You’re looking to buy your next home – how exciting! Home ownership is a rewarding and invigorating opportunity to create your own personal haven. There are a few steps to home ownership, and the entire process can take two weeks or it can take many years, whatever is right for you. As always, I preach education as the most important aspect of success, and reading this guide is a great first step.
If you’re interested in chatting more in person, contact me at Kristi@RealEstateVancity.ca or 778-387-7371 and let’s set up a meeting to chat through the process and your initial questions. Until then, have a look below.
The Steps Involved in Buying a Home
ONE / Start Working with a Real Estate Agent
TWO / Pursue a Mortgage Pre-Approval
THREE / Plan for the Purchase Costs and Home Ownership Costs
FOUR / Start Searching!
FIVE / Offering on A Property
SIX / Doing your Due Diligence
SEVEN / Making the Purchase Official
EIGHT / Planning your Move
NINE / Celebration!
Let’s get started!
ONE / Start Working with a Real Estate Agent
This will be the biggest decision of your life, don’t hesitate to employ a professional to ensure you make the right decision. I meet a lot of Buyers who start looking at properties before talking to a Realtor, and though that’s within your rights, it’s not in your best interest. Why?
- As someone enveloped in the Vancouver Real Estate Market, I know the in’s and out’s of what to expect in the market, the history of buildings and areas, and how your expectations align with your opportunities. It’s my job to ensure you know which properties are worth your time.
- It doesn’t cost you anything! Our renumeration is paid through the commission the Seller pays on the sale, so use my knowledge to your advantage, it’s free! It’s my job to ensure you’re successful.
- You don’t want to be looking for a property, find the right one, and then realize you haven’t developed a trusted relationship with someone who knows your best interests. You can be casually looking at real estate and still have professional guidance to ensure you’re on the right track. Once you find “the one” the process moves very quickly, so the more prepared you are for that situation, the more successful, and less stressed, you’ll be so you can focus on the important details. It’s my job to help you ensure you’re ready.
- Buying a home is a huge financial investment! Would you deal with a large lawsuit without the help of a lawyer? It’s my job to ensure you know your rights and responsibilities when it comes to the contract.
- All Sellers are using a Realtor, so when you’re at an Open House, those agents aren’t working in your best interests and will pass on any information you tell them to the Sellers, which could be used against you. It’s my job to tell you the nitty gritty details and ensure you’re thinking about both the pros and the cons.
- As per the Real Estate Board, Real Estate Websites aren’t allowed to list sale prices, so knowing what’s listed is one thing, but knowing what’s selling is another. This information helps you form an idea of value and gives you insight into what’s happening in the current market. It’s my job to get you the information you need to make an educated decision.
All you need to do to start working with an agent is to get in contact! Ideally, we’ll sit down with a beverage to chat through the process, your experience and knowledge, your expectations, your ideal property and what you can expect of me. I’ll get you set up on a Custom Search so we can start talking about properties, and then we’ll plan to go on tour to view your options together. I can give you some information about purchase costs, give you a referral to a Mortgage Broker, and ensure you have access to other qualified professionals (including lawyers, financial advisors, etc) who you may need to chat with about your purchase.
Disclosure to Clients
The Real Estate Board also requires that we disclose to potential Buyers what kind of relationship we would have – either a Client Relationship or an Unrepresented Relationship. If we sit down and decide to work together, we will have a client relationship, which means I am loyal to you and I work in your best interests to find you the best property at the best price. If you are an Unrepresented Client, that means I do not have any responsibilities to work in your best interests except to work honestly and ethically, as I do with everyone. The Real Estate Board makes it very clear – it’s not smart to be an Unrepresented Buyer.
TWO / Pursue a Mortgage Pre-Approval
Knowing what you can afford is (obviously) a very important step in this process. Connect with a Mortgage Broker who can walk you through the financial side of buying a home and submit your pre-approval so you know how much you can afford.
The Mortgage world is constantly adjusting to new Government policies, new lender policies, changing interest rates and unique client situations. Mortgages are complicated and require a good Mortgage Broker to help you understand your options and take advantage of opportunities. Mortgage Calculators that you find on the internet (including this site!) are a simplistic view of the process that doesn’t take into account your assets and debts, your employment, and any new policies that make your file unique. A mortgage pre-approval locks in an interest rate for 90 days so you know you’re protected if rates go up (you can always apply for the lower rate if rates go down) and it forces you to start gathering all of the documents you’ll need to give the broker, including pay stubs, bank statements, etc. Your mortgage broker will also be able to explain to you any opportunities you have to improve your file, which could include paying down debts or improving your credit score. You’ll chat about the pros and cons of fixed vs variable rates and the meaning of amortizations and terms. You should also have a conversations about your short and long term goals and will receive information on the mortgage costs involved.
Banks vs Mortgage Brokers
When you are looking to be pre-approved, you have the choice of either the bank or a mortgager broker. My opinion is that Mortgage Brokers offer a higher standard of service, are more available during days/evenings/weekends to chat, and can offer you more options since they work with every bank as well as other lenders. There are very specific scenarios where you’re better to use a bank for your mortgage needs, but that is usually limited to people who are new to Canada or overseas buyers. Otherwise, speaking from my own experience and the experience of my past clients – people are significantly happier when they’ve used the services of an independent mortgage broker.
Throughout my years in the industry, I have worked with a number of different mortgage brokers and have narrowed down the list to a few very organized, energetic, educated brokers who have always impressed my clients and I. Whether you’re a client of mine or not, I’m happy offer a list of fantastic brokers to contact for your mortgage needs.
Whether you connect with a mortgage broker or realtor first is really interchangeable. Some Buyers choose to learn the details of the financial possibilities first, whereas others like to focus on the real estate possibilities. Regardless, when you’re getting professional guidance, you’re on the right path.
THREE / Plan for the Purchase Costs and Home Ownership Costs
Every purchase will have some one time costs and then ongoing monthly costs to consider. All of these costs should be considered prior to purchasing so you know what’s expected of you and can feel comfortable going forward. I have a simple but useful spreadsheet that you can use to calculate your monthly costs.
Keep in mind, I am not an accountant, nor is this list comprehensive and/or correct for every situation. If you’re looking for exact numbers, please contact the professional offering the service for a quote. Also, always ensure you’re in communication with your accountant and financial advisor if you plan on buying or selling, especially with investment properties.
One Time Purchase Costs
- Home Inspection: ~$450 to $1000 – I’ll always suggestion a home inspection, whether it’s for old properties or brand new builds, so you can have a professional run through the big and little items you need to know about the current state of the house and how to properly maintain it in the future. It’s worthwhile to spend a few hundred dollars in order to avoid a bill for a few thousand later on.
- Appraisal: ~$300 – Your mortgage lender may require a third party review of the property to ascertain value before they approve the loan. Some mortgager brokers or banks cover this cost.
- Survey: ~$1300 – Similar to an appraisal, a survey is only necessary for detached homes, and may or may not be required by your mortgage lender.
- Legal Fees: ~$2000 to $2500 – Every purchase requires a Lawyer or Notary to complete the official transfer of ownership at the Land Title Office. The lawyer will prepare a statement indicating the final total of what you owe the Seller (this would include the purchase price, any adjustments for property tax, etc). Lawyer’s Fees are likely $1500 + $500 land title fees + any document costs + any adjustments for property tax and strata fees (you’ll pay a pro-rated amount of property tax and strata fees, calculated to start on your possession date). Talk to your Lawyer or Notary for a more specific idea of costs.
- Title Insurance: ~$225 to $500 – Every buyer, especially detached buyers, should purchase title insurance. This one time cost protects against fraud and a number of other potential issues you may learn about after a purchase. Let your Lawyer know that you would like to purchase title insurance.
- Property Transfer Tax (PTT): just under 2% of the purchase price – The BC Government imposes a tax called Property Transfer Tax, paid on the Completion Date. First-time buyers may realize savings of up to $8,000 if they will be living in the property, are a Canadian Citizen or Resident, and purchase property under $835,000. For more information about Property Transfer Tax: https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax. The tax is calculated as follows:
1% of the Purchase Price on the first $200,000;
2% of the Purchase Price that exceeds $200,000 but does not exceed $2,000,000;
3% of the Purchase Price that exceeds $2,000,000 but does not exceed $3,000,000;
5% of the Purchase Price that exceeds $3,000,000; plus
plus an additional amount equal to 20% of the Purchase Price if the Buyer is not a Canadian Citizen or Resident
- Goods & Services Tax (GST): 5%, once, on newly constructed homes and substantially renovated homes – The Government charges an extra 5% GST on all new homes, payable on the Completion Date. What constitutes as “new” is a bit of a grey area but generally anything you’re purchasing directly from the Developer or anything that has not been lived in or barely been lived in.
- Move In Fees, typically ~$100 for strata properties – Some condo buildings charge move in fees to cover for potential damage or work required by the Property Management Company change ownership information.
- Real Estate Fees – Typically, Buyers don’t have to pay anything as the Seller pays the real estate commission. There are rare occasions where properties are being sold off market or by the Seller themselves with no commission involved, so your agent will negotiate with you an appropriate commission.
- Other Costs – Some other costs to consider include moving costs, which can vary significantly, renovation or upgrade costs, connection fees (for new TV/Internet connections, etc) and of course, the costs to buy new furniture and host your house warming party 🙂
Ongoing Home Ownership Costs
- Home Insurance: varies, every year – Most mortgage lenders require Buyers to have a home insurance policy in place upon the Completion Date. Regardless, this is something that should be done to ensure you’re protected for unexpected issues or mistakes. Shop around for different quotes and ensure any upgrades to the home are covered by the insurance policy.
- Mortgage Costs: varies, monthly – This will vary depending on your interest rate, amortization, terms and down payment.
- Property Tax: varies – Every property owner pays property tax. The amount will change every year. Some mortgage lenders pay the property tax on your behalf and then include the amount in your monthly mortgage cost.
- Extra Municipal Taxes, varies – Some municipalities, in addition to property taxes, charge a separate fee for Garbage, Recycling, Utilities, etc. These charges may be monthly or yearly, and can change every year. Visit the website or call the municipality to verify. Some cities with these charges include Squamish, Burnaby, Port Moody. Note: these fees apply to owners in both houses and strata units.
- Vancouver Empty Homes Tax – Every year you have to declare whether your property is occupied or has been vacant for a period of time. If your home is left empty for more than 6 months every year, you’ll be charged the Vancouver Empty Homes Tax. For more information: https://vancouver.ca/home-property-development/empty-homes-tax.aspx
- BC Speculation and Vacancy Tax – Similar to the Vancouver Empty Homes Tax, this tax is levied on home owners who do not live in or rent out their home for a certain amount of time each year. Owners must declare the property status every year. For more information: https://www2.gov.bc.ca/gov/content/taxes/property-taxes/speculation-and-vacancy-tax
- Strata Fees: varies, monthly – This is only required for Stratified properties, and typically covers strata insurance, hot water, heat (if it’s supplied by the hot water), gardening, property management, city services, Strata insurance, and amenities.
- BC Hydro: varies, bi-monthly – BC Hydro controls your electricity, which covers your lights and in many homes, your heat as well. You’ll need to set up an account with BC Hydro.
- FortisBC: varies, bi-monthly – Not every property has a gas line, but if so, plan to set up an account with Fortis BC.
- Internet/TV: varies, monthly – Internet is a must these days, and having cable is up to you. Shop around and see what kind of deals you can get from the different providers.
- Personal Insurance: varies, monthly – Once your a property owner, it’s generally a good idea to increase the amount of personal insurance you have with regards to Disability, Critical Care and Life Insurance so that your living expenses and mortgage can be paid in the event of a personal emergency. Speak with a financial advisor about your options – this will add a few hundred dollars to your monthly costs but there are good benefits to having insurance in place.
Don’t forget to include your other personal expenses when it comes to determining your monthly budget. Other expenses include costs relating to your cell phone, Spotify/Netflix/Crave/HBO/Amazon/etc accounts, groceries, vehicle costs, travel, and more. If you’re moving to a different space, think about any potential new furniture or small upgrades you’d like in your home.
If you’re looking for a great tool to track your current spending habits, check out Wave Accounting. This is a free website that allows you to connect all of your bank accounts and track your spending with categories. You can be really detailed with your categories (i.e. I have a “mani/pedi” category), or really broad (i.e. all things “beauty”), but it’s a great tool to track exactly what you spend over the months so you don’t have to guess!
FOUR / Start Searching!
Think about your list of criteria, your “must haves” and where you want to live (now is the time to sign up for a Custom MLS Search). This step requires some significant lifestyle decisions, and don’t worry you can adjust your criteria as you start to learn more about your options. I have some clients who start you with a really specific Custom Search and then open it up as they realize what’s possible, and others who start with an open ended search and narrow down as they realize what’s important.
Considerations for your Search
Some lifestyle considerations to make: Do you need a second bedroom, or would a den be enough? Will you ever need to rent? Older with character? New and up and coming? Near the water? Near a skytrain? Long commute to work? In a good school catchment? Near a dog park? Open floor plan? Big kitchen, or small kitchen and big living room? Is outdoor space necessary? Sunny and south facing, or facing the Mountains in the North? What about parking? Do you want a fireplace?
Think about the construction style: Concrete, or wood frame? Rainscreened? How old is the roof, plumbing, electrical, etc? Do you want to live on the ground floor, or be high above the city? Are you willing to renovate at some point in time?
Condos have their own considerations: How much is in the contingency reserve fund for things like maintenance, decorating, repairs, etc? Are pets allowed? Are rentals allowed? Is any major work coming up that could be disruptive or noisy? Do you want special amenities like a pool, party room, workshop or gym?
Looking for a House? Don’t forget to consider these details: What is the zoning? Are you allowed to build a laneway house down the road? Is there a an oil tank? What are the typical heating and electrical costs? Is there parking? Are there any easements? Have there been any unauthorized renos on the home?
The best way to know what you want is to get out there and see it!! Different floor plans will elicit different responses from you, and you’ll really start to see how far your dollars are stretched with different features and neighbourhoods. Let your Realtor (me!) know what your criteria are, or send me a list of homes that have caught your eye and we can go on Tour. That way, you can see a lot of properties at one time and get professional, knowledgable advice from me.
Custom MLS Search
The Custom Search that I will set you up on will ensure you never miss a good listing, and allows both of us to comment on listings so you can ask questions, and I can give you some answers. You can also follow the listings that really caught your eye, and get rid of the listings you had no interest in. The search will update with new listings, price drops and sales, so you always know what’s happening. You can either sign up for a Custom Search view Fisherly (a new site that allows you to set up your own search and view sale prices) or fill in my Custom Search Form (and allow me to refine your search based on what you’re looking for so you don’t miss anything good due to odd criteria requirements).
Viewing Properties
Once you’re ready and available, we’ll start searching for properties!
You’re welcome to go to Open Houses anytime, and I’ll join you if I’m not hosting an Open House of my own. Let me know which Open Houses you plan on attending so I can veto the bad ones and give you some info on the good ones beforehand. We will also schedule property tours, where we can see multiple homes at one time so you can compare and so I can educate on different construction styles and what to look for during viewings.
The more properties you view, the more you’ll understand the characteristics of your ideal home.
FIVE / Offering on a Property
So you’ve found a fantastic property, I’ve done some initial due diligence to ensure the home is in good repair and your initial questions have been answered – it’s time for your offer to purchase.
We’ll talk about the comparable listings and sales, a negotiation strategy and what I know about the Seller.
Important Dates for an Offer
With regards to the offer itself, there are a few dates to keep in mind when making the offer:
- Acceptance Time: The day and time the Seller has to respond to or accept your offer, typically within 24 hours of submitting the offer.
- Subject Removal Date: The date by which you must satisfy all of your conditions/subjects on your contract to make the purchase contractually official. You subjects/conditions can include subject to receiving mortgage approval, subject to a satisfactory home inspection, subject to reviewing documents, etc. If what you have learned before the subject removal date doesn’t sit well with you, then you can cancel the purchase and walk away. If you are happy with everything you’ve learned, you will remove the conditions on the contract to create a firm contract to purchase. Once the contract is firm, you are legally obligated to complete the purchase, otherwise you can be sued by the Seller. The subject removal date is typically 1 week after the offer is accepted.
- Completion Date: The day you’ve been waiting for: you are now the legal owner of the home! Title of the property is transferred to you in exchange for the purchase price. This date can be anywhere from 2 weeks to many months after Subjects are removed. You’ll meet with the Lawyer a few days before the Completion Date so make sure you’ll be in town and available.
- Possession Date: Moving Day! I’ll happily give you the keys to your new home! Typically 1 to 3 days after Completion
I’ll write the Contract of Purchase and Sale on your behalf and will negotiate with the Seller’s realtor on your behalf. The Contract of Purchase and Sale lists, among other things: your name, the purchase price, your deposit amount, the dates you’ve chosen to complete the sale, terms of the sale, what you expect to be included in the sale (i.e. window coverings, chandelier, etc.) and your subject clauses.
Common Subject Clauses
Common Subject Clauses include, but are not limited to:
- Building Inspection: A must! If the inspection reveals something that will cost you more money than expected to fix or isn’t as it should be, you can request that the Seller repair the defects, you can ask for a price drop, or you can walk away from the contract (since what you offered to buy isn’t what was expected).
- Financing: You have to be able to arrange financing in order to complete the sale (remember, you were only “pre” qualified before, so that isn’t a guarantee).
- Property Disclosure Statement: This document contains the Seller’s disclosure of everything they know about the property. If there are known defects, they must be disclosed. You have to sign this document to state that you approve of this disclosure.
- Title Search: This document outlines ownership of the property, and if there are any charges or liens that need to be released before transferring ownership.
Common Subject Clauses for Condos:
- Strata documents: These documents tell you all about the financial situation of the building, the bylaws, maintenance issues, upcoming building work, meeting logs, etc.
- Parking & Storage Assignment: How these are assigned dictates their use. You need to know this before you buy.
Common Subject Clauses for Houses:
- Oil Tank: Many older homes have in ground oil tanks that are expensive and cumbersome to remove (and not at all necessary in this day and age). Best to be negotiated and removed prior to moving in.
- Zoning: Be sure to check the zoning of the property so you know if you are allowed to add a legal suite, another level, etc.
The Negotiation between Buyer and Seller
The Seller has three options when they receive an offer:
- Accept the Offer: If the Seller signs the contract you present, it creates a legally binding agreement for purchase and sale of the property in question.
- Reject the Offer: The deal is dead and the Seller is not willing to negotiate. You can submit a new offer.
- Make a Counter Offer: If the Seller changes anything on the contact (price, completion dates, etc) then the Seller is making a counter-offer. When you receive this offer, you have the same three options. This process continues until both parties come to an agreement, or one party decides to stop negotiating.
Terms and price will be discussed and negotiated. Once you and the Seller come to an agreement, you have an Accepted Offer!
SIX / Doing your Due Diligence
Now that we have an accepted offer, it’s time for your final due diligence. During the subject removal period – the amount of time you have for due diligence is until the “subject removal date” on the contract – we’ll go through all the property documents, bring in the home inspector (I can give you referrals to thorough inspectors), and you’ll work with your mortgage broker to ensure your financing is officially approved. If you learn anything from the documents, during the inspection or regarding your financing that you don’t like, you can terminate the contract and walk away from the purchase, or ask for a price reduction.
Typical Due Diligence
We’ll both read through the property/strata documents and I’ll tell you anything, good or bad, that I read about, and you can ask any questions. We may have to do some digging to get further information.
Your mortgage approval typically takes a few days to receive. You and your broker will chat about the different terms of the mortgage approval, any issues you need to know about and they may ask for more information from you.
The inspection is a good opportunity for you to get a professional opinion on the quality of the interior and exterior of the property, along with maintenance tips and things to consider in the future. The inspection is also a great time to spend a bit more time in the property to get a feel for the space. I can suggest thorough inspectors to you, or you can find your own, who will come into the property to review all the fixtures, do moisture and infrared testing and give their thoughts about the structure. The results of the inspection will determine if you want to go forward with the contract or walk away from the sale.
During the subject removal period, I also suggest that Buyers spend some time in the neighbourhood if they aren’t too familiar. Go for dinner or coffee nearby, test out your commute, visit the dog parks, find the nearest grocery store, etc.
Spend some time researching the schools and community centres, potential developments nearby, zoning restrictions and anything else that can affect the value and livability of the area.
This is the time where we need to ensure all of your questions are answered, so if you’re thinking about something, even if it’s random, ask!
Keep in mind that if you remove the subject clauses on the contract creating a firm deal, you’ll need to submit the bank draft of your deposit. Ensure these funds are liquid and in an account you can access easily and quickly. If the money is in investments, it may take a day or two to clear before you can remove it so make sure you’re doing what’s needed to have the funds available.
SEVEN / Making your Purchase Official
Once all of your questions are answered and your financing is approved, you can remove the subject clauses on the contract to create a firm offer. All that is required to remove the subject causes is to sign a few forms prepared by me, and submit your deposit! I’ll meet up with you to collect the bank draft. The deposit is held in trust by my brokerage (office) until the Completion Date, at which time we send it to the Lawyer who packages the deposit with the rest of your down payment and mortgage funds and sends it to the Seller to complete the purchase!
Congratulations! You are now contractually a home owner, with the purchase becoming official on the Completion Day and real on the Possession Day!
Have a drink to celebrate!
EIGHT / Preparing for your Move
Now that the purchase is official, we’ll be waiting for the Completion Day and Possession Day! On the possession date at 12pm (or whatever time is in the contract), we’ll meet at the property to ensure everything is as expected (i.e. is it clean? did they leave specific pieces of furniture?). Finally, you can start moving in!
Some of the things you’ll need to do between now and then..
- Work with your Mortgage Broker to get everything sorted – They’ll contact you if they need anything and make sure you have your down payment ready for the completion date.
- Contact a Lawyer or Notary to complete the sale – I can send you referrals for great Lawyers or Notaries. You’ll need to have a quick conversation with them, then they’ll get to work on the file. You’ll probably just have to meet with them once, a few days before the completion date, to sign the transaction documents and give them the rest of the purchase funds via bank draft (they’ll organize the mortgage funds).
- Set up your Home Insurance with an insurance provider. Feel free to look around for multiple quotes. Ensure that your insurance covers all the strata deductibles.
- Inquire with your financial planner with regards to increasing/adding critical illness insurance, liability insurance, life insurance, etc so you can be financially prepared in the event of an unfortunate issue.
- Set up (or Switch) an account with BC Hydro, for your electricity. You can get an account going online: https://www.bchydro.com/index.html
- Set up (or Switch) an account with Fortis BC, for your gas. You can get an account going online: https://www.fortisbc.com/
- Set up your Cable and Internet. Get your appointment time scheduled so you don’t have to wait to have a working wifi network.
- Contact the Strata to let them know that you’re going to be the new owner. You’ll be able to set up an account to automatically pay your strata fees, and you’ll have to book the elevator for any big moves. This is the same company you’ll contact if you ever need to do any renovations, or if there are any issues in the unit that the Strata should handle.
- Change your Address for everything including the CRA, your work, friends & family, magazine subscriptions, bills, banks, credit cards, car insurance, etc. You can sign up for mail forwarding with Canada Post so you don’t miss anything.
- Give your Landlords Notice. Make sure you give your one month’s notice to your current landlords, if applicable. More information about ending a tenancy can be found online: https://www2.gov.bc.ca/gov/content/housing-tenancy/residential-tenancies
- Packing & Moving Services – Book your movers as soon as possible, especially if your move is at the end of the month. Moves are always stressful, but I can give you referrals to companies that I’ve had a good experience with. Keep in mind that movers charge hourly, so the quotes they send are their guesstimate, and likely lower than the final cost.
- Start researching any new furniture purchases. It can take a few weeks for large items, like couches, to be delivered so plan ahead. Make sure you have the proper measurements of the home, doorways and elevator so you know the piece will fit.
NINE / Celebration!
On the Possession Day, you’ll finally get the keys! We’ll do a walk through of the property to make sure it’s clean and the appliances work, and then you can start moving in and planning your first shindig. It’ll be a whirlwind few days for you, but oh so exciting! This is your chance to create a lovely space that inspires and supports your lifestyle with the opportunity to create new routines.
Enjoy the process, try new things, and hang some art! Congratulations 🙂