Buyer Frequently Asked Questions.
What is a 'Buyer's Agent' ?
A Buyers Agent is a licensed real estate sales representative who will contractually agree to represent you and your buying interests through the process of shopping, offering, negotiating and closing the purchase of your next home. In many cases the Agent you use to sell your home will also be the Agent you use to buy your home. Both arrangements will be contractual.
If you are purchasing – but not selling first – then the initial relationship you will establish with a Realtor will be contracting them represent your interests in a purchase agreement.
Looking to buy a home, the best way is to create a working relationship with one agent who acts as your buyer representative.
Royal LePage Realtors are provided with on-going training in many areas including, but not limited to: updated clauses and legal documentation, marketing and advertising systems and guidelines, customer service tools, strategies to 'win the deal' and positive negotiation tactics.
Ethically and legally we are committed to the highest possible standards in our industry.
Using a buyer's agent, means the agent is working with your best interests (and wallet) in mind. A buyer's agent will work to negotiate the best price, ensure the property is inspected, and make sure you have the representation you need. Things you tell a buyer's agent remain confidential.
You can negotiate the terms of the agreement up front so both you and the agent know what to expect and are comfortable with the relationship.
Why do I need or want a Realtor to help me find a house? I know what I want !
Let's face it shopping for a home can be – and should be -fun!
Going to Public Open Houses, browsing the MLS listings online, and flipping through the weekend paper are all good pastimes.
However, if you are serious about making a real estate purchase (which is likely the largest investment of your life) it is always best to create a working relationship with a Realtor – and ONE Realtor -who will act as your buyer representative.
As Realtors we are members of the Kingston Real Estate Board. The board manages a dynamic tool which allows its members to expedite a property search for their clients. Property profiles are built on this tool narrowing down client preferences such as: area, school district, price range, age range, etc. These profiles are automated once built, and will begin to send selections from the MLS database to the client via email immediately upon the listing becoming active.
If you are doing the searches yourself – using the MLS.ca or REALTOR.ca websites, you are missing the boat... Ofttimes those properties are out-of-date, expired or sold as there can be a 4 day lag on uploads.
If you are trying to find a property in a particularly 'hot' area or in a price range under $300 000 (for example) you will almost certainly be too late.
Having your agent build you a property profile not only eliminates the need for you to surf the mls.ca sites to find houses for sale, but also ensures that you will be notified immediately of properties suiting your needs so you can get in to view it at once.
The relationship you will create with the Realtor will be contractual and documented in a BUYER REPRESENTATION AGREEMENT.
By signing the buyer representation agreement the Agent not only becomes responsible for helping you find the right home, they also become legally bound to represent your best interests.
If even one of the following areas of Buyer Agent duty is outside of your personal expertise and/or comfort-zone then you need a Agent to help you in the buying process:
-
having comprehensive knowledge, data, statistics of directly comparable property values
-
whether the property is worth the asking price.
-
knowing the availability of like properties at a better price.
-
Knowing which properties for sale that do not have display “For Sale” signs.
-
Talking to many agents may not increase your chances of finding the
-
right property.
-
How certain property features may affect future marketability.
-
How outside factors affect future property values.
-
Taxes, Utilities, Zoning, Restrictions and Covenants,
-
What lenders will require prior to purchase, Loan application and processing
-
Mortgage insurance, Title Insurance, Homeowner’s insurance
-
home inspections and subsequent inspections as recommended
-
Assist you in writing your offer to purchase
-
Represent you in negotiations with the seller and their agent
-
Monitor your transaction through closing
Wow. This service sounds expensive. How much is Hiring a Buyer's Agent going to cost me ?
Nothing at all.
Acting as a Buyer's Agent, your Agent will be paid from the proceeds of the sale of the house you purchase.
To elaborate, sellers listing their home for sale sign a Listing Agreement agreeing to pay a commission for the sale of their house. That agreed commission is divided. One portion will stay with the Brokerage (and subsequently the Agent you work with) representing the interests of the Sellers
and one portion will go to the Brokerage representing you the buyer. The brokerage in turn pays your Agent. Rest assured, your agent will be compensated for their hard work at the completion of a successful sale.
To begin the process of working with us in a Buyer Agency role, please complete the Buyer wishlist (Enclosed)
OK, so I agree that I need an Agent to represent me in my purchase. What happens now?
This is where your communication with the agent is critical. The agent needs to have a really good idea of what you want in order to make your search as efficient as possible.
After you comb through the MLS printouts your agent provides, appointments are made to see the homes that you approve. When you visit homes with your agent, the homeowners are typically absent. This gives you and your agent the opportunity to discuss the home freely and inspect things a little more thoroughly than you would if the proud homeowner is right there the entire time.
House Buying Notes
Take note of things you like and dislike about each home. It is also a good idea to make a house comparison chart to jot down information as you go through the house (or immediately after). This should be done for every home you see and attached to the listing sheet.
Sketching the floor plan is also a good idea because it doesn't take long at all for all of those houses you've seen to start running together. You'll quickly forget which house had that beautiful staircase and which house had the second story loft you liked so much. Probably more importantly, though, you may also forget which one had that leaky shower drain in the upstairs bathroom.
Since you really need to see at least a dozen or more homes in order to get a good feel for what you can get for your money, having a system to help you keep everything straight is all the more important. Taking photos is also a good idea to help keep things straight in your head as far as which house had which feature (prior to picture-taking, you'll want to make sure this is OK with the homeowner).
If you have found a house (or houses) you like, your agent will likely suggest a re-visit. You may find there are things that are apparent in the morning or at night that weren't when you saw it the first time. For example, the neighbour's dog likes to bark all night, the street is a teen drive-through scene and a hangout in the mornings before school -- anything that you might not necessarily want to live with.
Making an Offer on a House
When you've found the house and are ready to make an offer, there are several steps you need to take and contracts that need to be drawn up. The first thing that happens is your offer of purchase (Agreement of Purchase and Sale – form 100). When you make the offer, you have to keep in mind that it could easily become a legally binding contract if the seller accepts it. Because of this, you need to make sure the offer includes all of the contingencies, concessions, and conditions you require.
Your Offered Purchase Price
Here are some examples of things that should be included your offer:
-
Your offered purchase price and the amount of deposit you are putting down
-
Home inspection contingencies: Since the inspection may take place after the offer is accepted, you need to state that the entire deal is contingent upon an acceptable inspection report. If the house is on a well and septic system rather than city water and sewer, these should also be inspected.
-
Financing contingencies: You can also include a contingency for getting the mortgage you want (i.e., maximum interest rates, expected terms, etc.)
-
Items included in the purchase: This list can include things like major appliances (often the refrigerator goes with the seller), lighting fixtures, shrubbery, basically anything that isn't nailed down and some things that are!
-
Title contingencies: Your attorney will do a title search to make sure the property does not have any other legal claims against it and that the seller holds a clear title to it.
-
Timeline: A deadline for responding so you know when to consider the offer rejected
There may also be other special considerations that your agent may recommend, so be sure to ask for their advice. The offered purchase price is, of course, the most important aspect of the offer. Here is where a buyer's agent really helps. A buyer's agent should be able to provide you with a comparative market analysis (CMA) that will show you what similar properties sold for in that particular neighbourhood or the immediate surrounding area. This can also be used as ammunition if the seller counters your offered price. While the seller's agent probably provided them with a CMA before they listed the price, they may have chosen to price their home higher with the hope that buyers wouldn't have a similar document for comparison.
Armed with this comparative information, you might also make a quick drive by the other properties just to do your own comparison. Keep in mind that some of the amenities in the house may not increase the value of the home as much as the sellers might think. For instance, a backyard pool for some folks is a great advantage, while others may see it only as a liability and have immediate plans for filling it in with dirt and concrete!
Counteroffers
After your initial offer, the seller may counter with a price just slightly below their asking price.
This back and forth can go on a couple of times until you come to an agreement. Your agreement may not be only about the money, either; there may be other terms and demands that you have to deal with.
Just remember that until you have a signed contract, anyone else can step in and make another offer.
Negotiating Home Prices
It is a very infrequent occurrence that an initial offer is accepted. You can almost always expect some sort of counter to your offer and negotiations. It may be strictly related to price or it may be the fact that you want the porch swing and washer and dryer included in the deal. Be prepared for some haggling.
It's extremely important that you keep your financial state of affairs in mind and not let your heart make you house poor. (House poor is when you've overspent your budget on the mortgage and now can't afford to buy new drapes for the house or take your spouse out to dinner!)
Another helpful tidbit of information has to do with why the sellers are selling and how long the house has been on the market. Are they building a house and trying to meet a construction deadline? Have they already moved into another home and are now carrying two mortgages? Has the house been on and off the market for a year or more? All of these things can strengthen your negotiations in the deal.
Finally, be realistic in your offer for the house. Don't make a lowball offer on a house you really want.
If research has shown that the price is realistic, then offering a really low price is only going to annoy the sellers and potentially upset your chances of getting the house -- particularly if there are others folks making offers, too.
Here is a list of some of the major areas inspectors will cover:
-
Foundation: With either a basement or a crawl space, is it simply damp or are there outright water problems? Are there any cracks in the walls or floor that might indicate structural problems?
-
Construction: Does the house have good quality construction? Is the flashing properly installed to protect wood, are there any rotting problems with the wood, is the roof in good shape or will it need replacing soon, etc.
-
Plumbing: Has the plumbing been properly installed? Is it in good shape? Is there any evidence of leaks?
-
Heating and cooling systems: Are the units in good shape? Will they need replacing soon? Are they rated for the amount of square footage they are heating?
-
Electrical: Do there appear to be any electrical problems or code violations?
-
Interior: Are the floors level? Do windows and doors function properly? Do the appliances in the kitchen function properly? Is there any evidence of leaks or mildew in the bathrooms?
The bottom line is, don't skip the inspection and make sure the inspector you hire is experienced and certified to do the job.
Closing Costs
Assuming the inspection turns out well, the financing is going through to your satisfaction, and all other contingencies are met, you're now in the home stretch. Your attorney will do due diligence, which includes a title search to determine if the seller does indeed hold the title to the property and there are no other legal claims against it. This along with the home inspection will complete the due diligence package
If everything is clear, then you're ready to sign what may seem like the largest stack of documents you've ever seen! It is at the closing that the title to the property will be transferred to your name, your homeowners insurance (which you have to have already secured) begins coverage of the property and you are officially committed to your mortgage. It is, unfortunately, also time for you to plunk down your cash for the down payment and closing costs. You should be able to get a copy of the settlement statement that includes the amount of cash you'll need at closing from your lender a day or two prior to the closing.
Ontario Land Transfer Tax Explained
The Government of Ontario applies a Land Transfer Tax for land that is being transferred from one owner to another. This amount is payable by the purchaser upon registration of the Transfer/Deed. If a first-time purchaser is buying a new home from a registered builder, the first $2,000 in provincial Land Transfer tax is waived.
Ontario Land Transfer Tax
0.5% - on the first $55,000
1.0% - on portion between $55,000 - $250,000
1.5% - on balance over $250,000
2.0% - on anything over $400,000
Qualifying first time buyers receive a $2000 credit
First time buyers are exempt on the first $400,000
For budgeting purposes, be sure to have 1.5 – 2% of the purchase price set aside for your closing costs. This is outside of the down payment your lender requires to secure your mortgage financing.
Knowing these costs is important since you'll need to pay your down payment (and usually your closing costs) with a certified check.
You'll be signing lots of papers, including:
There may be additional documents to sign depending on the complexity of the deal, so be prepared and block out appropriate time for everything.
Once you know what kind of mortgage you want and the price of the house you can afford, you should add up all of the other costs involved in buying a house so that you know the true cost of buying your home.
When you buy a house, it isn't only the cost of the house that you need to save for. Don't forget these other costs:
Appraisal fee
An appraisal is an estimate of the value of the home. Your bank or credit union may require that the property be appraised at your expense. This can range between $250 and $350.
Deposit
A deposit is required to ensure that the buyer is serious about purchasing the home. It can form part of your down payment, but it must be paid when you make the Offer to Purchase.
Down payment
You will need a down payment (money paid up front) to obtain a mortgage. With a down payment of 20 per cent or more of the home's price, you can obtain a conventional mortgage. Your down payment must be at least five per cent of a home's price for you to benefit from a competitive interest rate.
Mortgage loan insurance premium
If you have less than a 20 per cent down payment, your bank or credit union may require that you buy mortgage loan insurance. You can add the mortgage insurance premium to your mortgage or pay the full amount when you close the sale on the house.
Home inspection fee
A home inspection, which costs around $500, is a report on the condition of your home. You may want to make your inspection a condition of your Offer to Purchase, to make sure you are aware of the condition of the house before you agree to buy.
Estoppel certificate fee (not applicable in Quebec)
This fee costs up to $100, but applies only if you are buying a condominium in a strata unit or condominium and costs up to $100.
Land registration fee
This is charged in some provinces and territories, and while the charge varies depending on the province, it is usually a percentage of the home's price.
Prepaid property taxes and/or utility bills
These charges are meant to reimburse the person who is selling the house for amounts already paid for, such as property taxes, filling the oil tank, etc.
Property insurance
The insurance covers the cost of replacing the structure of your home and its contents. Property insurance must be in place on the day you close the sale.
Survey or certificate of location cost
The bank or credit union may ask for an up-to-date survey or certificate of location prior to finalizing the mortgage loan. This can range in price from $1,000 to $2,000.
Legal fees
These fees must be paid when the sale is completed and costs a minimum of $500.
Title insurance
Your bank or credit union, or lawyer/notary, may suggest insurance to cover any loss caused by problems in the ownership of the property.
Water tests
If the home has a well, you will want to test the quality of the water to ensure supply is adequate and the water is drinkable.
Septic tank
If the house has a septic tank, you will want to have it inspected to make sure it is in good working order.
Other costs to consider
- Appliances
- Gardening expenses
- Snow-clearing equipment
- Window coverings
- Decorating materials
- Hand tools
- Moving expenses
- Renovations or repairs
- Service hook-up fees
- Condominium fees
Read more: http://www.vancouversun.com/life/much+will+home+really+cost/3671682/story.html#ixzz1dn1PDb8l
