You’ve just closed your house purchase-now what? Buyers have lots to do, besides unpacking and making minor repairs.
- Getting names and addresses, payment dates, account numbers and amounts to pay for the mortgage, taxes, condo maintenance and utility charges.
- Notifying everyone about your change of address-from the post office to credit card companies to the provincial health insurer.
- And don’t forget the provincial driver’s license and motor vehicle branch; failing to do so could lead to a fine.
- Where”911″doesn’t exist, obtain the emergency numbers of police, fire, ambulance, hospital and poison information centers.
- Determine garbage and recycling days.
- Arrange to get the interest on your deposit, if your offer provides for it.
- And most importantly, change the locks, or at least the tumblers, on all doors-who knows how many keys still remain in circulation?
- Consider upgrading the locks to deadbolts, for greater home security.
One of the most confusing areas of real estate is the GST. Most resale homes are exempt from GST, but buyers should still ask the appropriate question and deal with it in their offer to purchase, to be safe.
For brand new homes and condos, the offer should say whether the purchase price is “Plus GST” or “GST Included’; and who gets the GST new home rebate.
Buying a vacant cottage/chalet lot or a hobby farm is even more confusing. If an individual is selling, the sale is GST-exempt, but if the seller is a corporation, 5% GST is payable.
Residential rents are exempt from GST, as are condo maintenance fees. But GST is payable on real estate commissions, legal fees, some disbursements, and the cost of a new survey or home inspection.
If in doubt about the GST, check it out before signing an offer. Because if you’re wrong, it’s a 5% mistake.
Every real estate transaction has three key dates. Each must be clearly spelled out in the offer and adhered to-or the deal is off.
- The first: the irrevocable date, how long the seller has to accept a buyer’s offer.
- The second is the requisition date-when any issues arising from the title search must be reported to the buyer’s lawyer.
- The last is important to both buyers and sellers-the closing date- when money, title and keys change hands.
Agreeing on it may be the hardest part of the negotiations. Whenever possible, avoid closing on Fridays, the end of the month, and before long weekends.
- Buyers who close then often face delays getting keys, and a higher moving bill.
- Sellers discharging mortgages can face a financial drain, too.
- If the funds reach the lender late after a Friday closing, three extra days’ interest is payable-four on a long weekend.
- Whenever possible, steer clear of rush hour in the registry office when choosing a closing date.
Despite what many buyers of resale homes and condos believe, interest isn’t automatically paid on a deposit in a real estate transaction. They only get interest on their deposits if a clause saying that appears in the offer to purchase.
Then three criteria must be met-the deposit is at least $5,000; closing is at least 30 days away; and the buyer provides his or her Social Insurance Number. A $5,000 deposit and a thirty-day closing aren’t legal requirements, but they’re the minimum to buy a term deposit. And your Social Insurance Number is needed so you can be sent a T5 slip after closing, since the interest earned on a deposit is taxable.
Builders don’t often pay interest on deposits when buying a brand new home-but it can be negotiated into the contract.
When it comes to interest on deposits, remember-if it’s not in the offer, it’s not in the deal.
Deposits serve two purposes-part payment of the purchase price, plus an assurance the buyer will close the deal. Usually an uncertified cheque accompanies the offer; when a deal is finally struck, the cheque is certified and the funds held by the listing agent.
If buying privately, be sure the deposit is paid to the seller’s lawyer in trust; otherwise, if the deal collapses, recouping your money from the seller is no easy task.
How large should the deposit be?
- Buyers like to pay the smallest amount possible, to avoid tying up too much money; but sellers want a large deposit, as a sign of the buyer’s good faith.
- Real estate agents prefer big deposits, also, since the larger the deposit, the easier for them to get paid after closing.
While there’s no “legal answer” as to what’s a proper deposit, 5% of the purchase price is not uncommon today.
When buyers and sellers strike a deal, loose ends often need tidying up before the buyer will proceed. Typical examples: financing, a home inspection, and selling the buyer’s home.
When that’s the case, a conditional offer should be signed one made “Subject To” these conditions.
If the buyer satisfies them within the allotted time, the offer becomes “Firm And Binding”. If not, the deal is off, and the buyer gets the deposit back.
- As a buyer, make sure you understand how to keep the contract alive or kill the deal.
- As a seller, if you face a lengthy period of legal limbo with an outstanding condition, add an escape clause to the offer.
If another acceptable offer is presented, it’s decision time for the firs buyer-waive the condition and close the sale or lose the deal. Buyers, remember: conditional offers give you flexibility, but unconditional offers always get a better reception with sellers.
Buying and selling real estate has become very specialized the last few years. So when looking for a lawyer/notary, make sure it’s a real estate lawyer/notary-one who spends most of the time closing real estate deals.
And don’t wait until after the deal is struck before choosing a lawyer/notary; then you lose the valuable input he or she can provide scrutinizing the offer before your pen hits the paper.
Since a lawyer/notary’s role is part advisor and part confidant, a good rapport with your lawyer/notary is a must.
How can you find a good real estate lawyer/notary?
- Ask friends, family, neighbors and co-workers who they’ve used in the past; and get several names from your real estate agent or banker, too.
- Never choose a real estate lawyer/notary just because their fees are the lowest.
- As with any other professional, quality and experience are the key, not just price.
If you’re buying a resale home and don’t want to inherit the seller’s headaches, a home inspection is a must. Usually the offer to purchase is conditional on the buyer being satisfied with the inspection-so if the house fails the grade, there’s no deal.
Home inspectors examine the major systems in the house-plumbing, electrical, heating-plus the roof, foundation and insulation- and give the buyer a written report. The cost? Several hundred dollars, a small price to pay for the information provided.
But there’s one problem with the home inspection industry; it’s unlicensed, ungoverned, and unregulated. Anyone can establish a home inspection business with absolutely no training or credentials.
So before hiring a home inspector, check out his or her background and expertise as carefully as a good inspector will check out the house. Ask friends, family or your real estate agent for a referral.
And make sure the inspector has liability insurance, just in case a mistake is made; such as a hole in the roof or a leaky basement being overlooked.
The key to that fabulous house warming gift from the federal government: The Home Buyers’ Plan, better known as the “RSP Program”. It lets first-time buyers, including anyone who hasn’t owned a home in the last 5 years, borrow up to $20,000 per spouse from their RSP interest-free to buy a home, to be repaid over the next 17 years. But only funds that have been in your RSP at least 90 days can be withdrawn.
To get that free cash, take advantage of your unused RSP limit Say you’ve got $3,000 in unused RSP contributions, have saved $3,000 for a down payment, and plan to buy a home in the next few months.
- Deposit that $3,000 into your RSP.
- Keep it there at least 90 days, and remove it under the Home Buyers’ Plan when you buy your house.
- If you’re in the 40% tax bracket, you’ll get a $1,200 income tax refund when filing your next tax return, simply by parking your down payment money in your RSP for at least 90 days!
Which comes first-the purchase or the sale-is the greatest dilemma facing homeowners planning to move-up. If you choose to buy first, make sure the offer to purchase is conditional on selling your current house. That way, if you sell your house, both deals proceed; if not, the deal is off, and you won’t be stuck with two homes.
Selling first, though, will give you considerable peace of mind. Knowing how much money you’ll get on the sale will help you establish a price range for the new home. Selling first allows you to negotiate the purchase more vigorously, too, since unconditional offers carry a lot more weight with sellers.
Market conditions are another important consideration in deciding which route to follow.
- In a seller’s market, you’ll probably do better selling after you’ve bought.
- But in a buyer’s market, it makes more sense to sell first, and then buy.
A Condominium is more than a “Lifestyle”; it actually describes a form of land ownership.
In both high-rise apartments and townhouses, buyers own a specific residential unit, plus a percentage interest in the “common elements” lobby, hallways, elevators, parking garage and grounds.
Condo units are bought, sold and mortgaged separately; so owners are responsible for their own taxes and mortgage, plus the maintenance and repair of their units.
A monthly fee is also paid to maintain the common elements and to operate the condo corporation. Part of that money goes into a reserve fund, for major repairs and the replacement of major assets.
Townhouse maintenance fees are generally lower than in a high-rise as apartment condos have elevator banks and underground garages that need ongoing maintenance and repair.
Despite the conveniences condominium living provides, rules are enacted to regulate activities-everything from keeping pets to parking cars.
To know more about those restrictions, and the financial health of the project, make your offer to purchase conditional on reviewing the condominium documents.
While many buyers shy away from used cars, that’s not the case with “used” or resale homes.
As a resale home exists, you don’t have to visualize what it will look like-you see what you get, and get what you see. Also, resale homes are usually sold in more established communities and neighbourhoods.
That means recreational facilities, transportation links, support services, schools and shopping centres are already in place.
Many people believe they get better value buying a resale home, since appliances, light fixtures, floor and window coverings can be negotiated into the deal. Improvements like fences, paved driveways and landscaping automatically go with the house, too.
The survey needed by both you and the lender often is available from the seller, but make sure it’s up-to-date. You can reduce the risk of being saddled with hidden defects, by having a home inspector examine a resale home before the offer becomes firm.
For buyers on a tight budget, a resale home in move-in condition is always an appealing choice-you even avoid the GST!
Before shopping for a home, every buyer needs a home buying strategy-a game plan-that reflects his or her unique needs and wants. That means developing a pre-determined shopping list of what a house must provide (the needs) and the “would-like-to-haves” (the wants).
To properly prepare a home buying strategy, homebuyers must first examine their lifestyles and budgeting priorities. Then do their homework-asking questions, demanding answers, researching everything from closing costs to mortgage financing, and making all the major decisions-before an offer to purchase is ever signed.
In fact, signing an offer is the climax to the home buying process, not the first step
When buying a home, preparation and planning are the key to success. With a home buying strategy, the house you buy should satisfy all of your needs and as many wants as possible, and be one you can afford to buy and carry each month.
Most people buying a home need a mortgage. Too often, in the past, arranging a mortgage was left to the very end, sometimes even after a house was bought, forcing borrowers to scramble for financing.
How things have changed! Today it’s important to shop for a mortgage before you purchase a home, since most lenders will “pre-approve” buyers for a mortgage. Some lenders will even do it over the phone or on the Internet.
It’s a no-cost, no-obligation deal that lets you know before you go house hunting or sign an offer to purchase, how much you can afford to buy based on how much you can afford to borrow.
When getting pre-approved for a mortgage, see how long the rate commitment is good for; it differs from lender to lender.
With a pre-approved mortgage, you can confidently negotiate the purchase of a home, knowing the mortgage financing is arranged, subject to final property appraisal and a formal credit review.
According to a Canada Mortgage and Housing Corporation study, resale house prices rose faster than inflation in 23 of 27 major Canadian cities between 1971 and 1996-even in years when inflation ran rampant throughout Canada.
The principal residence tax exemption makes the capital gains from that increase in prices tax-free too.
And the power of leverage magnifies that return even more, since you’ve earned those gains on your down payment, not on the purchase price.
If you buy a $150,000 house and five years later it’s up 5%, you’ve made 1% a year; but that assumes you paid all cash for your house. With a 25% down payment, you’ve really earned 4% a year tax-free on the money you invested. And if you buy a house with only 10% down, over five years your annual tax-free return is 10%.
Of course, if you can avoid it, never buy a house with the smallest possible down payment, as mortgage interest is not tax deductible. But when tax-free capital gains are added to the power of leverage, real estate remains a good investment.
When you have decided to buy a home or property, the services of a qualified real estate professional are of utmost importance.
The ideal sales agent will have a good working knowledge of local real estate market conditions and be prepared to deliver a high standard of service to customers. Most importantly, a good agent will save you time and money.
Here are the advantages of working with a sales agent:
When buying a house:
- Agents are experienced negotiators who will manage your offers and counter-offers.
An agent is familiar with the neighborhood and can give you information on local real estate values, taxes, utility costs, services and amenities.
- An agent is familiar with the entire home purchasing process and can advise you of your legal and financial options as well as recommend appraisal, home inspection and contracting services.
- An agent can pinpoint homes that fit your needs and dismiss those that do not, saving you time.
- An agent knows the potential problem areas in a home and can guide you away from “lemons.”
Unison Realty Group Ltd. and its agents have over thirty years of combined experience. We will find you what you want and leave you as a satisfied customer. We sincerely hope you will let us use our experience to your benefit.
Terminology in ads can be confusing. Let us help you decipher some of the more cryptic combination of letters that you may come across.
||ba, bath, bth, bthrm
||br, bed, bdrm
|Central Air Conditioning
||cvac, c/vac, central vac
|Wall to Wall
|Washer / Dryer
Before you move it is a good idea to follow these recommendations
If you own your present home:
- Make the necessary arrangements to have your gas, water, and electric meters read on the day you leave disconnect it. Then have the bills forwarded to your new address.
- Have your telephone, cable TV, water, gas and electrical disconnected.
- Arrange for moving company, as you know that you have the date that your getting key for your new home.
If you rent your present home:
- Give appropriate written notice to your landlord and make arrangements for the return of any money owing to you on your deposit.
At your new home:
- Make the necessary arrangements for the gas and electric utilities, water softener, telephone and cable TV to be connected on the day the sale closes.
- Get “Change of Address” cards from the post office and send out well before your moving day.
- Have the post office forward your mail to your new address.
- Cancel any contracted services and pre-authorized cheques.
- Inform gardening, dry cleaning, garbage pick-up, newspapers, magazines, diaper and other home services. Arrange for service at your new address.
- Obtain a letter of introduction from Unison Realty Group Ltd. to help establish new accounts. Transfer trust or bank accounts and securities.
- Cancel or transfer social, athletic, civic, religious or business affiliations and memberships.
- Arrange for transfer of medical, dental, prescription and optical records.
- Change the address on your driver’s license(s) effective the day of the move.
- Collect all items out for cleaning, repair or storage. e.g. fur coats, dry cleaning.
- Make special arrangements for the moving of perishables, such as plants.
- Make special arrangements for the moving of your pets.
- Dispose safely of all flammable liquids as it is illegal for movers to carry them.