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Tips for Buying in a Hot Toronto Market

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Anyone looking to buy a home in Toronto will want to know anything they can do to get the edge on their competition – especially given how hot the market it and how it really doesn’t show signs of slowing down.

While it is true that you can always find a deal or two during the dog days of summer or the coldest months of winter, selection will be limited and you will have to fall in love with whatever is on offer or wait until the busy selling season starts.

One of the best least known ways to close a deal in a hot market without too much competition is to make an offer on days when no one else would even consider being in the market – Easter, Christmas, Thanksgiving weekend and Labor Day – in that order.

While it might seem sacrilegious to suggest making an offer on a holy day, for non-Christians, the first two are just regular days and open for business. Most people would rather be celebrating with family and friends but if you want to jump the queue and get in at the front of a line on a new listing, then making an offer when no one else is likely to do so is the best way to do it. By making an offer on a holiday day or weekend, the sellers are going to be in a more open and receptive mood and are more apt to entertain all kinds of offers.

 

Other tips for buying in a hot marketing include:

Having all of your finances in order. Make sure you are pre-approved for a mortgage so that sellers can see that you are serious and have come to play.

Know what you want in a house and be prepared to make an offer when you find it. Waiting for even a day can push you to the back of the line and drag you into a bidding war.

Showing the sellers that you are serious by scheduling a home inspection and providing all of the necessary paperwork.

If you find yourself in a bidding war, make the seller’s life easier. Offer to pay their closing costs, offer to take the home off their hands sooner if needed, offer to rent it back to them if they need to find a new home themselves; in short do whatever necessary to get the edge on the competition.

Finding a house in a sizzling market can be tricky and sometimes heartbreaking, but knowing how to go about securing your dream home can mean homeownership regardless of the hurdles.

Best Time to Buy A House in Toronto

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With Toronto’s housing market showing no signs of slowing down, it is not surprising that home buyers might be wondering just when the best time to buy a home might be. Although the housing market in Ontario is cyclical – much like any market is, when it comes to real estate, there is no definitive best time despite having distinct busier and slower months. However, there are a couple of things to consider when you plan on jumping into the housing fray:

1) Are you looking for the best deal possible
2) Do you want the most selection from which to choose

Answering those two questions honestly will likely determine when the best time would be to buy for you.

Here are the considerations when it comes to looking for a house – the busiest buying months are in the spring and the fall when listings abound and it seems like every realtor’s phone is ringing off the hook. During the high summer months sales tend to languish as people are off on holiday – the same holds true for December, January and early February, so listings are few and far between.

If you want plenty of selection, then you will want to begin your property search in late February/early spring when homeowners start polishing up their listings to cash in on the buying frenzy that starts when the warmer weather rolls around. If you start your search early, then you might get some of those choice pickings that come on the market before the others and you’ll have more options from which to choose. Should you find nothing to your liking during the spring season, then you can always look forward to the fall season when homeowners are again thinking about selling.

If you simply want the best deal possible and don’t really care about selection then looking during the months of July and August or December to early February is your best bet. However, be prepared for very limited selection. Regardless of what is on offer, you will be able to more likely make a deal with sellers during these months as they are probably wanting to sell their homes for specific reasons and will be more willing to entertain low offers.

So, while there is no definitive answer as to when the best time to buy a house in Toronto is, there are better times depending on your needs.

First Time Fixer-Upper In Toronto

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First-time homebuying in any city can be stressful, when it’s in a city like Toronto where the property market is sizzling, the pressure to find a good deal is even greater. Many buyers who want the best value for their money opt to invest in a fixer-upper. Here are some answers to the concerns you may have as a first-time home buyer of a property with potential.

The number one piece of advice for anyone buying a fixer-upper is to find a good inspector in your area qualified for the type of house you are buying. If you are thinking about buying an older home, make sure you tell the inspection service that you are in need of someone who is knowledgeable about homes of that age. If you suspect that there are structural problems, then calling in a contractor to check out the property is a good idea. In fact, having a contractor take a look at the house will also get you get a better estimate of what you might expect to spend.

When it comes to renovating a fixer-upper, be sure to know your budget and how much each project will cost. The very first thing you should do is to ensure that your infrastructure is solid. If there are any electrical problems to address or plumbing kinks you want to work out, then that is what you should tackle first. Once your infrastructure is good, then you will want to start with the projects that are most important first. Kitchens and bathrooms are where the bulk of your money should go after infrastructure as these two areas will immediately boost the resale value of your home. Budget according to what each project should cost, but allow room for unforeseen problems that might arise.

While renovating a home may seem like the easy route to your dream house, you have to be aware of your financial boundaries. Over budgeting or cost overruns can creep up on you and can cause major dilemmas. Making sure that you do not face these potential problems can be as simple as planning for contingencies, paying a lot of attention to project planning and constantly tracking your progress. If you do get in over your head, take a deep breath and consider the following options: seeking more funding, reducing the project scope, and reassigning your resources to lower cost ones.

The next crucial piece of advice to remember is to be realistic about how long it will take to renovate – usually double what you estimate as most projects will take longer than anticipated. Deciding if you want to live in a house under construction or want to find somewhere else to stay while doing major work is essential to maintaining your sanity and relationship (if you are in one) intact. Unless you’re okay with sleeping in an unfinished house with sawdust and power tools hanging about, finding a place to recharge comfortably every night would be a good idea.

For some couples, rebuilding a home is a fantastic bonding experience, for others it can cause tension and tears. Couples often forget or may not even know that remodeling a home is extremely taxing on a relationships and can put a huge strain on the people involved. Your tolerance will be put to the test through the demanding and strenuous work in renovating your first house together. Making compromises, communication, picking your battles, knowing your limits and not being afraid to ask for help are some key factors in having your relationship survive a remodel.

Choosing to buy a fixer-upper has its rewards; while it may involve hard work, careful planning and patience, it will all be worth it in the end when you have the house of your dreams at the price you wanted.

Hidden Defects and Your Toronto Home

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Buying a home in Toronto can be expensive enough as it is – the last thing any new homeowner needs is to suddenly find themselves faced with the unenviable task of repairing a hidden defect. If you are not familiar with this term, hidden defects are faults with a property that cannot be seen through regular visual inspections. Usually they involve incorrectly wired electricity, mould problems, plumbing issues, roofing defects, foundation cracks, etc… While discouraging, the potential of having to deal with such defects can be minimized by doing your due diligence.

In Ontario there are two types of defects that can crop up on a property sale – patent and latent. A patent defect is something that you can see easily when you walk into a home or that can be uncovered by a good inspector. For instance, if a window latch is broken and the window does not close fully, you cannot then claim damages from the seller to have it either changed or fixed. A patent defect is covered by caveat emptor, which basically means that you are soley responsible for ensuring the quality of the property you are buying.

The other form of defect is the latent defect, which is something that you cannot see easily. Regardless of the problem, you will need to establish whether the seller was aware of the issue and tried to conceal it from you during the sale. If you can prove that the seller was aware of it and either did not declare it or tried to hide it from you, then you can pursue the seller for the cost of repairs and/or damages.

For buyers, it is essential to request that the seller fill out a form called Seller’s Property Information Statement (SPIS). The form requires sellers to fill out “yes” or “no” answers to questions regarding different aspects of the home. While these forms used to be regularly filled out previously, in recent years, sellers have been cautioned away from them for liability reasons. However, these forms can work for the seller’s benefit as well. It is also essential to have insist that the sale only be concluded once a proper home inspection has been done to ensure to surprises down the road.

For sellers, by declaring whatever you know about your property, you are actually protecting yourself by demonstrating good faith. It is best to be upfront because it will minimize the chances of being sued after the fact and of having to return to repair or pay damages. It will also allow you to ask for a higher asking price.

In the end, it is hard to completely protect yourself from defects, but by doing your homework you should be good to go!

For some good reads on this topic go //bit.ly/1xhL1OE and also here //bit.ly/1BZMfT2.

Toronto Down Payments and Closing Costs

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The Toronto real estate market is a very competitive one with housing prices being the second highest in Canada. Therefore knowing how much you should save for a down payment can be a tough decision. After all, conventional wisdom says that 20% of the house price is what you should typically put down when buying. However, when the average house costs nearly $700K, that means you would need to save up $140,000 to put down on a property; add to this the closing costs of the home sale and you might be looking at several years of saving before you are able to fund your real estate dreams.

Down payment
For most people saving up such a sum of money will take far longer than they want to wait when looking to purchase in Toronto and it is why the minimum down payment required for a home sale is 5% of the asking price. However, remember that putting anything less than 20% down on a home will put your purchase into the “high risk” category and require you to have mortgage insurance from the Canada Mortgage and Housing Corporation (CMHC). The lower the percentage of your down payment, the higher the insurance that you will have to pay. The insurance can be paid up-front in cash or added to your mortgage amount. If you aren’t sure from where you will be able to save up for your down payment, there is a very good article on this very subject written by Gail VazOxlade over here //bit.ly/1xCOcUU.

Closing Costs
The costs that most first time buyers forget about when purchasing a home are the closing costs. These include all of the fees you will be called upon to cover in order for the purchase to go through. They include everything from notary fees to home inspector fees to the reimbursement of any monies paid towards property taxes. Here is a shortlist of the costs you can expect to cover:

House Inspection
Notary
Property valuation
Property survey
Land transfer tax where applicable
GST/HST where applicable
Title insurance
Interest adjustments
Prepaid property and utility adjustments
Mortgage life insurance
Movers/van rental for moving

A good overview of what to expect when it comes to costs can be found over here //bit.ly/14ibgPb. Also keep in mind that you’ll need money for renovations, paint, window dressings, etc…

As long as you are prepared with your down payment and the extra costs needed when buying a house, you will have an easier transition when the time comes.

Financial Aid for First Time Toronto Home Buyers

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Toronto is the second priciest city in Canada when it comes to home-buying. It is therefore no surprise that along with a sizeable down payment, many first-time homebuyers need other forms of financial assistance when it comes to making that leap from renting to buying. There are a few incentive programs designed to encourage first home-buyers. We cover a few of them over here.

Ontario Home Ownership Savings Plan (OHOSP)
Conceived as a savings vehicle for first time homebuyers in the province of Ontario, this plan allows you to open a savings account in any financial institution that will give you a tax credit of up to $500 per person ($1000 per couple) on your income tax return. It is not a tax shelter so any interest earned is taxable. To qualify your net income must not exceed $40,000 ($80,000 for couples). There is a maximum contribution to the account of $2000 per year ($4000 per couple) although there is no limit to how much you can actually put into the account. You can make contributions for 5 consecutive years before you have to close the account and you have 2 years to buy a home once the account is closed. You can ask your financial institution for more information on this incentive.

First-Time Home Buyers Tax Credit (HBTC)
The Canadian government has also devised a tax credit scheme to assist new home buyers with their first purchase of real estate. According to the government information page: The $5,000 non-refundable HBTC amount applies to qualifying homes acquired after January 27, 2009, and provides up to $750 in federal tax relief. You can read more about this incentive at the Revenue Canada Agency website.

First-Time Home Buyers RRSP Plan
The most well-known of all first-time home buyer incentives is the RRSP plan that allows first-time buyers to withdraw their RRSPs without penalty in order to use the money towards a down payment on their first property purchase. You then have 15 years in which to repay the amounts taken. You can consult your financial institution for more information on this program.

Ontario First-Time Home Buyer’s Land Transfer Tax Credit
The province of Ontario provides this tax refund of the land transfer tax up to $2000 for first time home buyers up to a maximum property price of $227,500, after which the cost is charged at a rate of 1.5%. So basically, you won’t have to pay the land transfer costs for the first $227,500 on your new home. You can read more about this over here //bit.ly/1B5boNL.

Raising the money needed to purchase your first home is never easy, which is why the federal and provincial governments offer these incentives to new homebuyers to help ease the financial burden. With a little planning, good budgeting and the help of these tax credits and incentives, you can be well on the path to homeownership!