Buying & Selling a Home For Canadians For Dummies

Douglas Gray, LLB, is a retired real estate lawyer and the author of 25 bestselling books. He is also a speaker and columnist. His website is homebuyer.ca. Peter Mitham has more than 20 years' experience writing about Canadian real estate for national and international publications.

Introduction 1

About This Book 1

Foolish Assumptions 2

Icons Used in This Book 3

Where to Go from Here 3

Part 1: Getting Started Buying and Selling a Home 5

Chapter 1: Buying and Selling a Home: Just the Basics 7

Knowing the Cast of Characters When Buying or Selling 8

Recognizing who’s important when buying 8

Identifying who’s essential when selling 9

Preparing to Buy a Home 10

Arranging financing 10

Finding a home 11

Making an offer 11

Doing the due diligence 11

Closing the deal 11

Considering Some Important Questions to Ask When You’re Ready to Buy 11

What is this going to cost me? 12

This is the right home, but is this the right neighbourhood? 12

What kind of changes can I make? 13

How much should I budget for maintenance? 13

What’s my exit strategy? 13

Knowing What Happens When You Sell 14

Deciding to sell 14

Preparing the home 14

Listing the home 14

Negotiating the sale contract 14

Closing the deal 15

Answering Some Questions You May Have When Selling 15

Does this home meet my needs? 15

Will moving be more trouble than it’s worth? 16

How much will this cost me? 16

Are last-minute renovations worth the cost? 16

What are the chances I’ll be homeless if I sell? 17

Chapter 2: Introducing the Key Players 19

Understanding the Real Estate Agent’s Role 20

Identifying important agent qualities when buying or selling a house 20

Sorting out the basics to the broker-agent relationship 21

Understanding the agency relationship 22

Discovering the perfect agent 25

Sizing up the candidates 26

Making your agent work for you 30

Choosing to Go It Alone 32

Saving the commission 33

Working out the costs of selling it yourself 34

Getting some help 35

Valuing the Appraisal Process 36

Knowing what an appraiser looks for 37

Eyeing who needs an appraiser and why 38

Recognizing a good appraiser 39

Knowing how much you can expect to pay 40

Comprehending How a Lawyer Fits into the Picture 40

Taking care of business: What your real estate lawyer does for you 41

Finding a lawyer or notary 44

Knowing what to look for in a lawyer or notary 46

Costing out a lawyer’s fees 46

Part 2: Preparing to Buy a Home 49

Chapter 3: Sizing Up Home Ownership 51

Recapping the Joys of Ownership 52

Knowing What’s Right for You 54

Considering your foreseeable future 54

Saving space for change 55

Knowing What You Want 55

Focusing on your needs 55

Making the list 57

Knowing When the Time is Right 62

Knowing your finances 62

Comparing renting to buying 63

Considering homeowner concerns 65

Adding up the costs of homeownership 65

Understanding the market 66

Chapter 4: Understanding Your Finances 69

Increasing Your Down Payment 70

Dealing with debts 70

Sizing up your savings 71

Getting Up Close and Personal with Your Finances 74

Determining What Size Mortgage You Can Carry 77

Gross debt service (GDS) ratio 77

Total debt service (TDS) ratio 78

Generating your own figures 78

Getting a Head Start with a Preapproved Mortgage 79

Understanding the advantages of preapproval 79

Getting the lay of preapproval land 80

Anticipating the Closing Costs 81

Deposit and down payment 81

Identifying three key closing fees 82

Appraisals, surveys, inspections,

and condominium certificates 83

Taxes 84

Remembering Little Extras You May Not Have Considered 85

Chapter 5: Knowing Your Mortgage Options 87

Defining Your Financing Goals 88

Knowing the potential scenarios 88

Keeping interest payments in check 89

Mastering the Lingo: Mortgage Jargon 101 90

Mortgage principal 91

Interest 91

Amortization period 91

Mortgage term 92

Understanding the Types of Mortgages 92

Conventional mortgages 93

High-ratio mortgages 93

Fixed-rate mortgage 93

Variable-rate mortgage 94

Blended payments 95

Mortgage-a-rama: All the Nifty Options 96

Payment options: Open, closed, or in between? 97

Portable mortgage 98

Assumable mortgage 99

Vendor (seller) take-back mortgage 99

Builder/developer interest rate buy-down 100

Self-directed mortgage 101

Line of credit 101

Playing It Safe: High-Ratio Mortgage Insurance 102

Qualifying for high-ratio mortgage insurance 102

Determining the cost of high-ratio mortgage insurance 103

Covering Your Bases: Life and Illness 103

Going Mortgage Hunting: What You Need to Do to Get a Mortgage 104

Enlisting a mortgage broker’s help 105

Searching on your own 107

Getting an online mortgage preapproval 107

Questioning Your Lender 108

Helping Your Lender Help You: Prepare Your Information 110

Sharing about yourself 110

Getting it in writing: The paperwork 111

Part 3: Discovering Your Perfect Home 113

Chapter 6: Finding a Home That’s Right for You 115

Looking Closer at Your Housing Options: Determining the Best Fit 116

Buying into a Fresh Start 118

Buying new 118

Building a home of your own 120

Country living in a new home 122

Following a Lead: Resale Houses 125

Eyeing the pros and cons with resale houses 125

Choosing the right resale home 126

Rising Ambitions: Investigating Condos 128

Weighing the ups and downs of condo living 128

Understanding condo ownership 130

Closing the deal 133

Converting condos 136

Living Co-operatively 138

Considering the co-op’s pros 139

Weighing the co-op’s cons 139

Home Owning as an Investment 140

Doing your due diligence 140

Helping your mortgage 141

Chapter 7: Shopping for a Home: The Nitty-Gritty 143

Finding the Right Home for You 144

Making the list 144

Checking what’s on your doorstep 148

Staying connected 149

Checking Out the ’Hood 150

Defining neighbourhood character 150

Improving the prospects 151

Your neighbourhood priorities 152

Drilling into Opportunities 154

Working with your agent 154

Working online 155

Working the neighbourhood 156

Working your network 156

Attending open houses 157

Getting Up Close with Foreclosures 157

Taking a Closer Look at Properties 159

Stacking up the properties 159

Scrutinizing more than one house 160

Coming to Grips with Coming up Empty 161

Getting Fired Up: Recognizing What Powers the House 162

Heating systems 162

Fuelling up 164

Considering electricity 167

UFFI 169

Asbestos time, the worst of times 169

Septic tanks 170

Well water 171

Stacking Them Up — How the Homes Compare 171

Chapter 8: This Home is Great! (Except for . . . ) 177

Putting Your Emotions Aside 178

Reality Check: Can You Fix the Home’s Problems? 179

Household cosmetics 179

Things you can’t change 180

When it’s not worth it 181

Catching a Flipped Home 182

Check It Out: Investigating Your Prospective New Home 183

Moving beyond appearances 184

Don’t be afraid to snoop 186

Ask questions 187

Determine whether the home has been maintained 187

Part 4: Getting the House You Want 189

Chapter 9: Making a Deal on Your New Home 191

Preparing to Make an Offer 191

Get your mortgage preapproved 192

Get to know the local market 192

Get to know the seller’s motivation 193

Get to know your limits 193

Ready to Purchase: Making an Offer 194

Figuring out who’s who and what’s what in your contract 194

Comprehending the terms and conditions (subject to clauses) 197

Competing with multiple offers 199

Chapter 10: Signing On to a New Life 203

Taking Care of the Paperwork 203

Removing conditions 204

Paying your lawyer a visit 204

Getting that mortgage 206

The Ins and Outs of Inspections 207

Getting an inspection, no matter what 208

Understanding what your inspector does 208

Choosing a good inspector 209

Knowing what to expect when you’re inspecting 210

Inspecting a Newly Built Home 212

Sizing Up an Inspection Report 213

Home exterior 213

Home interior 214

Checking Out Condo Inspections 216

Outside the building 216

Inside the building 218

You Are the Owner of All You Survey 219

Considering title insurance 219

Figuring out why you need a survey 220

Finding a professional surveyor 220

Chapter 11: Protecting Your Interests: Insurance and Warranties 223

Insuring Your Home 223

Knowing what to protect 224

Understanding how you’re protected 226

Extending your coverage 228

Getting the best deal 229

Finding Out Whether the Property Comes with a Warranty 229

Understanding the new home warranty 230

Knowing what’s covered 231

With a warranty, you’re in the driver’s seat 231

Preparing for the Preclosing Walk-Through 232

Chapter 12: Closing Time: Closing Events and Moving Day 235

Identifying What You Sign 236

Recognizing What You Pay 237

Taking Possession on the Possession Date 238

Making Your Moving Experience One to Remember 239

Moving day versus the day of possession 239

Timing is everything 240

Moving your life 241

Moving your stuff 241

Packing it all in 243

Moving it yourself versus hiring professional movers 244

Being Organized: The Moving Timeline 247

Two months and counting 247

One month to moving day 247

One week before 248

The day before 249

The big day 249

After the move 250

Part 5: Preparing to Sell Your Home 253

Chapter 13: Deciding To Sell (or Stay) 255

Making the Big Decision 255

Identifying the reasons why people sell 256

Recognizing reasons to stay put 256

Taking stock of wants and needs 257

Looking At Your Budget: Your Finances 259

Doing the math 259

Contemplating refinancing 260

Considering Your Mortgage When Moving 261

Paying off your mortgage early 262

Letting your buyer take over your mortgage 262

Taking your mortgage with you to your new home 264

Scouting incentives 264

Knowing the Ups And Downs Of Financing 265

Trading up: Your options 266

Trading down: Your options 266

Timing Your Move 268

Sell first and then buy, or vice versa? 268

Buying before you sell 271

Selling before you buy 272

Cutting through the stress 273

Buying time with the closing dates 275

Timing it right: The ideal selling and buying scenario 276

Changing Your Mind about Selling 276

Home equity loans and homeowner lines of credit 276

Refinancing your mortgage 277

Reversing your mortgage 277

Considering Estate Sales to Sell Your House 279

Knowing what to do as the estate’s executor 280

Being aware of taxes 280

Chapter 14: Setting a Price and Knowing the Cost 283

Pricing Your House to Sell 283

Determining your home’s worth 284

Recognising the three most common pricing mistakes 285

Comprehending the Basics of Appraisals for Sellers 287

Knowing if your home requires an appraisal 288

Exploring how an appraisal is performed 288

Appraising condominiums 290

Preparing for an appraisal 291

Sum Fun: The Math of Selling Your Home 292

Estimating the costs of selling 292

Tallying it up 296

Some Good News about Taxes 297

Principal residence exemption 297

Moving tax credits 298

Chapter 15: Making Your House Shine 299

Taking a Closer Look at Inspections for Sellers 300

Having your home inspected: The why 300

Having your home inspected: The why not 301

Knowing what your inspector looks at 301

Preparing for the inspector 302

Undertaking Home Improvements 303

Keeping future returns in mind 303

Creating curb appeal 305

Alluring interiors 306

Going to Market 309

Your basic For Sale sign 310

Advertise, advertise, advertise 310

Showing (Off) Your Home 313

Fielding the calls 314

Staying secure 316

Holding an open house 317

Part 6: Sealing the Deal 319

Chapter 16: Examining Listings and Disclosures 321

Getting the Lowdown on Listing Contracts 321

Understanding the listing contract 322

Selecting your listing type 323

Grasping the Importance of Disclosure Statements 325

Knowing who sees your disclosure statement 326

Identifying what you need to disclose 327

Chapter 17: Understanding the Legal Stuff 329

Cooking Up a Recipe for a Successful Contract 329

Reading the Recipe: Basic Contract Know-How 330

A pound of offer 331

An ounce of buyer 332

A pinch of deposit 332

A dash of address details 333

Pricing to taste 333

A handful of covenants and a sprinkle of conditions 334

Time frame of the offer 339

If you have rental units 340

Top with acceptance 341

Keeping Condo Owners Covered 341

Examining Deeds and Titles 342

Conveyance 343

Land registries 344

Chapter 18: Being Cognisant of Negotiating Tricks and Bargaining Chips 347

Keeping Your Eye on the Prize: What’s Really Important 348

Getting an Overview of the Negotiating Process 349

Knowing how low you will go 350

Negotiating the subject to clauses 350

Including appliances and household decor: “I never liked those drapes anyway” 353

Deciding on the closing date 354

Racing against the clock: Open for acceptance until 355

Signing on the dotted lines 356

Contending with Multiple Offers 356

Dealing with Backup Offers 357

Part 7: The Part of Tens 359

Chapter 19: Ten Regional Concerns When Buying a Home 361

Check Transportation Routes in Cities 361

Be Cautious about Industrial Sites 362

Stay Away from Major Roads If You’re Noise-Sensitive (Or Nose-Sensitive) 362

Be Certain Your Street’s on the Level 363

Make Sure You’re in a Good School District 364

Be Sensitive to How Local Climates Can Affect Your Lifestyle 364

Watch Out for Waterways 365

Only You Can Avoid Wildfires 365

Research Services in Rural Areas 366

Think Twice about Leased Land 366

Chapter 20: Ten Tips for Condo Buyers 367

Insist on Seeing and Reading Documentation 368

Have the Condo Inspected 368

Use Your Measuring Tape If You Buy New 369

Get to Know the Board of Directors 369

Stay Away from High-Rental Developments 370

Watch Out for Maintenance Fees That Are Too Good to Be True 370

Ask about the Building’s Commercial Property 371

Share as Few Walls as Possible, Especially If You Crave Quiet 371

Own Your Locker and Parking Space 372

Check for Signs of Aging 372

Chapter 21: Ten Tips for Home Sellers 373

Sell When Your Home is at Its Peak 373

Prepare Your Home for Sale 374

Fix the Little Things 374

Light It Up 375

Let Your Neighbours Know 375

Know Where to Advertise 376

Get Your Documents in Order 376

Prequalify Buyers 377

Tighten Security 377

Send Notifications: My Dear Tenants 378

Chapter 22: Ten Ways to Protect Your Investment 379

Inspect the Exterior 379

Know Your Surroundings: Landscaping, Yard, and Deck 380

Maintain Heating and Cooling Systems 381

Stay Warm: Insulation 381

Breathe Easy: Ventilation 382

Sleep Soundly: Home Safety 382

Keep an Eye on Your Doors and Windows 383

Cook Up a Storm in a Safe Kitchen 383

Get Away in a Leak-Free Bathroom 384

Into the Dark: The Basement and Attic 384

Glossary 385

Index 397