FAQ

1. What is Agency Disclosure?
2. What are the types of Agency Relationships?
3. What is the market value of a home?
4. What factors affect market value?
5. How do market conditions affect the value of a home?
6. What are the major elements of an offer to purchase?
7. How do we choose the right neighbourhood?
8. How can I make a great first impression when selling my home?
9. Are there additional costs associated with buying a home?
10. What is the difference between a conventional and high-ratio mortgage?
11. As a first-time buyer, can I borrow from my RRSP for my down payment?

  • 1. What is Agency Disclosure?
    A realtor must establish and disclose whether you will be their "Client" or their "Customer". There are substantial differences in the duties owed and the services provided to Clients and Customers, and you should be familiar with your options before committing to either.

    Agent:
    While the term "Agent" is not specific to the Real Estate industry, most Real Estate Salespeople, Brokers and realtors act as Agents when conducting business. An Agent is commonly defined as any person who represents another person in a business transaction.

    Fiduciary:
    A person in a position of trust and confidence who must put the interests of another person (their client) above all others.

    Client:
    Often referred to as a Principal, a Client is a person who asks an Agent to act on his or her behalf during the purchase, sale, exchange or rental of a property or business. An Agent owes their clients full fiduciary duties, such as loyalty, confidentiality, accountability, duty of care, obedience to all lawful instructions, and full disclosure of all pertinent facts.

    Customer:
    A customer is a person who has not retained an Agent to work on his or her behalf. While a customer does not enjoy the fiduciary duties and benefits of the Client-Agent Relationship, they are nevertheless entitled to be treated fairly, honestly and with due care at all times.
  • 2. What are the types of Agency Relationships?
    An Agency Relationship is created when a person, known as the Client, asks another person, known as an Agent, to act for and on their behalf in a business transaction. In a typical Real Estate transaction, an Agency Relationship is created when a Seller or Buyer asks a realtor to be their Agent. Agency is not as complicated as it sounds; it simply means: "who is representing you with your best interests in mind".

    In a real estate transaction, there are three types of agency representation which can occur:

    Seller Representation:
    When you list with Christian, Paul and Fran, they undertake a contractual obligation by which they and their company are representing you, the seller, in your best interests. "Seller Agency" is established in writing through the MLS Agreement.

    Buyer Representation:
    This is also referred to as "Buyer Broker" agency. This means that the other real estate agent who brings forward an offer on your home is representing the buyer in their best interests. Although the other realtor's goal is to sell your property, they are representing their buyer. Buyer agency may only be established in writing by a Buyer's Agency Agreement, which is available in a standard Ontario Real Estate Association format for all buyers. If you are using the services of Christian, Paul and Fran to purchase a home, they will represent you as a buyer under "Buyer Agency".

    Multiple Representation:
    This occurs when another agent from the same company brings forward an offer on your home. "Dual Agency" also occurs if one of Christian, Paul and Fran’s clients wishes to make an offer on your property, which is listed through them.
  • 3. What is the market value of a home?A realistic asking price helps sell your home quickly and for top dollar. Properly pricing your home minimizes the gap between the asking and selling price, increasing the likelihood of competing offers.

    A house priced 10% over market value is many times less likely to sell in the initial 30 days than one priced within 5% of its true value. Not only will an over-priced home take longer to sell, it is also likely to sell for less than its actual value. People begin to wonder, "what's wrong with that house?" and leads owners to "discount" properties that have been on the market for a longer than average time.

    Recommended listing prices are based on historical sales and current market conditions. It’s a fine line between getting the most for a property, while at the same time ensuring your asking price is competitive enough to attract serious offers. You can always ask for more than the market is currently bearing and then, if necessary, reduce your price at a future date. The drawback of this strategy is that it could take longer to sell and you may help others sell similar homes as they look comparably less expensive than yours.

    This is where the experience and knowledge of a good Realtor is invaluable. Christian, Paul and Fran know the market inside and out. They have the resources, connections and ability to keep you up-to-date with its constant changes. They know all of the properties currently for sale in your area, and are your best resource for determining and getting the highest price possible.
  • 4. What factors affect market value?
    Location:
    - proximity to public transportation, parks, stores, churches and schools
    - quality and consistency of neighbourhood planning
    - future development plans and local zoning

    Property:
    - style, layout, size, age and quality of construction of the building
    - size, shape, privacy and landscaping of the yard.

    Condition of the home:
    - first appearances
    - floor layout
    - quality and appearance of fixtures
    - general overall condition of main systems (e.g., roof, furnace, electrical system, central air, etc.)

    Comparable Properties:
    - asking and selling prices of comparable neighbouring homes

    Market conditions and the economy:
    - number of homes currently on the market
    - number of people looking to buy
    - the state of the local and national economy
    - current mortgage rates
  • 5. How do market conditions affect the value of a home?
    Despite the condition or desirability of your home, its value will be affected by current market conditions:

    Balanced Market:
    The number of homes on the market is equal to the number of buyers. In this market, prices are stable and homes sell within a reasonable period of time. It is a calm atmosphere with buyers having a satisfactory number of homes from which to choose.

    Seller's Market:
    The number of buyers exceeds the number of homes on the market. In this market prices are increasing and homes sell quickly. As a seller you will probably have more negotiating power and obtain a higher selling price for your property. Unfortunately you will be on the other side of the fence when purchasing your next home.

    Buyer's Market:
    The supply of homes exceeds the number of buyers. In this market prices tend to drop and homes stay on the market longer. Your home may take longer to sell and you will have less negotiating power with respect to selling price. Fortunately you will be in the driver's seat when making an offer on your next home.
  • 6. What are the major elements of an offer to purchase?
    Price - the offering price will depend on market conditions, your own opinion of its value, and market information provided by Christian, Paul and Fran. The offering price may be different from the seller's asking price.

    Deposit - the deposit shows good faith and that you are serious about buying the home. It is held in trust and applied against the selling price on closing. It forms part and parcel of your total downpayment. The actual amount of the deposit will vary according to the asking price of the house. Christian, Paul and Fran will advise you on how much is an appropriate deposit.

    Conditions - there are a wide variety of conditions that you can place in your offer. It is extremely common to make your offer conditional on home inspection by a certified home inspector and conditional on bank financing. If you own another property, your offer may also be subject to you being able to sell your property.

    Inclusions - are those items which you wish to be included in the purchase price; for example, appliances, window coverings and blinds, etc. Inclusions will entail "chattels" or items which can be taken by the owner that are mobile and are not normally included in the purchase price.

    Exclusions - are those items the seller wishes to take with them; for example, a special light fixture. If something requires a screwdriver, hammer, or other tool to be removed and the Seller intends on taking it with them, it should be noted under exclusions.

    Land Survey - a land survey report / property survey / building location survey / surveyor's real property report (four words which have identical meanings in practice) - is a complicated and detailed measured drawing of the location of all properties lines and all of the buildings / additions / fences / decks / improvements that lie therein. If an existing survey exists, it is common practice to have a clause requesting it in the offer.

    Completion Date / Closing Date / Possession Date - these three names are all the same. It is usually (but not always) the date people move in to their "new" home as well. It is the date that title to the property & keys are handed over to you, the Purchaser, in exchange for funds. The transaction is finalized with the services of your lawyer and the Seller's lawyer.

    Other Clauses - each offer is very different and is custom tailored to suit your needs and the specifics of the property. Christian, Paul and Fran will assist you in creating these clauses.

  • 7. How do we choose the right neighbourhood?
    While this is a very personal decision hinging on hundreds of different factors, some things to consider:

    Availability of community amenities (e.g., public transportation, parks, stores, churches and schools). If you have school-age children you may even want to visit the local schools and day-care centres.

    Travel the new driving route to and from work during the appropriate times to see what traffic is like.

    The quality of neighbourhood planning, any future development plans and local zoning will have a significant affect on a neighbourhood's desirability. Re-sale values and future property taxes are likely to be affected by any significant changes. Are developers interested in the neighbourhood? If so, what projects are planned.

    Find out if there are major infrastructure projects planned for the area. Major construction projects, which could be anything from building a new mass-transit station to widening the area's major roadway, are usually part of a long-range city, town or county plan. While construction can be disruptive, you need to determine if it will have a positive or negative long-term effect on the neighbourhood and its property value.

    Investigate the local job market. You can expect property values to rise if area employers are creating more jobs, especially higher-paying jobs.

    Talk to the neighbours. They can be one of your most valuable sources of community information.

  • 8. How can I make a great first impression when selling my home?
    First impressions count. The decision to buy a house is not solely based on price, location and accessibility to services. It is also an emotional choice. It is a search for a home, a place in which one will find comfort, security and happiness. To create a favourable first impression consider:

    Love at first sight
    - plant flowers, weed and edge gardens
    - mow lawn, trim hedges and shrubs
    - clean driveway and sidewalks of dirt, leaves or snow
    - water the lawn extensively, well in advance of selling
    - remove old lawn ornaments, toys and play sets
    - clean and repair rain gutters and siding
    - touch up exterior paint
    - clean out garage
    - pick up any litter

    Cleanliness is a virtue
    - make mirrors glitter and appliances sparkle
    - wash and polish floors
    - clean and freshen bathrooms
    - clean and shampoo carpets
    - clean windows, walls, doors and trim

    This place looks neat and tidy
    - clear countertops
    - declutter heavy traffic areas, halls and stairs
    - store surplus furniture to reduce feeling crowded
    - put seasonal clothing into storage
    - pack closets only half-full – move items to other storage areas

    It certainly is well maintained
    - touch up interior paint and paper
    - repair cracked plaster
    - tighten door knobs and cupboard latches
    - oil squeaky doors
    - repair leaky plumbing (taps, shower heads and toilets)
    - repair seals/caulking around bathtub and sinks
    - replace burnt-out light bulbs and install brighter bulbs
    - clean furnace and humidifier

    Presentation
    - turn on all lights
    - open all drapes in daytime
    - play quiet background music
    - turn on air-conditioning or light fireplace
    - keep pets outside or with a friend during showings
    - avoid being in the home during showings; buyers often feel awkward and rush if they feel they are inconveniencing the owner.
  • 9. Are there additional costs associated with buying a home?
    As a purchaser, there is no cost to you for the services provided by Christian, Paul and Fran; however, you should be aware of the costs associated with buying a home:

    Home inspection fee
    The cost varies from $275 - $400 and up depending on the complexity of the inspection, the size of the home.

    Mortgage appraisal fee
    The cost of an appraisal ranges from $150 - $250 and up for larger homes. Some mortgage brokers charge an application fee.

    High ratio mortgage insurance
    This is payable if you have less than a 20% down payment. Refer to the CMHC for a summary of premiums.

    Land surveyors fee or title insurance fee
    The cost varies and Christian, Paul and Fran and your lawyer can advise you on the differences. Sometimes, the seller of a home will have an existing survey that he/she can pass along to you at no additional charge. Often, this will meet the requirements of your mortgage lending institution and solicitor, if there are no significant additions or improvements to the property since the time that the survey was completed.

    Land transfer tax
    There are two taxes payable by all home purchasers: the City of Toronto and the Province of Ontario land transfer taxes. First time buyers receive a break on the “City of Toronto” portion for homes under $400,000. Christian, Paul and Fran will assist you in calculating the amount of the land transfer tax. This tax varies according to the purchase price of the property.

    GST
    This is applicable on new construction only. You do not have to pay GST on the price of a "used" residential home. In basic terms, a "used" residential home is one that has been owner occupied in the past. There are other considerations regarding GST; Christian, Paul and Fran will provide you with more information. GST is also applicable on all services (legal, appraisal, etc.) related to the real estate transaction.

    Legal fees
    The cost of having a lawyer close the transaction is made up of various components: his/her legal fee + GST + disbursements + the law society levy. Consult your lawyer directly on the breakdown of these costs.

    Other costs/adjustments
    An adjustment occurs when a seller has prepaid something, like property taxes or utilities. There are other adjustments which Christian, Paul and Fran, your lawyer and your mortgage lender will advise you on.

    Property taxes, maintenance costs, and utility bills
    They begin on the day you take possession of your new home. Christian, Paul and Fran can give you "rules of thumb" or help you in budgeting for these expenses.

    Moving costs
    Renting a truck or hiring a professional mover. The more you can do yourself, the less costly. Don't forget to save a bit of money to order food on your first evening. The last thing you want to do after moving all day is prepare a meal!

    Household insurance
    Contact your insurance agent or broker for quotes on fire/theft/liability insurance. Your insurance professional will review all of your insurance options with you.
  • 10. What is the difference between a conventional and high-ratio mortgage?

    All buyers, including first time buyers, can purchase a home for as little as 5% down (conditions apply - see lenders for details). If you have between 5% and 20% down payment, you will apply for a high-ratio mortgage. The process is only slightly different than applying for a regular or conventional mortgage (i.e. 20% down payment or greater).

    A high ratio mortgage requires high ratio mortgage insurance. High ratio insurance protects the lender against the risk of default of repayment. In Canada, non-private lenders can only legally lend up to 80% of the appraised value of a home (hence, conventional mortgage financing). But with high ratio mortgage insurance, lenders can lend as much as 95% of appraised value (high-ratio mortgage financing).

    There are two high ratio mortgage insurance companies: CMHC and GEMI. GEMI will not underwrite in all areas. Your lender will advise you. Currently, the application fee is $165 including the bank appraisal, due on the date you apply for financing. The insurance premiums range from 0.5% to 3.1% (higher with 0% down). Visit the CMHC website for full details.

    When applying for a conventional mortgage, there are two approval levels: you, as a client, must be approved and then the property purchased must be approved (based on the appraisal report). When you apply for a high-ratio mortgage, there is a third level of approval: you must be approved by the mortgage insurance company. As a general rule of thumb, the financial institutions are well acquainted with CMHC and GEMI's guidelines and will gear their own application to be in line with the CMHC and GEMI requirements.

    The approval process is completely automated, with your application being elevated within seconds to CMHC or GEMI.
  • 11. As a first-time buyer, can I borrow from my RRSP for my down payment?

    The Home Buyers' Plan permits first-time buyers to withdraw up to $20,000 each from their RRSPs to put toward their down payment. There is no tax withheld on the money withdrawn from the RRSP account. Speak to your lawyer about preparing the additional paperwork to facilitate the withdrawal. The amount borrowed must be repaid over a period of time, not exceeding 15 years.