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Tips and Advice for Buying

Four steps to making the right purchase

The purchase of a house is, for most people, one of the most important purchases of their life. It is a transaction that must not be taken lightly. No element is to be neglected or left to chance.

With the goal of making your purchase a winning transaction, the following four elements need to be considered:

Identify your needs
With the goal of finding a property that truly meets your needs, prepare a list of features, by order of importance, beginning with those that are “musts”. Then, draw up a second list of the features that you consider important. Lastly, a list of things that you would like, but that are not essential. For example, first identify the type of property that you are looking for (condo, two-storey house, bungalow, split-level, etc.), the areas of interest, the range of price that you are ready to pay, the required or desired amenities (parks, supermarkets, schools, daycares, etc.) or even the size of the building and lot. Establish clear criteria in order to not be distracted by fairly superficial elements, such as the decoration, which could make you lose sight of your basic needs.

Assess your borrowing capacity
Before starting to look for your dream home or property, it is a good idea to get your mortgage pre-approval from a financial institution. Doing so will enable you to know, in advance, the maximum mortgage for which you would qualify. Also, you will be able to establish a budget to determine the monthly payment that you would be comfortable with, taking into account your other financial obligations. In choosing your mortgage, you also need to consider the type of loan that you will be contracting, that is, whether it will be a conventional loan (with at least a 25% down payment) or a CMHC-insured loan (with less than a 25% down payment).

Seek professional assistance
The acquisition of your property is a major purchase, making it important to do everything possible to prevent problems or complications from arising down the road. This includes consulting professionals who are qualified to guide you through all the steps involved in purchasing a property. These specialists (real estate broker, building inspector, legal advisor, Québec notary or lawyer, etc.) will be able, in turn, to advise you, answer your questions and help you avoid errors that could transform your dream into a nightmare. To find a professional to help ensure that your real estate transaction is a successful one, consult the sections “Find a Broker” and “Resources and Support”.

Estimate your related expenses
The purchase of a property is invariably accompanied by many expenses that you may not have foreseen at the outset. As expenses can be many and varied, we cannot list them all here, but you should budget at least a few thousand dollars to cover those related to the deposit you make with your offer to purchase, as well as notary fees, moving costs, the real property transfer tax (taxe de Bienvenue in Québec), house insurance, reimbursements to the seller (municipal and school taxes), charges to reconnect telephone and Internet services, and so on. In other words, your mortgage payment will not be your one and only payment.

Understand the market conditions

Market conditions can change significantly from one region to the next. It is to your advantage to have a good understanding of the conditions in your area of interest so that you can adapt your purchasing strategy accordingly.
The real estate market can fluctuate for a number of reasons, with the obvious and primary one being the availability of properties (“inventory”) in a given area versus the number of buyers in the same area. Indeed, if there are many properties for sale, prices will tend to drop whereas when the inventory shrinks, prices rise. The law of supply and demand applies: when there are more properties for sale than there are buyers, prices drop. When there are fewer properties than buyers, prices rise. 

Before purchasing a property, you need to know whether it’s a buyers’ market, a sellers’ market or a balanced market.
Buyers’ market
This type of market is clearly advantageous for you, providing the perfect conditions for negotiating the selling price downward. In a buyers’ market, supply is greater than demand, which means that properties usually remain on the market longer. This situation affords you more leeway. You have more choice and can more easily impose your conditions and lower the price.

Sellers’ market
This type of market benefits the seller. With a low inventory and many buyers, the competition for the few properties can be fierce. Such a situation results in price increases and gives rise to bidding wars. In a sellers’ market, you can expect to pay more or, at the very least, be prepared to act very quickly when you find a property that interests you. In addition, under such circumstances, conditional offers and other specific requirements are more susceptible to being rejected.

Balanced market
In a balanced market, prices are relatively stable because the number of buyers is almost the same as the number of properties available. Purchase conditions, like sale conditions, are therefore more reasonable and, in turn, lead to more reasonable prices.

The type of market in your region appears on the PublimaisonTM home page, along with industry news and the PublimaisonTM real estate index. 

Your offer to purchase

When you have found the home of your dreams or the property that meets your requirements and would like to buy it, you must make an offer to purchase. As a general rule, this offer can be either conditional or firm.

If you opt for a firm offer, it means that you are ready to purchase the property without any conditions attached and that you are offering a specific and final amount. If your offer is accepted, the property is yours.

If you opt for a conditional offer, it means that you are interested in purchasing the property, but under certain conditions. For example, your offer can be conditional on financing and/or upon a building inspection.

Obviously, the purchase of a property is a major investment and it is absolutely essential that you ensure that there are no undisclosed problems that could lead to legal proceedings.
When submitting your offer to purchase, you should keep the following in mind:

Offer a fair price
If you “low-ball”, you could lose the property to another buyer who offers more. When a number of offers are made at the same time, and you are serious about purchasing the property, you may want to consider offering, at the outset, the maximum that you are ready to spend, since the property will clearly go to the highest acceptable offering.
The conditions 
You must indicate all the terms and conditions important to you, such as a home or building inspection, the warranties that you require, the work to be completed so that the property is to your taste, etc.
The deposit
Though the deposit is not mandatory, it shows that you are serious and can influence the seller in your favour.
Your offer can be conditional to the inclusion of certain articles such as the dishwasher or elements of decoration, such as window coverings, for example.
The closing date
In Québec, the date of the official transfer of the title of the property and the funds is indicated in the offer to purchase.

Once the negotiation is completed and your offer to purchase is accepted, the sales contract is then drawn up, covering all the terms and conditions that have been accepted by the two parties.

Purchase guide

The purchase of a property is often the most important purchase of your life. It is important to take the time to closely examine the diverse aspects of the property to help prevent disappointments down the road.

General maintenance
A property that has been well maintained over the years is less likely to give rise to unpleasant surprises. Check whether the owners carried out the usual maintenance over the years. Ask questions about the renovations made and inspect the house closely. For example, is the yard well maintained? Does the doorbell work? Is there any condensation on the windows around the edges? Is the house clean?
Renovations made
Any renovations that have been carried out are usually a good indicator of the condition of the property. Has the roof been redone? Have the windows been changed? Have the bathrooms and kitchen been updated?
Ambient noise
Ask yourself how tolerant you would be of noisy environments. Is the property located on a busy boulevard? Go into the yard and imagine being about to relax on a nice Saturday afternoon. Is there too much noise? Does the setting suit you?
The general condition of the property
Conduct a visual inspection. Is there any mould or signs of water infiltration? Do the yard and the house appear to be well kept? Such matters should be considered, as they often reveal the overall condition of the property.
For assistance, consult a real estate broker or building inspector. Click on the tabs “Find a Broker” or “Resources and Support” for a list of the resources available.
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