A First-Time Buyer's Guide to Choosing Agents and Understanding Fees

Navigating the Canadian Real Estate Maze:
Imagine stepping into your dream home, keys in hand, ready to start a new chapter of your life. But before you can cross that threshold, you need to navigate the complex world of Canadian real estate. Don't worry – we've got you covered with this comprehensive guide to choosing the right real estate agent and understanding how fees and transactions work across Canada's provinces.

The Real Estate Landscape in Canada

As of 2025, the Canadian real estate market continues to evolve, with each province offering unique opportunities and challenges for first-time homebuyers. Whether you're eyeing a cozy condo in Toronto or a spacious house in Vancouver, understanding the nuances of real estate transactions is crucial.

Choosing Your Real Estate Ally

Selecting the right real estate agent is like finding a skilled navigator for your home-buying journey. Here's how to ensure you pick the best guide:

1. Experience Matters

Look for an agent with a solid track record in your desired property type and area. An agent specializing in residential properties is ideal if you're searching for a family home7.

2. Local Market Knowledge

Your agent should be well-versed in local market trends, pricing, and upcoming developments. This expertise can help you make informed decisions and avoid overpaying7.

3. Check Credentials

Ensure your agent is licensed and, preferably, a member of the Canadian Real Estate Association (CREA). REALTORS® who are CREA members adhere to a strict code of ethic.

4. Read Reviews and Ask for Referrals

Online reviews and personal recommendations can provide valuable insights into an agent's reputation and work style.

5. Competitive Rates and Terms

Contrary to popular belief, banks often offer highly competitive mortgage rates. They set their rates based on the Bank of Canada benchmark and then offer borrowers rates based on their credit and financial profiles. With a bank, you have the opportunity to negotiate directly, potentially securing a better deal.

The Preapproval Process: What to Expect

Step 1: Gather Your Documents

To get pre-approved, you'll need to provide:

• Government identification

• Proof of income (pay stubs or notices of assessment for self-employed individuals)

• Proof of down payment and ability to cover closing costs

• Information about your assets and debts1

Step 2: Apply Online or In-Person

Many banks offer the convenience of online applications, but you can also visit a branch if you prefer face-to-face interaction. The application process can be as quick as a few minutes1.

Step 3: Credit Check and Financial Assessment

The bank will perform a hard credit check and assess your financial situation to determine how much you can borrow6.

Step 4: Receive Your Preapproval

If approved, you'll receive a preapproval letter stating the maximum loan amount, interest rate, and other terms. This is typically valid for 60 to 130 days.

Understanding Mortgage Rates and Home Loans

As a bank mortgage specialist, I can offer insights into various mortgage products tailored to your needs. Whether you're looking for a fixed or variable rate, a conventional or high-ratio mortgage, we have options to suit your financial situation.

5. Communication is Key

Choose an agent whose communication style aligns with your preferences. They should be responsive, clear, and keep you updated throughout the process.

6. Interview Multiple Agents

Don't settle for the first agent you meet. Talk to several to compare their strategies and how well they understand your needs.

7. Trust Your Instincts

You'll be working closely with your agent, so choose someone you feel comfortable with and trust.

Understanding Real Estate Fees Across Canada

Real estate fees can vary significantly across provinces. Here's a breakdown of typical commission structures:

Ontario

In Ontario, the combined real estate agent commission typically ranges from 3.5% to 5% of the total selling price5. For example, on an average home price of $900,161 (as of April 2024), the total commission paid to both agents would be around $45,008.

British Columbia

The Greater Vancouver Area uses a tiered commission structure:

• 7% on the first $100,000

• 2.5% on the remaining balance

For a property valued at $1,006,248 (average as of April 2024), the total commission would be approximately $29,656

Alberta

Alberta follows a similar tiered structure:

• 7% on the first $100,000

• 3% on the remaining balance

On an average home price of $499,505, this would result in a total commission of about $18,985.

Quebec

Quebec typically charges a flat 5% commission on the total price. For an average home price of $498,124, the commission would be around $24,906

Other Provinces

• Saskatchewan: 6% on the first $100,000, 4% on the second $100,000, and 2% on the remaining balance

• Manitoba, Nova Scotia, New Brunswick, Prince Edward Island, Newfoundland and Labrador: Generally 5% of the total price

It's important to note that these rates can be negotiable, and some agents may offer different fee structures or services.

The Home Buying Process: A Step-by-Step Guide

1. Get Pre-Approved for a Mortgage

Before you start house hunting, get pre-approved for a mortgage. This will help you determine your budget and show sellers that you're a serious buyer.

Pro Tip: Use a mortgage calculator to estimate your monthly payments based on different interest rates and down payment amounts.

2. Determine Your Down Payment

In Canada, the minimum down payment is:

• 5% for homes priced up to $500,000

• 10% for the portion of the purchase price above $500,000

A larger down payment can help you secure better mortgage rates and reduce your overall borrowing costs.

3. Find Your Real Estate Agent

Using the tips provided earlier, select an agent who understands your needs and can guide you through the local market.

4. Start Your Home Search

Work with your agent to view properties that match your criteria. Don't be afraid to ask questions about the neighborhood, property condition, and potential for appreciation.

5. Make an Offer

When you find the right home, your agent will help you prepare and submit an offer. Be prepared for negotiations.

6. Get a Home Inspection

Once your offer is accepted, arrange for a professional home inspection to identify any potential issues with the property.

7. Finalize Your Mortgage

Work with your lender to finalize your mortgage details. This is where your pre-approval comes in handy.

8. Close the Deal

Your real estate agent and lawyer will guide you through the final steps of the transaction, including signing all necessary documents and transferring funds.

Understanding Mortgage Rates and Home Loans

As a first-time buyer, navigating mortgage rates and home loans can be daunting. Here are some key points to consider:

Types of Mortgages

• Fixed-rate mortgages: Interest rate remains the same for the term of the mortgage

• Variable-rate mortgages: Interest rate fluctuates with market conditions

Mortgage Terms

Common terms in Canada include 6 months, 1 year, 2 years, 3 years, 4 years, 5 years, 7 years, and 10 years. The 5-year fixed-rate mortgage is the most popular option

First-Time Home Buyer Incentives

The Canadian government offers several programs to help first-time buyers, including:

• First-Time Home Buyer Incentive: A shared equity mortgage with the Government of Canada

• Home Buyers' Plan (HBP): Allows you to withdraw up to $35,000 from your RRSP to buy or build a qualifying home

Next Step: Get connected with a trusted agent

If you’re ready to take the next step, get in touch today to find out your mortgage options - from there we can connect you with trusted local agents who have proven track records of success and will be a good fit for YOU.

Sources:

1. https://www.cmhc-schl.gc.ca/en/consumers/home-buying/mortgage-pre-approval-and-pre-qualification

2. https://www.ratehub.ca/mortgage-pre-approval

3. https://www.canada.ca/en/financial-consumer-agency/services/mortgages/preapproval-qualify-mortgage.html

4. https://www.ratespy.com/mortgage-pre-approval-05121252

5. https://www.bmo.com/main/personal/mortgages/pre-approval/

6. https://www.scotiabank.com/ca/en/personal/mortgages/mortgage-pre-approval.html

7. https://www.td.com/ca/en/personal-banking/products/mortgages/pre-approval/

8. https://www.cibc.com/en/personal-banking/mortgages/mortgage-pre-approval.html

9. https://www.realtor.ca/blog/postpage/15506/1363/why-you-should-get-pre-approved-before-house-hunting

10. https://www.crea.ca/news/why-you-should-get-pre-approved-for-a-mortgage/

11. https://www.moneysense.ca/spend/real-estate/mortgages/mortgage-pre-approval-canada/

12. https://www.canadianrealestatemagazine.ca/news/why-mortgage-preapproval-is-more-important-than-ever-334856.aspx

13. https://www.lowestrates.ca/resource-centre/mortgages/mortgage-pre-approval-canada

14. https://wowa.ca/mortgage-pre-approval

15. https://www.nerdwallet.com/ca/mortgages/mortgage-pre-approval