Buyers Guide
Step 1: Selecting your Realtor and preparing your finances.
The Brohearns Promise.
Your satisfaction is our number one priority.
Our background in sales data analysis, and strata knowledge allows us to review documents and provide in-depth opinions on a building's value and condition. We promise to represent you with full disclosures, provide you our honest opinion, and most of all, create a trusted partnership with you for all of your future real estate needs.
Preparing Finances, Getting Pre-approved
You should talk to a mortgage broker as soon as you decide you want to make a purchase in real estate. The earlier you start talking to a broker, the earlier you can get preapproved, the smoother the entire process will be.
It is important to be approved BEFORE you start shopping because:
1 📚
You (will have better knowledge of) know what your price limit is.
2 ⬆️
You are protected from an interim rise in interest rates (~60-90 day rate hold is common)
3 💵
Have paperwork and cash ready to go, in case the perfect property does come along
4 ✅
Sellers will take your offers more seriously, and are more likely to negotiate if they know the buyer is qualified
Mortgages
Closed or Open, learn what works best for you.
Closed Mortgage
Closed mortgages cannot be renegotiated, refinanced, or paid in full until the end of the term. Better if you will be holding the property long term, and want a slightly lower rate.
Open Mortgage
Can be paid off in full and cancelled at any time during the term with no penalties, they are much more flexible. Usually better if you want the flexibility to sell, or refinance in the short term, and don’t mind paying a bit of a premium.
Quick Tip
If you plan on selling in a shorter time-frame, it may be better for you to save some money by going with a variable rate and an open mortgage, just make sure you are not penalized for paying the mortgage back early, and cancelling it when you sell the home.
How much for a down payment?
20% of the purchase price is quite standard. Anything under 20% requires mandatory mortgage loan insurance (CMHC), with 5% being the absolute lowest you can put down.
Ex. $80,000 Down Payment on a $400,000 property.
Purchase price | Minimum amount of down payment |
|---|---|
$1 million or more | 20% of the purchase price |
$500,000 to $999,999 | 5% of the first $500,000 of the purchase price, 10% for the portion above $500,000 |
$500,000 or less | 5% of purchase price |
Step 2: Determine the area and find the property.
How can I get a feel for a neighborhood?
Open Houses
Open houses are a great, low pressure way of getting exposure to homes, anyone can go. Just keep in mind the realtor at the open house is usually working for the seller, NOT the buyer. (see FAQ)
Check out what's around
Visit local coffee shops and take a walk in the local parks. To get an idea on the surrounding schools, check the school rankings on https://www.compareschoolrankings.org/
Commuting and Safety
Check your commute time to work on Google maps. It's also a good idea to research crime levels by searching on the local police incident website. Research average age, income, education level of the neighbourhood - realtor.ca has an amazing statistics section.
What's Next?
After you have checked out a few neighborhoods that you find promising, here are some practical next steps to help finalize a decision on where to settle down.
1 🏠
Narrow down your neighborhoods to 1 - 3 areas.
2 🛋️
Discuss what property features are important to you and any potential deal breakers.
3 🧱
Determine a list of ‘nice to have’ features versus ‘must have’ features.
4 📩
Have us set up your email with automated listings from the MLS system, this way you’ll receive the most recent listings as soon as they go live on the market.
Step 3: Drafting and submitting an offer.
Offer Price & Deposit
Offer
Determining the offer price involves reading the situation and coming up with a strategy based on a large number of variables.
Your realtor will strategize with you and conduct a comparative market analysis of the property and will make price recommendations based on the recent sales of other similar homes.
Some of the factors that influence the price to offer include: the number of competing buyers (ie: multiple offer situation), the number of conditions in your offer, the number of similar homes available, the product type, timing, seller motivation, Market conditions (buyers vs sellers market) among many other factors.
Deposit
No set amount on how much it must be, but a typical amount ranges from 5-15% of the total purchase price of the property.
The deposit is money that is put down and payable after acceptance of an offer or removal of subjects. The money is held in trust by the purchaser’s brokerage as a stakeholder in most instances.
This stakeholder will then pay the deposit to the conveyancer who will also hold it as a stakeholder. If not paid to the conveyancer for the sale of the property, it may only be released with the written consent of all the parties to the transaction.
Important Dates in the Offer
Step 4: Due diligence and subject removal.
Subject Conditions
Subjects are put in the offer to allow buyers to have some time for due diligence on the property before it is a done deal. It gives the buyers a way out, if something that negatively affects the value or use of the property is found. Some of the most common subjects are:
1. Finance
The finance condition is to ensure the bank can provide final approval for your loan, and the property
2. Inspection
This condition allows the buyer to hire a professional to view the home, and point out any deficiencies that can severely affect the value of the home.
3. Document Review
This condition allows buyers, along with their realtor to check the property’s title, property disclosure statement (PDS), Strata related documents (if applicable).
4. Insurance
This condition allows the buyer to obtain or verify that they can obtain suitable insurance on the property or in the case of a strata to review the strata’s insurance policy.
Offer Acceptance Period
This is how long your offer will be open for acceptance or counter offer until it expires. After this time period has passed, the offer is no longer valid.
In a competitive offer situation, a shorter window of acceptance is advantageous to put pressure on the other party to answer your offer first (within 3 hours). If you are sending in a low offer, a longer time of acceptance is better to provide more time to talk to sellers and allow them to consider your offer (2 days or longer).
Home Buyer Recession Period
If the buyer puts a “subject free” offer, with no conditions. Buyer now has the right to cancel the deal within 3 business days, however a 0.25% penalty (calculated off accepted offer price) would be payable to the seller if the buyer cancels their offer. The 3 business days start from the final accepted offer day. This only affects those putting in a subject free offer, providing them with extra protection.
Once both you and the seller of the property come to a satisfactory agreement we will go through “subject removal” if there are any conditions in your contract.
A typical subject removal on a condominium purchase:
1. Perform physical inspection of the unit/property.
2. Read through the Bylaws, minutes, building history; look for any rental regulations, or rules that would be an issue for you (we will help you go over documents too).
3. Examine the budgets, spending, reserve fund and financial other statements and determine if they are financially healthy.
4. Call your bank to advise them you have an acceptable offer but subjects still to be removed. Provide them copies of the offer and ask for an approved appraiser to go to the property. You will have to pay for an appraiser; some banks will credit you for that.
5. Inform the sellers that you have satisfied all of your conditions and the deal is firm.
6. Pay your deposit (~5% of the purchase price) to your realtor’s brokerage held in trust until completion day.
Step 5: Completing the purchase.
Steps to completing the purchase
1. Call your bank, lender or mortgage broker to advise them of your purchase and that all conditions have been removed. They will ask for a copy of the purchase and sale agreement which will be provided to you by your agent.
2. Find a legal representative (notary or lawyer) to help convey the purchase for you. Ask for a list of approved lawyers from your lender or from your realtor. Call them for prices and availability to convey the purchase. Select your legal representative and inform your realtor who you will be working with.
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A real estate Lawyer will clear property’s title, register your title, handle the mortgage registration, payout and sign property transfer forms and adjust any costs between the seller and buyer. They will let you know once everything is ready to be signed which is typically a few days before completion date.
What are my closing costs?
(Example purchase on a $820,000 strata condominium)
Property Transfer Tax* | $14,400 |
Bank and Mortgage Appraisal | $500 (approx) |
Legal Costs + Third party closing costs | $1800 (approx) |
Inspection | $500 |
GST (if applicable)* | $41,000 |
Property Transfer Tax:
1% first 200k, 2% on balance up to 2 million NOTE: For new properties (pre-sale), under the “Newly Built Home Exemption” buyers would qualify for full exemption if purchase is under $1.1M .For a “used property” (re-sale) the purchaser will be exempt from property transfer tax on the first $500,000 of the purchase price if they are a first-time home buyer, and the purchase is under $835k for principal residence.
GST:
5% on purchase price NOTE: GST applicable to the purchase of new construction homes. (pre-sale or newly built). Used homes (re-sale) are exempt from GST*
*highly renovated homes may be subject to GST, consult tax specialist
Step 6: Setting up your services.
Contact service providers and obtain quotes, arrange appointments, and/or inform them of your new address. Some of these items can wait until after you’ve moved in, except for insurance, we would suggest having a policy arranged to be effective on completion date.
1. Insurance
You will need to get insurance on your new property (ensure that your insurance covers the maximum strata deductible outlined in the strata’s insurance policy.)
2. BC Hydro
Make sure BC Hydro services are set up upon move in day.
3. Fortis BC Gas (if applicable)
Same with Fortis BC Gas, you'll want this set up upon move in, if applicable.
5. Moving
Book a Moving company in advance if you are moving-in right on possession day. Be sure to book the elevator with the strata in advance (if applicable)
4. Cable TV and Internet providers
This can be set up through appointment bookings once you have moved in.
6. Strata Fees
For strata units, the property management company will be contacting you to sign up for a PAP (Pre-authorized payment) for your monthly maintenance fees and other strata fees (if any) once you are all moved in. Read the rules on move-ins i.e. notice required, information to be provided, move-in fees if any, make an elevator appointment for move-in day if applicable
Got more questions? Most frequent buyer questions here.
