The process of buying a house usually follows a well-worn path: identify your requirements and arrange financing, view suitable options and make an offer, address any conditions and — if all goes well — close the sale and move in. But with new social distancing rules in place, some of these steps have changed.
Here’s how each of the steps in the home-buying process has been transformed as a result of the pandemic, and how you can successfully purchase a house now.
Step 1: Confirm That You’re Financially Ready to Own a Home
Your first step, once you’ve decided to start the process, is taking a look at your finances. Previously that may have meant an in-person meeting with a mortgage specialist. But with social distancing rules in place, you can opt to plug your information into online guides that walk you through the financial calculations associated with home ownership without needing to step into a branch.
To determine how much you might be able to spend on a home, you can use an online mortgage calculator, such as the RBC True House Affordability Tool which will give you your result in a minute.
Of course, mortgage specialists are still available by phone, email, and virtual meetings to answer questions.
Step 2: Arrange the Finances for Your Home Purchase
Next, you’ll need to apply or be pre-approved for a mortgage. In most cases, it’s possible to arrange all your financing without needing any in-person contact with a lender. You can connect directly with an RBC Mortgage Specialist online.
Step 3: Find the Right Home
The process of finding the right home for you is the step that’s been turned upside-down by the pandemic. In prior months, you could simply hop in your car, potentially with a real estate agent and your family in tow, to drive from showing to showing.
But these days open houses are rare and most home tours are conducted online. That means you might not even visit some of the homes you’re interested in. Instead, the homes are previewed using pre-recorded videos, 3D home tours, and interactive floor-plan tools.
Once you’ve narrowed down your search to a home you’re interested in, you should be able to arrange for an in-person tour. It’s possible you’ll be asked to reduce the number of in-person viewers, perhaps to just one adult, and you may be required to wear personal protective gear like masks and gloves while you’re in the home.
Step 4: Make an Offer – and Close the Deal
The next step in the home-buying process is to make an offer on your chosen home. Your office might be firm (that is, with no conditions), or it might be conditional. A conditional offer is an agreement to purchase that’s subject to a condition, such as the home passing a home inspection, the buyer getting their financing in order, or the buyer selling their current home.
The offer sets out any of the conditions you’re proposing — from the price you’re prepared to pay, to any extra elements you’d like to include in the deal (like necessary repairs) — and the date you’d like to take possession.
Often, the process of making a purchase offer involves negotiating with the seller, coordinated through your respective real estate agents. Today, while the need for negotiations hasn’t disappeared, most of them will take place virtually. If your lender needs an appraisal, it could be without in-person interaction, such as a drive-by or modified full appraisal using comparable sales data to assess the home’s value. And your offer might include a “COVID clause” to allow for greater flexibility with your timeline, due to delays in inspections, appraisals, and in closing the sale.
Step 5: Closing Day
Once your offer has been accepted, you will take possession of your new home on closing day. You’ll transfer your down payment (less any deposit) from your lender to your lawyer, along with closing costs. Your lawyer will then pay the seller, register the home in your name, and then give you the deed and keys to your new home. Today, most of these steps take place remotely, to minimize in-person contact.
When it comes to planning your move, you might want to consider a digital concierge service, like MoveSnap, an RBC Ventures business, that can support you through your move. With MoveSnap, you can receive quality support through every step of the process, such as updating your information and transferring utilities – all in one easy-to-use platform!
Traditionally, real-estate transactions have relied on in-person meetings for almost every aspect — from open houses to the transfer of documents to closings. Today, the home-buying process has quickly adapted to digital practices wherever possible, and technology has risen to play a starring role at each stage of the process.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.