First time home buyers taking possession of their first house.

Calgary First Time Home Buyer Information - How to Buy a House

This page is designed to provide an overview of how to buy a house in the Calgary Real Estate market with the first time home buyer in mind.

Real Estate Transaction Process

While every Real Estate transaction is unique and may not follow this process exactly, it is a good representation of a common residential transaction in the Calgary area.

Down Payment vs. Deposit

The first step to buying your first home is to gather up some money. Even with great a great credit rating, banks generally will not let you get a mortgage unless you save up at least a 5% of the value of the home you wish to buy. However you come up with that money, whether from savings, RRSP's or, if you're lucky, a generous parent, it is important to understand a few things about how this money is dealt with during the transaction and the difference between down payments and deposits.

Down Payment
The total amount of cash you're chipping in towards the purchase. The totality of which is due when you take possession of the property.
Some portion of the down payment that you give to the seller at the time you present your offer. For most starter homes, $5,000-$10,000 is usually sufficient. Offer less and you may find the seller is reluctant to accept your offer as they may perceive you as unlikely to get your financing approval.

A side note regarding down payment money from parents... If you have to pay it back, the banks will consider the money a debt when calculating your approval. If you don't want that to happen, you'll need to provide the bank with a letter indicating the money is a gift that does not need to be repaid.

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At the start of any serious home search you should get pre-approved for financing. Having pre-approval will make your offers more competitive and may save you money too because pre-approvals generally lock in an interest rate for a couple months which is great if rates rise before you find the right house.

In Calgary, there are really two ways to search for a house:

  1. Do it on your own
    • Involves searching Internet listings by limited criteria and contacting each home's owner or Realtor individually
    • May miss the best deals as Internet version of MLS is delayed from the version accessible by Realtors
    • Scheduling viewings will be on their availability and can become inconvenient for more than just a few homes
    • The seller's Realtor is working in the best interests of the seller, not you
  2. Use a Buyer's Realtor
    • Search by detailed criteria to find only the homes you are interested in
    • Get instant notification of new listings and price reductions the moment they are posted to the MLS database
    • Your Realtor will setup all the viewing appointments based on your schedule so you can see lots of homes when it's convenient for you
    • Your Realtor will be working in your best interest with no obligations to the seller.

Best of all, because even buyer's Realtors typically get paid from commissions offered to them by sellers, the extra benefits of using a Realtor when buying usually don't cost you anything. In fact, you can even make money when buying a house by using a Realtor that offers buyer incentives.

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Writing a Conditional Offer to Purchase

Once you find the house you want to buy you will write an offer. Your Realtor will work with you to ensure it is crafted to protect your interests, typically by inserting certain conditions. Common conditions on an offer to purchase include:

There are a variety of other conditions that may be inserted into an offer depending on the situation and needs of the buyer but those are the most common. After negotiation and final acceptance of the offer, the property is considered to be conditionally sold and the buyer is given a specific period of time in which to satisfy the conditions.

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Satisfying your Conditions

Sellers can't sell their house to anyone else while it is conditionally sold so they want the deadline to be just long enough for a buyer to get the job done and no longer. As a result, most negotiations result in contracts that give buyers no choice but to get the ball rolling immediately. This is not the time to be searching for a mortgage broker with a good rate. That should have been completed long ago and a pre-approval should have ideally already been obtained to make the approval process even faster.

It is always a good idea for a first time home buyer to get a property inspection. Not only will a good inspection help you from buying a home with problems, it will also give you an opportunity to learn about the systems in your house. A good home inspector will point out the location of all the utility shut offs and provide you with a guide on how to maintain your new home.

Assuming each of your conditions is dealt with to your satisfaction and you wish to proceed with the purchase you will need to waive the conditions by providing written notice to the seller prior to the deadline of the conditions. If you fail to provide the notice in time, the deal dies, you get your deposit back and the seller can sell to someone else.

*Note that when buying new construction on contracts provided by builders, it is often the opposite, and you become legally bound to purchase the home unless you provide written notice prior to the deadline.

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After the Sale is Firm

Once a contract has all conditions waived it becomes a firm sale. At this point your Realtor will need to know who you intend to use as your lawyer. They will forward all the details to the lawyers and then everyone will promptly ignore you until about a week prior to possession day. About a week before possession your lawyer will contact you to arrange to meet with them and sign more paperwork and provide them with the balance of the down payment money.

Your Realtor will likely follow up with you close to possession day to ensure you've met with the lawyers and arrange a time to meet on possession day to present you with the keys to your new home.

You should use the time prior to possession to arrange for insurance, utilities, mail service, Internet and other things to be active as of possession day.

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Taking Possession of the Property

Possession is typically at noon and most buyers like to get the keys and enter the property as soon as they can, but it's not required. Once you have the keys you're all set to move in and enjoy your new home. Be sure to test all the appliances as soon as is practical to ensure everything is in proper working order.

In most cases owners of homes who use community mail boxes will leave a note with the mailbox key indicating which box belongs to the house. If they don't, just try your key in every box. Mailbox keys for the boxes will be unique so the one that opens is yours.

If you notice a bunch of paint cans or building materials in a garage or basement, it doesn't necessarily mean the sellers left you a mess. Most sellers, as a courtesy, will leave behind materials that can be used for repairs or touch ups such as leftover tile, hardwood or carpet and half empty cans of paint that match the existing colors of the house. This is a good thing and can save you tons of money and effort down the road.

In most cases there are no major surprises but if you do discover an issue with the property you didn't agree to, be sure to save all receipts if you incur costs. If you end up having to go after the seller for damages you'll want proof of all the costs incurred. Also note there is limit to how long after possession you can sue the seller for a problem so it's always best to bring issues to the attention of your Realtor or lawyer sooner rather than later.

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