Real Estate 101

Eight Real Estate Myths, and the Rules

By Georges Matar · May 31, 2026 · 6 min read

A real estate myth survives because nobody goes and reads the text. Here are eight beliefs that persist in the Montreal market, and the written rule that corrects each one, every rule verifiable at its source.

Myth 1: you need a 20 per cent down payment

The federal rule is tiered, and 20 per cent is not the entry point. The minimum down payment is 5 per cent up to $500,000. Above that, it is 5 per cent on the first $500,000 and 10 per cent on the portion beyond. At $1.5 million and up, 20 per cent becomes mandatory, because CMHC caps the lending value it will insure at $1,500,000.

What is true is that a down payment under 20 per cent means buying mortgage loan insurance, whose premium runs, according to the Financial Consumer Agency of Canada, from 0.6 to 4.5 per cent of the loan amount. CMHC also requires housing costs to stay within 39 per cent of gross household income, and total debt within 44 per cent. The arithmetic, with numbers, is in the down payment myth.

Myth 2: the buyer pays the broker’s remuneration

Remuneration is set neither by the Real Estate Brokerage Act nor by the OACIQ. It is negotiated. When the seller is represented, his broker offers a share of his remuneration to the buyer’s broker. The amount stipulated in the brokerage contract to purchase is then deducted from that share, and the OACIQ says it plainly: the buyer may have no remuneration to pay directly to his own broker.

Three useful details. The buyer’s broker must disclose the share being offered before the promise to purchase is even drafted. Payment happens at the signing of the deed of sale, once financing is in place, and the notary distributes the sums. And where a purchase brokerage contract does leave something payable, clause R2.5 of the mandatory Annex R form allows it to be added to the purchase price and financed. The possible forms, percentage, lump sum or hourly rate, are laid out in commission explained.

Myth 3: new construction is always safer

The mandatory warranty plan administered by Garantie de construction residentielle covers detached, semi-detached and row houses, buildings of two to five dwellings not held in divided co-ownership, and co-ownerships with four superimposed private portions or fewer. Condo buildings with more than four superimposed units, meaning condo towers, are excluded. So are building conversions, renovations such as an extension or construction on existing foundations, and self-building.

Where it does apply, the warranty is real: one year for existing non-apparent poor workmanship, three years for latent defects, five years for design, construction or soil defects, and it transfers to the next buyer for the remaining term. It also protects the deposit paid to the contractor up to $50,000, and covers up to $6,000 in rehousing, moving and storage costs if delivery is late. Check first that the contractor is accredited and the project registered, in the new construction guide.

Myth 4: a preapproval guarantees the loan

It does not. The Financial Consumer Agency of Canada is explicit: a preapproval does not guarantee you will get a mortgage for that amount, and a lender can refuse someone who has been preapproved. Before approving, the lender verifies that the property meets certain standards, and the final amount depends on the value of the property as much as on your down payment.

In other words, a preapproval qualifies the borrower, not the house. The mistakes that sink a file between preapproval and the notary are gathered in preapproval pitfalls.

Myth 5: the asking price reflects value

The asking price is a marketing decision. Two reference points make that clear. First the municipal assessment, routinely mistaken for value: the Act respecting municipal taxation sets its reference date at July 1 of the second fiscal year preceding the roll’s coming into force, eighteen months earlier. The same Act defines real value as the exchange value on a free and competitive market, the most probable price in a private sale where neither party is under any obligation to act. A roll therefore describes a past market, correctly measured.

Then the lender. Since the amount granted depends on the value of the property, a price paid above that value does not get financed: the gap is filled in cash. That is exactly what plays out in the truth about bidding wars.

Myth 6: you can cancel an accepted promise by changing your mind

In principle, no. Educaloi puts it bluntly: an offer to purchase presented to the seller is itself a contract. During the acceptance period it is irrevocable, and you can only withdraw it if your notice reaches the seller before the offer does. The Civil Code adds that once the promise is accepted, both parties are bound to conclude the sale.

What remains are the exits written into the contract, such as the inspection condition, which assumes a significant problem rather than a change of heart, or an agreement with the seller, bearing in mind that brokers who did their work may claim their remuneration.

One genuine right of withdrawal exists, and it belongs to new construction. Where a builder or a developer sells a residential immovable, built or to be built, to a natural person acquiring it to live in, the sale must be preceded by a preliminary contract, and that contract must contain a stipulation letting the promissory buyer withdraw within 10 days. Any indemnity the contract provides for exercising it cannot exceed 0.5 per cent of the agreed sale price.

Myth 7: the seller must accept the highest offer

No rule requires it. The OACIQ writes that the seller has the right to refuse a promise to purchase even where the price and conditions offered meet his expectations, and that it is ultimately up to him to accept one offer over another. An occupancy date, financing already in place or the absence of conditions sometimes weighs more than the number.

What is regulated is the procedure. The broker must present every promise as soon as it is received, regardless of the order of arrival, the identity of the buyers or the circumstances. He cannot reduce his share of remuneration to favour one buyer. And the OACIQ warns against the strategy of collecting all offers at a set date and time, which runs against the duty to present each proposal without delay.

Myth 8: an inspection guarantees there is no problem

It guarantees nothing, and it does something more. Educaloi points out that the legal warranty does not apply to what a pre-purchase inspection, an up to date certificate of location or a notary’s search of the land register could have revealed. The Civil Code runs the same way: the seller does not warrant an apparent defect, the kind a prudent and diligent buyer can detect without an expert.

An inspection is still essential, but as a decision tool, not as an insurance policy. What it actually covers is set out in the checklist, item by item.

What is left once the myths fall

Each of these eight corrections comes from a text you can read yourself, and none of them rests on an opinion. The useful reflex is always the same: ask for the source before adjusting an offer, and distrust any advice that starts with you should always. The same reflex is what spots the red flags that justify walking away.

Is one of these beliefs steering your decision right now? Write to me and we will check together what the rule actually says in your case.