Purchasing a home in Ontario can be an exciting yet challenging process, especially for first-time buyers. Building a reliable team of professionals can make a real difference, helping you navigate legal, financial, and property-related aspects with confidence. This guide highlights key roles in a real estate transaction and offers insights into selecting professionals who will protect your interests and streamline your home-buying journey.
Role of a Real Estate Agent
When deciding to purchase real estate in Ontario, the buyer usually turns to a database containing properties for sale such as MLS or Housesigma as their initial research tool. The buyer can narrow down the search by neighbourhood, type of property they are looking for and house specifications. While the database is a great place to start, once the buyer search starts getting serious, they will need to enlist the aid of a real estate agent to help facilitate access to the property and subsequently assist with negotiating the best deal for the buyers and drafting of an agreement of purchase and sale.
A real estate agent is one of most powerful tools for the buyer. An experienced real estate agent will function as an expert guide who can provide the buyer with market analysis ensuring that the buyer avoids delays and costly mistakes. Realtors’ in depth knowledge of the city can help buyer narrow down their search criteria to a specific neighbourhood based on their required criteria such as schools, work, and local amenities. This will save the buyer time as realtors will be examining all listings available but sending you the listings that fit the buyer specific criteria. Some realtors may have access to off market properties and have professional connections with other realtors who may have access to a property that fits buyers needs.
The process of finding your dream property may take weeks or even months, but in some cases, the buyers find their dream home quickly. With a realtor in your corner, you are able to schedule a showing and look at the property and determine if the property fits your needs in person and not just in photos. Utilizing realtors’ knowledge of the market conditions, specific area and the house itself, the realtor will be able to suggest a competitive price and lead negotiations as well as drafting the agreement of purchase and sale. The real estate professional that you choose must have proficient command of English language and know industry specific terminology to effectively negotiate and put together the agreement of purchase and sale that will protect your rights as a buyer.
Once the agreement of purchase and sale is drafted by the realtor and if the agreement has conditions listed, the buyer will then have to enlist the help of other industry professionals to finalize the agreement.
There are many different conditions that can be written into the agreement of purchase and sale, but for the purpose of this article we will discuss the following three conditions: financing/mortgage, inspection, and lawyer review.
Financing and Mortgage Condition
Unless you are buying your property without a mortgage, most likely your agreement of purchase and sale will be conditional on you getting mortgage financing. In that instance, you will need the aid of a mortgage broker or bank to assist in qualifying you for a mortgage. This is a vital part of your purchase transaction, as the financing institution will determine if the bank is willing to loan money for the house and if you are able to make the monthly payments. Without a mortgage, unless the buyer has funds available, the buyer is unable to purchase the desired property. If the financing condition is properly drafted by the realtor, and the buyer does not qualify for a mortgage, the agreement would end, and buyers deposit would be returned without any penalty or deductions.
The bank considers several factors when qualifying a buyer for a mortgage such as the amount of downpayment, your income and assets/liabilities that you are currently carrying and the house itself. Working with a knowledgeable mortgage broker gives buyers a better chance for qualifying for a mortgage as brokers have access to multiple lenders including banks. Furthermore, mortgage brokers can give you professional guidance on what to consider with respect to selecting the right mortgage for you. For more information on working with a bank or mortgage agent to finance your purchase transaction please refer to our other article. Once the buyer qualifies for the mortgage and fulfills conditions put forth by the bank, the buyer can waive the financing condition and move one step closer to a firm offer of purchase.
Working with a mortgage broker or bank has huge upside and does not cost anything to the buyer. Therefore, there are no excuses not to engage banks or mortgage broker services when purchasing a property in Ontario. If there are other conditions still outstanding, the buyer will continue to fulfil those conditions before the agreement becomes firm and binding on all parties.
Inspection for Property Safety
Inspection condition is another condition that is usually included in the agreement of purchase and sale to protect the buyer. The purpose of an inspection is to ensure that the property does not have any hidden issues that may not be visible to an untrained eye. Inspection can save thousands of dollars for the buyer if an inspection reveals issues before the agreement of purchase and sale is firm. Cost of an inspection is minimal compared to the benefits that the buyer will receive starting with a piece of mind that the property has no issues or that issues were discovered and the real estate agent was able to negotiate either repair or reduction of the purchase price. Therefore, working with a knowledgeable inspector is very important as they will help identify hazards and potential risks which will in turn help the buyer decide if the buyer wishes to continue with the agreement and undertake the repairs while taking into account price reduction, or if the buyer has an opportunity to walk away from the agreement based on the inspection report findings. Often, unless inspection clause reveals serious hazards and/or lift threatening risks that may not be repaired or that the repair is extremely costly, the issues found during the inspection are treated as bargaining chips to reduce the purchase price.
Lawyer’s Review of the Agreement
Lastly, the agreement of purchase and sale may be conditional on lawyer review. This condition allows the purchaser to take the agreement and review it with his or her lawyer. The lawyer will read the agreement and make the necessary suggestions or amendments to ensure that purchasers’ needs are protected, and their wishes are upheld. The lawyer will also review clauses written in the agreement and make sure that they are enforceable prior to closing rather than waiting to sue to seller after transaction has closed.
In some cases, when a condominium is being purchased, the agreement may be conditional on status certificate review. Status Certificate is a document provided by a condominium corporation that notes specific information about the unit as well as the building. The lawyer would review the status and advise the client of the financial health of the corporation, reserve fund information, whether there are any liens or anticipated special assessments. It is vital that the agreement as well as the status be reviewed by a knowledgeable lawyer who understands the ins and outs of the transaction. Condition in the agreement of purchase and sale for lawyer review is important because it will identify deficiencies and minimize financial liabilities for the buyer. Once the lawyer reviews the agreement and/or status certificate and no conditions remain, the agreement becomes firm. Firm agreement means that the agreement becomes is a binding contract between two parties.
A knowledgeable real estate lawyer is the most valuable tools a buyer can have when purchasing a new home. At the preliminary stages, the lawyer will review the agreement and make corrections, look at the title of the property and confirm if there is an issue that was not disclosed at the time of the agreement. The lawyer will also review the status certificate and discuss its implications. Recommendations brought forth by the lawyer after initial due diligence will safeguard the buyer and may prevent financial loss to the buyer. Lawyer compensation is minimal compared to the benefit and the work that needs to be done to protect the buyer and convey clean title.
Choosing the Right Team
As a buyer, specifically first time buyer, it is very important to have the right professionals working with you when buying your home. To pick the right people for you, you may turn to your colleagues, friends or family members for recommendations but do your own due diligence. Pay attention to google reviews and your instincts when you are talking to professionals. Once you select your team of professionals, ensure that there is collaboration between members to ensure that you are getting strong support and guidance from your professional team. The importance of selecting the “right” team cannot be understated. Failure to work with experienced professionals may turn the purchase of your dream home into a nightmare.
At MBLAW Professional Corporation, we prioritize your interests, ensuring each step is handled with precision and care. If you need a skilled lawyer for your real estate transaction, contact MBLAW today. We protect your interests!
