Buyers' Tips
The process of buying a home is exciting and it can be stressful at times, but a systematic approach will help to keep it positive.
Major considerations at the outset are:
Budget:
- You might have a particular neighbourhood or housing style in mind but, if these are above your price range, it can lead to disappointment.
- Start by consulting with a good mortgage broker. Your broker will go over your income, assets and expenses with you to establish what payments you can afford, what size of mortgage you can qualify for, and what price range you should be looking in for your new home. Your broker will explain the different types of mortgages (i.e. open, closed, fixed rate, variable rate), determine what percentage of the purchase price you can borrow (first time buyers can qualify for up to 95% financing with an insured mortgage), and explain all associated costs. Ask plenty of questions and don't just settle for what your bank offers you, shop around for the best terms; remember, you are the customer!
- Once you have determined your price range your real estate professional will show you listings to illustrate what type of property is available to you.
- Drive by homes for sale to get a feel for the neighbourhood and narrow your search down to the areas that feel best to you and fit your budget.
- Acquaint yourself with the market – go to open houses and tour listings with your realtor so you can compare properties.
Personal Requirements:
- If you are in the market for a single-family home, are you an empty-nester or will you need room for a growing family?
- If you have school-aged children, check out the schools in the catchment area and the school bus routes.
- See if there are nearby parks, walking trails or other recreation sites.
- If you use public transit, check out the home’s proximity to bus stops.
- Do you want to be near to amenities and shopping?
- Do you want a large garden or would you prefer a low maintenance yard?
- Do you prefer new subdivisions, older neighbourhoods, or rural areas?
- Does multiple housing, such as a condominium or duplex, suit your lifestyle; if so, and you want to keep a pet, verify that there are no strata restrictions on pets
- If you want to buy a unit in a strata complex to rent out, determine the rules regarding rentals in that development.
- Is a view important to you, or other special features like waterfront or beach access?
Take your time to consider all of your requirements objectively; try not to let your emotions control your decisions.
When you find a home that seems right for you, make sure you inspect it carefully:
- Will it need any major repairs, i.e. new roof?
- Look for signs of water leak damage in the ceilings, attic and walls.
- Make sure that the roof is properly vented and check for any signs of mould.
- Are the appliances included and are they in good condition?
- Is the layout and design of the home pleasing to you?
- If the water comes from a well, try to determine its quality and quantity.
- Does the land slope away from the house?
- Look for signs of drainage problems outside and in the crawlspace or basement.
- Ask plenty of questions.
- Do not discount a solid home simply because its décor is outdated or there are some minor repairable defects: many a hidden gem shines after a bit of tlc.
Your real estate professional can assist you with the following important considerations:
- Confirm the zoning of the property with the appropriate government agency and get a copy of the zoning bylaw.
- Make sure that the property does contain unauthorized non-conformities and that the purpose for which you intend to use the property is permitted under its zoning.
- Look for signs of encroachments, easements or impediments that may affect the property.
- When you are ready to make an offer on a home it is important to do so in writing and covering all details such as included items, completion dates, terms and price; your real estate professional will use a standard Real Estate Board contract that has been carefully worded to protect your interests.
Real estate agents must keep Errors and Omissions Insurance which can protect buyers should they later discover that the property they purchased was misrepresented or had a latent defect that the seller did not disclose. However, the buyer is responsible to discover problems that can readily be detected by a reasonably knowledgable person. The cost of having professionals conduct inspections such as those listed above is money well-spent and can save purchasers thousands of dollars in potential unforeseen expenses.
A real estate professional will wisely council you to make your offer subject to things that are essential to your ability to complete the purchase, and for your sole benefit, for example:
- Obtaining financing of a specified amount and terms
- Approval of a Home Inspection report – the inspector will objectively examine the mechanical condition of the home (i.e. heating and air conditioning, plumbing and electrical, roof, attic, insulation, walls, floors, ceilings, windows, doors, foundation, and basement), assess its condition, and recommend repairs that are desirable or necessary. If costly repairs are required, or unrepairable defects exist, you can cancel the sale or, alternatively perhaps, renegotiate the sale price to reflect the repair costs. Being present for the inspection will give you the opportunity to ask questions and gain knowledge.
- Approval of a Septic System report (if applicable) – again, if the septic system is inadequate the sale can be cancelled (at your option) or the price renegotiated between parties.
- Testing of water from wells on rural property.
- Inspection and approval of title and site survey; verify that the seller holds title and that lot boundaries are where they are said to be.
It is important to note all included items and chattels (if any), and any other special terms (i.e. notice to be given to tenants, clean up to be performed by seller) in writing on the contract so that there is no misunderstanding at completion time.
Negotiating the final purchase price can be tricky, your real estate professional will represent your best interests to the sellers and their agent so as to give you the best bargaining power. There may be a counter offer to consider (and perhaps more counters back and forth) before you close the deal. Bear in mind that as soon as an offer is countered the original offer is cancelled and does not have to be honored, so proceed carefully.
You will need to hire a lawyer or Notary Public to handle the conveyance of title and make all of the necessary financial adjustments between buyer and seller to ensure that the proper share of taxes and costs (mortgage fees, rents and security deposits, utilities paid etc) are charged to each party, and to ensure that any charges the seller has on the title are discharged and moneys disbursed. The mortgage holder will also require proof of home insurance. You will receive title and keys on the date agreed to in your contract.
A summary of expenses you can expect to incur, and will need to budget for, over and above the purchase price of the property are as follows:
- Inspection reports
- Property appraisal for mortgage purposes
- Mortgage application fee
- Survey fee (if required for mortgage)
- Legal fee for conveyance of title, mortgage registration and associated expenses
- BC Property Transfer Tax (1% on first $200,000 plus 2% on balance)
- Your share of property taxes
- Fire insurance
- Mortgage life insurance (if desired)
- Some properties properties may be subject to HST in BC, including new or substantially renovated homes.
Your real estate professional can guide you through these pointers and help you to manage the home-buying process thoughtfully and objectively so that it is a rewarding and enjoyable experience!
