When you partner with us it is our goal to help you understand the complexities of a residential real estate transaction and navigate through the terms associated with each type of deal. It is our hope to demystify those terms and situations you will encounter throughout the course of a real estate transaction and make them easy for you to understand. A well informed and prepared client is a confident one and that is our goal at homeliveshere.com.

Getting started…

The working with a realtor form should be the first document you encounter whether you are buying or selling. It explains the types of representation that are available to you in the course of a real estate transaction.

Working with a REALTOR

When Buying…

Everyone knows that when someone makes a commitment to you in writing it means you have their full attention. With a Buyer representation Agreement (BRA) you can be reassured that your REALTOR® will work as hard as they can to find you your next home when their commitment to you is in writing.

• Buyer Representation Agreement

When Selling…

The “Listing Agreement” authorizes your REALTOR® and their brokerage to market and sell your home. Every detail of your work together, including the limits of your REALTORS® authority will be clearly defined. It provides detailed information about your home that can then be placed on the Multiple Listing Service® to help potential buyers find you. And, it forms the basis for drafting offers on your home. Any formal offer on your home starts with the Listing Agreement and the following link explains one in plain English.

• Listing Agreement – Authority To Offer For Sale

Costumer Service…

A Real Estate Brokerage may provide services to buyers and sellers without creating buyer or seller representation. This is called “Customer Service”. Under this arrangement, the brokerage can provide many valuable services in a fair and honest manner. This relationship can be set out in a buyer or seller customer service agreement.
Whether it’s a Seller or buyer customer service agreement you’re commitment to us is our commitment to you. The following link explains a seller and buyer customer service agreement in plain English.

• Buyer Customer Service Agreement
• Seller Customer Service Agreement

The Offer…

Understanding the Agreement of Purchase and Sale is essential regardless if you are the buyer or the seller. The offer is a precisely worded document that sets out the terms and conditions between the buyer and the seller. Once the offer is made and accepted, and after any conditions or terms of the offer are met and/or removed, the offer becomes a legally binding contract. This means that the buyer and the seller are contractually obligated under law to hold up to both ends of the agreement and complete the transaction. For that reason, you must be very sure you understand what’s in your offer before you sign it. The following link explains an agreement of purchase and sale in plain English.

• Agreement of Purchase and Sale
• Agreement of Purchase and Sale Condo

The Price…

The cost for each real estate transaction can vary and are not easy to pinpoint exactly. The following guide is to help you understand some of the costs you can expect to encounter whether you are buying or selling.

Costs Related to a Real Estate Transaction…

The conveyance of real property results in the payment of certain expenses by the parties involved. Set forth below is brief summary of theses expenses, that are incurred when transactions are handled properly and professionally, viewed both from the position of the Buyer and from the position of the Seller. Buyers should budget approximately 2-3% of the purchase price for closing costs.

Provincial Land Transfer Tax

This is paid by the Buyer at the date of the final closing to the Minister of Finance pursuant to the Land Transfer Tax Act. The tax is based on the purchase price and the current rates became effective on June 1st,1989.

The rates are as follows for a single family residence:

• $0 – $55,000 .5% (0.5% of $55,000 is $275)
• $55,001 – $250,000 1% less $275
• $250,001 – $400,000 1.5% less $1,525
• $400,001 and up 2.0% less $3,525

Example: To calculate the land transfer tax on a purchase price of $275,000, multiply the purchase price by 1.5% and deduct $1,525 ($4,125 – $1,525 = $2,600)

FIRST-TIME Buyers of both new and re-sale homes are eligible for a rebate of the provincial land transfer tax of up to $2,000.

The Ministry of Finance has indicated that, until the legislation regarding this rebate is passed, first time buyers can submit their applications for the refund and they will be processed once the legislation has passed.

Toronto Land Transfer Tax

This is paid by the Buyer at the date of the final closing to the City of Toronto. The tax is based on the purchase price and the current rates became effective on February 1, 2008.

Residential:

• 0.5% of the amount of the purchase price up to and including $55,000
• 1% of the amount of the purchase price between $55,000 and $400,000
• 2% of the amount of the purchase price above $400,000

FIRST-TIME home buyers of new AND re-sale homes will receive a rebate of the Toronto

land transfer tax of up to $3,725 (this equals a 100% rebate on homes purchased for up to $400,000) for purchases of more than $400,000.

Disbursements – Purchase

In addition to the payment of Land Transfer Tax, Buyers are responsible to pay for certain disbursements incurred by their lawyer in respect of various certificates, searches and registrations. Examples of such approximate disbursements are as follows:

• Registration of Deed $ 70.50
• Registration of Mortgage $ 70.50
• Disbursements (including search costs & office costs) $400.00

For a typical purchase (including one mortgage), a Buyer should budget about $550.00 for disbursements. There will also be further costs for adjustments, land transfer taxes and legal fees.

Title Insurance

Title insurance insures against past problems that could affect your ownership in the future. A low, one-time premium covers you for loss or damage up to the policy amount and all legal costs you would have to pay to defend your title. Once the policy is issued, a covered title problem is not your concern, it becomes the responsibility of the Title Insurance Company. No survey is required by your lending institution if you have title insurance.

• Houses up to six units up to $500,000: $380.00 + .99/$1000 over $500,000
• Condominiums up to $500,000: $380.00 +.99/$1000 over $750,000

Click here for more information.

Disbursements – Sale

The Seller in a real estate transaction is not required to pay any Land Transfer Tax. However, the Seller’s responsible to pay for certain disbursements incurred by their lawyer such as:

• Registration of a Discharge of Mortgage: $ 70.50
• Disbursements (including transaction levy and office costs) $200.00

Legal Fees – Normal

Approximation of average legal fees on a residential real estate transaction is as follows:

• Purchase: $800 for purchase price up to $750,000
• Sale: $650 for sale price up to $750,000

Adjustments on Closing Between Seller and Buyer

On closing there will be adjustments to the sale price between the Seller and the Buyer which will appear on a Statement of Adjustments as credits in favor of the Seller or the Buyer. If the Seller is relying on receiving or if the Buyer is relying on paying a fixed amount on closing, it is unpleasant if these adjustments come as a total surprise to your client.

For example, if taxes for the calendar year are $4,000.00, the deal closes June 30th and the Seller has paid the taxes for the entire calendar year, there will a credit on closing to the Seller of $2000.00. In other words, the Seller receives $2000.00 more and the Buyer pays $2000.00 more.

Also, if there is a fuel tank at the property, the Seller usually fills the tank on closing and sells a full tank to the Buyer. If the adjustment were approximately 52 cents per litre for 909 litres, the Seller would receive $450.00 more and the Buyer pay $450.00 more on closing.

Survey

Most financial mortgage institutions now require a Buyer to produce a recent survey for the real property being purchased showing the boundaries of the lands and the location of the dwelling thereon. The term “recent” varies from lending institution to lending institution but as a loose rule a survey 10-15 years old will probably still be acceptable to a lender if accompanied by a Declaration of the Seller saying it is still accurate. If the Buyer requires a survey for the lender and the Seller does not have one, it is the responsibility and the expense of the Buyer not the Seller to have a new one prepared by an Ontario Land Surveyor.

Title insurance will take care of the problems incurred in the absence of a survey or an up to date survey! It is highly recommended that title insurance be obtained in the absence of a survey.

Mortgage Insurance

In the event that the amount of your first Mortgage on your purchase transaction exceeds 80% of the purchase price, it will be necessary for you to purchase, for the protection of the

Lender, mortgage loan insurance. This mortgage loan insurance premium that is paid is to protect the lender in the event that the mortgage is not paid. This is not to be confused with life, disability, or job loss insurance.

The mortgage insurance is normally purchased through CMHC (Canada Mortgage and Housing Corporation) or GEMI (GE Capital Mortgage Insurance Canada.) The cost of the insurance premium is paid by the Buyer. The amount of the mortgage insurance premium is calculated using a loan/value ratio, and may be added to the mortgage amount. The premiums are as follows:

A 10% premium refund and extended amortization period without surcharge may be available when CMHC Mortgage Loan Insurance is used to finance Energy Efficient Homes.

Other high ratio financing costs include an application/appraisal of $165 and there is 13% provincial HST on the mortgage insurance premium to be paid by the borrower as set forth above. While the mortgage insurance premium can be added into the amount of the Mortgage, the provincial tax on the premium is payable immediately at the time of the advance of the mortgage funds.

Click here for more information.

Building Inspection Fees or Home Inspection Fees

It is generally recommended that when purchasing a resale home or new construction that a building inspection be carried out on the structure, either prior to making an offer on the property or at the time you have entered into the Agreement of Purchase and Sale. The fee for a normal building inspection can range from $250.00 to $500.00.

Home Staging Fees

A home staging consultation can run between $150.00 and $350.00. Additional costs are dependent upon the amount of staging done and upon who is responsible for completing the work.

NOTE: Royal LePage Estate Realty and homeliveshere.com does not take any responsibility for the accuracy of the costs listed above. The costs are to give you an idea of the approximate expense range. As a professional realtor, it is incumbent upon you to verify any costs that you will be using in your representation to buyers and sellers so as not to misrepresent. Also use an approximate range of value instead of one fixed amount. As mentioned previously, Buyers should budget 2-3% of the purchase price for closing costs.