IF YOU’RE THINKING ABOUT BUYING REAL ESTATE, YOU’LL PROBABLY HAVE QUESTIONS. HERE ARE SOME OF THE COMMON QUESTIONS I GET ASKED BY MY CLIENTS THAT ARE READY TO BUY.
WHEN IS THE BEST TIME TO START LOOKING FOR A PROPERTY TO BUY?
In short, when you’re financially ready. The financial aspect basically controls the rest of the process, like where you can buy and what you can afford to buy. Once you have the financial information sorted out, you can begin looking for a property. Anytime of the year is really fine to begin looking, but typically, the Spring and Fall seasons is when the real estate market starts to pick up, which means that there will likely be more listings available for you to see, but that doesn’t mean that you should stop looking for a property to buy during the slower months.
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HOW MUCH CAN I AFFORD TO SPEND?
Your best bet is to meet with a mortgage broker and get pre-approved. Doing that will let you know the exact amount that you’re eligible to spend on a property when you buy. If you think you might want to get pre-approved, which is a good idea to do, let me know, and I can recommend some experienced mortgage brokers to help you. You can also check out my mortgage calculator right here.
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DO I HAVE TO PAY HST WHEN I BUY A HOME?
When you buy a home, you only need to pay HST on the purchase price if the home is considered to be a new construction/new build or a commercial property. If the home doesn’t fit into one of those two categories, then you don’t have to pay HST on the purchase price.
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WHAT IS LAND TRANSFER TAX? DO I HAVE TO PAY IT?
Yes. If you purchase a property in Ontario, you have to pay Ontario land transfer tax; if you purchase a property in Toronto, you have to pay the Toronto land transfer tax on top of that. The amount is payable on the property’s closing date, along with the downpayment. If you’re a first-time homebuyer, and you haven’t ever purchased a property before anywhere in the entire world, then you’ll get a first-time homebuyer rebate on the land transfer tax. If you still have questions, you can check out my land transfer tax calculator right here.
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HOW MUCH SHOULD MY DOWNPAYMENT BE WHEN I’M BUYING A HOUSE?
The minimum downpayment amount for a property that will be your primary residence is 5% of the purchase price. If you put down more than 20% of the purchase price, you’ll avoid paying the CMHC insurance fees, which protects the lender in case you default on your mortgage. Most people assume that they should put down as much as possible, but that isn’t always the case; with the help of both a real estate agent and a financial professional, you can decide how much of a downpayment makes the most sense for your specific situation.
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IS A DEPOSIT AND A DOWNPAYMENT THE SAME THING?
No. The deposit comes first, then the downpayment comes second. A deposit is submitted with the offer once it’s accepted, but the deposit amount will go towards your downpayment amount.
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WHAT IS A B.R.A, OR BUYERS REPRESENTATION AGREEMENT, AND SHOULD I SIGN ONE?
A B.R.A is a contract between the buyer and a real estate agent. While that might sound scary, it’s really not. For the most part, this agreement is simply making it official that the buyer and real estate agent are committed to working with each other through the purchase process. Typically, this agreement is set for a pre-determined period of time. While each agent is different, my policy is that we need to sign a B.R.A to work together, but, if during the process we decide that we’re not a good fit for each other, I’m happy to cancel the agreement so that you can work with another agent. Whether it’s in your best interest or not to sign a B.R.A with a real estate agent is up to you, but most professional real estate agents won’t work without one. You can get more information about a B.R.A and it’s implications on the TREB website here.
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IF I’M BUYING A HOME, DO I PAY COMMISSION TO THE REAL ESTATE AGENT?
The short answer is no. In most cases, it’s the seller that is paying the commission to both the selling agent and the buying agent.
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WHAT’S A BIDDING WAR?
When a house is listed for sale, as part of their selling strategy and if they expect there to be a lot of interest in a property, some real estate agents may decide to have an offer presentation, which is when all of the interested buyers will present their best offers, and the seller will choose the one that they like best.
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WHAT’S A BULLY OFFER?
Sometimes, if there is a offer presentation date set for a property, a buyer will want to put in an offer ahead of time to avoid a possible bidding war. That’s called a bully offer. Typically, in an effort to have it accepted, a bully offer is a fairly strong, and includes no-conditions and is well above the asking price.
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WHAT STEPS CAN I TAKE TO HELP MY OFFER GET ACCEPTED?
You’ll want to make your offer look as attractive as possible to the seller. You can do that by including a closing date that appeals to the seller, having a higher deposit amount, and having fewer conditions. It also helps to have you offer presented by a professional real estate agent that has experience working in the real estate market, so they can make your offer sound and look its absolute best to the seller.
