How to Buy a House in BC: Everything You Need to Know About the Home Buying Process
Buying a home is probably the largest purchase that you’ll ever make in your life. However, it seems that so many people spend more time when buying a new car than they do in working through all of the nitty gritty details and emotions of buying a home. The home buying process can be overwhelming at first, but our step by step guide on everything you need to know about how to buy a house in BC will help you to understand. From finding your realtor, to getting an accepted offer, to moving in – this is your tell all guide on how to buy a house in BC.
FIND YOUR REALTOR
Having a realtor to guide you through the process of buying a home is an absolute necessity. The buyer’s agent is there to assist you in the process, help to guide you in the right direction, show you homes and all of the great neighbourhoods, write an offer for you that protects you, and assist you towards completion to ensure smooth sailing. The service of a realtor when you are purchasing a home is free – the seller pays your agent’s commission. Make sure that your best interests are protected and that you hire a buyer’s agent to consult you throughout your purchase.
For more details on the role of the buyer’s agent read this blog post: What Does a Buyer’s Agent Do
FIND YOUR MORTGAGE BROKER
Your realtor will have a network of mortgage broker’s that their clients have used in the past, and your friends and family will also most likely have a recommendation. Another option is to go to your bank and find a mortgage broker that can assist you with the home buying process. Your mortgage broker will be able to help you get pre-approved and determine your affordability based on your income and various factors, as well as search for the best rate and term for you based on your real estate goals. It’s important that you hire a mortgage broker that has a good availability, as offers oftentimes happen last minute and in the evening. Having a mobile mortgage broker with a flexible schedule will assist you greatly throughout your purchasing journey.
PRE-APPROVAL PROCESS & BUDGETNG
A mortgage pre-approval is when your mortgage broker has sent in your basic financial information (income, credit score, current debts, etc.) to the lender for review. From there, the lender will have determined the maximum amount of money they will lend you, along with an estimated interest rate and monthly mortgage payment. Many home sellers nowadays will not even look at offers if the buyer is not pre-approved. Pre-approval assures the sellers that you are a motivated and ready buyer that is certain of their affordability and not just taking a shot in the dark from an online calculator.
During the pre-approval process, there are a couple of things that the lender will need to confirm that you have:
- Down Payment: This is the amount that the bank is willing to lend you plus your down payment will be the maximum purchase price that you can afford. There are various sources available for your down payment. For more details on the minimum down payment and down payment details read this blog: Minimum Down Payment in BC
- RRSP withdrawal: You can withdraw up to $25,000 per borrower to be used towards your down payment. The funds have to be repaid within 15 years and you cannot take out RRSPs unless they have been in your account for at least 90 days.
- Gift: A common way for buyers is to receive a gift from a family member to help with their down payment
- Borrowed funds: You may borrow funds from a line of credit to assist with your down payment.
- Closing Costs: To complete the transfer of title there are a number of costs in addition to the purchase price that you will need to consider. For more details on closing costs and the cost of buying a home read this blog: Costs to Expect When Buying a Home. In short, some costs associated with closing are:
- Notary or lawyer fee: This fee ranges from $1000 to $2000 depending on complexity of the deal and whether or not they need to order additional documents.
- Property transfer tax: If you are a first time home buyer then you may qualify for a property transfer tax exemption. In BC the property transfer tax is calculated on 1% of the 1st $200,000 and 2% on the balance. If your purchase price is less than $500,000 then you are exempt from the entirety of the tax. If you are not a first time home buyer than you may not quality for the property transfer tax exemption. For more information on property transfer tax and exemptions read this blog: Everything You Need to Know About Property Transfer Tax in BC
- Maintenance fee adjustment: If you are purchasing a strata property such as a condo or townhome, then you will need to pay the difference in the monthly maintenance fee for the time that you are living in the home.
- Property tax adjustment: All homes pay a property tax once a year in July. Depending on whether or not the seller has already paid the property taxes, you may have to pay for the portion of time that you are living in the house. This can often be a large sum of money and it is important that you have your realtor and/or notary calculate this for you in advance.
PRIORITIZE WANTS AND NEEDS
Make a list of your needs vs. your wants. Everything you want may not be realistic within your budget, so it’s important to narrow down exactly what you need. Everything else included after your needs will just be a bonus! Bring your list with you when you go to check out homes. It can be difficult not to get caught up in the cosmetic nuances such as quartz countertops and hardwood flooring, but at the end of the day you should really be paying attention to structure, price, and dates.
CHECK OUT HOMES
Once you’ve determined a very strict list of needs and wants, it’s time to go out and search for homes! You’ll have the chance to attend open houses. Not every home you see online will still be available or have an open house – have your realtor check availability and book private showings.
NARROW THE SEARCH
After checking out some homes you should be able to narrow down exactly what you like and don’t like. From there, your realtor should perform a comparative market analysis for you to determine the market value of your favourite homes. If they are within your budget, then rank those homes from best to worst and decide which home you would like to write an offer on. The process of finding the right home can take anywhere from one day to more than a year. Take your time, and know when the right one really comes along and go for it.
WRITE AN OFFER
Once you’ve found the home that you can see yourself living in the next step is to write an offer with a Contract of Purchase and Sale. In a hot market, they may be an exact date when the seller is reviewing offers, and in this case you may be encountering a multiple offer scenario. Alternatively, if the home has been on the market for a long time or the seller has requested it, they may be doing offers on a first come first serve basis. When writing an offer you’ll need to decide on a few things:
- included/excluded items
- terms to ensure you’re protected.
It’s important that you use your own realtor [a buyer’s agent] and not the listing agent to write the offer, as a buyer’s agent will work solely for you and therefor protect your best interests. When you purchase your home with the listing realtor, they have the tough task of looking after both the seller and the buyer’s [you] interest – which is nearly impossible as one wants the highest price and the other wants the lowest price.Writing a contract is a legal document, and should be done by a realtor that is working solely for you and acting as your agent. [the buyer’s agent] Once your realtor has drafted your contract to present to the sellers, you should review and adjust accordingly in preparation for your offer to be submitted.
BEGIN SUBJECT REMOVAL WITH FINANCING AND INSPECTION
Subject removal is there for the buyer to perform due diligence on the property as well as ensure that their finances are in order prior to handing in the deposit. Typical subjects that you will need to perform prior to the subject removal date [usually 7 days long] are financing, inspection, title, property disclosure statement, and strata documents if required. If you are satisfied with all of your subjects before the subject removal date, then you will proceed and provide the deposit. If you are not satisfied with the results of the subjects that you have the option to collapse the deal and walk away.
For more information on subject removal and how it works, read this blog: Everything You Need to Know About Subject Removal
REMOVE SUBJECTS AND PROVIDE DEPOSIT
If you remove subjects, then you will need to provide the deposit to your realtor within 24 hours of subject removal. [unless otherwise agreed to in the contract] Some contracts may require you to submit the deposit upon subject removal. The deposit is typically 5% of the purchase price, and is held in trust by the buyer’s agent’s brokerage until completion. This deposit will form a part of your down payment on the home. Once you remove subjects and provide the deposit, the deal is now considered “firm” and all you have to do is wait until you move in!
For more information on real estate deposits, read this blog post: Real Estate Deposits 101
CHOOSING A NOTARY OR LAWYER
Anyone buying or selling a home needs a notary or lawyer to represent them in their real estate transaction. If you are buying and selling, it is best to keep the same notary or lawyer for both transactions. They will be the ones to draft up a statement of adjustments for you, in which you will know how much money is due upon completion and what the exact closing costs are to complete. In the case that something goes wrong, they will be your representation to ensure things are smoothed out.
Prior to closing, your realtor will instruct their conveyancing team to send your notary or lawyer all of the documents that they need to start your file and work towards completion. Your lawyer or notary should have already calculated how much money you will need to bring in a week or two prior to closing in order to complete the transaction. You will be instructed to bring them a bank draft or certified cheque to cover the balance of any funds necessary to close, along with proper government issued ID.
The completion process requires a fair amount of paperwork to go through, and you will need to sign off on documents required in order to complete the transfer.
Depending on which lender you use, you may also have to visit the branch to review important mortgage details like preferred payment dates and ensure that they have all of the documents that they need before closing.
Your possession day will have been stipulated in your contract of purchase and sale, along with the time that you should receive the keys. Make sure that your realtor reviews this with you and tells you exactly when you are able to move in so that you can schedule with your movers accordingly. The sellers should have already cleaned the house, but a secondary clean before you start moving all the furniture in won’t hurt! Your realtor should pass the keys along to you at the time of possession and double check that they are all working and none are missing as per the contract.
TIP: If you were going to do any painting or renovations it might be a good idea to do that before you have your furniture moved in so you don’t have them obstructing your path during renovations.
CHANGE THE LOCKS
It’s better to be safe than sorry, and it’s important that you change the locks to your new home and obtain new keys from a locksmith upon possession.
We hope that this blog post helped you navigate through how to buy a house in BC. If you’re thinking of purchasing a home in the near future, or have already started looking and are interested in writing an offer then give us a call at 604-765-0376. We can help you throughout the home buying process and ensure that your interests are safe and protected from the beginning to the end. Prefer text? 604-319-0200. or email firstname.lastname@example.org to start a conversation.
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