The sale or purchase of real estate involves many players. For this reason, it is a good idea to understand the role each party plays to ensure a smooth and worry-free process. The key participants are as follows:
Real Estate Agent
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Usually the buyer and borrower are the same person(s). This is the party involved in the “purchase” side of the real estate transaction, who will later seek to receive a mortgage from a lender and obtain the property from the seller.
The seller is the party involved in the “sale” side of the real estate transaction, who will later disperse the property to the buyer.
The purchase of real estate almost always involves the arrangement of a mortgage. The mortgage advisor involved is the individual who makes sure that both the lender’s and borrower’s criteria have been met as he/she constantly negotiates and communicates between both parties. It is ultimately the mortgage advisor’s role to ensure that both parties are satisfied and ready to move forward with the mortgage transaction. Mortgage advisors help you every step of the way in a personalized manner, introduce you to the right team of professionals (if required), get you the most competitive rates, and provide professional advice regarding credit counselling and related mortgage qualifications.
The lender is the party who makes mortgage funds available to borrowers. A lender can range from a financial institution to a private lender. A lender’s main responsibility is to ensure that the borrower meets lending criteria and to disperse the appropriate funds. We currently have access to over 40 lenders to ensure that your individual needs are satisfied. We do the “shopping around”, so you don’t have to.
When a down payment is less than 20% (high-ratio mortgage), the mortgage must be insured against default. This is for the protection of the lender incase you cannot keep up with the payments. A certain percentage of the total mortgage value is calculated based on the amount of down payment provided. The borrower is expected to pay this amount if the mortgage is high-ratio. He/she has two options; the borrower can either pay the amount up front, or let the lender pay and the amount added to the total mortgage value (usually a small increase in the monthly payment is observed). Sometimes a lender may require mortgage default insurance regardless of the down payment, in which case the lender will pay the premium. In Canada, we have one regulated insurer and two private insurers, being the Canada Mortgage and Housing Corporation (CMHC), Canada Guaranty, and Genworth Financial respectively.
For more information on mortgage default insurance please visit our Insurance Page›.
A mortgage servicer/administrator is an individual who is an employee of the lender or of a third party on behalf of the lender. He/she receives mortgage payments from the borrower, maintains the client relationship once funds have been advanced and the mortgage registered, processes minor increases, renewals, discharges, and simple information requests. Also, they often manage the collection and default procedures for the lender.
Real Estate Agent
The realtor is the person who acts on behalf of another in attempt to acquire or dispose of real estate. The realtor does this in expectation of a financial reward. He/she is fully licensed to solicit and market properties for sale on behalf of the seller. Realtors work closely with buyers to search and screen for the ideal home that meets their criteria. They are a great source of information when it comes to helping you make an informed purchase decision.
The builder’s representative is the individual that communicates with the buyer on behalf of the builder when buying a newly constructed home. It is their responsibility to arrange the sale of the new home to the buying public and act as the seller’s (builder) agent. They provide information to buyers on upgrades, models, lots, costs, requirements, warranty, and any other related features of the new property.
Essentially, a lawyer makes sure that the property becomes yours without any overlooked legal troubles. When you buy a property, you are also buying the legal rights of ownership. Sometimes, another party may have a claim against the property and this will complicate the situation for the buyer. The lawyer makes sure that this is not the case by conducting a title search and ensuring that the property is in good standing. A lawyer also has a lot of other legal responsibilities such as:
Reviewing the Contract of Purchase and Sale
Reviewing mortgage documents
Making sure that the current/proposed occupancy usage conforms to local by-laws
Ensuring there are no owing property taxes, outstanding liens
Ensuring all closing documents have been completed properly
Recording all documents with appropriate local governments
Validating the identity of the borrowers
Registering the mortgage on title
Dispersing funds to appropriate parties
Transferring ownership from the seller to buyer
Applying for title insurance if necessary
Although title insurance is not always mandatory, it is highly recommended. Title insurance compensates the insured for losses resulting from the title not being as stated in the policy. The premium is only paid once and it protects the insured for the life of the ownership. Access to the title insurer is usually through the lawyer. The major insurers in Canada are First Canadian Title, Stewart Title, and Law Pro.
For more information on title insurance please visit our Insurance Page›.
The property inspector is the individual who evaluates a property and provides a written report on the things that might not be so clear and visible. The inspector evaluates the interior and exterior structure, plumbing, electrical work, insulation, foundation, HVAC system, and roof. It is typical for the buyer to order and pay for the inspection as a part of his/her due diligence procedure.
Appraisers are responsible for assessing a property’s value if the lender requests an appraisal. They determine the market value by assessing the condition of the home and the selling price of comparable homes recently sold in the area. This lets the lender know if the property falls within their risk limit.
For a more in-depth and professional review of your individual and personalized situation please give Harpreet Singh The Mortgage King a call at (416) 795-1919.Connect with us on: