Making an Offer on a Toronto Home – Part 3 of 3

DEPOSIT

How Much is Needed for a deposit on a Toronto Home?

The typical deposit amount in Toronto is about five percent, but generally you only need to put down enough to assure the vendor that your intent to purchase is serious. If you are able to put more up front it can put you at an advantage however, as larger deposits tend to impress the vendor and may get you a slightly lower price in the end.

Is My Deposit Safe?

The risks in Toronto are very low as the province of Ontario mandates all deposit funds be put into the broker’s trust account within two days. To ensure the safety of your deposit funds make sure that your cheques is payable to the real estate company’s name, “In Trust”, as trust account funds are tightly regulated with very strict laws.

What Happens to the Interest?

If specified in the Agreement of Purchase and Sale, the funds will be deposited in an interest bearing instrument within the trust account and any interest accrued will be for the buyer’s benefit. Once the transaction has been finalized the buyer will receive a separate cheque for the interest. As T5s will need to be processed in the event of a cheque being issued, keep in mind that the broker holding the deposit will need your social insurance number.

When Must the Deposit Money be Available?

The deposit funds must be available in your account when you present your deposit cheque as the Agreement of Purchase and Sale will say that the deposit must be submitted either “upon acceptance” or “herewith” the offer. Some real estate companies require that the deposit cheques be certified prior to submission to the listing broker’s office.
NOTE: DEPOSIT FUNDS ARE A LEGAL PURCHASER OBLIGATION.
If the deposit funds are not immediately available the vendor that the legal right to terminate the transaction so be sure that you have ready access to all monies you propose in your offer. Another option to consider is a two stage deposit if you cannot access the total of your proposed deposit funds. This is where a lesser amount  is presented with the offer, and followed with another one before completion.

CONDITIONS IN THE OFFER

Your Toronto real estate agent should have a list of standard conditions to include in your offer. The better more experienced Toronto real estate agents will also have a set of special conditions that will help protect you in certain circumstances and make the deal a little bit better for you  Although these conditions are included in the initial offer it does not mean the seller will accept them. But its always worth a try. Listed below are just some standard conditions that you will want to include in your offer.

Home Inspection

Toronto home inspections should always be done prior to purchasing a Toronto property. In general Toronto is very accepting of building inspection conditions in offers. The typical length of the home inspection condition is three days. Have an inspector lined up before a particular time frame in the offer is committed to, and make sure to have extra time once the inspection has been completed to review the results before the condition expires.

Financing

In most cases you will know if there is a need to include a financing condition in the offer. Be sure to get pre-qualified and pre-approved before arriving at the offer stage after you have carefully read over the financing section. Make sure to also look over any commitment documentation you may have received from a mortgage broker or lender and discuss with them any restrictions or limitations that may be attached to the mortgage. Be sure that any quoted rates will remain available on your stated completion date. You may not need to, but be sure that if you are not completely satisfied that the mortgage will be forthcoming then it is a good idea to include an adequate financing contingency. Most Toronto home buyers ensure their financing is in place before submitting an offer.

Conditions on the Sale of Your Current Property

Good houses that are reasonable priced sell rather quickly in the Toronto market. As such not many purchasers make their offer conditional upon the sale of their backup property. Vendors therefore are not often required to consider and accept these conditions. If however the property has not had many showings, or has been on the market for quite some time, then conditional offers may be the way to go.

Contingencies

Be reasonable if you want your offer taken seriously. Trust your instincts but be realistic.

Balance of Terms and Clauses

Items up for negotiation include the irrevocable period, chattels to be included in the sale, and the closing date of the transaction. These issues and more need to be considered and decided upon, but again, be reasonable and realistic.

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