Advertise

 
 

GENERAL REAL ESTATE FREQUENTLY ASKED QUESTIONS
 
1. What is a Realtor?
A "Realtor" is a licensed real estate professional who is a member of a local real estate board (Toronto Real Estate Board), as well as the Canadian Real Estate Association (CREA) and the Ontario Real Estate Association (OREA). When you work with a Realtor, you can expect strict adherence to provincial law as well as to a national code of ethics, ensuring you'll receive the highest level of service, honesty and integrity.
 
2. What should I expect from a Realtor?
A Realtor must disclose to you in writing, who exactly he/she represents in any real estate deal involving you. A Realtor may represent you as a buyer or a seller; he/she may also represent both buyer and seller in the same transaction. But because a strict Code of Ethics and Standards of Business Practice guide all Realtors, a Realtor must always treat you fairly.

An active Realtor has his/her finger on the pulse of the housing market and has daily contact with buyers potentially interested in your home. You can trust a Realtor to protect your best interests and to look after details. You are an active partner in the process, working with a Realtor, every step of the way.

It makes sense to choose a Realtor you feel comfortable with - someone, who listens to what you have to say, asks intelligent questions and shows a genuine interest in helping you. You should feel comfortable and confident that the Realtor can help you buy or sell your home, for the best terms and conditions for you in current market conditions. The more you learn about buying and selling homes from your Realtor, the better your working relationship will be with a Realtor.
 
3. What is the difference between a customer and a client?
The difference between receiving information and services from a Realtor and being represented by a Realtor is the difference between being a customer and a client. If the Realtor represents you, you are a client. A Realtor owes his/her client the fiduciary duties of utmost care, integrity, confidentiality and loyalty. If you are simply provided valuable information and assistance, you are a customer.

All Realtors are obliged to treat both clients and customers honestly and fairly. The Realtor must: respond honestly and accurately to your questions about the property; disclose information about the property which he or she knows or reasonably ought to know; promptly present all offers to the seller; and, market the property without regard to race, creed, sex, handicap, religion or national origin.

Listing Agreements and Buyer Agency Agreements establish contractual agency relationships between Realtors and clients. Refer to the "Working With A Realtor" brochure for explanation of the three types of Agency Relationships; Seller's Agent, Buyer's Agent and Dual Agent.  
 
4. How do I select a Realtor?
A good way to start looking for any professional is to ask for referrals from satisfied friends and business contacts whom you trust. You may want to interview more than one professional before selecting the Realtor to represent you. The right choice is the Realtor that makes you feel comfortable and confident and shows a genuine interest in you. If you enter into an agreement with a Realtor, and you become dissatisfied with their services, and the issue cannot be mutually resolved, you could terminate your contract in writing at any time. A successful and competent Realtor will likely offer a service guarantee to ensure their clients' satisfaction. Communication is the key to any successful relationship.
 
5. What do I cover when interviewing Realtors?
Interviewing Realtors to Sell Your Home

You may want to interview several sales professionals before selecting one to represent you. If you are selling your home, the real estate sales professionals you interview should cover the following items during the interview:
  • Pricing your home
  • Increasing your home's value
  • Marketing strengths
  • Negotiating the sale -The seller's agent should review every offer with you and help you evaluate all aspects of each offer and its financial implications.
  • An overview of the local standard Contract For Sale along with typical addenda and a copy for your review

Interviewing Realtors to Buy A Home If you are buying a home, the real estate professionals you interview should cover the following:
  • Agency relationships
  • Many real estate professionals who primarily represent buyers have been specially trained to do so and have received a certification or designation to specialize in representing Buyers
  • How much home you can afford
  • The difference between being "pre-qualified" for a mortgage and being "pre-approved" for a mortgage
  • Key features you "must have" in your new home vs. those you would like to have
  • How to evaluate and compare the homes you see
  • An overview of the local standard Contract For Sale along with typical addenda and give you a copy for review
  • The types of inspections you will want to have done on the property you select
Refer to "The Realtor Interview" for a worksheet to use for interviews.  
 
6. How do I research the market on my own before I consult a Realtor?
You can access the Internet to preview resale homes and prices, find tips on newly built homes and condominiums, find consumer protection information and get the facts on Realtors on the following websites:
www.mls.ca
www.cottagelink.com
www.newhomes.org
www.reco.com
www.orea.com 
 (created by Canadian Real Estate Association)
(Canadian Cottages)
(Greater Toronto Home Builders Association)
(Real Estate Council of Ontario)
(Ontario Real Estate Association)
 
7. How do I recognize and understand market conditions?
The real estate market is always changing. It helps to understand how market conditions can affect your position as a buyer. Your realtor can provide you with current real estate market conditions and explain their impact.
 
8. Buying A Home - How much can I afford?
Cost of Buying Home
       
=
  • Down Payment
  • Legal Fees
  • Inspection Fees
  • Land Transfer Tax
  • GST if applicable
+
  • Mortgage
  • Utilities
  • Maintenance
  • Insurance
  • Property taxes
    One time   Monthly Costs

The two types of costs in buying a home are 1) the amount of money you will need for the initial purchase; this consists mainly of the down payment and other costs such as legal fees, inspection fees and taxes; and 2) the ongoing costs of paying back your mortgage, along with monthly operating costs for utilities, maintenance, insurance and annual property taxes.

When lenders assess your ability to buy and determine how much money they will lend you, they look at your ability to pay both types of costs. Before you ever visit a lender, you can predetermine this amount, using the same formulas they do.

A quick way to estimate your price range, if you borrow funds through a conventional mortgage, is to multiply the money you have available for a down payment by four. For instance, if you have access to $50,000, you may be able to purchase a home with an appraised value of $200,000. ($50,000 x 4 = $200,000) DOWN PAYMENT X 4 = COST OF HOME

This assumes that you have sufficient income to make the payments on a $150,000 mortgage (75% of $200,000). Most lenders will not permit a borrower to take on a debt load the borrower cannot carry. That's why reputable lenders will "qualify" potential borrowers before issuing mortgages.  
 
9. How do I decide on what kind of home I want to buy?
When selecting the best home for you, it is helpful to create a list of the important features of your new home. Make a list based on three categories:
  1. A need to have is a feature that you and your family see as mandatory. For example, if you work from your home, you need to have a den or office. A need to have is a feature that you cannot live without.
  2. A want to have is a feature that you would prefer. However, if everything else in the home was perfect, you could live without this feature. If you always wanted hardwood floors, but the home you are considering has good wall to wall carpeting, you may compromise on the hardwood floors.
  3. A nice to have is an item that is not very important to you. If the home offers it - great! However, it will not be a major influence in your selection of one home over another.
Only you can make these choices. Your Realtor may offer assistance to you in deciding what is important and what features should be given priority.
 
10. What are the typical expenses in buying a house?
This is a list of possible extra costs involved in buying a home. Some of them are one-time costs, and others such as condominium maintenance fees and property insurance will be ongoing monthly expenses. The good news is that not all of these costs may apply in your circumstances.
  • GST Tax for new housing
  • LEGAL FEES can include disbursements such as Title Insurance, Title & Execution Searches, Transfers & Registrations, Closing Fees, Courier Fees, Photocopies.
  • INTEREST ADJUSTMENT Paid on the 1st of the next month, if you choose monthly payments. Slight adjustments are made for weekly or bi-weekly payments.
  • PROPERTY TAX ADJUSTMENT You pay taxes on July 1st for the previous 6 months and the next 6 months to come. Depending on when you close, the vendor may have paid some or all of the taxes. Your lawyer or notary will make an adjustment for taxes, as you will owe taxes from when you take possession to the end of the year.
  • SURVEY CERTIFICATE (not required on strata units) Some lending institutions may require a survey certificate. Ask your Realtor if this is available from the previous owner. If not, it may be necessary to hire a certified Ontario Land Surveyor to conduct a Survey.
  • LAND TRANSFER TAX Exemption for 1st time buyers purchasing a newly built home. Otherwise, approximately 1% of the first $200,000 plus approximately 2% on the balance.
  • C.M.H.C. or GE (Mortgage loan insurance premium and application fee for high ratio mortgages)
  • Mortgage Broker's fee in some circumstances
  • Home Insurance & Mortgage Insurance
  • Appraiser Fees (An independent certified appraisal of the property)
  • Moving Expenses, Utility Adjustments and Connection Fees
  • Home Inspection Fee, potential Renovations and Repairs
  • Condominium or Maintenance Fees
  • Water quantity and quality certification
The Vendor pays REAL ESTATE BROKERAGE COMMISSIONS. The Greater Toronto Area market supports 5% to 6% total commission of the Sale Price of the property. Commission is normally split between the Listing Broker and Selling (Cooperating) Broker. Consult your Broker/Realtor for details.
 
11. What is the difference between a Mortgage Insurance Premium and Mortgage Insurance?
The Canadian Mortgage and Housing Corporation (CMHC) and General Electric Mortgage Insurance Corporation (GE) offer Canadians incentives to become homeowners. These programs provide the qualified buyer with an opportunity to purchase a home with as little as 5% down payment. Mortgages necessary to finance such a purchase are called high ratio mortgages and by law, must be insured through CMHC or GE. These insurers guarantee the risk of lending to homebuyers who need a high ratio mortgage. The borrower on behalf of the lender pays an insurance premium to CMHC or GE to protect the lender in the event that the mortgage is not paid. Mortgage Insurance, that would provide you protection in the event of the death of a spouse, disability or job loss, that can pay your mortgage payments/balance, is a completely separate type of insurance, and is available through your Insurance Company.
 
12. How and why should I obtain a pre-approved mortgage?

Make an appointment and meet with your lender representative (Communications Technologies Credit Union) and get a written pre-approval for a mortgage with a specified time frame (the longer, the better).

Why?

  1. Pre-qualification enables you to determine which loan program best fit your needs and which program you qualify for.
  2. You know exactly how much you are qualified to purchase. It's no fun to find your ideal home and then realize you can't afford it.
  3. Your monthly payments can be set. This allows you to budget your money before making this large investment. It shows you what the down payment and closing costs will be.
  4. You can make an offer on a property with confidence that financing will not be a problem and have better negotiating power.
  5. Your written pre-approval guarantee's you the rate negotiated at the time of the approval for at least 60 days (varies from lender to lender) and protect you from any interest rate increase for that period.
If you are a first-time buyer, you may be able to qualify for a special program, which may allow you to afford more home for your money.  
 
13. What are the steps in finalizing a mortgage?
Once you've found the home you want to purchase, there are some documents you'll probably be asked for in order to finalize your financing. They will include:
  • A copy of the real estate listing of the property. If the home is still to be built, the mortgage lender will need to see the architect's or builder's plans and details on lot size and location.
  • A copy of the offer to purchase or the building contract, if this document has been prepared.
  • Documents to confirm employment, income and source of down payment (if not provided at pre-approval).
 
14. Is a Home Inspection a good idea?
It is always a good idea to have the home inspected. A professional home inspection by a qualified, insured professional will aid you in making an informed decision in the purchase of your home. The home inspector will take 3-4 hours and go through all structural, mechanical and grading elements of the property and give you a written report on their findings and recommendations for improvement, repairs, costs, etc. Your home inspector will identify existing and potential problem areas, suggest practical low-cost solutions, and provide estimates regarding costs for any work required. Shortly after the inspection has taken place, a report summarizing the findings is generally provided to the potential purchaser.
By commissioning a home inspection prior to purchase, you're protecting both yourself and your investment, as well as buying a little peace-of-mind. Ensure that the inspector has errors and omissions insurance. This means that if, for example, you buy a home that requires a costly repair that the inspector didn't report, then the inspector can be held financially responsible for the cost of the repair. Home inspectors' fees can range from $250 to $350 for a home that costs $300,000 or less. The Home Inspection is usually requested as a condition in the offer by the Purchaser and is paid by the Purchaser.
 
15. Selling A Home - Should I Buy first or Sell first?

There are pros and cons to both sides, but ask yourself a few simple questions: Why are you moving? Everyone has a different reason. Consider the importance of your move and the timing. What are you selling? Some homes are in more demand than others. Don't put yourself in the position of having to sell your home because you have already bought, if you have a unique or difficult home to sell. What are you buying? Is what you're looking for difficult to find? You wouldn't want to put yourself in the position of having to buy whatever comes available if you're truly looking for something special. How do you plan to price your home? Are you prepared to be realistic with your pricing; eg. Take the advice of a professional Realtor and take into consideration what other similar homes have sold for recently, or are you going to ask 10% more?

Are you aware of conditional sales and purchases? There are conditions that you can place in your offer to purchase, that allow you time to sell your own home before you are obligated to firmly purchase the new home. Often these conditions can be costly. At the same time, you may sell your home conditionally upon purchasing a new home within a given time. It is wise to consult your Realtor regarding the advantages and disadvantages of these conditions.

 
16. How do I prepare my home for sale?
You have become so accustomed to your home that being objective can be tough. Everything is where you want it to be and it is very comfortable. Now you must look at your home objectively, just as if you were looking at it for the first time through the eyes of the buyer.

One of the best ways to evaluate the appearance of your home is to visit several open houses and compare the appearance of your home to them. The appearance of a home and how well is shows can result in a substantial difference in the selling price. It can impact how fast it sells and increase its exposure by other real estate agents.

The advantages of being objective are great, so be sure to work hard at being objective at this stage to prepare your home for sale.

The first step in creating a positive first impression is NCR - Neat, Clean & Repair. As you step through your home from the driveway to the bedrooms, kitchen, storage areas and closets, remember the key phrase Neat, Clean, Repair! Consult your Realtor on specific tips for preparing your home for sale.  
 
17. Should I sell my home using a Realtor, or try it on my own?
You may be tempted to do it yourself and "save" the real estate commission. For most of us, this is false economy and makes no more sense than trying to rebuild our car's transmission in an attempt to save the mechanic's fee.

Selling your home is a complex procedure, involving large sums of money, stringent legal requirements and the real potential for very costly mistakes. It requires a tremendous depth of knowledge and experience, as well as a substantial amount of time to follow-up on every detail promptly and properly.

Your Realtor has these qualifications and expertise, and is committed to spending the time it takes to help you sell your home successfully - so you can focus on the things you do best and enjoy the most. More than 95% of homes that are sold in Canada, are sold with the assistance of Realtors.
 
18. What is a Listing Agreement?
 It is a contract between you and the Brokerage Company that the Realtor represents. It is a framework for subsequent forms and negotiations. It is important that the agreement accurately reflects your property and clearly spells out the rights and obligations of all parties and what is included and not included in the deal.

Both you and the listing brokerage company/Realtor sign the listing agreement and each receives a copy. The agreement binds both parties to its terms and conditions. Whether or not you wish your lawyer to review the agreement, you should in any case let him/her know that you are selling your home.

Generally, in the agreement you appoint the Brokerage Company as your agent and give its representatives the authority to find a purchaser; duration of the agreement is indicated; and the compensation is set out. Commissions are paid out upon closing or when the house changes hands.

The agreement also sets out the listing price and describes the property you are selling - lot size, building size and style, materials, floor areas, heating/cooling systems, room sizes and descriptions. Here you decide what you are taking with you and what you are leaving with the house. Generally, unless stated otherwise, fixtures remain with the property, while chattels (things which are movable) are not included in the sale. If necessary, what stays and what goes are listed under "inclusions" or "exclusions".

The agreement will identify the financial details including mortgage balance, monthly payments, due dates for all mortgages, annual property taxes, and any easements, right of ways, liens or charges against the property.

There are two common types of Listings; Exclusive Listing and MLS Listing. An Exclusive Listing appoints only one firm to act as your agent in the sale of your home. This firm usually has the sole, irrevocable and exclusive right to sell your home for a given period of time. The MLS (Multiple Listing Service) Listing allows the Realtor to work with all other Realtors through the local board's MLS system and give your property maximum exposure. This type of cooperative effort may result in the listing agent sharing the commission with the selling agent.

The Multiple Listing Service (MLS) System is a computer system that is loaded with complete details of your home and is sent to all Realtors in the board, immediately. Recently the Toronto Real Estate Board launched a new Internet based system called "Toronto MLS". A new listing is virtually available within minutes of it being added to the system. Your property gains maximum exposure because it reaches the majority of real estate professionals in your community and through www.mls.ca, the national MLS Internet website, participating local real estate boards can advertise their listings to potential buyers across the country and around the world. The Toronto Real Estate Board has approximately 17,400 members.

Note: Excerpts have been borrowed from the Ontario Real Estate Association booklets in answering some of these frequently asked questions.

The Ontario Real Estate Association offers two comprehensive free booklets entitled "How to Buy Your Home" and "How to Sell Your Home". Call toll free 1-800-563-HOME for your copies.