THE BUYING PROCESS
The first step is to
define your needs and wants. Choose the neighbourhood, house style
and amenities you require. Consider number of bedrooms, bathrooms, parking facilities, transportation etc. Make a
list of your "must haves" and "like to haves" and prioritize it.
- Next, get your finances in order. Determine what you have
as a downpayment and ensure that you have funds available to use as a deposit
when you are ready to make an offer on a property. Try to establish a good
credit rating by practicing good payment habits. Use a credit card to
establish a credit rating but not to accumulate debt.
Select a Realtor
- Choose a realtor with whom you have rapport, who listens
to you and understands your needs.
- Read Agency
Relationships Explained provided by the Toronto
Real Estate Board or Working
with a Realtor published by the Ontario Real
Estate Association and discuss agency issues with your realtor.
- You will likely want to sign a Purchaser Agency Agreement
with a Realtor to ensure the agent will be working in your best interests.
Understand what you are signing and make changes to the standard agreement if
required. Discuss under what conditions the agreement can be terminated if you
are unhappy with their service. Being loyal to one agent will ensure that
he/she will work diligently for you.
- The realtor is usually paid commission from the
transaction as stipulated in the listing agreement between the seller and his
agent so it does not cost you anything to have your own agent working on your
Determine Your Price Range
- The downpayment plus the amount you can borrow determines
the price you can pay.
- Determine how much downpayment you can come up with. You
may be able to borrow up to $20,000 per person from your RRSP to apply to the
downpayment without any tax consequences under the Home Buyer's
Pre-approved for a Mortgage
- Get pre-approved for a mortgage so you will know how much
you can borrow and what it will cost. You might like to deal with a bank with
whom you already have a relationship but be sure they give you a competitive
rate. Rates are negotiable. It is usual to bargain for a rate lower than the
- Your realtor can also refer you to lenders with whom they
have a good working relationship and can get special rates.
- Lenders will tell you in advance what they are willing to
lend you and will guarantee an interest rate for 2 or 3 months which is
protection in case rates suddenly rise.
- Having a pre-approved mortgage will make your offer more
attractive to the seller as you will be able to arrange the financing more
Selecting a Home
- Meet with your realtor and discuss
your list of "must haves" and "like to haves".
- Your realtor will select
appropriate properties and make an appointment to view them with you. Be sure
to offer your feedback about what you like and don't like. Your feedback helps
the realtor to refine the search and zero in on the best properties for
- Remember no home in your
price range will be perfect so don't eliminate an otherwise good home just
because of something that can be easily changed like wallpaper, paint colour,
or cleanliness. If you can see the potential in a property you can still get a
- At some point you may have
to re-define your needs or priorities or make some compromises if your
original expectations prove to be unrealistic.
- First time buyers may have
to compromise and buy a starter home first and move up to their dream home in
- When you find the home you
like, you should have your agent prepare an offer as soon as possible as you
will be disappointed if it is sold to someone else while you are
- Your realtor will give you
information on comparable properties to help you determine an appropriate
price to offer.
- The offer identifies the
parties and the property, the price you will offer and how you propose to pay
it--deposit, balance of downpayment and mortgage proceeds--and the closing
date. It also lists any chattels you want included (for example appliances)
and specifies any fixtures to be excluded.
- You should include any
conditions you require such as time to arrange financing or having a home
inspection or for a condominium reviewing the estoppel certificate.
- Warning. In a hot market
unconditional offers are more attractive to the seller and the time allowed to
satisfy the condition should be as short as possible. If there are multiple
offers the most attractive one wins and there is usually someone willing to
pay top price without conditions. There is some risk involved however, in
making an unconditional offer.
- Be aware that there are
some additional expenses, most notably land transfer
tax in Ontario, which you will also have to pay on closing in addition to
the purchase price.
- Be prepared to write a
cheque for a deposit to accompany the offer. The deposit will be held in trust
usually by the listing broker and is applied to the purchase price on closing.
If the offer is not accepted or the conditions not met the deposit will be
returned to you.
- An agreement to purchase
property is a big committment. Make sure you understand what you are signing
and be sure to ask your agent any questions that concern you.
- Your agent will make an
appointment to present the offer to the seller through the listing agent.
- The seller can accept the offer, reject it, or sign it back to you with
changes which you can either accept, reject or change and sign back to the
seller as a counter-offer. This process continues until an agreement is
reached or until the negotiations are terminated.
- When an agreement is
reached, your deposit cheque will be turned over to the listing broker to be
held in trust to be applied to the purchase price on closing.
the Offer is Accepted
- Your agent will assist you
to fulfill any conditions such as financing and home inspection so they can be
waived within the permitted time period.
- Once the conditions are
removed the documents are passed to your lawyer who will search title and
attend to all the paperwork.
- You must arrange for fire
insurance coverage and arrange for utility services to be transferred to your
- A day or two before
closing you will meet with your lawyer to sign all the documents and provide
the funds required to complete the transaction.
- On the closing date, your
lawyer meets with the seller's lawyer and keys and payment are
- Move in ...and enjoy!!
Invite me to your housewarming and I will bring some