As a full service real estate agent, Ronald takes every effort to make the buying process enjoyable and stress-free, from my first consultation with you, to negotiating the purchase of your new home on your behalf.
Ronald has the kill and confidence, expertise and backing to handle all the important details of acquiring with you the best home available from the beginning of our search, through viewing each home, preparing a realistic comparative market analysis (CMA) of the marketplace, putting in an offer and then finally negotiating and closing the deal.
The neighborhood you choose to live in usually has a lot to do with your preferred lifestyle.. For example if you work in a town like South Surrey, White Rock, Murrayville or Langley City and want the somewhat urban lifestyle with most amenities within walking distance, then homes in these neighborhoods and many others in between will most likely be suitable. Alternatively if you love that open free country feel: South Langley and even parts of Brookswood might suite your needs. Langley, Maple Ridge, Aldergrove and Abbotsford neighborhoods tend to be more attractive to first-time buyers or those with young families. Having mentioned all these specific areas above there are many houses and communities in between. There are many different aspects to finding your right neighborhood. Use some of the following guides when deciding what's best for you: Parks and green space, crime rate, future construction in the area, overall ambience, traffic, transportation possibilities, cultural diversity, languages, local government, property values and future potential of the neighborhood. Also try to figure out what amenities you wish to be within close proximity to, and which would you rather steer clear of. Many neighborhoods such as Murrayville, Langley City and South Surrey offer the following amenities: doctors, dentists, hospitals, freeway/highway access, airports, parks, events centers, fire department, places of worship, public transportation , recreation, shopping, schools within walking distance or school buses, special programs, sport venues, and employment opportunities.
To find out about some of these factors in a specific neighborhood, you can explore Walkscore (walkscore.com), or Google Maps (maps.google.com), neighborhood specific websites, or go one step further and take a drive and walk around the neighborhood on a busy day and evening to get a good feel of the neighborhood.House characteristics
What are the characteristics of the home you are looking for? Is it large or small? How many bedrooms and bathrooms do you need? Do you prefer modern or classic with potential to do your own Reno's. Do you prefer a house with small private rooms or an open living concept?
What about lot size and landscaping or deck space for that hot tub? Do you need a garage, or do you need a shop? In condominiums common areas, features and amenities vary greatly and this will affect your lifestyle and also impact strata fees. Do you have a simple lifestyle desiring minimal perks and low fees? Or are you willing to pay a little more for extra features?
Are you willing to consider houses that need upgrades? Houses that need renovations and/or replacements are often available at a better price for those buyer’s willing to upgrade after purchase.
A good place to start would be to make a list of these key aspects before starting your search. Make a wish list and divide it into two sections: wants and needs.Types of housing
- Duplex A duplex is an attached house that can come in a pair of either one above the other or side by side. A fourplex can be four side by side or 2 duplex homes one above the other.
- Townhouse A townhouse is typically an attached home which offers less privacy than a single-family detached home, but still provides a separate outdoor space know as limited common property and is an excellent option for first time buyers, those on a budget or if you want to live and thrive in an urban environment.
- Semi-detached A semi-detached home is simply joined by a common wall. It can offer many of the advantages a single family detached home can, but it is usually less expensive to buy and maintain.
- Carriage house The carriage house or coach house is a private dwelling usually next to or behind a main house and is commonly built above a single or double garage. In most circumstances it is a smaller home, and can be considered as a mortgage helper.
- Manufactured home A manufactured home is one that is factory built and can come as a single or double wide They are usually considered to be a single family home and may be transported to your chosen location and placed on a foundation.
- Condo/Apartments A condo / apartment building is a usually a concrete tower with several storey's split into individual suites with shared common areas and is considered strata-ownership.
- Low-rise apartment A low rise or walk-up apartment style building is a multi-story apartment building that simply put does not have an elevator.
While you are looking for a home it is very important to consider its age. The age of a home can have influence on its design, condition and value . Also consider: has it been well taken care of or does it look tired or run down. This may make it more or less appealing to you as a buyer, depending on your needs and goals.New home
There are certainly many pros of purchasing a new home or condo in the building phase: you can often specify the interior design color or decor or upgrade appliance to eco smart standards which meet or exceed your taste. New development or homes also have the great advantage of being built to modern codes and standards. And if you are building your own home you can implement all the eco smart and sustainable living aspects your budget can afford. Ultimately maintenance costs will be lower as everything is new and items such as appliances will generally be covered by warranty. “2-5-10” new home warranties offer you that peace of mind by protecting against major system failures and potential structural problems for a set period of time, typically 2-5-10 years.
Although there are pros to buying a new house, the flip side is that there will most certainly be cons. When purchasing or building a new home, you will most likely be paying a higher purchase price. And while it may sound wonderful to move into a newly developing neighborhood, it may not be fully developed, meaning there will be ongoing construction for the next few months or years, and there may not be any schools, shopping and service amenities close by. Having to deal with ongoing road construction may become part of your daily life.... Eventually this may not be the case but it's something to think about. Also, you will have to pay Good and Services Tax (GST) on a new home, although if you fall into this category there is a rebate if the purchase price of the home is less than $450,000.Resale home
Buying a used or resale home can be much less stressful than building a new house or buying a new home that has not yet been built. With a used resale home, the long and short of it is "what you see is what you get". The neighborhood is typically well established with all amenities and transportation fairly close.. There is no GST payable on used resale homes. Having said that, you might want to make ecosmart changes, retrofits or upgrades to the existing home to suit your style, taste or needs and any major renovation can be quite costly and expensive. Be sure to talk to your lender and factor in these costs, and have a budget in place before you make the offer.Building a home
If your dream comes true and you have the opportunity to build your own home you can customize anything to your choosing and exact standards and needs. This option offers flexibility, although it can be costly to make changes to design and structure along the way. Bear in mind that while building a new home from the ground has many advantages, if you're not prepared it has the potential to cost a lot more time, money, energy and stress than you may have thought.Timing of purchase
Supply and demand largely determine house values within a housing market. Knowing what type of market an area is currently in will help you evaluate if this is the best time to enter into homeownership.Seller's or buyer's market?
The real estate market is volatile and constantly changing. Please feel free to contact me to explain whether the neighborhood you live in, or want to live in, is currently in a buyer's market or a seller's market.
When the real estate market slows down the average selling time for a home can take much more then several months. When this occurs it is considered to be a buyer's market. There becomes more product available on the market for a much longer period of time and because of that the inventory is of course high and the buyers demand is low. Prices and terms reflect those conditions favorable to the buyers.
When the economy is booming as well as the real estate market homes may sell in just a few days. In some cases a multiple offer situation might occur and the home may sell for more than what the sellers were originally asking. This happens when there are more buyers than product on the market. This is considered to be a seller’s market and prices and terms will reflect those conditions favorable to the sellers.
Beautiful British Columbia now know as the "best place on earth." The Lower mainland and Fraser Valley are growing everyday with eco smart and green initiatives, and because of its healthy future it is one of the more desirable urban / suburban places to live in the world. (for that reason alone it has a market that is truly special and unique.)
I specialize specifically in the Lower Mainland and the Fraser Valley real estate market with all its unique features and attributes. I can advise you so that you as a buyer you can maximize your possibilities and secure the best possible home in the best possible neighborhood at the best possible price.
Fraser Valley lifestyle
The Fraser Valley is known around the world and by tourists that come every year for its lush natural beauty, friendly faces, diverse cultures and sights, and the many outdoor activities that are available, such as hiking, RVing, camping and fishing Whistler, where we hosted the 2010 winter Olympics, is just a short trip away, or catch a quick ferry over to our gorgeous Vancouver Island.
Knowing and understanding your goals as a potential home buyer is imperative.
Buying a home is certainly one of the biggest and perhaps most important purchases of your life. Whether this is your first time buying or even as an investor it is without a doubt a major purchase. People have many different reasons for buying a home, therefore I would urge you not to jump into buying a home without help or guidance from a real estate professional. At the very least contact me to point you in the right direction in regards to seeking legal independent advice.
advantages of homeownership
Financial investmentIn a hot market when housing prices rise, it is possible that your home could act as an investment due to increased house value over time. When you own your own home this allows you to create equity in your home and may often qualify you for tax breaks.
Freedom and adaptabilityOne of the most wonderful things about being a homeowner is the freedom you have to make your home "your home". You have total control over the decorations to the renovations and meeting your personal taste, style or needs.
Security and permanencyMoving into a neighborhood or community and owning your own home allows you to settle into one place and gives you a sense of belonging and personal security in that neighborhood and community.
Pride of ownershipWhen you become a homeowner and do all the things you want to do to your home and property you can take pride in your accomplishment.
The disadvantages or costs of homeownership:
Purchasing CostsWhen purchasing a home there are many costs involved, some of which may include your initial down payment, lawyer or notary fees, property transfer tax (PPT), the actual mortgage payments and mortgage and home insurance which will tie up your money when you become a homeowner.
Maintaining your homePart of homeownership is keeping your house and/or grounds well manicured, up to date and in good shape. This not only takes time but also money and energy.
Home Ownership CostsIt is possible that your mortgage payments can be made monthly, biweekly, or even weekly. These payments may be more than what you would pay for rent per month. There are also the costs of maintenance insurance and property taxes.
Greater responsibilityYou are 100% responsible for your monthly payments, repairs and maintenance to your home.
These include freehold, freehold strata, leasehold or cooperative ownership.
FreeholdThe highest form and the most common type of ownership is freehold. Owners have the right and freedom to make changes to their home or property as they see fit, although these must comply with the local bylaws and building codes.
A detached home is the most common type of freehold property, but there are many condo's that are also sold as freehold property, although this differs slightly.
Freehold StrataAs a freehold strata owner you own your home and may do any renovations design changes or alterations to your home but only to the inside. The rule of thumb is you are not allowed to change anything on the exterior. Having said that, always check before you make an offer and see how strict the strata really is, because some strata cooperation's may allow you to do some minor changes.
LeaseholdIn a leasehold property the buyer agrees to purchase the right to occupy the land or the building for a specific length of time contained in a lease contract.
CooperativeA cooperative, or a “co-op,” is a legal entity that owns a property which consists of one to four residential buildings. Each owner of the co-op becomes a member in the co-op and has the right to occupancy to that specific unit. There are several Co-op buildings in the Fraser Valley
If you are serious and really want to move forward in purchasing a home, the first and most important step is knowing what you can exactly afford.
The majority of people will require a loan of some sort from a lender in order to purchase a home. This type of loan to purchase a home is called a mortgage loan.
A mortgage loan is used to finance the purchase of property. The lender will use your home as collateral for the loan, meaning that if you fail to make several payments the lender can take back the home to recoup the mortgage loan. Mortgage payments are typically repaid monthly but can also be paid by-weekly or weekly, during the specified term of the loan. Lenders or banks don't always want you to know this simple fact but the faster you can pay off your loan the less interest you pay and more money you save.. Always read the fine print and ask the lender: is it possible to make a lump sum payment in a closed mortgage loan? and if so is there a cap on that payment? Also be sure to ask if there are any penalties and if so what are they specifically.
Typically you will find that mortgage payments are almost always a blended mortgage, meaning the mortgage payments include the principal (the physical amount borrowed from the lender) plus the interest of that mortgage (the cost for borrowing the money). It is also possible that mortgage payments may also include pro-rated property taxes.
- If you are fortunate enough to put a down payment of 20% towards the purchase price of your home, the Lender will most likely give you what's called a conventional mortgage.
- If you do not have 20% to put down toward the purchase price of your home the lenders or banks consider that then to be a high-ratio mortgage. This kind of mortgage loan usually requires mortgage loan insurance, And will ultimately cost you more as a home owner paying off your mortgage.
- It is important to understand that banks are not your friends, they are a business. Therefore that mortgage loan insurance is designed to protect the lender, and by law, most Canadian lending institutions require you to carry it, (insurance that is) especially if your down payment is below 20%. Because a mortgage is insured, if the borrower (you) fails to pay the mortgage, the lender is paid back by the insurer. The cost for this type of insurance is in the form of a premium (more money spent) and can be paid in a single lump sum or it can be added to your mortgage and included in your monthly payments.
- An Open mortgage is a mortgage that is flexible, basically meaning that you can repay in part or in full at any time without penalty, but the interest rates are higher than a closed mortgage.
- Closed mortgages offer the more desirable low interest rates and the fixed payments, (so you know every month what your payment will be) but they are inflexible. Prepayments and lump sum payments are not usually allowed without stiff penalty.
- Although not as common, split mortgage or a multi-rate mortgage allow you to arrange part of your mortgage at one rate and term; and the another part at a different rate and term.
- With a fixed rate mortgage, it offers a locked-in interest rate that does not change or fluctuate during the life of the loan agreement.
- A variable rate mortgage means that the interest rate can and will change and fluctuate up and down to whatever the market rate changes to. While monthly payments stay the same, the ratio of the payment that goes toward the principal and interest rate will change.
- Protected (or capped) variable rate really just means that there is a set limit on how high your interest rate will rise. typically if you receive this kind of mortgage you will be charged a premium.
- Adjustable means exactly that, that both the interest rate and the mortgage payment can fluctuate based on current market conditions.
Be aware and conscious that there are several smart ways to reduce your mortgage, such as making a larger down payment or making lump sum principle payments, deciding to choose a shorter amortization period and, if possible, increasing your regular monthly payments. Doing one or all of these can significantly reduce your mortgage and interest on that mortgage.
Getting approved for a mortgage
If you have finally made the decision and are ready to search for a home you will most likely need a mortgage. Your first step should be to do some due diligence and select whom you would like to use as a lender in advance and arrange for pre-approval. Your lender at that time will evaluate all aspects of your financial situation and establish the amount of mortgage you can afford ahead of time, making the buying process much more pleasant and direct.
Who should you really use? a bank, lender or broker?
There are many avenues an individual can choose from if you need a mortgage loan: there are your typical banks and credit unions, trust companies, for some their pension funds, and independent mortgage brokers. Always do your own due diligence; work off of references but always investigate all institutional options because every company is different and although the rates maybe similar their terms and conditions may not be.
Another option to think about is contacting an independent mortgage broker to do the majority of the leg work for you. Since an independent mortgage broker does not work for any specific lending institution, they will shop around for the absolute best mortgage rate that suits your needs.
A second mortgage is simply another mortgage loan against an existing property that you currently own. This mortgage loan will be held in addition to the principal, and the interest of that second mortgage is owed under the first mortgage. A second mortgage will traditionally have a higher interest rate and a much shorter amortization period.
Things your lender may ask for during the pre approval stage:
You will need to provide your lender with personal information, some of which may or may not include:
- Your bank statements,
- The last three years of notice of assessment,
- The last two years of your T4 and or T4A,
- The source of your income,
- The last 3 months of your paystub,
- A letter from your employer explaining the details of your job and confirmation of your salary or hourly rate,
- Proof of any financial assets,
- Any RRSP's,
- Source and amount of your down payment, and if it is a gift the "gift letter" stating as such, plus proof of source of funds for the closing costs.
Once you are pre-approved for a mortgage, the lender will give you written confirmation for a fixed interest rate, valid only for a limited time, typically 2-3 months or more. Getting a pre-approved mortgage makes the search for your new home much easier on you and a lot less time consuming for all parties involved because you now have a realistic goal and know what you can afford and where. Just remember that even after all that work and pulling the documents together for the pre approval, the approval you received is not set in stone. You must still meet with your lender during the final conditional offer period to get the final mortgage approval. At that point when you sit with your lender he or she will ask you for the property listing and signed Offer of Purchase and Sale and finalize everything.
When you have ultimately decided to begin the search for your new home, please feel free to give me, Ronald Klarenbeek, a call. It is important to consider your time frame in buying your new house, the valuation of homes in the neighborhood(s) that may interest you, as well as all the comparable homes that have recently been sold.
How much time do we actually have to purchase?
Purchasing time frame
First, identify what homes are available in the area.
It is extremely important to compare the purchase price of similar homes that have recently sold in the area to give you a greater understanding in value.
The purchasing process can be very different depending on if you are in a rush to buy a home, or if you are in no hurry.
Like anything else, it is very important to have a solid selection to choose from while looking for a home. especially if the property or home is completely unique on its own.
Aspects used in the market analysis of a home may include such things as:
location, neighborhood, size of home and property, characteristics of the property, age of the home, construction and style of home, ocean view, mountain view, city water or well, if it is on septic and more.
- Outside condition
Roof, gutters, siding, paint, drive way foundation etc
- Interior condition
what does the paint, carpet, windows, doors, ceilings and appliances look like? Does it look well cleaned and maintained or does it look tired.
- Structural integrity
does the home have uneven floors or cracks in the foundation; are the windows even?
- The mechanics
How is the heating, plumbing and electrical?
- Energy efficiency
What is the heating source and what will the utilities cost me per month or per annum to use?
take your time here because you might find in an unfinished basement that there is evidence of a cracking foundation or flooding, maybe mold or water damage?
- Water pressure in the home
This is quite often overlooked, but it is pretty important, how do the toilets flush and water pressure in the kitchen and showers and outside hoses?
Is there any sign of insects infestation or raccoons, squirrels, birds?
- Zoning and new developments
When considering buying that special property be sure to go to the city to see if there is a new development that might block your gorgeous view, or if you want to build a coach house that the bylaws are still in place and that you can build your dream shop.
Comparing a home that you are interested in against others in the marketplace is a great place to start when considering buying that property. The easiest way to compare potential houses is to make a pros and cons list and break down your choices into a chart, by doing this you can compare all aspects of each house and decided which house fits your needs the best.
Now that you have found the home you want, the next step is to make an offer on that house. This can be both a fun and stressful thing, but I am here to help! If I am given the opportunity to act as your representative I can certainly helpmake the process of presenting the offer as , fun, stress-freeinformed and successful as possible. First step is writing the offer. This includes many things, some of which are of course the offer price, when you want to move in, things you would like the current home owner to leave behind (if anything), the subjects clauses, warrants and or guarantees. Also consider how long you would like this offer open for. See below for contract glossary.
How to make an offer
We need to present the vendor/seller with what's called a Contract of Purchase and Sale: The offer. There is probably no doubt that your home is one of the biggest investments you will ever make so it is imperative to have a skilled, full service and qualified professional, such as myself, to work closely with you and your lawyer/notary.
The Contract of Purchase and Sale is a legal contract and must be carefully considered and prepared in order to get you the best deal as possible in the current real estate market.What exactly are conditions or subjects?
Subjects are simply conditions or terms which are included in the contract of purchase and sale before I present it and the contract becomes final. In most cases it is imperative that subjects or conditions are added to the contract but I can explain this in detail and the potential consequences if subjects are not included.
The Typical subject you see included in the contract of purchase and sale are the home inspection, property disclosure, title search, approval of financing, and property insurance. (all applicable strata documents). Remember every deal is different and therefore could include more subjects than the ones mentioned.
As important as these subjects may be, if there are multiple showings on the particular house you are interested in and there are too many subjects you risk the chance that you might lose the house you want. The cleaner or more appealing you can make your offer look the better. Talk to me for details in regards to what your next steps should be to get a successful and accepted offer.
Several responses you might get after we place the offer:
- One response can be accepted as is, meaning the deal is complete once it is signed by the vendor/seller and at that point the offer becomes a legaly binding contract. You, the buyer, then begin to work on the subjects.
- A second response could be a counter offer, meaning the seller has made changes to your offer original. Usually these changes include changes to the price, or perhaps the closing dates (completion and possession) or they have removed or added some conditions. You may accept the counter offer by signing the document, which would then finalize the deal. Alternatively, you are free to make another counter offer back to the seller. Throughout this process I will explain every detail to you thoroughly, and remember that anytime you "open up" a contract or make any changes to the contract the other party has the opportunity to back away or walk away from the deal and accept another offer.
- Another response could be to simply reject the offer and the sale will not go through.
When the supply of homes is limited, and the demand from buyers is high, sellers may receive multiple contracts or offers. Multiple offers tend to push home prices higher than the market reflexes, and for this reason it can create stress for the buyer especially if you have high hopes on a particular property. I have great strengths and strategies to make your offer stand out and be appealing and competative with the multiple offers if not better.
Accepting an Offer As previously mentioned whenever any party makes any change to the contract of purchase and sale, the other side is 100% free to accept or reject the offer, or they can counter again. The contract of purchase and sale only becomes a legally binding contract when oneparty actually ends up signing the unconditional acceptance or changes of the buyers or sellers terms.
Once the contract of purchase and sale has been accepted the only way for the purchase/sale to go through is toremove your subjects or conditions put on the contract of purchase and sale before the specified date, which is typically 7-10 days. If you need help I will be there to help facilitate and coordinate any appointments for you.
Withdrawing an Offer is certainly an option if an emergency or something else pressing comes up, but remember you can only withdraw an offer right up until the moment it is accepted. I can explain in detail more about this and certain circumstances or options you might have.
A firm offer is when all subjects have been officially removed by the buyer. The next step would be to contact your lawyer/notary and set up an appointment; I can help direct you if you don’t have a lawyer or notary. Then we wait until the completion date as specified on the contract of purchase and sale. see buyers completion
Understanding the Completion stage
Once your offer has been accepted and subjects have been removed there are several steps that need to be taken before you take possession of your new home.
When the subjects have been removed; on that day or sometimes 24 hrs later, you will need to arrange payment by either a wire transfer or certified cheque of the deposit amount as outlined in the Contract of Purchase and Sale. These funds will be held in trust by my office Royal LePage Northstar until the completion date.2. Mortgage requirements
Now that the deposit is in, it is time to meet with your lender and finalize you mortgage. You will need to provide your lender with a copy of the Contract of Purchase and Sale. You might need to take care of certain conditions promptly, such as arranging an appraisal of the property value, if that is a condition of financing or sale, but usually that is taken care of during subject removal.
The Home Buyer Plan (HBP) allows you to withdraw up to CAD $20,000 from your Registered Retirement Savings Plan (RRSP) to purchase or build your own home. If this is of interest to you, please consult with your financial advisor for more details on HBP when you discuss your mortgage requirements.
3. Conditions and subject clauses
As a buyer, you must be satisfied and remove all and any subject / conditions that you wrote into the Contract of Purchase and Sale by the stated date in the contract or the contract will terminate. This may or may not include a home inspection, obtaining financing, approving strata meeting minutes, insurance, checking title and or anything else you feel you would like to include. Typically subject or conditions are in place for 7-10 days which is enough time to be satisfied with and remove said subjects.4. Home inspection
A home inspection, while not mandatory, is usually written into the buyer’s offer as a subject. A home inspection enables you to make a more informed decision about the condition of your purchase property and is therefore highly recommended. If you do decide to do a home inspection the choice is yours but rather than hiring a "home inspector" I would recommend calling the professionals. Start with looking at the better business bureau (BBB) for individual trades such as an electrician, plumber, roofer, building or structural engineer. Then call for an estimate and have them look at any specific concerns you might have. (Estimates are usually free or they may charge a standard service or call out fee).5. Insurance
Like anything of value you want to protect your investment, so be sure to purchase home or townhouse/condo (content) insurance in advance so that the insurance policy will take effect on the completion date.
You will need to select a lawyer or notary; when you know who you will be using my office will provide them with a copy of the signed Contract of Purchase and Sale. A few days prior to the completion date the notary office will call and arrange a meeting to sign the necessary paperwork.7. Completion Day
On the actual completion day, these are the things that will take place:
- The Legal property ownership is transferred into your name(s).
- The mortgage amount is provided to your lawyer or notary by your lender.
- You will receive the statement of adjustments with costs payable, including: the balance owing, any legal fees, the property transfer taxes and other completion costs.
- Your lawyer or notary will pay the seller and complete all the necessary documents.
- Your new home will be registered at the Land Titles Office in your name(s).
On completion day, you will need to bring the following to the office of your notary or lawyer (if they do not already have it):
- A bank draft to pay for the remainder of the down payment, if required.
- A personal cheque to pay any legal fees to your lawyer or notary.
- Photo identification, such as a driver’s license, passport or resident’s card.
- A copy of the Contract of Purchase and Sale.
If this is your first-time buying a home, or it is all just a little but daunting or stressfull, I would be more than happy to accompany you to your lawyer or notary.
This is the day you can move into your new home. On possession day, I will arrange to pick up all and any keys, fobs, garage door openers etc. and meet you at your new property. Together we will do a final inspection of the property to make sure that everything is as it should be, and then you may begin to move in. Prior to your move in day you might want to review my move in guide, to ensure you have all areas covered.9. Completion costs
The fees owed by the buyer must be paid at completion, and are known as the "closing costs." These may include any or all of the following:Any adjustments
Adjustments are costs that the buyer incurs to reimburse the seller at the time of possession of the home. These may include the property taxes (if the seller has prepaid for the year then the buyer will reimburse the seller for the portion of the year you moved in and he moved out.), utilities, strata fees and ongoing service contracts. On the adjustment date, as determined in the Contract of Purchase and Sale, simply put the buyer credits the seller by paying the agreed-to amount in full. The lawyers and notaries pay special attention these details.Appraisal
If your lender requires an appraisal of the home, they may have their own appraiser but you may need to arrange and pay for a professional appraisal of the property yourself prior to them approving your mortgage . Appraisal fees vary from $150 and upwards. This is typically done prior to or during subject removal.Goods and services tax (GST)
Goods and Services Tax or GST is payable on the purchase of a new or substantially renovated home. The amount payable is 5% of the purchase price of the property.
Remember that the New Housing Rebate will reduce the total amount of GST payable by 36% if you intend to make your new home your primary residence meaning that you live there, along with satisfying these requirements:
- The purchase price must be $349,999 or less to qualify for the entire rebate.
- To qualify for a partial rebate, the purchase price must be between CAD $350,000 and CAD $449,999.
The net amount of GST payable is due at the time of closing.
The Residential Rental Property Rebate will also reduce the amount of GST payable by 36% if you intend to rent your property to tenants in addition to satisfying the following requirements:
- The purchase price must be CAD $349,999 or less to qualify for the entire rebate.
- To qualify for a partial rebate, the purchase price must be between CAD $350,000 and CAD $449,999.
- The rental unit must be a ‘qualifying residential unit’, meaning a self-contained unit which includes a private kitchen, bath and living area.
- The unit must be the primary residence of the tenant and rented for at least one year.
You can apply for the Residential Rental Property Rebate after the full amount of GST is paid at closing. In addition, supporting documents will be required which include the Statement of Adjustments, Contract of Purchase and Sale, lease agreement and insurance policy.
The New Housing Rebate and the Residential Rental Property Rebate are not available if the purchase price of the property is $450,000 or above.
PLEASE be aware that the above information is subject to change at any time. For full details visit the Canada Revenue Agency.Home Inspection Fee
The home inspection needs to be taken care of before closing on a new or resale property. Be sure to arrange to have your new home inspected by a certified trade professional or home inspector in order to make a more informed decision on the quality of your purchase and protect your investment. A home inspection should take anywhere from 2-5 hours and be sure to budget from $500 and up.Insurance
Prior to completion, it’s critical for you to get adequate and appropriate home and content insurance to protect your investment. Because there are several different types of insurance to consider I will be happy to direct you to the right people to talk to.
- Condo/content insurance
Typically a strata corporation provides insurance for the overall structure and common areas of a condo or townhouse building. However, it is recommended that you carry content insurance to protect the replacement cost of your personal belongings such as your jewelry, electronic equipment, tools etc. The cost will of course vary depending upon the value of thebelongings you claim.
- Home insurance
Standard home insurance provides coverage for detached homes and content, including personal belongings. Almost all lenders require you to carry home insurance as a condition of your mortgage. The cost will vary depending upon the value of your home, its contents there in and your insurer. Get several quotes from reputable insurance companies prior to purchasing and be sure to have your home insurance in place by the date of completion.
- Mortgage insurance
If you cannot come up with more than a 20% down payment and are borrowing more than 80% of the purchase price of your home, you need to obtain mortgage insurance from the Canadian Mortgage Housing Corporation or (CMHC). For more information and current premiums, please visit cmhc.com.
- Property title insurance
Title insurance is not mandatory but it protects you as a buyer/owner against potential fraud and forgery, encroachments onto neighbouring properties, builders’ liens, zoning restrictions, errors in surveys or other official public records, and known and unknown defects which could adversely affect your ability to build a shop or to sell your property l in the future.
The lawyer or notary you hire will help assist you in all or most of these steps and the legal documents required for the sale of real estate property. Legal fees also can vary anywhere from $600.00 and up, plus GST and disbursement costs. Some lawyers and notaries include the GST, but again, call around to get the best deal and hire someone you are comfortable with. I will also be happy to help find you the right lawyer or notary.
Your lawyer or notary will arrange for the transfer of the purchase money to the seller from your lender. Your lawyer or notary will also prepare the Statement of Adjustments which catalogs the costs payable at completion. Finally, the disbursement costs, which coverthe simple things such as the faxes sent, the phone calls made and the mailing fees will be cataloged and itemized; this total will vary from approximately $250 (total) and up.Property Transfer Tax
Property Transfer Tax or PTT must be paid to the government when real estate is purchased. Please contact the Property Transfer Tax office in Victoria at gov.bc.ca/sbr for complete details.
The total amount of tax payable in British Columbia is 1% on the first CAD $200,000 and 2% on the remainder. This tax applies to any real estate, whether residential, commercial or industrial.
To give an example, to calculate the Property Transfer Tax (PTT) for a home purchased at $374,000:
1% x $200,000 = $2,000
2% x $285,000 = $5,700
Property Transfer Tax = $7,700
If you are a First Time Home Buyer, you may be able to apply for an exemption to PTT if the following requirements are met:
- The purchaser is a Canadian citizen or a permanent resident of Canada and resided in B.C. for 12 consecutive months immediately before registering the property or has filed two income tax returns as a B.C. resident during the last 6 years.
- The purchaser has never bought or owned an interest in a property or in a principal residence anywhere in the world at anytime.
- The purchaser has never received a first time home buyer exemption or refund.
- The purchaser must move in within 92 days of the date the property is registered and live in the property as the principal residence for a minimum of 1 year. To keep the exemption, there are additional requirements:
- To obtain full exemption, the fair market value or purchase price of the property must not exceed CAD $425,000. A partial exemption is available for homes priced between CAD $425,000 and CAD $450,000.
- The land must be 1.24 acres, 5018.102 square meters or 54'014.4 square feet or smaller.
- The property will only be used as a principal residence.
Use This formula to calculate the amount of tax payable on homes purchased between $425,000 and $450,000
Amount of PTT x ($450,000.00 – Purchase Price)
For example, a home is purchased for $430,000.00. The partial exemption would be $5,280.00 and the total Property Tax payable is $1,320.00.
$6,600 x ($450,000.00 - $430,000.00)
$6,600.00 - $5,280.00 = $1,320.00Survey Fee
In order to obtain a mortgage your lender may request to have an up-to-date site survey of your property on file. A property site survey confirms the lot size and dimensions and identifies any encroachments. If you did not receive a copy from the seller, you will be responsible for the costs to have a survey completed. In most cases if the city has a site survey on record they will give you a copy but if you need to get one done a surveyor will charge anywhere from $150 to $350 and up, depending on the size of the property.Utilities
Prior to possession day, you will need to contact your utility companies such as your telephone, cable and internet provider, and your hydro and gas to arrange for service. There may be fees associated with setting up a new account or transferring existing ones, and it is best to contact your providers in advance.5 Closing
Once you have removed all your subjects and conditions try to be prompt and make an appointment with a lawyer or notary as soon as possible.
The offer has been accepted; the subjects have been removed; and the lawyers and notaries have taken care of completion. Now it is time for possession- the big take over!Typically speaking, the completion day is one day before you take possession. From the time you write the offer and its acceptance the completion and possession day generally are four to eight weeks away. So it’s best to prepare for the move as soon as possible. Please see my Moving guide.
- Measure rooms in new home for reference
- If renting, notify landlord that you are moving
- Notify utilities and transfer service to new home for phone, gas, electric, water and cable
- Forward mail with Canada Post
- Hire movers or rent moving van
- Insure belongings for move
- Purchase property insurance for new home