Buying a home is like a journey with many steps to take between the day you decide to buy and moving day. Although buying a home can be very exciting, it is also a complicated process that requires careful planning.
Once you have found the home you would like to purchase, at a price you can afford, you’ll need to give the vendor an Offer to Purchase (sometimes called an Agreement of Purchase and Sale). It is very helpful to work with a realtor and/or a lawyer/notary to prepare your offer since it is a written contract setting out the terms under which you (the buyer) agree to buy the home. If your Offer to Purchase is accepted by the seller, it forms a legally binding contract.
The offer or agreement will typically include all the details of the sale including your legal name, the name of the vendor and the legal civic address of the property, the price you are offering to pay, the amount of your deposit, and the closing day or the date you take possession of the home. The offer should also specifically state any items in or around the home that you think are included in the sale such as window coverings and appliances.
Once drafted, your realtor or lawyer will then present the offer to the vendor. The vendor will respond in one of three ways – he or she will either accept your offer, make a counter-offer or reject it. A counter-offer might ask for a higher price or different terms. This process of making an offer, receiving a counter-offer and then revising it again is a common part of making the deal work for you and the seller.
Chances are your realtor or your lawyer will have included certain conditions in your Offer to Purchase, making it a conditional offer. Three conditions that are generally standard in an Offer to Purchase – especially for first-time buyers – include lender approval of mortgage financing to finance the purchase, obtaining a satisfactory home inspection report, and a property appraisal. Once these requirements are fulfilled, the conditions are removed and the Offer to Purchase becomes final.
But that’s not the end of the home buying process. There are many things you will need to do prior to closing day – the day you take legal possession of your home. You’ll need to give notice to your landlord if you are renting and decide whether you will hire professional movers or do it yourself. If you choose to use a professional moving company, be sure to ask them for references, an estimate and an outline of fees.
Other important arrangements include necessary address changes for utilities and services and acquiring property insurance. Also, when you are budgeting to buy a home, be sure to include post-closing costs such as changing locks, appliances, cleaning and decorating.
On closing day, your lender will give the mortgage money to your lawyer/notary and you must provide the down payment (minus the deposit) to your lawyer/notary, including the remaining closing costs. Closing costs include legal fees, transfer fees and disbursements. Finally, once your lawyer pays the vendor and registers the home in your name, he or she will give you the deed and the keys to your new home.
Start with a solid plan to ensure your homebuying experience goes smoothly. CMHC’s Homebuying Step by Step: A Consumer Guide and Workbook will lead you through the homebuying process in five simple steps. Download your free copy at www.cmhc.ca or call 1-800-668-2642. For more practical tips and helpful advice on homeownership, sign up for our free electronic newsletter at www.cmhc.ca/enewsletters.
Mark Salerno is the Corporate Representative for the Greater Toronto Area at Canada Mortgage and Housing Corporation. You can reach him at 416-218-3479 or e-mail him at firstname.lastname@example.org.