BUYING GUIDE!

1. Importance of Budgeting
2. Staying on Budget
3. Contact an attorney
4. Define Needs and Wants
5. Property prospecting
6. Property Expectations
7. Purchasing Process

Deciding to buy a residential property whether to live in, for investment opportunity or both takes careful consideration and time. To help you make a smart informed decision here are some valuable tips you should know before you begin your search.

1. Importance of Budgeting:

If you will be requiring a mortgage, you will want to know what amount you can afford to finance before your search for a property begins. The best way to go about this is to visit a mortgage lender, mortgage broker. They will qualify and pre-approve you for a mortgage and provide you with an approximate value of the maximum purchase price you can afford.

Please refer to Mortgages/Loans for more detailed information.

When purchasing real estate and aside from the down payment, there will be costs you will be required to pay up front before the pleasure of holding the key to the property is yours. They are: Land Transfer tax1; legal fees and billable expenses, GST on all fees. They may include (list not exhaustive): pro-rated property taxes; pro-rated condominium fees; deed transfer, mortgage registration and appraisal fees; fuel(oil); insurance, and if buying a new property they will include a municipal services hook up and other builder specified holdbacks, GST is built-into the price of newly constructed homes.

Try to set aside between 3% to 8% of the purchase price to cover these costs and any unexpected expenses.

1 Land Transfer tax is a tax payable on the purchase price of the property. You will be subject to at least one and possibly two such taxes in Ontario - A provincial levy plus the municipal levy if the property is purchased in the City of Toronto. First time buyers as defined by legislation are eligible for rebates – certain restrictions apply.

2 Residential properties are generally GST exempt, however land and certain residential use properties can attract GST. Buyers for their own protection should be aware of the treatment of GST on the Offer to Purchase.

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2. Staying on Budget:

Keep within your budget especially if you find yourself competing with one or more buyers and particularly if there is going to be a mortgage involved. The mortgage lender will be appraising the property at your expense to make sure the amount they lend you will not exceed a pre-determined percentage of its appraised value. When this happens the mortgage is not granted – a second may be required and the deal stands to fall through.

A multiple offer scenario arises when you find yourself competing against other Buyers for a property. As desirable as the property may be to you, staying within your budget will ensure you make a purchase within your means. And remember too your associated costs will rise with the purchase price. If the property is listed with a Brokerage only the number of competing Offers can be disclosed, the substance of each is strictly between the individual Buyer, Seller and their respective representatives and cannot be disclosed to any competitor as an aid with the bidding.

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3. Contact an Attorney:

Advise them you will soon need their service for handling the closing arrangements. If purchasing investment property, consulting with an accountant on the tax implications will be quite helpful to your planning.

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4. Define Needs and Wants:

These include the type of property, i.e, condominium, freehold, bungalow, detached etc.; property amenities; location boundaries; transportation; school proximity.

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5. Property Prospecting:

You are ready to start your house hunting and can go about this in any or all of several ways by: Seeking the assistance of a REALTOR®; visiting open houses, reading the real estate ads and searching a myriad of real estate web sites the largest database being the MLS® system - a web site comprised of the listings advertised by the member REALTORS® of the Real Estate Boards across Canada.

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6. Property Expectations:

Invariably you will visit more than one property before you find the one you must have and you will probably find that the list of needs and wants you set out with will become more narrowly defined. Buyers sometimes become frustrated not being able to find them all, you can avoid frustration by understanding that the only way to have everything you want is to build to suit. Concentrate on the physical attributes you are looking for and don’t be influenced by cosmetics such as paint colour and décor which do not appeal to you, they can be easily and inexpensively changed.

Aside from focusing on the things you like about the property, it is important to ask questions. If you are not accompanied by a REALTOR® ask them of the listing REALTOR® or owner if a private sale, and don’t be shy – this is a big investment for you and you need to know the pros and cons of the property. Take a brochure or feature sheet if there is one and make notes for future reference as the more properties you see the more they will meld into one.

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7. Purchasing Process:

If you choose to purchase a private sale (fsbo) and without the assistance of a REALTOR® an attorney’s assistance is recommended before submitting an Offer to Purchase.

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