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How to buying a home privately (For Sale By Owner)
The following are the steps for buying a home:
Determine Your Home Requirements
Determine the Price Range
Determine your professional needs
Search for your Ideal Home
Communicate with the Owner
View the home
Making an offer
Make a deposit on Ideal Listing
Closing

Please note that these steps may vary depending on the State that you live in. Check your State law to ensure all the requirements are met.



Determine Your Home Requirements

Location
Your choice of location primarily depends on your activities and the activities of your family member. You need to discuss the possibilities of different locations with your family and make a decision based on the needs of the family. As an example, the distance to work is a very important factor for families, or if you are just starting your family you need to look at the schools around the area that you are considering.

New or Resale
There are advantages and disadvantages to both new and resale homes. Following is a chart that discusses some of the advantages and disadvantages.

Brand New Homes
Advantages Disadvantages
  • You have the option to change an item such as siding, cabinets or flooring
  • Your new home will be built to meet the latest building codes and requirements.
  • There is usually a builder warranty on your new home. (this is not applicable in Northwest Territories)
  • There might be incentives provided by the State
  • Schools and Shopping areas might not be available and maybe still under construction for a number of years
  • You would be required to do your own landscaping.
  • The warranty might have requirements that need to be met in order to be honored by the builder. This might restrict you from making changes to your home.
  • You might not be able to know your neighbors until after you move in.
  • You are usually responsible for deciding on the fencing with your adjoining neighbors


  • Resale Homes
    Advantages Disadvantages
  • The neighborhood is probably established and you can scope out the neighborhood before you decide.
  • Landscaping is most likely completed
  • Fencing is usually installed.
  • The basement might be already finished.
  • There might be a swimming pool available.
  • The older houses might require more maintenance.
  • There might be costs attached to fixing the house
  • You might need to renovate the house.
  • You would need to have a professional inspector check the house for structural or other problems in the house.


  • Type of Home
    You need to determine the type of home that would suite your needs. Condominiums might offer security and no maintenance, but you also will have a smaller space available to you. A low-rise might offer a convenient access to the rooms without having to climb stairs, but a two storey home would offer more privacy.
    You need to discuss with your family and decide on what type of home would be suitable to your needs.

    Other things to consider
    There are many factors that need to be considered from the perspective of you and your family. You need to review your needs and come up with your own list of things to consider, but the following is an example:
  • Exterior of the house
  • Energy Efficiency
  • Health Problems
  • Basement conditions
  • Parking



    Determine the Price Range
    The price range of the house that you should be considering is dependant on how much you can afford. The first rule of affordability is that your monthly housing costs shouldn't be more than 32% of your gross household monthly income. Housing costs include monthly mortgage payments, taxes and heating expenses. There is also second affordability rule which dictates that your entire monthly debt load shouldn't be more than 40% of your gross household monthly income. This includes housing costs and other debts such as car loans and credit card payments.
    Based on these ratios, lenders will advise you of the maximum home price they think you can afford.
    A lender will be able to calculate your financial means and pre-approve you for a mortgage. This will allow you to look for a house knowing how much you can pay.

    It is recommended that you consult with a lender.




    Determine your professional needs
    You will need professional help in your home purchase. For example nearly all need a lender to provide them with a mortgage. It is also a good idea to have a lawyer to protect your interests.
    Following is a list of people that you might need:

  • Appraisers

  • You can do an independent appraisal done on the home that you are purchasing. It can protect you from paying more than the market value. You can make an offer conditional on completion of an independent appraisal. If the appraised value is lower than the asking price, you may be able to negotiate a new price.

  • Lenders

  • You can obtain a mortgage from many different institutions such as banks, trust companies, credit unions, caisses populaires, pension funds, insurance companies and finance companies. You are encouraged to shop around for the right lender.

  • Mortgage Brokers

  • Mortgage brokers are independent from lending institutions and help you find a lender. There might be a fee attached and the fee is usually collected from the lending institution but you would want to clarify the terms and services.

  • Lawyers

  • Your lawyer will review any contracts you need to sign, especially the Offer to Purchase. If you make an Offer to Purchase that is accepted, your lawyer will be responsible for many of the closing arrangements.

  • Home Inspectors

  • Home inspectors will go through the property and perform a comprehensive visual inspection of the property. They will determine the problems and suggest what should be considered, looked at or replaced. The inspections are intended to provide a better understanding of the property.

  • Insurance Brokers

  • An insurance broker can provide you with your insurance needs for your property. Lenders insist on property insurance because your property is their security for your loan. Property insurance covers the replacement cost of your home and the premium varies.




    Search for your Ideal Home
    Ideal Listing has made searching for your ideal home real easy. You can select the State that you are interested in, and you can select a specific county. To get a list of all the cities in the state you need to select all the counties options. You can select multiple cities that you are interested in and then specify the price range and the type of property that you are looking for.

    You will see a list of properties that match your criteria. Please note that the list is displayed in random order which means that if you perform the same search twice, you will see the matching properties in a different order.

    You can simply click on the matching property to find the details and the specifications of the home. From that screen you can also use your toolbars to add it to your clipboard for later reference, or you can click on "Not Interested", which will exclude this property from being listed in your searches in the future.

    You can also use our Home Alert service to alert you when your Ideal Home becomes available. You can look under My Accounts for the tool.
    Search FSBO!




    Communicate with the Owner
    You can easily use our messaging service and communicate with the owner of the house. You can ask them questions and find out more details about the home. When there is a response to your questions, you will also receive a notification e-mail sent to you that there is a new message sent.




    View the home
    We have made it extremely easy to view a home. You can simply check the owner's schedule of availability and use the tools to book an appointment to go and view the home. Please note that the owner would have to accept the viewing otherwise it is assumed that it is declined.




    Making an offer
    When you are privately purchasing a home you have the option of personally negotiating with the seller. These conversations should primarily be focused on the price of the property. Once an agreement has been reached over the price, you can draw up other details such as the appliances and other points of interest and come to an agreement. It is recommended that you create a worksheet to detail all the items that were agreed on and discussed. The following is a list of items that can be discussed on the worksheet:
  • Seller's Name and Ideal Listing User ID
  • Buyers Name and Ideal Listing User ID
  • The exact address of the property
  • The agreed purchase price
  • Details of the deposit. (e.g. The amount of deposit, and how the money is held in escrow - usually seller's lawyer holds the money)
  • The amount of time that the seller has to respond to the offer. 48-72 hours is normal.
  • The Chattel or items in the home which will be included with the price.
  • Conditions of sale: e.g. buyer must obtain financing, property inspection with the date attached to each item.
  • Closing date.


  • Once an agreement has been reached, it is important that you visit Ideal Listing and use the tool on your left hand side to detail that a deposit has been made. This will identify that the property is going through a process of sale and might not be available for sale.
    You can draw up the letter of an offer (this is a legal document) and review it with your lawyer. Make sure that your Ideal Listing user id is also mentioned in the letter. The seller would have to use type in this ID on Ideal Listing to finish the sale process. You then will have to present it to the seller and exchange the deposit for the property.
    Your offer will include:


  • Basic details, such as your legal name, the name of the vendor, and the legal and civic address of the property.
  • The purchase price of the property that you have agreed upon.
  • The Chattel or items in the home which will be included in the purchase price.
  • The amount of deposit, any interest to be paid on it and details of the mortgage.
  • The closing date which you will take possession of the property.
  • Request for current land survey of the property
  • Your Ideal Listing user ID.





  • Make a deposit on Ideal Listing
    Please note that as mentioned in the step "Making an Offer" you need to use the Ideal Listing tool "Make a Deposit" to specify that you are making a deposit on the house. This process is important as the status of the home will be updated to say processing sales. You need to use this tool after an agreed upon price has been reached with the owner of the property.
    You also need to pass on your Ideal Listing user ID to the seller in order for the seller to complete the sales process. Please make sure that this information is mentioned in the offer.
    Please note that you don not pay Ideal Listing, or Ideal Listing will not be involved in exchange of money. This step allows us to update the status of your property on our search engine so that other people are notified you are in serious discussions with another party.




    Closing
    Closing is a process during which all the legal and financial obligations stated in your offer will be met. Your lawyer should inform you of the steps but following is just a brief review.

    1. Lawyer will review the offer and examine the conditions of sale. You should also notify your lawyer how the title of the property should be registered (the name of you and any other co-buyers)
    2. Conditions of the offer should be met. During closing, all conditions stated in the Offer must be satisfied by the stated dates.
    3. If you didn't receive a survey from the seller, you have to arrange to have a land survey performed on the property.
    4. Your lawyer will search the title to the property. This ensures that the seller does have a clear title to the home that they are selling.
    5. Your lawyer will also check into regulations and other legalities. These include ensuring that the taxes on the house are up to date and that there are no liens on the property that will be transferred to you.
    6. Your lawyer or lender will also finalize your mortgage document.
    7. You need to arrange to have the final payment made for the utilities at your old home and to begin service at your new home.
    8. You need to arrange for moving your furniture and property to the new place.
    9. Your lawyer will prepare a Statement of Adjustment, which will confirm the selling price, the amount that you have to pay the vendor, the balance of the down payment and adjustments. You also will also owe your lawyer for legal fees. A certified cheque for this total should be made payable to your lawyer in trust.