I've bought and sold many condos and helped friends and family do the same. When I first started out I wish there had been a list available like the one I've made to help you.
Often when first-timers decide it's time to purchase a condo, they aren't aware of how many steps are involved beyond the obvious of having a downpayment and a realtor. This is a pretty extensive list of most of the steps that are required.
Before getting started
You'll need to have money in the bank for a downpayment and/or a letter from a relative acknowledging they are giving you the money as a gift with no repayment required. The money should be in your account for at least 3 months before meeting with a bank. You can not borrow from credit cards or lines of credit for a downpayment. A bank will not allow you to borrow money for a down payment. Have all of your income tax returns up to date.
Do you know if you have a good credit score? Now is a good time to make sure you're in good standing and have no collection agencies after you. The lower your credit card balances, the better and make sure you have a history of making regular monthly payments.
Print your bank records.
Find your T4s and Notice of Assessment from CRA. If you are self employed, a bank will want to see that you have had consistent back-to-back contracts. Collect all of your contracts of employment.
Meet with your bank or a mortgage broker to determine how much of a loan you qualify for. Bring at least two years of previous tax returns and proof of employment and income to the meeting. A pre-approval for a mortgage only means you are approved for a certain amount. It does not mean that a bank will automatically offer you a mortgage when you've found the place you want, though. The bank will still want to dig into the building to make sure you are not overpaying, or that the building is not in rough shape and they won't get their money back if you default on your mortgage.
Create a monthly budget so you know how much you spend on food, entertainment, travel, clothing, etc. It's ok to cut back on a few things to make sure you can afford to pay your mortgage and strata fees, but you have to be realistic about what you can cut back on for a very long time. You don't want to be so tied to your mortgage that you can't still have a good quality of life. House poor is a thing. So is condo poor.
Once you know how much you can borrow, it's time to decide how much you are willing and able to pay per month on your mortgage and strata fees combined. Just because the bank has given you the go-ahead on a pre-approved amount doesn't mean you have to max it out.
Think about how much you would like to spend on renovations if you already know you prefer to have a renovated/remodeled kitchen and bathroom(s). New flooring isn't cheap either. It's surprising how much renovations cost. If you're handy and you can do it yourself, great! you'll save yourself a lot of money, but if you can't and you have to hire someone, it's expensive. The best way to hire a renovator is through word of mouth.
Interview realtors. Again, it's best to find your realtor through word of mouth. If you have already gone to some open houses and connected with a realtor, this would be a good time call them. It's best to chose your realtor for purchasing based on if you really like them. You're going to be spending a lot of time with them. Also, it's good to chose your realtor based on their negotiating skills. This is something you will only know by asking friends who have used them.
Once you start looking
Begin looking on line (MLS) and let your realtor know what your price limit is. If you've spent some time on MLS you will already have a good idea of what is available in your price range and if you are able to afford in the neighbourhood you most desire. Take your time. This is the time when it begins to get a bit crazy, a bit exciting, sometimes exhausting, and very time consuming. Don't rush. If a great place comes along and you missed out on it, there will be another.
Send the links to your realtor and expect that they will have something to say about the places and that they will also recommend other properties to view.
Set aside your evenings and weekends. This can sometimes be a long process.
Once you've found a place you like
Once you've found a place you are considering, hire Stratasure to help you review the documents. Reading through the documents with a Stratasure report makes the process a lot less daunting and far less confusing. If you are happy with what you've learned from reading the documents and Statasure's report, it's time to make an offer.
Keep your bank or mortgage broker up to date so they are ready to get things in motion when you're ready.
At the point when you're ready to make an offer, try as hard as you can to not be too emotionally attached to the condo. It's easy to get swept up in the excitement and bid too high out of fear of losing out, and it's also common to not listen to a realtor and force a bid that is too low that will be rejected.
It's good practice to keep your offer as clean and uncomplicated as possible. "Subjects to sale" is the term that is used in offers to describe any requirements that are needed to fulfill the offer. It is customary to have a subject to financing and another subject to inspection. Having subjects is normal and offers you a way out of the deal if you need it. In highly competitive markets, when multiple offers are being presented to a seller, some offers are written without subjects in an attempt to make the offer stand out from the others. This is a very tough situation to be in for a first time buyer, and if possible, should be avoided.
Setting a time for possession is a negotiation between you and the seller. You can ask for a quick sale and be in your new condo in about a month, but it's usually a 3 month period of waiting. The seller may ask to have a longer possession date in order to give them time to find a new place.
Your Stratasure report
As soon as you receive the strata documents, send them to Stratasure to create a report. While Stratasure is creating the report also read through the documents and make notes.
You'll receive the report within 48 hours of sending the documents to Stratasure.
Read through the Stratasure report and share it with your realtor. Cross reference the notes you made with what the report has noted.
Do your best to contact a strata council member and/or the strata property manager. Use your Stratasure report to ask any questions that have been identified. Property managers work for the strata corporation and as a potential purchaser, they don't work for you (yet) so they really have no obligation to find time for you. If you do get them on the phone, and you have specific questions, they are obligated to answer any questions that are on record about upcoming costs. The same is true with the strata council but remember that they are volunteers and they already have their hands full dealing with owners and the building. They don't have an obligation to speak with potential buyers. If you aren't able to get the information you need, try standing at the front of the building and introducing yourself to owners as a potential owner. Asking them a few questions will give you a real sense of the building and if you're really lucky you may meet someone who loves the building and knows everything and has time to share with you.
Have a property inspector lined up. Your realtor may have a list of a few, but again, the best way to hire a property inspector is through word of mouth.
Share your Stratasure report with the property inspector so they are aware of the state of the building beyond their visual inspection.
You can use the inspector's report and your Stratasure report to renegotiate the price. Say the seller was unaware of a special assessment that is coming up, you can ask for a reduction in price to help cover the costs of some of the assessment.
Expect some back and forth while you renegotiate the price.
After you have removed subjects
If it all checks out, remove any subjects to sale and take a deep breath and close the sale. You will now probably have two to three months before taking possession of your new condo.
Meet with a lawyer or a notary public to deal with all of the legal paperwork. Choosing a notary or lawyer is again done best through word of mouth. Sometimes at this stage there can be a few unexpected surprises. Remain calm, they will get sorted out. Here you will learn about the Canadian Mortgage and Housing Corporation,and the requirements to have insurance on your mortgage. It's a mountain of documents that you will be signing and it will take more than an hour to get through everything. Your lawyer or notary will have looked through the contract and made sure that no mistakes are made. All you have to do is sign on the dotted line on many different contracts.
If you plan on renovating, begin to collect images of rooms you like for inspiration. Begin to engage with a renovator or designer. Renovators are often booked up 6 months or more in advance. Something to consider, if you can afford it is to do the renovation before you move in. It's a lot easier to not be living in a place during renovation.
Meet with an insurer to have your unit insured on the day you take possession. The building is insured but you need your own insurance against theft, damage to other units caused by you, contents insurance in case of fire, liability, etc.
Congratulations! Possession time!
This is when you get your keys. You do a walk through with the realtors and inspect everything that was agreed to is still in the unit. Things like window coverings, carpeting, light fixtures, faucets and appliances are usually standard as part of the sale.
It's a long list, right? So much to do and having everything figured out ahead of time may help you to be able to relax a bit during the process. If you have done your homework and followed this list you won't be as surprised as others who have not. For a first time buyer, it is truly mind blowing just how much is involved.