HOW REALTORS ® WORK FOR THEIR CLIENTS
With a wealth of online resources, an increasing ‘for sale by owner’ market, and countless real estate online guides, it’s not surprising that some home buyers consider adopting a ‘do it yourself’ approach as their option of choice when deciding to purchase real estate.
However, for most people a real estate professional is an indispensable partner in the home-buying process. While buyers today are more educated about real estate than ever before, all the research in the world can’t match an experienced REALTOR’S ® understanding of today’s market. Without the pavement-pounding and advance scouting a REALTOR ® does on behalf of their clients, prospective buyers might overpay for a home or lose out on the home of their dreams simply because they do not find out about it. Buyers just do not have the same type of resources that a REALTOR ® does. A REALTOR ® is also completely objective and professional when discussing their opinion of the property being considered for purchase unlike a parent, spouse, partner or best friend.
The buyer’s REALTOR ® is typically compensated through the seller, which means buyers have nothing to lose and everything to gain by tapping the expertise of a REALTOR ®. From the moment you select a Sage Real Estate REALTOR ® until the day you move in, our team will be working for you.
Anyone can purchase a house; however, at Sage Real Estate we pride ourselves on finding you a home. The right home not only fulfills your current needs, it continues to be right for you as time progresses. Buying the right home has long term personal
and investment benefits whereas the costs of buying the wrong home can be immeasurable.
The role a REALTOR ® plays for buyers is not as simple as sifting through MLS ® properties online, showing them and then selling. Finding the perfect home is really about listening: having a client’s individual needs and wants understood, their priorities and concerns addressed, and their tastes and lifestyles considered.
Sage REALTORS ® are trained and particularly adept at accomplishing these goals for their clients.
Sage REALTORS ® understand how clients benefit from REALTOR ® networking: drawing on previously established relationships and resources, and exchanging information and support. It’s about overall professionalism: maintaining honesty and integrity, dedication, respect, and commitment. It’s also about plain hard work, and the employment of energy, hustle, passion, and drive.
The governing body of real estate in Ontario is the Real Estate Council of Ontario. RECO is responsible for ensuring REALTOR ® compliance of the relevant ‘Trust In Real Estate Services Act, 2020’ (TRESA). Under the umbrella of greater transparency and understanding, Buyers are now to have the required Information Guide provided and explained to them, together with other updated real estate documentation and processes. Trained Sage REALTORS welcome the opportunity to provide this information to buyers in a clear, concise manner.
The RECO Information Guide is available now for review via this link: https://rb.gy/3pjx3t
GETTING STARTED
To the uninitiated, the process of buying a home may appear to be relatively straightforward, however there are dozens of variables and pitfalls to avoid in any transaction that can make home buying quite complex. If you are organized and prepared, the process will not only be easier and less stressful, you will be well positioned to take advantage of an opportunity when it presents itself. Here are some steps reviewed in detail to follow throughout your search:
THE BUYING PROCESS
1. CHOOSE YOUR TEAM
Buying a home is a collaborative effort. Each member of your team plays an important role.
2. CHOOSE YOUR SAGE REALTOR ®
Choosing the right advisor to guide you through a transaction is a critically important decision. It can absolutely make the difference between getting a home or not.
3. UNDERSTAND AGENCY RELATIONSHIPS
Buyer Agency ensures the buyers’ best interests are enshrined. RECO’s Information Guide will be provided and explained. It outlines agency relationships in detail and may be accessed for review now via the previously provided link.
4. FINANCING, BUDGETING & MORTGAGES
Mortgage pre-approvals are the way to go and incredibly easy to obtain.
5. SAGE ADVICE FOR HOME BUYERS
Points to consider:
• Know Your Property Types: every neighbourhood in
the city offers a variety of housing styles. One needs to understand the advantages and limitations of each.
• Finding Your Home: Make a wish list, look at everything, keep track of what you see, and be sure to give your REALTOR ® honest feedback.
• View a Complete Website: SageRealEstate.ca
6. REALM
The home search portal you wished for.
7. MAKE AN OFFER
When you find a home you absolutely love, it’s important that you are in a position to act quickly.
8. MULTIPLE OFFERS
Understand the nuances of bidding war negotiations.
9. PREEMPTIVE BIDS (BULLY OFFERS)
Untangling the bully offer conundrum.
10. UNDERSTAND THE ROLE OF YOUR LAWYER
Your lawyer will protect your rights and ensure you actually get what you’re paying for.
11. GET INSURANCE
Seek quotations from relevant insurance experts for each type of insurance you require.
12. COMPLETE THE TRANSACTION
Your Sage Real Estate REALTOR ® will make sure everything is in place for a smooth and efficient closing.
13. MOVE AHEAD
As you’re settling into your new home, we will still be there for you.
YOUR REAL ESTATE TEAM
BUYING A HOME IS A COLLABORATIVE EFFORT
You will need to acquire your own team of professionals to support you throughout the process.
YOUR FIRST STRING PLAYERS ARE:
1. THE LISTING BROKERAGE/ REALTOR ®
2. THE SELLING OR COOPERATING BROKERAGE/REALTOR ®
3. LENDER
4. APPRAISER
5. INSPECTORS
6. LAWYER
7. INSURANCE BROKER
SUPPORTING ROLES:
8. HOME SECURITY SPECIALIST
9. MOVING COMPANY
Understanding the parts each one plays will allow you to work with them in a mutually beneficial way.
1. THE LISTING BROKERAGE/ REALTOR ®
Works with each homeowner (seller) to market a home. The listing REALTOR ® works for the seller.
2. THE COOPERATING OR SELLING BROKERAGE/REALTOR ®
This is the agency role a REALTOR ® plays for most buyers. The cooperating brokerage/ REALTOR ® works with buyers to help them locate exactly the right home to meet their needs. The cooperating brokerage/ REALTOR ® typically works for the buyer.
3. THE LENDER
Unless you have all the necessary funds to purchase the property, you will require a mortgage from a lender. There are many different types of mortgage loans that can be reviewed in detail with your mortgage provider or broker.
4. THE APPRAISER
The property must be appraised to make sure the lender feels it is worth the full amount being paid to secure the loan that the lender is planning to give.
5. INSPECTORS
There are many inspections that can be obtained on any home. The basic ones are:
• Building inspection. This detailed mechanical and structural home inspection is used to assist in understanding the condition of the property being considered for purchase. Also helps with budgeting for required repairs.
• Pest control.
• Environmental (if applicable).
6. LAWYER
Your lawyer handles much of the paperwork involved and facilitates the transfer of the home’s ownership. They also ensure that you receive good title to the property you purchase.
7. INSURANCE BROKER
Property insurance will be required for your new home. In securing insurance for your
property, you might opt for other insurance coverage as many insurance brokers offer complete packages for a reasonable amount. Please review the insurance section in this guide.
8. HOME SECURITY SPECIALIST
Although burglar alarms are not essential, homeowners value the peace of mind having a home security system provides. With advanced technology now incorporated into many systems, some home alarm systems contain freezing temperature alerts in case of furnace malfunctions and flood alerts in case of back-ups. Many security systems now have the capability to be turned on or off remotely and some even have visual online monitoring capacity.
9.
MOVING COMPANY
Good movers are worth their weight in gold. Negotiating for replacement of articles carelessly broken is not fun, so ensure the moving company you employ is fully bonded and has provided you with references.
YOUR SKILLED ADVISOR
Choosing the right advisor to guide you through a transaction is important because their counsel and direction illuminate the pathway to home ownership. Home buyers should give just as much consideration to hiring a buyer’s representative as sellers give to hiring a listing REALTOR ®
That means conducting interviews, seeking referrals, and researching the brokerage as well as the REALTOR ®
It is important to ask potential REALTORS ® a number of questions relating to their experience, comfort levels and routines. It is also important to listen for the questions they ask you to see if they are intent on understanding your needs and if they are committed to fulfilling your wants.
Experience in your preferred neighbourhood and the style of home you want is also important. The comfort level that is established between you and your REALTOR ® is equally important because buying a home is a highly personal experience. Ultimately, you only work with one REALTOR ® so it should be someone you like and respect and who feels the same way about you. You must have complete trust in your REALTOR ® of choice. If you feel REALTOR ® trustworthiness is not there, keep on looking.
UNDERSTANDING AGENCY RELATIONSHIPS
REALTORS ® — CHAMPIONS OF YOUR CAUSE
‘THE REALTOR ® WORKS FOR ME, RIGHT!?’
Your REALTOR ® will work on your behalf to find you a house and will negotiate for it on the best terms possible for you if you retain the REALTOR ® by signing a Buyer Brokerage Agreement.
BUYER AGENCY
If you sign a Buyer Brokerage Agreement then your REALTOR ® is called the Selling REALTOR ® or the Cooperating REALTOR ® in the transaction. They work exclusively to represent and protect their buyer’s best interests. Selling or Co-op REALTORS ® do not owe their allegiance to the seller so they can fight on their buyer’s behalf to get the house on the best terms for the buyer. The seller’s interests are protected by the listing REALTOR ® of the property.
WHO PAYS THE REALTOR ®?
In the case of Buyer Brokerage, the Cooperating REALTOR ® can either be compensated directly by the purchaser
or be compensated through the Listing Brokerage from the proceeds of the sale. Buyers are usually only responsible to directly compensate the Selling REALTOR ® if they purchase a property which has not been listed for sale. Buyer Brokerage Agreements clearly detail any responsibility for payment of commissions. Buyers should discuss the type of agency relationship they desire to have as well as REALTOR ® compensation with their REALTOR ®. Please review and read the RECO Information Guide and ask questions of your REALTOR ® until you completely understand its contents.
WHERE DO I GO FROM HERE?
After reviewing and understanding the forms, it will be necessary for you to choose and authorize the appropriate representation. This should be done before you look at homes. Representation Agreements are now required by law in Ontario if you purchase a property through a registered REALTOR ®
FINANCING, BUDGETING & MORTGAGES
GETTING A MORTGAGE PRE‑APPROVAL
In today’s home buying environment, a mortgage pre-approval is not only essential, it is also incredibly easy to obtain and can be done over the phone or in person. A mortgage pre-approval lets you know the maximum mortgage amount the lender is prepared to lend you. It also demonstrates to a seller that you are a serious, willing and capable buyer. It goes a long way to provide you with the lender’s formal loan commitment once you have found the home you would like to buy.
DO I GO TO MY BANK OR TO A MORTGAGE BROKER FOR MY PRE‑APPROVAL?
You should see both. See what your bank can do for you. Interview a mortgage broker as well because they have access to many lenders and can obtain quotes from the various lenders who are best positioned to meet your requirements. Mortgage brokers understand what qualifications each lender is looking for and can structure your application accordingly. They also know where the bargains are. Mortgage brokers are usually compensated by the lenders they represent.
HOW MUCH CAN YOU AFFORD?
You can afford a house that costs as much as the mortgage amount for which you qualify added to your total down payment.
CHECK OUT YOUR OWN CREDIT REPORT
Lenders will ask for your permission to obtain and examine a credit report detailing your credit history. Information contained in your report
formulates their decision whether or not to lend you money. It also is used in consideration of what interest rate the lender is prepared to offer prospective borrowers. Credit reports precisely describe existing credit card limits, timeliness of payments, types of accounts, loans, balances, judgments, and bankruptcies and easily identifies any exaggerations or misrepresentations made on mortgage applications. Credit reports are not infallible however and you should request a copy of your own report so that you can confirm its accuracy before you formally apply for mortgage pre-qualification. You may challenge any errors and attempt to rectify wrong information before it works to your mortgage approval disadvantage.
HOW TO OBTAIN YOUR OWN CREDIT HISTORY REPORT
There are two main credit bureaus in Canada; Equifax, and Trans Union of Canada, both of which will provide you with a free copy of your own report. Contact them directly for details on how to go about it. www.consumer.equifax.ca or www.transunion.ca
PRE ‑ QUALIFICATION
This is the first step in obtaining a mortgage. Pre-qualification is the lender’s estimate of your borrowing power. Your ability to buy depends on your approved capacity to borrow. In the pre-qualification process the lender will review your mortgage application and usually request a credit report. After analyzing your credit history, income and debts, the maximum loan amount for which you would qualify will be confirmed.
PRE APPROVAL
The line between pre-qualification and pre-approval often gets blurred. Occurring quickly on the heels of pre-qualification, pre-approval formalizes the estimate of a buyer’s borrowing power and leads to provision of some type of commitment or offer to place a mortgage from a lender or mortgage broker. It would involve a credit application and usually requires income verification as well. The lender carefully analyzes your financial situation by applying their established standards for underwriting.
HOW MUCH SHOULD I TRY TO GET PRE APPROVED FOR?
Secure a pre-approval for the highest amount for which you would qualify. Only spend into your comfort zone but it is important to establish your maximum approval parameters.
LOAN COMMITMENT AND FINAL LOAN APPROVAL
The pre-approval process concludes with you obtaining a letter or certificate of commitment from a lender to place a mortgage with you and their final approval of that loan. The commitment certificate or letter is confirmation that you have been approved as a borrower by the lender for a specified amount at specified terms. Please carefully review the letter as it usually places caveats on their final loan approval. Lenders usually reserve the right to have their own appraisers confirm market value of the house you want to finance. They may want to ensure that the house complies with their underwriting standards, verify information, or re-check your credit before granting
final loan approval. Carefully review approval documentation with your lender or mortgage broker and discuss any implications of buying a house without a financing condition.
GET YOUR PENCILS OUT!
While your bank or mortgage broker will be able to tell you the exact range for which you can be approved, it is a good idea to also calculate what you feel comfortable spending. You must recognize and accept the extent of the financial commitment you are about to undertake as you will likely be making mortgage payments for many years. You may not want to commit to monthly mortgage payments as high as the amount for which you qualify. Only you know how much you are comfortable spending on monthly mortgage payments.
TOTAL DOWN PAYMENT
You must determine exactly how much money you now have available to invest in your down payment and closing costs. This is the total amount of cash available. If you already own a home, you will need to estimate the amount of equity you have acquired in your house so that you can add this calculation to your available savings for a down payment. This is your total down payment.
CLOSING COSTS ESTIMATION
Part of your available cash will have to be kept aside for expenses incurred to complete the sale. Even though you will not be able to establish the exact expense total at this time, you should be able to arrive at a very close approximation of your total costs through discussion with your lawyer.
SAGE ADVICE FOR HOME BUYERS
1. LOCATION, LOCATION, LOCATION!
You’ve heard it before and it’s true! Buy into a location that you predict will be equally attractive in the future and you most likely will have made a good investment. Remember, you can change a house but you can’t change its location.
2. CHECK OUT THE SCHOOLS
The school district is important even if you don’t have children because at some point, you might decide to resell your home. It is not uncommon in Toronto for some people to move into an area just because of its close proximity to a particular school. Re-visit point one, above.
3. ENERGY EFFICIENT HOUSES SAVE THOUSANDS OF DOLLARS IN UTILITY BILLS OVER TIME
If the house you’re considering purchasing isn’t energy efficient now, make certain it becomes so once it’s yours.
4. TRIAL RUN YOUR COMMUTE DURING RUSH HOUR
Drive, walk, or use “The Better Way” to get yourself to work during peak periods from the house you are considering buying. If the commute is unbearable, it’s best to find out now.
5. WANT YOUR EQUITY TO INCREASE EXPONENTIALLY ? BUY A FIXER‑UPPER
Buyers will pay top dollar for a good house in a demand area that is in really good condition. Give your equity position a terrific boost by purchasing the classic “fixer-upper”. If you pay to have the kitchen and bathroom remodeled yourself you not only
get the benefit of living with your own design choice but your home instantaneously becomes worth much more. Your Sage REALTOR ® can tell you which renovations reap the greatest returns.
6. DO A CREDIT CHECK ON YOURSELF
Make certain there are no errors on your credit report. If there are, take steps to rectify them before they adversely affect your mortgage pre-qualification. Transunion.ca or Equifax.ca both detail how to obtain your own credit report.
7. CLEAN UP YOUR CREDIT –PAY OFF DEBTS AND DON’T INCUR MORE!
Make all your payments on time. Even if your credit history has been through a bad patch or two, lenders are more forgiving to borrowers who have seen the error of their ways and have recently been making regular on-time payments. This is a time in your life to be financially prudent and responsible.
8. INTEREST RATES LOW ?
Should you go for a longer term, fixed-rate mortgage or a variable-rate mortgage that will allow you to lock in to a fixed term if you see interest rates on the increase? A Mortgage Broker can help you delineate the pros and cons for your consideration.
9. BUY SO YOU CAN EXPAND
Buy a house that can expand along with your family’s changing needs. There are times when trading up is appropriate and there are also times when the need to purchase another home could have been avoided had you bought a home that would have accommodated minimal expansion.
PROPERTY TYPES
TORONTO: A VARIETY OF HOUSING STYLES
From towering condominium skyscrapers to sturdy bungalows, Toronto’s housing stock is amongst the most diverse in the world, giving home buyers virtually limitless options when looking for a home to call their own. Almost every neighbourhood in the city offers a variety of housing styles and a choice between existing, new construction or renovated homes. Here is a brief rundown of the various types of residences you’re most likely to encounter during a home search in Toronto:
SINGLE FAMILY HOMES
Officially defined as a residential structure that includes only one dwelling, single-family homes are readily available in most of Toronto’s neighbourhoods. Buyers should be prepared to pay a premium for the extra land, privacy, square footage, and outdoor space a single-family home affords. The variety of singlefamily homes in Toronto is vast and includes bungalows, detached, semi-detached, row homes, modern homes, townhomes, and multi-million dollar mansions.
CONDOMINIUMS
Purchasing a condominium in a multi-unit building means that the buyer owns an individual unit as well as a share of the building’s common areas, such as the lobby, corridors and amenity areas. Many buyers choose condominiums because they require little maintenance, frequently offer amenities such as a swimming pool or fitness centre, and in most cases are relatively affordable compared to townhomes or single-family homes.
Because of the shared ownership, a condominium association is responsible for decisions regarding the operations of the building and owners must abide by the rules
and regulations set forth by the association. Condominium owners also pay monthly assessments which cover maintenance and repairs of common areas as well as costs associated with shared amenities.
In Toronto, condominiums run the gamut from new construction high-rises with striking views and luxury amenities to vintage walk-up buildings with charming elements such as original hardwood floors and built-ins.
GREEN TORONTO
Thinking of living Green? Here are some considerations:
• A location near public transit.
• Building materials containing recycled content.
• Renewable energy sources such as solar power.
• Energy-efficient windows, appliances, and heating and cooling systems.
• Plumbing fixtures that reduce overall water usage.
• Rapidly renewing or recycled materials for interior finishes, such as bamboo flooring, wool carpeting, and countertops made from recycled metal or glass.
• Low-VOC (volatile organic compound) paints, carpet adhesives and sealants which limit emission of volatile organic compounds and thereby promote a healthier indoor environment.
• Native vegetation in landscaped areas or on a green roof.
• A landscape irrigation system that recycles rainwater.
• Facilities for storage and collection of recyclables.
If green features are important to you, talk to your Sage Real Estate REALTOR ®. We’ll help you find a housing option that fits your needs.
FINDING YOUR HOME
CREATING A WISH LIST
Almost every home purchase involves some degree of compromise which is why you must prioritize your needs and wants before beginning your search. When deciding to purchase a home, think about the following:
• Three features a home absolutely must have in order for it to be in the running.
• Additional features that are essential for you.
• What else would really make you happy?
LOOKING FOR PROPERTIES
You are ready to begin your home search once you have obtained a mortgage pre-approval, decided on a REALTOR ®, selected your buyer representation, and completed your wish list.
The Buyer’s Responsibilities
Share your wish list and your price range comfort zone with your REALTOR ®. That information will assist them with researching the market for properties that seem to fulfill your requirements.
Get Educated in the Market
Ask questions such as: What are current market conditions? What is happening in the market in your particular price range? What are the price trends in the locations that interest you? Check the details on properties that have recently sold.
Look at Everything
The first series of showings should give you an overall understanding of what is available in the marketplace. There is no home listed on the market by any REALTOR ® that cannot be viewed through your Sage Real Estate REALTOR ® .
Now is the Time to Explore Alternatives
Keep an open mind. As you inspect various possibilities within your price range, you will be more comfortable narrowing your search to specific parameters and you will be able to assess various alternative housing styles, configurations and conditions.
Tell Your REALTOR ® Your True Feelings About What You’re Seeing
Honest feedback efficiently steers your REALTOR ® towards your goal. It is important to discuss your impressions and reactions to properties confidentially with your REALTOR ® in a frank and direct manner.
Keep A Record of Each House You See
This is an essential part of your market education process and will assist in evaluating the home you ultimately decide to buy.
Should You Go Into Other REALTORS ’® Open Houses?
You may attend open houses if you identify yourself to the REALTOR ® holding the open house and tell them that you have a buyer’s agency contract with another REALTOR ® . Hand them one of your Sage REALTOR ’s ® business cards. This will allow the REALTOR ® hosting the open house to concentrate on other prospective buyers. It is inappropriate for another REALTOR ® to pry into the confidential details of your home search.
Outside of Open Houses, Should I See Homes with Any Other REALTOR ®?
No. Once you have signed a buyer’s agency contract with Sage Real
Estate, it becomes your REALTOR ’s ® responsibility to show you homes. It is unethical for other REALTORS ® to show buyers homes if they know the buyer is under contract to another brokerage.
Inform Your REALTOR ® of Changing Search Parameters
Keep your Sage Real Estate REALTOR ® advised of any changes to your requirements along the way. Decide to spend more money? Decide to spend less? Decide to consider other locations? Decide to only consider one location? Tell your REALTOR ® so your revised parameters can be responded to immediately.
How to Use the Internet to Your Best Advantage
The internet provides a comprehensive database of current listings and almost every listed property works its way onto several websites. Write down the listing identification number(s) of listings which appear interesting and record the site domain name. E-mail, fax, or telephone this information to your REALTOR ® so they can investigate and identify.
When You Find “The Right House”
Our goal is to educate you so that you will feel comfortable directing your Sage Real Estate REALTOR ® to proceed with the purchase of the right property when you see it. Timing is critical when purchasing a home and there are several strategies that you can use in order to be successful with any offers that you make.
SAGEREALESTATE.CA
Virtually all buyers use the internet in their search. If you’re searching for a home in Toronto, there’s only one web address you need to know: SageRealEstate.ca, Toronto’s ultimate home search.
Our website includes tools, tips and access to all of the Toronto properties listed on MLS ® and best of all, you’re in control.
VIRTUAL TOUR & PHOTO GALLERY
Sage Real Estate listings are featured with virtual tours, photo galleries, and individual listing websites.
THE HOME SEARCH PORTAL YOU WISHED FOR
Realm is Toronto Real Estate Board’s latest home search tool that offers infinite control and possibilities for home buyers.
Users can search the MLS ® system in real time, across any device. Buyers can find out about a new listing the very moment it gets uploaded onto MLS ® by requesting instant notifications and they can manage all searches themselves by revising search criteria at will. They won’t miss finding out about any hot new listing.
Buyers can also easily communicate with their Sage REALTOR ® through Realm by making comments on a listing that get conveyed automatically, request showings, etc. Searches can be saved, photos are large, relevant transit maps are included, similar listings can be provided. Users simply define the information they would like to receive. It is the best buyer portal we have seen. Simply ask your Sage REALTOR ® to invite you to join in on the fun.
I LOVE IT. I WANT IT.
When you find a home you absolutely love, someone else may love it too. It’s important to act quickly and make a solid offer based on a rational approach to pricing and negotiating that you and your REALTOR ® have discussed. To start the process rolling, your REALTOR ® will draw up an agreement that includes your offering price and other terms and contingencies. Buyers often focus on the price but there are other important terms included in a real estate agreement. You can include any terms you like but remember that the more you add, the more likely the seller is to object. Here are the most common elements of an Agreement of Purchase and Sale:
PRICE
The market, the buyer and the seller will determine the final price. Your REALTOR ® will help you formulate an offer based on comparable listings and sales and current market conditions.
MORTGAGE CONDITION
A mortgage condition stipulates that you will buy the home subject to obtaining a mortgage. If you cannot obtain a mortgage then the contract will be void. You will need to establish a time frame for securing financing.
HOME INSPECTION CONDITION
A thorough inspection of the property by a licensed home inspector protects you against structural or material problems that are not detectable in a casual walk-through. Home inspections are just as important in new construction as they are in resale. Buyers can’t inspect a home that isn’t built yet; however, they can request an inspection prior to closing. In new construction an inspector will make sure that all mechanical systems are working properly and may also spot repairs that need to be added to the builder’s punch list (a list of items that need to be completed). The buyer, not
the seller, is responsible for hiring and paying the inspector.
DEPOSIT
The deposit is given by the buyer typically to be held in the listing brokerage’s trust account and secures the contract until the closing. An initial deposit usually in the form of a cheque or money order must be given to the seller or seller’s REALTOR ® along with the offer. Upon completion of the agreement the deposit will be applied to the down payment and/ or closing costs to the benefit of the buyer. If the sale does not go through due to contingencies covered within the contract, then the deposit money typically will be returned to the buyer.
CLOSING DATE
One of the most important terms of a real estate contract is the closing date – the date when ownership changes hands. This is usually the date that the seller must vacate and the buyer may occupy the property. Flexibility on the closing date can give a buyer a big advantage over other potential buyers and can occasionally allow you to negotiate a lower price or other, more favourable terms.
COUNTER OFFERS
In some transactions, there is a fair amount of negotiation – offers and counter offers – before both parties are satisfied. This is one aspect of a real estate transaction in which a REALTOR ® is invaluable. Not only can a REALTOR ® draw upon previous experience and market knowledge to offer sound advice during a negotiation, they can also serve as a buffer between the buyer and the seller/seller’s REALTOR ®. Negotiating for a home can be a highly charged and emotional process, and even the most emotional buyer will look like one cool customer behind the right REALTOR ® .
HOW TO WIN
Securing the house when in a bidding war takes knowledge, commitment, preparedness, and guts. Sometimes the differences between the top offers that have been presented to a seller are very slight. Frequently there is no clear-cut winner and the seller is forced to make a judgment call. Only one buyer gets the house, stack the cards in your favour to have that buyer be you.
Here are the keys of success:
1. TRY TO MEET THE SELLERS
Sellers like to sell to people they have met and feel would be good buyers for their home.
2. KNOW THE MARKET
So that you are in a position to bid high but not overpay.
3. BID HIGH AS YOU CAN
Sellers almost always sell to the highest offer.
4. OFFER YOUR TOP PRICE ON THE FIRST ROUND
You are not guaranteed to get an opportunity to improve your offer.
5. OFFER A HUGE DEPOSIT
Certified cheque or bank draft to greatly impress the sellers.
6. CONSIDER INSERTING A CLAUSE
Consider inserting a clause in the offer that states should you (the buyer) default on the purchase and not close the transaction, the deposit will be immediately released to the seller. Your lawyer might not like this but sellers love it.
7. POSSESSION DATE
Accommodate the seller’s requested possession date. Even better, offer a seller-flexible possession date within specific dates. This gives the seller the opportunity to set his/her exact preferred date.
8. FEW, IF ANY, CONDITIONS
Building Inspection: Prudent buyers want to have an inspection before submitting an offer. This is understandable, however, you have to balance this with the fact that winners in multiple offers usually have firm unconditional offers. Maybe have it inspected before you submit your offer? Financing: Get your financing in place before you submit an offer. Talk to your mortgage broker, your bank manager or existing mortgagee before you get to the offer submission stage on a house so you know exactly what you can rely upon them to provide.
9. PROVE YOUR ABILITY TO CLOSE THE TRANSACTION
Perhaps impress the seller with your career or have a letter from your bank stating you are in a position to close the transaction.
10. DON’T ASK FOR EXTRAS
Don’t ask for things that the seller has not already included in the sale.
11. WRITE A NOTE
Include a note with the offer about why you want the house.
12. KEEP YOURSELF AVAILABLE
When offers are being presented, be totally, 100% available for last minute discussions, negotiations or clarifications.
13. HAVE FAITH AND TRUST IN YOUR REALTOR ®
If you don’t trust your REALTOR ® by the time you are into a multiple offer scenario, you are dealing with the wrong REALTOR ®. The experience and counsel a trusted REALTOR ® can and should provide when in multiple offers can absolutely win you the house. Your REALTOR ® should provide you with insight and informed options. Consider them and make the most aggressive choice you can.
14. TRESA REGULATIONS
The new TRESA regulations allow for Sellers to share with all Bidders in multiple offer scenarios, particulars of offers. This may or may not disadvantage your offer. Review with your Sage REALTOR ® the need to include a clause in your offer stating that if the seller chooses to share any aspects of your offer then you reserve the right to withdraw your offer.
One comforting reality is that bidding wars usually take place only on good properties. Paying top dollar for a house today may prove to be a bargain in hindsight tomorrow. Today’s multiple offer winner buyer may also well be putting themselves in a seller’s multiple offer scenario when selling in the future. Nothing is more gratifying.
PRE-EMPTIVE BIDS
BULLY OFFERS
WHAT ARE THEY?
When sellers list a good property in a hot market they are often hoping that their property will generate a bidding war. Bidding wars have a track record of generating the highest prices for sellers. That happens frequently in Toronto’s current real estate market. When that strategy is employed by the seller and listing brokerage then a date, typically five to seven days down the road, is set for interested buyers to submit their offers to the seller for consideration. If more than one buyer comes to the table at the time then a multiple offer scenario ensues.
Don’t forget that the seller is a client of the listing Brokerage and as such the listing REALTORS ’® allegiance is directed exclusively towards the seller. The buyer, on the other hand, typically is a client of the cooperating brokerage and as such the REALTOR ® has an allegiance to do the best for the buyer. So even though a seller may have set a particular date to review all offers, a buyer is legally entitled to ignore that request and submit an offer earlier than the requested ‘offer date’. Should the buyer go ahead and submit an offer earlier than the seller-requested time-frame, we have a bully offer.
Sellers are not legally required to consider a bully offer, however, if a bully offer is duly registered with the listing brokerage then the seller must be advised of the existence of that offer. They must then decide whether or not to actually entertain that offer.
Part of the seller’s decision making process, whether or not to consider a registered bully offer, often revolves around the price of the offer. While not formally presenting the offer, the buyer’s REALTOR ® (with the buyer’s permission) might verbally disclose to the listing REALTOR ® the price of the offer in an effort to get a formal presentation of the offer to the seller.
Sellers go through several considerations before deciding whether or not to look at the offer. Such as: How many people are viewing the property?; How many other hot prospects exist in the wings?; Might they lose this buyer if they refuse to consider that offer now?; How much more might they possibly hope to get on offer presentation night above what is being offered now in the bully offer? There are a host of other considerations that all give rise to deciding whether or not the Seller will entertain the bully offer.
If the seller decides to go ahead, the listing REALTOR ® has a set procedure to follow regarding advising other buyers and those who have expressed an interest in the property about the advancement of the offer presentation time. The seller is then at liberty to view, accept or reject the bully offer.
From a buyer’s perspective, bully offers have pros and cons too.
A bully offer may well be accepted by the seller with little or no competition from other buyers. Sellers have to face the ‘bird in the
hand’ conflict. It puts the buyer more in the driver’s seat. ie. here is my terrific offer, take it or leave it.
On the down side, sellers may resent having their requested offer presentation schedule being ignored and feel like the buyer is exerting excess pressure on them, particularly if the bully offer has a short irrevocable period.
Should a buyer submit a bully offer on a property they see that they really want to buy?
Perhaps they should, you never know, it just might fly. However, for bully offers to be considered they must be particularly attractive to a seller. Usually, attractiveness here is defined as price. The seller must come to the conclusion that it is not worth the risk of waiting until the official offer date time because it is unlikely that a higher offer will be forthcoming. Bully offers must be very, very good, attractive and compelling. Buyers making unattractive bully offers can easily offend sellers, disadvantaging their subsequent offer on offer night.
A good REALTOR ® can review the appropriateness of bully offer submissions with buyers in detail in each specific situation and come to the conclusion whether or not to go ahead with one.
DEALING WITH LEGALITIES
THE ROLE OF A LAWYER
The buying process involves a number of legalities and sound legal representation is not merely a suggestion, it is a requirement.
Your lawyer will protect your rights and ensure you actually get what you’re paying for.
WHAT IS IMPORTANT IN A LAWYER?
Ideally you will want to use a lawyer with substantial real estate experience, as lawyers who may be excellent in one field of law might not be as strong in real estate law. Most transactions close without any problems; however, if there were to be some difficulties an experienced and effective real estate lawyer is invaluable. Go with the lawyer that you feel has the right experience for your situation.
HOW DO THEIR FEES
WORK?
Toronto lawyers typically charge a flat fee for their real estate purchasing clients. It is usually beneath the law society mandated maximum tariff rates. Talk to a lawyer and get a quote. The best lawyer for you may well not be the cheapest but save money elsewhere. You need a good lawyer!
WHAT ABOUT THE EXTRAS?
Disbursements will be in addition to the quoted fee. Common disbursements and adjustments are land transfer tax(es), realty taxes, prepaid utilities, clearance certificates, etc. Your lawyer will be able to provide you with exact disbursement expenses on your transaction.
FUNCTIONS PERFORMED:
Before the Offer is Signed
• If requested, lawyers will consult with buyers to review
the offer clauses. They will not recommend negotiation strategies but will ensure that the buyer understands the legal aspects of the offer.
After the Agreement is Accepted
• Detail exact closing costs.
• Search title.
• Search taxes, utilities, building and zoning, or order title insurance.
• Execution search.
• Mortgages and other financing arrangements.
• Verify insurance policy documentation.
• Calculate land transfer tax.
• Requisition letter to seller (requesting resolution of any problems found in searches).
A Few Days Before Closing
• Address any provincial sales tax issues.
• Prepare mortgage documentation.
• Prepare statement of adjustments.
• Prepare documentation for land registry.
• Accept closing funds from buyer.
• Review and have buyer sign necessary documentation.
On Closing Day
• With mortgagee, will exchange mortgage documentation for money.
• Meet with seller’s lawyer at registry office.
• Complete final searches.
• Transfer funds.
• Register deed and mortgage in buyer’s name.
• Pay land transfer tax.
• Obtain keys from seller’s lawyer.
After Completion
• Send you a reporting letter certifying your title together with the deed, survey, and all other related documentation.
• Invoice you for services rendered.
The insurance requirements associated with home ownership can be complex as there is no one-stop insurance shop to fill every insurance need. Some insurance is placed by your lender or mortgage broker, some by an insurance broker, and some by your lawyer.
This section provides a brief overview of the various types of home-related insurance. Please seek quotations from the relevant insurance expert for each type of insurance. Carefully review coverage, limits, restrictions, rates, and overall policy suitability to ensure that your insurance needs are being appropriately met. You do not need every type of insurance; however, if something goes wrong the appropriate insurance becomes the bargain of a lifetime.
HOMEOWNER’S INSURANCE
What Is It?
Just as one would not drive a car without insurance, one does not own a home without this basic insurance. Homeowner’s insurance protects your home against hazards such as fire, smoke, wind, hail, and acts of vandalism. It would also provide liability coverage against injury to any of your visitors.
Is It Required?
Your lender will require Homeowner’s insurance coverage in an amount at least equal to your mortgage. This is required because the lender could be left without security for its loan in the event of property damage or loss.
Options
Most homeowners opt for a homeowner’s policy that also protects the contents of the home. Contents protection coverage can also be for full replacement value. Hint: Non-smokers often get rate discounts as do home with monitored burglar alarms. Contact your general insurance broker or REALTOR ® for advice and coverage.
MORTGAGE LIFE INSURANCE
What Is It?
This is a life insurance policy with the amount of insurance being equal to the principal amount of the mortgage. In the event of the mortgagor’s death, the balance of the mortgage is paid off.
Is It Required?
Lenders do not usually make their commitment to place a residential mortgage with a buyer contingent upon the buyer taking out mortgage life insurance. An exception to this would be mortgages for very high amounts.
Where Do I Get It?
Through the lender or mortgage broker at the time you take out your mortgage.
MORTGAGE INSURANCE
Also known as Mortgage Loan or Mortgage Default Insurance. Not to be confused with Mortgage Life Insurance.
What Is It?
These are all the same. They describe the mortgage insurance through CMHC which protects lenders of high ratio mortgages against mortgagor default. They are not one of the insurance policies that purchasers consider buying for their own benefit.
TITLE INSURANCE
What Is It?
‘Title’ legally describes the ownership of land. Purchasers want assurance that the property they are buying will legally be theirs and they will receive good and marketable title to it. Those with any claim to your property should be restricted only to any mortgagee(s) and the government if taxes are not paid. Title insurance eliminates the risks of a defective property title by providing the compensation necessary to rectify covered title defects. Most policies also pay the cost of defending against any covered claim. Unlike homeowner’s insurance which
protects you from an unforeseen event in the future, title insurance protects you from an undetected defect or fault in the past.
What
Is A Title Defect?
The following are some examples of hidden title defects that a title insurance policy could typically cover: unsatisfied mortgage, lien or judgment; fraudulently discharged mortgage(s); missing heirs, etc.; improperly executed deeds; irregularities or errors in existing surveys; required removal of existing improvements; unregistered easements or rights-of-way; …the list could go on and on.
If I Don’t Have Title Insurance, How Serious Could A Claim Be?
It could be very serious. You would have to pay all defense costs and a claim could result in complete loss of equity if defense were unsuccessful. Title insurance means that you do not have to worry about any mistakes in titles.
How Much Does It Cost?
Should We Get It?
The cost of title insurance is a few hundred dollars. We encourage purchasers to consider buying title insurance not because of the fairly small likelihood of an undiscovered title defect but because of the cost savings provided. Some savings are even significant enough to almost completely pay the cost of some title insurance policies.
What Cost Savings Are There?
In usual transactions, lawyers not only search title but also obtain certificates of clearance from the zoning department, work orders, liens, hydro, etc. If the property is title insured then the lawyer can skip some of the searches as the need for them is redundant. If there were to be a problem discovered on any search then the insurance would pay to resolve it. As municipalities increase their search fees title insurance becomes more cost effective. On some properties the savings amount to several hundred dollars.
AND IT’S YOURS
Your Sage REALTOR ® will work closely with you and your lawyer to make sure everything is in place for a smooth and efficient closing. Typically, a day or two prior to the closing, your lender will forward all loan documentation to your lawyer and let you know the amount required to complete the purchase. You will be responsible for bringing the balance of your down payment and closing costs to your lawyer in the form of a certified cheque. At the closing, your lawyer will guide you through the many documents you need to sign.
Sage Real Estate’s goal is to provide you with the information you need to feel confident throughout this process.
In addition, if you have an existing home to sell, Sage Real Estate will customize a comprehensive marketing program to help you achieve the highest possible sales price in the shortest amount of time. For more information, ask your Sage REALTOR ® or visit SageRealEstate.ca.
AFTER YOU BUY
REBUILDING YOUR SAVINGS
Buyers should take time to review and evaluate their finances after a home purchase. One important step to consider is setting up an automatic electronic payment with your mortgage lender which lets you avoid costly penalties associated with late payments.
Make a plan for gradually rebuilding your savings account which many buyers deplete in order to make their down payment and pay for moving costs. As a homeowner, it’s important to have a cash reserve set aside for unanticipated maintenance that your home may require. In fact, a general rule of thumb is that homeowners should expect to spend about 1-3% of the cost of their home per year on maintenance and repairs.
While Your Transaction Is Complete, Our Work Is Not
In fact, Sage Real Estate maintains relationships with our clients long after closing. We are always glad to help you find a variety of service providers and tradesmen to perform work on your home.
As you’re getting settled into your new home, here are a few situations you may encounter in the coming months and years that are important to think about.
REFINANCING
Keep an eye on interest rates even after you purchase your home. If rates go down, you may be able to save
money by refinancing which simply means you take out a new mortgage at a lower interest rate that will replace your original loan. Another common situation that calls for refinancing is the expiration of the initial fixed-rate period on an adjustable-rate mortgage (ARM). If prevailing fixed-rates are substantially lower than the rate, your ARM will carry once it adjusts, then it might make sense to refinance into a fixed-rate loan.
Many lenders offer no-cost refinancing which means they take the costs and fees associated with refinancing and roll them into the interest rate. It’s a way for homeowners to lower their monthly payment.
While refinancing a mortgage has become much easier in recent years, it is still a major financial transaction with important implications which requires just as much diligence as securing the original mortgage. Your Sage REALTOR ® will happily refer you to a mortgage professional to help you determine the right time to refinance.
HOME IMPROVEMENT
Whether it’s a fresh coat of paint, new hardwood floors or a major kitchen remodel, most new homeowners have at least a few projects they want to undertake once they move in. Your REALTOR ® can help you determine the market value of improvements you are considering making to your home.
TRACK THE VALUE OF YOUR HOME USING CASTL.
Castl. (yourcastl.com) is a proprietary platform for Sage agents and clients. It allows clients to:
1. TRACK THE VALUE OF YOUR HOME
Track the valuation of your home through regular updates from Castl. and let this work as a stock ticker for your most valuable asset.
2. LEARN SOLD PRICE OF YOUR NEIGHBOUR’S HOME
Find out the price at which homes are selling in your neighbourhood and throughout the GTA.
3. FOLLOW THE MARKET
Access our monthly sold reports to stay on top of the real estate market, in your neighbourhood and 600 others in the GTA.
4. FIND YOUR NEXT HOME
Search for your next property through Castl.
To get started with Castl., simply ask your Sage agent to add you to this proprietary platform.
ABOUT SAGE
If there’s one word that sums up Sage, it’s uncompromising. Uncompromising is our way of making sure that every real estate experience isn’t just good, it’s great.
We set a high bar for ourselves, and our REALTORS ®. Our clients deserve the very best of us, from the services and counsel we provide to the quality of our marketing materials, and we’re relentless in making sure they get it.
As a family-run company, we have an unusual combination of deep industry expertise – literally decades of experience – and a fresh, progressive approach.
We never stop thinking about how we can improve what we do so that we can deliver more value to our clients and REALTORS ®
THE MARKET DOESN’T STAY STILL. NEITHER DO WE.
We monitor, respond and adapt quickly but strategically, keeping an eye out for ideas that will help everyone stay ahead of the market.
ON THE GROUND AND HANDS ON.
Our REALTORS ® are our partners. We work side by side with them,
providing industry-leading knowledge, training and expertise.
They’re supported by one of the most advanced, comprehensive marketing systems in the industry, an in-house creative team that’s second to none and a management team that’s one of the most respected in the business.
SMARTER. FASTER.
This uncompromising level of support ensures that sellers’ homes are positioned in the most favourable light and receive maximum exposure in the marketplace locally, nationally and internationally.
Buyers gain valuable knowledge about neighbourhoods and market trends that they can put into action to make informed buying decisions.
WE STAND BY OUR WORD.
We insist on the highest standards of integrity in everything we do, hand-selecting REALTORS ® who believe, as we do, in doing what’s right and fair for our clients.
When it comes to making sure that they consistently get the best of us, we never compromise.
GLOSSARY
Adjustable Rate Mortgage (A.R.M)
Mortgage with a rate that is variable. It is usually tied to the prime rate.
Agency
Relationship a buyer or seller has with a real estate brokerage company.
Agreement Of Purchase and Sale (AKA Offer)
Legal document that outlines the terms of a Toronto real estate deal that will be signed by both the buyer and the seller.
Amortization
Mortgage payment that includes both principal and interest.
Amortization Period
How long it will take to repay the mortgage.
Appraised Value
Amount that a professional appraiser thinks what a Toronto property is worth. This is usually done to get the value of the house for mortgage purposes.
Assessed Value
Amount at which a property is valued for taxation purposes.
Assumable Mortgage
Mortgage that can be passed on from the seller to the buyer, should the buyer want the mortgage and qualify.
Blended Mortgage
Combination of two separate mortgages.
Balloon Payment
One-time payment against the principal paid at the end of certain mortgages.
Bridge Financing
Loan that covers a borrower in-between the purchase of their new Toronto home and the sale of their existing Toronto home.
Canada Mortgage and Housing Corporation (CMHC)
Institution whose primary purpose is to administer the National Housing Act and provide lenders with insurance against high ratio mortgages.
Cap
Maximum amount an interest rate can change.
Chattels
Contents of the home belonging to the owner which are not included in the sale of a home unless specifically outlined in the offer.
Clear Title
A Toronto property that has no claims against it.
Closed Mortgages
Mortgage that cannot be paid out until the end of the mortgage period. Sometimes exceptions are made, but usually there will be a penalty charged.
Closing Date
Date that the house actually exchanges hands from the seller to the buyer. The Toronto buyer gets the keys and the Toronto seller gets their money.
Cloud on Title
When a claim has been made against the title of a Toronto property. Typically, it impacts the value of the property.
Collateral
Tangible asset that is used as a guarantee of payment in a loan. A house acts as the collateral in the mortgage.
Commitment
Written agreement that a lender will provide a specified amount of funds under certain conditions.
Common Elements
Parts of a condo building that are owned by all owners of the building, ie. walkways, elevators, halls, recreation facilities, etc.
Condition
Clause written into the offer which outlines something that has to happen before the agreement becomes binding. Should the condition not be met, the negatively affected party has the option to terminate the transaction.
Conditional Offer
Offer that has one or more contingencies that must be fulfilled in order for the agreement to become firm and binding upon both parties.
Condominium
Form of ownership where the owner has the title to a specific unit and a portion of the common elements of a building.
Conventional Mortgage
Mortgage from a traditional lender such as a bank where the value of the mortgage does not exceed 75% of the value of the Toronto property. Any mortgage greater than 75% is considered high ratio and must be insured by CMHC.
Cooperative
Type of ownership wherein the building is owned by a company. In order to be entitled to live in the building you must buy shares. It is typically difficult to get a mortgage for a co-op without a large down payment and you must also be approved by the Co-op Board of Directors.
Deed
Document that officially transfers ownership of a Toronto property.
Default
When a borrower is not able to make a debt payment.
Deposit
Money that is put down after an offer has been accepted and is held in trust, usually, by the listing real estate brokerage.
Disbursements
Various expenses and costs that a lawyer will pay on behalf of a Buyer to close the sale.
Discharge
When a mortgage has been paid in full and the title has been changed to reflect that.
Discount Points
Fee that is charged when a mortgage interest rate is reduced from the current rate. One point equals one percent of the mortgage value.
Down Payment
Amount that the buyer puts down on the property in cash: this is the difference between the purchase price and the mortgage amount.
Dual Agency
(See Multiple Representation)
Easement
Legal right to use someone else’s land for a specified purpose. This right is tied to the land, not the individual, so it passes from the seller to the buyer.
Encroachment
Occurs when the boundaries of some part of one property impede over the boundaries of its neighbouring property.
Equity
Value of the property minus any outstanding debt.
Fiduciary Duty
Legal relationship between a buyer or seller and their REALTOR ® .
First Mortgage
First mortgage on a property. It has the first claim on the property should there be a default.
Fixed Rate Mortgage
Mortgage that has a fixed amount of interest paid over a specific amount of time.
Foreclose
When the lender takes legal ownership over a property due to the borrower defaulting on the loan.
Gross Debt Service Ratio (G.D.S)
G.D.S is typically used as the indicator that tells you if you can afford a certain mortgage payment. All costs associated with housing (mortgage, taxes, heating, and 50% of condominium fees, if applicable) should not exceed 32% of your gross annual income (income before tax).
High Ratio Mortgages
Mortgage that exceeds 75%. Must be insured by the CMHC.
Hold Back
When money is held back by the lender until a condition is satisfied.
Homeowner’s Insurance
Protects homeowners against damage to their home caused by fire, smoke, wind, hail, vandalism and slips/falls.
Home Inspection
Objective evaluation of a house by a home inspector. At the end of the evaluation a detailed document is provided outlining the condition of the house.
Home Warranty Plan
Insures against the failure of the operating systems of the home. It may cover things such as the heating system, central air, electrical, plumbing, and large appliances.
Interest Adjustment
Portion of interest that is paid if the closing date of the transaction does not coincide with the mortgage payment date. For example: if mortgage payments are made on the 15th of the month but the sale closes on the 10th, there will be an interest adjustment for 5 days.
Interest-Only Mortgage
The interest is paid on a regular basis and the principal is paid at the end of the term.
Irrevocable Period
The period at the end of which an offer expires.
Joint Tenancy
Situation where two people share an equal ownership share of a property. If one dies, their share is transferred to the remaining person instead of to the beneficiaries of the estate of the deceased.
Land Transfer Tax
Tax paid to transfer a property.
Leasehold Mortgage
Home mortgage when the house is on leased land.
Legal Fees
Amount charged by lawyer to execute the purchase or sale of a property. Liabilities
Debts.
Lien
Legal claim against real estate to guarantee payment of a debt.
Listing Agreement
Formal agreement between the seller of a property and a real estate brokerage company authorizing the brokerage to offer a particular piece of real estate for sale.
Listing Broker
The real estate brokerage company that represents the seller.
Loan Commitment
Document that demonstrates a lender is willing to lend a certain amount of money with certain conditions to a borrower.
Lock-In
Occurs when a buyer tells the lender that they accept a certain interest rate for a certain amount of time.
Maintenance Fee
Amount of money a condo owner pays each month towards upkeep on the common areas of the building.
Maturity Date
End date of a mortgage.
Mortgage
An agreement between a lender and borrower where the borrower puts up a piece of real estate as collateral for a loan to purchase that property.
Mortgage Broker
A professional who brings together borrowers and lenders. Usually their fee is paid by the lending institution.
Mortgage Insurance
Also referred to as mortgage loan insurance or mortgage default insurance, this is offered through CMHC and covers the lender when a borrower has less than 20% down payment. Currently in Canada there are three major such insurers: CMHC, Canada Guaranty, and Genworth.
Mortgage Life Insurance
Mortgage life insurance covers the mortgage value in the event of the death of the mortgage holder.
Mortgagee
Lender.
Mortgagor Borrower.
Multiple Representation
Occurs when a brokerage represents more than one client in a single transaction. For example, the buying client of one Sage Real Estate
REALTOR ® buys a property that has also been listed with Sage Real Estate.
Open Mortgage
Type of mortgage where the borrower can pay the debt at any time.
Origination Fee
Fee the lender receives for processing a loan application.
Penalty
Amount of money paid to the lender so that the borrower can prepay a portion of the mortgage.
PIT
Principle, interest and taxes.
PITH
Principal, interest, taxes, and heating.
Possession
Control (ownership) of a property.
Power of Attorney
A legal agreement wherein one individual grants another the legal authorization to represent them and make decisions on their behalf.
Pre-Approval For A Mortgage
A written commitment from a lending institution to lend a potential buyer a certain amount of money at specific terms for the purchase of a property.
Pre-Payment Privilege
The right of a borrower to prepay some of the principal without having to pay a penalty.
Principal
This is the base amount of money borrowed.
Real Estate Agent (Broker)
The brokerage company that represents either a buyer or seller in the process of buying or selling real estate.
REALTOR ®
A registered real estate sales representative or broker.
Refinance
When a new mortgage is obtained and used to pay off the old mortgage.
Renewal Agreement
An agreement to extend the mortgage for another term once the initial term is reached.
Reserve Fund
Bank account established by a condo corporation to cover major repairs to the common elements. The fund is paid into from a portion of the monthly maintenance fee.
Seller Take-Back
Mortgage where the seller personally provides some of the financing for the buyer.
Setback
The distance back from the property line beyond which you must get approval for any improvements.
Statement of Adjustments
Amount of money owed at the time of closing. The amount will be calculated by a lawyer and the adjustment will typically be the difference between the deposit and down payment subject to various credits and debits.
Selling Broker/Cooperating Broker
The REALTOR ® who represents the Buyer in an Agreement of Purchase and Sale.
Special Assessment
Special charge a condo owner has to pay for a capital improvement or unforeseen expense.
Status Certificate
Document that outlines the financial and legal status of a condo corporation.
Sub-agent
An agent who finds the buyer for a property but has a fiduciary responsibility to the seller.
Survey
Document that outlines the property line on a piece of real estate as well as the location of any fences and buildings on the property.
Tenancy in Common
When a property is jointly owned by a group of individuals, not necessarily in equal shares, and each owner has the right to sell their portion.
Term
Amount of time a lender lends funds to a borrower.
Title
Legal certificate outlining who owns a property.
Title Insurance
Insurance that covers a piece of land. This provides assurance that the real property remains the property of the buyer if a claim against the property is processed.
Title Search
The process of checking records to ensure the seller has the legal right to sell the property.
Total Debt Service Ratio (T.D.S)
T.D.S. is typically used as the indicator that tells you if you can afford to take on more debt. Your TDS should not exceed 40% of your gross annual income (income before tax). This includes any mortgage debt, car loans, etc.
Trust Account
Bank account used by brokers to keep deposit funds separate from other funds.
Trust In Real Estate Services Act, 2020 (TRESA).
A replacement of the Real Estate and Business Brokers Act (REEBA). It is legislation that governs how Real Estate Professionals are to transact business in Ontario with increased consumer education, protection and transparency.
Underwriting
Calculation of risk involved for a lender.
Variable Rate Mortgage
Mortgage that has fixed payments but where the interest rate is adjusted to market levels. If rates go up, a larger portion of that month payment goes to interest but the actual amount of the payment does not change.
Waiver
Document normally signed by the buyer which relieves the seller from obligation to a particular condition in an offer.
Warranty
Legally binding commitment that the seller provides to the buyer to guarantee that the house is in good condition.
Zoning Regulations
Criteria that regulates how a property may be used, typically established by the municipality. A property could be zoned for many different uses including residential or commercial.
YOUR REAL ESTATE EXPERIENCE SHOULDN’T BE GOOD. IT SHOULD BE GREAT.
