Make sure you follow the correct procedures to smooth the process of buying property in Canada
By Christopher Nye
Buying property is rarely a joy, but the process in Canada comes closer than most countries. Everything is in English (or French), the process is straightforward and well regulated, the buying costs are cheap and there is no shortage of data and information out there.
Canadian homes are big and getting bigger. The average size of a new Canadian home has almost doubled in the past 40 years to 1,950 square feet, while in the UK, for example, new homes now average just 925 square feet. The average price of a home across Canada is C$433,000, but in British Colombia it’s C$600,000, in Ontario C$460,000 and in Alberta £380,000. Most of the other provinces average below C$300,000.
The Canadian real estate market has many of the same advantages as the USA, including the Realtor system, where estate agents are qualified and regulated and have to undergo continuous training. Your realtor (or REALTOR®, as they like to call themselves) will know the local market, have access to all the properties, and should negotiate on your behalf. Realtors use a huge online index called the Multiple Listing System (MLS®) that includes every property. So when you choose an agent they are working for you, not the seller, and you only have to deal with one agent, not a whole high street of them.
When you find the right house your realtor will design an offer with you, to include the offer price, the date by which you wish to complete and details of what the sale includes. It will also list any conditions attached, such as getting a mortgage or needing to sell your own home first. The offer will be in writing. Your realtor will normally do this so you don’t need to employ a lawyer at this stage. It is usually best to be pre-qualified if using a mortgage and, as an expat, ensure that you have all the paperwork with you in Canada. This will include tax returns and bank statements.
With the offer the buyer pays a deposit of 10% of the property value, which will be held in a secure escrow account. The seller may accept, decline or make a counteroffer, also in writing. If and when agreement is reached, it will be written as an Offer of Purchase and Sale, which must be signed by both parties. The lawyer checks the Offer document and ensures that the property has no debts owing and complies with government regulations. Conditions such as home inspection reports must be ready before completion.
When ready, usually within 60 to 90 days of the original offer, the lawyer will confirm the balance of the selling price and any extra costs in a Statement of Adjustment. The buyer pays this amount by certified cheque, the money is transferred to the seller and the deeds and keys handed over to the new owner.
You should budget for up to 3% in buying costs. In most provinces there is a land transfer tax of between 0.5 and 2% of the property price. Legal fees are a minimum of C$500 and usually add between 0.5 and 1%. The realtor’s fees of 3-7% are usually paid by the seller, but may be split.
In Quebec, notary fees are around C$1,200.