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Property in Kawartha Lakes and Durham Region
August 24th, 2019 
Jerry Bryans
Sales Representative

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Purchasing Farm and Rural Properties


Buying a farm or rural property is a unique experience. Unlike urban homes, rural properties and farms are unique in their settings, land types, age, topography, buildings, features and use. Properties range from full agricultural such as dairy, beef and other livestock to cash crop, hobby farming, vacant land and bush properties.


As a result of their uniqueness, buyers normally inspect a number of properties before purchasing the property that best suits their needs, wants and desires. When the right property is found, buyers are usually very anxious to secure their purchase. Caution is recommended, and very often disappointment is the order of the day if proper planning and pre-work are not completed ahead of time.


Charter banks and financial institutions are very conservative in their approach to mortgaging farms and rural properties. Generally, the home and 5 to 10 acres of land excluding “outbuildings” such as barns and sheds are used for valuation. Dependant on the property, this may only represent 70 percent of the total value of the purchase. When considering a mortgage, the following is an example of a possible scenario with such lending institutions.


Purchase Price $500,000
Valuation of home and 5 to 10 acres            $350,000
Mortgage Financing at 80% $280,000
Purchasers Down payment $220,000


Pre-qualification and possible alternate financing arrangements are highly recommended. Fortunately, there are a number of alternatives to securing your dream purchase. Private financing, second mortgages and financial institutions that specialize in farms and rural properties are available. Quite often, these alterative financing sources will consider additional land and possibly outbuildings as part of the valuation. Wise buyers will spend some time and do some pre-planning with a mortgage broker prior to finding the right property. Time may be of the essence if that property is in high demand.


Many real estate brokerages have onsite mortgage specialists or can recommend reputable mortgage brokerages. Royal Lepage Kawartha Lakes has an onsite mortgage specialist who would be pleased to assist in preplanning and preapproval of your financial needs.


In addition to financial needs, prudent buyers will be aware that septic systems and wells are the norm on most rural properties as sewers and municipal water supply is rarely available. Wells may be dug or drilled. Septic systems are varied in nature dependant upon age and location on the property. When submitting an offer to purchase, real estate professionals will include clauses requesting “warranty and representation” by the seller, that adequate water supply and quality as well as the sewage system being in good working order.


Current surveys on many rural properties do not exist or have long been out of date. The cost of a new survey in many cases is cost prohibitive to both buyers and sellers. In recent years, most lawyers, at the time of title transfer, will have the buyers purchase title insurance to address concerns over property lines, encroachment and numerous other issues concerning clear title to the property.


Buyers should also be aware of zoning, special designations, easements and environmental issues when purchasing a property. In Ontario, the Oak Ridges Moraine and associated Green Belt impact the use of properties. In addition, many properties have some or all of their land designated as “environmentally protected” under provincial legislation. Investigation prior to an offer is highly recommended.


These are just some of the issue that may arise during your search for the right property for you. Selecting prudent and detailed real estate professional with experience in farms and rural properties is a wise decision.

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