ABOUT BUYING REAL ESTATE
The first step in a real estate transaction is for the buyer to make an offer to purchase. The offer may be conditional on certain things that are stated in a “binder” or an “interim agreement”. Such things may include the buyer’s ability to arrange suitable financing and sell their current property. The offer is usually also contingent on a satisfactory appraisal and inspection of the property. If the offer is accepted, the binder acts as a sales contract. The offer is accompanied by a deposit for around one thousand dollars or more, made out to the trust account of the real estate broker. A buyer should never make a deposit payable to the seller. When the seller receives an offer, they can accept it, reject it or propose a counter offer. The buyer in turn can reject the offer, or make another counter offer. This process can be repeated until an agreement is reached.
Whether buying a brand new home or one that’s 50 years old, a home inspection is a good idea. Inspectors are trained to look for problems in the construction of the property in question. Most will check areas the average person may not even think to look. They will investigate walls, sidewalks, the driveway and the grounds for cracks, rotting and sagging. The inspector looks at the windows, doors, gutters, chimneys and the roof for leaks and signs of damage. The foundation, including the attic, ceiling and walls are also scrutinized during inspection. Inside the bathroom and kitchen, an inspector will check for proper exhaust, seals and for chipping on the appliances and fixtures. The electrical and plumbing will be tested to make sure they are in proper condition. Most home inspection companies provide a written commentary as well, with a list of suggestions and recommendations. A home inspection report can be an excellent bargaining tool. Normally, it will cost from $250 to $400 depending on the type and size of home inspected.
CHOOSING A REAL ESTATE LAWYER
Since both the buying and selling real estate agent are paid commission by the seller, you should get unbiased legal advice in any real estate transaction. The real estate lawyer will protect your rights and guide you through the process, so it’s important to choose a lawyer who specializes in real estate. Among other things, the lawyer will help write your offer to purchase, conduct a title search including any mortgages, liens, back-taxes, easements or other encumbrances registered against the property. The lawyer will also handle the transfer of the purchase money and register the deed and mortgage in your name. Buying and selling real estate often deals with large sums of money and can be quite complicated. Be sure to get qualified legal advice before you begin.
Title insurance protects you should someone else claim ownership of your home and property, and covers you for as long as you own it. It also protects you should any outstanding liens or debts be discovered after your purchase. Occasionally, after the purchase problems do surface. Depending on the situation and the claims made, you may not be able to keep the home or property, but with title insurance you will be reimbursed for your down payment and other expenses. You are usually reimbursed for your loss, up to the entire purchase price. In many cases, mortgages will not be granted without proof of title insurance.
LEGAL FEES AND CLOSING COSTS
When buying a property, there are costs beyond the actual purchase price that will be incurred. These costs include lenders and notary fees, legal fees, utilities, taxes and insurance, and sometimes local municipalities will attach additional charges. These costs are usually divided between the buyer and seller. It is wise to determine these fees well in advance of your closing date, prior to arranging financing, to insure that you will have sufficient funds available. Your real estate agent and lawyer can assist you in determining the amount you will need to have on hand to cover these costs, and avoid any surprises.
LAND TRANSFER TAX AND GST
Land transfer tax is paid by the buyer. Whenever a property changes title in Ontario, this tax must be paid. Canadian residents and people lawfully admitted for residence in Canada pay a lower Land Transfer Tax than other individuals. GST applies to new home purchases only, but you may qualify for a GST rebate. Resale homes are sold without GST. However, realtors and other professionals must include GST on their services. These taxes should always be included when calculating costs when contemplating buying a home and arranging a mortgage.
ABOUT SELLING REAL ESTATE
There are many things to consider when selling your home. You have to learn the true market value of your property and determine your asking price. You must decide how you want to list your home and market to prospective buyers, how you want to accept payment, and prepare your home for viewing. Your real estate agent and lawyer can assist you with the entire process, consulting with you, negotiating for you, and protecting your rights. Every transaction is unique. Every offer is different. It’s extremely important to obtain assistance from experienced professionals. Never make a decision or sign any papers without consulting your advisors.
PREPARING THE HOME
It is important to properly prepare your home prior to offering it for sale. Before listing, make an inspection of your property and note any items which should be repaired, replaced, cleaned or painted. All areas of the home and property should be easily accessible to potential buyers and their agents. Remove any items that could be blocking or hindering access. If there are areas where visitors could be injured, such as slippery or uneven floors, information should be provided to the visitors before entering and these areas should be clearly marked. Obviously, the more attractive your home is to potential purchases, the greater the opportunity there is for a successful transaction. A little time, care and money invested in your home prior to listing can reap big rewards.
The Property Disclosure Statement is a written document created for the safety of all parties involved in a real estate transaction. It is a statement of the condition of the property being sold. The vendor is obligated to make the buyer aware of general and structural problems or concerns with the property that they know about. For example, if there is water damage or there was a problem with pests the vendor or owner must disclose this information. A disclosure statement can be a very useful bargaining tool for the buyer and the seller. For more detailed information on disclosure contact your real estate agent or a real estate lawyer.