Due Diligence

We need to conduct appropriate due diligence when looking to buy your next home. This due diligence can be conducted after an agreement has been accepted (e.g., a conditional offer). In most cases though, we will be competing on offer night and conducting our due diligence prior to offer night because it will position us for success at the offer table. So how do we go about conducting our due diligence prior to offer night?

When it comes to freehold homes there are three main areas of focus. With condominiums, there are typically two.

Home inspections

This is an important part of the buying process when considering a freehold home. In an aggressive market, such as Toronto, it is becoming harder and harder, logistically, to conduct a home inspection prior to offer night. Most likely when “Bully Offers” are the norm. 

The main way that we get around doing our due diligence in tighter situations is from working off of a pre-list home inspection. Most listing agents will conduct their own home inspection that buyers can look at. We can tell a good home inspection from a bad one and know who the good home inspectors are in the City, versus the less reputable ones. In the end, you need to be comfortable to make an offer on home and that’s what we’re aiming for. 

Termites

You might not know this, but termites are a pretty big deal in Toronto when speaking on freehold homes, not to worry with condos. There are streets in the City that are notorious for termites while other streets have no history at all. We work with Aetna (pest control) to find out if there is history in a particular block of homes to decide if we need to conduct further evaluations regarding termites or not. Aetna has been around for 30+ years and they are very well respected in our business, plus they have a large database of homes they have treated.

Financing

This is an important part of the buying process for both freehold and condominiums. You have already been pre-approved for a certain budget based on what the lender calculated you can afford to spend on a home. The other side of the coin would be whether your lender feels that what you paid for the home is reflective of its value. We will advise you on the value of a home based on comparable sales of homes in the area. We will work with you to make sure the price you pay is within the boundaries of value or we will tell you otherwise.

Status Certificate

This aspect of due diligence is specific to condominiums. When buying a condo, you aren’t just buying your unit, you are also buying part of the common elements of the building, that’s where a status certificate comes in. A status certificate is a document provided by the condominium corporation to buyers of resale condos that provides a snapshot of the unit as of the date that the certificate is issued. In most cases, if the building is serviced by a property management company, it is prepared by the property manager.

A status certificate contains pertinent information about the individual condominium unit. Among other things, the certificate would indicate if the current unit owner is in default of paying the monthly common expenses, if an increase in the common expenses has been declared by the condominium board, and the amount in the reserve fund.

Just like a pre-list home inspection conducted by the Selling agent for freehold homes, most Selling agents for condos will pre-order a status certificate for lawyer review prior to offer night. With a status, it’s important to have your lawyer review to make sure there are no “red flags” with the unit or building. Some lawyers will not charge for this review if they get your business for closing. If you need a lawyer to review the documents, please let us know. We have a great lawyer that offers this service to our client.