Buying Selling Real Estate Vancouver Information | Simon Clayton
Buying Selling Real Estate is likely to be the biggest single financial transaction of your life. It can be a very exciting and emotional experience, but sound advice from your real estate professional will go a long way to making it a smooth and problem free process
Typically, there are many steps involved in the process of buying and selling a home, including:
Selecting a realtor
As with all major financial decisions, seeking sound professional advice is certainly prudent. Selecting a competent realtor is an important part of this process. We are licensed real estate professionals adhering to a strict ethical code and committed to representing and promoting your best interests. It is very important to work with a professional who knows the area you want to live in. Professional’s committed to the area will know al the best product, neighbourhoods, and the area’s for; families, first time buyers, sports enthusiasts et cetera.
Determining your needs
What are you looking for? What do you need versus what you want? By determining your needs from the outset, this will provide a focus to make efficient use of both your time and your realtor’s time. Your Macdonald realtor will help you put together a prioritized list of your requirements such as price, location, accommodation and other needs or preferences you may have. Your realtor will then bring his or her experience into play and counsel you with regard to your various options.
Mortgage pre-qualification: what does this mean to you? Your mortgage broker or financial institution will discuss financing options and provide you with a mortgage amount and rate guaranteed for a certain period of time. Being pre-approved is advantageous for the following reasons: it may help you refine your search parameters;
the guaranteed interest rate lock in period protects you from interest rate fluctuations; and it will allow you to act more quickly when you find a property you would like to make an offer on. If you do not have a pre-existing relationship with a bank, we can suggest a number of excellent mortgage brokers who will work for you in your best interests
Looking at properties
By now you should have your requirements and your financing in place. Now you’re ready to start looking at properties! Of course, you may have already been looking at homes advertised in the newspaper or on the internet. However, your realtor has access to the database of all properties for sale on the Multiple Listing Service ® and can provide you with specific information you may not have access to. Furthermore, they may also have access to listings on the MLS ® that may not have been advertised yet.
Making an offer – the contract of purchase and sale
So you’ve found the perfect home!
This is when your realtor’s knowledge and training becomes invaluable – they will construct a legally enforceable contract containing terms that suit your needs and protect your interests. Part of this stage involves determining market value, ascertaining the condition of the property, stating how much you’re willing to pay, paying a deposit, suggesting a closing date, expiration of the offer, and a proposed set of conditions.
Simon Clayton will negotiate on your behalf under the terms of the agency outlined in the contract; explain the whole legal process.
In addition to the purchase price, you will need to take into account additional or extra closing costs that may be involved in the purchase.
property purchase tax of 1% on the first $200,000 and 2% on the balance will be applicable;
G.S.T. is applicable on all new home purchases (which will be covered in your Contract of Purchase and Sale);
if you have high ratio financing , a mortgage insurance premium of up to 2.5% may apply;
your share of property taxes and utilities as outlined in the statement of adjustments; and legal costs and disbursements;
It is obviously prudent to cover all of these issues with your realtor as early as possible.
While not every real estate transaction will involve all of these steps, we have provided information on each so you will know what to expect. The above steps will vary from transaction to transaction, but in all cases, early consultation with a realtor will streamline the process and ensure a more pleasant home buying experience.
These comments are for information purposes only and do not constitute legal advice.
Buying Versus Renting
Why use your hard-earned cash to pay the landlord’s mortgage when you could be using the rent money to buy a home of your own? That’s a question many people ask themselves when they start thinking about moving out of the rental market to home ownership. It’s a big step. For most people, taking out a mortgage is the biggest financial commitment they will ever make. But buying your own home has always made sound financial sense. Here are some facts to think over when considering home ownership as opposed to renting.
If you are 35 now and just buying your first home, you will likely be mortgage-free when you are 60 and sitting comfortably on a considerable asset.
It’s highly likely your investment will appreciate considerably in 25 years. It’s important, however, not to buy with the intention of making a quick fortune. Think of home buying as a sound, long-term investment.
Buying a home is a very effective way of saving regularly over many years. Even if you never buy into another retirement or investment plan, you are effectively putting money away for the future.
Owning a home of your own means you and your family can set down roots, get to know your community and involve yourselves in it.
Discover the pride of home ownership. You can fix the place to suit your particular needs. You can also have pets in your home.
As your family grows and moves on to homes of their own, you will have the option of earning extra income by renting out spare rooms or floors, if local bylaws allow.
If you are planning to borrow money from a bank or other financial institution, owning your own home is a definite plus when it comes time to negotiate.
The date agreed to by both parties for the allocation and adjustment of property taxes, interest, utilities, rents and other appropriate items. This date is usually the same as the possession date. (See Seller’s and Buyer’s statements).
Agreement For Sale
The Seller agrees to sell the property to a Buyer on credit terms. Normally the Seller carries the financing himself and the Buyer arranges a payment with the Seller. The Seller remains on the title as registered owner. Very similar to a first mortgage. The agreement for sale is the registered contract.
A term applied to a predetermined schedule for installment mortgage payments where these is a gradual debt reduction. Combines interest and principal in a fixed monthly payment. The most common amortization period is 25 years for a residential mortgage.
A report made by a qualified person giving an estimate of value, based on experience, comparable sales and pertinent data relating to the property.
The price placed on the property for sale by the Seller.
Used for the purpose of assessing property tax by a local municipality, this property value is assessed by the B.C. Assessment Authority.
Payments consisting of principal and interest components, paid during the amortization period of a mortgage.
When the interest rate on a mortgage is higher than current rates, sometimes the rate can be reduced by payment to the lender of a lump sum that represents the interest differential from the present to the end of the mortgage term.
A person or firm representing the Buyer. The Buyer is the Buyer Agent’s client and a Buyer’s Agent has a primary allegiance to his or her Buyer.
Buyer’s Statement Of Adjustment
The statement indicates the balance of cash (after all adjustments) required to complete the transaction.
A note placed on the register in the Land Titles Office at the instigation of a person who claims a certain interest in the land. In B.C., a caveat remains in force for only 2 months, then lapses.
Personal property not attached or affixed to the land or property. Also refers to appliances, etc. in a rental property.
Canada Mortgage and Housing Corporation. A Crown corporation which provides information services and mortgage loan insurance.
In B.C. it is illegal to receive “net” commissions (i.e. any amount of monies given on the sale of the property over and above the agreed price.)
The date on which the Seller is entitled to the net proceeds of the sale and the Buyer is entitled to the transfer of the title. Real Estate commissions and legal fees are paid out at this time.
Something done or promised (i.e. deposit money) to be done by one party in return for something done or promised to be done by the other party (i.e. the transfer of title to the property).
A co-op is a company formed to create and operate defined living spaces within a building. A Buyer purchases shares in the company that normally owns the building. The purchase of these shares usually entitles the owner to the sole use of a suite in a co-op building through a long term lease or shareholder’s agreement.
A response from the Seller to an offer from the Buyer. Legally this is an offer to sell.
Cash to a new mortgage to be arranged.
The measurement of debt payments to gross household income which may include, in addition to the main wage earner’s salary, salaries of other wage earners, commissions, bonuses, overtime, etc.
Monies taken at the time of acceptance as a sign of good faith. These monies are held in a real estate company’s trust account pending the completion of the purchase and are credited towards the purchase price.
A real estate broker or salesperson who acts as agent for both the Seller and the Buyer in the same transaction. Both Buyer and Seller are the agent’s clients.
Anything that affects or limits the title to property such as a mortgage, lease, easement, etc.
The difference between the price for which a property could be sold and the total debts and mortgages registered against it.
All things attached to the property or growing on it. To avoid this dispute, specify in writing any items that will not be included in the sale of the property. Better yet, remove them prior to offering the property for sale.
Floor Space Ratio. A City zoning term that defines the maximum allowable square footage to be built or occupied in a building in relation to its lot size.
Gross Debt Service
The amount of money needed to pay principal, interest, taxes and sometimes, energy costs. If the dwelling unit is a condominium, all or a portion of common fees are included, depending on what expenses are covered.
Gross Debt Service Ratio
The percentage of gross annual income needed to cover payments associated with housing payments. (Mortgage, principal and interest, taxes, secondary financing). Primarily used by the mortgagee (lender). Most lenders prefer the GDS be no more than 30% of a purchaser’s gross annual income (before deductions).
The total amount of taxes owing as per your B.C. Assessment and municipal property tax bill before any deductions are made.
An information and marketing sheet given to the public and other sales agents that outlines details of the property for sale.
High Ratio Mortgage
A situation where the loan exceeds 75% of the appraised value. This loan must be insured by C.M.H.C., G.E. Capital (Mortgage Insurance Canada) or other insuring agencies for a fee.
A lease is a rental for a fixed period of time. Leases over 3 years duration should be registered in the Land Titles Office.
A contract between a Seller and a real estate company whereby the real estate agent agrees to find a ready, willing and able Buyer for a listed property on certain terms stipulated by the Seller. The Seller agrees to pay a stated amount of commission if the salesperson is successful.
The highest price paid for a piece of property which has been exposed ‘for sale’ in the open market allowing a reasonable time to find a Buyer.
Multiple Listing Service. A listing service handled by the Real Estate Board that issues print and online listing information comprising details of properties for sale on MLS® in our market areas.
A specific form of security for a debt, more specifically, property or chattels as security for payment of a debt. The borrower is the mortgagor and the lender is the mortgagee.
The person or financial institution lending the money, secured by a mortgage.
The property owner borrowing the money, secured by a mortgage.
In Canada, high-ratio mortgages (those representing greater than 75% of the property value) must be insured against default by either CMHC or private insurers. The borrower must arrange and pay for the insurance, which protects the lender against default.
The amount owing after allowable deductions made such as homeowners’ grant, and senior citizen’s deductions.
Offer to Purchase. A promise made by one party, the offeror, to another party, the offeree. A legal agreement which offers a certain price for a specified piece of real estate.
Open Houses/Agents’ Opens
An agent’s open is an open arranged by the listing agent to allow all other agents in the area to view the property for their prospective Buyers, normally on a weekday morning. A public open house is usually held for a two hour time period between 1 and 5 p.m. on weekends when the listing agent will be present and potential Buyers will be encouraged to drop in. (Sellers are advised to be absent during these times.)
P.C.D.S. or P.D.S.
See Property Disclosure Statement.
Principal, Interest and Taxes. A method of combined mortgage payment.
The date the Buyer is entitled to possession of the property at twelve noon that day, subject to existing tenancies.
A situation where a mortgagee (lender) will appraise a property prior to putting it on the market and set the ceiling mortgage funds that it will lend to a Buyer who meets its internal qualifications.
Property Disclosure Statement
The Property Disclosure Statement is designed to protect all persons involved in real estate transactions. It provides a written record of representations made and, as importantly, not made, allowing the Seller the opportunity to review the condition of your property so you’re less likely to overlook a defect. Disclosure can make the property more attractive to potential Buyers who often require completion of this form to reduce any risk of misunderstanding.
The Seller’s Agent, also known as a Listing Agent, represents the Seller under the listing agreement with the Seller, typically through the MLS® system. In dealing with prospective Buyers — customers– the Seller’s Agent can provide a variety of information and services to assist the Buyer in his/her decision-making. The Seller’s Agent does not represent the Buyer.
Seller’s Statement Of Adjustments
The statement indicates the balance of cash to be forwarded to the Seller after all adjustments.
Seller Take-Back Mortgage
A situation where a Seller will agree to hold the mortgage in the case of a Buyer who may or may not qualify for a conventional mortgage, or as a way to attract Buyers by offering a lower interest rate. The Seller must be secured in his loan.
Seventy-Two Hour Clause
A protection clause for the Seller who accepts an offer which is subject to the sale of a property that the Buyer owns. The Buyer must remove his subjects within 72 hours or the Seller has the right to deal with the new offer to purchase. This clause is sometimes written as either a 24 or 48 hour clause.
The Condominium Act permits air space to be divided and fee simple titles created from that air space.
(A) Strata Suites: each strata lot (i.e. suite or office) is traced out on a strata plan that is filed in the land Titles Office. Each strata owner owns a fee simple title to his suite plus a share of the common property (i.e. hallways, land).
(B) Strata Duplex Or Townhouse: Strata owner owns fee simple title to a unit plus has exclusive use of limited common property (balcony, sundecks, yards, etc.).
(C) Bare Land Strata: Exists where a large parcel of property is divided into strata lots (i.e. homesites) and recreation facilities etc. are provided in the development as common property.
Unit Entitlement Of Strata Lot
Indicates the share of an owner in the common property and is used to calculate strata owner’s contribution to common expenses.
Strata owners collectively become the strata corporation and elect a strata council to run the daily operations of the project.
Strata corporation have by-laws providing control, management, administration, use and enjoyment of the strata lots, common property, facilities and assets. These by-laws, may among other things, restrict the right of an owner to rent out his strata lot or restrict the keeping of pets.
A legal agreement where there are certain conditions that must be met, before the agreement becomes firm and binding on both parties.
Mortgage time period (usually 1-5 years). Upon expiration of this time period the mortgage becomes due and payable (without penalty) or the mortgage rate is renegotiated for a further agreed upon term.
The legal title to an interest in land (by an innocent Buyer) is not disputable once it is registered in the Land Titles Office. Indefeasible or absolute security is given to registered titles in fee simple in British Columbia. This is not so in Ontario, for instance, where lawyers must take the trouble and expense of investigating the history of the title back to the original grant from the Crown to check for fraud, etc. or in Washington State, where a Buyer must purchase an insurance policy form a private title insurance company to protect his title to property.
Trust Accounts (Escrow)
An account set up by the real estate firm or Seller’s solicitor who acts as stakeholder on behalf of the Seller, to hold deposit funds. The money can be arranged to bear interest for the Buyer in certain circumstances.