Misconceptions about the real estate market can make buyers shy away or hesitate to get into the home-buying game. If you are considering buying a home, take time to read about the common myths and get clarifications, so you don’t pass up on an opportunity to invest in a property or get your dream home. You can also make informed decisions and have a pleasurable experience.

Misconception No. 1: The buyer can back out of an agreement without consequences

Usually, you will offer to purchase a home but with specific conditions such as the approval of your financing application and satisfactory home inspection. When these do not work out, you can back out on your offer and get your deposit back.

On the one hand, when you have already waived the conditions, you can’t back out of the agreement without losing your deposit or being sued for breach of contract. You are legally bound to close the deal. If you have a situation that requires you to cancel your offer, talk to your lawyer and realtor immediately, and understand the consequences.

Misconception No. 2: The seller pays the land transfer tax

The seller usually pays the real estate commission, but only the buyer pays the land transfer tax. This should be cleared with the buyer to avoid any surprise expenses.

Misconception No. 3: The buyer can renegotiate the price based on home inspection condition

In Ontario, a buyer can back out on the agreement and refund the deposit if the buyer is not satisfied with the home inspection, as stated in the standard home inspection condition clause in the Agreement of Purchase and Sale. Meanwhile, in a buyer’s market where the buyer is in control, the seller may renegotiate for the price and repairs, knowing the possibility of losing the buyer. However, when the seller is in control, renegotiations are not likely to happen since they may have other potential buyers in line.

Misconception No. 4: The buyer can renegotiate the price if the appraisal value is less than the buyer’s offer

When the appraisal happens after your offer is set and you have no more conditions to waive, you cannot renegotiate the price even when the bank or lender appraised the house lower than your offer. At this point, look for another lender and hope that the appraisal will be close to your offer. Otherwise, you will have to come up with the money to make up for the difference because the lender will not give you a mortgage more than their appraised value.

Misconception No. 5: The buyer hired an individual as agent

Even when a buyer opted to work with an individual agent, the buyer hires the real estate brokerage. All the legal agreements the buyer signs are with the brokerage.

Conclusion

When you’re planning to purchase a property, getting clear with these misconceptions is essential to make an informed decision. If you’re looking to buy real estate in Toronto, get in touch with us today! We’re happy to help you find a property that suits you.