6 Steps to your first PEI Home

Many people become confused when trying to purchase their first home. This is understandable and as the purchase is probably the largest business deal that most people will undertake it is important to have the information at your fingertips. That is why I have put together a list of steps and a description of each one. While these will apply to a home purchase anywhere in Canada I have added a few points unique to buying PEI real estate

1. Contact your Bank or a Mortgage Broker
Before rushing out to look at homes and properties it is important to know how much you can afford to pay. You can start this process by using online mortgage calculators and financial tools that you can find by Googling for them. However it is important to find a lender and you can start with your bank. Mortgage calculators do not take into consideration your credit score, bankers certainly do! You will find out your credit score when applying for a mortgage or you can buy it prior to seeing your banker from companies such as Transcredit and Equifax. Obviously the higher your credit score the more easily and cheaply you will be able to borrow. If your credit score is poor you may wish to work on improving it over the next 6 months to a year before buying a home. The saving in interest payments will be worth it. You will want to secure from your bank or through a mortgage broker a “certificate of pre-approval”, usually good for 90 days, this gives you a guaranteed amount to spend. You will also find that your offers will be more favorably looked upon by sellers if they know you are pre-approved.

2. Find a Realtor
The next step is to hitch up with a realtor. You are looking for a realtor who is willing to spend the time with you that a first time buyer requires. You may not want the most experienced agent in the office, but rather one who has the time and does not pressure you into buying.

3. Communicate your needs
You should communicate clearly to the realtor what you are looking for, the things that are wants and the things that are needs, what is non-negotiable about your future home and what you ay compromise on to find what you want at the right price. The agent will search the PEI MLS database and come up with a short-list of PEI real estate that meets your requirements. You will want to make an initial viewing of all these properties. Try to see enough but not so many that you are confused by the end of the day. Those properties that are definitely not suitable eliminate them immediately and then have a second look at the top 3.

4. Make an offer
When you have made a decision then it is time to make an offer. Have your agent do a comparative market analysis and make your offer within the range that analysis shows that the property is worth. Do not low-ball too much! You will find, especially on the island here, that vendors will refuse to deal with you if you really low-ball. Be sure to put any conditions in the offer and one that any non-resident should include is “subject to IRAC approval”. There are land purchase restrictions in PEI real estate and you want to be sure that you will be approved. Also many older island homes are definitely worth having a home inspection performed. Many have clay basements and while these often look scary to the uninitiated, these homes have often stood on the same foundations for 100 years or more and will still be here when we are gone

5. Acceptance & Negotiation
After you have made an offer the vendor may accept it as is, reject it totally or make a counteroffer. Remember that if this is the home that you have really fallen in love with don’t lose it over a few thousand dollars. Every 1000$ extra you pay amounts to approximately 6$ per month extra payment. Sometimes it isn’t price that makes or breaks a deal. Possession date can be an issue as can too many subjects; the vendor wants to feel that the deal will go through.

6. Conveyancing
Conveyancing involves title search, valuing unused oil, the unused portion of property taxes and generally making an account of those things that the vendor has pre-paid and needs to re-imbursed for. You will need a lawyer to perform this work.

Finally the home is yours and you are ready to move in! Enjoy, this is your best investment, gaining equity while providing a place to live.