Read our tips and make your real estate purchase an educated one:
1. Before Shopping: Choose Your Team
You have finally decided to buy your home. But, before you start shopping, make sure you have a great team. Assembling your team in advance will make the entire process go smoothly and help you avoid most potential problems.
- Choose an experienced Realtor®. It's best to have a knowledgeable Realtor® to help you in your search and to represent you when it's time to make an offer. Generally, we advise against approaching the listing agent of a property directly since this will put them in a position of dual agency – acting for both you and the seller. While this is not unethical, it is problematic for a Realtor® to represent both parties. Your Realtor®'s commission will usually be paid by the seller.
- Arrange your financing. Choose a bank or mortgage broker to get mortgage pre-approval so you know what you can afford. Don't assume, though, that this pre-approval guarantees final approval. The lender will also want to approve the property to ensure it has sufficient value for the mortgage. Because of this, you should always include a financing condition in your offer so you can get out of the contract if the mortgage is not approved. Also, don't waive the financing condition until you have approval in writing. We suggest using a mortgage broker since they are often able to get you better rates than the banks.
- Choose your lawyer. Make sure the lawyer you use to help you with your real estate purchase contract has experience in real estate deals and please consider us. We don't pretend to be experts in personal injury law or divorce matters, but we sure know our way around a residential real estate purchase!
Once you have assembled your team, you will be able to buy your home with confidence and protect yourself against future legal issues.
You should also find out any costs you will have to pay in addition to the purchase price of the home.
2. The Real Estate Purchase Contract
Once you have found a home and are ready to make your real estate purchase, make sure you understand what you're getting into. Find out how much the property taxes are, how much the monthly utilities are and any zoning or building restrictions.
Then your REALTOR® will complete an offer to purchase on the standard “Real Estate Purchase Contract” form.
The offer will contain all the essential terms of the contract and may be accepted, rejected or countered by the seller as part of the negotiations. Once accepted by both parties, it becomes a valid and binding final contract. It is important, therefore, that you understand all the terms and conditions in the offer before signing. For example, one area that causes disagreements is personal property. Make sure you specify exactly which items stay with the house and which ones the seller will take.
Always include some conditions in your offer for your protection. Make the purchase subject to items such as financing, selling your existing home, a home inspection or other conditions.
To avoid future problems, it is very important to review the terms and provisions with your lawyer before signing. Alternatively, you can include a condition that the real estate purchase is subject to your lawyer's approval.
It is also advisable to save a copy of the listing information and other ads or material the seller's Realtor® may have prepared in the event there are any future disputes.
We also suggest making the real estate purchase conditional on a satisfactory home inspection. The cost of a home inspection is a small price to pay for the peace of mind you will have knowing there are no surprising major expenses down the road.
3. Don't Sign Before Seeing Your Lawyer
It is important to have your lawyer review any contract before you sign it. Once signed, it is legally binding after all conditions are waived and some terms or conditions may cause problems if you don't understand their implications.
Realtors typically prepare the real estate purchase contract but they are not lawyers. It is critical to get expert advice before you sign or there may be problems that can't be fixed.
If you can't see us before signing, advise your Realtor® to make the purchase conditional upon your lawyer's approval.
4. Other Costs of Buying
Your lawyer will outline the other costs, in addition to the purchase price, of the transaction such as:
- Legal fees and disbursements
- Property tax adjustments
- Fees to register title and mortgage
- GST if buying a new home (most cases)
- Mortgage fees
- Appraisal and Real Property Report (if required)
5. Condominiums: Buyer Beware
Special care should be exercised when buying a condominium. If you are buying a condominium, click here to discover how to protect yourself.
6. Mortgage Fraud
If you're unable to qualify for a mortgage from a conventional lender, you may be tempted to look at properties being offered with low or no down-payments or some other enticement.
Having an experienced team on your side can prevent you from a financial disaster. Make sure you consult your Calgary real estate lawyer, your Realtor® and your mortgage broker to prevent making a serious mistake.