Your Current and Future Needs

Before you start searching for a home, you need to think about your needs both now and in the future. Here are some things to consider:

• Size requirements. Do you need several bedrooms, more than one bathroom, space for a home office, a two-car garage?

• Special features. Do you want air conditioning, storage or hobby space, a fireplace, a swimming pool? Do you have family members with special needs?

• Lifestyles and stages. Do you plan to have children? Do you have teenagers who will be moving away soon? Are you close to retirement? Try to buy a home that meets most of your needs for the next 5 to 10 years, or find a home that can grow and change with your needs. Use the Home Features Checklist at the back of this Guide to see what you want, need and may potentially need in the future.

Choosing a Location That Is Right for You

Even if the home you choose has everything you need, the location might not be appropriate. When deciding where to live, you should take the following things into consideration:

• Whether you want to live in a city, a town or even in an out-of-town location

• Where you work and how easy it is to commute

• Where your children will attend school and how they will get there

• Whether you need a safe walking area or recreational facilities such as a park nearby

• How close you would like to be to family and friends

New Home, Previously Owned or Build Your Own?

When thinking about the kind of home you want, the first thing you should consider is whether you want a previously owned home (often called a resale) or a new home. Here are some characteristics that may help you decide:

New Home

• Personalized choices. You may be able to upgrade or choose certain items such as siding, flooring, cabinets, plumbing and electrical fixtures.

• Up-to-date with the latest codes/standards. The latest building codes, electrical and energy-efficiency standards will be applied.

• Maintenance costs. Lower maintenance costs because everything is new and many items are covered by a warranty.

• Builder warranty. A homebuilder’s warranty is usually available in all provinces (except Nunavut and the Northwest Territories). This can be important if a major system such as plumbing or heating breaks down. This warranty does not apply if you build the home yourself.

• Neighbourhood amenities like schools, shopping malls and other services may not be complete for years.

• Taxes such as the Goods and Services Tax (GST) (or, in certain provinces, the Harmonized Sales Tax (HST)) will apply. However, you may qualify for a rebate of part of the GST or HST on homes that cost less than $450,000. For more information about the GST New Housing Rebate program, visit the Canada Revenue Agency website at www.cra-arc.gc.ca

• Extra costs. You may have to pay extra if you want to add a fireplace, plant trees and sod, or pave your driveway. Make sure you know exactly what’s included in the price of your home.

Resale Home

• Easy access to services. Probably established in a neighbourhood with schools, shopping malls and other services.

• Landscaping is usually done and fencing installed. Previously owned homes may have extras like fireplaces or finished basements or swimming pools.

• No GST/HST. You don’t have to pay the GST/HST unless the house has been renovated substantially, and then the taxes are applied as if it were a new house.

• Possible redecorating and renovations. You may need to redecorate, renovate or do major repairs such as replacing the roof, windows and doors.

Building Your Own Home

Some people prefer the challenge and flexibility of building their own home. On one hand you can get exactly what you want in terms of size, design, location, quality of material, level of energy-efficiency, etc. However, you should expect to invest lots of time and energy.

Deciding on the Type of Home to Buy

There are many types of homes to choose from and each has its advantages and disadvantages. Think about your needs before making a decision. Don’t forget to look beyond the walls. The environment surrounding your home can be almost as important as the environment inside of it.

Single-family Detached

The most popular style and the most solid investment. It is a free-standing home which sits on its own lot thereby offering a greater degree of privacy.

Semi-detached

A single-family home that is joined to another one by a common wall. It can offer many of the advantages of a single-family detached home and is usually less expensive to buy and maintain.

Duplex

Two units – one above the other or side by side. The owner usually lives in one unit and rents the other.

Row House or Townhouse

One of several types of single-family homes joined by common walls. It offers less privacy than a single-family detached home but still provides a separate outdoor space. These homes can cost less to buy and maintain.

Link or Carriage Home

Houses joined by garages or carports which provide access to the front and back yards. Builders sometimes join basement walls so that link houses appear to be single-family homes on small lots. These houses can be less expensive than singlefamily detached homes.

Condominium

Refers to a form of legal ownership as opposed to a style of construction. Condominiums can be high-rise residential buildings, townhouse complexes, individual houses and low-rise residential buildings. Condominiums are also known as stratas in British Columbia or syndicates of co-ownership in Quebec.

HOW MUCH WILL IT REALLY COST?

Once you have figured out the home price range you can afford and the type of mortgage you qualify for, you will need to calculate all of the associated costs of the transaction to make sure you are financially ready.

Up-Front Costs

You will need to plan ahead to cover the many up-front costs of buying a home. Timing is important to help make sure things go smoothly.

• Mortgage Loan Insurance Premium. If yours is a high-ratio mortgage (less than 20% down payment), your lender may need mortgage loan insurance. Your lender may add the mortgage insurance premium to your mortgage or ask you to pay it in full upon closing. (Refer to step two for details.)

• Appraisal Fee. Your mortgage lender may require that the property be appraised at your expense. An appraisal is an estimate of the value of the home. The cost is usually between $250 and $350 and must be paid when you contract for those services. (Refer to Step 5 for details.)

• Deposit. This can form part of your down payment and must be paid when you make an Offer to Purchase. The cost varies depending on the area, but it may be up to 5% of the purchase price. If you wish to make a down payment of 5% and you give a deposit of 5%, then your down payment is considered to be made.

• Down Payment. With mortgage loan insurance from CMHC you can own your home with little or no down payment. At least 20% of the purchase price is usually required for a conventional mortgage.

• Home Inspection Fee. Remember that this may be a condition of your Offer to Purchase. A home inspection is a report on the condition of the home and may cost over $200, depending on the complexities of the inspection. For example, it may be more costly to inspect a home that has large square footage, one that is expensive or one where contaminants such as pyrite, radon gas or urea-formaldehyde are suspected. (Refer to Step 5 for details.)

• Land Registration Fees (sometimes called a Land Transfer Tax, Deed Registration Fee, Tariff or Property Purchases Tax). You may have to pay this provincial or municipal charge upon closing in some provinces. The cost is a percentage of the property’s purchase price and may vary. Check with your lawyer/notary to see what the current rates are.

• Prepaid Property Taxes and/or Utility Bills. To reimburse the vendor for pre-paid costs such as property taxes, filling the oil tank, etc.

• Property Insurance. The mortgage lender requires this because the home is security for the mortgage. This insurance covers the cost of replacing the structure of your home and its contents. Property insurance must be in place on closing day. (Refer to Step 5 for details.)

• Survey or Certificate of Location Cost. The mortgage lender may ask for an up-to-date survey or certificate of location prior to finalizing the mortgage loan. If the seller does not have one or does not agree to get one, you will have to pay for it yourself. It can cost in the $1,000 to $2,000 range.

• Water Quality Inspection. If the home has a well, you will want to have the quality of the water tested to ensure that the water supply is adequate and the water is potable. You can negotiate these costs with the vendor and list them in your Offer to Purchase.

• Legal Fees and Disbursements. Must be paid upon closing and cost a minimum of $500 (plus GST/HST). Your lawyer/notary will also bill you direct costs to check on the legal status of your property. (Refer to Step 5 for details.)

• Title Insurance. Your lender or lawyer/notary may suggest title insurance to cover loss caused by defects of title to the property. If you feel you cannot cover all of the up-front costs, you can ask your lender for a loan. Remember that payment for this loan amount, based on a 12-month repayment period, will have to be included in your Total Debt Service ratio calculation.

Other Costs

Besides up-front costs, there are other expenses to consider:

1. Appliances. Check to see what comes with the house, if anything.

2. Gardening equipment.

3. Snow-clearing equipment.

4. Window treatments. Check to see what comes with the house.

5. Decorating materials. Paint, wallpaper, flooring and tools for redecorating.

6. Hand tools. You will need some basic hand tools for your new home.

7. Dehumidifier. May be required to control moisture levels, especially in older homes.

8. Moving Expenses.

9. Renovations or Repairs.

10. Service Hook-Up Fees. Charged for utilities. You may be required to pay a deposit for utilities such as telephone and heating services.

11. Condominium Fees. You may have to make the initial payment for these monthly fees.

Use the Home Purchase Cost Estimate table to estimate your homebuying costs

THE IMPORTANCE OF HAVING A BUYER’S AGENT

What Exactly is a Buyer’s Agency and How it Benefits You

The typical home sale involves two licensed real estate professionals. One Realtor® representing the Seller (Listing Agent) and another representing the Buyer(s). The Realtor working solely with the buyer may informally be referred to as the Buyer’s Agent.

Buyers require more help with a wider assortment of tasks than Sellers. If you make your purchase with the Seller’s agent there is a potential for conflict of interest. Dual agency is the situation where both a Buyer and a Seller are represented by the same agent in the same transaction. Although there are legal restrictions on the flow of information between the Realtor® and both parties, it is nearly impossible to be completely loyal to the interest of both Buyer and Seller. Their interests are completely opposed. By having a Buyer’s Agent you can be confident knowing your representative is legally obligated to protect and promote your interests as they would their own. Your Buyer’s Agent owes you the following duties:

1. Undivided loyalty. The Brokerage must protect the principal’s negotiating position at all times, and disclose all known facts which may affect or influence the principal’s decision*

2. To obey all lawful instructions of the principal*

3. An obligation to keep the confidences of the principal*

4. To exercise reasonable care and skill in performing all assigned duties*

5. To account for all money and property placed in an Brokerage’s hands while acting for the principal*

Aside from the legal protection of Agency, there are more benefits to purchasing your new home with the services of a Realtor®.

Access to MLS - Realtors® have 24/7 access to MLXchange; a web based program used by the Real Estate Board of Greater Vancouver (and all other boards in B.C.) to promote listings to all B.C. Realtors®. Your Buyer’s Agent, through their access to MLXchange, will be able to provide you with listings as soon as they hit the market. The same cannot be said about public MLS sites that lack detail and are usually out dated by 3 to 4 business days.

Market Knowledge – Realtors® have a great deal of valuable knowledge regarding the real estate market and the area you wish to purchase in. Armed with this information your Realtor® will advise you on the market activity, pros and cons of the prospective property and most importantly its market value.

Competitive Edge – Everyone knows the Vancouver real estate market is scorching hot and extremely competitive. Properties often have multiple offers (2 or more competing offers on one property) and are sold within days. With up-to-date listings from MLXchange accompanied by market knowledge and negotiating skills, your Realtor® has the tools you need to give you the competitive edge you need.

Customer Service – An exceptional Buyer’s Agent will alleviate any pressures or stress that can sometimes accompany the buying process. Providing a high level of customer service, your Realtor® will help navigate you through each step of the purchase ensuring all requirements and deadlines are met.

FREE! – So by now you are probably wondering, “What is the Buyer’s Agent’s fee?” Good news, it’s FREE of charge. In a typical real estate transaction the Seller will agree to pay the Listing Agent a commission fee of which a portion is allocated for the Buyer’s Agent. So as you see, you get all the benefits of a secure and confident real estate purchase without the cost.

Contact me today and let me show you how I can assist in the purchase of your dream home!