a comprehensive

Buyer’s Guide

Lesley  Sullivan  Sales  Representa1ve  

 Royal  LePage  Loca1ons  North  Brokerage  

Direct:  705-­‐446-­‐6710  Email:  Lesley@GeorgianBayLis1ngs.ca  

Compliments  of:  

Buying a home is the biggest investment most people make in their lives. The choice you make will become your largest asset, the cornerstone upon which you can build your personal worth and the place you call home. This helpful guide highlights some of the expenses involved, the process and provides some important information to assist you in better understanding the world of real estate. I look forward to working with you.     Understanding Who Is Working For You   Realtors are governed by the concept of “representation.” It is important that the people we work with fully understand who is representing them and in what capacity.   A real estate brokerage may represent you as a client, if a signed representation agreement exists between you and the Brokerage. A specific Realtor® from that Brokerage is working with you and acting

on your behalf. Essentially, this means your Realtor and the Brokerage are obligated to look after your interests during the term of the Buyer Representation Agreement.   It is important to understand different relationships that can evolve in a real estate transaction.  

Here are some examples:

•  The Seller and the Buyer have Representation Agreements with Realtors® from different Brokerages, who represent them individually.

•  The Realtor® is representing the Seller and has a Buyer, who does not have a Representation Agreement with them. In this case, the Buyer is a customer, not a client The Realtor® must do what is in the best interest of the Seller, while offering valuable customer service to the buyer.

•  The Buyer and Seller have Representation Agreements with the same Brokerage, meaning a multiple representation situation exists. The Realtor must be fair and impartial and provide factual market information for the Buyer and Seller, during negotiations.

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Code of Ethics  !The Code of Ethics is administered by the Real Estate Council of Ontario. The Code requires Realtors to disclose in writing the nature of the services they are providing and encourages Realtors to obtain written acknowledgment of that disclosure. A copy of the agreement is to be provided to the buyer or seller. ! !Understanding Market Conditions  !The real estate market is in constant flux, not only as a whole but in particular areas as well. Knowing what is going on in the local market will help you understand how these conditions can affect your negotiations. Here are three types of market conditions:! !A Buyer’s Market occurs when a high volume of homes are for sale in comparison to a low number of buyers. Homes usually stay on the market longer. Prices are stable or sometimes dropping. As a result, buyers spend more time looking for a home and have more leverage in negotiations. ! !In a Seller’s Market the number of potential buyers exceeds the supply of homes for sale. In this market homes may sell faster and prices sometimes increase. Buyers tend to move quicker on their decision to purchase.! !In a Balanced Market the number of homes for sale and the number of buyers is roughly equal or balanced. Prices generally remain stable and homes usually sell in a reasonable time period.! !House Hunting  !93% of the buyers begin their house hunting search online. Websites like www.GeorgianBayListings.ca can be a helpful resource in getting familiar with the market and current inventory. I encourage you to explore listings online as it compliments the work I am doing on your behalf. ! !It’s important that I understand you and what kind of property you are looking for. The more I understand, the better able I am to assist you. Establishing a “wish list” of house criteria, discussing your budget and timelines will help to get you on track. Taking the time to get to know you and your needs will save you time and better equip me to find suitable properties.!

ELEMENTS OF THE BUYING PROCESS

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!Establishing Your Budget  !Prior to house hunting, it is imperative to understand your cost of living and establish what you can realistically afford to spend on the purchase of a home. Having a discussion with your bank to get pre-qualified or pre-approved is always recommended.! Pre-Approval Letter  !A pre-approval letter is a statement from a lender that you are qualified for a purchase of a home up to a predetermined amount. A pre-approval letter will only be provided when all documentation has been provided to the lender to confirm and verify your income and debt. The lender determines the amount of debt they are willing to service you for. The advantage of obtaining a pre-approval letter early is knowing your price range, being able to move forward with an offer quickly and better leverage in negotiations. ! !A pre-approval letter is time sensitive and will usually cover a 90 – 120 day time frame. Also consider that the lender still has to approve the property you decide to purchase. They will sometimes send an appraiser to value the property. Mortgage documents are separate from a pre-approval letter and will detail the terms of the mortgage, names on title, rates, amortization period, payment schedule, etc. !  I recommend you always insert a condition in your offer for financing approval to ensure the lender approves the property.       !

ELEMENTS OF THE BUYING PROCESS (CONT)

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ELEMENTS OF THE BUYING PROCESS (CONT)

 Making an Offer  !Once you find the right home, it’s important to understand the process and stages of making an offer. Your offer will be made on a document known as an Agreement of Purchase & Sale. Additional documents to be signed will include Confirmation of !Co-operation & Representation, Working With a Realtor® and possibly the Buyer Representation Agreement, if not already complete. The Realtor® will also fill out a FINTRAC form, based on the identification you provide. All these forms will be explained in full before signing. ! !Most offers will have conditions, set by the Buyer and for their benefit. I will help and advise you on what conditions should be included in your offer. Conditions on financing, insurance and home inspection are highly recommended. Additional conditions may be required. Time frames for completion of these conditions will also be established. ! !I will also provide you with comparable sold properties to help you determine purchase price and where to start negotiations. The closing date or date of possession, deposit and title search dates, inclusions and exclusions will also be documented in the offer. Note, the deposit is due to the Listing Brokerage within the stated timeframe after acceptance. Your offer will then be presented to the Seller.! !The Seller may accept, reject or counter the offer. An offer may go back and forth several times with both the Buyer and Seller making changes to suit their needs. Once the offer is agreed upon and accepted by both parties, it is referred to as an accepted, conditional offer. The home is not sold until all conditions have been met and Notices of Fulfillment or Waivers have been signed and provided to the Seller. Alternatively, the Buyer may choose not to proceed with the purchase by not waiving the conditions.! !In the case of an offer to purchase with no conditions, the property is sold firm once the offer is accepted, by both parties.! !! !

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ELEMENTS OF THE BUYING PROCESS (CONT)

Home Inspection  Buying a home can be filled with excitement and it’s easy to overlook deficiencies in the home. Purchasing a property conditional upon a home inspection is always recommended. ! !A professional home inspector is impartial and offers his/her knowledge and opinion on the overall condition of the house. Inspections most often cover, roofing, structure, exterior, interior, insulation, plumbing, electrical, heating, air conditioning. Few people have the broad knowledge and expertise of a home inspector, who will provide a written or online report. This report will help you make a decision on how to proceed with your purchase. Reports also detail estimated life spans of the roof, furnace, windows, etc., bringing awareness to potential future expenses. !!Inspections usually cost $400 - $500 and take between 3 – 4 hours to complete. Home inspectors will advise you of any limitations of the inspection. As example, they cannot damage the home to access any portions not visible! !! !

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ELEMENTS OF THE BUYING PROCESS (CONT)

Land Transfer Tax Land transfer tax is assessed on real property when a deed is registered to transfer ownership of the property from one party to another. When you acquire a property or land, you pay land transfer tax to the province when the transaction closes. Land transfer tax is normally based on the amount paid for the land, in addition to the amount remaining on any mortgage or debt assumed as part of the arrangement to buy the land. !If you are a first-time homebuyer, you may be eligible for a refund of all or part of the land transfer tax. See the following link for additional details:!http://www.fin.gov.on.ca/en/refund/newhome/index.html!Calculating Land Transfer Tax!0.5% on the first $55,000!1.0% on the portion between $55,000 - $250,000!1.5% on the balance over $250,000!    Cost On Closing The best way to avoid surprises on closing is to be educated on what to expect. On closing the buyer will pay the seller the balance of the purchase price. However, on top of that there are several other expenses such as:!•  Legal fees!•  Land transfer tax!•  Transfer fees!•  Disbursements !•  Closing Adjustments!•  HST (if applicable)!•  Insurance !•  Mortgage !•  Moving !•  Appraisal !!A general guideline to establish closing cost is to plan for 2% of the purchase price. For example, closing costs on a $250,000 purchase will be approximately $5000.!