Frequently Asked Questions | Buying A Property
Do I really need a realtor to buy a home?
Many homebuyers wonder about the role of a realtor in the home buying process as they feel they can directly contact the listing agent and make an offer. You must understand that the listing agent is working to get the best possible price for the seller, so they do not have your best interest while accepting the offer. A realtor’s knowledge not just guides you through the financial and legal paperwork involved in buying a home, but can also help a great deal in finding the perfect home and negotiating the offer.
I’m thinking about buying my first home. Where do I start?
If you are a first-time homebuyer, figuring out the budget is possibly the best place to start. Get in touch with a bank or a reputed lender to ascertain the maximum mortgage amount you can get for buying a home. Knowing your mortgage amount helps you decide your buying budget, and puts you on the right track on the search for your dream home. We can connect you with trusted mortgage brokers to help you secure a good mortgage deal.
How do I get the best mortgage rates?
In general, mortgage amount and mortgage rate are decided by a number of factors such as your credit score, your monthly income, gross debt service, total debt service, and the current Bank of Canada key interest rate. The rates might also differ based on fixed or variable mortgage rates. In order to simplify the process of mortgage approval, we recommend getting in touch with a reliable mortgage broker in GTA. We can put you in touch with the best mortgage brokers in the city to get you the best possible mortgage rates.
Do I need to pay Realtor Fees?
Many first-time homebuyers wonder if they need a realtor since they don’t want to spend money on realtor fees. What most homebuyers don’t know is that, on most occasions, it is the seller who pays realtor fees to the buyer’s realtor. We pledge on finding the perfect home for you and do not expect any commission or fees for our service.
How long will it take to seal the deal when buying a house?
Depending on various factors, buying a home that meets your requirements can take anywhere between a week to a couple of months. From getting the mortgage approved and finding the house to making an offer and closing the deal, a buyer needs to be patient throughout the process of homebuying. Working with an experienced realtor like Pavel not just simplifies the steps you need to take as a homebuyer but also helps you deal with the stress of the homebuying process.
Is it necessary to pay a 20% down payment?
While the higher the down payment amount, the lesser will be your mortgage and the higher will the chances of the seller accepting your offer, you don’t necessarily have to pay a 20% down payment.
If your deposit is less than 20%, you will have to get mortgage loan insurance. The closer your deposit is to 20% of property purchase price, the lesser will be your mortgage loan insurance.
Do I have to pay a land transfer tax in Ontario?
Apart from the deposit amount, the homebuyer has to pay home inspection fees, real estate lawyer fees, mortgage insurance and land transfer tax. The real estate lawyer will perform a land title search to find any claims or liens that need to be taken care of by the seller. Once all is clear in the title search, paying land transfer tax marks the transfer of ownership of the property. In Ontario, a buyer has to pay municipal as well as provincial land transfer tax.
Here’s how municipal and provincial land transfer tax works in Toronto:
Property Purchase price
Municipal Land transfer Rate
Provincial Land Transfer Rate
$ 0.01 to $55,000
$55,000.01 to $250,000
$250,000.01 to $400,000
$400,000.01 to $2,000,000
If you are a first time home buyer, you get a maximum municipal tax rebate of $4,475 and a maximum provincial tax rebate of $4,000.
For example, if you are buying a house of $500,000 in Toronto, your land transfer tax will be:
Municipal Land Transfer tax: ($55000 * 0.5%) + (($250,000-$55,000) * 1%) + (($400,000 - $250,000) * 1.5%) + (($500,000 - $400,000) * 2%) = $6,475
After first-time homebuyer tax rebate of $4,475, municipal land transfer tax = $6,475 - $4,475 = $2,000,
Provincial Land Transfer tax: ($55000 * 0.5%) + (($250,000-$55,000) * 1%) + (($400,000 - $250,000) * 1.5%) + (($500,000 - $400,000) * 2%) = $6,475
After first-time homebuyer tax rebate of $4,000, provincial land transfer tax = $6,475 - $4,000 = $2,475
Thus, the total land transfer tax that the buyer has to pay for purchasing a $500,000 house in Toronto is $4,475
What is mortgage loan insurance?
If your down payment towards a house is less than 20%, you will need to get mortgage loan insurance. This helps protect the lender in case you are unable to make payments. It also ensures that you can still get a reasonable interest rate even with a lower percentage of down payment. It ensures a win-win situation for both the buyer and the lender.
Can I skip the home inspection?
Well, you do have the option to not conduct a thorough home inspection. However, we at Real Pavel strongly recommend a home inspection from a qualified home inspector prior to making an offer. A home inspection can save you a world of trouble and a truckload of money by highlighting the damages and repairs to the home that would require fixing. Working with Real Pavel of The Matt and Ben team puts you in touch with qualified home inspectors.
What happens after I make an offer?
Once you make an offer to buy a home, the seller can either accept the offer, send a counter offer, or reject the offer. If the seller accepts the offer, you are very close to becoming a homebuyer. If the seller sends a counter offer, it starts a negotiation process between the seller and buyer’s agent in an attempt to get a fair deal for both parties. The seller can reject your offer for numerous reasons but they are not legally obliged to disclose the reason for rejection. Also, please note that it is not advisable to put in offers on two different houses at the same time as it might lead to trouble if both get accepted.
What are my options if a seller rejects an offer?
A seller could reject your offer for a lot of reasons:
i. If your offer is way too low compared to the market price.
ii. If they have better offers in terms of money from other potential homebuyers.
iii.If your deposit money is low enough to make the seller doubt your purchasing capabilities.
iv. If your offer has financing conditions, and the seller finds another offer without financing conditions.
If a seller rejects your offer, you still have the option of sending a new purchase offer for the seller to reconsider. On the other hand, if a seller rejects your offer, you can look for other properties to make an offer.
Frequently Asked Questions | Selling A Property
Can I sell my home without the help of a real estate agent?
You can sell your home without a realtor, by listing it in MLS as FSBO - For Sale By Owner. However, there are risks involved in selling as FSBO:
- Your listing might not be seen compared to other listings marketed by real estate agents.
- You might not achieve the perfect staging and presentation required to attract buyers.
- You will have to deal alone with the legal issues involved in selling a house.
- It could take a lot of time to sell your house.
- You might settle for a sale price way lower than what would be a fair deal.
- There might be some unforeseen issues with closing the deal.
Selling your home can be a complex process that involves a lot of time, effort, and understanding of the real estate market. From helping you figure out the base price of your property to promoting the listing across multiple marketing channels, a real estate agent assists you every step of the way. A realtors’ expertise is also required while comparing, negotiating, and accepting offers. Make things easy by working with a REALTOR® like Real Pavel!
How much would it cost to sell my house?
A seller needs to pay the following fixed costs:
- Home inspector fees
- Real estate lawyer fees
- Realtor’s commission (normally 5%, with 2.5% for buyer’s agent and 2.5% for selling agent)
While there are many fixed factors that contribute to the cost of selling the house, whether you are looking to repair and renovate your home also adds to the expenses. It is recommended to fix the damages that were found during the home inspection to get the best possible price on the home. Pavel’s personal network of construction contractors in Toronto and GTA can get the best deals on home renovation for you.
Should I sell my house before I buy a new one?
That’s totally a personal call. If you sell your house before buying a new home, you would need to find a temporary living arrangement till you buy a house again. Apart from your temporary living situation, you also need to consider the expense of moving all your valuables twice - once to a storage space when you are moving to a relative/friend’s house and the other when you move to your new home. Thankfully, the closing of the deal after the house sale can take anywhere between 30-90 days, which gives enough time for the seller to look for a new property to buy and move in.
If you buy a house before you sell your current home, it would lead to double the mortgage expenses and a dent in your savings for raising the deposit for your new home.
When should I sell my property?
While there is no one answer to this question, most realtors believe you get the best price for your house during a seller’s market, i.e. when there are more potential homebuyers compared to the number of properties on sale. The more the buyers, the fiercer the bidding wars, and the higher the selling price of the house. Another option to consider is when other homeowners in your neighbourhood put their property on the market. If a buyer likes your locality but has multiple houses on sale to choose from, it could dent your chances of selling the house. You must also keep an eye out for benchmark pricing in your neighbourhood. If the houses in your locality are appreciating fast drastically, it might be the perfect time to sell your house. When you work with Real Pavel, you don’t have to keep your eyes peeled for benchmark pricing as Pavel keeps a close watch on house appreciation trends in your neighbourhood.
Do I really need marketing strategies to sell my house?
Many sellers think an MLS listing is good enough to sell the house. Well, they can’t be more wrong. While MLS listing is a good starting point to let potential buyers and their realtors know about your property, you need a well-thought-out marketing strategy that promotes your listing in conventional and unconventional ways. We at Real Pavel follow an array of marketing tactics including posting listings on Realtor.ca, Padmapper, etc., attracting potential homebuyers through social media listings and paid promotions, posting high definition pictures and videos online, shooting virtual tours videos, drone videos, organizing virtual staging, and much more. Our out-of-the-box promotional strategies will ensure that your property gets the best exposure in the market.
What happens to my existing mortgage when I sell my house?
There are a few options to help you deal with the mortgage on the property you are selling. If you have paid a major chunk of your mortgage and built home equity, you can foreclose the mortgage with the money from the buyer. However, closing the mortgage before time can lead to penalties. You could also port your mortgage, which means you can transfer the mortgage at the same rate to your new home. There is also the option of the buyer taking over your mortgage but the buyer needs to qualify for the mortgage from your lender.
Why is it taking so long for my house to sell?
Selling a house can take its own sweet time. But if it has been months since you put your house on the market, and no offers have been made, it may be because of the following possibilities:
- Your asking price is way above the fair price for your home.
- The location of your home is not ideal for a family. Lack of good schools, restaurants, medical amenities in the neighbourhood can negatively impact the selling process.
- Your house hasn’t been marketed well enough online to get buyers excited.
- Your house wasn’t staged well during the buyer's in-person viewing.
- Market conditions play a huge role. While a seller’s market can attract a lot of competition among buyers, a buyer’s market allows buyers to take their time and consider other properties before they make you an offer.
- Seasonal factors can impact your house sale. While summers have generally proven to be a great time to sell a house, listing your house for sale during winters might not attract enough attention from the buyers.
Get in touch with your realtor and discuss solutions to these potential issues that are plaguing your property’s selling chances in the market.
Frequently Asked Questions | Renting A Property
What should be the term of my lease?
A standard lease term signed between the landlord and the tenant is 12 months in Ontario. However, if both parties agree the lease term can be extended over 12 months. Real Pavel does not recommend a lease contract of over 12 months as it locks you into the rental property for a longer period and makes it very hard to vacate within the leasing period. After the 12-month leasing term, your contract becomes month-to-month. Your landlord can increase the rent during month-to-month contracts.
The tenants living in new houses, apartments, and condos that were occupied for the first time after November 15, 2018, are not protected by rent control. This means the landlord can hike the rent as per their wish or put the rental property on the leasing market once the leasing contract becomes month-to-month. (Please note that the landlord has to evict the tenant for valid reasons before putting the houe back on the market.)
However, if you are living in a property covered by rent control, once your 12-month leasing term ends, your landlord can only increase the rent by a small percentage as mentioned in the residential tenancy act.
(Please note: In case of new constructions that weren’t previously occupied, if a tenant signs a lease on or before November 15, 2018, but moves in only after November 15,2018, then that tenant is still qualified to be protected under rent control.)
What do I need when applying for leasing a property?
Apart from filling out the leasing application, you must also provide supporting documents like a letter of employment, a recent credit report, previous landlord’s reference, and the deposit sum - first month’s rent and last month’s rent.
What happens if I wish to move out during the leasing period?
If you want to move out of the rental property before the completion of the leasing contract, you have a few options. You can end the tenancy contract early if:
- You and your landlord enter into an agreement for ending the tenancy early.
- You assign the tenancy and the rental property to another tenant.
- The Landlord and Tenant Board sends out a written notice to end the tenancy.
- You have suffered domestic or sexual violence.
- Your lease agreement was signed on or after April 30, and your landlord hadn’t used the standard lease tenancy form despite your written request to use the standard lease tenancy form.
Please keep in mind that once you and your landlord agree to end the tenancy early by signing an agreement, you must vacate the rental unit by the tenancy end date mentioned in the agreement. Change of mind or failing to move out by the tenancy end date could lead to eviction by your landlord.
Do I need to pay the rental agent’s fees?
If you use the services of a real estate agent to find a leased property in Toronto and GTA, then be rest assured that you don’t have to pay any realtor fees. Only the landlord has to pay the rental agent’s fees.
What is a month-to-month lease?
When the 12-month lease agreement period is complete, you automatically enter a month-to-month agreement with the landlord. While the terms of your lease are still the same as the initial agreement that you signed, you have the freedom to move out by providing a 60-day written notice.
Do I need insurance for a rental property?
Contrary to the popular belief, tenant insurance is not mandated by law in Ontario. However, your landlord will want you to buy tenant insurance to qualify for lease. Tenant insurance decreases the landlord’s liability if any accident occurs on their property. Real Pavel highly recommends getting tenant insurance as it protects you financially against unforeseen damages to your personal belongings.