When buying property, it is helpful to have a basic understanding of real estate terms involved in a purchase.
Pre-Approval Lender Letter – a writing from a lender stating that a potential buyer has approval to borrow a stated amount of money from his firm based on having documented all the personal information needed. Final approval is subject only to the lender’s receiving a copy of a contract to purchase real estate, a satisfactory appraisal of that real estate, and its underwriting department’s review of all pertinent information. In other words, the buyer qualifies so long as the property does and no changes occur.
Real Estate, or Real Property – ground, any plants growing in it, any minerals under it, and any buildings or other improvements built on it.Title Insurance – insurance which will compensate the insured for the value of his ownership or collateral position in real property if a person not thought to be a current owner materializes as an owner. (I’ve seen this come into play when property was owned by many heirs a generation or two ago.)
Making An Offer
If you have decided that this is the right home for you, decide on a figure and have your agent prepare the Offer (Agreement of Purchase And Sale). With your agent, list everything you want included (i.e., conditions on financing and inspection, survey clause, appliances, light fixtures, etc.). At this time, you may want your lawyer to check it out, and certainly prior to waiving any conditions to make the offer firm.
A firm offer: means that you will buy the property as outlined in the offer of purchase and that there are no conditions attached. Once the vendor accepts the offer, you are both bound to the agreement.
A conditional offer: means that you will buy the property if those certain conditions are met. We recommend that a condition on financing is included, especially for high-ratio insured mortgages. If you have a condition on financing clause, get in contact with us right away. We’ll get right on it to finalize the mortgage approval. At this time, you will need the following information:
- Copy of the accepted Offer To Purchase
• Copy of MLS listing (if listed on MLS service)
• Completed and signed application (if one is not on file yet, so that we can run a credit check).
• Confirmation of your earnings: if you are salaried, a signed letter of employment, 3 years tax returns and assessments if commissioned, and 3 years tax returns and financial statements if self-employed.
• Confirmation of your down payment: it may be from your savings, RRSP, equity from sale of another home (copy of sales agreement), a gift letter for any money gift.
• If purchasing a condominium, a copy of the financial statements for the condominium corporation
Once all conditions have been satisfied (the offer has been accepted), a deposit is required as a symbol of commitment to the offer of purchase, and it is made payable to the listing Real Estate Firm “In Trust”. Interest on the deposit can be requested, and this deposit will be applied towards your down payment on closing.