Why Buy a Home?
- The only appreciable asset besides RRSPs that can be cashed out without paying capital gains taxes
- Need a roof over your head
- Hedge against inflation
- Forced savings plan, security for when you get older (retire)
- You can alter your home as you wish, renovate, update, landscape, etc. (indulge your creative desires)
- In an income property, you can leverage your investment and have someone else pay your bills
Working with an Agent
- The vast majority of properties sold in the Toronto area are Listed for sale with a Realtor – SELECTION
- Save time and effort
- Product knowledge – know the marketplace, neighbourhoods, property value, etc.
- Professional negotiation skills
- Can assist with financing
- As soon as you decide you want to purchase a home or explore your purchasing options.
- Help you realize what you can afford
- Help you realize what you want vs what you need
- Introduce you to areas of the city you might not have considered
- Are you going to work exclusively with one agent in a Buyer Agency relationship or are you going to work with an agent as a customer or a client?
- Are you going to work exclusively with one agent or are you going to call around to any and all agents whose ads, signs, etc. you see?
Most of the time you spend with a realtor will be in looking at properties, although you will also spend time in his office or your home working over an offer(s)
- Working with an agent should be a rewarding experience both financially and emotionally.
- Selecting the agent you work with can be as important a decision as the property you buy.
- Make sure you both like and trust the agent you decide to work with.
- Don’t be afraid to ask for references.
Customer vs. Client
Duties owed by an agent to a client are different than those owed by an agent to a customer. As can be seen by the chart below an agent’s duties owed to a client are much greater than his duties owed to a customer. Until very recently the industry standard in Toronto was to treat the buyer as a customer and the seller as a client. Buyer Agency makes the buyer a client and gives the buyer a real opportunity to be represented by his own agent during both the searching for properties and the negotiation of offers. Buyer Agency also gives the buyer much greater legal recourse vis a vis his agent in the event of a dispute or problem arising before, during or after the closing of a sale.
Agent’s Fiduciary Duties to “Client”
- Best Efforts (Advocacy)
- Reasonable Care and Diligence
- All of the duties owned to a customer
Agent’s Duties to “Customer”
- Fair Dealing
- Reasonable Skill and Care
- Disclosure of Property Condition and Defects
- Reasonable Care and Diligence
These duties are the obligations of the entire office/firm and are impressed upon both the Listing Office and, in sub-agency situations, the Selling Office.
How Much Can I Afford?
The monthly expenses of home ownership will vary depending on the type and size of home you purchase. Suffice it to say in the Roncesvalles area a typical home owner is going to be spending anywhere from $700.00 to $1,200.00 per month before they ever make a mortgage payment. Expenses to consider over and beyond one’s mortgage are: property tax; home owner’s insurance; heat; electricity; water & sewage and maintenance. The mortgage calculator here will help you understand what you can borrow. I’m happy to help you figure out the rest.
The average closing is about $1,600.00 – $2,200.00. This includes cost of drawing up and registering one mortagage, preparing Land Transfer Tax Affidavit, searching title and disbursments.
Adjustments on Closing
This amount is dependent on how much of the property tax, heating costs, water bill, and any other property expenses the vendor has prepaid.
Land Transfer Tax
Land transfer tax (LTT) can be both a provincial tax and, if buying a home in the city of Toronto, a city tax. First time home buyers are able to apply for partial rebates of both the provincial and city taxes. For first time buyers the maximum rebate on the city of Toronto LTT is $3,750.00, which represents the tax that would have been paid on the first $400,000.00 of purchase price, while the maximum rebate of the provincial land transfer tax for Toronto buyers is up to a maximum of $4,000.00 for homes purchased over $368,000.00
USE THE LAND TRANSFER TAX CALCULATOR
The average home inspection costs between $400.00 – $550.00. This should include a check of all major systems, written report, and some type of “Home Book”. Other prices are available for more or less comprehensive inspections.
The actual insurance premium charged is generally added to the principal amount of the mortgage and paid back by the borrower on a monthly basis. There is, however, an administration fee of $175.00 which must be paid for in cash. PST is also charged on insurance premium and must be paid for on closing.
Survey Title Insurance
If a survey is required and is to be paid for by the Purchaser a cost of $1,800.00 – $2,5000.00 can be anticipated. Relatively new to the Canadian housing market is the concept of Title Insurance which can be purchased for much less (approximately $350.00) and serves the same purpose as a survey.
No house is perfect. Invariably a new owner will want to improve the house in some way or another, even a coat of paint in a few rooms can cost up to a thousand dollars or more. As a rule of thumb one should expect to spend several thousand dollars on minor improvements on a home after one moves in (this figure does not include renovations of any significance.
It depends on whether or not you hire professional movers, how far a distance must be travelled and how many possessions you own. But even if you have friends/family to help you move, plus renting a wreck and providing pizza and beer for everybody, it will still be a several hundreds of dollars.
A methodical physical examination of the structures on the property, including a check of all major systems, can also include a termite inspection and on occasion more specialized investigations.
Usually after an Agreement of Purchase and Sale has been negotiated but sometimes especially in a seller’s market before the offer is presented.
Takes place at the subject property. You should be there.
Typically between $400 – $550.00 depending on size and purchase price of house this figure can increase.
- Unbiased second opinion of the deficiencies, if any, in the subject property.
- Give you an opportunity to spend a couple of hours in the house to get a better feel of it.
- Establish a maintenance schedule for the house.
- Create a budget for future repairs.
Usually as a condition of sale.
Should be a qualified home inspector with a reputable company.
Lawyers are an integral part of all real estate transaction. Your lawyer is there for you to look after your interests and to ensure a successful closing or very occasionally not depending upon the particulars of the Agreement of Purchase and Sale.
The standard Agreement of Purchase and Sale has been designed, with legal input, to allow for a buyer and seller to use it with a minimum amount of additions. Nonetheless there may be times when a purchaser wishes to have his/her lawyer check over an offer before it is signed/presented.
When an offer is accepted and usually after any conditions have been removed your Realtor’s office will send copies of the offer and any other relevant documents to your lawyer. Your lawyer will then search the title of the property to make sure that you are buying what you thought you were buying, that there are no liens or mortgages (which can’t be discharged), check with City Hall to make sure there are no work orders on the property and obtain the various clearance letters necessary to close a sale. Your lawyer will also prepare the Land Transfer Tax Affidavit and if you are getting a mortgage the documents will be prepared and registered by your lawyer.
Prior to the day of closing, usually the week before the closing date, you will visit your lawyer to sign the final papers and give a cheque to your lawyer for his/her fees, the Land Transfer Tax, and the balance of your down payment plus adjustments.
On the day of closing, this is the day you actually become the owner of your home, your lawyer or a “closer”, someone he/she has hired, will go down to the Registry Office, in Toronto. This is in the east tower at the Atrium on Bay (it is open to the public and has some of the most helpful government employees you will ever meet. Anyone can go there and search the title of his/her home to see its history), and meet with the Vendor’s lawyer to register the sale documents and exchange money for keys.
In the event that your lawyer does uncover complications he/she will begin a dialogue with the vandor’s lawyer in order to try and resolve the dispute. Very occasionally there are problems with a real estate deal that end up resulting in an unsuccessful closing. If this occurs you will definitely be seeing more of, or talking more to, your lawyer as you decide what to do about the problem.
Real estate is a very specialized field in the legal profession. When you are selecting a lawyer to represent you in a closing, make sure you use someone who has experience closing real estate deals.
“There is no such thing as a small real estate deal, each one involves significant life decisions. Whether it happens quickly or over an extended period of time, working with a real estate practitioner who never loses sight of -it’s about you, is of paramount importance.
Let me help…”
– CHANDER CHADDAH
SUTTON GROUP ASSOCIATE BROKERAGE, INDEPENDENTLY OWNED & OPERATED