How Does a Realtor Help?
Market Knowledge
In a fast-moving market like ours, total immersion and constant exposure is the only way to keep on top of changing property values and Buyer expectations.
experience
REALTORS® are trained marketing professionals. Practice makes perfect, and we agents actively practice our craft day-in-and-day-out in the midst of the market dynamic.
independent advice
As a caring expert who is emotionally separate from your home and family I can provide the kind of independent advice that will help you make the best decisions.
negotiation representative
For the same reasons that kings and presidents use "negotiation by proxy" so should a home buyer or seller. When negotiating on your behalf I can be more aggressive and less emotional, and still give you the final say – separated from the heat of the moment.
Comfort & trust
I'm a trained and certified specialist, a member of a professional organization, selected & backed by a Broker in your community, informed and insured and here to help when you're thinking of a move.
Estimating Purchasing Costs
There are always additional costs to the buyer of a property, beyond the negotiated purchase price, to meet the legal requirements of the transaction and ensure the property is properly transferred and registered in the new owner's name. In particular circumstances there may be additional costs, but the following list shows the customary costs applicable to the purchase of a home.
Interest Adjustment – The mortgage interest payable between the time the mortgage money is advanced to the lawyer and the date of your first regular mortgage payment.
Monthly Strata Fees – In the case of a strata unit such as a condominium or town-home.
Deposit - Usually 5%-10% of the purchase price; required "UPON SUBJECT REMOVAL". The deposit is held in trust by your realtor's company and applies as part of the payment for the home on the completion of the sale.
Home Price - The balance of the negotiated purchase price, less the mortgage amount and deposit (and including all Adjusted Costs and HST if applicable) must be paid in trust to the conveyancing lawyer usually a day or two before closing date.
Moving Costs - Check with two or three movers to get competitive rates; be sure to understand the exact services offered (packing, insurance, storage, etc.) as well as cartage.
Home Inspection - The recommended in most cases; about $700-$900 depending on the size of the house and the company you choose. Best to phone around or ask your Realtor for the names of Inspectors he has used.
Appraisal - Most mortgage lenders will require an independent appraisal to confirm the property sale price reflects "fair market value," usually about $400+
Survey - Your bank may request a survey certificate (showing the exact location of the lost and the buildings on the lot, noting any easements or encroachments; allow $400 to $600. In some cases the lender will accept Title Insurance in lieu of a survey, in some cases the Seller may provide a survey.
Brokerage Fees - In most cases, the realtor's fees for both the Seller's and Buyer's realtors come from the transaction (ie. are not separate, additional fees). But in circumstances where the Buyer has specifically contracted with a realtor as their Buyer's Agent for a fee larger than that agreed to in advance by the Seller - an additional fee can be required.
Property Purchase Tax – 1% on the first $200,000 and 2% on the balance. NOTE: First-time home buyers are granted an exemption on homes under $425,000 (prorated up to $450,000)
General Sales Tax (GST) – 0% on resale (not new) homes – 5% on new homes, with a portion of the tax rebated in most circumstances for homes under $525,000. Check for current regulations governing rebates
Legal Fees – For conveyancing and disbursements incurred by the conveyancer on the buyer's behalf for the title search, registration fees, etc.
1. Average cost $800 to $1200 (depending on the home price); applies to both Buyer & Seller
2. If a MORTGAGE is required, an additional fee of about $300-$400
3. Survey - about $400-$600; Vendor may have a survey, lender usually requires it
4. Appraisal (if required by the mortgagor) about $400
Insurance – Depends on the home and the amount of coverage for the contents; will be required by the mortgage lender.
Insurance Application Fee – Mortgages where the Buyer has less than 20% down payment require mortgage insurance; these mortgages require both an application fee and an insurance premium (which is typically added to the mortgage amount and paid back over the term of the mortgage). (CMHC)
Adjusted Costs – Buyer and Seller pro-rate costs of the property taxes, water fees, etc. according to the portion of the year each party owns the property.
Legal Process Overview
Most of us do not buy and sell homes frequently, so the legal process is not usually a familiar one and can appear complicated. This overview is meant to be a brief description of the normal process of buying a home – please remember that every situation and transaction is unique and requires the advice of a legal professional.
Important Milestones
Offer
Acceptance
Removal of subjects
Deposit
Possession
DOCUMENTS AND LAWYERS
TITLE SEARCH (BY LAWYER)
CLOSING (USUALLY TWO BUSINESS DAYS BEFORE POSSESSION)
SIGN DOCUMENTS & BALANCE OF FUNDS
POSSESSION, ADJUSTMENTS (USUALLY THE SAME DAY)
Following acceptance, the Buyer usually has a week to remove subjects, and the Seller may need to cooperate by providing access to the property for an inspector or surveyor. When subjects are removed (also in writing) the sale is "firm" and usually at this point the Buyer must pay a deposit – usually 5-10% of the purchase price – to a trust account with the Buyer's agent.
Conveyancing is the process of transferring title of the property from the Seller to the Buyer. In BC, the title is registered at the BC Land Titles Registry to ensure that land ownership is always fully documented and transferred smoothly.
Usually, the Buyer and Seller use the services of lawyers for the conveyancing. A day or two before "closing" the Buyer transfers the balance of the money required for the purchase to their lawyer, in trust. The lawyer holds the money, does a final confirmation with the Land Registry that the Seller is in fact the current owner, calculates the exact amount of money that must change hands, including the deposit and the adjustments, and files the paperwork with the Registry once all the conditions have been met and the money is in hand, then releases the cash to the Seller after Title has been registered in the Buyer's name.
Adjustments are calculated by the lawyer to account for such things as property taxes and prepaid utilities and mortgage interest for the days between the payment date and the adjustment date, which is usually the same date as possession.
The contract of purchase and sale: An offer to purchase real estate must be in writing and is generally written by the Buyer's realtor on a standard form "Contract of Purchase and Sale" which contains all the standard terms and conditions, as well as places for specific details of the offer.
The offer will have expiration time and date, generally one to three days after presentation of the offer. Unless rescinded, the offer is binding as it is written. The offer contract must be signed by the Buyer(s), and any changes or corrections to the writing on the contract must be initialed by each party.
As well as the offer price, the contract will also specify the list of inclusions and exclusions (window coverings, appliances, etc.), the amount of the deposit, a list of subject conditions (i.e. subject to home inspection, or subject to financing, etc.), the closing date and possession date.
The Seller will accept or counter the offer, using the same contract document. For a counter offer, changes are clearly written on the document and initialed, and the contract is signed by the Seller. When an offer is countered, it forms a commitment by the signing party; when both parties indicate acceptance of all the terms by initialing the last changes, the document is a binding contract.
Possession is usually at noon on the possession date.
8 Money-Saving Mortgage Tips
increase your mortgage payments a set amount
Round up your payments by adding even a nominal amount of say $10 per payment; the amount of interest you are saving will be unbelievable, and the extra money relatively painless to part with.
Take advantage of your lump sum payments when available
Pay a lump sum whenever possible to decrease the principal of the mortgage. Your regular payments will not be allocated as much to interest, thereby accelerating the end of your mortgage.
stabilize your mortgage payments even when interest rates drop
Keep payments the same when mortgage rates have fallen if the payment amount has not been a problem so far, and then keep it the same, thereby paying down the principal faster.
with your annual income increase - why not increase your mortgage payments
Raise payments in line with increased income on an after-tax basis. If your income increases, don’t keep your mortgage payments the same. Although the disposable income may be fun to spend in the short-term, the long-term benefits of being mortgage-free faster far outweighs the short-term sacrifice.
INCREASE YOUR PAYMENT TO THE MOST YOU CAN AFFORD
The upside is that most lenders will allow you to reduce it again to the previous level if it turns out to be too great of a burden or your circumstances change.
utilize your rrsp-driven tax rebate as a mortgage pre-payment method
Even if you can only prepay annually, make sure your tax refunds are set aside for paying down your mortgage. Many Canadians borrow (at prime) to buy an RRSP to ensure the maximum rebate. When applied to the mortgage principal, the resulting refund is a “gift that keeps on giving.” Combining the refund with the tax-free interest earned on the RRSP over the subsequent years will quickly outpace the short-term interest costs of the RRSP loan.
Increase the frequency of your payments
Make accelerated bi-weekly payments to get a “free” principal reduction equivalent to one full mortgage payment every year – painlessly.
use your pre-payment privileges
Make use of double-up privileges whenever possible. Tell yourself that you will “skip-a-payment” whenever necessary…then skip only when you absolutely must.
9 Secrets for Saving Thousands of $$
SIX
Ensure your mortgage has pre-payment and double-up privileges, allowing flexibility.
SEVEN
Arrange a home inspection by a qualified Home Inspector to ensure no costly surprises later, and based on the inspector’s report, renegotiate price with the Seller before reaching a final deal.
EIGHT
Ensure Closing and Possession dates are close together, so you are not paying for a home you can’t live in (and avoid hotel costs).
NINE
Ensure oil tanks have been properly decommissioned at the Seller’s expense (save $500 to $5000 depending on removal costs, soil contamination, etc.) (BC Fire Code regulations).
ONE
Retain the services of a qualified REALTOR® you can trust – save time and money with sound advice.
Two
Ensure you get the best mortgage rates available by using a Mortgage Broker. (A 1½% rate advantage can save you over $12,000 on a 5-Year term $250,000 mortgage).
THREE
Have your Lender agree to waive fees for mortgage application and appraisal (typically about $500) if possible. Shop around or threaten to.
Four
Save thousands by choosing weekly mortgage payments instead of monthly.
FIVE
Ask the Seller to provide a copy of the survey certificate if
possible, and save about $375.
The Home Inspection Report
The goal of an inspection by an independent professional home inspector is to identify potentially significant expenses that would affect a typical purchaser's buying decision. Most buyers will make their offer to purchase "subject to a satisfactory home inspection" and, to be safe rather than sorry, some seller may have an inspection before putting their house on the market. The seller can then make the necessary repairs ahead of time in order to get the property sold faster and potentially for more money.
What is covered in a home inspection?
exterior surfaces
Siding, wall condition; mildew or dry rot, paint condition, doors and windows.
Decks, Porches & stairs
Safe, solid railings to code, no settling or rot, cement cracking.
Roof, Gutters, Flashing & Chimney
General condition, clogging and remaining life.
Interior walls, ceilings & floors
Cracks, leaks, staining, mildew and signs of settling.
Attic & Roof
Access, moisture or mildew, ventilation, rafter and insulation check, is there asbestos present?
fireplaces
Flues, dampers, chimney liners, gas lines, safety & related dampness.
Ventilation & Condensation
Check crawlspace, bathrooms, attic, etc. for moisture, mould, mildew or dry rot.
foundation & basement
Cracks, settling, insulation, drainage problems, sump and insects.
ASK YOUR REALTOR FOR DETAILS
kitchen
Besides checking out the obvious (counters, cabinets, appliances, etc.) an inspector will examine the area to see if there are any damages, leaks, faulty wiring, etc.; appliances will be checked for working order.
Bathrooms
Condition of grout and tiles; check for leaks or drainage problems, or cracks in toilets, check CFGI outlet operation, fans, water pressure and water volume.
plumbing
Check the pipes, drains, vents and hot water tank; check for leaks or drainage problems; water pressure.
Laundry facilities
Confirm the machines work properly, check the drains, check vents.
heating
Furnace, thermostat, ducting, filters.
electrical system
Service size, grounding of all components, panel and breaker condition, code complaint.
Site condition & drainage
Does the property have a steep grade? Condition of retaining walls, drain tile functional; patio settling; sidewalk & driveway condition.
BELOW
IMPORTANT INFORMATION FOR BUYING FROM A
NON-RESIDENT OF CANADA FOR TAX PURPOSES