A journey of a thousand miles begins with a small step….and ends in a basement of a home in Canada.
Typically, all newly arrived families in Canada go through a ‘housing cycle’.
Their first place of residence is a rental apartment or a basement unit of a bigger house. A one or two bedroom unit located close to transit,schools and shopping plaza for convenience as there is usually no car at this point of time.
Once the family is financially settled typically after 2-3 years and has built a good Canadian ‘credit history’ they move to a bigger home, which is usually a townhouse or semi-detached home with three bedrooms and one car garage.
Thereafter as the kids are growing up the family moves to a bigger,detached home with bigger area, typically 4-5 bedrooms and a two car garage and 2 cars’ driveway parking.
The last move is when the kids move out of the home and the retirement age approaches and clearing the snow and maintaining the home becomes challenging for the seniors.The original couple then moves to a Condominium Apartment or a townhouse Condo with monthly fees for mundane maintenance.
The story so far:
Having arrived in Canada as a permanent resident towards the end of 2014,after a long stay in Dubai, where 90% of the expatriates rent a home,whether it’s a 1300 sq feet apartment in a high-rise or a 3000 sq feet Villa by the Arabian sea, the idea of owning or buying a home did not appeal to us at all.
So we rented a two bedroom apartment in an idyllic setting of a west Mississauga neighbourhood surrounded by a lake and numerous walking trails,close to a high school and an elementary school and GO station as well as Mississauga transit.Renting seemed to be the best way to live.
That did not last though.Before long everybody in our social circle was asking us,’So guys now that you have a job and are settled,when are you buying a home’? And we would be like, Hello, what’s the harm in renting ,after all we were renting for 10 years in Dubai.No Problemo..
Finally,one day my office colleague who himself was a veteran of middle east before settling in Canada clarified the matter in bullet points. He said to me, ‘listen carefully Habibi’ :
- Why pay hard-earned dollars to a rental company when paying a little more money can take care of your monthly mortgage ?
- Home is the only asset that appreciates substantially in Canada especially if you are living in Toronto or Vancouver area.So better get one ?
- Mortgage rates are so very cheap @ around 2.65 %, so why not cash in?
- Owning a home allows you to build your home equity line of credit (HELOC) which in turn allows you to borrow money for major expense like kids’ education or unforeseen medical expenses. So go for it asap.
That made complete sense so after a short family discussion it was decided that once after rental apartment contract of 12 months go over we would move into our own home.
But how to go about it? Back home in India or even during Dubai’s real estate mega boom that lasted till 2008 buying a home was simple.
There were always new properties being launched and announced.So you approached one of the builders, zeroed in on a property,paid a nominal booking amount, spoke to your bank about mortgage term and rate and that was it !!
The banks there were not as conservative as Canadian bank and thus your mortgage amount was limited to five times your annual gross salary ! Buying a resell property was always a distant option unless one had a specific requirement.
Everything in Canada is focussed on real state and its ancillaries.Open any newspaper and it will be full of real estate projects and real estate agents or mortgage providers or mortgage agents.Tune in to any radio station or and the same story repeats over the airwaves.In fact some of the most popular reality tv shows are based on property.Shows like , ‘Property Brothers’, ‘Love it or List it’ and ‘Game of Homes’ are all based on home buying/improvement.
Buying a actual home in Canada is however a much more complicated process.
Firstly, in a ‘in demand’ area like Toronto and Mississauga the number of new properties are very few and usually Condominium apartments which are generally not preferred by families.Secondly the resell market here is huge even for homes which are 20-30 year old. In short the demand outstrips the supply handsomely.
Most importantly, in Canada, buying and selling a home is almost always through a real estate agent. The seller has a listing agent and the buyer has a buying agent.
The way it works is that a seller pays a 4% on the final sale amount. The listing/seller’s agent earns 1% while the buyer’s agent earns 2.5 %.
And at the last count there are more than 40,000 such gentlemen and ladies in the Greater Toronto Area.
These agents are anywhere and everywhere.They could be anybody and everybody.An agent is not necessarily a full-time agent. So,an agent could be your wife, brother, cousin,best friend or your office colleague, boss or even your client.
The buying and selling of homes is regulated by a competent authority in Canada.
The real estate agents are answerable to this authority.However there are no restrictions on becoming a real estate agent. One needs to pass a simple written examination, register with an authorized brokerage firm and Boom !! You are authorized to buy and sell million dollar homes in your province.
Once you have made up your mind, there are two ways to do the actual house hunting.Go to realtor.ca and identify the neighbourhood where you want to buy and look at the available listings there.
The latest listings usually have a ‘Open House’ on weekends from 2 pm to 5 pm, so you and your partner sacrifice the Saturdays and Sundays,hopping from one open house to another and get a feel of the various properties available in the market.
Another way is to appoint a real estate agent to represent you, tell him/her about your requirements and then he/she sends the listings to your inbox twice a day.You then tell him about the property that interests you and he/she arranges a private visit to that particular property.
If you like a home, you ask your agent to put in a ‘offer’ on it.For example if the property is listed for $ 500,000 you can, based on your reading of the property put in an offer below the listed price, at the listed price or more than the listed price.
These days the property market is hotter than a Sunny Leone video so most of the listings are going for multiple offers or bids.In this the initial offer by all the buyers is rejected by the seller and they are asked to come with an improved bid/offer.
Now this becomes like a game of lottery between the buyers and depending upon the number interested parties the house price can go up astronomically.
We too got caught in one of these bidding wars and lost out as we were not willing to compromise on home inspection waiver.
On another occasion just this week, we liked a corner freehold townhouse with excellent location and attractive price.Although the home was 30-year-old, size was decent with 4 bedrooms and a large backyard.Everything seemed suited for our requirements until we came to the kitchen and my wife realized that there was no dishwasher and neither was there a provision to install one !!
Never thought that a $ 550,000 deal would fall through because of a $ 1,400
dish washer….But here I am writing this piece on a lazy sunday afternoon and preparing for some more ‘Open Houses’.
Vive La Canada.