Buyers Guide

Overview

This is a guide to help make the experience of buying a home a pleasant and exciting one. It will answer questions, eliminate surprises and explain how you and we will work as a team to achieve your goals.

Choosing your own Realtor is the first step. We will work to find a home that is the perfect match for you using the MLS System.

Selecting Homes

You'll look only at choice properties. We will have all the facts researched before we see the home.

Viewing Homes

We will serve as the liaison between you and the seller. We will subscribe to the New Brunswick Real Estate Association's strict code of ethics, which requires complete honesty and fair treatment to all that deal with us. Our point of view is an objective one.

Contract Preparation

We will prepare the contract to purchase the home you choose so that it reflects what you want.

Closing

From the time your offer is accepted until possession date, We will work with your lawyer and mortgage lender to ensure the transaction is a smooth one.
We feel confident that this guide will answer any questions you may have. However, if you have any questions not answered here, do not hesitate to call us anytime.

Let's get to work!

The first step in finding your home should be a visit to your local mortgage lender. Your mortgage lender will explain the options available for financing your new home and discuss with you the current interest rates, terms, payments, etc.

* Pre-approved Mortgage

There are several advantages to getting a pre-approved mortgage. Your mortgage lender can determine how much of a mortgage you qualify for so that you see only houses you can afford. A pre-approved mortgage has a guaranteed rate of interest for at least 60 days so when you find your home you will get your guaranteed rate, or if interest rates have gone down, you'll automatically get the lower rate.

* Down Payment

A down payment is the amount of money needed up front in order to buy a home. You will need 5% of the purchase price for a down payment but you can increase this if possible.

* Mortgage Loan Insurance

If your mortgage is for 75% of the purchase price or more you will need what is known as a high ratio mortgage. This type of mortgage must be insured by the Canada Mortgage and Housing Corporation (CMHC) or by GE Capital Mortgage Insurance Company of Canada.
You obtain this insurance as part of the mortgage process. There are two costs in buying mortgage loan insurance. There is the application fee of approximately $235 and the premium, which ranges from 1.25% to 3 ¾% of the mortgage.

The Buying Process

Once we have found the home that interests you it triggers a series of steps to begin.

The first step involves presenting the offer to purchase in writing in the form of an Agreement of Purchase and Sale. We will tailor the offer to reflect your particular wants and needs. Items to be included in the offer include your proposed purchase price, everything in the house to be included in that price, amount of your deposit, how the balance of the purchase price will be paid and a possession date.

When writing an offer to purchase a property, you will need to include a deposit in the form of a cheque or cash. If the offer is accepted, the deposit becomes part of the purchase price. A deposit of $100 is common and this money is kept in the trust account of the Real Estate Company and is not turned over to the seller.

Your offer to purchase may include conditions to be met before the offer is confirmed. You might want to make your offer conditional on arranging financing, the outcome of a building inspection, the selling of another property or the results of the survey.

When the offer is presented to the seller they have one of three options:
1. Accept your offer as is;
2. Reject your offer; or
3. Give you a counter offer that could include many of the details of your offer but with some revisions. The most common changes are price and/or possession date.

Once we have an accepted offer the next steps are to meet the conditions of the offer. Now is the time to contact your mortgage lender and provide him/her with the details of the purchase to arrange financing.

Legal Services

A lawyer is a vital part of any property transaction. A lawyer's duties include a "title search" of the property which will indicate any covenants, easements, liens or other conditions which may apply to the property. Your lawyer can also obtain a legal survey or location certificate of the property, which is, required by most mortgage lenders.

Your lawyer's fees cover a variety of services and HST will apply to these fees.

Your lawyer will probably want an initial meeting with you regarding the purchase. He will cover such things as:

Agreement of Purchase & Sale to ensure everything is in order;
Secure a copy of the legal description;
Correspond with the seller's lawyer;
Search the title at the country registry office;
Prepare closing documents;
Prepare a Statement of Adjustments;
Obtain a Certificate of Title;
Meet with you for signing of the closing documents;
Forward closing funds to the seller's lawyer;
Peruse the deed received from the seller's lawyer;
Pay the Land Transfer Tax;
Record the deed and mortgage at the Registry Office;
Forward the deed to you with a final report.
Additional Costs

In addition to the purchase price of your new home, there are a number of costs, some mandatory and some optional, that you will incur.

*Inspection Costs

An inspection of your home is not mandatory, but it's a very wise step to make it a condition of your offer. A home inspector provides you with a written report after checking that the building is sound, and will identify potential repairs and their estimated costs. An inspection usually costs in the vicinity of $300.

*Property Survey Cost

A survey indicates the property boundaries and measurements, position of major structures, and any registered or visible easements or encroachments on the property. An easement is, among other things, a right to access your land for a specific purpose such as a driveway or public utilities. An encroachment is any intrusion on your land by a neighbor's fence, structure or overhang. If there isn't a current survey available from the seller, which there often is, this can cost you approximately $500-$700.

*Land Transfer Tax

A tax is levied on any property that changes hands. As a buyer, you are responsible for paying this tax which is ¼ of 1% of the greater of the purchase price or the assessed value. i.e. Tax on a $50,000 property would be $125.00. The tax is payable before the deed is registered so plan to have that extra money available.

*Property Tax Credit

An adjustment will be made for property taxes as of the closing date. The total amount of taxes for the year is divided by the number of days in the year. The seller is then charged their share of the taxes and the buyer theirs. A buyer may be required to pay an additional amount on top of the purchase price to reimburse the seller for taxes paid in advance. If you are getting a mortgage on the property it may also be necessary to advance the mortgage company a portion of the taxes expected for the next year so they can accumulate enough to pay your taxes for you when they come due.

*Fuel or Utility Adjustment

A fuel or utility adjustment is often made at closing. If the seller leaves fuel or has prepaid utility bills, the purchaser will have to pay the seller for his share.

*Registration Fees

These are fees payable to register your Deed. Your lawyer will charge you these costs with his fees.

*HST

There is no HST payable on existing homes. HST is payable on new construction, but many builders include it in the purchase price. We will know and advise you where HST is payable.

*Fire Insurance

On or before the closing date you will require a copy of the fire insurance policy protecting you against financial loss from fire. The first loss payable should be to your mortgage company. Should you be unable to obtain the insurance policy in time for closing, a letter signed by the insurance agent setting out the details of the policy should be acceptable in place of the actual policy.

*Legal Fees

Your lawyer fees will be payable at closing for the legal work involved in representing your interests in the purchase of your home. These fees do not include disbursements for such things as daily searching fees, costs of registering the deed, costs of registering the mortgage, photocopy fees and perhaps travel expenses. It is difficult to judge exactly what fees will be at the onset, as it will depend on whether any problems arise and how much work is involved in correcting them. You should get a preliminary estimate to assist you in budgeting and you will be advised as soon as possible if anything unexpected arises.

*Amounts Payable on Closing

On or shortly before the closing date you will be required to provide your lawyer with a certified cheque for the difference between the purchase price and the mortgage. This amount may be modified if there are any adjustments due to prepaid taxes, fuel adjustments, etc. Your lawyer will let you know the exact amount.

 

Thinking of Selling Your Home

There are a million different reasons why people sell their homes, but every seller has one thing in common: the desire to get as much money as possible from their existing residence as quickly and as hassle-free as possible. (If your home is your principal residence, you won't have to pay capital gains tax on any profits from the sale. If, on the other hand, it is an investment property, prepare for the tax man!)

Before you begin the selling process, really evaluate why you're moving. Do you have too few rooms, or too many? Has your job moved to another city and you're relocating? Are the neighbours driving you away? Or are you simply looking for a change? A complete analysis of your current position will set a good foundation for your next home hunt.

When is the Best Time to Sell Your Home?

Everyone seems to have specific ideas on when the right time is to sell. Some base their theories on the overall economy, while others will tell you that there are key buying months that you'll want to capitalize on.

If you're not buying and selling strategically or for investment, the best time to sell is really when you feel your existing home will not meet your future needs. The best reason to purchase a new home is to take advantage of your family and lifestyle changes. Do you wish to be closer to a school? Are you switching jobs? Do you have an aging parent to care for?

In Canada, weather and holidays do play a factor. Almost no one goes house hunting around Christmas, and few give up their summer vacations. Of course, those with school-aged children are less likely to move during the school year and summer is an ideal time. In some areas, there is a definite "spring cycle" -- perhaps it's a bit of spring fever and a wish to break out of the bonds of winter.

Some gamblers look for winter bargains and then try to sell their homes during the spring cycle. But overall, that could be more tension and aggravation than you wish. And the monetary results may be disappointing.

Another key factor to consider is the economy. Are interest rates higher or lower in comparison to your current mortgage? If they are higher, you may want to stick with your current home, as your new mortgage payments could be uncomfortable. If rates are lower, you might be able to trade up to a more expensive home without a significant increase in your monthly mortgage obligation.

What's more, if it's a buyers' market, you may be in a strong position to purchase a new home, especially if you have accumulated some equity in your current property.

Are There Costs Involved in Selling?

Unfortunately, the answer is yes. Even if you think your home is perfect, you may have to do some minor repairs or upgrades to make your home more attractive to potential purchasers.

A professional home inspection may be a condition of the offer. If the inspection points to problems, your purchaser may ask that you make the necessary repairs or choose not to close the deal.

Closing costs, such as lawyers' fees or unpaid taxes, will also have to be paid.

Mortgage discharge fees may be levied by your lending institution.

Sales commissions must be paid. They usually amount to 6% of the selling price.

Buy or sell first?
That's tricky. After all, if you find a purchaser for your existing home, before you've found a new one, you may find yourself living out of a suitcase if convenient closing dates can not be negotiated. On the other hand, if you find your dream home before you've unloaded your old one, you may be faced with carrying two mortgages for a time.

So how do you manage? Easy. Do your homework and have a good idea about the neighbourhood and type of home you're looking for. Do an honest evaluation of your family's needs and budget.

Speak to your EXIT Realty agent and start your new home search as soon as your existing home hits the market.

If you've found a home, before you've sold your existing one, use "sale of your existing home" as a condition on your offer. If you don't sell your house within a fixed period of time, you can choose not to go through with the offer. This, however, is a difficult condition for many vendors to agree upon and you may find that you have to forgo your price negotiating power.

Purchasing a home before you sell could be a risky strategy if you're counting on the proceeds from the sale.

If you've found a purchaser before you've found your next home, use "purchase of a new home" as a condition when you sign back the agreement. Again, it will only be for a fixed time. Even if you have not found the ideal next house by the time the deal closes, you may still wish to proceed with the offer. As a buyer with a "sold house" you will be in a better position to negotiate price.