ll be receiving those new listings as soon as they are activated. Look thru them daily, and contact your agent when you are ready to view one (or several). Here are a couple of pointers:
GIVE YOUR AGENT A LITTLE NOTICE
In a perfect world, you will let him/her know that you’re ready to look at some properties at least one day in advance. Some of the homes may be occupied by renters, who, in Manitoba, have the right to be notified at least 24 hours in advance. So if you are ready to look at homes on a Saturday afternoon, for example, ideally you’ll let your agent know by Thursday evening, so that he/she can begin the process of notifying the owners or tenants of these homes you want to see.
LIMIT THE NUMBER OF HOMES ON ANY ONE TOUR
Ideally, you’ll go out and see 4 to 5 homes. Any more than that, and they will blend in your mind. “Which was the house with the great kitchen?” or “Was that the one with the smokey smell”?
Open Houses are a great way to start. Even when you work with your own real estate agent, you are always welcome to attend Open Houses, just make sure you let your agent know. Also let the Open House Agent know that you are already working with your own Buyer Agent.
Step 4: THE OFFER TO PURCHASE PROCESS
You’ve selected a home, and it’s time to make an offer. To give you an idea of what offers look like in Manitoba, below this section you will find a down-loadable copy of a Residential Offer to Purchase. These offers are standard among all real estate agencies, wether you use Remax, Century 21, Sutton, Royal LePage etc…
Your real estate agent will go over the offer and he/she should be explaining all the different sections to you. For the offer you will need to bring several things
- Photo Identification
Your agent will guide and advise you on the proper and most advantageous deposit amount. The amount may depend on circumstances: perhaps you are best served with a smaller deposit? Or maybe it makes your offer look stronger if you deposit a larger amount? Speak to your agent about this. A regular cheque (on a local account) is sufficient, you do not need a certified cheque.
Everyone who is involved in the purchase (if more than one person) should be present, and bring identification. Under new Government guidelines, if the deposit cheque comes from a 3rd person ( such as a parent who is helping a young couple) , that 3rd person will have to be identified as well.
Here is a down-loadable copy of a Residential Offer to Purchase used for Winnipeg home purchases.
Step 5: The Follow-Up
LIFE INSURANCE OR MORTGAGE INSURANCE
Let me make this clear…. In this section we are talking about Life or Mortgage Insurance, NOT property insurance. The latter (property insurance) is necessary to insure the property in cases of fire, theft, vandalism etc,,,, and this type of insurance is mandatory if you are getting a mortgage. The reason is simple: Since the bank owns somewhere around 90% of your home (depending on the size of your down payment), the bank (or lender) needs to protect their investment.
However, Life Insurance or Mortgage Insurance is NOT mandatory, even though I have heard stories of some financial institutions trying to persuade their clients to buy mortgage insurance.
In my humble opinion, the buyer is usually better served by buying Life Insurance from a qualified life insurance provider/expert, instead of mortgage insurance. For a full description of each, see this article. Here is a summary of the differences between the two. (For a referral to a trusted Life Insurance Expert, contact me anytime)
PREPARING FOR POSSESSION
The time between when the offer is accepted and final, to the time when you take possession of your new home, you will have plenty of things to prepare. Assuming you’ve signed the mortgage agreement, here are the next things you have to do:
CONTACT YOUR LAWYER
Just let him/her know that the offer papers will be faxed to them by your real estate agent. Of course, let your REALTOR® know who your lawyer of choice will be.
CONTACT A HOME INSURANCE COMPANY
Take the MLS listing information to your home insurance company. Quite often, the insurance company will have additional questions and will contact your real estate agent for answers.
CONTACT A MOVING COMPANY
Depending on the season, you may need to hire the moving company several months in advance. Having an ‘odd’ possession date (something other than the 1st, 15th or last day of a month) can be to your advantage. Moving companies are usually less busy (and less expensive) on odd dates, such as the 12th of the month, for example.
CONTACT YOUR LANDLORD (IF YOU’RE CURRENTLY RENTING)
Make sure that you let your landlord know about your plans to move out. Actually, you need to check your lease agreement to make sure that you CAN get out early, without penalties. Other options might include the ability to sublet your apartment to a friend or relative, but discuss all of these options with your landlord.
Step 6: Possession Date
In some cases, the buyers lawyer may actually give him the keys a day early, but always with instructions to not enter prior to the specified time.
The home officially becomes YOUR property according to the time and date set out in the original Offer to Purchase. DO NOT enter the home before the specified time and date. If the offer shows possession date/time to be the 18th of April, 2016 at 09:00 am, the buyer is NOT permitted to enter the residence before 9:00 am on that date.
When you buy a home in Winnipeg, the process works like this: The buyers lawyer will send the money to the sellers lawyer (in trust), at the same time the sellers lawyer sends the keys back to the buyers lawyer, (also in trust).
The keys are released to the buyer when the sellers lawyer is satisfied that all the money has been transferred.
Once the buyer does have the right to enter, he should check the condition of the property immediately. Make sure that all items, which are included in the sale (such as appliances, draperies etc) are left in the home. Check the basement for any recent leaks. Start the furnace and/or air conditioner (depending on the season) to make sure it’s working properly.
CHANGE THE LOCKS
Even though the seller is supposed to release all the keys to the buyer, you simply dont know if other people had made copies in the past. It is prudent advise to change the locks on all doors (or at least, call a locksmith and have them re-keyed).
STEAM CLEAN CARPETS
Some sellers clean the home before turning it over to the buyers, but this is NOT a requirement. Start with a fresh slate, and steamclean the carpets before bringing in all the furniture.
CLEAN THE DUCTS
Who knows if thats ever been done? Call a reputable duct cleaning company and have the ducts vacuumed out. Need a referral for this, call me.
GET A POST BOX
If you’re in an area which is ‘served’ (and I use the term loosely) by super mailboxes, you will need to attend at the local post office and arrange for one of those boxes to be assigned to you. You may NOT be receiving the old owners box, but rather be assigned a new one.
Interested in Buying a House or Condo in Winnipeg?