insurance brokers « Buying Real Estate

Buying a home can be an intimidating process, so it’s important to have the right people around you to answer any questions you might have along the way. Finding the people you want to work with can make a huge difference to your level of understanding and comfort when purchasing a home.

Insurance Broker

When you purchase a home with a mortgage, your lender will require you to have your home and its contents insured. Nearly all homebuyers will purchase homeowners insurance, and most will include all-risk coverage on the building and its contents. This kind of policy will cover you for more than just fire and theft, but wind, hail, lightening, explosions, an impact by vehicle and basically anything else you can think of.

An important part of homeowner’s insurance is the liability exposure. This is important if someone lips and falls ont he sidewalk outside your home, or if your dog bites someone – a homeowner’s insurance policy will cover you for your building, contents and liability.

If the house you’re buying is less than 10 years old, depending on the company you may qualify for a 10 to 15 per cent discount on your insurance. You may qualify for additional discounts if you’re over the age of 50 or 55, if there’s a burglar alarm, if you’ve had insurance for three years without making a claim, or if you’re buying a home without a mortgage.

Generally, company insurance rates can range from $500 to $1,000 annually. Some companies may start with very high rates, but offer more discounts. Others may start with a lower base rate, but offer fewer discounts. If the homeowners don’t qualify for many discounts, it’ll be best for them to go with the lower base rate.

If you’re not looking to buy a home for a year or two, it’s still a good idea to get a tenant’s content insurance package. This insurance can prove valuable even if you don’t own very much – purely for the liability coverage. For instance, if you’re living in an apartment building and there’s a grease fire in your kitchen, the building owner’s insurance will cover the damage, but your landlord may sue you for the damage. If you have a tenant’s package you’re covered. The second benefit is that you’re gaining insurance experience, and you’ll get your claims-free discount when you go to insure your house later on. If you’re a first time insurance buyer, you’re not going to get that discount. The cost for tenant’s insurance, if you’re still living in an apartment, ranges from $100 to $200 per year.

When looking for an insurance broker, start with the Insurance Brokers Association of Canada or your provincial chapter. Because most brokers will give you a quote over the phone, it’s a good idea to call a few to see what kinds of different quotes and packages are available. Since each broker represents many different insurance companies, the broker will record your details and see which company’s policy fits your situation best.

Working on a referral basis is also a good idea. The majority of people get referred to an insurance broker by their real estate agents or mortgage brokers.

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When buying a home, there is range of professionals ready to assist you with the many details that need to be taken care of for a successful real estate transaction. Here we explain these key people and the roles they perform during the home buying process.

Real Estate Agent

A real estate agent is a professional trained in all aspects of real estate, and they can save you a lot of time and trouble. They may even save you money! All licensed real estate agents use a national system for home listings called the Multiple Listings Service or MLS System. A home listed on the MLS System is available to any real estate agent in Canada, and these tools are the number one way buyers and sellers meet. More than 90% of Canadian homes available are sold through the Canadian MLS System.

Due to their training, experience, and industry connections, real estate agents are an invaluable resource. They know every step involved in the home buying process, and can assist you in finding a home that meets your needs. They are also experienced negotiators who work on your behalf to get you the best price.

Here are the valuable services your Realtor will conduct on your behalf:

Help clarify your wants and needs so you don’t waste time looking at homes that aren’t at all right for you.
Preview properties for ones that most closely meet your needs.
Arrange appointments and showings.
Put you in contact with a network of resources for additional needs you might have, including mortgage brokers, lawyers, home inspectors and appraisers.
Tour the homes with you and offer advice based on solid experience and understanding of the local real estate industry.
Keep you informed of factors that influence your buying decision.
Assist you with all closing details, ensuring everything is handled smoothly and professionally.

Appraisers

In many cases, you won’t have to hire an independent appraiser. Your lender will usually require an appraisal from their approved professionals, prior to the approved purchase of a home. Your Realtor will also prepare a Comparative Market Analysis for you to establish a value range. If the home is unusual in some aspect, or there are huge discrepancies between your CMA and the bank’s appraisal, you may want to consider hiring an additional appraiser.

Lenders

A lender is anyone (a bank, your mother-in-law, a credit union, an institutional lender) who lends you money. As this financial commitment determines your future for many years to come, you will want to ensure you have a good relationship with this person or institution, with beneficial rates.

You can conduct your own search for a lender. First, get a copy of your credit history. Then review the newspaper and other real estate publications to see the varying rates for institutions and banks. When you have all your documents ready and research done (employment history, credit history, price of home, etc), make an appointment and negotiate your best deal.

Mortgage Brokers

A mortgage broker could save you time and money. They do the legwork in finding the lender that offers the mortgage terms and conditions best for your situation. This person works for you, not any particular lender, although they often do have access to all available lenders. The lender will typically pay the mortgage broker a finder’s fee, though some brokers may charge you a fee for these services.

Lawyers/Notaries

A lawyer understands the legal documents and other aspects of buying a home, from both the buyer and seller position. They work on your behalf to ensure all documents are properly prepared and you are protected. These legal details must be completed prior to your possession date.

Home Inspectors

A professional home inspection could save you money, and — more importantly — headaches in the future. In a few hours a professional inspector will provide a complete, written review of your prospective home, citing areas in good, fair or poor condition. With this report, you will have a better idea of repairs that may be required right away, or in a few years.

You can make the purchase of the home conditional upon a satisfactory home inspection. If the home inspection reveals some defects, you could cancel the contract, renegotiate, or require that repairs be completed by a specified date. Your Realtor may be able to recommend a skilled home inspector who has the background and knowledge to provide you with an unbiased review. The $300 – $500 you pay for this service is definitely a good investment. Scrimping on a home inspection or thinking you don’t need one could wind up costing you a huge amount of money in the future.