FAQ for Buyers

This seems to be an oddly frequent question – odd because if you get to the point of having made an offer, I’d like to think your Realtor would have explained the financing condition to you. A financing condition is defined as “a requirement that is fundamental to the very existence of the offer.” A breach of a condition allows the Buyer to get out of the contract and obtain the full amount of the deposit back. If your offer is conditional on financing, you have a duty to seek financing in good faith (meaning you can’t just change your mind about the house the next day and back out of the deal saying you couldn’t get financing). Whether or not you have to prove you didn’t get financing depends on the wording of the clause your Realtor used. We usually use a clause that says that the financing obtained must be ‘satisfactory to the buyer in their sole and absolute discretion‘, meaning that the terms, interest rate and lender need to be satisfactory – not just that someone has agreed to give you a mortgage.

I love this question. No, you cannot avoid paying land transfer tax. Unless you don’t buy land. And yes, a condo is considered land.

This is a great question! Unfortunately, most (probably all?) home inspection companies in Toronto limit the amount of their liability to the cost of the inspection. So if they miss a $10,000 problem, you’ll likely only be able to recover the amount you paid for the home inspection (usually around $500). Before a home inspection, you’ll be asked to sign an agreement that will detail the home inspector’s liability. It will also detail the limits of what they are inspecting – for example, most Toronto home inspections don’t include looking for termites or mould, and, of course, the inspector can’t see behind walls and under floors.

There really is no ‘normal’ in real estate closings- we’ve seen closings as short as 2 weeks or as long as a year. When an offer is made, the Buyer and Seller agree to when they want to close, depending on their own personal and financial situations. Typically in Toronto, we see closings in the 30, 60 and 90 day range.

Knowing the crime stats of a neighbourhood is an important step when buying a house or condo. Our favourite site to know what’s really going on in a Toronto neighbourhood is Spot Crime, though you can also contact Toronto Police Services Statistics.

Generally, in Ontario, a first-time Buyer needs a minimum 5% downpayment to buy a house or condo, though banks will require you to get insurance if you default (i.e., don’t pay your mortgage). If you have less than a 20% downpayment, your lender will require you to get insurance through a company such as Canada Mortgage and Housing Corporation. If you’re having a hard time coming up with 5% down, check out our Downpayment Strategies for the First Time Buyer blog.

Well, that depends on your goals. Is this an investment or do you live in it? There are important lifestyle differences between owning a condo and owning a house (you can read about them in Condos vs Houses blog) and as we frequently report in our market updates, the condo and house markets in Toronto behave very differently. If you’re looking to lock in the price appreciation of your house and spend less overall money on housing, than selling your house and buying a condo is a relatively safe alternative. If your number one priority is increasing the value of your real estate investment, then it’s important to remember that historically, houses have appreciated higher and faster than condos. Best to talk to a REALTOR to discuss your own situation.

If your offer is conditional on financing and you discover that you don’t qualify as a first-time buyer during the conditional period (meaning that you won’t get to use up to $25K of your RRSP’s as a downpayment and aren’t eligible for first time buyer rebates and tax breaks), then you have a legitimate reason not to waive your financing condition. If you don’t waive your financing condition, you get your deposit back. If your offer is firm – meaning that there are no outstanding conditions, you are obligated to close on the transaction or risk losing your deposit and getting sued. Talk to your lawyer or REALTOR asap.

Legal fees vary by lawyer, but a house under $500,000 will generally cost about $1,800 in legal fees (all-in) in Toronto. We love Feld Kalia’s online legal fee quote.

Generally, you’ll need at least a 5% downpayment to buy a house in Ontario. If you have less than 20% downpayment, you’ll be required to purchase CMHC insurance (which provides protection for the lender). Lenders will also look at your income and ability to pay a mortgage, the amount of debt you owe and your credit history. If you aren’t a resident of Canada, you’ll be required to have a larger downpayment.

More importantly, WHY do you want to buy a house if you have no downpayment and bad credit? This is how our friends in America got into problems. If you want to buy a house, take the time to save a downpayment and fix your credit rating. Owning a home isn’t a right. Prove to yourself that you can be responsible enough to own a home by taking control of your financial health.

Toronto and Ontario land transfer taxes are always paid by the Buyer. Sorry.

Everyone has a different definition of what makes a ‘best school’, but check out our Toronto School Maps to see how schools rank by neighbourhood.

Do your research and work with a REALTOR, who understands the needs of first-time Buyers. Spend some time defining your real goals, take time in making the decision to purchase a condo or house and don’t spend all the money the bank is willing to give you.

Every condo board has rules about what can and cannot be renovated, and owners have to get approvals for many alternations, from adding a wall to putting decking on your balcony. ALWAYS call your condo board before undertaking any renovation. If you make alterations to your unit without the proper approvals, you may be required to tear everything down and it may cause issues when it’s time to sell your unit. It’s better to get approval than to ask for forgiveness later.

Many lenders require an appraisal (meaning they send in an independent appraiser to justify how much you paid for a specific property before they give you the mortgage). Fees for appraisals are in the $300-$500 range, but many banks (including RBC) will pay the appraisal fee for you.

No. You can buy a home by yourself, with the help of a lawyer or with a real estate agent. Real estate agents represent Buyers and are paid by the Seller. They can help protect your interests by providing guidance on neighbourhoods and specific condo buildings/houses, negotiate prices, help with obtaining financing/home inspections/contractors and have in-depth knowledge of unique Toronto issues like termites and knob and tube wiring. Of course, I’m biased, but if you’re about to make the biggest financial investment of your life, wouldn’t you want to do it with someone who lives and breathes the real estate market every day?

That depends on what you’re waiting for. If you’re busily saving for a downpayment or waiting to get a salary increase to be able to afford the house or condo you want, then waiting is a good idea. If you’re waiting because you want prices to come down, recognize that’s a risky proposition unless you have the ability to predict the future. We’ve had Buyers who have been waiting for prices to come down for years and can now no longer afford to buy a house.

House prices vary depending on location, size and features/finishes. If you’re looking to buy in downtown Toronto, you’ll generally need at least $600,000 (unless you want to do a lot of renovations); to buy a condo, you’ll need at least $275,000. The further you move from Toronto’s downtown core, the less expensive prices will be.

That depends on how you define ‘best’. REALTORS differ in the neighbourhoods they know, the type of properties they sell (condos or houses), the amount of experience they have, the number of homes they sell and, of course, their overall approach to their clients. Decide what’s important to you, ask your friends/relatives for referrals, check online reviews (like Yelp) and, of course, give us a call. If we don’t think we’re the best real estate agent to help you find what you’re looking for, we’ll put you in touch with someone who is. We have relationships with all kinds of agents all over the GTA.

REALTORS love their bad acronyms. A ‘+ bed” is a room that isn’t officially a bedroom, usually an office or den. “Pets perm’ means pets are permitted in a condominium building or rental. ‘0 beds’ means the condominium is a studio or bachelor apartment and doesn’t have a separate bedroom. For more info on reading the MLS listing, check out How to Read an MLS Listing.

Bad, bad things will happen. You NEED to confirm your financing during the conditional period, otherwise you risk losing your down payment and getting sued. There’s no point in having a financing condition if you don’t take the opportunity to make sure a lender will give you a mortgage during that period of time.

Yes. Buyers always pay land transfer tax even for a new home.