Author: Mike Holman

My friend Christine has kindly agreed to write a series of posts on her experiences with buying a home for the first time which will be posted occasionally. See Part 7 – A Close Call.

Condo Show

After a dismal period of viewing unappealing and expensive properties, we decided to attend the Metro Toronto Condo Show just to gauge our options. It seemed like a good way to learn about the basics of a condo purchase. And admittedly, a new or near-new development is appealing in that it would be maintenance-free and likely decorated in our style.

If we hadn’t already been aware of the target demographic for many of the new condos, the Condo Show was attended mainly by early 20-somethings and to a lesser extent, retired empty nesters. The show added little to our knowledge as we had already done some research. There were only a few condo representatives on hand, and they had little hardcopy information. The free condo magazine was useful, but much of the information it contained was already online as well. The majority of exhibitors represented flooring, closet and furniture retailers.

What we were able to take away from the experience was that the newer buildings tended to have smaller units. The luxury condos offered larger units and a more mature crowd, but had heftier prices. On the whole, many of the more affordable buildings did not suit us in terms of their locations in the Entertainment District, along the Harbourfront or in Liberty Village. Buildings in the neighbourhoods we do like are not necessarily cheaper than a house. The main advantage is that condos are move-in ready. Older resale buildings do seem to offer larger units so may be the route we choose.

Municipal Land Transfer Tax

It was with great anxiety and inevitability that I read about the approval of the municipal land transfer tax on October 22, 2007. The tax will be levied on Toronto home buyers and is paid in addition to an Ontario Land Transfer Tax.

Just what are the implications of the new tax? It comes into effect on February 1, 2008 and will work on a sliding scale according to the purchase price. Therefore, a $500,000 home would be taxed at three different tax levels.

The exceptions to the new tax are for homes purchased with a signed legal agreement by December 31, 2007 even if the closing date falls after February 1, 2008.

First-time home buyers receive a tax break by way of a $3,725 rebate for properties costing up to $400,000. The portion of the purchase price which exceeds $400,000 is still taxed at 2%. In effect, that means that first-time home buyers of properties costing less than $400,000 are exempt from the tax.

While conscious of the looming December 31, 2007 deadline, we are still at the mercy of market availability. After all, a house is too large a purchase to make rashly just to save some money.

My friend Christine has kindly agreed to write a series of posts on her experiences with buying a home for the first time which will be posted occasionally. See Part 6 – Week One with a agent.

As the weeks went by, the house hunt took us to a nicely renovated semi with rental potential. After taking a second look at the property, my husband and I decided to bid for the house.

Our agent briefed us on the offer process. A bank draft made out to the listing agent’s company for five per cent of the asking price was required to accompany our offer. We were to go in with our best offer as it would be a multiple bid competition. Our agent also recommended that we submit an offer free of conditions or it might not even be considered. Thus we chose to have a home inspection prior to the offer date. As we already had pre-approved financing, we were comfortable with omitting such a clause.

Four hundred dollars is not cheap, but was a small price to pay to evaluate a purchase that we would be paying off for the next quarter century. The home inspection was also a useful primer about home maintenance and helped in estimating the cost of various repairs. Mike and his wife warned us ahead of time that a home inspector cannot see through walls. Therefore insufficient insulation or shoddy construction could not be properly detected. I was fortunate that I was able to be present during the inspection, and that the inspector had a gregarious personality and welcomed my many questions. At the end of the inspection, I was taken through the house with the more pressing repairs explained. Most helpful was having monetary figures attached to the various repairs. I truly felt that it had been money well spent.

After discussing the home inspection findings with my husband, we decided not to bid on the house. In many ways, the required repairs were typical of an older house. We took the advice of the home inspector in deciding if we could comfortably afford to budget in the immediate repairs on top of the purchase price. While we thought the house was lovely, it was not nice enough to warrant the additional repairs which we would have to do before making aesthetic changes. It was near the top end of our budget already. We passed on this house without regret and learned that it had sold later that week for over asking.

Things we learned along the way

Termites have penetrated into the majority of the older downtown neighbourhoods, as the following chart shows.

Aetna, one of the largest pest control companies in the city, maintains a database of termite infestations. Anyone can call and ask if there have been live infestations on a particular street.