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Purchase process

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Purchase process

1. Choose a Realtor

2. Prepare

3. Budget / Pre-Approval

4. Search

5. The offer

6. The Contract

7. Waiting Period

8. Closing

9. Moving

10. Home Ownership

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Choosing a Realtor

A Real Estate Agent or Realtor plays a very important role in the purchase of a home and must be selected with care. Choose a Realtor that you feel comfortable with; one who will handle the purchase of your home with the highest level of expertise. Inquire about their track record, possible client testimonials and references. Find out if he or she can provide you with a full time, full service attention from the beginning of the home buying experience to your ultimate goal of homeownership.
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There are three types of Realtors

1. Buyer Agent – Represents the best interest of a Home Buyer

2. Seller Agent – Represents the best interest of a Home Seller

3. Dual Agent – Multiple Representation occurs when both Buyer and Seller are represented by the same Realtor or Real Estate Agent who works on behalf of a Real Estate Brokerage.

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What to look for in a Realtor

As a Buyer client, your relationship with a Realtor is vital, so it’s important to consider different factors when selecting a Realtor to represent you. Choose a Realtor that will:

• Understand and fulfill your home buying needs.

• Be professional, dedicated and focused on their job at hand.

• Have their Real Estate Licence and Memberships with the appropriate associations in good standing.

• Be knowledgeable of the neighbourhood you are buying in, of the current market conditions and the comparable selling prices, so that you will be fully informed and prepared when it comes time to buy.

• Be a top negotiator when it’s time to present the offer to purchase to the Seller.

• Treat you with the respect, honesty and integrity that you deserve!

• Protect your best interest throughout your real estate transaction.

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How to choose a Realtor

The relationship between a Buyer and their Realtor should be based on mutual trust, full communication and a clear understanding of what the expectations from both sides are. All of this can be best established in an agreement or contract signed by both the Buyer and Realtor. This agreement is called a Buyer Agency Agreement.

Since Realtors are governed by the legal concept of “Agency”, the signing of the Buyer Agency Agreement is necessary to establish the following information:

. Indicate what services the Realtor is obligated to provide the client he or she is representing.

. Outline the terms and conditions between both parties.

. Specify who will pay the Realtor’s commission.

. Clarify the start and expiry date of the Agreement.

Choosing a Realtor through the Buyer Agency Agreement is the key step to starting your home buying process and should be considered carefully.

Preparing for the purchase

Being well informed of what the different steps for buying a property are and what is required from you as a Buyer are important to know before starting your purchase. Below are some aspects of the homebuying process to consider ahead of time:
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Mortgage Financing

If you will require a mortgage loan, take a close look at your financial situation in preparation for the mortgage application. The pre qualifying factors that the bank or lender will consider to apply for a mortgage are:

A) The applicant’s credit history and credit score.

B) The applicant’s income and debt ratio.

C) Required amount for the down payment.

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Purchase Costs

Buying a house generates some costs that must be covered at different times:

Deposit – At the beginning of the purchase, you must submit a deposit when putting an offer on a house to show that you are serious about buying. The deposit is considered a part of the full downpayment and accounted for on the date of closing.

Home Inspection – As a condition to the Agreement of Purchase and Sale, it is recommended that a Professional Home Inspection of the property be carried out. This involves a cost to be paid upon doing the inspection.

Appraisal – During the home buying process, a lender may require an appraisal (carried out by a qualified company) for the value of the home being purchased. The cost of said valuation is paid at the time that the appraisal is being done.

Closing costs – Can include (but are not limited to) different items like:

– Lawyer fees and disbursements

– Transfer and Mortgage Registrations

– Title insurance

– Property Tax Adjustments

– Prepaid Utility Bill Amounts

– PST on High Ratio Mortgage Default Insurance

– Builders Costs for new homes

The closing costs will be added on to the Municipal and Provincial Land Transfer Tax along with the balance of downpayment. This final amount can reach a significant sum of money so be well prepared. Your lawyer will tell you the total figure that you need to pay at the closing appointment however your realtor can give you an approximate idea of how much it will be ahead of time.

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Budget

Budgeting for your purchase price is an important step that must be carefully considered even if you are buying without a mortgage.

However, if you are a Buyer that requires a mortgage loan it is highly recommended to get a Pre-Approval before searching for your dream home.

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The Pre-Approval

• Will establish the maximum purchase price you qualify for and give you a preview of your mortgage monthly payments and related mortgage details.

• Will strengthen your position when submitting an offer on the house you want to buy. Sellers are generally more willing to accept offers from buyers that are already pre-approved. In the case that there are other several Buyers bidding on the same house, it is crucial that you be fully prepared with your mortgage financing.

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Requirements for a Pre-Approval

1. Your Credit Score and Credit History.
Credit history and score are important factors in obtaining a mortgage, so managing your credit responsibly will be a point in your favor when applying for the loan. A good credit history and score will determine the amount of down payment required. The better your credit score is, the less down payment will be required. Your credit history and score can be obtained through a credit report.

• What is a credit report?

A credit report contains the history of your credit repayment. It will show if you paid your bills on time, if you were ever late, if you missed payments or have applied for credit proposals or bankruptcies. Lenders (Banks, Finance Companies or, as the case may be, Mortgage Brokers), use the credit report to determine the ability of a person to pay their debts on time and to see if the applicant is a good candidate, or not, to receive the mortgage loan. If you are planning to buy a home, you will need to show that you can make your payments responsibly and on time. If you do not have any credit and are thinking of applying for a mortgage, try to get at least one or two credit cards or loans in order to establish a payment history. You can obtain your full credit report with a score for a small fee from any of the Credit Agencies. Equifax or Transunion can provide you with your report by visiting: www.equifax.ca or www.transunion.com

2. Your Income and Debt ratio.
The amount of money you make is not what determines whether you can afford to buy a home. What really counts is how much of that income you use to pay for household expenses and debts such as credit cards, car and other loans. Your lender will factor in your income and your monthly debt to make sure you will be able to make your monthly mortgage payments. When preparing to buy a home, avoid incurring more debt (specially high ones like auto loans) unless absolutely necessary.

3. The amount of funds for Down Payment.
You do not always necessarily have to pay a high down payment to buy a house. In fact, a wide range of loans are offered to help you become a homeowner from high ratio mortgages of minimum 5%, 10% or 15% down, to conventional mortgages with 20% and higher down payment. Which mortgage you may qualify for depends on your individual financial situation. However, increasing your down payment can give you more flexibility in choosing the best mortgage rates and terms.

The lender will examine the above criteria to determine the final Pre-Approval result. When this result has been provided you are ready to start visiting the properties available for sale at the price you have been pre-approved for. Once you have found the right property it is time to formally apply for the final mortgage approval loan based on the home you have chosen.

If required, your Realtor can refer you to several financial institutions who can assist you with your mortgage financing.

For more information, please feel free to can contact me directly or fill out the following form:

6 + 4 =

All information provided is 100% confidential and will not be shared with or sold to anyone else.
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Time to search for your property

One of the most important parts of the home buying process is finding the ideal home for you and your family. Once you have chosen the right Realtor and established your budget, it is time to visit the potential properties in your desired area.

Communication with your realtor is the key for an effective home search. Inform your realtor what your search criteria is. What you like and don’t like, and what you consider is necessary or important in a home before starting your search.

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Analyze your needs, wants and requirements

Before starting your search, think about what are the most important elements for you in a home, to try to find the one that is closest to your ideal. Here are some basic points to keep in mind:

  • Location: Whether you are looking for an investment property or your dream home to live in, one of the most important factors to consider is the location of the house. The location can be as important as the home’s appearance or size. Do you have to be in a particular school district, or near your work or family, near transportation, or a daycare for your children? It might help to tour the area you are considering before actually visiting each property. This will determine if the location offers you the amenities you need. Visiting different neighbourhoods can be a determining factor in deciding if you are interested in seeing the inside of the homes with your real estate agent.
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  • Wants and Needs Make a list of the features or characteristics that you would like your new home to have. Be sure to distinguish your “wants” from your “needs.” Rank each point according to its importance and find a house with the most important characteristics.

    Pay special consideration to items on your list that cannot be changed or adjusted and those that can. Updates to bathrooms, kitchens, flooring and windows can eventually be carried out once you move in.

    However, items like the layout and structural design of the home are harder if not impossible to change. And in terms of location, remember that even the perfect home can stop looking so perfect later on if you are not happy in the neighborhood you are in.

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Home Search Reminders

  • With the rise of websites that provide the public with inventory of properties for sale, it is important to keep in mind that your realtor will have access to the full list of available properties on their official Real Estate Board MLS site which is updated in real time.
  • An experienced realtor can provide you with the necessary guidance, information, and knowledge throughout the search for your property. This can be an exciting part of the transaction when handled by the right professional realtor.
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The Offer

Bidding on a home is an exciting step – you’ve found the home you want and are trying to make it yours. Details and planning are important. Know how much you are willing to pay and the amount that your lender has pre-approved for you. If your offer is a firm one (with no conditional clauses). Make sure you are serious about your purchase before submitting it. If the seller accepts it and you provide the deposit, your offer becomes a legal binding contract.

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Preparing a written offer

Unlike other major purchases that have a fixed price, homes are sold for the sum that the seller and buyer negotiate. Your real estate agent can help you in determining the appropriate amount for the initial offer.

Offers usually include the following items:

Names
Names of the seller, buyer and their respective Agents.

Proposed purchase price
In a typical case the seller can counter-offer your original bid with a higher price – keep this in mind when deciding on the purchase price to offer. In a strong market, there may exist multiple offers for one house and therefore little or no room for negotiation. The strongest offer in terms of price will prevail.

Deposit
You must offer a deposit to show that you are serious about buying the house. Generally, this money is deposited into a trust account and credited toward the purchase price on closing.

Closing/Completion date
The closing /completion date is the date of possession in which title of the property will be transferred to your name and keys to the house provided to you. This date is determined by both Seller and Buyer as part of the negotiation of the offer.

Extras
Extras that are going to be included in the sale will be negotiated by Buyer an Seller and can include (but are not limited to) certain household appliances, light fixtures, window covers, garden sheds, alarm systems, and other permanent fixtures.

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Conditions

Your Offer may be contingent on you being able to satisfy certain conditions. Some examples are:

Home inspection condition
If you require financing for your home loan and already have a pre-approved mortgage you still need to obtain a final approval from your lender once you have purchased the property. This condition will be requested in the offer and asks the seller to give you a certain period of time (usually 5 days) to get the final approval. If the seller agrees to this condition and the final approval is not met, then you have the option to cancel the accepted offer without repercussions.

Financing Condition
It is recommended to have a professional inspection of the property before doing a firm purchase. You will need to request a condition in the offer asking the Seller to give you a certain period of time (usually 5 days) to have the home inspection done. If the Seller agrees to this condition and the home inspection reveals major problems with the house that he or she is unwilling to fix and you as a Buyer cannot accept then you have the option to cancel the accepted offer without repercussions. Ask your real estate agent to recommend a professional inspector with many years of experience or you can shop around for one. The inspector should provide you with a written report of the home and make repair recommendations if necessary.

Negotiation
Negotiation is a normal practice in real estate, and something that your agent will do on your behalf. All negotiations must be done within a certain time frame and in writing, and not verbally, to ensure that the parties understand each other perfectly.

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When the Offer becomes a Contract

As soon as the Seller/Buyer has accepted the final price and terms of the offer and all conditions have been satisfied, then it becomes a binding contract and a firm deal.

Typically, purchase contracts cover the following:

Names of the seller, buyer and their respective representatives and lawyers.

Address and legal description of the property.

Here the property you are buying is described, in terms of its dimensions (measurements and boundaries) in relation to a registered subdivision plan (survey).

Purchase price and deposit.

Deadlines and Key Dates.

These dates may refer to the deadlines to conditions of financing and home inspection by the buyer, or the seller’s signback/response to the original offer. Other key dates include the deadline for the lawyer’s revision of title and the closing/completion date of the transaction.

• Remember that no two real estate transactions are exactly alike. Buyers and sellers bring different personal stories, interests, and goals to the negotiation table, and the purchase contract will reflect these differences.

• An experienced and knowledgeable realtor will prepare your offer, explain in detail what you will be signing and most importantly, negotiate the offer in your best interest as the Buyer.

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Condiciones que se tienen que cumplir para completar la transacción:

  • Financiación.
    Esta condición le protege a usted indicando que la venta depende de que un prestador le apruebe una hipoteca, interés y plazo específicos.
  • Inspección.
    Si usted hizo que el contrato dependiera de la inspección de la casa, esto dará lugar a que se fije una fecha para la inspección y una explicación de lo que sucederá si por medio de la inspección se identifican algunos problemas.
  • Status Certificate (Condominios).
    Aquí se incluye la notificación legal de toda la información requerida sobre la propiedad (tal como copias de documentos de la asociación de propietarios), cuestiones o problemas con la propiedad.

    Recuerde que no hay dos transacciones de bienes raíces exactamente iguales. Los compradores y vendedores aportan a las negociaciones historias personales, intereses y objetivos distintos, y el contrato de compra reflejará estas diferencias.

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You are only a few steps away from Homeownership

The period of time from the moment you buy your property and actually take possession, can be filled with much anticipation. It is in this waiting period that your lawyer is preparing all documents and working on your file in preparation of the closing or possession date. As well there are certain items for you as a home Buyer to consider before moving in.

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Final visit to the property

If agreed upon in the contract, you may have the right to revisit the property you are buying before the closing date. On that day you will be able to review the house in more depth, take measurements, and check that the condition of the house and the extras that will remain as part of the purchase, are in good order. Any abnormal changes to the property since the date of purchase should be notified to your lawyer as soon as possible so that he/she can take immediate action before the closing day.
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Property insurance

A home/fire insurance policy is mandatory by the bank or finance company (lender) that is providing you with the mortgage loan. This policy must be obtained by the Buyer before the closing day.

In a home purchase that is not financed by a mortgage loan, or for homes that are fully paid off, a home insurance policy is not required by law, but is strongly suggested as it offers peace of mind. A Home insurance policy will provide you coverage for fire, catastrophe, theft, liability or in the event someone is injured on your property.

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Property Title Insurance

Title insurance protects both the borrower and the lender against losses caused by disputes over the ownership of the property or any legal claim against it. It also includes issues regarding lot size and unpaid accounts from the previous owner. Your lawyer will arrange for this insurance on your behalf.
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Logistics

Some things to take care of while you wait for the possession date are:

• Book and coordinate the details of the moving day with the moving company. In the case of a condominium apartment purchase, don’t forget to book the elevator for the move in date.

• Register your children in their new schools.

• Redirect your mail to your new address through the appropriate post office.

• A few days before the possession date confirm that the utility and tax accounts have been set up under your name.

Closing is the last step in buying a home and requires several important steps. The time, between the moment your offer is accepted and the closing meeting with the lawyer, may be longer than you think. Meanwhile, consider the following:

STEPS TOWARDS THE CLOSING PROCESS

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Mortgage Commitment

Before the closing date, the mortgage lender will have you sign a commitment/contract which shows all the details of the mortgage. Make sure the closing date is before your interest rate guarantee expires.

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Obtain Home Insurance Policy

Make sure your Home Insurance policy has been secured. The Insurer will require contact details of your lawyer to provide proof of the policy.

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Lawyer's Closing Meeting

Closing meetings are a routine matter in the home buying process. A few days before the possession date you will have a closing meeting with your lawyer in which you will carry out the following:

• You, along with anyone else on title of the property, will need to sign the legal documents to be registered, such as the Transfer Deed of Property and the Charge/Mortgage Document and other related paperwork. Spouses not on title will need to sign as consenting parties.

It is recommended to be familiar with the documents you will be signing and with the amount of funds required for closing. Your Realtor will provide detailed information of what to expect prior to the appointment.

• You will be handing in to your Lawyer the payment for the following outstanding items due
on closing:

Balance of Purchase Price
If purchasing with a mortgage loan you need to pay the balance of the Down Payment
after adjusting for the initial deposit that you submitted with your offer.

If purchasing without a mortgage loan you will need to pay the balance of the purchase
price after adjusting for the initial deposit you submitted with your offer.

Closing Costs
There are several items that are part of the closing costs that can include
(but are not limited to) items like:

. Lawyer fees and disbursements

. Transfer and Mortgage Registrations

. Title insurance

. Property Tax Adjustments

. Prepaid Utility Bill Amounts

. PST on High Ratio Mortgage Default Insurance

. Builders Costs for new homes

Municipal and Provincial Land Transfer Taxes. This final amount can reach a significant sum of money so be well prepared. Your lawyer will tell you the total figure that you need to pay at the closing appointment however your realtor can give you an approximate idea of how much it will be ahead of time.

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Closing

Once all documents have been signed and the closing costs paid, the Lawyer will register

the deed and mortgage against the property under your name. (You will receive a copy of the deed at the time you sign the closing, but you will not receive the original documents until several weeks later).

At this point the closing process has been finalized, the keys will be handed to you, and finally the house is yours!

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The Move

You have found your dream home, made an offer, and went through closing. Now the house is yours – all you have to do is move in!

An important decision related to your move is to determine whether to use the services of a professional moving company, or whether to move yourself. Distance and budget are often the biggest factors in determining the best method for you.

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First day of the Possession Date

It is recommended on the closing date to do a thorough visual inspection of the house as soon as you receive the keys, even if you are not moving in the same date.

Any irregularity, damage or problem not present on your final visit to the house before closing, should immediately be reported to your lawyer.

As a new homeowner, remember to confirm that the tax and utility accounts have been set up properly under your name if you did not have a chance to do so a few days before closing. The setup of new accounts may be done by your lawyer, however it is a good idea to double check.

What you should know once you are a new Home Owner

Home Ownership comes with greater financial responsibilities. One of them is having a well organized monthly budget. The monthly costs a new Homeowner is responsible for can include:
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Mortgage Payment.

For your convenience the equal monthly mortgage payment can be set up to be automatically withdrawn from your bank account. Your lender, mortgage broker or lawyer will help you carry out this process. Remember, it is very important to make your payments on time to protect your credit. If you decide to buy another home in the future, a good payment history will be very helpful. Your mortgage requires that you keep your property in good repair. This requirement serves to protect your investment and increase the value of your property if you ever decide to sell it. When making repairs, be sure to always use the services of experienced contractors.
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Property Taxes

Property Taxes may be paid by the Buyer directly to the municipal tax office or with the monthly mortgage payment. It all depends on the Lenders terms and stipulations.
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Utilities

Heating, Cooling and electricity costs are usually paid on a monthly basis through your local gas and hydro companies.
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Water

In some municipalities the water consumption is paid on a quarterly basis along with the waste disposal charges through your corresponding municipal office.
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Home Insurance

Depending on the company, a Home Insurance premium can be paid all at once, in monthly equal monthly payments and in some cases it could even be financed.
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Condo Maintenance Fees

The maintenance fee for a condominium apartment or townhome is usually paid on the first day of each month to the condo corporation. Such payment can be set up to be automatically withdrawn from your account.
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Repairs and Improvements

Now that you are a homeowner it is a good idea to have an allocated reserve fund for the cost of any unexpected emergency repairs. As well you may want to have a list of contractors ready when you need them. This can be referred by family, friends or even your Realtor. Such a list may include plumbers, electricians, and heating/air conditioning technicians among other tradespeople.
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What to do in case of fire

If your home is damaged by fire or by any other event that is covered by your insurance, call your insurance agent immediately to fill out the report. An insurance damage appraiser will do an inspection of your property to establish a sum of the damages.

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