Your first step in home buying is to prepare for your purchase
Visit open houses you can find them by visiting web sites and the Real Estate section of newspapers. This will help familiarize yourself with areas that you may want to live in. It's also a great way to get a feel for prices. It's often a great idea to check out the neighbourhood by ringing a few doors bells and asking residents their views on the area or in the case of new home construction - their builder.
Sock away extra cash. You'll be motivated to skip a vacation or expensive dinner when you have a short-term goal for a down payment. Don't buy anything on credit. This is not the time to increase your credit risk. If someone will make a large cash gift toward your purchase (such as a parent), get it into your savings account before you apply for a loan.
- Once you have arranged your financing, you can start looking for a home in your price range. If you are looking for a new home, you will probably deal directly with the builder. If you are looking for a resale home, you will most likely need a real estate agent to help you to find a suitable home. You should be aware that in most cases your real estate agent will earn a commission which is payable by the vendor on your purchase of a home. This creates a potential conflict of interest and there is legal precedent that the agent's primary responsibility is to the vendor, not to the purchaser
- When you have decided to make an offer on a home, an Agreement of Purchase and Sale will be prepared by your agent or by the builder. This sets out the description of the property, the selling price, the amount of deposit, any fixtures or chattels included, and the closing date for the transaction, along with a number of other legally significant clauses. In most cases for resale homes a standard form contract printed by the Ottawa Real Estate Board or the Ontario Real Estate Agents Association will be used, although there may be a number of additional clauses written or typed in. This is where you should give serious consideration to having the home inspected by a professional home inspector. Make sure to include any important clauses such as a purchase being conditional on financing; perhaps the sale of a current home, a satisfactory home inspection, or a satisfactory water analysis if it's a rural property with a well. Builders will usually have their own standard form agreement. It's a good idea to see if there is a clause in the agreement that allows you to be able to visit the home during the construction process. This may also facilitate matters if you arrange to have your new home inspected by a qualified home inspection professional during its construction to ensure that it is being built correctly. Whether you are buying a new home or a resale, you should have the agreement reviewed by your lawyer before signing it. After it is too late as the terms of purchase are set out which may not be in your favor or best interest. Always run the offer by your lawyer first.
- The deposit you pay is negotiable between you and the vendor, but is commonly around 5%-6%. In the event that you are unable to complete the purchase you may forfeit the deposit to the vendor. You may also be liable for damages in addition to the deposit if the vendor is unable to sell the house for the same price you had offered.
- If at all possible you should obtain a survey from the vendor before signing the agreement. The survey can be attached to the agreement and form part of it through a reference in the description part of the main agreement. In many instances the vendor will not have a survey, or only have a very old survey. You should be aware that lenders will usually require an up to date survey before agreeing to advance money on a mortgage. If the vendor is unable to provide you with one, you may have to pay to have one prepared for you. This can cost anywhere from $700 to a few thousand dollars depending on the property.
- Once the Agreement of Purchase and Sale has been reviewed by your lawyer and signed by both you and the vendor, you should take a copy of it to your lawyer as soon as possible. He or she will need as much time as possible to conduct searches on such matters as title, zoning, building code compliance, taxes and hydro arrears. In addition to lawyer's fees, you will have to pay for the cost of these searches, as well as the cost of registering your deed and mortgage. A significant additional cost will be for Land Transfer Tax, which, depending on the selling price of the home, can amount to several thousand dollars.
After the purchase has been completed, your lawyer will usually contact you and turn the keys to your new house over to you. This will most often be in the afternoon of the day set for completion of the purchase, so you should not plan on moving in until late afternoon or evening on the day of closing.
This information is provided as a service to our web site visitors. While we attempt to ensure that all information is accurate and a fair depiction of real circumstances, it is to be used solely for information purposes. Home Inspectors® may not be held responsible for the accuracy of any of the above information. Re- production of any of this information is strictly prohibited without written permission of Home Inspectors®.
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