First-Time Homebuyers: Prepare to Make a Strong Offer

A down payment is an important milestone for home buyers, but it’s far from the only requirement for a successful purchase.

In Halifax, realtor Sandra Pike estimates that fewer than half of the buyers she meets are fully prepared to buy. Many have some of the necessary pieces—savings or intent—but lack the full set of financial and logistical preparations.

“A lot of them say, ‘Okay, I’ve made a decision’ and start looking at houses,” said Pike of The Pike Group at Royal LePage Atlantic. “Then they want to write offers and only afterward arrange financing. As a first-time buyer, if you submit an offer on one of my listings, I ask for a letter of approval. If I don’t have that, I don’t want to consider your offer. I don’t want my sellers stuck in conditional purgatory while someone tries to get financing together.”

Prepare for the full cost of home ownership

Beyond saving for a down payment, buyers should work with an experienced mortgage broker to understand debt service ratios and determine a realistic affordability range. A true pre-approval (not just a pre-qualification), a strong credit score and a detailed budget are essential. Plan for closing costs, inspections, moving expenses, home insurance and furnishings.

“We had someone the other day who wanted to purchase,” Pike said. “She had $250,000 in cash but really bad credit.” Despite the cash, that buyer couldn’t secure financing.

Robert Saunders, CEO of Ownright—a service that helps buyers handle the legal and logistical aspects of closing—advises prospective buyers to ensure career stability and a readiness to take on the responsibilities of home ownership.

“My advice would be to make sure you’re looking at the full cost of ownership,” Saunders said, noting that many buyers overlook closing fees and ongoing property maintenance expenses. Home ownership often means a significant lifestyle change and the long-term responsibility of carrying a mortgage.

Understand all the fees before buying a condo

Condo purchasers should obtain a professional legal review of the status certificate, which outlines the unit’s and the condominium corporation’s financial and legal standing. First-time buyers are frequently surprised by items in these certificates and the implications for future costs.

“That document can show historical trends in maintenance fee increases, issues in the building that could lead to higher common expenses, and other details,” Saunders said. “We work with many younger buyers purchasing condos, and surprises in these fees are one of the most common challenges in the transaction process.”

Preparing to buy means thorough research and use of online calculators—estimating legal fees, mortgage loan insurance for buyers with less than a 20% down payment, and any applicable land transfer taxes. Some first-time buyers and certain provinces qualify for exemptions, so check the rules that apply to your situation.

Factor in the cost of home repairs

Pike warns that buyers who opt for lower-cost properties, especially when moving from urban to rural areas, must be prepared for lifestyle adjustments. During the pandemic, many buyers from Ontario and British Columbia purchased inexpensive rural properties in Nova Scotia, and not everyone adapted well—routine trips to stores, gyms or medical appointments can become lengthy commutes.

“It’s not just buying a house and looking at the ocean,” Pike said. “Buying inexpensive property often comes with trade-offs if you’re moving to a rural area.”

Buyers are also frequently surprised by the condition of many homes. Outside the high-end market, properties within a given budget can require tens of thousands of dollars in repairs and upgrades. Many buyers underestimate or forget to budget for these expenses.

Plan to stay put for a while

Pike recommends that first-time buyers plan to remain in a property for at least three years, and ideally five or more. If you anticipate needing extra bedrooms for children in the future, consider waiting or choosing a home with the appropriate space rather than assuming you can comfortably upgrade in a couple of years.

Even when factoring in equity gains and potential price appreciation, the transaction costs and realtor commissions mean it often takes three to five years to come out ahead financially. Although the pandemic saw rapid price growth in some markets, most buyers should expect to build meaningful equity over several years before selling and purchasing again.

When the financial and logistical pieces are in place, a buyer should be ready to proceed—and willing to lean on a team of professionals, including a mortgage broker, realtor and lawyer.

“You should not be afraid to ask questions or to say, ‘I don’t understand this,’” Pike said. “Buying a home is a big deal.”

Further reading on real estate:

• The complete guide for first-time home buyers
• How much income do you need to qualify for a mortgage: a look at affordability
• What to do if a pre-construction condo drops in value
• Understanding fixed mortgage rates and term options
• Rental income and taxes for property owners