BUYING SINGLE PRE-OWNED HOMES IN OTTAWA
Single Pre-owned Home
Buying a home is a huge decision. If you are looking for a single pre-owned home, your real estate agent will assist you in looking at and finding suitable homes while guiding you through the buying process. When you find the home you want and best suits your needs, you begin with an Offer to Purchase. Your agent will then prepare the offer and submit it on your behalf. However, an agent’s loyalty is often divided between the vendor and the purchaser.
It is always advisable to have a real estate lawyer review the offer on your behalf exclusively, as your lawyer’s only loyalty is to you. Make sure to have your real estate lawyer look it over before you sign it. If that isn’t possible, then your agent can make the offer conditional on your lawyer’s approval. Our Ottawa real estate lawyers are often available outside of typical office hours to review the offer and suggest improvements to benefit you, most importantly.
Buying a property might be the biggest transaction you’ll make in your life. Don’t take chances. Consult one of our real estate lawyers before you put pen to paper.
Our lawyer will help you through every step of the process before you get the keys to your pre-owned home:
Our lawyer will help you through every step of the process before you get the keys to your pre-owned home:
Deciding on the purchase price for a pre-owned home depends on a few factors, the most important of which is its location. The home’s location has a large impact on the value of the home both now and in the future. For example, a home on a quiet street will have more value than a home placed on the corner lot of a busy street. However, if the noises of the area don’t bother you, then you might be able to negotiate a lower price accordingly. Homes located in thriving and vibrant communities may also have more value than other homes on the market. A home will likely reduce in value if it is located in an area where businesses are failing, schools are on the decline and roads are not well cared for.
Additional factors may play a part in the purchase price, including the number of homes available in general as well as in that particular neighborhood. The recent history and asking price of similar homes in the area, unique selling features like pools and fireplaces and the general condition of the surrounding area can weigh heavily on the purchase price. Most sellers will usually set their asking price at a point above what they’d be willing to settle for, so be prepared to bargain.
Keep yourself informed by checking the business section of the newspaper for information about the local housing market. Alternatively, you can discuss it with your banker.
Before a final price agreement is reached, you and the seller will probably go through a series of negotiations over the price or other conditions of the sale. Some vendors will respond to your first offer with a counter-offer of their own, which details specific changes. You are then free to present your own counter-offer or withdraw your offer entirely. This process goes on this way until either an agreement between the two parties is reached, or one party withdraws from the negotiations.
Usually the purchaser will make a deposit with the offer as evidence of good faith. There is no specific rule on the amount that should be submitted as a deposit, but the amount is often perceived as an indicator of how serious you are about the purchase. If you’re considering making a large deposit, be cautious. If the owner accepts your offer and you later choose to cancel it, you could end up losing your deposit and having legal action brought against you by the vendor.
Once you have found the home that you want and have established your budget, the next step is to have an Agreement of Purchase and Sale (or APS) made. This contract is used to purchase your new home and contains all of the necessary conditions of the purchase. This is a legally binding document, and should never be made under pressure or without a full understanding of what you are signing.
The most commonplace form of the APS for residential real estate transactions is called the Ontario Real Estate Association (or OREA) Form. This form has been taken up by every real estate board in the Province of Ontario. Because these forms can be very general, it is advisable to consult our real estate lawyer to help you add clauses or make amendments in your best interest.
This agreement should concisely outline all terms and conditions of the sale including, but not limited to the following:
1. The parties involved in the transaction
2. The proposed purchase price
3. The property is subject to the agreement
4. Items included or excluded in the purchase price (ex: appliances)
5. Items located within the home that are rented
6. The deposit made by the buyer
7. The closing date for the sale of the property
8. The date of occupancy
9. Any conditions attached to the sale (ex: house inspections, mortgage approval, etc)
Sale closing costs and additional fees
Initial costs associated with the purchase of a home can add up really quickly. It’s important to consider the following costs so that there are no surprises when it comes time to close:
Utility and Property Tax Adjustments
These costs are payable through the lawyer once the sale is closed. Depending on when the vendor’s property tax and utility payments are due, the vendor may or may not add these costs. If the seller prepays these expenses, then the buyer will be expected to refund the difference to them upon closing.
If the vendor does not pay these expenses in advance, they will be required to pay the buyer any amounts accrued before you become the possessor of the house. The exact amount will be calculated by the lawyers involved during the sale.
Mortgage Prepayment or Discharge Fees
The seller should be forewarned that if they plan to pay off any mortgage on the property with proceeds from the sale, the vendor’s bank might charge a fee for closing the mortgage account. A penalty fee might accrue as well if it is paid off early.
Inspection Fee
Purchasers should have an inspection performed by a professional building inspector before the offer to purchase is made. The inspection could make you aware of problems that you weren’t knowledgeable of before and makes sure that the building is structurally sound before you invest your time and money. Normally the inspector will provide the buyer with a written report, but they should still ask the inspector for one if they did not offer one up on their own.
Interest Adjustment Costs
Interest adjustment dates can dramatically reduce your cash flow, so please take note of your lender’s policy. Most lenders expect the first mortgage payment one month after closing the purchase of your new home. If your closing date is during the middle of the month, however, some lenders might expect the first payment at the beginning of the next month, two weeks before you’d normally expect to have to pay. Alternatively, they may charge a pro-rated interest to make up the difference.
When arranging your mortgage, ask how the interest is collected up to the interest adjustment date. When you ask the right questions, you can avoid a cash-flow crisis when you close the sale.
Land Transfer Tax
Calculated on the purchase price for the land and buildings, this tax is paid for by the buyer. Currently, the rates are as follows:
• First $55,000 = ½ of 1%
• $55,000 – $250,000 = 1 ½ %
• Above $250,000 = 3%
If the property contains one or two single family homes and the purchase price exceeds $400,000, the tax is two percent on the excess amount.
There are numerous ways in which you could qualify for a refund of land transfer tax paid. Consult your lawyer to see if you qualify!
Property Insurance
All homes must have adequate insurance coverage against fire and other risks of loss, theft, and liability. Your mortgage lender will require that you provide your lawyer with proof that your insurance is in place by or before the closing date.
Moving Costs
Whether you hire movers or you take care of hauling everything yourself, there will be expenses involved in the process of moving. If you plan to move during the spring and summer months, you should contact your service provider two to three months in advance, if at all possible.
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