Buying a home is a huge commitment and one of the biggest financial investments you’ll ever make. If you’ve never done this before, you can expect to get hit with a barrage of real estate terms and jargon that might leave your head spinning. Your RE/MAX agent is there to guide you through the process, but for the keeners who want to hit the books before you hit the streets, below is a list of some common real estate terms. Read them, learn them. By familiarizing yourself with these home-buying basics, you’ll be better equipped to make informed decisions and a wise investment. 

Home Buyer’s Glossary: Real Estate Terms You Should Know

Amortization
The length of time allotted to paying off a loan – in home-buying terms, the mortgage. Most maximum amortization periods in Canada are 25 years.

Balanced Market
In a balanced market, there is an equal balance of buyers and sellers in the market, which means reasonable offers are often accepted by sellers, and homes sell within a reasonable amount of time and prices remain stable.

Bridge Financing
A short-term loan designed to “bridge” the gap for homebuyers who have purchased their new home before selling their existing home. This type of financing is common in a seller’s market, allowing homebuyers to purchase without having to sell first.

Buyer’s Agent
The buyer’s agent represents the homebuyers and their interests in the transaction. One the other side of the transaction, the listing agent represents the seller and his or her interests.

Buyer’s Market
In a buyer’s market, there are more homes on the market than there are buyers, giving the limited number of buyers more choice and greater negotiating power. Homes may stay on the market longer, and prices can be stable or dropping.

Closing
This is the last step of the real estate transaction, once all the offer conditions outlined in the Agreement of Purchase and Sale have been met and ownership of the property is transferred to the buyer. Once the closing period has passed, the keys are exchanged on the closing date outlined in the offer.

Closing Costs
The costs associated with “closing” the purchase deal. These costs can include legal and administrative fees related to the home purchase. Closing costs are additional to the purchase price of the home.

Condominium Ownership
A form of ownership whereby you own your unit and have an interest in common elements such as the lobby, elevators, halls, parking garage and building exterior. The condominium association is responsible for maintenance of building and common elements, and collects a monthly condo fee from each owner, based on their proportionate share of the building. Condos often have guidelines regarding noise, use of common areas and allowable renovations within the units themselves.

Deposit
An up-front payment made by the buyer to the seller at the time the offer is accepted. The deposit shows the seller that the buyer is serious about the purchase. This amount will be held in trust by the agent or lawyer until the deal closes, at which point it is applied to the purchase price.

Down Payment
The down payment is the amount of money paid-up front for a home, in order to secure a mortgage. In Canada, the minimum down payment is 5% of the home’s total purchase price. Down payments less than 20% of a home’s purchase price require mortgage loan insurance. The selling price, minus the deposit and down payment, is the amount of the mortgage loan.

Dual Agency
Dual agency is when one real estate agent (or real estate brokerage) represents both the homebuyer and the seller in a real estate transaction. There are limitations and requirements around dual agency, which differ by province.

Equity
The difference between a home’s market value and the amount owing on the mortgage. This is the portion of the home that has been paid for and is officially “owned.”

Fixed-Rate Mortgage
fixed-rate mortgage guarantees your interest rate and for a pre-determined amount of time, typically 5 years. When the term expires, you have the option to stay with the same lender or switch to a different one.

Freehold Ownership
A form of ownership whereby you own the property and assume responsibility for everything inside and outside the home.

Gross Debt Service
The percentage of your total monthly income that goes toward housing costs. Canada Mortgage and Housing Corp. recommends your GDS remains at or below 35%. Check out CMHC’s Gross Debt Service calculator.

High-Ratio Mortgage
A high-ratio mortgage is a mortgage where the borrower has less than 20% of the home’s purchase price to make as the down payment. A high-ratio mortgage with a down payment between 5% and 19% of the purchase price requires mortgage loan insurance. In Canada, 5% is the minimum amount required for the down payment.

Home Appraisal
A qualified professional provides a market value assessment of a home based on several factors such as property size, location, age of the home, etc. This is used to satisfy mortgage requirements, giving mortgage financing companies confirmation of the mortgaged property’s value.

Home Buyers’ Amount
This is a $5,000 non-refundable federal income tax credit on a qualifying home, providing up to $750 in tax relief to assist first-time buyers with purchase-related costs.

Home Buyers’ Plan
federal program allowing first-time homebuyers to withdraw up to $35,000 interest-free from their Registered Retirement Savings Plan (RRSP) to help purchase or build a qualifying home. The borrowed amount must be repaid within 15 years to avoid paying a penalty.

Home Inspection
The home inspection is performed to identify any existing or potential underlying problems in a home. This not only protects the buyer from risk, but also gives the buyer leverage when negotiating a reduced selling price.

Home Warranty
A warranty that protects the homeowners against future problems with the home for a determined period of time. New home builders are required to offer warranty protection to homebuyers, such as Tarion in Ontario. Home warranty requirements and providers differ by province. Home warranty programs also exist for resale homes.

Land Survey
A land survey will identify the property lines. This is not required to purchase a home, but it is recommended and may be required by the mortgage lender to clarify where on the property the owner has jurisdiction. This is important if issues arise between neighbours or the municipality, should the owner wish to make changes in the future such as installing a pool, fence or other renovations involving property lines.

Land Transfer Tax
This is the tax payable by the buyer to the province in which the transaction occurred upon transferring land. The amount varies depending on the municipality, the size of the land and other factors. Most provinces have Land Transfer Tax, though it may have a slightly different name (such as property purchases tax). If you are a first-time homebuyer, you may be eligible to receive a rebates, which is typically processed at the same time as the land registration, so the costs can be offset.

Mortgage Loan Insurance
If your down payment is less than 20% of the purchase price of the home, mortgage loan insurance is required. It protects the lender in case of payment default. Premiums are calculated as a percentage of the down payment, changing at the 5%, 10% and 15% thresholds.

Mortgage Pre-approval
mortgage pre-approval helps buyers understand how much they can borrow before going through the mortgage application process. Allows you to make an immediate offer when you find a home, since you know how much you’ll be approved for this this lender, and locks in the current interest rate for a period of time insulating you against near-term rate increases.

Offer
An offer is a legal agreement to purchase a home. An offer can be conditional on a number of factors, commonly conditional on financing and a home inspection. If the conditions are not met, the buyer can cancel their offer.

Porting
Transferring your mortgage (and the existing interest rate and terms) from one property to another.

Seller’s Market
In a seller’s market, there are more buyers than there are homes for sale. With fewer homes on the market and more buyers, homes sell quickly in a seller’s market. Prices of homes are likely to increase, and there are more likely to be multiple offers on a home. Multiple offers give the seller negotiating power, and conditional offers may be rejected.

Title Insurance
Title insurance is not mandatory in Canada, but it is highly recommended to protect both the buyer and the mortgage lender against losses related to the property title or ownership, such as unknown title defects, existing liens against the property’s title, encroachment issues, title fraud, errors in surveys and public records, and title-related issues that could prevent you from selling, leasing or obtaining a mortgage. Your lawyer can advise you on this.

Variable Rate Mortgage
A variable rate mortgage fluctuates with the prime rate. Your monthly payments remain the same, but the proportion of your payment going toward principal versus interest can change.

Virtual Deals
The home-buying process completed by means of technology in place of face-to-face contact. Some common technology tools include 360 home tours and video showings, video conference calls, e-documents, e-signatures and e-transfers.

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You’ve likely heard people lauding the benefits of home ownership. Canadian real estate has historically seen solid long-term gains, which bodes well for existing home owners and those who plan to buy and keep the place for the long term. Other benefits of owning a home – a roof over your head, a place to plant roots, pride of ownership, retirement plan, the list is long and varied. However, as with all investments, there is that initial cost of owning a house in Canada, and unlike other investment vehicles, a home comes with ongoing costs as well. So, down to the nitty-gritty: How much will it cost to buy a house? The price of the home and the services associated with the purchase are all relative to the type of property, its age/condition and location, so do your research to ensure it remains a good investment. A real estate agent can outline what you can expect to pay, and maybe some unexpected expenses as well. In the meantime, here’s a list to factor into your budget.

 

Deposit

Depending on the price of a home and the market conditions, you should factor an up-front deposit into the cost of buying a home. The deposit acts as a security measure to ensure you don’t lose the home to another interested buyer. The deposit also acts as assurance to the seller that you’re serious about the purchase. If you are required to pay a deposit, it will become part of your down payment once you have purchased the home. There’s no standard deposit amount, but your real estate agent can advise you on this based on the home’s asking price and the market conditions.

 

Down Payment

 In Canada, the minimum down payment on a home depends on the purchase price. If the home is below $500,000, the minimum down payment will be five per cent. If the price is from $500,000-$999,999, the down payment is five per cent on the first $500,000, and 10 per cent on the remaining amount. While five per cent is the minimum down payment, anything below 20 per cent is considered a high-ratio mortgage and requires mortgage loan insurance. To avoid paying this, you’ll need a down payment of 20 per cent or more.

 

Land Transfer Tax

When you buy a home, you are required to pay a land transfer tax on closing. This tax is based on the amount paid for the property, as well as the remaining amount on any mortgage or debt assumed as part of the arrangement to buy it. Cost will vary depending on your municipality, the size of the land and other factors. Alberta, Saskatchewan, and parts of Nova Scotia do not have Land Transfer Tax at all, while other provinces use a tiered system. Meanwhile, homebuyers in Toronto are hit with a double-whammy, having to pay a municipal land transfer tax on top of the provincial land transfer tax.

 

Appraisal Fee

A property appraisal will normally cost in the ballpark of $300, but cost can vary depending on the appraiser and your location. However, this is an essential step, saving you from borrowing more than you need to, and preventing lenders from giving you too much.

 

Home Inspection

home inspection is a recommended step in the home buying process, helping you avoid many potential pitfalls. A failed home inspection could be a negotiating factor or a deal-breaker. A home inspection will normally cost an average of $350 depending on the size, age and condition of the home, but it’s well worth the spend for the peace of mind you’ll have.

 

Property Insurance

While property insurance is likely already something you have factored into your budget, it’s important to do your research and find a reasonable quote that will ensure you are covered should anything unexpected happen.

 

Mortgage Insurance

There is mortgage life insurance, which is designed to ensure the repayment of your mortgage, should anything happen to you. Then there is also mortgage loan insurance, which protects the lender against mortgage default. Mortgage loan insurance is required if your down payment is less than 20 per cent of the purchase price. Premiums for this type of insurance range from 0.6 per cent to about 4.5 per cent.

 

Lawyer Fees

The fee you will be charged by your lawyer will vary depending on the person representing you and must be paid upon closing. Ask your real estate agent for advice as they likely have a preferred trusted lawyer they can refer you to.

 

Title Insurance

Title insurance is a one-time fee that provides protection from losses related to the properties title or ownership.

 

Property Taxes

Property tax is billed annually, and is is expressed as a dollar rate for every $1,000 estimated to be the market value of your property. The tax is paid on property owned by an individual or an entity, and is one of three taxes that a household pays in Canada, the others being sales tax and income tax. When you’re looking at homes to purchase, your real estate agent will be able to tell you what the property tax was for previous years. This will allow you to plan for this ongoing expense.

 

Maintenance and Energy Costs

Potentially your largest ongoing homeowner expense, these costs include lawn care/ yard work, professional services, additions/upgrades and the cost of keeping the house running year-round.

 

Moving Expenses

It’s easy to forget about the small things when moving, but it’s important to remember they can add up quickly! Consider the cost for phone, electricity, and other utility installations and don’t forget about movers, a moving truck and feeding your friends who are helping out!

 

Now that you have a better idea of the cost to buy a home, it’s time to hit the books to find out how much these services will cost in your area. Make a list, create a budget, and get started!

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Prepping your house for sale can often require an investment to bring it up to current standards and help it compete in the hot real estate market. Especially if you’ve lived in the house for several decades, you may be blind to your home’s shortcomings. Here, we examine the top home renovations to ensure your return on investment.

 
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Paint

Painting is probably the most under-appreciated home improvement. It provides a high return for a relatively low investment and minimal effort. When putting your home on the market, consider a professional painter who can help select the right palette, skim the walls, seal trim and repair minor damage before applying top quality paint that’s appropriate for each surface (matte for living areas, egg shell or semi-gloss for trims and doors and proper ceiling paint.)  It doesn’t seem like the most glamorous of renovations, or promise the most dramatic before-and-after, but it instills freshness and can flatter your home in ways you’ve never imagined. It’s like dressing for your body type, a colour expert can help select the perfect shades to work with the lighting in your home and ensure it puts its best face forward!

ROI: A fresh coat of paint typically garners a 60% return on your investment.

By the Numbers: Budget for a 2,000-sq.-ft. home: approximately $10,000-$15,000

 
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Good “Bones”

When contemplating a profitable renovation, nothing “sinks” a sale price quicker than a house that’s taking on water. Especially in this market, where strong sale prices are being paid for homes with “good bones,” ensuring that the roof and windows are in good shape, gutters and drains are functioning properly and the foundation is dry is crucial to realizing the potential value in a home. Consider items like vinyl windows, a new roof or even waterproofing the foundation. Buyers are wise to structural issues, and learning that a homeowner has done their homework and made the proper investments to prevent flooding and leaks will go a long way in a buyer’s eyes (and offer!).

ROI: Renovations that will save home owners money in the long run will draw a higher return, around 75 per cent, depending on the scale of the reno.

By the Numbers:
All new, good quality vinyl windows for a 2,000-sq.-ft. home: approximately $15,000
Stripping and replacing the roof with quality asphalt shingles: $8,000 to $10,000
Proper waterproofing of the exterior of a foundation: approximately $60-$80/linear foot

 
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Doors & Hardware

Investing in new interior doors and hardware; replacing the front door and adding a quality lock-set; and adding baseboard, door trim, crown mouldings and wainscoting are all examples of relatively inexpensive and non-invasive improvements that can immediately punch up the appeal of a home. It really comes down to the quality of the finish though. This is not a time to skimp on materials or workmanship. Hire someone you know and trust, or ask for referrals from friends who you know share similar standards.

ROI: Smaller projects that have less of a “wow” factor, and may even go unnoticed in an open house, draw a smaller return, around 50 per cent of your initial investment.

By the Numbers:
Solid wood front door with quality lock-set: $2,500
Solid core interior doors with hardware: $250/per door

 
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Countertops

Since kitchen renovations can easily snowball, consider a quick counter-top refresh and appliance-swap as options for a great return on investment. Instead of shelling out upwards of $25-50,000, expect to pay about $3,000 for a quality stone, like granite or quartz,  and between $5-10,000 for quality slide-in or a stand-alone set of kitchen appliances with a pro-look like stainless steel.

ROI: Kitchen renovations have the best return on investment, typically garnering a 75-100% return.

 
 
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Bathroom

Creating one luxury space in a home can have a great effect and return on investment. Focus your attention to items like a frameless glass shower enclosure, marble-topped vanity or a gorgeous tile backsplash. Analyze your bathroom, pinpoint its strengths and weaknesses and ask yourself, “Where is my eye drawn when I enter this room?” Is the bathtub the focal point? The vanity? A window? This is where your renovations should begin.

ROI: Bathroom renovations, when done well, have a return of 62%, on average.

By the Numbers: Budgets vary but typically range between $5,000 to $15,000

 
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Flooring

Flooring is the hardest wearing element in any home and for many homeowners, replacing aging flooring is a must. However, the quality of the installation is essential. Expensive hardwood floors can look terrible if they are lifting or there are gaps between planks. While inexpensive laminate from a big box store can look great when laid properly. Carpeting, however, is rarely a good idea, especially when you’re planning to sell. While some people love the warmth and feel of carpeting in a bedroom or basement, buyers will see carpet and think one thing: carpet cleaners, STAT! Carpets tend to lovingly hold on to memories of previous homeowners, memories that buyers would sooner rather forget. Spare buyers the cleaning fee, or worse, all-out removal, and skip carpeting, or remove it yourself.

ROI: Depending on the flooring you choose, the return is generally 100-150% of your investment.

By the Numbers:
Typical hardwood floor: $4 to $6 per sq. ft., plus $2 installation fee per sq. ft.
Typical laminate floor: $1 to $3 per sq. ft., plus $1.50 installation fee per sq. ft.

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You’ve been saving for awhile, weighing your options, looking around casually. Now you’ve finally decided to do it—you’re ready to buy a house. The process of buying a new home can be incredibly exciting, yet stressful, all at once. Where do you start?

It is essential you do your homework before you begin. Learn from the experiences of others, do some research. Of course, with so many details involved, slip-ups are inevitable. But be careful: learning from your mistakes may prove costly. Use the following list of pitfalls as a guide to help you avoid the most common mistakes. 

1. Searching for houses without getting pre-approved by a lender: Do not mistake pre-approval by a lender with pre-qualification. Pre-qualification, the first step toward being pre-approved, will point you in the right direction, giving you an idea of the price range of houses you can comfortably afford. Preapproval, however, means you become a cash buyer, making negotiations with the seller much easier. 

2. Allowing “first impressions” to overly influence your decision: The first impression of a home has been cited as the single most influential factor guiding many purchasers’ choice to buy. Make a conscious decision beforehand to examine a home as objectively as you can. Don’t let the current owners’ style or lifestyle sway your judgment. Beneath the bad décor or messy rooms, these homes may actually suit your needs and offer you a structurally sound base with which to work. Likewise, don’t jump at a home simply because the walls are painted your favourite colour! Make sure you thoroughly the investigate the structure beneath the paint before you come to any serious decisions. 

3. Failing to have the home inspected before you buy: Buying a home is a major financial decision that is often made after having spent very little time on the property itself. A home inspection performed by a competent company will help you enter the negotiation process with eyes wide open, offering you added reassurance that the choice you’re making is a sound one, or alerting you to underlying problems that could cost you significant money in both the short and long-run. Your Realtor can suggest reputable home inspection companies for you to consider and will ensure the appropriate clause is entered into your contract. 

4. Not knowing and understanding your rights and obligations as listed in the Offer to Purchase: Make it a priority to know your rights and obligations inside and out. A lack of understanding about your obligations may, at the very least, cause friction between yourself and the people with whom you are about to enter the contract. Wrong assumptions, poorly written/ incomprehensible/ missing clauses, or a lack of awareness of how the clauses apply to the purchase, could also contribute to increased costs. These problems may even lead to a void contract. So, take the time to go through the contract with a fine-tooth comb, making use of the resources and knowledge offered by your Realtor and lawyer. With their assistance, ensure you thoroughly understand every component of the contract, and are able to fulfill your contractual obligations. 

5. Making an offer based on the asking price, not the market value: Ask your Realtor for a current Comparative Market Analysis. This will provide you with the information necessary to gauge the market value of a home,and will help you avoid over-paying. What have other similar homes sold for in the area and how long were they on the market? What is the difference between their asking and selling prices? Is the home you’re looking at under-priced, overpriced, or fair value? The seller receives a Comparative Market Analysis before deciding upon an asking price, so make sure you have all the same information at your fingertips. 

6. Failing to familiarize yourself with the neighbourhood before buying: Check out the neighbourhood you’re considering, and ask around. What amenities does the area have to offer? Are there schools, churches, parks, or grocery stores within reach? Consider visiting schools in the area if you have children. How will you be affected by a new commute to work? Are there infrastructure projects in development? All of these factors will influence the way you experience your new home, so ensure you’re well-acquainted with the surrounding area before purchasing.  

7. Not looking for home insurance until you are about to move: If you wait until the last minute, you’ll be rushed to find an insurance policy that’s the ideal fit for you. Make sure you give yourself enough time to shop around in order to get the best deal.  

8. Not recognizing different styles and strategies of negotiation: Many buyers think that the way to negotiate their way to a fair price is by offering low. However, in reality this strategy may actually result in the seller becoming more inflexible, polarizing negotiations. Employ the knowledge and skills of an experienced realtor. S/he will know what strategies of negotiation will prove most effective for your particular situation. 

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