FAQ

These are offered to help guide you through the maze of a real estate purchase. Don't take any of this to the bank without verification of significantly important points. I'm not an accountant or lawyer or mortgage broker. Talk to the professionals in their fields for official answers.

These answers relate to the practice of real estate in Toronto, Ontario.

What is MLS?
MLS is the database of all properties for sale by Realtors.The MLS database contains complete details and photos about each property for sale listed by a member Realtor.
Why do I see properties online that are not available?

MLS status refers to whether a property is?

* Active - available for sale,
* Sold Conditionally - either the buyer or the seller has a condition(s), for a specified time period, written into the agreement of purchase and sale which need to be met before the sales agreement will be firm.
* Suspended - the property is temporarily unavailable for showings
Who pays the real estate commission?
The real estate commission, or brokerage fee, is typically paid by the seller of the property except in unusual circumstances. Of the commission paid by the seller, one portion pays the buyer's broker and the other portion pays the seller's broker.
Who do the real estate agents represent?
Canadian law has established the agent's obligations when dealing with the public on a real estate transaction and acknowledges these forms of agency:
* Buyer or Seller's Agent, representing the buyer or seller exclusively with a fiduciary duty to protect the client's interests
* Dual Representation, occasionally a real estate brokerage will work with both buyer and seller representing neither to the detriment of the other. The obligation exists to deal fairly and honestly with both parties.
* Customer Service, is not commonly used. A real estate brokerage may provide services to buyers and sellers without creating buyer or seller representation. In this case the brokerage has no fiduciary duty to the buyer or seller.

You should not assume that any real estate broker or sales associate represents you unless you have signed a written contract with a brokerage engaging their representation.You are advised not to disclose any information you want to be held in confidence until you make a decision on representation.

A Single Agent represents a buyer or seller, but not both. Another Realtor represents the other party, buyer or seller, in most cases. Representation incurs a fiduciary duty for the real estate agent to protect the client's interests.

Buyer's Agent - As a real estate broker representing you, we help you find the best house or condo for your needs, negotiate the best price and terms, and oversee the many details leading to closing.

As a Buyer's Agent, we're in position to help you get a better price than you'd get by dealing with the Seller's Agent. If you call a phone number from a yard sign or advertisement you'll be speaking to the listing agent who is representing the Seller. The Seller's Agent is legally obligated to get the highest possible price for the Seller.

Buyer Agents are paid by sharing the commission that the seller is paying. Buyer Agents do not normally charge buyers a fee.

Seller's Agent - When helping you sell property, we market the property for sale online and on the MLS, promoting your property to the public and to other Realtors. We advise you about the best price you can expect and what may be done to your house or condo to enhance its desirability. When an offer comes in, we'll help you decide what to do with it. When the offer becomes a contract, we'll coordinate the many details leading up to closing, where you get your money.

How much money do I have to give with an offer?
Although here are no rules about how much the 'earnest money' or 'good faith deposit' must be, it typically is a minimum of 5% of the purchase price. The deposit is placed in an escrow account and kept safe there until needed for closing. The purpose of the deposit is to show the buyer's good faith intention to close on the purchase. The deposit forms part of your downpayment.
Should I get pre-approved or pre-qualified for a mortgage?
Before spending time running around looking at property, you'll want to know that you're able to buy a house or condo in the price range that you're interested in. The best way to ensure that you're on the right track is to contact a mortgage broker or lender's loan officer. This is commonly done with a brief phone conversation during which you provide the individual information about your income and debts and authorize a credit check. In a very short time, you can be 'pre-qualified' for a mortgage amount subject to verification of the information given.

Read more in Financing -- How Do I Start?

What does it mean to 'qualify' for a mortgage?
The mortgage company will consider your employment, income, credit rating, assets, and debts to determine the amount of money you're qualified to borrow to buy real estate. Most often, all of your information will need to be supported by documentation via tax returns, pay stubs, bank statements, etc. The property you're buying has to qualify, too, by appraising for the purchase price. This is done by a certified real estate appraiser chosen by the mortgage company.
How much do I need for a down payment?
Whenever possible, buyers should make a 20% down payment. You can make a lower down payment and the lender will require mortgage insurance, which serves only to protect the lender if the borrower stops making payments.
Do I need a lawyer?
Yes. After you sign the Agreement of Purchase and Sale, you need to retain a lawyer to close the transaction. The lawyer will conduct a title search on the property to ensure that you as their client will become the legal owner of the property, free and clear of any liens, mortgages or other matters that could jeopardize ownership. Your lawyer will coordinate the closing with respect to obtaining and transferring all relevant materials such as the deed, and the key to the property, on the day of closing.
What are closing costs?
Closing costs are the various costs associated with the transfer of property from a seller to a buyer. Try this online calculator to learn more about the closing costs related to Toronto properties. (Calculator courtesy of McNaughton Law).
Do I need a home inspection?

A home inspection is not required but is advisable. It is the buyer's option and expense which is paid at the time of the inspection.

The home inspector will examine the structure, electrical, plumbing, heating/cooling - the functional components of the property. Cosmetic conditions are not warranted meaning cracked tiles, carpet stains, etc are not covered by a seller's warranty.

The property may be offered 'as-is' without the seller warranting the condition of the functional components of the property. In this case, I recommend you still have a home inspection. I will protect you from buying a property needing excessive repairs by including a clause in the agreement giving you the option to walk away from the agreement, and have your deposit returned in full if you don't like the results of the home inspection.

What about a termite inspection?
Termite inspections are a good idea. A home inspector will let you know if he/she sees any evidence of termite activity, and if so we can call in a termite inspector for a complete picture.
If a property is offered 'as-is', does that mean it has problems?
No, most often when a property is offered 'as-is', it's because the seller either doesn't know the condition of the property, or doesn't have the money to fix one or more components of the property, and the property most often is priced accordingly. Your home inspection should uncover any major issues, and if you have done your home inspection prior to putting in an offer on the property, you may choose not to follow through and put in that offer, or you may want to adjust the price or conditions on your offer.
What is a CMA?
CMA = Comparative Market Analysis

CMA is typically created by a Realtor using data from MLS to show a seller or buyer similar properties for sale, recently sold, and sometimes ones that did not sell, as a means of establishing the market value of a property. The format may be brief or detailed. It is commonly used to give sellers what they need to price their property properly. It's also useful for buyers who want to ensure that they're not overpaying for a property. This is similar to the means used by certified appraisers although realtors are not licensed appraisers therefore the CMA is a professional opinion of value.

What is an appraisal?
An appraisal is a certified document prepared by a certified real estate appraiser and is used by mortgage lenders to ensure they're loaning money on a property that is worth the price being paid. It's also used when refinancing an existing mortgage for the same reason.
What about homeowner's insurance?
Your lender will require you to have insurance prior to taking possession of your property.
What do condo monthly maintenance fees pay for?
Condo maintenance fees are typically paid monthly to the condo's Homeowners Association and used by the condo association to pay the common expenses of the association. These include
· Exterior maintenance of the building, parking lot, and grounds
· Insurance on the structure
· Water, sewage, trash removal
· Property taxes for the commonly owned area
· Any professional management fees, unless self-managed
· Basic cable TV is often included
When I put my house up for sale, how can I be sure it's ready to show?
I can help you decide if your house is ready. If it isn't, I can introduce you to my associates who will help you stage it. Read more at: Is My House Ready to Show?
How is the Canadian real estate business different than in other countries? Is a Realtor like an estate agent?
In some other countries, an Estate Agent sells only property his/her company has for sale. If you want to see a property you go to the company whose sign is on the property. In Canada, Realtors are members of the Multiple Listing Service and there is cooperation between companies. We can help you buy any property offered by any MLS member company, which is virtually all companies. Another slight difference may be in terminology. In the UK, for example, sellers are referred to as vendors, buyers as purchasers. Closing is referred to as settlement. To our UK buyers, once you have a contract, you cannot get bumped at the last minute. A contract is binding on both parties.