You and your group have now reached Step 5 in our series on the Steps to Co-Ownership. In Step 1 you found your perfect partners, in Step 2 you created your financial model, in Step 3 you created your house rules and charter and in Step 4 you created your co-ownership legal agreement. Finally, in Step 5, you are now ready to find your perfect property. In this step, we discuss the strategies and tips in order to finalise your co-ownership dream.
Before The Purchase
In Toronto’s real estate market, there are more buyers than sellers. It’s a competitive market and many homes will receive multiple offers. This means that many homes will sell above their asking price and won’t stay on the market for very long. You and your group need to be prepared to act quickly and decisively.
GoCo recommends having a couple of items ready just in case you have to act fast.
A Pre-Approved Mortgage
When you have all your financial work as a purchasing group complete and ready, secure a pre-approved mortgage with a lender. It gives you an edge in the fierce competition of the market. Though if your group finds a property that exceeds your pre-approval, you will have to start the process all over again.
A Real Estate Agent
The real estate market is fast and competitive. It is best to have someone on your side who is an expert on these complex transactions, particularly someone with co-ownership experience and advice. Lesli Gaynor is known across Toronto for her work and deals for co-ownership and co-operative real estate.
A Home Inspector
You’ll want to make sure the property is suitable and there is no need for major repairs. Have your home inspector on call and ready when you need them.
Your Completed Home Brief
This is crucial to help you find your perfect property. It’s an outline of all the needs and wants you and your group compiled back in the first step of this process.
The Home Brief
Let’s talk about your home brief. By this point, you and your group have already compiled and discussed your needs and wants. From this discussion, you’ve created the Home Brief that will help guide you and your real estate agent through the process of finding the perfect property. The home brief allows you to clearly understand the group’s desires and perimeters so that, as a team, a quick decision can be made. It is beneficial to review your home brief with your agent so that everyone can be on the same page when scouting for properties. If the home brief is too ambitious for the price parameters, your group will need to modify and assess before they can look at homes. Within your home brief, there should be a clear list of core needs and wants. For example, what neighbourhoods would be best and if the group is flexible or if they are required to be within a certain range of downtown, or how many bedrooms and bathrooms would be required.
Types Of Homes
Common property types that can suit co-operative house purchases are listed below. Keep in mind that many of these properties have their own pros and cons and it is up to your group to figure out which ones suit your model best.
Remember that competition is fierce. You need to act quickly and be prepared to go back on the hunt for properties as they can get snatched up quickly.
Ready To Buy?
Say you and your group have found a property and are ready to make an offer. You’ll need to discuss a couple of things with your agent.
Price To Offer
This is a strategy that you will develop with your real estate agent. Factors informing your price will include competing offers, conditions you want to place, history of comparables in the neighbourhood, and the desirability of the house for your group.
Conditions
Some offers are conditional. It could be conditional on financing or home inspection. In a market where there are multiple offers, with winning offers well over the asking price, your group wants to be in the position of making an offer with as few conditions as possible. If your offer is conditional on inspection, some homes may offer a home inspection document to view prior to sale. It may be on display at the home showing. If it is a reputable firm, it may provide enough information and assurance that your group is prepared to make an offer without conditions. However, if you are planning to make some renovations, it is advisable that you have contacted and vetted a home inspector and you have advised them of your home search, so they are readily available. If your inspection is possible before the offer, your group will have a better chance of being successful on offer night. Your group should avoid an offer conditional on financing if possible as often, these will lose in a multiple bid situation.
Closing Date
Some sellers want a shorter than 30-60 day average closing date. If you are able to offer this, your group may be in a better position than others with a higher bid.
Renovations
If your group requires a property that needs renovations to work, there’s a few things you should consider before purchasing a property.
Zoning Laws
Toronto’s zoning and by-laws are notoriously difficult to manoeuver. You need to be aware of the constraints and limitations of the area and property you are looking to purchase. You may need to obtain licensing and complete several applications.
Building Permits
You may need to obtain a permit for construction or building depending on the level of renovation required. Familiarise yourself with the building code and by-laws to ensure you can renovate safely and within the confines of the law.
Conclusion
It may seem daunting but this step can be a lot of fun. Being able to visualise and see the types of properties is exciting. As with every step in this process, you will need to be prepared. With careful planning and quick-acting, you and your group can be successful in your co-ownership journey.