Buying property in Canada (Part 1 – useful tips).
Hello, I’m Elena Palagnyuk – Real Estate Buying and Selling Agent in Toronto, representative of Re / Max, the largest real estate company. I want to tell you today how the purchase of real estate in Canada takes place as it is a complex, responsible, and very emotional process that requires serious preparation.
So, you decided, and do not know where to start?
First, make your life easier – choose a real estate agent. You can know a lot, read articles on the Internet and ask friends, but remember that this is probably the biggest purchase in your life, you simply can not afford to learn in the process on your own mistakes. The agent will become your “guide”, warning you in advance of the next steps and possible consequences of a decision. The agent will explain all the complicated legal terms, warn unnecessary expenses, make all calculations, so that there are no surprises at closing the deal, will offer alternative options suitable for your situation. I recommend that you meet with several agents and choose a good professional (believe me, it’s not difficult to determine) and a person with whom you just like to communicate, because you spend a lot of time together while choosing the house that suits you.
Many people think that the process of searching for real estate is not at all complicated, and no agent is needed for this, especially information available to everyone on the Realtor website and many other sites on the Internet. In practice, it’s quite different. The real estate market is very active today and real estate exhibited at the right price can be sold on the same day. Therefore, often information becomes obsolete by the time of publication on public MLS because this site is updated every few days. When you work with the Agent, he receives full information about all new real estate within a few minutes after leaving the MLS (professional realtor’s website accessible only to licensed agents) and reacts at the same moment as soon as he sees the suitable option, informs the client and can organize a show and even submit a proposal for a purchase on the same day. Believe me, this is relevant in today’s market, when we have insufficient number of good listings and a lot of people who want to buy them.
In addition, practice shows that in the search process, buyers very often change the criteria in the selection of the house and even the area and price. Working with a good agent, you will save a lot of your time, as he will purposefully select houses worthy of attention and comment during the search for the ratio of various factors, for example, whether you want to buy a house with a separate entrance to the bayment, or better do it yourself, and how it will affect the price. Is it worth buying a house with a certain number of bedrooms for this particular family, and what will be the difference in the monthly mortgage payments. The services of an agent representing the interests of the buyer are free of charge, and right, one should not abandon one of the best representation schemes developed in Canada.
Decide on the maximum purchase price, i.e. what kind of a mortgage you can get. Contact the bank or a mortgage broker, it does not oblige you to take a mortgage at the same time, but definitely will give you an advantage when buying. Get a Pre-Approval (prior approval from the bank for a mortgage) is better before you start looking for a suitable home. To determine the maximum amount of mortgage, the bank must check your income and credit history (credit score). And after that you can safely break into the search for the house of your dreams.
Your realtor will explain to you all the costs associated with buying a house. Your mortgage usually stretches for 25-30 years, and closing costs must be paid up to the moment or at the time of the transaction. This includes: payment for a lawyer, state fees and duties, state transfer of land transfer tax, Title Insurance, title insurance, home insurance, services of a licensed home inspector for the technical inspection of a home, a professional appraiser real estate. Your agent will tell you what services are required, which ones are recommended, and which ones are at your discretion.
Also your realtor will explain the very process of concluding the contract of purchase-sale (Agreement of Purchase and Sale) terms and concepts:
Deposit (pledge) – indicates the seriousness of your intentions and is paid by check when accepting your offer. If you decide to withdraw from the Purchase / Sale Agreement without good reason, you will lose your deposit and the seller can sue you to recover damages. Your agent will protect your interests by means of special conditions (such as Financing, Inspection, Status Certificate, Lawyer’s Approval etc.) that will allow you to exit the transaction without loss, for example, if you did not receive a mortgage or the house was found to be defective, inconspicuous, unprofessional or any other reasons why the transaction can not be closed.
Downpayment (the first payment for a purchase is usually 5 – 20% of the cost) – is presented at the time of closing the transaction. From the size of the down-grade, it depends whether you will pay the bank so-called. insurance of increased risks. If there is 20%, this additional insurance is not paid. As you can see, even in this process of preparation there are many nuances that can not be avoided and it is necessary to get the right advice in time.
And finally the day has come when you understand the situation on the market, you understand the rules of buying and owning real estate. You looked at enough houses and found “MY HOME”! It’s time to make an offer to buy a house. Remember that the “Proposal to buy” (the same Offer, the same Agreement of Purchase and Sale) is a serious legal document, and your agent makes it according to strictly defined rules. Mandatory components are: address, legally correct names of the buyer and seller, the proposed price, the amount of the mortgage, everything that is additionally included (and not included) in the price of the house, the closing date of the transaction, requests for additional documents, conditions under which the transaction will be considered to be invalid .
How is the Proposal to buy into a Purchase Contract:
You gave the offer, and the Seller accepted it at once. As a rule, it happens if you really are in love with the house and want to buy it at any price. You give the full asking price, remove all the conditions and you have no competitors. The offer becomes a contract, and then you wait for the legal checks of the “title”, the bureaucratic procedures – until the day when the transaction is realized, when the lawyer will give you the keys to your New Home! Brilliant. but a very rare scenario.
You gave an offer, and the Seller made a Counter-offer, changing the price or some conditions. The agents of the seller and the buyer make the necessary changes in the contract and submit them to the other party until both parties reach an agreement, sometimes in a few days or even weeks, signing each time a change in the transaction, which only with the consent of the parties becomes (Firm Deal) ie the contract.
In the process of exchanging counter-proposals, one of the parties considered its interests insufficiently secured and does not accept the next counter-offer, the game (trade in price and conditions) ceases, the deposit is returned to the buyer, the transaction “dies”. A sad scenario. We continue to search further. those. we start all over again.
Finally, the house is found, the contract is signed, in the negotiation process, an agreement is reached, the experts of all related professions have performed their work “perfectly” and you become the happy owner of the long-awaited house. Do not forget that at the same time you are assuming the legal rights and responsibilities of owning property in Canada. Realization of the transaction with the real estate (ie the day when you received the keys from your new home) occurs, usually within 1-3 or even 6 months after the signing of the contract. However, on this day the most important actions take place:
– The lender (bank, financial company) transfers to you the amount of mortgage (house price minus the first deposit-deposit). Practically it looks like a bank check or bank transfer from a bank account to your lawyer and then to the seller’s lawyer.
– You pay all costs associated with the purchase of real estate (the amount you will learn from a lawyer in advance).
– Your lawyer pays all “overpaid amounts” (eg taxes, utilities) to the former owner.
– Lawyers representing, both parties, carry out transaction registration – in the big cities of Canada there is electronic registration of property.
– You are given keys.
And that’s all. You are the lucky owner of your own house!
Last little advice: do not worry! Everything is already good. This is your house! Today, on the day of closing the deal, you receive the keys and you can move. However, sometimes due to some technical reasons for processing the transaction, you will receive the keys, most likely, after 3 o’clock in the afternoon. So ask your agent beforehand how and when to transport things correctly.