In order to identify homes that fit your wishlist, we use
a combination of strong market knowledge, excellent relationships
with other Realtors to provide advance notice of suitable
properties about to be listed, and access to the Guelph Board
MLS system.
Each and
every day, we search the market for new homes that come on
the market that may meet your needs. Using the Multiple Listing
Service system (MLS), Meehan and Al can access any home listed
with any real estate broker, in addition to those offered
for sale by Royal LePage Royal City Realty.
While
it is possible to search for a home on your own, not all houses
are advertised nor have "for sale" signs posted
on their front lawns. As well, many homes sell before they
reach the MLS system. As Realtors, we receive advanced notice
on listings about to be offered for sale and often can get
you through a home before it is even listed.
In most
cases, the purchaser does not provide compensation for our
services. Even though we represent you, our compensation is
provided by the seller, through the Listing Agreement they
have signed with their agent. Not only do you receive the
benefit of professional advice, home searching, and offer
preparation, our negotiation skills can save you money on
your purchase price.
A home
purchase is likely the most substantial and impactful purchase
you will make. Having the experience and knowledge of industry
professionals who will walk you through the entire process,
will ensure a most rewarding and financially sound purchase.
Elements
Of An Offer
Although and Agreement of Purchase and Sale contains many
elements, there are a certain few which require detail and
most significantly impact any transaction.
Price
Offered
In most situations, a Seller's asking price will not be
the offered price. The price you decide to offer will depend
on market conditions, your personal opinion of property
value, and the market information and advice we provide
you with.
Deposit
The deposit is merely a sign of good faith and an indication
that you are serious about purchasing the home. The Seller
does not immediately receive the deposit, as it is held
in trust and applied against the selling price on closing
of the purchase. The actual amount of the deposit will vary
according to the asking price of the house. We will provide
you with advice on an appropriate deposit amount.
Conditions
There are a wide variety of conditions that you can place
in your offer. They are important to protect your best interests
in any agreement. Most often offers are made conditional
on a home inspection by a certified home inspector and conditional
on approval of appropriate financing. If you own another
property, your offer may also be subject to you being able
to sell your property.
Inclusions
These are items that are to be included in your offered
price; for example, appliances, window coverings and blinds,
or pool equipment. 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 an item is fixed to
the home, or requires a tool to be removed and the Seller
intends on taking it with them, it should be noted under
the exclusions section of the offer.
Land
Survey
A land survey report is a detailed measured drawing of the
location of all properties lines and all of the buildings
/ additions / fences / decks / improvements that lie within.
If an existing survey is available, it is common practice
to have a clause requesting to see it included in the offer.
Completion
Date
It is the date that title to the property & keys are
handed over to you, the Purchaser, in exchange for the balance
of the purchase price. The transaction is finalized with
the services of your lawyer and the Seller's lawyer.
Other
Specialized Clauses
Each offer is very different and is custom tailored to suit
your needs and the specifics of the property. We will assist
in protecting your interests with specialized clauses when
required.
Preparing
An Offer
Once we have found you the home you've been searching for,
the next step is to make an offer.
At this
point, working with Realtors who are professional in their
level of service becomes paramount. Our job is to prepare
an offer that promotes and protects your best interests. Offers
of Purchase and Sale are legally binding documents that, if
improperly prepared, can leave you in a comprimising situation.
As
a result, we take offer preparation and presentation very
seriously.
Here are
the major steps of offer preparation and presentation that
we take on your behalf :
Prepare
you with all of the relevant data and inside information
we can to assist you in making a sensible and informed decision
Draw
up your offer and go over every element of it with you.
The offer is known as an Agreement of Purchase and Sale.
This offer incorporates the major elements as noted in the
section above
Communicate
with the listing agent that we have an offer on the property.
In some occasions, there are more than one offer from different
purchasers at the same time. If this situation does occur,
we will discuss the process and provide you with additional
advice concerning the elements of your offer
We
present the offer on your behalf at the earliest possible
time. We are there to promote you as a purchaser and your
interests in the transaction
After
the offer has been presented, the seller has an opportunity
to review and discuss the offer with his/her agent
After
consultation, the seller will exercise 1 of 3 rights available
to them :
accept the offer,
reject the offer, or
countersign the offer.
In
most cases, the seller will elect to countersign the offer.
Countersign may occur on a variety of elements within the
offer (ie. price, closing date, conditions). At this point,
we will communicate back to you the results of the presentation
and discuss a subsequent plan of action.
The
offer may go back and forth several times. You as a Purchaser
have the same 3 rights with the counteroffer :
to accept the counteroffer,
to reject the counteroffer, or
to countersign it again back to the Seller.
This whole
process takes time, careful analysis of the situation and
negotiating expretise. Selecting the right Realtors to work
on your behalf is without a doubt, the most important step
to purchasing a home.
First
Time Buyers
Buying your very first home is one of the most memorable and
exciting occasions in your life. Although this is an extremely
exciting opportunity, there are a lot of new information and
decisions presented. The following is an overview of reasons
to purchase vs. rent, a small financial scenario, and some
general mortgage and first home buying information.
Purchase
vs. Rent
In the
past few years low interest rates have allowed many people
to enter the real estate market for the first time. Concurrently,
there has been a strong push from numerous new financing sources
to lend you money. Money has never been so readily available
and cheaper to borrow than it is today. In many cases, you
will be paying less monthly on a mortgage than you pay in
rent! While these rates may not last for ever, reasonable
rates will always indicate ownership makes more financial
sense than renting.
Here are
a few advantages of entering into the world of home ownership:
Your
money will not be being wasted. Each month when you make
your mortgage payment, you're building equity in a place
of your own.
Despite
short term fluctuations in prices, property generally outperforms
any other form of investment.
If
you own a property, you are not at the mercy of unscrupulous
landlords. If there are problems that arise with the house,
you will be able to fix the problem yourself.
As
the owner of the property, you will be able to decide the
"house rules".
You
will have security of tenure. Rather than move from one
rented home to another, from year to year, you will have
somewhere that you can genuinely call home.
You
can decorate the property according to your own taste.
Purchasing
your dream home becomes one step closer, as you build equity
in your first home.
Financial Scenario
The following
is a hypothetical situation using numbers common to today’s
Guelph real estate market:
Suppose
you are currently paying $850/month to rent your own apartment.
Not a bad price for rent in Guelph and hopefully low enough
to allow you to save a few dollars towards your first home.
Assuming your rent stays the same over the next 5 years, which
it might not, you will have paid a total of $51,000 into someone
else’s pocket. There is certainly a lot of convenience
associated with renting, but does that equal over $50,000
worth of convenience?
Since
this will be your first home purchase, we will use a very
reasonable home purchase price of $190,000. Within this range,
we could likely find a smaller 2 or 3 bedroom home or relatively
new link home in Guelph, perhaps even with rental income potential
to help pay the mortgage. For the purchase of this home, you
will supply a small down payment of $9,000 and estimate mortgage
payments (including property taxes) of about $1,200/month.
Over the same 5 year period, you will have paid down over
$25,000 with your monthly principal and interest mortgage
payments of $1,050/month (deduction for taxes of $150/month).
Plus, assuming a modest increase in housing values of 5% each
year, your property will have increased in value by over $50,000.
This would equal a total investment growth of over $75,000
in those same 5 years.
This
scenario may be a bit confusing, and we would be more than
happy to explain it to you using numbers that fit your life
and financial situation. Even as the numbers change, the idea
remains the same: Owning a home will always be a more sound
financial investment for your present and your future.
General
Mortgage and First Home Buying Information
In today’s
real estate world, buyers, including first time buyers, can
purchase a home for as little as 5% down (talk to a lender
for more information). Although mortgages may sound somewhat
confusing the process is relatively straightforward.
A down
payment of anywhere from 5% to 25%, will result in what is
called a “High Ratio” mortgage. The process differs
slightly with a down payment of greater than 25% which most
first time buyers don’t possess. A high ratio mortgage
requires a mortgage applicant to obtain high ratio mortgage
insurance, which is similar in fashion to other types of insurance.
This insurance is for the lender and insures them against
the risk of lending you a large portion of the purchase price
of your home. The lender is protected against the risk of
default of repayment. In Canada, non-private lenders can only
legally lend up to 75% of the appraised value of a home (conventional
mortgage financing). However,iwth 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 which insure
lenders - CMHC and GEMI. Talk to your lender for advice. If
you are wondering how to contact a lender, give us a call
and we can assist you through this process.
Here are
a few answers to some possible questions you may have:
Q: What is the cost involved of obtaining a high ratio mortgage
vs. a conventional mortgage?
A: There
are two costs:
The
application fee (currently $165 including the bank appraisal).
This is due on the date you apply for financing.
The
insurance premium. Premium rates range from 0.50% to 3.25%
(higher with 0% down). See www.cmhc.ca
for full particulars.
Q:
What is the difference between applying for a high ratio mortgage
and a conventional mortgage?
A: Very
little. You still only do one application.
When you
apply 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 CMHC's and GEMI's
requirements.
Q:
Does the approval process take any longer because it is a
high ratio mortgage?
A: Yes.
Since there is an additional level of approval that must be
granted, the total process will take longer. Anywhere from
one to seven additional days is required.
Borrowing
From Your RRSP’s
The Home
Buyers' Plan permits first time buyers to withdraw up to $20,000
each from their RRSP's to put toward their down payment to
enable them to buy their first home. There is no tax withheld
on the money withdrawn from the RRSP account. The amount borrowed
must be repaid over a period of time, not exceeding 15 years.
We hope
this information helps you understand some of the steps and
processes involved in purchasing a home. If you have any questions
about entering the housing market or just want some clarification,
feel free to contact us.
