The Buying Process
Stu Bell and his Team are there every step of the way:
- Help you to clarify the type of home you need and can afford.
- Provide you with all the information about available properties and sources of financing
- Arrange appointments to view available properties
- Provide accurate answers to any questions you may have about a specific home you are considering
- Explain the forms used in a real estate transaction and assist you in making a written offer to purchase
- Present your written offer to the seller
- Familiarize you with the steps you must take to complete the purchase after the seller accepts your offer
What Can You Afford?
Before you start looking for a new home, it is important that you become aware of how much you can afford to pay. This knowledge will allow you to spend your valuable time looking productively at homes which are within your predetermined
Almost everyone who purchases a home borrows some of the money needed to pay for it. The easiest way to determine how much money you will be able to borrow as a mortgage loan is to consult with one or more lending institutions.
Lending institutions will usually require you to make a downpayment of at least 5% to 10% of the purchase price of the home. Lending institution policies may vary from time to time. However, as a general rule, you should make your cash downpayment
as large as possible. Your deposit for the real estate transaction may form part of your down-payment.
Based on Your Income
A general guideline is to allow no more than 30% of your gross monthly income (before deductions) to make your monthly
housing payments. This test of your ability to repay a mortgage loan is generally referred to as the Gross Debt Service Ratio. If you have other monthly financial obligations, such as car or credit card payments, the lending institution will also apply the Total Debt Service Ratio test to determine the maximum mortgage loan for which you can qualify. A general guideline should be that the total of your monthly housing payment added to your other monthly debt payments should not exceed 40% of your monthly gross income.
Many lending institutions will prequalify you for a specific size and type of mortgage loan before you begin searching for your new home. Taking the time to apply for a pre-approved mortgage will give you the security of knowing how much you can
afford to spend. We'll introduce you to a
The Closing Costs
It’s easy to count your available cash, but remember that all of these cash savings cannot be used as your down-payment.
There are last-minute costs, such as taxes, legal fees, appraisal fees, moving expenses, and home insurance to pay before you are finally in your new home.
Where Should You Purchase?
- Before you begin looking for your new home, it is important that you consider following factors:
Now it’s time to begin your informed search for that “right” home. You have gathered all the information you need to make a rational decision rather than an emotional one, but it may not be easy! You, like everyone else, will probably want what you can’t afford. Try not to become discouraged. Every homeowner started somewhere and it is most likely that there is a place for you!
What Should You Look For?
- After you have found a home, don’t be shy! Ask questions and pay attenetion!
- What size and shape is the lot/living space?
- Are there any roof leaks or recent repairs?
- Is the natural lighting to your liking?
- Are the room sizes adequate for your family’s needs?
- Is the kitchen suitable?
- Are storage areas and closet space adequate?
- Does it look like renovation work has been done? If so, are
- there copies of building, electrical and gas permits for this work?
- What type of heating system is it?
- Is there sufficient electrical wiring?
- Drainage—is the home well drained and has landscaping been done to prevent erosion?
- What is the condition of the basement and foundation?
- How large is the garage? Is the driveway adequate?
- Is a Property Disclosure Statement available?
- What is the Zoning on this Home?
- Is a Land Title Search Available?
- Are There any Restrictive Covenants?
- Are There any Easements?
- How Much are the Property Taxes?
- Is the Structure Covered by any Warranty?
- What are the monthly charges for common area maintenance (strata fees)?
- Are owners permitted to rent their units to tenants?
- How much money is in the contingency reserve fund?
- Are pets allowed in the building?
- Have any special assessments been agreed upon or have any structural problems been noted which may lead to a special assessment in the future?
- Has the building envelope been renovated in the past?
- What about parking stalls and storage lockers?
Fixtures vs. Chattels
Things contained in a building or on the land are classified as either fixtures or chattels. The difference between a fixture and a chattel is very important to you because fixtures stay with the home when it is sold, but chattels depart with the old owner. If you see an attractive fireplace insert, a “murphy bed” in the spare bedroom closet, a vacuum canister in the utility, or custom window blinds which you think should stay, but are not certain if the seller agrees, ask if it is a fixture.
Making an Offer
Once you have found the home you would like, a written offer to purchase must be prepared. When we prepare an offer for you, it should contain a number of standard details, plus any conditions which are important to you. Be fully aware that once you sign this document and the seller also signs it, a legally binding contract has been formed. Legally binding means both you and the seller will be bound by the terms of the contract and must each perform your respective obligations as stated within that contract. Either of you can go to court to compel the other to perform his or her part of the contract. Even if a contract contains subject
clauses, it is legally binding as soon as both the buyer and the seller have signed the contract.
Your offer should include:What are the Seller’s Options?More About “Subject” Clauses
- Date of offer.
- Date and time your offer expires.
- Full legal names and addresses of both the buyer and the seller.
- Full legal description of the home.
- Amount of the deposit you are giving (which will be held in a trust account and will form part of your down-payment).
- Sale price.
- Amount of your cash down-payment and details as to how you will finance the remainder of the purchase price.
- Your desired closing and possession dates.
- A list of the conditions which must be satisfied before the sale can occur. These are called “subject clauses” or “conditions precedent.”
- A list of items which are not attached to the building (chattels), but which you state are to be included in the sale price; for example, drapes, refrigerator, stove, etc. It is helpful to be specific in the description of these items.
- Your signature.
- When the seller receives your “offer to purchase,” he or she has four options:
- Accept the Offer Exactly as Written
- Reject the Offer
- Ignore the Offer
- Make a Counter-Offer
The purpose of a subject clause (also know as a condition precedent) contained in an offer to purchase is to set out a
specific condition which must be fulfilled before the sale can go through, although the contract is legally binding once it is signed by both parties. Some possible items you might wish your purchase to be “subject” to include: a satisfactory professional building inspection the arrangement of the financing you require the lender’s approval of your application to assume the seller’s existing mortgage the sale of your present home if the home is a strata lot, satisfactory review of all relevant strata documentation, including engineer’s reports and/or building inspection reports, if any When you place “subject” clauses on your offer to purchase, you are required to use every reasonable effort to see that the conditions are satisfied. It is important to know that subject clauses are not “escape” clauses that allow you to avoid your If you are unable to meet the conditions after making every reasonable effort to do so, the contract ends and there is no legal obligation to complete the purchase. It is important to remember that if the brokerage is holding your deposit, both you and the seller must sign a deposit release form prior to the deposit being released to you.
Completing Your Purchase
The Contract of Purchase and Sale, which you signed, will state the completion day for the transaction. On that day, legal ownership will transfer from the old owner to you in exchange for the purchase price of the home. You will be able to move in on the possession date stated on your contract. The completion and possession dates are not necessarily on the same date. It is normal practice for the buyer to engage a lawyer or notary public to prepare the documents necessary to transfer the legal ownership.
A lawyer or notary public will:
- Search the title in the Land Title and Survey Authority Office registration system to find if anyone other than the seller has any legal rights to the home and to see if there are any registered easements or restrictive covenants
- Prepare the documents to transfer ownership from the seller to you, including the Property Transfer Tax return ensuring that the seller’s old mortgage has been properly
- Discharged, if this is required
- Confirm that all payments for which the seller is responsible have been made
- Arrange for you to sign the transfer documents
- Preparing a Statement of Adjustments outlining all monies owed by you and the funds you will need to complete the transaction
- Deliver the final amount due to the seller and ensuring you are registered as the owner in the Land Title and Survey Authority Office
- Obtain documents for strata titled properties, such as the Information Certificate (Form B as prescribed in the Strata Property Act), Certificate of Payment (Form F as prescribed under the Strata Property Act) and the strata corporation’s Certificate of Insurance
The day has arrived! You have signed the documents, turned
over your cheque, and received the keys. The home is yours!
Remember, I will be working for you every step of the way!