What is real estate?
For most people in New Brunswick who buy or sell real estate, the term refers to their home. Buying a first home (whether house, townhouse, condo, or other form), and then maybe selling your home later and buying a new one, is how the typical New Brunswicker gets involved in the real estate market. The home is both a place to live, and an investment. It’s your home because you and your family live in it—of course. And it’s an investment, because as the real estate market rises or falls in your area of New Brunswick, you gain or lose equity.
But the term “real estate” refers to more than just buying and selling houses. Real estate is the property, the land itself, buildings on the land, air rights above the land, and underground rights below the land. There are four types of real estate, as outlined below.
Residential real estate
Most commonly in New Brunswick, residential real estate refers to single-family homes. But there are also condominiums, co-ops, townhouses, duplexes, and other forms of residence.
Commercial real estate
This refers to any property used to produce income. It includes things like malls, medical and educational buildings, hotels, offices, and apartment buildings.
Industrial real estate
This category includes warehouses and manufacturing buildings. These properties are typically used for the production, storage, and distribution of goods or services.
As you’d expect, this category includes vacant land, but also such things as farms and ranches.
Real Estate Investing
When you buy a house, you may not think of yourself as a real estate investor, but that’s exactly what you are. This means you should think of your purchase as more than just a place for you and your family to live. You should consider questions such as whether the house is likely to rise in value while you own it, and how future interest rates might affect you and your investment.
You can also invest in real estate for the sole purpose of trying to make a profit. One way to do this is to “flip” a house (when you buy a house to improve then sell it). Or, you could own several homes and rent them out, for example.
You’ll probably need a mortgage
Unless you have hundreds of thousands of dollars saved up, you’ll probably be in the market for a mortgage. The majority of New Brunswickers need one to buy a home.
A mortgage is a loan that can help you finance the purchase of your home. To be more exact, a mortgage is a legal agreement in which property is used as security for the repayment of a loan. If all the terms of the mortgage are met, the borrower, you, will own the property outright by the end of the specified period—usually 25 years.
Before you begin looking for a mortgage, or house hunting, you’ll need to consider how much house you can afford. The typical rule of thumb is to find a house that costs less than 2.5 times your gross annual salary.
Before a bank will issue a mortgage, you’ll need to provide proof that you have homeowners’ insurance.
It helps to get pre-approved for a mortgage before house-hunting, so you know for sure how much house you can afford. Learn more about mortgages.
Professionals involved in real estate transactions
You may work with several companies or professionals when buying, selling or building a home.
Real estate agents: A company or individual that helps consumers buy and sell property. They must be licensed by FCNB.
Real estate salesperson: Works for the agent and helps buyers and sellers navigate the process of buying and selling a home on behalf of the agent. They must be licensed by FCNB.
For Sale by Owner (FSBO) service: Companies that provide sellers with the tools to market and sell their home on their own for a fee.
Lawyers: Help buyers and sellers review and understand important documents, such as offer and acceptance letters, before signing.
Personal bankers: Work with their clients to help the client secure a mortgage to finance the purchase of a home.
Mortgage brokers and associates: Act as intermediaries between borrowers and lenders. They must be licensed by FCNB.
Home inspectors: Assess the condition of a home, to help you make an informed decision when buying a home.
Real estate appraisers: Help determine the value of a home by providing an impartial opinion after conducting a full analysis and evaluation of the property.
Builders and contractors: If you’re building your own home, you might use the services of a builder or contractor.
Insurance agent or broker: An insurance provider can help you protect your home with home insurance. They must be licensed by FCNB.