When you’ve found the home you want to buy, it’s
easy to get caught up in the excitement and let your emotions get in the way of reality. But actually making and closing the deal is a step-by-step process that requires a cool head.
REW.ca spoke to four experienced Realtors to provide an overview of what to expect, from making an offer, to the purchase agreement, right through to receiving the keys to your new home.
First off, your agent should know your price range, what kind of down payment you can afford and whether you have a mortgage broker or not, says Greyfriars Realty’s Joanne Bonetti.
“The more information your Realtor has, the better they can work for you,” she says.
The first step is to get pre-approval for a mortgage in order to know how much you can afford and to be ready to make your purchase.
“Mortgage brokers have connections at a variety of financial institutions and are experienced in dealing with them,” says Bonetti. “In addition, your bank will pay your mortgage broker on your behalf, so there is no cost to you.”
You’ll also need cash for your deposit, so make sure you have liquid assets. Your deposit cannot come out of your mortgage.
Okay, this is “The One”
Once you’ve found the right home, your Realtor’s office will do a title search to make sure there are no liens on the property and find out about any issues that are on the property title.
It’s also important to get a written disclosure of all known defects, because not all defects appear on the title itself.
Joanne Bonetti advises, “The law now requires sellers to make complete disclosure of known material defects. Make sure you get it in writing, and take time to consider how these defects may affect what you’re prepared to pay.”
If everything is fine, then your Realtor will help you to negotiate your purchase agreement.
Putting in an offer
“Your Realtor will write an offer and present it as quickly as possible to the seller’s agent,” says Cathy Chin of RE/MAX Central in Burnaby. “I believe a buyer gets better representation if their Realtor presents the offer in person, rather than by fax or email.”
The prospective buyer should hear back within 24 hours as to whether the offer has been accepted or not.
“The only exception to this rule is if the seller lives out of the country or is on holidays… it just means it will take a bit more time,” she adds.
What happens next is either acceptance of your offer, or a counter-offer by the vendor asking for a higher price or different terms. That will start a round of counter-offers ending in acceptance or rejection.
Don’t get your offer rejected
The problem Cathy Chin encounters most often with buyers is the offer—either it’s far below market value or it places too many terms and conditions on the sale.
Many Realtors agree. Although it’s a Realtor’s job to present each and every offer, the RE/MAX City Realtor says that “a lowball offer for a market value home will only insult and anger the seller, and will probably take you out of the running even if you were to provide a reasonable counter-offer.”
“Prior to putting in the offer, I would do a market comparison showing my buyer the selling prices of comparable homes in the neighbourhood or in comparable neighbourhoods,” he says.
If a vendor counter-offers at a higher price, ensure that you know exactly how much you can afford before you start negotiating. You don’t want to get caught up in the heat of the moment and end up with costs you can’t afford.
But money isn’t the only consideration. Terms and conditions (“subjects”) can trump a higher bid, say all four veteran Realtors.
“Terms such as a completion date or an offer with no subjects can be more appealing to the seller than a higher offer,” says Bagry.
Contract of Purchase and Sale
Once a seller has accepted your offer, you sign the Contract of Purchase and Sale. This is when most buyers hire a lawyer or notary public.
“A lawyer or notary public prepares the documents to legally transfer the property as well as ensure the seller has the rights to sell the home and will make sure the seller’s mortgage is discharged,” says Cathy Chin.
According to Fred Brome of RE/MAX West Coast in Richmond, these items are typically included:
Your legal name, the name of the vendor and the legal civic address of the property.
The price you are offering to pay.
- Things included
Any items in or around the home that you think are included in the sale should be specifically stated in your offer. Some examples might be window coverings and appliances.
- Amount of your deposit
This is to protect the seller. If you change your mind and decide not to buy the home, not only do you not get your deposit back, but the seller could sue you. Deposit amounts are usually about 5 per cent, but can be less for a quick closing or more for out-of-country buyers who can’t be sued. The deposit is held in trust with either the buyer’s agent or a lawyer/notary once the deal is firm, meaning when subjects are removed or an accepted offer no subjects.
- The closing date
The closing date is the day you take possession of the home. It is usually 30 to 60 days after the date of agreement. But, it can be 90 days, or even longer.
- Request for a current land survey of the property
- Date the offer expires
After this date the offer becomes null and void.
- Strata documents
If you’re buying a strata property, you need to see the strata corporation minutes and any engineer’s reports, including the depreciation report.
- Other conditions
Other conditions may include a satisfactory home inspection report, a property appraisal, and lender approval of mortgage financing. This means that the contract will become final only when the conditions are met. In real estate-ese the term is, “all subjects are removed.”
Rarely, but sometimes, at the last minute a sale doesn’t go through.
“It can happen … for instance, a builder sees a sold sign and realizes the owner owes him money and he slaps a lien on the home, or the day before completion the owner dies,” Cathy Chin says. “Extremely rare but it does happen.”
In the end all four say: “Do your due diligence, because it’s buyer beware.”