Buyer considerations

Whilst one can gather much information online, there is no substitute for the knowledge of a professional. This is particularly applicable when it comes to buying or selling real estate. For many people it is one of the most important financial decisions they may make. It is also one of the most personal and emotional decisions one may make.

My approach is to provide my clients with all the information needed to make sound decisions, as well as providing considered guidance. My skills acquired in mining corporate finance and mergers and acquisitions are helpful from an analytical perspective as well as in negotiating the best deal. 

It can take time to find the right property, so it is best to start the process in good time. I use a funnel approach to make sure that all properties on the market that match my clients broad criteria in terms of price, features, size, location and feel are included and considered. Over time the criteria are refined, ranked and narrowed down. It is helpful to get out and see a range of housing options to clarify one's preferences and needs. The objective is to find the house that best matches the clients true needs. My role is that of an advisor.

Buy first or sell first?

One of the most common questions in real estate is whether one should buy or sell first. And, the answer is largely driven by one's financial resources. Clients that have the financial ability to carry two homes, for a period of time, may decide to buy before they sell. The advantage is they are under no pressure to buy and can wait until they find the ideal home. The disadvantage, besides carrying two homes for a period of time, is that they do not know what they will receive for their home. They also carry the risk of a change in market conditions which could be positive or negative.  Extending the closing period on the purchase will reduce the risk of holding two homes, but is not always achievable and is subject to negotiation.

If one does not have the financial resources to carry two homes., then there are two primary ways to avoid the financial risk.  The first way is to sell first and then buy. This has the benefit of certainty in terms of selling price and resultant available funds. The disadvantage is how one houses oneself until one finds a new home, and avoids buying or renting a less than ideal home. This risk can be mitigated by negotiating a long closing period, which allows time to purchase a new home or find suitable rental accommodation. The second way is to make the offer to purchase the new home conditional on the sale of the existing home.  The disadvantage is that such a condition is unattractive to sellers, and they are likely to be less negotiable on price, and in a competitive bid situation such a condition may result in failure.   It is important to be able to provide comfort to the seller that the buyers' home is ready for listing, and will be priced at market value.

Every situation is unique with different considerations and weighting to the advantages and disadvantages. It is important at the outset for me to consider the details of my clients situation and advise and work with them in developing an appropriate strategy.  Please give me a call to discuss your situation.

How much can I afford?

It is the first question one should ask oneself. If you require a mortgage it is important to speak to a mortgage broker first to understand the size of the mortgage you will be granted, and also to obtain a pre-approved mortgage.

Please click here for a Mortgage Calculator

Do you have funds for a deposit?

It is common for a seller to require a deposit to indicate capacity and intention to execute the transaction. The size of the deposit varies, and is normally held in trust by the listing brokerage. Typically the deposit is around 5% of the price of the property and is payable at the time your offer is accepted.

First time home buyer?

Learn more about the Canadian First-Time Home Buyer Incentive.

Please click here to Learn More

Closing costs and funds due on or shortly after closing

On closing the balance of the purchase price is due. This is normally funded through a combination of your own resources and the mortgage loan. There are also numerous costs associated with closing a home purchase. They potentially include land survey fees, home inspection fees, legal fees, CMHC insurance if downpayment is under 20 percent, appraisal fees, insurance costs, mortgage fees,  land transfer taxes and other taxes and relocation expenses.

ItemAmountTo WhomWhen
Balance of Purchase Price   Remaining 95% approxSeller's lawyer  At Closing
Legal Fees & Disbursements Estimate $2,000 plus HSTOwn lawyer At Closing
Property Inspection Estimate $300-$500 plus HSTOwn inspector At Inspection
Utilities or Property Tax AdjustmentTBDSeller's lawyerAt Closing
Title Insurance  Estimate $500-$1,000    Insurer At Closing
Moving ExpensesTBDOwn mover At Closing
Property Survey   (Optional)Estimate $2,000 plus HST  Own surveyorAfter Closing
Ontario Land Transfer Tax Please see the links belowGovernment At Closing
High Ratio Mortgage InsurancePlease see the links below  Insurer At Closing
HST On New Construction Homes Only13% of Purchase Price Government At Closing


Land Transfer Tax Calculator

The following link will take you a land transfer tax calculator

Land Transfer Tax Calculator

Land transfer tax

The following Government of Ontario website contains more information on land transfer tax.

Land Transfer Tax Information

High ratio mortgage insurance

If you want to buy a home with a down payment of less than 20%, you will need mortgage loan insurance. This protects your lender in case you can't make your payments.

To get mortgage loan insurance, you'll need a minimum down payment. The amount depends on the home's purchase price:

If the home costs $500,000 or less, you'll need a minimum down payment of 5%.

If the home costs more than $500,000, you'll need a minimum of 5% down on the first $500,000 and 10% on the remainder.

If the home costs $1,000,000 or more, mortgage loan insurance is not available.

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