What can you afford?
There are several key factors that go into determining what you can afford to pay on a property. Before you start looking for a new home, consider the following. How much money do you have for a down payment? 5% 10% 20% or more? Obviously the more you put down, the less you need to finance.
Other things to can affect your financing, are you currently carrying other debts or loans? Do not speculate! Speak to a licensed mortgage broker or your financial institution to get a realistic figure to work with, and most importantly, get pre-approved for a mortgage. A pre-approval is one way to get a better idea of how much money a lender is willing to provide to you.
Where do you purchase?
Having a preferred or target neighbourhood is great but be flexible and willing to look outside that area or in similar neighbourhoods because there might not be a home suitable or perhaps your budget won't allow you to buy in your preferred area.
Other factors to consider are; transit, schools, shopping, etc. These are all factors that determine where to buy. Remain flexible and understand your criteria may change throughout the process.
Working with your REALTOR®
It is important to work with an experienced REALTOR® who is knowledgeable in the area you wish to live in. Have honest discussions with your REALTOR® about your concerns and your needs. Remember, your REALTOR® is bound to act in your best interest. A real estate licensee’s duty to you include (full detail can be found here):
- Avoid conflicts of interest
- Maintain confidentiality
- Follow lawful instructions
- Act only in scope of the authority you grant them
- Discover and disclose relevant facts about the property
Types of Ownership
In British Columbia, there are different types of ownership, understanding them will help your search in your home. Outlined below are the common types of ownership you will encounter:
A freehold interest (also known as a fee simple) is the more precise term for what we ordinarily refer to as “ownership” of a home. The owner of the freehold interest has full use and control of the land and the buildings on it, subject to any rights of the Crown, local land-use bylaws, and any other restrictions in place at the time of purchase.
The strata title form of ownership is designed to provide exclusive use and ownership of a specific housing unit (the strata lot) which is contained in a larger property, plus shared use and ownership of the common areas such as halls, grounds, garages, elevators, gardens, parking, storage area etc. This type of ownership is mostly found in condos, townhouses and duplexes.
This type of ownership is used most often for townhouses or apartments built on city-owned land. It is also used occasionally for single detached homes on farm land, on First Nation reserves etc. You purchase the right to use a residential property for a long, but limited, period of time.
Leasehold interests are typically set for periods of 99 years, you will only be able to purchase the remaining portion of the lease period. Of course, the shorter the remaining portion, the less you, or the person who eventually purchases from you, will be willing to pay for the leasehold interest.
Leasehold properties are not subject to the three day rescission period provided to buyers.
In the cooperative form of ownership, each owner owns a share in a company or cooperative association which, in turn, owns a property containing several housing units. Each shareholder is assigned one particular unit in which to reside.
Searching for a home
The time has come for you to begin your informed search for the "right" property. You have all the information you need to make a rational decision rather than an emotional one. You know how much you can afford, and you have a good idea of what and where you want to buy. While you use our awesome search function to find your home, here are a few things to keep in mind:
- What is the zoning?
- Does the property title have any restrictive covenants?
- Does that property title show any easements?
- How much are the property taxes?
- How much are the strata fees?
- Does the property have an existing warranty?
- What items are included with the property?
- Any upgrades done to the home, with or without permits?
- Is that rental suite authorized?
- Any rental, pet or age restrictions in the building?
Take notes during your search or while viewing the homes, it's easier to refer back to them later.
Making an offer
"We want to make an offer!" Once you have found the property you are interested in, your real estate agent will start to prepare your offer.
An offer is typically prepared on a standard Contract of Purchase and Sale. You and your real estate agent will go through the contract together and ensure that all the terms added to the contract reflect your intentions. They will also ensure that you understand the contract before you sign it.
The written offer will contain some standard information like your name and address, and will also include any terms and subject conditions which are important to you. Subject conditions may include, but not limited to; subject to financing, inspection, review of strata documents and checking title, review property disclosure statements, insurance etc.
Be fully aware that once you sign this document and the seller also signs it, a legally binding contract has been formed. Legally binding means both you and the seller will be bound by the terms of the contract and must each perform your respective obligations as stated within that contract. Believe it or not, even if a contract contains subject clauses, it is legally binding as soon as both the buyer and the seller have signed it.
The purpose of a subject clause in an offer to purchase is to set out a specific condition which must be fulfilled in order for the sale to go through. Subject clauses must be carefully and precisely worded.
There can be many subject clauses in a single offer to purchase, however, the fewer you put into an offer, the more serious you seem as a buyer and the better the chance is that your offer will be accepted. Remember that you are, in effect, asking the seller to take the home off the market during the period while you are attempting to fulfill and satisfy the conditions you have set.
Some typical conditions you might wish your purchase to be “subject” to include:
a satisfactory building inspection (by licensed inspectors)
obtaining financing approval
review title search
review a property disclosure statement
obtaining an insurance quote on the property
if the home is a strata lot, review of all relevant strata documentation, engineer’s reports, strata insurance coverage etc.
When you place subject clauses on your offer to purchase, you are required to use every reasonable effort to see that the conditions are satisfied. It is important to know that subject clauses are not “escape” clauses that allow you to avoid your legal responsibilities in the contract. Once you have fulfilled the conditions, written notification should be given to the seller that you are removing the subject clauses, and the sale will proceed.
Completing your transaction
The Contract of Purchase and Sale will state the completion day for the transaction. On that day, legal ownership will transfer from the previous owner to you in exchange for the money you are paying on the home. You will be able to move in on the possession date stated on your contract. The completion and possession dates are not necessarily on the same date. There will also be an adjustment date in the contract which your lawyer or notary will use to adjust for property tax, utilities, strata maintenance fees etc.
It is normal practice for the buyer to engage a lawyer or notary public to prepare the documents necessary to transfer the legal ownership.
Typically your lawyer or notary will ask you to come into his office to sign all paperwork a few days before the completion date. You will be asked to bring the remaining funds for the purchase to his office in the form of a bank draft.
After the title has been registered in your name and the money is now with the seller’s lawyer, you can arrange for possession and key transfer to your new home!
Additional Costs You Will Incur
- Legal and/or Notary Public fees
- Property Inspectors
- Property Insurance
- Strata Move In/ Move Out Fee
- Moving Fees
- Repairs and Renovations
- Rescission Fees*
* As of January 1, 2023, buyers in the province of B.C. are entitled to a period of three days after their offer is accepted to rescind their offer to purchase the property, subject to specific exemptions. When an offer is rescinded the buyer is obligated to pay a fee of 0.25% of the offer price to the seller.