Buying a home is a big deal! While the whole process can be time consuming and somewhat complicated, it doesn’t need to be scary or stressful. As with most things, it always pays to be prepared in advance, so when it comes time to make an offer on your dream home, you already know what steps come next and what will be required of you as a buyer.

Required Paperwork

If you’re working with a real estate agent, it’ll be their job to draw up any necessary paperwork once you’re ready to make an offer on a house. In order for your offer to be considered valid by the standard of the Canadian Mortgage and Housing Corp., it must include the following specific details:

– Your legal name, the name of the seller and the address of the property

– The amount you’re offering to pay (purchase price) and the amount of your deposit

– Inclusions and exclusions (does any furniture come with the sale? How about appliances?)

– Your desired closing day (the date you want to take possession)

– A request for a current land survey

– The date the offer expires

+ Any other conditions that must be met before the contract is finalized (i.e. home inspection)

Identifying What’s Included In The Purchase

Understanding and outlining what’s included as part of the home purchase is crucial. Never make assumptions. Instead, ask lots of questions. See an above-ground pool in the backyard? Before you get excited to own a pool, make sure it’s actually included in the sale and the owners don’t plan to take it down and remove it before closing day.

If you’re interested in having specific items included with the sale of the home like appliances, certain furniture, light fixtures or window treatments, mention this to your real estate agent as each one will have to be added to your paperwork when you make an offer.

Negotiating The Price Of The Home

When making an offer on a house, you need to be strategic. Gone are the days of a casual back-and-forth negotiation over the course of a week. In today’s competitive real estate market, potential buyers are coming in over asking right out the gate to ensure they get the house they want without the risk of losing it to a higher bidder. You may encounter an opportunity to negotiate, so you should be prepared to do so. Before you make any offers, know what your maximum price point is and what you’re willing to sacrifice should it come down to details like removing conditions.

Deposit On The Home

A deposit is not the same as a down payment, so understanding what makes it different is an important part of the home buying process. If you’re actively looking for a home, you should be prepared to walk in with a deposit should the seller require it. There’s no standard amount that’s required as you won’t always encounter this in the market but it can vary depending on the type of property, the location and how badly you want the house as a buyer.

The purpose of the deposit is to show the seller that you mean business and you’re willing to put money down up front while the financing gets organized. This helps them mitigate their risk and can also give you an edge over other buyers. If your offer is approved, the deposit gets rolled into your down payment, but if you walk away from the deal before things are finalized or you change your mind prior to signing any final paperwork, you’ll lose that deposit.

Down Payment

Most buyers will need to secure financing before making an offer on a house. Different types of mortgages will require different down payment percentages. A conventional mortgage will require a 20% minimum down payment whereas an insured mortgage could only set you back 5%. In today’s fast-paced market, it’s wise to visit your financial institution and get preapproved so you can move quickly through the offer process when the time comes. Preapproval also gives the seller peace of mind as they know your financing is in order.

Land Survey

A land survey is a legally binding document that includes a drawing that shows exactly where the property boundaries are. It also lays out the dimensions of the home and any other buildings on the site. The cost of a land survey will vary by province, but the National Average across Canada is $600, so make sure to budget accordingly.

Date The Offer Expires

Your offer will likely include an irrevocable time and date, which means it cannot be withdrawn by the potential buyer during that time. Once it expires, however, it’s no longer active or legally binding, which means you’re free to move on and bid on another house without worrying about your original expired offer.

Firm Vs. Conditional Offer

When you put an offer down on a house you have two options: a firm offer or a conditional offer. A firm offer means that there are no conditions attached to your offer. A conditional offer, on the other hand, means that in order for it to be valid, certain conditions need to be met.

Some common conditions may include:
– Purchase conditional on a home inspection. A home is likely the biggest purchase you’ll ever make, so you won’t want to do it blindly. While today’s real estate market is making home inspections difficult, it doesn’t mean they’re any less advisable. Look into a home inspector in your area based on recommendations from friends/family and learn more about what a home inspector offers.

– Purchase conditional on financing. This is a common condition for first-time home buyers who aren’t yet preapproved for a mortgage. It means the lender needs to sign off on the offer before it can go through. The buyer will be given a few days to get this signature and complete a home appraisal. If the lender doesn’t approve the financing, the buyer’s agent would notify the seller’s agent and the offer becomes null and void.

– Purchase conditional on the sale of your own home. If you’re looking to buy a house but you need to sell your current one first, this is a condition you’ll want to add so you don’t end up the proud owner of two houses at once. This condition is not ideal for sellers, so if it can be avoided, you may have better chances of getting your offer approved.

Review Your Offer With A Lawyer

It’s important to remember that your offer is a legally binding document, so be sure you understand every aspect of what it includes. As a buyer, you have the option to take an offer to your lawyer before you sign anything so you can ask questions and get clarification on anything you’re unsure of. It’s your lawyer’s job to help make the paperwork more manageable, so take advantage of your time with them to ensure you completely understand what you’re signing and agreeing to.

What To Do When Your Offer Is Accepted

Once your offer is accepted by the seller, there are still some steps that need to be taken.

Complete Your Financing With Your Lender

When the seller accepts your offer, your real estate agent will work with your lender to complete the financing for the house and ensure the lawyer is set to receive the funds on your closing day. Keep in mind that sometimes the original offer will have been amended due to home inspection findings, so the total funds required may need to be revised if that’s the case.

Closing Day

Congratulations! This is the day you legally take possession of your new house! Typically, this is the day when the final paperwork signing will take place at your lawyer’s office. This is also the day that your lender will provide the mortgage money, down payment and closing costs to your lawyer. At this point your lawyer will then pay the seller what is owed, register the house in your name and provide you with the deed and keys to your new house.

The home buying process may seem complex, but it doesn’t have to be. Understanding the steps involved in buying a home and what is required of you will make the process a lot less daunting and help you prepare for any curveballs you may encounter along the way. Looking to buy your first house in Canada? Want to learn more about your options for mortgages? Our team can help!