Sandy and Judy Hines
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THE BUYING PROCESS
Buying a property is a complicated process. Here is a brief explanation of how it works .

You and your REALTOR®
The buying process
Agreement of Purchase and Sale
Deposit
Closing or Possession Date
Conditions in your agreement
After an agreement is signed
Closing costs

YOU AND YOUR REALTOR®

Buying a property is totally different than buying any other large ticket item. When you are looking for a car, for example, you must go to the dealership that has the specific car you want to look at and deal with the salesperson for that dealership. Real estate is different because of a system called MLS® that allows one REALTOR® to show you properties listed with all real estate companies.Here's how it works.
Property owners sign a contract to sell their property with a licensed REALTOR®. This is called listing their property. These properties are usually placed on a system called the MLS® system ( Multiple Listing System). Any REALTOR® in any real estate company has access to information on any property listed on this MLS® system. So you only have to deal with one REALTOR® who has access to all MLS® listings. Ask your friends and family for a referral to a good REALTOR® or interview some different agents and then pick the one you are most comfortable with. You should choose an REALTOR® who is familiar with the area you are interested in and the type of housing you require. There is no cost to you. The REALTOR® is paid a share of the commission the owner of the property pays.
Once you choose your REALTOR® work with this REALTOR® and only this REALTOR®. If an REALTOR® knows he/she is working with a loyal client the REALTOR® will spend as much time as it takes to find you a home. On the other hand if an REALTOR® knows you are working with several REALTOR®s the REALTOR® will spend less time looking after your interests. The REALTOR® is paid on a 100% commission basis. The REALTOR® only gets paid if they are the one that sells you a property. Pick your REALTOR® and stay loyal. Demand good service and if you don't get it choose another REALTOR®.

HOW THE BUYING PROCESS WORKS

Once you have selected your REALTOR®, you and the REALTOR® will usually meet to make a plan of action and to sign some paperwork before you get started.

Working with a  REALTOR®Pamphlet:

All real estate salespersons must disclose in writing the type of representation they will be giving you. There are several options including representing you as an "Agent" and as a "Customer". Usually they will be representing you as a "Buyer's Agent". The salesperson will provide you with and explain a pamphlet called "Working with a REALTOR®". Once you understand the agency relationship you will be asked to sign a tear off strip on this pamphlet acknowledging that you have read and understood it. To download a copy of the pamphlet click here : Download  or View Working with a REALTOR®. For more information on agency click here Agency.

Buyer Brokerage Agreement:
As noted above real estate REALTOR®'s work on a commission basis. If you buy a property privately or from another REALTOR® they do not get paid. If you decide to work with an REALTOR® they may ask you to enter into a legal contract and sign a "Buyer's Brokerage Agreement". This agreement outlines the extensive services the salesperson is going to provide you. The salesperson is contracting to provide these services to you. The buyer agrees to work with only that salesperson and gives the salesperson the authority to look for properties that are listed but also those that are private sale. Usually a part of this agreement is that if you decide to purchase a property where there is no commission available to the salesperson that you will agree to pay the salesperson an agreed upon commission. This almost never happens because most properties are listed on the MLS® system where the sellers pay the commission and most private sales will agree to pay REALTOR®s a commission if they bring an acceptable offer to them. Not all salespeople use this agreement but you should be aware of it's existence. To view or download a copy of The Buyer Brokerage Agreement ( 2013) click here Dowload Buyer Brokerage Agreement.

ESTABLISHING WHAT YOU NEED IN A PROPERTY

At your meeting you will also decide on the properties that best suit your needs. The REALTOR® will later phone the REALTOR®s who have the properties listed and make appointments for you to view the homes. Your REALTOR® will then take you to see the homes. After you have viewed the homes you pick the home that you feel is the right one for you. This may take several outings but not necessarily. Many buyers find there home surprisingly quickly. Once you have decided on the property you want to purchase your REALTOR® will prepare a written offer or what is technically called an "Agreement of Purchase and Sale" on that property.

THE OFFER  or AGREEMENT OF PURCHASE AND SALE

When you make an "offer" on a property you will sign an Agreement of Purchase and Sale. This is a written contract that you will sign and if acceptable the seller will also sign. If certain items such as price are not acceptable to the seller a Counter Offer is prepared by the seller. This is then presented to you and if the changes are acceptable to you an agreement is made. This agreement sets out the conditions under which you are agreeing to buy this property. It is a binding contract between the two parties and will stand up in a court of law. It is for this reason that you must understand some conditions that should be in your offer.

PROVIDE PROOF OF IDENTIFICATION


In 2008 the Federal Government, through an agency called Fintrac, made it a requirement for real estate companies to obtain proof of identification from sellers and buyers of property. You will need to show a government photo ID such as a driver's license, a heath card, a passport or other approved document. Information such as name, birth date etc are recorded by the REALTOR® on a form provided by Fintrac.

DEPOSIT:

You will be required to write a cheque as a deposit for your purchase. You will usually be asked to provide this deposit cheque within 24 or 48 hours after the offer has been accepted or at the time of writing your offer. This deposit is written to the listing real estate company in trust. The deposit cheque is only cashed if the offer is accepted. When you write the deposit cheque you must ensure that there is enough funds in your account to cover this cheque because it is cashed when it is given to the listing company. The deposit funds are held in the listing real estate company trust account until you take possession of the property or what we refer to as the "closing date". This deposit is credited towards the purchase price on closing.You can use this deposit as part of your down payment.
This deposit will be returned if all the conditions you set out in your agreement are not met. For example say you couldn't arrange financing then the deposit is returned. You also agree to forfeit this deposit if all conditions are met and you do not go through with the sale.
The amount of the deposit will vary but will usually be a minimum of $1,000. There are several good reasons for giving a larger deposit. Discuss the deposit with your REALTOR®

CLOSING DATE:

The date you take possession of and pay for the property is referred to as the "Closing Date". This date is set out in the agreement. You should choose a date that will be acceptable to both you and the seller. A reasonable amount of time is usually 4 -8 weeks from the date you make your offer. This may vary considerably. The owner may require much more time or if the property is vacant you could take possession within a couple of weeks. Discuss this with your REALTOR®.

CONDITIONS:

The conditions that can be put into an agreement are endless. I have seen it all. .However there are several conditions  that are standard in all agreements such as:

Conditional upon the purchaser obtaining financing:
Unless you have the entire amount of the purchase price in cash you should always put a condition in the offer for financing. This condition will outline the amount of financing you will need, the interest rate and the terms of the mortgage. You will be given a set number of days to arrange this financing, usually 5 banking days. If the lender turns you down for some reason the agreement is no longer is force and your deposit is returned. It is a good idea to have a mortgage preapproved before you start looking for property. This will speed up the time it takes to have your mortgage approved on a specific property.

Conditional upon the purchaser having an inspector inspect the property for structural soundness:
Most purchasers have the property inspected by a professional home inspector after they have an accepted offer. There are many inspection companies to choose from. Ask your REALTOR® for recommendations. This condition would set out an amount of days, usually 3-5, for this inspection. In the event the inspection uncovers structural problems that you were unaware of you can either renegotiate with the seller to have the seller either pay for some or all of the work to repair the problems or if the problems are too much for you to handle then you can declare the agreement null and void and your deposit will be returned. Most properties have something wrong with them and the older the property the more things that are wrong. You should prepare yourself for the inspector uncovering some things and make your offer accordingly.

Conditional upon the owner providing a "Property Condition Disclosure Statement":
When a property is listed by an REALTOR® the owner is asked to fill out a Property Condition Disclosure Statement or PCDS. This form asks the owner many questions about the structural soundness of the property such as has the owner had problems with the structure or the electrical or plumbing system, and many other questions about the property. In your offer you should ask to see this PCDS and have at least 24 hours to review and accept this PCDS. This is important. For example if the owner has an ongoing leak in the basement that is disclosed in the PCDS you may choose not to go ahead with the purchase.

Conditional upon the owner providing a survey or plot plan:
You will want to know what the property lines are for the property you are considering. You should ask for the owner's copy of the location certificate or plot plan. It is a good idea to have your own location certificate completed later but having the seller's copy will help you understand where the boundaries of the property are located.

Conditional upon certain items remaining:
Items such as dishwasher, blinds,drapery tracks,light fixtures and any other items that you want to include such as appliances, shelves etc. will be identified in your offer. The list can be endless but should include all light fixtures and ceiling fans, drapery tracks, mirrors in bathrooms, blinds and built in appliances such as dishwashers. You should discuss with your REALTOR® the items you want to include in your offer and the REALTOR® will write this items into the agreement.

If the property is on well or septic

Conditional upon a water test and the results meeting the Nova Scotia health standards

If the property has it's water supplied by a well then you will have a condition outlining provisions for you having the water tested and the results meeting the standards set out by the Department of Health. Water is drawn from the well, usually through the kitchen tap. You can either take the sample yourself or a third party can to do it for you. Your REALTOR® can only show you how to take the sample. Property inspectors often take water samples for you at the time of inspection. If you are having any additional tests completed on the well such as a flow test (see below) the person doing this test will usually take the water sample for you.
This sample is then taken to the Department of Health Path Lab or a private water testing company for testing. There is an unlimited number of things you can ask to be tested and there is a cost for all of them. If you are getting a mortgage you will be required to have the water tested for bacteria, arsenic and uranium. You may want to test for other things such as iron, sulphur and hardness. There is usually a package deal offered by the lab to test for either the basic things required for a mortgage or a long list of items. We recommend doing the more extensive test because even if the property has acceptable levels of bacteria, arsenic and uranium it may have high levels of other items that will require you to purchase an expensive filter system.
The results of the water test will take about a week for the basic test and up to two weeks if you are having the more through test completed. If the results show the levels are above acceptable levels there are ways to bring the levels to acceptable levels such as shocking the well and retesting, installing a UV Light system, installing a water filter system and more. Your REALTOR® will discuss the options that you have should the results come back higher than acceptable. Usually this can be worked out and your sale completed.

Conditional upon a satisfactory water flow test
The amount of water the well is actually producing can be determined by having a Flow Test completed. This test is completed by a professional and involves connecting a hose to the outside tap and draining the well for a set time and then calculating how long the well takes to recover. These calculations are compared to accepted Provincial guidelines to determine whether the well is producing enough for your families needs. This is usually completed within a few days of acceptance of the offer.

Other Conditions:
As I said the list of potential clauses is endless. Consider the things that important to you and discuss this with REALTOR®.


AFTER YOU SIGN THE AGREEMENT OF PURCHASE AND SALE WHAT HAPPENS?

The agreement is then given to the listing REALTOR® who presents the agreement to the seller. The seller has three options
1) Accept the agreement as is 2) Prepare a Counter Offer form 3) Reject the agreement totally .
A counter offer is the most common response to an offer. In the counter offer the seller itemizes those items they are not prepared to accept and state what they will accept. For example price is often not accepted. The seller will state what price they will accept.
This Counter Offer is given to your REALTOR® who presents it to you. There are two options for you at that point. You can 1) Accept the counter offer 2) Reject the counter and write a new offer on the same property 3) Reject the offer and move onto another property
The process continues until eventually to obtain an accepted offer on a property.

AFTER AN AGREEMENT OF PURCHASE AND SALE IS ACCEPTED

Once an agreement is in place you proceed and getting the conditions of the agreement satisfied.
1) Set up times for all inspections, test etc to be completed. Your REALTOR® can recommend inspectors and testers and will call and set up a time, usually the next day or two, for the inspections and tests to be completed. You will attend all these inspections. For more details on inspections see our section on Property Inspectors for details.
2) Formally apply for your mortgage. You should immediately call a mortgage lender and formally apply for your mortgage.
3) Decide on and contact a lawyer. Your lawyer will review your agreement, confirm that the property has good title and deal with the seller's lawyer on your behalf. Your REALTOR® can recommend a lawyer and send all paperwork to the lawyer that they will require. You will usually not meet with the lawyer in person until closing.
4) Arrange to have other conditions met. There will likely be other conditions in your offer that have to be met.
5) Once your mortgage is approved and all conditions are met you arrange your move and wait until the closing. The day of or the day before the closing you will go back to the property with your REALTOR® for a walk through called a Pre Closing Inspection. This is to see that the property is in the same condition as when you bought it and any items you asked to remain are still in the property.
6) Closing. After your final walk through or often before, you will meet with your lawyer and sign the final closing papers. On the day of closing your lawyer will transfer the funds to the sellers lawyer and once that is completed you will receive keys to property. The property is officially yours at this point.
7) Start moving. Most agree this is the fun part.

SUMMARY:
Above is a brief explanation of the process. There are many twists and turns along the way. Your REALTOR® is there to make sure the process is as easy as possible.

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