There is a certain price that goes along with buying a home. There are also a number of advantages that you can enjoy when you buy a home in Toronto vs. renting one.

Benefits to Buying A Toronto Home

1. People usually buy property as an investment for their future. In Toronto it is a rather safe investment. In the last twenty years Toronto alone has witnessed more than eleven percent annual increase in the value of houses.

2. As the owner of the house you get to renovate the house according to your tastes and requirements. You do not have to get anybody’s permission and you will most likely see a return on the money you spend once you sell your home.

3. Getting a mortgage has never been easier or cheaper. The big banks offer home loans at very reasonable interest rates right now. Often you can also secure a mortgage with a little as 5% down

4. Making your monthly mortgage payments are sort of like forced savings. As you will recoup these funds (minus the interest payments) once you sell your home.

5. There are two types of interest rates for home loans – first is fixed and the second is called floating. The fixed interest rates hedge you against the changing market whereas a floating rate differs in accordance with the market.

6. As an owner of the house you get to decorate it as you see fit.

7. There are tax incentives for Toronto home sellers. You do not have to pay capital gains tax on your primary residence when you sell it and realize a profit.

8. In most cases you get a bigger and better home when you buy as compared to what you get for your money when you rent.

9. Rent is an outflow that does not create an asset, whereas your monthly mortgage payments are an investment in your future.

Benefits to Renting a Toronto Home

1. The biggest advantage of renting an apartment or house is the flexibility. If you do not like the home or the neighbourhood it is much easier and cheaper to move if you are renting as compared to buying.

2. Some people can afford to rent but not to buy.

3. Given today’s economic uncertainty you may fear for your job. It is of lesser consequence to miss paying your rent one month as compared to missing a mortgage payment. Missing mortgage payments can result in the bank seizing you house.

4. If your marriage is on shaking ground it might be a good idea to hold off buying that house together. It is easier to walk away from a rented apartment than it is to figure out who gets the house in the divorce settlement.

5. If you have bad credit you may not qualify for a mortgage.

6. If, the real estate market is going down then it might be a good idea to rent until you think the market has bottomed out. That way you may be able to get a much better deal.

7. Last but not the least is that renters do not have to worry about maintenance and repair. They just have to call the landlord.

There is no hard and fast answer to the rent vs. buy question. It really depends on you as an individual and your situation.

Deposit
The amount of the down payment differentiates the serious buyers from the casual market checkers. In Toronto, it is the norm to offer a down payment with your offer. This token amount in most cases is 5% of the total value. It has also been observed that a higher down payment can in some circumstances result in a lower overall price. A buyer does not have to worry about losing the down payment. If the deal falls apart the money is usually refunded. There are some circumstances where it would not be refunded but those are few and far between.

The legal structure related to the financial side of a real estate transaction is very well developed in Toronto. The down payment is supposed to be credited to the brokerage’s trust account within a couple of working days. To be absolutely sure that the offer money will not get lost in the transaction, it is advisable to address the beneficiary as the agent’s brokerage, “In Trust”. Trust accounts were developed to protect both sides of a deal the seller and the buyer.

Based on the terms and conditions of the Sale agreement, the deposit money is credited in an account that has an interest rate attached. Till the time the deal is settled, the buyer is the owner of the deposit money and any interest. Once the deal has been finalized, the seller gets the offer money and the buyer gets a cheque for the interest amount. Social insurance numbers are required if the interest amount is paid via cheques and T5’s are required.

Traditionally, in Toronto, the deposit is provided once the offer has been accepted. Then after the closing the remainder of the funds are transferred to the seller. The purpose of the down payment is to demonstrate that the buyer has full intent of closing on the property on the close date as outlined in the sales agreement.

Suggested Clauses for inclusion in the Offer
It is important for the home buyer to include certain clauses in the offer to help ensure they get the best possible deal. Your experienced Toronto real estate agent should be able to provide you with clauses to include in the offer. Some clauses may not be accepted by the seller so be sure to know which ones are important and which ones you can concede during the negotiations.

Listed below are some pretty standard clauses that are good to include:

Home Inspection
Dependent on home inspection is a very standard clause in Toronto that should be a non-issue. A thorough, meticulous inspection performed by an experienced home inspector is key for the buyer as it should reassure you as you know the exact condition of the house.

Financing
Including a clause that says the deal is dependent on financing is a fairly common clause but it is also a bit of a warning sign for sellers. This is because it shows that you have not yet been preapproved for your mortgage. So you may not be in a position to financially close on the deal. Its easy to be preapproved so do it. Try and avoided including this clause if possible.

Condition based on the sale of current property
Most often, reasonably priced houses in Toronto do not sit on the market for long. However, certain properties – for various reasons – do not move. For those kinds of long unsold properties buyers will present a conditional offer. The condition says that buyer will buy the seller’s property only if they are first able to sell their own. Due to the level of uncertainty associated with this clause this is sometimes a contentious issue during negotiations.

Have backup plans and prioritize your Needs
Know what you need and prioritize them . In any negotiation you have to make compromises so know which clauses you are willing to be flexible on and which you are not. Put yourself in the seller’s shoes and think about how they are likely to react.

Go through the details
There are a lot of details associated with buying and selling a home; terms and conditions, price, key transaction dates, key points in sale document, and final deal date. Be sure to take your time and go through all of these details carefully because once you sign the document you have a legal obligation to abide by it.

Guideline to remember while determining your offer amount
Purchasing a house is not like shopping for a dress which you can return if you change your mind when you get home. Since it is a long term commitment with significant transaction costs one must consider a long list of things before pouring their hard earned money into buying a house. By following the points given in this article one can gain some valuable insights about purchase a house.

1. Do your homework
To determine fair market value for a Toronto property you have to do your homework. Investigate the current market conditions in the neighbourhood that you are looking in. It is also worthwhile to look at historical sales in the neighbourhood and compare those to what was happening in other areas of the city at that time. It is also important to consider the features of a house such as its maintenance, age, and condition.

2. What is the current market situation?
In a slow economy, the seller is more inclined to consider a low offer from a buyer. But if the property market is in a boom period then you will be competing with many other buyers which means you will have to be more aggressive with your offer price.

Toronto real estate agents are a great resource to consult when trying to figure out what is happening in the market. It is their livelihood to understand what is happening in the market, they can give you a good idea about the market and its changing phases. Mostly Toronto has an even market, but sometimes there are periods of  imbalance.

3. How long has the listing been on the market?
If a property is on the market for a while it becomes easier for the buyer to negotiate a better deal.

4. If, possible keep flexible
If the house that you want is $775,000 but you only wanted to spend $750,000 than you may want to consider paying the little bit more. That is only if your agent agrees that the fair market value is $775,000 because in all likelihood you will recoup that $25,000 and then some when you go to sell the property. It is better to buy the house you want even if you have to pay a little more than to regret not buying the house and feeling like the had to settle on the one that you did buy. Not to mention that extra $25,000 will have a negligible impact on you monthly mortgage payments.

5. Knowing the previous selling price of the house
It can be both useful and detrimental to know what the previous price of the house was. In one market valuation technique knowing what the home previously sold for is instrumental in calculating the current market value. But if the buyer gets caught up on how much return the seller is making off of them it can be detrimental even though the level of return has nothing to do with what the fair market value of the house.

6. Charge for necessary maintenance/repairs
Before you settle on a final offer price be sure you take into account any necessary maintenance. It is very useful to spend a couple hundred bucks to hire a home inspector to go through the house. They will be able to give you a very good idea on what needs to be replaced and what that might cost. You should consider subtracting the major repairs from the fair market value of the home.

8. What are your conditions?
One has to keep in mind that the person giving the most profitable deal to the vendor will get the house. After considering all the features of the house try to reach a win-win deal. There could be certain clauses in the contract that you don’t value, but the vendor does. Do your best to understand their position so that you can help to ensure they get what they value most especially if that is something that you don’t care about. All that said it is best to try and not include conditions. Often conditions will cost you money so if you can avoid including them than do so.

9. Multiple offers do not affect the properties fair market value
Multiple offers do not affect the fair market value of a home. It is alright to pay over fair market value but just be careful when entering into multiple offers that you do not get so caught up in the excitement of the negotiation that you lose track of what the property is actually worth.

Arguably the most important and primary step when buying a Toronto home is to prepare the offer. This is because your lifestyle for the coming years will be dictated by the terms and conditions included in the agreement. Hence, once you have selected the appropriate Toronto home be sure to work with a real estate agent as their expertise in preparing the offer is vital in securing the property.

It is advisable that you go over the particulars of the deal carefully before the documents are finalized. If something does not make sense to you ask for clarification. Take your time to make sure everything is accurate because it becomes unalterable and compulsory once you have signed the document.

After the completion of this process the offer gets registered. It is then sent to the listing agent, and then the offer presentation appointment is set. Generally, when dealing in Toronto, offer presentations take place on the same day. At times it lasts all day long with back and forth negotiations. Your position will be negotiated by your real estate agent, it is their job to put forward your offer to the listing agent and vendors (sellers). You need to make yourself available for any “sign backs”. This back and forth can take you late into the evening so be prepared. After the completion of this step you will hopefully be the proud owner of a new house.

Items to be Listed in your Offer

•   Offer price
•   Deposit amount to be tendered with the deal
•   Allowance to be made by vendor
•   Home examination clause
•    Financing clause
•    Exact explanation of the terms that are to be included and excluded in the sale

Offer Amount
Pricing Guidelines:
Outlined below are some common pricing guidelines for Toronto homes:
1.    The under-priced bad properties are usually sold for asking price, seldom more.
2.    Average properties that are well priced are usually sold for asking price, rarely more.
3.    Excellent properties that are new to the market are usually sold for asking price, or over asking.
4.    Poorly priced properties usually get sold below asking price. This is especially true for those properties that have had to reduce their price to generate new interest.

Overpriced?
Compare the below mentioned price strategies to the property that you are thinking about buying. This practice will help you to determine what price you want to offer.

Listing Price Strategies
#1 Less than Fair Market Value
Priced below value, these properties often provoke bidding wars and finally are sold at a price over asking. The reasons for listing below market price may be to generate this bidding war or the real estate agent maybe just priced it wrong, or the vendor may have requested that price to sell it quickly.

#2 At Fair Market Value
Priced at a very competitive value, these houses are generally sold promptly and at a price which is either near the listing price or above. To price so correctly, the vendors thoroughly study the rates of other comparable properties for sale and then quote their listing price. When this is the case it is important to submit an offer as quickly as possible so that it is not sold out from beneath you.

#3 Somewhat Overpriced
These are the properties which are generally overpriced by five to ten percent. Sometimes it’s because they feel that their home is actually worth the value quoted, these sellers are usually open to negotiation.

#4 Tremendously Overpriced
Tremendously overpriced are those properties which are generally ten to twenty five percent overpriced. There are a number of reasons for overpricing a property by a vendor. First of all, it may be because the vendor thinks that the property is truly worth the price quoted by them. Secondly, the real estate agent may have overstated the property’s value in order to win the listing. Regrettably this happens more often than you would think. This puts the vendor in a very bad position because it forces them to drop the price. Dropping the price puts them in a very bad negotiating position.

The first thing you do before you house hunt in Toronto is to firm up your budget so that you can narrow down your search. This is also one of the first things that a Toronto real estate agent will ask you. A great way to figure this out is to sit down with a mortgage broker and calculate how large a mortgage you can comfortably carry.

You now have to ask yourself what type of lifestyle you want. Are you looking for the carefree maintenance of a condo or do you want more privacy with a detached or semi detached home. The type of home you want and your price range will then help narrow down the neighbourhoods that you can live in.

The neighbourhood is another lifestyle decision. Are you looking for the cool and trendy Queen West scene or are you willing to accept a little grit and grime and buy into an up and coming neighbourhood such as Leslieville.

Do some research, talk to various Toronto real estate agents, home owners, and check various online home sites to get as much info about the different neighbourhoods as possible. Don’t forget to visit the neighbourhoods at different times during the week to get a true sense of the area. Once you have developed a short list of neighbourhoods engage a real estate agent to start pulling together listings for your review. Visit as many homes as possible; take note of the amenities, the area, layout, finishes, and the price. It is worth visiting properties that you know you do not want because it will help you to better identify what you actually want and need.

Once you have decided on the neighbourhood then you can start to list out the specific characteristics that you are looking for in your home. Always be brutally honest with your toronto real estate agent. Tell your agent your prioritized wish-list. This will allow them to identify which listings are worth viewing and those that are not. The better they understand you the better they will be able to service you.

Maintain notes from each house visit. Structured notes along with pictures of house will serve you well when you are at home comparing the different properties that you have seen. The notes may include: what you liked and disliked about the house, what the area was like, what really stood out for you, how close it is to the local grocery store, how you felt about the property, and don’t forget to note the price.

First movers’ advantage is very important as homes are going at multiple offers again. Have your agent set up automated email notifications so that as soon as a property is listed you are notified about it.

Listen to your real estate agent. They should act like a consultant and present the relevant pros and cons of each listing without imposing personal bias about the house to the buyer. You need to find an agent you trust so that you are comfortable taking their advice.

Most importantly be ready for a long search as sometimes it can take months for the appropriate property to come onto the market. Patience is especially important during this process.

These 7 tips will help any buyer when search for a home in Toronto.

1.    Get Pre-approved for Your Mortgage:
It is important to get pre-approved early in the process so you know what price range to be looking in. This will also remove the necessity to include a financeing clause in your offer.

2.    Research the Home Buying Process:
Spend some time and study up about the home buying process. By eliminating uncertainty you should be able to lessen the stress of the whole process. This will also help with your relationship with your agent as you will be more comfortable when they start throwing around jargon. No matter how much research you do you will still have questions for your agent so be sure to ask them when you do not know or understand something.

3.    Sort Out What Type of Property You Want:
Figure out what sort of property you want to live in. Would you prefer to be in a detached home, semi-detached home, condo, loft, or townhouse? The one you choose usually comes down to your lifestyle and needs. Once you know the type of place you want to live in you can work with your agent to find the neighbourhood that meets your needs.

4.  Know What You Want:
Once you have decided what you can afford, the type of property you want, and the neighbourhood you can start to develop a realistic list of wants and needs in your potential home.  Your real estate agent will then be able to better filter the listings to ensure they show you only those properties that you might be interested in.

5.    Do Some Shopping:
Do not settle. This is a big decision, you need to be patient and wait for the right property to come along. Continue shopping until you find a place that meets you wants and needs.

6.    Making a Home Purchase:
When you find the perfect home, your agent will work with you to put together the offer. Once you have decided to put in an offer do not waste any time, get it in. Once the contract is drawn up, your agent will present it to the current owners and begin the process of negotiating for you.

7.    Final Closing:
Once the sale of your home is final, your agent should remain in constant contact to verify all of the necessary details are being tended to.

You should have the assistance and reassurance from your agent from beginning to end, making your home buying experience the best it can be.