CHAPTER 1: BEFORE CLOSING DAY

Once you make an offer on a property and the seller has chosen to accept your offer, you need to make sure you conduct your due diligence as a buyer by completing a few key tasks.

Schedule a home inspection
While home inspections are optional, we always strongly recommend you have a licensed home inspector complete a thorough inspection of the property you’ve placed an offer on. Often, buyers will place conditions in their offer that requires a satisfactory home inspection for the Agreement of Purchase and Sale to become firm. This condition protects you should there be any serious issues with the home, such as structural integrity, leaks, or even mould.

A home inspector’s report generally consists of the following:
The condition of the home’s heating system and central air conditioning system
The condition of interior plumbing and electrical systems
The condition of the roof, attic, and visible insulation
The condition of the walls, ceilings, floors, windows and doors
The condition of the foundation, basement, and structural integrity of the home

The average home inspection costs about $315, but prices generally range from $200 to $400. Depending on the size, location, and features of the home, prices may be higher or lower.

Order a property appraisal
Prior to releasing the mortgage funds, your lender will require an appraisal of the property you are purchasing in order to get an estimate of the property’s value. This helps the lender determine the final amount they are willing to lend to you, as well as if the property’s value is sufficient to warrant the loan (i.e. if the value of the property is great enough to repay the mortgage loan should the bank have to sell the property in the event you default).

An appraisal fee covers the cost of having a professional appraiser evaluate the home to determine an estimate of the market value. The cost is often around $300 to $500, but prices do vary based on the specific property being appraised. Unique properties, such as large houses or properties in remote locations, typically cost more to appraise.

Get a property survey
A survey refers to the process of locating, measuring, and mapping a property’s boundary lines to determine the exact amount of land that a homeowner owns. A survey will also locate and measure any easements (a right to cross or otherwise use someone else’s land for a specified purpose) or encroachments on a property.

Most lenders will ask for a survey. Usually, the seller will provide the buyer with a survey. However, sometimes lenders will request an updated survey and you will need to contact the local Land Registry Office where the property is located to request this.

Again, the prices for surveys do vary widely based on a number of factors, but prices are generally $300 to $500, with an average price of around $450.

Title insurance
Title insurance is generally recommended when purchasing property as it’s a form of indemnity insurance that protects you from monetary loss resulting from defects in title to real property, such as title fraud, municipal work orders, zoning violations (e.g. where the property does not meet the local municipal bylaws), and other property defects.

Title insurance policies protect you for as long as you own the property. Title insurance is generally purchased when you buy your home or when you refinance it, although it can be purchased any time after you buy your home. You will only make one premium payment when you first buy the insurance. The premium for title insurance ranges from $200 to $400, depending on the insurer.