Sage Real Estate Home Buyers' Guide

HOMEWARD BOUND
A SAG E G U I D E FO R B U Y E R S

the perfect home

In a world of changing needs, finding the perfect home often
requires making immediate decisions and compromises. Because of
this, prospective buyers may begin to wonder if their dream abode
is even out there. At Sage Real Estate, we are confident the perfect
home is within reach. Every day, in neighbourhoods throughout
Toronto, we help clients acquire the home they’ve dreamed of.

Of course, it’s not as simple as sifting through MLS properties
online, showing, and then selling. Finding the perfect home is really
about listening: having your individual needs and wants understood,
your priorities and concerns addressed, and your tastes and
lifestyles considered.

It’s also about agent networking: drawing on previously established
relationships and resources and exchanging information and
support. It’s about overall professionalism: maintaining honesty and
integrity, dedication, respect, and commitment. It’s also about plain
hard work: employment of energy and hustle, passion, and drive.

By working with a Sage Real Estate agent who understands just
what ‘perfect’ means to you, your perfect home is within reach.

A BR OKERAGE OF THE N EX T G EN ER AT I ON

a b o u t s a g e r e a l e s tat e

Sage Real Estate stays true to its vision of a next-generation real
estate company - one that continually raises the bar on service,
professionalism, and performance. It is a vision that consistently attracts
top-producing Realtors, all of whom produce very satisfied clients.

Sage Real Estate has also invested heavily in industry-leading
technology. By establishing state-of-the-art office support and creating
marketing and customer-relations programs, Sage Real Estate
demonstrates its dedication to the profession which enables its Realtors
to provide their clients with the very best resources available.

Sage Real Estate truly cares about making its list of very satisfied
clients grow one client at a time. It is our hope that your name will be
added to that list.

YO U R REA L ESTATE P R OF ESSI ON A L

h o w r e a l e s tat e a g e n t s w o r k f o r yo u

With a wealth of online resources, an increasing ‘for sale by owner’ market,
and countless real estate cable TV shows, it’s not surprising that some
homebuyers consider adopting a ‘do it yourself’ approach as their option of
choice when deciding to purchase real estate.

For most people, a real estate professional is an indispensable partner in
the home-buying process. While buyers today are more educated about
real estate than ever before, all the research in the world can’t match an
experienced agent’s understanding of today’s market. Without the pavement
pounding and advance scouting an agent does on behalf of their clients,
prospective buyers might overpay for a home or lose out on the home of
their dreams simply because they do not have the same type of resources
that an agent does. An agent is also completely objective and professional
when discussing their opinion of the property being considered for purchase
unlike a parent, spouse, partner, or best friend.

The buyer’s agent is typically compensated by the seller, which means
buyers have nothing to lose and everything to gain by tapping the expertise
of an agent. From the moment you select a Sage Real Estate agent until the
day you move in, our team will be working for you.

Anyone can purchase a house; however, at Sage Real Estate we pride
ourselves on finding you a home. The right home not only fulfills your
current needs, it continues to be right for you as time progresses. Buying
the right home has long term personal and investment benefits whereas the
costs of buying the wrong home can be immeasurable.

THE BUYING PROCESS
g e t t i n g s ta r t e d

To the uninitiated, the process of buying a home may appear to be relatively
straightforward; however, there are dozens of variables and pitfalls to avoid in
any transaction that can make home buying quite complex. If you are organized
and prepared the process will not only be easier and less stressful, you will be
well-positioned to take advantage of an opportunity when it presents itself.
Here are some steps to take before beginning your search.

Yo u r Pat hway H o me
Th e B u yin g P ro cess

1 C h o o s e you r
Re a l Estate Team 2 Choose Your Sa ge
Rea l Esate Agent
C h o o s i n g a n a d vi s o r to g u i d e
3 U nd erst a nd
Ag ency Rel at i o ns hi p s
Buy ing a ho m e is a B uy ing a hom e is a
collaborative e ffort . yo u th ro u g h a tra n s a c ti o n i s a s colla borat ive effort .
Each member of your team i m p o r ta n t a s b u y i n g th e h o m e i ts e l f. Each member of your team
plays an important role. plays an important role.

4 G et a M ortg age
P re-A p p roval
A m ortgage pre -approva l i s
5 Create Your
Wish List
P r i o r i ti ze yo u r wa n ts &
6 Know Yo ur
P ro p ert y Ty p es
Every neighbourhood in
e sse n t ial an d in cre dib l y e a sy needs before beginning t he c it y offers a va riet y of
to at t ain . your search. housing st y les.

7 F in d You r
H o me
Look at eve ryt h in g, ke e p
8 Ma ke a n Offer
Wh e n yo u f i n d a h o m e yo u
a b s o l u te l y l ove, i t ’s i m p o r ta n t
9 U nd erst a nd The
Ro l e o f Yo ur L awyer
Your lawyer will protec t your
track of what you see, and be to a c t q u i c kl y. rights and ensure you actually
sure to give your salesperson get what you’re paying for.
honest feedback.

10 G et I n su ran ce
Se e k qu ot at ion s from
re levan t in su ran ce
11 Com plete the
Tra nsa c tion
Your Sage real estate agent
12 Move Ahea d
As you’re set t ling
into your new hom e,
expe rt s for e ach t yp e o f we’re st ill working.
will make sure everything is
in su ran ce you re qu ire.
in place for a smooth and
efficient closing.

THE BUYING PROCESS
1
b u y i n g a h o m e i s a c o l l a b o r at i v e e f f o r t

You will need to acquire your own team of professionals to support you
throughout the process.

Your First String Players Are:
1. The Listing Agent/Salesperson
2. The Selling or Co-operating Agent/Salesperson
3. Lender
4. Appraiser
5. Inspectors
6. Lawyer
7. Insurance Broker

Supporting Roles:
8. Home Security Specialist
9. Moving Company

Understanding the parts each one plays will allow you to work with them
in a mutually beneficial way.

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1
buying a home is a collaborative effort

1. The Listing Agent/Salesperson: 6. Lawyer:
Works with each homeowner (Seller) to market a home. The Listing Your lawyer handles much of the paperwork involved and facilitates the
Salesperson works for the Seller. transfer of the home’s ownership. They also ensure that you receive good
title to the property you purchase.
2. The Co-Operating Or Selling Agent/Salesperson:
This is the Agency role a salesperson plays for most buyers. 7. Insurance Broker:
The co-operating or selling agent works with buyers to help them locate Property insurance will be required for your new home. In securing
exactly the right home to meet their needs. The co-operating agent works insurance for your property, you might opt for other insurance coverage as
for the Buyer. many insurance brokers offer complete packages for a reasonable amount.
Please review the Insurance section in this guide.
3. The Lender:
Unless you have all the necessary funds to purchase the property, you 8. Home Security Specialist:
will require a mortgage from a lender. There are many different types of Although burglar alarms are not essential, homeowners value the peace
mortgage loans, all of which are reviewed in detail in the Financing section of mind having a home security system brings. With advanced technology
in this guide. now incorporated into many systems, some home alarm systems contain
freezing temperature alerts in case of furnace malfunctions and flood alerts
4. The Appraiser: in case of back-ups.
The property must be appraised to make sure it is worth the full amount of
the loan that the lender is planning to make. 9. Moving Company:
Good movers are worth their weight in gold. Negotiating for replacement
5. Inspectors: of articles carelessly broken is not fun, so ensure the moving company you
There are many inspections that can be obtained on any home. employ is fully bonded and has provided you with several references.
The basic ones are:
• Building inspection. This detailed mechanical and structural home
inspection is used to assist in understanding the condition of the property
being considered for purchase. Also helps with budgeting for required repairs.
• Pest control
• Environmental (if applicable)

You can obtain a useful list of questions to ask potential building inspectors
under the Buyer’s section of our website at SageRealEstate.ca.

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c h o o s i n g a s a g e r e a l e s tat e a g e n t

Choosing an advisor to guide you through a transaction is as important as
buying the home itself. Homebuyers should give just as much consideration
to hiring a buyer’s representative as sellers give to hiring a listing agent.
That means conducting interviews, seeking referrals, and researching the
brokerage as well as the salesperson.

It is important to ask potential agents a number of questions relating to their
experience, comfort levels, and routines. It is also important to listen for the
questions they ask you to see if they are intent on understanding your needs
and if they are committed to fulfilling your wants.

Experience in your preferred neighbourhood and the style of home you
want is important. The comfort level that is established between you and
your agent is equally important because buying a home is a highly personal
experience. Ultimately, you only work with one agent so it should be
someone you like and respect and who feels the same way about you.
You must have complete trust in your salesperson of choice. If you feel agent
trustworthiness is not there, keep on looking.

Learn more about the agents of Sage Real Estate at www.sagerealestate.ca

There is a handy questionnaire in the Buyer’s section there for you to use
when interviewing salespeople.

AN AGEN T CHAMP ION S YOUR C AUSE

THE BUYING PROCESS
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u n d e r s ta n d i n g a g e n c y r e l at i o n s h i p s

‘The salesperson works for me, right!?’

Your salesperson will work on your behalf to find you a house and will negotiate for it
on the best terms possible for you if you retain the salesperson by signing a Buyer
Brokerage Agreement.

Buyer Agency
If you sign a Buyer Brokerage Agreement then your agent is called the Selling
Agent or the Co-operating salesperson in the transaction. They work exclusively to
represent and protect their buyer’s best interests. Selling or Co-op agents do not owe
their allegiance to the Seller so they can fight on their buyer’s behalf to get the house
on the best terms for the buyer. The Seller’s interests are protected by the listing
agent of the property.

Who Pays The Salesperson?
In the case of Buyer Brokerage, the Selling Agent can either be compensated directly
by the purchaser or be compensated through the Listing Broker from the proceeds
of the sale. Buyers are usually only responsible to directly compensate the Selling
Agent if they purchase a property which has not been listed for sale. Buyer Brokerage
Agreements clearly detail any responsibility for payment of commissions. Buyers
should discuss the type of agency relationship they desire to have as well as Realtor
compensation with their Realtor. Please read, review, and ask questions of your
salesperson until you completely understand.

Where Do I Go From Here?
After reviewing and understanding the forms it will be necessary for you to choose
and authorize the appropriate representation. This is to be done before you can look
at homes. Representation agreements are now required by law in Ontario if you
purchase a property through a registered real estate sales representative.

T IME TO GET YOUR F I N A N C I A L HOUSE I N OR D E R

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g e t t i n g a m o r tg a g e p r e - a p p r o va l

In today’s home buying environment, a mortgage pre-approval is not only
essential, it is also incredibly easy to obtain and can be done over the phone
or in person. A mortgage pre-approval lets you know the maximum mortgage
amount the lender is prepared to lend you. It also demonstrates to a seller
that you are a serious, willing, and capable buyer. It goes a long way to
provide you with the lender’s formal loan commitment once you have found
the home you would like to buy. There is a specific mortgage section located
in this guide.

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c r e at i n g a w i s h l i s t

Almost every home purchase involves some degree of compromise which is
why you must prioritize your needs and wants before beginning your search.
When deciding to purchase a home, think about the following:

• Three features a home absolutely must have in order for it to be in the running.
• Additional features that are essential for you.
• What else would really make you happy?

Sage Advice For Home Buyers

1. Location, Location, Location !
You’ve heard it before, and it’s true! Buy into a location that you predict will be equally
attractive in the future and you most likely will have made a good investment.
Remember, you can change a house but you can’t change its location.

2. Check Out the Schools
The school district is important even if you don’t have children because at some point,
you might decide to resell your home. It is not uncommon in Toronto for some people
to move into an area just because of its close proximity to a particular school.
Re-visit point one, above.

3. Energy Efficient Houses Save Thousands of Dollars in Utility Bills Over Time
If the house you’re considering purchasing isn’t energy efficient now, make
certain it becomes so once it’s yours.

4. Trial Run Your Commute During Rush Hour
Drive, walk, or use “The Better Way” to get yourself to work during peak periods from
the house you are considering buying. If the commute is unbearable, it’s
best to find out now.

THE BUYING PROCESS
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c r e at i n g a w i s h l i s t

5. Want Your Equity to Increase Exponentially? Buy a Fixer-Upper
Buyers will pay top dollar for a good house in a demand area that is in really
good condition. Give your equity position a terrific boost by purchasing the
classic “fixer-upper”. If you pay to have the kitchen and bathroom remodeled
yourself you not only get the benefit of living with your own design choice but
your home instantaneously becomes worth much more. Your Sage Real Estate
sales representative can tell you which renovations reap the best returns.

6. Do a Credit Check on Yourself
Make certain there are no errors on your credit report. If there are, take steps to
rectify them before they adversely affect your mortgage pre-qualification. Review
the video section for Buyers at our website SageRealEstate.ca for information on
how to obtain your own credit report free of charge.

7. Clean Up Your Credit – Pay Off Debts and Don’t Incur More!
Make all your payments on time. Even if your credit history has been through
a bad patch or two, lenders are more forgiving to borrowers who have seen the
error of their ways and have recently been making regular on-time payments.
This is a time in your life to be financially prudent.

8. Interest Rates Low?
Go for a longer term, fixed-rate mortgage or a variable-rate mortgage that will
allow you to lock in to a fixed term if you see interest rates on the increase.

9. Buy So You Can Expand
Buy a house that can expand along with your family’s changing needs. There are
times when trading up is appropriate and there are also times when the need to
purchase another home could have been avoided had you bought a home that
would have accommodated minimal expansion.

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to r o n to : a va r i e t y o f h o u s i n g s t y l e s

From towering skyscrapers to sturdy bungalows, Toronto’s housing stock is among
the most diverse in the world, giving homebuyers virtually limitless options when
looking for a home to call their own. Almost every neighbourhood in the city offers a
variety of housing styles and a choice between existing, new construction, or
renovated homes. Here is a brief rundown of the various types of residences you’re
most likely to encounter during a home search in Toronto:

Single-Family Homes
Officially defined as a residential structure that includes only one dwelling, single-
family homes are readily available in most of Toronto’s neighbourhoods. Buyers
should be prepared to pay a premium for the extra land, privacy, square footage,
and outdoor space a single-family home affords. The variety of single-family homes
in Toronto is vast and includes bungalows, detached, semi-detached, row homes,
modern homes, town homes, and multi-million dollar mansions.

Condominiums
Purchasing a condominium in a multi-unit building means that the buyer owns an
individual unit as well as a share of the building’s common areas, such as the lobby,
corridors, and amenity areas. Many buyers choose condominiums because they
require little maintenance, frequently offer amenities such as a swimming pool or
fitness centre, and in most cases are relatively affordable compared to town homes
or single-family homes.

Because of the shared ownership, a condominium association is responsible for
decisions regarding the operations of the building and owners must abide by the rules
and regulations set forth by the association. Condominium owners also pay monthly
assessments which cover maintenance and repairs of common areas as
well as costs associated with shared amenities.

In Toronto, condominiums run the gamut from new construction highrises with
striking views and luxury amenities to vintage walk-up buildings with charming
elements such as original hardwood floors and built-ins.

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Lofts
Traditionally, a loft is a home adapted from a large open space in a factory,
warehouse, or other commercial building. Hallmark features of an authentic loft
include high ceilings, large windows, exposed timber or concrete support columns,
timber or concrete ceilings, exposed brick walls, and exposed ductwork. In recent
years, buildings in many of Toronto’s former manufacturing and industrial districts
have been converted to residential lofts thanks to demand from buyers who
appreciate the urban style and open, airy layouts. In fact, loft homes have become
so popular that many developers now build ‘soft-loft’ or ‘loft-style’ buildings. Plentiful in
Toronto, these are actually new construction buildings that replicate the layouts
and distinctive styling of a true loft conversion.

Town Homes
Town homes are multi-level dwellings that share at least one common wall with a
neighbouring home which typically has a similar façade. In downtown Toronto where
land costs are high, town homes tend to be more affordable than single-family homes
since they use land more efficiently. Likewise, the common walls and roofs of town
homes lessen construction costs for developers. Town homes are usually low
maintenance and offer buyers many of the features they would typically find in a
single-family home such as ample living space, a private garage, and an outdoor
area. Town home buyers enjoy the benefits of a strong community.

THE BUYING PROCESS
6

Green Toronto
Thinking of living Green? Here are some considerations:

• A location near public transit
• Building materials containing recycled content
• Renewable energy sources such as solar power
• Energy-efficient windows, appliances, and heating and cooling systems
• Plumbing fixtures that reduce overall water usage
• Rapidly renewing or recycled materials for interior finishes, such as bamboo
flooring, wool carpet, and countertops made from recycled metal or glass
• Low-VOC (volatile organic compound) paints, carpet adhesives, and
sealants which limit emission of volatile organic compounds and thereby
promote a healthier indoor environment
• Native vegetation in landscaped areas or on a green roof
• A landscape irrigation system that recycles rainwater
• Facilities for storage and collection of recyclables

If green features are important to you, talk to your Sage Real Estate agent.
We’ll help you find a housing option that fits your needs.

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l o o k i n g at p r o p e r t i e s

You are ready to begin your home search once you have obtained a mortgage
pre-approval, decided on a real estate agent, selected your buyer representation,
and completed your wish list.

The Buyer’s Responsibilities
Share your wish list and your price range comfort zone with your salesperson.
That information will assist them with researching the market for properties that seem
to fulfill your requirements.

Get Educated in the Market
Ask questions such as: What are current market conditions? What is happening in the
market in your particular price range? What are the price trends in the locations that
interest you?

Look at Everything
The first series of showings should give you an overall understanding of what is
available in the marketplace. There is no home listed on the market by any realtor that
cannot be viewed through your Sage Real Estate sales representative.

Now is the Time to Explore Alternatives
Keep an open mind. As you inspect various possibilities within your price range, you
will be more comfortable narrowing your search to specific parameters and you will be
able to assess various alternative housing styles, configurations, and conditions.

Tell Your Salesperson Your True Feelings about the Houses You’re Seeing
Honest feedback efficiently steers your salesperson towards your goal. It is important
to discuss your impressions and reactions to properties confidentially with your sales
person in a frank and direct manner.

THE BUYING PROCESS
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Keep Track of What You See
Use the ‘Individual Property Viewing Score Card’ and the ‘Summary Record of
Properties Viewed’ under the Buyer section of SageRealEstate.ca to keep a record of
each house you see. This is an essential part of your market education process and
will assist in evaluating the home you ultimately decide to buy.

Should you go into Other Agents’ Open Houses?
You may attend open houses if you identify yourself to the salesperson holding the
open house and tell them that you have a buyer’s agency contract with another sales
person. Hand them one of your Sage Real Estate Sales Representative’s business
cards. This will allow the Real Estate sales representative hosting the Open House to
concentrate on other prospective buyers. It is inappropriate for another salesperson to
pry into the confidential details of your home search.

Outside of Open Houses, Should I see Homes with any other Salesperson?
No. Once you have signed a buyer’s agency contract with Sage Real Estate it
becomes your salesperson’s responsibility to show you homes. It is unethical for
other salespeople to show buyers homes if they know the buyer is under contract to
another brokerage.

Inform your Salesperson of Changing Search Parameters
Keep your Sage Real Estate Sales Representative advised of any changes to your
requirements along the way. Decide to spend more money? Decide to spend less?
Decide to consider other locations? Decide to only consider one location? Tell your
salesperson so your revised parameters can be responded to immediately.

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How to use the Internet to Your Best Advantage
The Internet provides a comprehensive database of current listings and almost every
listed property works its way onto several websites. Write down listing identification
number(s) of listings which appear interesting and record the site domain name.
E-mail, fax, or telephone this information to your salesperson so they can investigate
and identify.

When You Find “The Right House”
Our goal is to educate you so that you will feel comfortable directing your Sage Real
Estate Sales Representative to proceed with the purchase of the right property when
you see it. Timing is critical when purchasing a home and there are several strategies
that you can use in order to be successful with any offers that you make. To help you
decide if a specific property in which you are seriously interested is indeed the right
one please review the ‘Is this the One? Let’s be Certain: A 15-Point Property Hit List’
form that is located under the Buyer’s Section of sagerealestate.ca.

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8
the abc’s of making an offer

When you find a home you absolutely love someone else may love it too.
It’s important to act quickly and make an educated offer based on a rational
approach to pricing and negotiating that you and your agent have discussed.
To start the process rolling, your agent will draw up an agreement that includes
your offering price and other terms and contingencies. Buyers often focus on
price but there are other important terms included in a real estate agreement.
You can include any terms you like but remember that the more you add, the
more likely the seller is to object. Here are the most common elements of an
Agreement of Purchase and Sale:

Price
The market, the Buyer, and the Seller will determine the final price. Your agent
will help you formulate an offer based on comparable listings and sales, and
current market conditions.

Mortgage Condition
A mortgage condition stipulates that you will buy the home subject to obtaining a
mortgage. If you cannot obtain a mortgage then the contract will be void. You will
need to establish a timeframe for securing financing.

Home Inspection Condition
A thorough inspection of the property by a licensed home inspector protects
you against structural or material problems that are not detectable in a casual
walk-through. Home inspections are just as important in new construction as they
are in resale. Buyers can’t inspect a home that isn’t built yet; however, they can
request an inspection prior to closing. In new construction an inspector will make
sure that all mechanical systems are working properly and may also spot repairs
that need to be added to the builder’s punch list (a list of items that need to be
completed). The buyer, not the seller, is responsible for hiring and paying the
inspector.

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8
the abc’s of making an offer

Deposit
The deposit is given by the buyer to be held in the listing brokerage’s trust
account and secures the contract until the closing. An initial deposit usually in
the form of a cheque must be given to the seller or seller’s agent along with the
offer. Upon completion of the agreement the deposit will be applied to the down
payment and/or closing costs to the benefit of the Buyer. If the sale does not go
through due to contingencies covered within the contract, then the deposit money
typically will be returned to the buyer.

Closing Date
One of the most important terms of a real estate contract is the closing date – the
date when ownership changes hands. This is usually the date that the seller must
vacate and the buyer may occupy the property. Flexibility on the closing date can
give a buyer a big advantage over other potential buyers and can occasionally
allow you to negotiate a lower price or other, more favourable terms.

Counteroffers
In many transactions, there is a fair amount of negotiation – offers and counter
offers – before both parties are satisfied. This is one aspect of a real estate
transaction in which an agent is invaluable. Not only can an agent draw upon
previous experience and market knowledge to offer sound advice during a
negotiation, they can also serve as a buffer between the buyer and the
seller/seller’s agent. Negotiating for a home can be a highly charged and
emotional process, and even the most emotional buyer will look like one cool
customer behind the right agent.

For some additional Hints on the Fine Art of Negotiations please visit the Buyer
Section of Sage Real Estate.ca where you can also find an article on Insider
Secrets on Bidding Wars.

DEAL ING W ITH LEG A L I T I ES

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t h e r o l e o f a l aw y e r

The buying process involves a number of legalities and sound legal representation is
not merely a suggestion, it is a requirement. Your lawyer will protect your rights and
ensure you actually get what you’re paying for.

What is Important in a Lawyer?
Ideally you will want to use a lawyer with substantial real estate experience, as
lawyers who may be excellent in one field of law might not be as strong in real estate
law. Most transactions close without any problems; however, if there were to be some
difficulties an experienced and effective real estate lawyer is invaluable. Go with the
lawyer that you feel has the right experience for your situation.

How Do Their Fees Work?
Toronto lawyers typically charge a flat fee for their real estate purchasing clients. It is
usually beneath the law society mandated maximum tariff rates. Talk to a lawyer and
get a quote. The best lawyer for you may well not be the cheapest but save money
elsewhere. You need a good lawyer!

What About The Extras?
Disbursements will be in addition to the quoted fee. Your ‘Closing Costs Work Booklet’
is available on SageRealEstate.ca and details the costs of typical disbursements.
Your lawyer will be able to provide you with exact disbursement expenses on
your transaction.

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t h e r o l e o f a l aw y e r

What Specific Functions Does a Lawyer Perform?

Before the Offer is Signed: On Closing Day:
• If requested, lawyers consult with purchasers to review the offer clauses. • With mortgagee will exchange mortgage documentation for money.
Will not recommend negotiation strategies but will ensure that purchaser • Meet with vendor’s lawyer at registry office.
understands legal aspects of the offer. • Complete final searches.
• Transfer funds.
After the Agreement is Accepted: • Register deed and mortgage in buyer’s name.
• Detail exact closing costs. Most of these you will have already anticipated • Pay land transfer tax.
and estimated in your “Closing Costs Work Booklet”. • Obtain keys from Seller’s lawyer.
• Search title.
• Search taxes, utilities, building and zoning or order title insurance. After Completion:
• Execution search. • Send you a reporting letter certifying your title together with the deed,
• Mortgages and other financing arrangements. survey, and all other related documentation.
• Verify insurance policy documentation. • Invoice you for services rendered.
• Calculate land transfer tax.
• Requisition letter to Seller (requesting resolution of any problems found
in searches).

A Few Days Before Closing:
• Address any Provincial Sales Tax issues.
• Prepare mortgage documentation.
• Prepare statement of adjustments.
• Prepare documentation for land registry.
• Accept closing funds from buyer.
• Review and have buyer sign necessary documentation.

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insurance

The insurance requirements associated with home ownership can be complex as there is no one-stop
insurance shop to fill every insurance need. Some insurance is placed by your lender or mortgage
broker, some by an insurance broker, and some by your lawyer.

This section provides a brief overview of the various types of home-related insurance. Please seek
quotations from the relevant insurance expert for each type of insurance. Carefully review coverage,
limits, restrictions, rates, and overall policy suitability to ensure that your insurance needs are being
appropriately met. You do not need every type of insurance; however, if something goes wrong the
appropriate insurance becomes the bargain of a lifetime

1. Homeowner’s Insurance

What is it?
Just as one would not drive a car without insurance, one does not own a home without this basic
insurance. Homeowner’s insurance protects your home against hazards such as fire, smoke, wind, hail,
and acts of vandalism. It would also provide liability coverage against injury to any of your visitors.

Is it Required?
Your lender will require Homeowner’s insurance coverage in an amount equal to your mortgage.
This is required because the lender could be left without security for its loan in the event of property
damage or loss.

Options
Most homeowners opt for a homeowner’s policy that also protects the contents of the home.
Contents protection coverage can also be for full replacement value.

HINT: Non-smokers often get rate discounts.
HINT: Monitored burglar alarms often get rate discounts.

Where Do I Get it?
Contact your general insurance broker or agent for advice and coverage.

THE BUYING PROCESS
10
insurance

2. Mortgage Life Insurance defects. Most policies also pay the cost of defending against any covered
claim. Unlike Homeowner’s Insurance which protects you from an
What Is It? unforeseen event in the future, Title Insurance protects you from an
This is a life insurance policy with the amount of insurance being equal undetected defect or fault in the past.
to the principal amount of the mortgage. In the event of the mortgagor’s
death, the balance of the mortgage is paid off. What is a Title Defect?
The following are some examples of hidden title defects that a title
Is It Required? insurance policy could typically cover: unsatisfied mortgage, lien, or
Lenders do not usually make their commitment to place a residential judgment; fraudulently discharged mortgage(s); missing heirs, etc.;
mortgage with a buyer contingent upon the buyer taking out mortgage life improperly executed deeds; irregularities or errors in existing surveys;
insurance. An exception to this would be mortgages for very high amounts. required removal of existing improvements; unregistered easements or
rights-of-way;…the list could go on and on.
Where Do I Get it?
Through the lender or mortgage broker at the time you take out If I Don’t Have Title Insurance, How Serious Could A Claim Be?
your mortgage. It could be very serious. You would have to pay all defense costs and a
claim could result in complete loss of equity if defense were unsuccessful.
3. Mortgage Insurance, or Mortgage Loan Insurance, or Mortgage Title insurance means that you do not have to worry about any mistakes
Default Insurance (not to be confused with Mortgage Life Insurance) in titles.

What is it? How much does it cost? Should we get it?
Mortgage Insurance, Mortgage Loan Insurance, and Mortgage Default The cost of title insurance is a few hundred dollars. We encourage
Insurance are all the same. They describe the mortgage insurance through purchasers to consider buying title insurance not because of the fairly
CMHC which protects lenders of high ratio mortgages against mortgagor small likelihood of an undiscovered title defect but because of the cost
default. They are not one of the insurance policies that purchasers savings provided. Some savings are even significant enough to almost
consider buying for their own benefit. completely pay the cost of some title insurance policies.

4. Title Insurance What Cost Savings are there if I get Title Insurance?
In usual transactions lawyers not only search title but also obtain
What Is It? certificates of clearance from the zoning department, work orders, liens,
‘Title’ legally describes the ownership of land. Purchasers want assurance hydro, etc. If the property is title insured then the lawyer can skip some
that the property they are buying will legally be theirs and they will receive of the searches as the need for them is redundant. If there were to be
‘good and marketable title’ to it. Those with any claim to your property a problem discovered on any search then the insurance would pay to
should be restricted only to any mortgagee(s) and the government if taxes resolve it. As municipalities increase their search fees title insurance
are not paid. Title Insurance eliminates the risks of a defective property becomes more cost effective. On some properties the savings amount to
title by providing the compensation necessary to rectify covered title several hundred dollars.

THE BUYING PROCESS
11
co m p l e t i o n o f t h e t r a n sac t i o n

Your Sage Real Estate agent will work closely with you and your lawyer to make
sure everything is in place for a smooth and efficient closing.

Typically, a day or two prior to the closing your lender will forward all loan
documentation to either the title company or your lawyer and let you know the
amount required to complete the purchase. You will be responsible for bringing
the balance of your down payment and closing costs to your lawyer in the form
of a certified cheque. At the closing, your lawyer will guide you through the many
documents you need to sign.

Sage Real Estate’s goal is to provide you with the information you need to feel
confident throughout this process.

In addition, if you have an existing home to sell, Sage Real Estate will customize
a comprehensive marketing program to help you achieve the highest possible
sales price in the shortest amount of time. For more information, ask your Sage
Real Estate agent or visit www.sagerealestate.ca.

S ET T LIN G IN TO YOUR N EW HOM E

THE BUYING PROCESS
12
a f t e r yo u b u y

While your transaction is complete our work is not. In fact, Sage Real Many lenders offer no-cost refinancing which means they take the costs
Estate maintains relationships with our clients long after closing. We are and fees associated with refinancing and roll them into the interest rate.
always glad to help you find a variety of service providers and tradesmen It’s a way for homeowners to lower their monthly payment.
to perform work on your home.
While refinancing a mortgage has become much easier in recent years,
As you’re getting settled into your new home, here are a few situations it is still a major financial transaction with important implications which
you may encounter in the coming months and years that are important to requires just as much diligence as securing the original mortgage. Your
think about. Sage Real Estate Agent will happily refer you to a mortgage professional
to help you determine the right time to refinance.
Rebuilding Your Savings And Maintaining Financial Discipline
Buyers should take time to review and evaluate their finances after a Home Improvement
home purchase. One important step to consider is setting up an automatic Whether it’s a fresh coat of paint, new hardwood floors, or a major kitchen
electronic payment with your mortgage lender which lets you avoid costly remodel, most new homeowners have at least a few projects they want to
penalties associated with late payments. undertake once they move in. Your Sage Real Estate agent can help you
determine the market value of improvements you are considering making
Make a plan for gradually rebuilding your savings account which many to your home.
buyers deplete in order to make their down payment and pay for moving
costs. As a homeowner, it’s important to have a cash reserve set aside for
unanticipated maintenance that your home may require. In fact, a general
rule of thumb is that homeowners should expect to spend about 1-3% of
the cost of their home per year on maintenance and repairs.

Refinancing
Keep an eye on interest rates even after you purchase your home.
If rates go down you may be able to save money by refinancing which
simply means you take out a new mortgage at a lower interest rate that
will replace your original loan. Another common situation that calls for
refinancing is the expiration of the initial fixed-rate period on an Adjustable
Rate Mortgage (ARM). If prevailing fixed-rates are substantially lower than
the rate your ARM will carry once it adjusts, then it might make sense to
refinance into a fixed-rate loan.

FINANCING & MORTGAGES
financing & budgeting
Pre-Qualification
“I Need a Mortgage; Do I Go to My Bank or to a Mortgage Broker?” This is the first step in obtaining a mortgage. Pre-qualification is the
You should see both. See what your bank can do for you. Interview a lender’s estimate of your borrowing power. Your ability to buy depends
mortgage broker as well because they have access to many lenders and can on your approved capacity to borrow. In the pre-qualification process
obtain quotes from the various lenders who are best positioned to meet your the lender will review your mortgage application and usually request a
requirements. Mortgage Brokers understand what qualifications each lender credit report. After analyzing your credit history, income, and debts the
is looking for and can structure your application accordingly. They also know maximum loan amount for which you would qualify will be confirmed.
where the bargains are. Mortgage Brokers are usually compensated by the
lenders they represent. Pre-Approval
The line between pre-qualification and pre-approval often gets blurred.
How Much Can You Afford? Occurring quickly on the heels of pre-qualification, pre-approval formalizes
You can afford a house that costs as much as the mortgage amount for the estimate of a buyer’s borrowing power and leads to provision of some
which you qualify added to your total down payment. type of commitment or offer to place a mortgage from a lender or mortgage
broker. It would involve a credit application and usually requires income
Check Out Your Own Credit Report verification as well. The lender carefully analyses your financial situation by
Lenders will ask for your permission to obtain and examine a credit report applying their established standards for underwriting.
detailing your credit history. Information contained in your report
formulates their decision whether or not to lend you money. Credit reports How Much Should I try to get Pre-approved for?
precisely describe existing credit card limits, timeliness of payments, types Secure a pre-approval for the highest amount for which you would qualify.
of accounts, loans, balances, judgments, and bankruptcies and easily Only spend into your comfort zone but it is important to establish your
identifies any exaggerations or misrepresentations made on mortgage maximum approval parameters.
applications. Credit reports are not infallible however and you should request
a copy of your own report so that you can confirm its accuracy before you Loan Commitment and Final Loan Approval
formally apply for mortgage pre-qualification. You may challenge any errors The pre-approval process concludes with you obtaining a letter or certificate
and attempt to rectify wrong information before it works to your mortgage of commitment from a lender to place a mortgage with you and their final
approval disadvantage. approval of that loan. The commitment certificate or letter is confirmation that
you have been approved as a borrower by the lender for a specified amount
How to Obtain Your Own Credit History Report at specified terms. Please carefully review the letter as it usually places
There are two main credit bureaus in Canada; Equifax, and Trans Union of caveats on their final loan approval. Lenders usually reserve the right to have
Canada, both of which will provide you with a free copy of your own report. their own appraisers confirm market value of the house you want to finance.
Visit the Videos for Buyers under the Buyer’s section of SageRealEstate.ca for They may want to ensure that the house complies with their underwriting
details on how to go about it. standards, verify information, or re-check your credit before granting final
loan approval. Carefully review approval documentation with your lender or
mortgage broker and discuss any implications of buying a house without a
financing condition.

FINANCING & MORTGAGES
financing & budgeting

Get Your Pencils Out! Closing Costs Estimation
While your bank or mortgage broker will be able to tell you the exact Part of your available cash will have to be kept aside for expenses
range for which you can be approved, it is a good idea to also calculate incurred to complete the sale. Please review the closing costs work-
what you feel comfortable spending. You must recognize and accept the booklet section of the Buyer’s section of SageRealEstate.ca where the
extent of the financial commitment you are about to undertake as you costs are outlined. Even though you will not be able to establish the
will likely be making mortgage payments for many years. You may not exact expense total at this time, you should be able to arrive at a very
want to commit to monthly mortgage payments as high as the amount close approximation.
for which you qualify. Only you know how much you are comfortable
spending on monthly mortgage payments. How Much Mortgage Should You Carry?
This calculation will allow you to determine how much you are
Total Down Payment comfortable paying on an ongoing monthly basis. At SageRealEstate.
You must determine exactly how much money you now have available ca, under the Buyer’s section we have included a “Mortgage Affordability
to invest in your down payment and closing costs. This is the total Workbook” with easy step-by-step calculations that will lead you to the
amount of cash available. If you already own a home you will need principal amount of mortgage that you should be approved for and will
to estimate the amount of equity you have acquired in your house so be comfortable carrying. Once you have determined that amount you
that you can add this calculation to your available savings for a down are in a position to calculate your price range.
payment. This is your Total Down Payment.

SAGEREALESTATE.CA
s a g e r e a l e s tat e . c a

Over 90% of home searches begin on the Internet and if you’re searching for
a home in Toronto, there’s only one web address you need to know:
www.sagerealestate.ca, Toronto’s ultimate home search.

Our website includes tools, tips, and access to all of the Toronto properties listed
on MLS and best of all, you’re in control. Sign up to customize and manage your
search, receive email updates on new listings as they become available, conduct
several searches at once, and save properties you wish to see.

SAGEREALESTATE.CA
v i r t u a l to u r a n d p h oto g a l l e r y

Sage Real Estate listings are featured with virtual tours, photo galleries, and individual
listing websites. View photos of every room and print an online brochure of the property.

TORONTO REAL ESTATE GLOSSARY
g lo ssa ry o f t e r m s

Adjustable Rate Mortgage (A.R.M) Bridge Financing Commitment
Mortgage with a rate that is variable. It is usually Loan that covers a borrower in-between the Written agreement that a lender will provide a
tied to the prime rate. purchase of their new Toronto home and the sale specified amount of funds under certain conditions.
of their existing Toronto home.
Agency Common Elements
Relationship a buyer or seller has with their Canada Mortgage and Housing Corporation Parts of a condo building that are owned by all
Toronto real estate agent. (CMHC) owners of the building, ie. walkways, elevators,
Institution whose primary purpose is to administer halls, recreation facilities, etc.
Agreement Of Purchase and Sale (AKA Offer) the National Housing Act and provide lenders with
Legal document that outlines the terms of a insurance against high ratio mortgages. Condition
Toronto real estate deal that will be signed by both Clause written into the offer which outlines
the buyer and the seller. Cap something that has to happen before the
Maximum amount an interest rate can change. agreement becomes binding. Should the condition
Amortization not be met, the negatively affected party has the
Mortgage payment that includes both principal Chattels option to terminate the transaction.
and interest. Contents of the home belonging to the owner
which are not included in the sale of a home unless Conditional Offer
Amortization Period specifically outlined in the offer. Offer that has one or more contingencies that must
How long it will take to repay the mortgage. be fulfilled in order for the Agreement to become
Clear Title firm and binding upon both parties.
Appraised Value A Toronto property that has no claims against it.
Amount that a professional appraiser thinks a Condominium
Toronto property is worth. This is usually done to Closed Mortgages Form of ownership where the owner has the title
get the value of the house for mortgage purposes. Mortgage that cannot be paid out until the end of to a specific unit and a portion of the common
the mortgage period. Sometimes exceptions are elements of a building.
Assessed Value made, but usually there will be a penalty charged.
Amount at which a property is valued for Conventional Mortgage
taxation purposes. Closing Date Mortgage from a traditional lender such as a bank
Date that the house actually exchanges hands where the value of the mortgage does not exceed
Assumable Mortgage from the Seller to the Buyer. The Toronto buyer 75% of the value of the Toronto property. Any
Mortgage that can be passed on from the seller to gets the keys and the Toronto seller gets mortgage greater than 75% is considered high
the buyer, should the buyer want the mortgage their money. ratio and must be insured by CMHC.
and qualify.
Cloud on Title Co-operative
Blended Mortgage When a claim has been made against the title of a Type of ownership wherein the building is owned
Combination of two separate mortgages. Toronto property. Typically impacts the value of by a company. In order to be entitled to live in the
the property. building you must buy shares. It is typically difficult
Balloon Payment to get a mortgage for a co-op without a large down
One-time payment against the principal paid at the Collateral payment and you must also be approved by the
end of certain mortgages. Tangible asset that is used as a guarantee of co-op Board of Directors.
payment in a loan. A house acts as the collateral
in the mortgage.


Deed Equity Home Inspection
Document that officially transfers ownership of a Value of the property minus any outstanding debt. Objective evaluation of a house by a home
Toronto property. inspector. At the end of the evaluation a detailed
Fiduciary Duty document is provided outlining the condition of the
Default Legal relationship between a buyer or seller and house.
When a borrower is not able to make a debt payment. their agent.
Home Warranty Plan
Deposit First Mortgage Insures against the failure of the operating systems
Money that is put down after an offer has been First mortgage on a property. It has the first claim of the home. It may cover things such as the
accepted and is held in trust by the listing agent. on the property should there be a default. heating system, central air, electrical, plumbing,
and large appliances.
Disbursements Fixed Rate Mortgage
Various expenses and costs that a lawyer will pay Mortgage that has a fixed amount of interest paid Interest Adjustment
on behalf of a Buyer to close the sale. over a specific amount of time. Portion of interest that is paid if the closing date
of the transaction does not coincide with the
Discharge Foreclose mortgage payment date. For example: if mortgage
When a mortgage has been paid in full and the title When the lender takes legal ownership over a payments are made on the 15th of the month
has been changed to reflect that. property due to the borrower defaulting on the but the sale closes on the 10th, there will be an
loan. interest adjustment for 5 days.
Discount Points
Fee that is charged when a mortgage interest rate Gross Debt Service Ratio (G.D.S) Interest-Only Mortgage
is reduced from the current rate. One point equals G.D.S is typically used as the indicator that tells The interest is paid on a regular basis and the
one percent of the mortgage value. you if you can afford a certain mortgage payment. principal is paid at the end of the term.
All costs associated with housing (mortgage,
Down Payment taxes, heating, and 50% of condominium fees, if Irrevocable Period
Amount that the buyer puts down on the property applicable) should not exceed 32% of your gross The period at the end of which an offer expires.
in cash: this is the difference between the annual income (income before tax)
purchase price and the mortgage amount. Joint Tenancy
High Ratio Mortgages Situation where two people share an equal
Dual Agency – (See Multiple Representation) Mortgage that exceeds 75%. These mortgages ownership share of a property. If one dies, their
must be insured by the CMHC. share is transferred to the remaining person
Easement instead of to the beneficiaries of the estate of the
Legal right to use someone else’s land for a Hold Back deceased.
specified purpose. This right is tied to the land, not When money is held back by the lender until a
the individual, so it passes from the seller to the condition is satisfied. Land Transfer Tax.
buyer. Tax paid to transfer a property.
Homeowner’s Insurance
Encroachment Protects homeowners against damage to their Leasehold Mortgage
Occurs when the boundaries of some part of home caused by fire, smoke, wind, hail, vandalism Home mortgage when the house is on leased land.
one property impede over the boundaries of its and slips/falls.
neighbouring property.


Legal Fees Mortgage Penalty
Amount charged by lawyer to execute the An agreement between a lender and borrower Amount of money paid to the lender so that the
purchase or sale of a property. where the borrower puts up a piece of real estate borrower can prepay a portion of the mortgage.
as collateral for a loan to purchase that property.
Liabilities PIT
Debts. Mortgage Broker Principle, interest, and taxes.
A professional who brings together borrowers
Lien and lenders. Usually their fee is paid by the PITH
Legal claim against real estate to guarantee lending institution. Principal, interest, taxes, and heating.
payment of a debt.
Mortgage Insurance Possession
Listing Agreement Also referred to as mortgage loan insurance or Control (ownership) of a property.
Formal agreement between the seller of a property mortgage default insurance, this is offered through
and a real estate brokerage company authorizing CMHC and covers the lender when a borrower has Power of Attorney
the Brokerage to offer a particular piece of real less than 25% down payment. A legal agreement wherein one individual grants
estate for sale. another the legal authorization to represent them
Mortgage Life Insurance and make decisions on their behalf.
Listing Broker Mortgage life insurance covers the mortgage value
The real estate brokerage company that in the event of the death of the mortgage holder. Pre-Approval for a Mortgage
represents the seller. A written commitment from a lending institution to
Mortgagee lend a potential buyer a certain amount of money
Loan Commitment Lender. at specific terms for the purchase of a property.
Document that demonstrates a lender is willing
to lend a certain amount of money with certain Mortgagor Pre-Payment Privilege
conditions to a borrower. Borrower. The right of a borrower to prepay some of the
principal without having to pay a penalty.
Lock-In Multiple Representation
Occurs when a buyer tells the lender that they Occurs when a sales representative(s) from Principal
accept a certain interest rate for a certain amount one Brokerage represent both the listing and This is the base amount of money borrowed.
of time. selling sides of the transaction. For example,
the buying client of one Sage Real Estate Sales Real Estate Agent (Broker)
Maintenance Fee Representative buys a property that has also been The brokerage company that represents either a
Amount of money a condo owner pays each listed with Sage Real Estate. buyer or seller in the process of buying or selling
month towards upkeep on the common areas of real estate.
the building. Open Mortgage
Type of mortgage where the borrower can pay the Realtor
Maturity Date debt at any time. A registered real estate sales representative
End date of a mortgage. or broker.
Origination Fee
Fee the lender receives for processing a Refinance
loan application. When a new mortgage is obtained and used to pay
off the old mortgage.


Renewal Agreement Survey Variable Rate Mortgage
An agreement to extend the mortgage for another Document that outlines the property line on a piece Mortgage that has fixed payments but where the
term once the initial term is reached. of real estate as well as the location of any fences interest rate is adjusted to market levels. If rates go
and buildings on the property. up, a larger portion of that month payment goes to
Reserve Fund interest but the actual amount of the payment does
Bank account established by a condo corporation Tenancy in Common not change.
to cover major repairs to the common elements. When a property is jointly owned by a group of
The fund is paid into from a portion of the monthly individuals, not necessarily in equal shares, and Waiver
maintenance fee. each owner has the right to sell their portion. Document normally signed by the buyer which
relieves the seller from obligation to a particular
Seller Take-Back Term condition in an offer.
Mortgage where the seller personally provides Amount of time a lender lends funds to a borrower.
some of the financing for the buyer. Warranty
Title Legally binding commitment that the seller
Setback Legal certificate outlining who owns a property. provides to the buyer to guarantee that the house
The distance back from the property line is in good condition.
beyond which you must get approval for Title Insurance
any improvements. Insurance that covers a piece of land. Zoning Regulations
This provides assurance that the real property Criteria that regulates how a property may be
Statement of Adjustments remains the property of the buyer if a claim used, typically established by the Municipality.
Amount of money owed at the time of closing. against the property is processed. A property could be zoned for many different uses
The amount will be calculated by a lawyer and the including residential or commercial.
adjustment will typically be the difference between Title Search
the deposit and down payment subject to various The process of checking records to ensure the
credits and debits. seller has the legal right to sell the property.

Selling Broker/Co-operating Broker Total Debt Service Ratio (T.D.S)
The real estate agent who represents the Buyer in T.D.S. is typically used as the indicator that tells
an Agreement of Purchase and Sale. you if you can afford to take on more debt. Your
TDS should not exceed 40% of your gross annual
Special Assessment income (income before tax). This includes any
Special charge a condo owner has to pay for a mortgage debt, car loans, etc.
capital improvement or unforeseen expense.
Trust Account
Status Certificate Bank account used by brokers to keep deposit
Document that outlines the financial and legal funds separate from other funds.
status of a condo corporation.
Underwriting
Sub-agent Calculation of risk involved for a lender.
An agent who finds the buyer for a property but
has a fiduciary responsibility to the seller.

Sage Real Estate Ltd., Brokerage | 1820 Bayview Avenue, Toronto ON M4G 4G7 | SageRealEstate.ca

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