Buying a home

Buying a home is a big decision – whether it’s your first home or a vacation home.

Here some tips and tricks on what you need to know if you are in the market to purchase a home.

Buyers’ Checklist
DO YOUR HOMEWORK.
Get informed about the buying process, before it begins, to save time, hassle and money.

GET IT IN WRITING. 
If your real estate professional offers you rebates or incentives, they should provide the details in writing.

UNDERSTAND WHAT YOU’RE SIGNING. 
Before you sign a buyer representation agreement, make sure you know what it means, how long it will be in effect and what the different clauses mean. Ask questions and seek independent legal advice if you’d like a second opinion.

KEEP BUDGET IN MIND:

    • Remember to include legal fees, land transfer tax, mortgage insurance and utility hookups in your total cost.
    • Know the costs of a home inspection and home appraisal or survey.
    • Moving costs can vary based on volume, distance and whether you hire a professional mover. Have wiggle room in your budget to cover the cos

PROTECT YOURSELF.
Make your offer conditional on mortgage financing, a home inspection, the sale of your existing home, and/or other factors that are important to you. These conditions provide you important protection as a buyer.

CHECK WHAT’S INSIDE THE WALLS.
Ask your real estate professional to look into the age and condition of the home’s systems, such as the plumbing and electrical. Find out if proper permits were pulled for any renovations. Consider a home inspection to further examine the home and don’t hesitate to ask questions.

BE SPECIFIC.
Make your offer as detailed as possible. Outline what will be included with the sale (e.g., appliances and light fixtures) and be clear if certain renovations need to be completed, based on the home inspection.

PLAN AHEAD.
If you encounter a bidding war, enter with a strategy. Set ground rules in advance about what you want from a home, what you’re willing to spend and what conditions must be met. Once your rules are set, stick to them. When there are competing offers it can be tempting to waive your conditions (such as a home inspection). Think twice before doing this.

EXPECT THE UNEXPECTED.
Does your closing date on your new home align with when you need to move out of your existing home? Have a contingency plan in place in case the dates don’t match up.

Commissions and fees

Arrangements can vary. Commission and fee arrangements come in three forms:

    • A fixed amount
    • A percentage of the sale price
    • A blend of a fixed amount plus a percentage of the sale price

    The most common arrangement is a percentage of the sale price.

    Arrangements where the percentage rate decreases as the sale price increases are permitted. For example, a brokerage could set a commission rate of 3% for a sale price up to $250,000 and 2.5% for a sale price over $250,000. However, the percentage rate cannot increase as the price increases – it can only remain fixed or decrease.

    In addition, commission rates cannot be based on the difference between the listing price and sale price. For example, the commission arrangement cannot specify a different rate if the property sells for at least 10% over its listing price.

    FEES AND COMMISSIONS CAN VARY
    Fees and commission rates are not fixed or approved by the Real Estate Council of Ontario, government authorities, real estate associations or real estate boards. It is the brokerage that determines the fee structure and rate.

    While you may be working directly with a broker or salesperson, commissions are payable to the brokerage. If you are asked by an individual to make a direct payment to someone other than the brokerage, contact the brokerage immediately.

    Home buyers and sellers have a broad range of choices when they look for a real estate professional. Consider your options and ensure the person you choose will provide the services you need at a fair price. Keep in mind that, as with most things, the cheapest deal is not necessarily the best deal.

    Prices and service levels vary, and communicating clearly ahead of time and getting everything in writing can help avoid problems later on. Always read what you are signing and consider seeking legal advice if you do not understand.

Dealing with competing offers

In certain market conditions, consumers may find that more than one buyer is interested in a property.

This is a competing offer situation and creates unique conditions in a real estate transaction. Both sellers and buyers need to consider how to respond when presented with a competing offer situation. Working closely with your real estate broker or salesperson will ensure that you understand the process.

In Ontario, the seller’s real estate broker or salesperson is required to disclose the number of competing offers to all buyers who have submitted a written offer. However, the terms and conditions of each offer are confidential to the seller and their broker or salesperson.

WORKING WITH A REAL ESTATE BROKER OR SALESPERSON
The seller’s real estate broker or salesperson represents the interests of the seller in the transaction. The decisions about how offers are presented and responded to, as well as which offer is accepted, are made by the seller.

The buyer’s real estate broker or salesperson represents the interests of the buyer in the transaction. The buyer makes the final decisions related to their offer, including the important decision of whether or not they want to participate in a competing offer situation.

In some situations, the real estate broker or salesperson will represent the interests of both seller and buyer or multiple buyers. Consumers should seek guidance from their real estate broker or salesperson if this situation arises.

TIPS FOR BUYERS
In a competing offer situation, buyers may be tempted to offer more for the property than they planned to and/or remove conditions from offers that are intended to protect them.

Before participating in a competing offer situation, buyers should consider factors such as:

Offer price: How much can the buyer afford to offer for the property and how much is the property worth? A high offer could enhance the buyer’s chance of success. However, it may not be the best long-term financial decision for the buyer. A competing offer situation does not necessarily mean that a property will sell for more than the asking price. Similarly, an offer that meets or exceeds the asking price will not guarantee that a buyer’s offer is accepted.

Financing: Buyers should be aware that pre-qualifying for a mortgage does not safely eliminate the need for a financing condition in an offer.

Home inspection: In competing offer situations, it can be tempting not to include a clause in an offer that makes it conditional on a home inspection. While your offer might be more acceptable to the seller, you may later learn that there are property defects, required repairs or needed upgrades that you weren’t aware of. In some cases, this can be expensive in the short or long-term. Foregoing a home inspection is a significant risk that a buyer needs to carefully consider.

TIPS FOR SELLERS
A seller facing competing offers has to consider how they want to deal with the situation. The seller can decide to: accept the best offer; negotiate with one buyer and reject all other offers; negotiate with one buyer and advise other buyers that their offers are being set aside while the seller negotiates; or reject all offers.

Even in a competing offer situation, buyers have other options and may choose not to continue to participate. A seller may attempt to negotiate only to find out that it was the best offer the buyer could present. In the meantime, other buyers have found new properties they are interested in.

The seller’s real estate broker or salesperson can provide advice and guidance, ensuring that the obligations and the options available are understood.

Seller property information statements

The Code of Ethics, a regulation under the Real Estate and Business Brokers Act, 2002, contains specific provisions related to the Seller Property Information Statement (SPIS). However, it does not oblige a seller to complete one.

The SPIS will provide information related to defects, renovations and other pertinent property information, based on the seller’s knowledge and experience.

If a broker or salesperson has a seller as client and knows that the seller has completed the SPIS, the broker or salesperson is required to disclose its existence to every buyer interested in the property. They are also required to make the SPIS available to any interested buyer upon request, unless the seller has directed them not to.

Brokers and salespersons are also required to disclose material facts. This means they have an obligation to disclose any fact they are aware of that, with respect to the real estate transaction, that might reasonably affect a person’s decision to buy or sell a property.

Buyer representation agreements
UNDERSTANDING THE FINE-PRINT
When you are buying your home, a real estate broker or salesperson may ask you to sign a representation agreement. A representation agreement defines the nature of the relationship between you and the brokerage, including the broker or salesperson.

Representation agreements can be written, oral or implied. However, your broker or salesperson is required by law to reduce the agreement to writing and provide it to you for your signature. The agreement should be in writing in order to protect the interest of all parties.

BEFORE YOU SIGN
Your broker or salesperson wants to provide you with the best service he or she can. To make the most of this relationship, it’s important to clarify your needs and expectations. To avoid misunderstandings later on, it’s important not to make any assumptions. You should also take time to ask what the broker or salesperson expects from you and what your obligations are.

Discuss all of the services that will be provided. Take the time to clarify the fees and costs related to these services and make sure the written agreement is clear.

DON’T SIGN IT IF YOU DON’T UNDERSTAND IT
Never sign an agreement unless you are sure you know what it means, how long it will be in effect and what the different clauses mean. It’s one of the most important steps you can take to protect yourself. Take the time to read it thoroughly. Ask questions. Your broker or salesperson can’t provide legal advice, but they are familiar with these agreements and should be able to answer your questions and explain what the clauses mean and what effect they will have. Feel free to seek legal advice at any time.

If you choose not to sign an agreement, the brokerage is still responsible for outlining the services that will be provided to you by the brokerage.

WHAT IF I DON’T SIGN?
The Code of Ethics clearly states that loyalty ultimately rests with the client and that a broker or salesperson must protect and promote the client’s best interests. However, the Code also requires that a broker or salesperson deal fairly, honestly and with integrity and provide conscientious service to all clients and customers. You can decide to be a customer, rather than a client, but should be aware that the obligations of the brokerage will differ.

MULTIPLE REPRESENTATION
Multiple representation means that a brokerage is representing both the seller(s) and buyer(s) of a property. There are no standard terms of services under multiple representation so you need to refer to your representation agreement before any offer is submitted. RECO can’t provide a legal interpretation of your contract. However, multiple representation must be consented to in writing. When such a situation arises, ask questions and make sure you are comfortable with how it may affect the services provided to you.

HOLDOVER CLAUSE
RECO often receives calls from consumers about holdover clauses in agreements and what they mean. This is a legal question and you should seek legal advice if you have concerns. While there is no “standard” holdover clause, generally, a holdover clause means that if a property is bought or sold within “X” days of the contract expiry, and without the assistance of the broker or salesperson, commission may still be payable to that broker or salesperson.

Home inspections and choosing a home inspector

When you purchase a home, it’s often recommended that you have a home inspection done.

In fact, a typical Agreement to Purchase Form will include a standard preprinted clause with respect to home inspections. This is one of the most common conditions in an offer to purchase a property. When real estate markets are extremely active and you really want a particular home, skipping the home inspection and not placing this kind of condition in an offer can be tempting. Before you make the decision, consider the benefits of a home inspection.

If there is a Seller Property Information Statement (SPIS), you may receive a copy and have a general sense of comfort about the history of the property. However, you should keep in mind that the person selling the home may not be aware of property defects and that the information provided in the SPIS is based only on their personal knowledge.

Similarly, the broker or salesperson representing you in the transaction may have the experience to identify visually obvious defects, but underlying problems can exist.

A qualified and experienced home inspector will examine the major systems in the home such as:

    • Electrical
    • Roofing
    • Plumbing
    • Heating/Air Conditioning
    • Foundation
    • Septic Systems

Many home inspection companies encourage you to attend the inspection and ask the inspector questions during the process and about the results of the inspection. The decision is yours to make, but you will be better informed and able to assess whether or not you want to invest in any upgrades or repairs that might be needed.

RECO does not regulate home inspectors. For information about home inspectors and home inspection services you can speak to your real estate broker or salesperson or refer to the Ontario government website.

Avoid being a victim of mortgage fraud

Mortgage Fraud continues to be an issue of concern for the real estate industry and the public.

As a regulatory body, RECO addresses mortgage fraud through education, investigative activities to ensure compliance, collaboration with organizations concerned about mortgage fraud and legal/statutory activities to impose disciplinary action on registrants found to have participated in mortgage fraud.

ENFORCEMENT
Mortgage fraud is a criminal act, and while RECO has no jurisdiction to prosecute under the Criminal Code of Canada, the Real Estate and Business Brokers Act, 2002 gives RECO the power to investigate criminal offences that are relevant to a person’s fitness for registration under the Act. The Registrar’s position is that any registrant proven to have knowingly participated in mortgage fraud faces losing their registration. It should be noted that some registrants alleged to have participated in mortgage fraud voluntarily terminated their registration.

COLLABORATION
In order to effectively combat mortgage fraud, it needs to be addressed by all parties involved in the real estate transaction. Organizations such as the Law Society of Upper Canada, the Canadian Association of Accredited Mortgage Professionals and other real estate regulatory bodies are active in combating mortgage fraud either by releasing educational information or through collaborative efforts.

CONSUMER TIPS
Avoid being an unwitting participant in mortgage fraud. Be suspicious of situations where you are:

    • Asked to inflate (overstate) your income on a mortgage application, indicate you plan to live in a property being purchased as a rental property or provide other false statements.
    • Asked to sign documents that contain blanks or asked not to complete certain sections of a form or document.
    • Offered a fee for the use of your name and credit information.
    • Discouraged from visiting the property, having the property appraised or inspecting the property you are purchasing.

Finally, if it sounds “too good to be true” it probably is.

Insurance: Protecting your deposit

When you work with a registered real estate broker or salesperson, your deposit is protected subject to the terms and conditions of the insurance policy.

All brokers and salespersons are required by law to participate in an insurance program that includes consumer deposit insurance.

The coverage that protects your deposit is available under the insurance program at no cost to you.

COVERAGE
Consumer deposit insurance offers protection in the event of fraud, insolvency or misappropriation of funds by a registrant (e.g. a brokerage). There is no deductible under this coverage. However, the insurance policy contains clauses, which may limit the amount payable if there is a loss. The insurance provides coverage up to a maximum of $100,000 per claim. In the event the sum of all claims made by all consumers against a particular registrant related to an occurrence (e.g. a brokerage becomes bankrupt) exceeds $3,000,000, effective September 1, 2016, the amount recoverable by each consumer may be pro-rated and limited to a portion of the maximum amount of $3,000,000 of coverage, subject to the terms and conditions of the insurance policy.

WHAT’S NOT COVERED
Claims arising as a result of a registered broker or salesperson acting as an executor, administrator, trustee, guardian, conservator, or in any other fiduciary capacity other than as a broker or salesperson are not covered under the policy.

HOW TO MAKE A CLAIM
Information related to making a claim is provided below. Before making a claim you may want to contact RECO’s Insurance Department for more information.

Complete the Consumer Deposit Notice of Claim form, attach all relevant documentation and forward this information to:

Attention: Insurance Department
Real Estate Council of Ontario
3300 Bloor Street West, West Tower, Suite 1200
Toronto, ON Canada  M8X 2X2

Phone: 416-207-4800
Toll-free: 1-866-245-6910
Fax: 416-207-9020
Email: insurance@reco.on.ca

Common Questions and Answers

Below are answers to some common questions buyers have when thinking about purchasing a home:

1. I FIND SOME TERMS USED IN REAL ESTATE ARE CONFUSING. COULD YOU EXPLAIN SOME OF THE TYPICAL ONES?
Answer:
a. Registrant – an individual or a brokerage registered under the Real Estate and Business Brokers Act 2002 (REBBA 2002)
b. Salesperson, Broker – individuals registered under REBBA 2002 who provides services to a consumer on behalf of a brokerage
c. Broker of Record – a broker that is designated as the person in charge of a brokerage
d. Representation Agreement – an agreement that outlines how a brokerage will represent a buyer or seller
e. Brokerage – the real estate company
f. SPIS – seller property information statement. A statement completed by a seller. It is not a mandatory form. Ask your salesperson or broker about this form.

2. HOW DO I KNOW IF I AM WORKING WITH A PERSON REGISTERED UNDER THE REBBA 2002?
Answer: Visit our website (www.reco.on.ca) where you may search for registrants.

3. MUST I SIGN A REPRESENTATION AGREEMENT WITH A BROKERAGE/SALESPERSON?
Answer: No. A brokerage (usually through their representative) is obligated to provide you with a written agreement outlining real estate services being provided, any fees, etc. that is signed by the brokerage and presented to you for acceptance and signature. You are not obligated to sign this agreement if you do not wish to. You may also ask the brokerage to make changes to the agreement before signing it.

4. DOES A BROKERAGE/SALESPERSON HAVE TO PROVIDE SERVICE TO ME?
Answer: No. Only if they have agreed to do so. A brokerage may choose not to provide service to you (i.e. show you homes).

5. IS THERE A MAXIMUM OR MINIMUM TIME FRAME FOR A WRITTEN REPRESENTATION AGREEMENT?
Answer: No. There is no minimum or maximum time frame; however, if the agreement is for more than six months in duration, the expiry date must be initialed.

6. CAN I LIMIT A REPRESENTATION AGREEMENT TO A PARTICULAR PROPERTY OR CITY?
Answer: Yes. A representation agreement can cover a particular property, a town, a city, or the province. You should ensure the agreement specifies what you agree to.

7. DO I GET A COPY OF AN AGREEMENT I SIGNED?
Answer: Yes. You must get a copy.

8. WHAT MUST BE INCLUDED IN AN AGREEMENT?
Answer: The start date, an expiry date, services to be performed, any promises, amount of commission/compensation, any other terms/services agreed to.

9. IS THERE A SET COMMISSION RATE/FLAT FEE?
Answer: No. Commissions are not set or fixed by any regulation. They can vary based on the services provided by the brokerage.

10. IS THE COMMISSION ALWAYS PAID BY THE SELLER?
Answer: No. Buyers should confirm the commission arrangements prior to entering into an offer on a property.

11. THE SALESPERSON HAS PROMISED TO DO CERTAIN THINGS FOR ME. WHAT DO I NEED TO DO?
Answer: Make sure any promise is in writing expressing your understanding of the promise.

12. I DON’T UNDERSTAND THE REPRESENTATION AGREEMENT HE OR SHE HAS ASKED ME TO SIGN. WHAT DO I DO?
Answer: If the brokerage representative cannot explain a term of the agreement to your satisfaction, do not sign it until you do understand it. You may want to contact the broker of record or a lawyer for clarification of any terms of the agreement.

13. IS THERE A “COOLING OFF” PERIOD TO CANCEL A REPRESENTATION AGREEMENT?
Answer: No

14. WHAT IS A CONFIRMATION OF REPRESENTATION?
Answer: It is a form that is signed before you sign an Agreement of Purchase and Sale(APS)/Offer that confirms which brokerage is representing the buyer and seller and what type of representation is (i.e. client, customer, no representation) being provided.

15. HOW MUCH SHOULD I GIVE AS A DEPOSIT?
Answer: There is no set amount, amounts vary by local custom.

16. WHAT IS THE PURPOSE OF THE DEPOSIT?
Answer: The deposit demonstrates the commitment of the buyer to the seller to complete the purchase.

17. WHERE DOES THE DEPOSIT GO?
Answer:
a. The deposit holder is identified on the first page of the APS and any deposit payment needs to be made to the holder named.
b. Deposits are traditionally held by the statutory Real Estate Trust Account of the seller’s brokerage.

18. ARE THE DEPOSIT MONIES INSURED?
Answer: If they are held in a brokerage’s Real Estate Trust Account the funds are insured under the RECO Deposit Insurance Program, up to $100,000 per claim, subject to the terms and conditions of the insurance policy.

19. DO I GET INTEREST ON THE DEPOSIT?
Answer: Interest, if any, must be stated in the APS.

20. IF MY APS DOES NOT COMPLETE DO I GET MY DEPOSIT BACK?
Answer: The return of a deposit would be by written mutual consent of the buyer(s) and seller(s) or by court order.

21. IF I DON’T REMOVE THE CONDITIONS, DO I GET MY DEPOSIT BACK?
Answer: See answer above.

22. DOES A SELLER HAVE TO MAKE ME A COUNTER OFFER/SIGN BACK?
Answer: No. Once an offer is presented to a seller they may do what they want, such as accept, decline, make a counter offer or do nothing.

23. DOES A SELLER HAVE TO GIVE ME AN OPPORTUNITY TO MAKE ANOTHER OFFER?
Answer: No. See above.

24. WHEN DO I GET MY COPY OF THE AGREEMENT OF PURCHASE AND SALE?
Answer: You must get a copy when all parties have signed the agreement.

Get in touch and we'll get back to you as soon as we can.  We look forward to hearing from you!

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My Wife and I listed our house in Lindsay with Lighthouse Real Estate in Aug 2020 with Dave Hardyman and he sold it in two weeks. We liked his down to earth approach! There was a issue on closing date with additional cost and Dave with his respect for his clients did not hesitate to correct the problem and my wife and I were very impressed with his business sense. He and his company made this a very good experience and we fully recommend this Realty for anyone wishing to sell

~ Dale and Betty Dowswell, Fenelon Falls, Ontario

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“I have known Kathy for many years and have worked with Kathy in several real estate transactions. I have also referred Kathy to friends who have benefitted from her years of experience”. Kathy is an energetic agent that has the experience to negotiate complex transactions. She’s an out of the box thinker which is often critical in Real Estate transactions.”

~Brad Smith

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"They certainly helped us "find our way home"! I can't say enough about the customer service from the first phone call, to finding "Our" perfect home. Thoughtful, considerate and extremely knowledgeable. I honestly wouldn't consider calling anyone else. Thank you Lighthouse Real Estate!"

~ Sharon, Fenelon Falls, Ontario

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“I’ve completed six real estate transactions in the past 18 years and Kathy Stewart has been there for them all. She made things a million times easier for me. Her spirit, initiative, and motivation are second-to-none, as is her capacity to work through adversity. Especially on those occasions where my anxiety got the best of me, as it does for many of us when we’re involved in scary economic negotiations with strangers. Yet Kathy kept me calm throughout, simply proceeding in the professional way that the situation called for, and shouldering whatever work she could on my behalf. I’ll forever be thankful for Kathy’s competent and kind assistance.”

~David Ward

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“My family and I have known Kathy for many years. Her name is well known around the Kawartha area. She has assisted in the sale of previous and purchase of current residential properties. She has also been very helpful in the early stages of a business property search. She is knowledgeable and well informed of market trends, and has a good understanding of what type of business could thrive in a small community. She has been helpful and encouraging and I look forward to the use of her services again in the future. If you do not have a go to real estate agent, you do now. Call Kathy Stewart. You won’t be disappointed. Thank you Kathy!”

~James butcher

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"My family sold our house and bought our new house with Lighthouse Real Estate Ltd, specifically David Hardyman and he did a fantastic job with selling our first house to ensuring we bought our dream home...we will never work with a different salesperson in the future!"

~Jeremy and Melissa Crawford

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"Allison has a positive attitude, with a friendly and helpful approach to people. With the power of constructive criticism, and problem solving, she is able to make any client feel comfortable when it comes to decision making."

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Best real estate agent. Found exactly what we wanted. Very thorough. Very patient as my husband and I are very picky. 

~ Corie Childs, Fenelon Falls, Ontario

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“Kathy is an amazing Realtor. She listens, delivers and never disappoints. She successfully navigated us through the process of purchasing both our home and cottage in Kawartha Lakes with ease and confidence. Her knowledge of the surrounding area surpasses all. We have and will continue to recommend her to everyone we know. Should we require anything even after the sales, she has always been available.”

 ~Mr & Mrs. Eyre

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“I have had the pleasure of working with Dave Hardyman of Lighthouse Real Estate for both the purchase and sale of my properties. Dave brings a wealth of knowledge to real estate and his personality; business acumen and great sense of humor make one of the most stressful and financially taxing situations seamless and quite pleasant. In addition, the sale of my cottage property was done during COVID.  Dave went above and beyond to ensure that all safety protocols (and some additional) were in place and that all viewings were done through a very thorough screening process. I have and will continue to refer Dave and his team to friends and colleagues who are interested in selling or purchasing."

~Merrill

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