About a year ago, Emily Colpitts, a sales and marketing executive from Halifax, started thinking about giving up her rental and buying a home. After finding nothing that suited her, she took a break and did some research.
When she started looking again, she decided to check out a condo. With real-estate agent Denise MacDonell, she looked at a few condos without success. The condos that fit her budget were one-bedroom units, but she was looking for a home she could start a family in. And that she could easily resell later.
“Overall, I just think I’d have the home a lot longer than I’d keep the condo,” says Colpitts. “And I feel like I would be getting a lot more for the exact same cost.”
She was also determined to stay within her budget. The amount her mortgage broker preapproved her for shocked her. “[Price ranges have] been quite high,” she says. “I am just one person paying this mortgage and I don’t technically have someone right now to rely on, so I think it’s just really important to make sure you’re giving yourself that safety.”
With condos and pre-existing homes crossed off Colpitts’ list, she started looking at new construction. When Halifax Magazine talked to her, she was poised to put in an offer on a home in Governor’s Brook, a neighbourhood near Herring Cove Road.
For her, it’s a great option that offers solutions to all her musthaves: 15-minute drive to work, she can customize it, and it suits her budget. Better yet, it’s something she’ll be able to sell to someone else, when it’s time for Colpitts to make another move.
TAKING THE LEAP
Real-estate agent Denise MacDonell and mortgage agent Bill MacDonald have advice for first-time homebuyers in Halifax.
When you start looking for a real-estate agent, begin by talking with a few different people to make sure you find someone who’s the right fit for you. Once you decide on an agent, you’ll have to sign a buyer’s contract to get started. A lot of people get nervous about this, but if you’ve chosen your agent well, it doesn’t have to trigger your fear of commitment.
“Don’t be afraid of a buyer contract,” says MacDonell. “I don’t want to work with people if they don’t want to work with me, if it’s not working out. We have a termination form. If you’re not happy with me, tell me. I’ll either make you happy or we’ll agree that we aren’t a match and you need to have someone else.”
The contract also protects buyers, since it lists out the responsibilities the agent must fulfill as well, and outlines how the agent is compensated. As a first-time home buyer, you probably won’t be paying any part of the commission, since that generally comes out of the sale price of the home you buy.
But what happens if you just happen on an open house and you decide you want to buy that house, right then and there? Well, first, take a breath, calm down, and don’t impulse-buy. Remember that the agent that’s looking at you hopefully is working for the seller, not you. Then consider your options.
- Hiring your own real estate agent (recommended).
- Arranging a transaction brokerage, where the seller’s agent agrees to act as an impartial facilitator between the buyer and seller.
- Signing an agreement to work with the agent on your own as a “customer.” This means you have no agent advising or negotiating on your behalf (although the seller does). We don’t recommend it.
CHOOSING THE RIGHT NEIGHBOURHOOD
To get the best value for your dollar, you need to buy in the right neighbourhood. According to MLS, the average 2016 sale price for single residential homes and condos in HRM was $298,945 and on average they took 97 days to sell. Overall, MacDonell says the peninsula is a “good bet in terms of appreciation because there’s not a lot more that can be done here unless we start building up—and we are.” But she also got specific.
Dartmouth: Dartmouth is a popular area because buyers are close to the peninsula but pay less; there are good schools, harbour views, and a strong market. Property in downtown Dartmouth, Southdale, and Crichton Park is usually a good investment. These areas are mostly developed so properties are scarcer, which raises the value.
Central Halifax: Scarcity drives value, which makes central Halifax (south of North Street and north of the Common) very strong in terms of appreciation. But good luck finding anything for sale in this area.
North End: “People love it,” says MacDonell. “The nucleus of life is kind of moving. It used to be downtown, but now it’s the Agricola corridor, the Commons with the Oval. There’s easy access to downtown, but great restaurants, coffee shops, and shops right there.”
West End: This is largely residential neighbourhood that’s been popular for a long time. It’s close to everything, but you’re probably still driving your car to the grocery store. Last year, houses sold for an average of $350,075 (about 17 per cent more than the HRM average) and they sold faster too because there’s less for sale in the area.
South End: “The South End always has a cachet, but they have what I call a ‘saggy belly’ in terms of value because prices are so high,” says MacDonell. “You’re still always going to struggle with a house that needs a lot of work… But people will always want to walk to work, walk to universities, walk to the coffee shop, and the South End has all that.”
Bedford: This area’s popular with families, particularly when it comes to new construction. West Bedford and Basinview are doing the best right now overall. Although Bedford properties take longer to sell than the average HRM property does (127 days in 2016), they also sell for 30 per cent more at $390,862. This is partly because their larger and newer than the average HRM property.
MAKE AN OFFER
When you find the place you want, your next step is to make an offer. In a typical situation, your agent will send an offer to the seller’s agent, who will present it to the seller. The offer will include the amount you’re willing to pay and conditions around things like closing dates and home inspections. The seller will then accept your offer, reject it, or make a counteroffer. In the latter case, you’ll go back and forth until one of you decides to settle or walk away.
If the seller accepts your offer, the next step is a home inspection. MacDonell says there are two kinds of defects—latent and patent. Patent defects are the obvious things like old windows and dated appliances. Those are the things you consider when you’re making your offer. Latent defects are the less obvious things like patches of bad shingles on the roof or cracks in the foundation. Those are the things your inspector will look for. If they find something serious, your agent will probably recommend renegotiating the sale. If it’s really bad, you might need to walk away. Your agent should be able to tell you exactly what inspections and tests you’ll need, but there are a few different ones to consider, including:
- Sewer line inspections
- Radon tests
- Vermiculite testing
- Furnace inspections
- Septic inspections
- Well testing
All of this costs money. According to MacDonell, you should budget about $1,000 if you’re buying a house in the city. If you’re buying something rural, double it.
THE COST OF DOING BUSINESS
MacDonell and MacDonald agree that you should get preapproved for financing through your bank or a broker before you start looking for a house. That helps you know exactly what you can afford and locks in your rate for 120 days.
Before you start, you’ll need to make sure you have a down payment of at least five per cent (assuming your dream home is $500,000 or less. Minimum payments increase above that). If you’re putting more than 20 per cent down, most lenders will ask for an appraisal, which will cost you about $400.
If you’re putting down less than that, you’ll need to pay for mortgage insurance, and if you’re only putting down five per cent be prepared to pay a little extra on insurance; starting this month, you’ll pay four per cent more on insurance premiums.
- Land transfer tax (1.5 per cent)
- Legal costs ($800–$1200 plus GST)
- Title insurance: about $300
- Tax adjustment (this is where you pay the seller back for any prepaid property taxes)
- Moving expenses
- Property insurance
- Utility hookups
- Condo fees