Published on 31 December 2005 at 04:32 pm
Filed under: North America:- Canada Property Guides » Canadian Real Estate Purchase Process
As one might expect from a country as sophisticated and well regulated as Canada the Canadian real estate purchase process is straightforward and well documented and both the vendor and purchaser’s rights are legally protected.
In this home buyer’s guide for Canada we detail the entire property buying process for the international real estate investor interested in purchasing property assets in Canada.
Anyone requiring a mortgage to purchase property in Canada should consider getting pre-approval before they begin looking for their ideal property investment. With pre-approval of a home loan in place it makes the entire purchase process quicker and smoother as any offer made to a vendor will be more welcome when the vendor knows that the funds are available to hand or have been agreed at least in principal with a lender. Furthermore a real estate purchaser in Canada will get a good idea of how much they can afford to borrow when they approach a lender for pre-approval and this can make the hunt for a suitable home to buy that much simpler when the buyer has a fixed budget in mind.
In terms of the real cost of buying Canadian real estate unfortunately there are many extra expenses that an investor can incur and a real estate buyer should be aware of at least the following fees and charges and question their real estate agent and lender about which they may have to pay: -
Mortgage insurance and loan application fees
Appraisal fees
Deposit of around 5% paid when an offer to purchase is accepted
Down payment of around 25% less the 5% deposit
Estoppel certificate fee
Home inspection fee
Land and deed registration fees
Prepaid property tax refund
Home insurance
Survey costs
Legal fees
Title insurance
In Canada it’s essential to establish a good rapport with a real estate agent. Unlike in many emerging property markets around the world Canadian real estate agents are licensed and work hard for the buyer by assisting with finding the ideal investment property in Canada, preparing and submitting offers to purchase, entering into negotiations with the vendor and ensuring that the real estate investor’s path through the property buying process is smooth and straight forward.
The other person to establish a good rapport with is a lawyer (or notary if buying in Quebec) who will work on behalf of the real estate investor and protect their legal interests throughout the process.
Once you begin the property seeking process either on the ground and face to face or remotely via email, fax and telephone communication with your real estate agent it’s essential to keep in mind how you want your Canadian real estate investment to work. If you’re buying to let out think about your target rental market and what they will be looking for from a property and its location. If on the other hand you’re hoping to buy to renovate and resell for profit then look at the property prices for quality homes in a given location to give you an idea of how high you’ll be able to resell your renovated property for and how cheaply you need to purchase a refurbishment project to make the best profits.
Once you’ve located the best real estate for your particular investment purposes you have to submit a legal document to the vendor known as an ‘Offer to Purchase’ or ‘Agreement of Purchase and Sale’ and it’s usual for the real estate agent and lawyer to get involved with the preparation of this document. The document is a cross between a straight offer and a conditional contract as it states the price you’re prepared to pay plus the terms under which you’re offering to purchase including how much deposit you’ll pay, when you want to close the purchase etc., it’s usual for this document to go back and forth between vendor and purchaser for revisions but once the offer is agreed upon and the conditions of the offer are met the ‘Offer to Purchase’ becomes final.
The final step is reaching closing day when the real estate legally becomes the property of the real estate investor, final monies change hands and the title deeds can be registered in the name of the purchaser.
North America:- Canada Property Reports
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