Buy Real Estate in Canada

How to Buy a House in Canada

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Making an Offer

After viewing a property that you decide you'd like to own, the next step is to make a formal offer to the seller. If you're using a realtor they should be able to help with this. Basically the offer says how much you're willing to pay for the property and the dates on which you wish to complete the transaction and obtain possession (NB the possession date is usually one day after completion).

The offer usually also consists of a number of conditions, eg being subject to a satisfactory inspection, receiving and approving copies of strata minutes and accounts, obtaining finance, selling your current home etc. You can add whatever conditions you like, but the more conditions you have, and the more demanding they are, the more likely the seller is to reject your offer - particularly if you are hoping for a significant reduction. Of course, the fewer conditions you include, the more likely the seller is to a substantial drop in price.

If you are considering a strata controlled property be sure to make sight and approval of strata minutes, accounts and by-laws a condition of your offer. One thing to check is that the strata ha sufficient contingency funds in its accounts. This is money to be used in the event of major works being needed such as roof repairs.

One way of avoiding a finance condition is to speak to lenders beforehand enquiring how much finance is available. You should be able to obtain an agreement in principle, but a lender will usually wish to carry out a valuation on the property to ensure the security of their capital.

The seller will accept the offer, reject it, or propose a counter offer (eg a price between your offer and the asking price). They may also seek to vary some terms of the offer, eg the completion and possession dates.

Once an offer has been accepted the buyer should endeavor to remove his/her conditions.

Property Inspection

You will most likely want to have the property professionally inspected before finalizing your offer. The best way to find an inspector is on personal recommendation, failing that you should ensure their qualification for the task, eg by their membership of a reputable body such as the Canadian Association of Home & Property Inspectors.

The inspection will almost certainly throw up some issues with your intended purchase. Don’t be alarmed; these may just indicate your chosen inspector is doing his job properly. Hopefully the issues are minor ones, but if major problems are brought to light you have several options:

  • Ascertain costs of making good the problem(s) and revise your offer accordingly.
  • Put the onus on the seller to make good the problem(s), with the requirement they provide evidence and guarantees for the work carried out.
  • Walk away from the deal. Provided your offer was properly written you can freely do so.

A bad inspection report can lead to a lost deal, but is way better than later finding you’ve bought a turkey.

Finalizing the Purchase

Once the inspection report has been approved and the other conditions met the offer to buy is finalized. At this point a deposit is payable and the offer becomes binding. If you change your mind you will lose the deposit and can also be sued.

Once your offer is accepted and all conditions have been met you will need to engage a lawyer to handle the conveyancing, ie the transfer of title from seller to buyer. Once again, personal recommendation is a valuable indicator. Failing that, speak to a number of lawyers to obtain quotations. Don’t necessarily go for the cheapest, but consider also how efficiently your enquiry was dealt with.

In addition to transferring title the lawyer will also calculate the amount payable on completion. This may include adjustments for property taxes, utilities and mortgage interest, and any applicable land transfer tax.

You will need to ensure transfer of utilities before completion, and would also be sensible to arrange insurance for your new property.