Understanding Our Process

Agency Relationships

When working with a REALTOR®, it is important to understand who the REALTOR® works for, and to whom is the REALTOR® legally obligated. The Canadian Real Estate Association (CREA) requires REALTORS® to disclose Agency Relationship to a potential client at the earliest time possible.

Buyers Relationship to Realtors®

A Buyer has a choice of two relationships with a REALTOR®. As a Client, a real estate company acting as a Buyers Agent must do what is best for the buyer. A written contract, called a Buyer Agency Agreement, establishes buyer agency. It also explains services the company will provide, establishes a fee arrangement for the REALTORs® services and specifies what obligations a buyer may have. Under such agency, a buyer will be obliged to work with that company for a period of time. In return, anything the buyer shares with that company will be kept confidential. The REALTOR® is also required to offer professional advice, negotiate the best price for the buyer and provide the buyer with as much information required to make the right decision.

As a Customer the buyer can expect to be treated fairly and honestly. It is important for the buyer to realize that under such a relationship the REALTOR® is technically a sub-agent of the seller so that duties are owed to that seller. However, the buyer can expect the REALTOR® to disclose all pertinent information about a property, not to misrepresent any facts, and to honestly answer all questions about the property. Under such relationship with the buyer, the REALTOR® must not imply that they shall negotiate a price for the buyer as that would be a direct conflict with the REALTORs® sub-agency relationship with the seller and a violation of our rules and regulations.

 

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Greater Savings with a Larger Down Payment

The size of a down payment can vary. Depending on the type of mortgage, down payments generally range from 5% to 20% of the purchase price.

To obtain a conventional mortgage, home buyers are required to put down at least 20% of the purchase price or appraised value (whichever is less) as a down payment. If you don’t have the necessary time or resources to save a full 20% down payment, you can choose a high-ratio mortgage and buy a home with a down payment of as little as 0%. This option is called a high-ratio mortgage and it requires you to purchase default insurance.

Whether you choose a conventional or a high-ratio mortgage, one thing is almost always certain: the larger your down payment, the more you save in the long run.
larger down payment…

• Reduces the amount of your monthly principal and interest payment
• Reduces the total amount of interest you pay over the life of your mortgage

Insuring Your High-Ratio Mortgage

CMHC or Genworth Financial may insure a mortgage for up to 100% of the lending value of the house. Therefore, purchasers do not need a down payment. Eligible borrowers include anyone who buys a home in Canada intending to occupy it as their principal residence.

Purchasers can use up to 32% of their gross family income for payments of mortgage principal and interest, property taxes and heating. A buyer’s total debt load (including consumer loans, etc.) cannot exceed 40% of the gross family income.

Making An Offer

Elements of an Offer Explained

  • Price: Depending on the local market conditions and information provided by me, your Real Estate Professional, the price you offer may be different from the seller’s price.
  • Deposit : Your deposit shows good faith and will be applied against the purchase of the home when the sale closes. As your Real Estate Professional I can advise you on an appropriate amount.
  • Terms: Includes the total price offered and the financing details. You arrange your own financing or ask to assume the seller’s mortgage, especially if it has an attractive interest rate.
  • Conditions: These might include “subject to home inspection”, “subject to you obtaining financing”, or “subject to you selling your property”.
  • Inclusions and Exclusions: These might include appliances and certain fixtures or decorative items, such as window coverings or mirrors. These items would remain in the house.
  • Closing or Possession Date: Generally, the day the title of the property is legally transferred and the transaction of funds finalized

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Understanding The Related Expenses

Closing Costs
Closing costs are a list of charges your lawyer presents to you on the closing date of your home. Many people are surprised at the additional costs over and above the price of the home. According to the CMHC and Genworth Financial you should have at least 1.5% of the purchase price for closing costs in addition to the down payment (have around 2.5% to be on the safe side). The costs vary among provinces and cities.

Below you will find a brief explanation of these costs. Please note these are some of the closing costs you may encounter depending on your specific situation. Use this as a guideline then talk with your lawyer who can provide a more realistic estimate for your situation.

Appraisal Fee Generally Required with New Homes
An appraisal provides the lender with a professional opinion of the market value of the property. This cost is normally the responsibility of the buyer and it can cost between $300-$400.

Home Inspection Fee Generally Required with Resale Homes

A professional inspection of the home, top to bottom, is for the benefit of the buyer. A home inspection can cost anywhere from $450-$650 and is well worth the investment. When hiring a home inspector make sure the inspector has liability insurance just in case they overlook something.

Fire Insurance
Mortgage lenders require a certificate of fire insurance to be in place from the time you take possession of the home. The amount required is generally the amount of the mortgage or the replacement cost of the home. This cost can vary on the property size, amount of coverage, the insurance company and the municipality. The cost can vary anywhere from $250-$600 annually for most properties.

Provincial Sales Tax on Mortgage Insurance

If your mortgage is insured, (CMHC or Genworth Financial), you will be required to pay the applicable taxes on the insurance premium on closing. While the insurance premium can be added to the mortgage amount, the tax must be paid at closing.

Land Survey Fee or Title Insurance Fee
A recent survey of the property is usually required by lenders. If one is not available the cost can range between $600 – $900 for a new survey. In lieu of the survey most lenders today will accept title insurance which can cost considerably less.

Legal Costs and Disbursements
Lawyers and notaries charge fees for their services involved in drafting the title deed, preparing the mortgage, and conducting the various searches. Disbursements are out-of-pocket expenses incurred during the process such as registrations, searches, and supplies.

Land Transfer Tax
Most provinces charge a land transfer tax payable by the purchaser. The amount varies depending on the province. Land transfer tax is based on the purchase price. First time home buyers purchasing a new home may be entitled to a refund.

New Home Warranty
In most provinces new homes are covered by a new home warranty program. The cost to the purchaser for this warranty is approximately $600 and should the builder default or fail to build to an agreed-upon standard the fund will finish or repair the deficiencies to a maximum amount. For more information on Ontario new home warranty visit http://www.tarion.com.

HST
HST is payable on the purchase of a newly constructed homes only. If you are purchasing a new home make sure you know who pays this, you or the builder. On the offer the purchase price will say “Plus HST” or “HST Included” and who gets any HST rebates. Many builders have included this cost into the purchase price so the buyer does not have to come up with it at closing.

Closing Adjustments
An estimate should be made for closing adjustments for bills the seller has prepaid such as property taxes, utility bills, and other charges. Any bills after the closing date are the responsibility of the purchaser. A lawyer will let you know what they are once the various searches have been completed