1. You need to provide your deposit
Technically, your offer becomes legally binding when you provide a deposit, usually required within 24 hours of the offer being accepted. In Toronto, a deposit is usually around 5% of the purchase price (though often higher for luxury properties) and is paid in the form of a certified cheque or bank draft to the listing brokerage (where it is held in trust, meaning the brokerage can’t use your deposit to pay their hydro bills). Your deposit is usually a different amount than your downpayment (which is the difference between the purchase price and your mortgage). If for some reason you do not close on the house, the Seller may be entitled to keep your deposit. Deposits are a way of showing a Seller that you’re financially sound and that you’ve got some skin in the game and are motivated to take possession.
2. You need to do whatever it is you need to do to waive your conditions
3. You need to tell your lender
Generally, most lenders require a copy of the MLS listing and your signed Agreement of Purchase and Sale. If your offer was conditional on financing, they’ll use that information to confirm that they will indeed give you a mortgage for that particular home.
4. You’ll likely need an appraisal
Many Toronto lenders will order a house or condo appraisal before they’ll lend you the money. An unbiased professional home appraiser will actually visit the property you just put an offer on and confirm the value to the bank. The bank’s goal is to confirm that you paid market value for the property so that in the event that you default on your mortgage, they aren’t stuck with a $500,000 house that you/they paid $650,000 for. [Related: All About Appraisals]
5. You need to tell your lawyer
Once an offer has been accepted, your real estate lawyer’s job begins. He or she will need a copy of the Agreement of Purchase and Sale and your personal identification. [Related: Your Real Estate Lawyer’s Role]
6. You need to get home insurance
No lender will advance you a mortgage until they have proof that you’ve insured the property. Get started on obtaining insurance right away – and make sure to get multiple quotes. [Related: All About Home Insurance]
7. You need to plan your re-visits
Most purchase agreements include the right for you to go back and visit the property before you take possession – to measure, show your family, plan your renovations, etc. Your REALTOR will accompany you to these showings. We usually recommend that you save one of your visits for the day before close to ensure that the house or condo is in the same condition it was in when you put an offer on it.
These final steps are critical in the home buying process. You’re almost there – now read this: How to Move and Not get a Divorce.