Buying A Home
- Tips for Buying Strata Properties
- Helpful Hints on Buying a Home
- The Final Cost of Buying a Home
- No Time Like the Present to Buy a Home
- Working With a REALTOR®
Tips for Buying Strata Properties
If you are thinking about buying a condominium apartment you are no doubt concerned about the problems some condominium owners face with moisture leaks. Although not all condominiums are affected, the Victoria Real Estate Board (VREB) encourages buyers to work with their REALTOR® in conducting a cautious and thorough investigation of any property before deciding whether to buy.
It's important to remember that any kind of property has the potential to have problems, such as moisture leaks, that are not immediately evident when the property is first viewed. The VREB, in co-operation with the BC Real Estate Association, has introduced a specialty form for condominiums called the Strata Property Disclosure Statement, which is completed by the seller.
Remember also that REALTORS® are bound by a strict code of ethics and have a duty to disclose to buyers information they know about a property.
Before buying a strata property, the VREB recommends buyers do the following:
- Work with a REALTOR® to obtain both the minutes of the Strata Council (if applicable) and minutes from the annual general meetings for at least the past two years along with the strata by-laws, financial statements, any engineering reports that may be underway or previously conducted and other relevant information that your REALTOR® recommends.
- Allow sufficient time to consult with an accredited professional who will inspect a building before any decision to buy is finalized.
- Ask to see the Property Disclosure Statement (PDS).
- Investigate the warranty program (if applicable) and the limits and responsibilities of the homeowner.
- Consult with the municipality and other professionals regarding building location and performance.
- If possible, investigate the background of the developers and / or builders of the building.
When reviewing Strata Council minutes, look for:
- Any past problems and special expenditures or reports.
- A written maintenance program or plan.
- Healthy contingency funds.
- Upcoming large expenditures.
- A well-maintained and managed building.
With careful examination of all relevant information and the help of a REALTOR®, there are many attractive buying opportunities in the housing market today, including condominiums.
Helpful Hints on Buying a Home
Buying a home is likely one of the biggest investments you will ever make. You will need to make a number of decisions about this purchase that should be based on the best information available. The best advice you can obtain on buying a home will come from a real estate professional -- a REALTOR®.
REALTORS® are members of The Canadian Real Estate Association who subscribe to a strict Code of Ethics and high Standards of Business Practice. Members of the Victoria Real Estate Board are members of both the British Columbia and Canadian Real Estate Associations.
The following is a list of services you can expect to receive from a REALTOR® when you buy a home:
- A REALTOR® will fully explain the details of your working relationship (called "agency") so that you are clear as to when a REALTOR® is working for you or for the seller.
- A REALTOR® has access to hundreds of current listings of homes for sale because of a co-operative system called the Multiple Listing Service® (MLS®). A REALTOR® can provide you with a customized list of homes that best your needs -- size, style, features, location, proximity to schools, hospital and shopping, etc. - and then make arrangements for you to view those homes that appeal the most.
- A REALTOR® will help you determine how big a home you can afford. Assessing the many financial alternatives is an important consideration when buying a home. REALTORS® are familiar with the local lending market and can offer helpful advice.
- A REALTOR® has no emotional ties to any type or style of home and can be objective in pointing out the merits of one home over another.
- A REALTOR® will have information on zoning changes, taxes, utility costs, school and recreation services that could affect your decision to buy a home in a specific area.
- A REALTOR® will assist you in negotiating the terms of your purchase. Presenting offers and handling counter offers can be a nerve-wracking process for someone who is not experienced in the art of negotiating.
- Finally, a REALTOR® will advise you of the legal process required in obtaining title and taking possession of your property. The costs associated with buying a home such as insurance, mortgage registration and legal fees will be explained in detail.
A REALTOR®'s knowledge and skill can help in many ways to make the experience of buying a home a pleasant and rewarding one for you and your family.
The Final Cost of Buying a Home
The purchase price of your new home is the biggest cost you will come across in your home-buying venture, but it is not the only one. A REALTOR® can provide you with helpful advice about other costs involved, some of which may include the following:
Application / Mortgage Broker Fee - Processing your mortgage application costs lenders money. Consumers may be charged a fee by a lender or mortgage broker for setting up a mortgage when income or credit issues become more sensitive to the approval process.
Appraisal Fee -- The money you borrow for your mortgage is usually a percentage of the home's purchase price, or of the market appraisal -- whichever is lower. The lender will use someone on staff or an independent professional to make this appraisal. You are normally responsible for this cost.
Land Survey Fee - A plot plan or survey of the property you want to buy is important to establish exactly where the boundaries are and make sure there are no encroachments such as part of your neighbour's house or garage sitting on your land. Your lending institution will want to see such a survey and can let you know what their requirements are.
Insurance -- If you are applying for a high-ratio mortgage -- that is, if you are borrowing more than 75 per cent of your home's purchase price -- you will have to pay for mortgage insurance to protect the lender in the event that you fail to make the necessary payments. As your new home will be used as security for your mortgage; the lender will want you to have extended coverage and fire insurance.
You may also wish to check out the cost of buying mortgage life insurance. This insurance ensures that the mortgage balance is paid off if you or a co-borrower dies.
Legal Fees -- These are the fees charged by a lawyer to help you complete the home-buying process. Disbursements are the costs involved in processes such as conducting a title search, drawing up the title deed and preparing and registering the mortgage.
Property Transfer Tax -- this is calculated on the property's purchase price at the rate of one per cent up to $200,000 and two per cent of the price over $200,000. First-time buyers may be exempt from this tax subject to certain restrictions. Ask your REALTOR® for details.
GST -- When you buy a new home, the entire purchase price is taxable. You may, however, qualify for a partial GST rebate if you plan to live in the home yourself. Ask your REALTOR® for details. A "used" residential home is normally exempt from the GST. Remember that GST is also applied to the REALTOR®'S commission and most other transaction fees such as legal and appraisal costs.
Other Costs -- When you buy a home you will also want to budget for utility bills, annual property taxes and maintenance costs.
No Time Like the Present to Buy a Home
If you are tired of renting and have always wanted a home of your own, now is an excellent time to take the home ownership plunge.
Attractive mortgage interest rates, government incentive programs and an excellent supply of homes for sale are making the dream of home ownership possible for more would-be buyers.
Consider Using Your RRSPs
You may want to take advantage of the RRSP Home Buyers' Plan. The program allows you to use your Registered Retirement Savings Plan (RRSP) contributions (up to $20,000 per person, $40,000 per couple) to buy or build a home. You must be a first-time buyer or at least not have owned a principal residence for four consecutive years in order to qualify under the plan. Remember, no income tax is deducted from these funds as long as they are repaid to an RRSP according to the government's repayment schedule.
A number of different mortgage options are available. Under a conventional mortgage, lenders will loan you up to 75 per cent of the appraised value or purchase price of the property (whichever is lower) to a maximum set by government regulation and you must come up with the remaining 25 per cent yourself. If you don't have the 25 per cent down payment, a high-ratio mortgage may be available that could provide most if not all the required funds. The proviso is that high-ratio mortgages must be insured and the cost falls to you. Check with your lending institution or mortgage broker to see whether you would be eligible for such a mortgage.
Variable-rate mortgages are usually offered for both conventional and high-ratio mortgages. If interest rates climb, you will be paying more per month in interest; if rates drop, you will be paying more off your principal. Fixed-rate mortgages, on the other hand, maintain the same rate of interest over the entire negotiated term.
Examine Your Needs
It is never too early to start considering where you would like to live and the type of house that best suits your needs. This is where a REALTOR®'s services prove invaluable.
REALTORS® have access to the Multiple Listing Service® (MLS®) which is a co-operative listing system that offers maximum exposure of homes listed for sale. A REALTOR® can help you zero in on the type of home you want with a quick search on the computer. Once you have defined a few key parameters like price, location and number of bathrooms, a REALTOR® can provide you with a customized list to assist you in your search.
Defining your focus is important because there are plenty of housing options available in the Greater Victoria area. You will have to choose the property that is right for you from among new houses, resale homes, townhouses and condominiums. A REALTOR® is a highly trained professional who can help you choose the one that best suits your current and projected lifestyle. A REALTOR® will accompany you as you view homes and provide you with all the pertinent information to make an informed decision.
So, if you are ready for home ownership, now is a good time. Many Canadians would agree that owning a home is one of the best investments you can make and helps provide financial security for retirement.
Working With a REALTOR®
Buying or selling a home is likely one of the largest business deals you will ever make. That's why it's important to carefully select the person who will help you get the most for your money or property -- your REALTOR® -- and to understand the different kinds of relationships you can have with a REALTOR®.
As licensed real estate professionals, REALTORS® subscribe to a high standard of service and a strict code of ethics. REALTORS® work within a legal relationship called agency. The agency relationship exists between you, the principal, and your agent, the company under which the individual REALTOR®, who is representing you, is licensed. The essence of the agency relationship is that the agent has the authority to represent the principal in dealings with others.
To eliminate any confusion, particularly if you are a buyer, it is important to establish from the start the agency relationship that exists between you and the REALTOR® you select. These relationships may include:
Seller's Agent - When a REALTOR® is a seller's agent, he or she must do their best for the seller of the property. The REALTOR® will provide the seller with a fair assessment of the property, prepare a listing agreement, develop a marketing plan and help separate the "lookers" from "buyers." He or she will ensure that only serious offers are made.
Buyer's Agent - When a REALTOR® is a buyer's agent, he or she must do their best for the buyer. A written contract establishing this relationship will explain the services to be provided and spell out if any special fees will be paid. It will also specify what obligations a buyer may have, such as working with the REALTOR® for a specified period of time.
Limited Dual Agent - Occasionally, a REALTOR® will act as the agent for both the buyer and seller. Since the REALTOR® has promised a duty of confidentiality, loyalty and full disclosure to both parties at the same time, it is necessary to limit these duties in this situation if both parties agree. If you find yourself involved in a dual agency relationship, before making or receiving an offer both you and the other party will be asked to consent in writing to this new, limited agency relationship. The REALTOR® will explain fully what kind of information he or she can and cannot disclose to the other party.
No Agency - You may also choose to use the services of a REALTOR® without having any kind of agency relationship. This might occur, for example, when the seller's agent is showing you a property. The REALTOR® you choose to work with in this situation has a legal and ethical duty to provide you with accurate and honest answers to your questions and can assist you in your search for a home. A REALTOR® who is not your agent cannot, however, recommend or suggest a price, negotiate on your behalf, inform you of his or her principal's bottom line or disclose any confidential information about his or her principal.
Understanding your relationship with a REALTOR® is the first step in ensuring your real estate transaction is the best one you can make. The REALTOR® you select should be someone who cares about your needs and has the experience to provide you with sound, effective advice and professional service.