Your home provides you with a personal place to relax, relieve stress, play, or enjoy quality time with your family and friends.

When purchasing a home in Vancouver, buyers must consider a multitude of factors, including down payment, credit score, neighbourhoods, layouts, prices, and mortgage. For most people, buying a home represents one of the biggest investments you will make in your lifetime — especially in the Vancouver real estate market.

Vancouver residents planning to move into their first home, seasoned home owners downsizing from a single-family home, or buyers relocating to the Greater Vancouver Region, this guide contains the basic information you will need to understand the home-buying process.

Taking the time to learn or remind yourself of the basic dynamics of buying real estate in Vancouver and possessing clear knowledge of what you can expect alleviates stress because you will be able to avoid surprises. Use this guide to help formulate your plan of action for purchasing your a piece of the most expensive real estate in Canada.

The action plan helps you move purposefully through each of the steps involved with buying a home in Vancouver. A plan helps you get organized, increases the likelihood of your closing the deal without a major hitch, and ensures that you receive the best value for your money.

Assemble Your Features Checklist

Before you begin your home search, visit several open houses. Familiarize yourself with the housing stock in the Vancouver real estate market, including features, amenities, and types of materials. Put together a “wish list” of the features and amenities you want in your home to make it a comfortable place to live in and add value to.

Consider the needs of family members currently in your household as well as any future additions, such as another child or elderly parents.

Start by choosing a housing type: single-family home, townhouse, or condominium. Decide on the minimum square feet of the home, its layout, number of stories, and lot size. Determine the age range of the home, such as new, two to five years old, or a heritage home.

If you want the look and feel of a new home, make sure you understand that the market value of your home might drop the moment you move into the property — similar to purchasing a new vehicle. Choose how many bedrooms and bathrooms you want in your home.

Other attributes you may want to include in your list are:

Style: Choose a home that harmonizes with the neighbourhood. A jarring, out-of-place home may fit your criterion for unique, but could affect the home’s resale. It is prudent to stick to the prevailing architectural style. The home’s entryway has a significant effect on its curb appeal and gives buyers a significant first impression. This item comes into play for a subsequent resale of the property.

Siting: The orientation or position of your new home determines the amount of morning sun, the location of the afternoon sun, and which room receives limited sunlight. Consider the view from the sunroom or deck if the family spends a lot of time socializing or entertaining in a particular area. The locations of windows also have a direct effect on the energy bill.

Building Materials: Determine the appearance of the home and the expense of maintaining the dwelling. For example, vinyl and aluminum siding reduces maintenance requirements and trim costs. Some buyers prefer newer, self-insulating window or patio doors instead of storm windows or hardwood to carpeted floors.

View and Landscaping: A view of the water or mountains or city panorama can make a property more valuable. It can also have some effect on the sale price of the home. The view does not have to take in sights of the mountain or sea, but may consist of a backyard creek or a colourful landscape. Vancouver home buyers should view and landscape as though it is an ordinary property or lot as much as possible.

Garages/Parking: Do you need a garage? If so, think about whether you want indoor or outdoor parking. How large of a garage do you need? Will you use the garage for storage?

Prioritize Your Wants and Desires

When assembling your checklist, prioritize features by order of importance, such as:

1 = must have, 2 = important, and 3 = desirable, nice to have. Assign each feature a ranking. This gives the agent some flexibility when searching for properties on your behalf. Ponder each “must-have” feature, and determine if you really need it in your home. For instance, is a living room a “must-have” item if your family spends most of the time socializing in the family room?

Think about trade-offs such as buying a smaller condominium for a shorter commute to your job or purchasing a larger house now because you will grow your family and expect an increase in salary. You can obtain a mortgage with an interest rate that increases your payment in the future.

The list of features and amenities can get rather lengthy as it expands to other desires. For example, an asthmatic might only consider homes with hardwood floors or prefer a hot water boiler instead of a forced-air heating unit.

When touring Vancouver homes, pay particular attention to features that will enhance your ability to resell the property later — even if you plan to reside in the home for a significant period. Place emphasis on the attractiveness of exterior appearances, kitchens, and bathrooms. Potential buyers tend to give these areas more weight when evaluating a home. Be flexible and willing to modify your list. Once you look at a few homes, you should have a better understanding of what features and amenities work for your family and budget.

The City of Vancouver has two distinct areas: Vancouver Eastside (or East Van) and Vancouver Westside (or the Westside). The two halves of the city are divided along Ontario Street. The Westside, runs west of Ontario Street to the University of British Columbia. East Van is the area east of Ontario Street up to Boundary Road (the division between Vancouver and Burnaby).

Following the recent trend of many metropolitan areas, many Vancouverites have taken up residency in the city’s downtown area. In the downtown core, the housing stock mostly consists of trendy, high-density, high-rise apartments with townhouses sprinkled in for good measure. There are almost no single-family houses remaining other than a handful of heritage homes found in the West End area.

Buying a property in Vancouver depends on a wide variety of factors, but “neighbourhood” or location ranks as the number-one item on the lists of most buyers. It does little good to have all the amenities one would want in a property only to have it located in the “wrong” neighbourhood.

Communities have settings and features that give them a distinct identity and appeal. Some neighborhoods have a reputation for heritage homes. Another area might offer quick access to the city’s downtown area, provide a feel of suburban living in the city, or provide residents close proximity to the beach.

If you want to know more about the flavour of a particular neighbourhood in which you have an interest, visit the area on different days, and at various times, during the week. Spread your visits out during morning, afternoon, and evening hours. If you frequently use public transportation, sample the bus or rail service to and from the community. You can also begin your research by having a read through our detailed guides to Vancouver neighborhoods such as Main Street or Kitsilano.

Crime

Vancouver crime rates fall well below most cities in the U.S., consisting mostly of automobile thefts and house break-ins. The city has fewer than 20 homicides a year.

The east side of the downtown core (or the Downtown Eastside) is impoverished and has a high rate of individuals with homelessness and drug problems. The area tends to have a higher crime rate compared to other neighbourhoods in metro Vancouver.

Buying a Condo or Town Home

In a condominium, you share the common areas with other condominium owners. You will have outright ownership of your unit and a percentage of common areas, such as a party room, tennis court, exterior decks, and swimming pools. If you really put a premium on your independence and privacy, a condominium might not make the best choice, but in Downtown Vancouver, it might be your only option.

Many Vancouver real estate buyers, like empty nesters, have sworn off yard work, shovelling snow, and making most home repairs. Condominiums also offer amenities within the building or complex, such as a pool, fitness room, or community room. The living space tends to be smaller than a townhouse or single-family home, but many buyers gladly accept the trade-off in exchange for the conveniences.

If you decide to purchase a condominium in Vancouver, make sure that you understand the costs involved beyond your monthly mortgage payment, taxes, and insurance. You will pay a monthly fee for the upkeep of common areas and for your portion of the contribution to the reserve account for making repairs and improvements in common areas.

A townhouse combines the characteristics of an apartment condominium and a single-family home. Similar to a single-family home, the unit typically has its own entrance and street number. Like an apartment condominium, the buyer owns a percentage of common areas and amenities. The common areas and amenities are typically not as extensive as with most high rise towers. However, the monthly maintenance fee is usually proportionately lower than the monthly assessments in a larger condo complex.

Review Strata Documents

It is critical for you to examine the records of the condominium association, which may include bylaws, depreciation report, current rules, annual operating budget, and Form B. In addition, ask to review minutes from meetings held in the last two years, including annual, special, general, and strata council meetings. A careful review of these documents can shed some light on the governance of the community, improvements to your unit, and the use common areas and amenities. The records can also reveal if the association has potential problems, such as inadequate reserves for making repairs or infighting among the association’s membership.

When assessing the condition of the contingency reserve fund, take into account the balance and future association fees collections to determine if the account can accumulate adequate funds to finance future repairs.

Vancouver home buyers who wish to qualify for a mortgage must first meet the employment and credit requirements of the lender. As part of the mortgage underwriting process, lenders prefer to grant credit to borrowers who have stable income and a good credit history. The down payment and property characteristics make up other factors that lenders consider when processing a mortgage application.

Verification of Employment

Most Vancouver home buyers’ sources of income come from employment or self-employment. Besides verifying the borrower’s employment status, a mortgage lender considers your current income as well as your outlook for ongoing employment.

The lender will need a “Letter of Employment” (LOE). Your employer must submit the LOE on company letterhead, date and sign the document, and include the signatory’s contact information. Generally, the LOE contains information such as employment status, whether salary or hourly, and number of guaranteed work hours per week.

In addition, lenders may require Vancouver home buyers to submit any of the following documents:

• Recent pay stubs
• Notice of Assessment from the last two years
• T4, T4A, or Commission Earnings Tax Form
• Income Tax Returns, T1 General Tax Form
• Bank Statements

Your bank or mortgage broker will tell you what documents you need to present along with your mortgage application. The requirements differ among lenders.

Income Sources Accepted by Lenders

Lenders accept a wide variety of income sources when evaluating mortgage applications. If you have permanent, full-time employment, make sure you have completed the probation period and have at least three years of unbroken job history. Permanent, part-time employees need to have at least two years on the job and three years’ continuous job history.

The most common types of income include wages, salaries, overtime, bonuses, commissions, and profit sharing. Lenders also consider secondary employment income if you have completed probation. Other types of income accepted by lenders include:

• Investment income
• Pension income
• Disability income
• Percentage of rental income
• Maternity leave payments
• Child support and alimony payments

Salaried or hourly employees must submit the last two years’ T4 slips. The mortgage broker and lender verify income. Mortgage lenders want to ensure, at least at the time of the application process, that the borrower has a high probability of making the monthly mortgage payments in the future.

Self-employed Vancouverites can expect the lender to request copies of the last two years of Notice of Assessments (NOA), and other documentation proving income, depending on the underwriting requirements.

What Information Does Your Credit Report Contain?

Canada’s two major credit-reporting agencies, Equifax and TransUnion, compile information from creditors regarding the payment records of consumers granted credit. The credit-reporting agencies package this information into credit reports. Credit reports summarize an individual’s credit history.

When a person signs off on the documents for a personal loan, credit card, or other request for credit, most lenders conduct a check on the applicant’s credit history. The credit history helps the lender determine the borrower’s ability to repay the loan.

The Business Practices and Consumer Protection Act covers credit information, what companies can include in reports, how third parties use the information, and your rights. Credit reporting agencies can only release your information to creditors or other organizations to which you have granted permission. This may include banks and mortgage brokers, credit card companies, car leasing firms, house or apartment rental businesses, or other lenders. It also applies to applications for insurance or employment.

Obtain a Copy of Your Credit Report

Start this aspect of the home-buying process long before you are ready to apply for a home mortgage. Obtain a free copy of your credit report. Obtain your credit score. The company may charge a fee for the score. When you receive the credit report, go over the information carefully. Sometimes, credit reports contain false or inaccurate information.

Check the following information on your report:

• Name
• Address
• Outstanding balance
• Account numbers
• Negative information: late payments, collections, write-offs
• Inaccurate or outdated information

Correct inaccurate or outdated information contained in the report by sending a letter to the credit reporting agency that disputes the erroneous information. The company must respond to the inquiry within 30 days.

If the report contains inaccurate or outdated information, send a letter to the credit bureau disputing the information. The credit bureaus may not have the same information in their records.

The following are links and phone numbers for the two credit bureaus:

Equifax Canada, 1-800-465-7166

Trans Union of Canada, 1-800-663-9980

Your Credit Score

FICO is an acronym for the Fair Isaac Company. This company owns the proprietary software used to calculate consumer credit scores, based on information contained in consumers’ credit files. Creditors use the credit score to determine how much mortgage or other credit they can lend, the interest rate, loan periods, and other associated costs. Equifax calls its credit score the “Beamon” score.

The two credit reporting agencies use a scale of 300 to 900. Vancouver home buyers with high credit scores may qualify for the best interest rate and mortgage terms. Lenders regard consumers at the high end of the scale as less risky. Consumers at the lower end may receive credit from lenders, but at a higher interest rate. Most lenders prefer a credit score of 680 or higher.

Generally, credit reporting agencies use the following factors and weighs to determine your credit score:

1. Payment history — 35%
2. Amount owed — 30%
3. Length of time in file — 15%
4. New credit — 10%
5. Type of credit — 10%

Some banks also have their own methods for determining a borrower’s credit score. However, most lenders rely on FICO. Information in credit reports changes frequently and requires the continual recalculation of credit scores.

How Your Credit Score Affects Interest Rates and Payments

The following table is only a guide, but it shows how your credit score influences the interest rate you receive and your mortgage payment. A high credit score results in a lower interest rate. Conversely, a low credit score means a higher interest rate. The figures are based on a $250,000 mortgage.

Credit Score Interest Rate Month Payment

760 – 850 3.80 $1.160.67
700 – 759 4.022 $1,191.91
660 – 699 4.306 $1,232.47
620 – 659 5.116 $1,351.79
580 – 619 7.670 $1,756.64
500 – 579 8.529 $1,901.29
Source: FICO

Tips on Raising Your Credit Score before Applying for a Mortgage

1. Pay all bills on time because they affect your credit score the most. If it helps, use your bank’s online account management software to schedule bill payment reminders. These will send you a text or email. Another approach is to have automated bill payments. The creditor debits your chequing account and ensures payment of your bills on time. In British Columbia, a late payment can stay on your record for six years.
2. If you do not have credit, apply for a credit card. It is not necessary to carry a balance on the credit card. Using one or two credit cards to make purchases will help raise your credit score. If you do not qualify for an unsecured credit card, apply for a secured card. The card issuer requires the applicant to open a savings account in the same amount as the line of credit. Verify that the card issuer reports cardholders’ payment information to Equifax and TransUnion.
3. Another method of building your credit score involves applying for one or two instalment credit accounts, like a personal or student loan. An automobile loan also qualifies.
4. If you have missed payments, bring them current. Paying the bill on time moving forward helps raise your credit score. Over time, the good payment history outweighs negative data.
5. A collection account stays on the credit record for six years, even if you pay it. Before making the payment, try to negotiate a favourable payment rating with the creditor.
6. Too many consumer accounts lower your credit score and make lenders uneasy. Lenders fear that an overextended borrower could have problems repaying the mortgage at some point in the future. Consider closing some accounts or reducing the credit limit on some credit cards. Do not close older accounts, which can also lower the credit score.
7. Develop a plan of action and a budget to reduce account balances or pay off certain debts. Start by listing your accounts in descending order on a piece of paper. Start with the credit cards with the highest carrying charge. Pay as much as you can afford on the card each month, until you reduce the debt according to plan. Make minimum monthly payments on the other credit cards. Avoid using the credit cards. Start paying with cash, cheque, or debit card.
8. Eliminate or limit “hard inquiry” checks on your credit. This comes from creditors checking your profile to extend credit. This raises a “red” flag for mortgage lenders.

Visit the Financial Consumer Agency of Canada for a good source of information about credit report, credit scores, and other consumer related information.

The down payment is the money the buyer puts toward the purchase of the home. The rule prohibits borrowing money from a lender. The money must come from the personal resources of the buyer — mainly savings or investment. Buyers may also accept a “gift” or borrow money from another party to apply toward the down payment.

Many mortgage lenders require applicants to provide proof of down payment sources. When using personal resources for your down payment, deposit the money in a savings account. Leave it untouched for three to six months. The lender may still require proof of source of funds when you transfer money or make a large deposit.

Besides confirming your ability to make the down payment, you will also have to prove you have the 1.5 to 6 per cent of the purchase price required to cover closing costs. The amount of the down payment you make determines if you qualify for a conventional mortgage or high-ratio mortgage.

• A conventional mortgage only applies when the amount of the loan does not exceed 80 per cent of the purchase price of the home or an 80 per cent loan-to-value ratio (LTV). The down payment amount is a minimum of 20 per cent. For a $400,000 home, the buyer needs to make an $80,000 down payment.
• A high-ratio mortgage pertains to transactions with a down payment of less than 20 per cent of the total purchase price. Federal Laws require the buyer to purchase mortgage insurance, which provides protection against defaults.

The amount of the down payment varies according to the type of mortgage. Generally, expect to need a down payment equal to 5 to 20 per cent of the purchase price of the home. A conventional mortgage requires a minimum of 20 per cent of the appraised value or purchase price of the home — whichever constitutes the lesser amount.

Home buyers who do not have the resources to come up with 20 per cent can elect to obtain a high-ratio mortgage. The high-ratio mortgage enables a home buyer to as little as 5 per cent down payment. However, the borrowers must also buy purchase default insurance.

Regardless of the type of mortgage — conventional or high-ratio — it works to the borrower’s benefit to put down as high a down payment as possible. A higher down payment lowers the monthly payment and reduces the amount of interest paid over the life of the loan.

High-Ratio Mortgage Insurance

Home buyers can calculate a maximum of 32 per cent of the gross family income for housing costs, which includes mortgage principle, interest, property taxes, and heating expenses. Underwriting rule prohibits a home buyer’s total debt load or obligations from exceeding 40 per cent of the gross family income.

Lenders charge buyers a premium for mortgage loan insurance. The amount of the premium depends on the down payment and the amount of the mortgage loan. Buyers have the option of making a lump-sum payment or having the cost included in the monthly payments. The premium ranges from 1 per cent to 4.5 per cent of the mortgage amount.

The RSP Home Buyers’ Plan

Eligible first-time homebuyers might be able to fund their down payment through the registered retirement savings plan (RRSP) Home Buyers’ Plan (HBP). HBP allows the buyer to withdraw up to $25,000 from an RRSP to purchase their first home. You must adhere to the conditions listed below to avoid any financial penalties for withdrawing funds.

• Repayment of the withdrawal within 15 years
• Repay an annual minimum 1/15th of the amount withdrawn, or $1,333 if withdrawing the full $25,000
• Pay taxes on any balance (of the required payment) not made for the particular year

Go to Canada Customs and Revenue Agency Publication to find out more information on HBP.

Discuss the down payment with your bank or mortgage broker to ensure that you have the resources necessary. Once you find out how much of a mortgage you qualify for, evaluate your options and decide on a down payment accordingly.

No Down Payment Programs

If you have excellent credit and a permanent job with an employer but do not have the funds necessary for a down payment, you might qualify for a “No Down Payment” mortgage program. The bank finances 95 per cent of the home’s purchase price and provides 5 per cent cash back at the closing. The borrower must pay the closing costs upfront. If you select this option, expect the lender to charge you a higher interest rate for your mortgage.

Note: The mortgage options discussed above refer to a home purchased as the buyer’s primary residence. Down payment requirements for the purchase of multi-unit properties or investment properties might differ.

Before you start the search for your home, take time to gain an understanding of the mortgage aspects of buying a home. With multiple lenders in the Vancouver real estate market, you will encounter a wide array of mortgage options. Often, similar products have different names.

Possessing essential knowledge of the basic types of mortgages can pay dividends by ensuring that you can differentiate between the choices and obtain the best mortgage product to fit your financial situation and objectives.

Do not wait to find a home before you begin the mortgage process. In fact, you will gain an advantage by obtaining a pre-approved mortgage, which is discussed below.

Bank, Mortgage Broker, or Credit Union?

You can work with a bank directly, enlist the services of a mortgage broker, or apply for a mortgage with your credit union. Bank loan officers receive a salary from their employer for their services. This could prevent you from receiving the most competitive interest rate for your mortgage. In addition, it might be difficult to obtain a mortgage from a bank if you have minimal credit history.

In contrast, mortgage brokers are independent business people. They have access to a wide variety of lenders and competitive interest rates. Mortgage brokers can find lenders to service all types of credit. They work with major financial institutions, including chartered banks, trust and insurance companies, and credit unions. Lenders pay mortgage brokers a fee or commission for their services.

One of five mortgages in British Columbia, according to the British Columbia Credit Union, originates at a credit union. Many credit unions provide mortgages for buying, building, and refinancing homes. They work with both employed and self-employed home buyers throughout the Greater Vancouver area.

They offer competitive rates and might provide more flexibility for mortgage repayment than banks. You must have membership in the credit union to apply for a mortgage. Credit unions have credit and income requirements that you must satisfy to obtain a mortgage. Contact your employer or the Greater Vancouver Community Credit Union to obtain more information about securing a mortgage from a credit union.

Types of Mortgages

Vancouver home buyers have a variety of mortgages available to meet their needs. Below is a summary of the main categories of mortgage options. Discuss the various options with your banker or mortgage broker. Select a mortgage that provides the repayment and interest rate that fit your personal circumstances.

Fixed Closed Mortgages Rates: The borrower gets locked into an interest rate that is fixed for the term of the mortgage — from one to ten years. Many closed mortgages offer buyers a more favourable interest rate. Premature sale of the property before the expiration of the term results in a penalty, which depends on the language in the mortgage contract.

Fixed Open Mortgage Rates: This mortgage has a term of six months to one year. This type of mortgage carries a higher interest rate and works for most home buyers who require short-term financing during the process of selling or remodelling their home. This type of mortgage does not carry a penalty for early repayment.

Variable Rate Mortgage: The term of the loan covers five years, and the interest rate fluctuates according to the prime rate. Vancouver home buyers with solid employment and good credit history should consider this option. Make sure that you have an awareness of the current trend of interest rates.

If you expect interest rates to rise, lock in at the lower rate. Usually, the term of the loan runs three years. Early repayment can cost you a penalty equivalent to three months of interest payments. You can obtain an “Open Variable Rate Mortgage,” which does not contain a clause penalizing you for early repayment of the mortgage.

Many Vancouver real estate buyers approach mortgages with a narrow-minded focus on obtaining the lowest interest rate. These special rates can seem attractive on the surface but can cost you more money in the end. Discuss the pros and cons of each product with your bank mortgage specialist or mortgage broker.

Obtain a Pre-Approved Mortgage

Secure a pre-approved mortgage — the lender’s estimation of how much money the institution will lend you for your home mortgage. The process works similarly to applying for an actual mortgage because the lender conducts a preliminary review your credit history and income. Mortgage lenders grant you advanced approval for a specific mortgage amount, interest rate, and term.

Lenders become obligated to the quoted rate for a certain amount of time, such as 60 to 120 days. A pre-approved mortgage does not require the buyer to follow through with a sales transaction; however, it does come with conditions such as verification of down payment, employment, and income later when you submit an offer.

When you make an offer, you demonstrate to sellers that you can close the deal, which puts you at an advantage over offers presented by buyers without a pre-approval. Even with a pre-approval in hand, make sure that you add a “subject to buyer obtaining financing” provision to the offer to purchase document.

Buying a home is one of the most exhilarating and daunting undertakings a person will ever make. At the same time, it represents one of the most expensive financial transactions most people will encounter in their lifetimes.

Whether you have purchased a home before or you are a first-time home buyer, working with a professional team that includes a real estate agent (licensee) and Lawyer can help you sidestep many of the pitfalls of buying real estate in Vancouver. Choose a practical professional who takes the time to get to know you and your objectives and who is a straight talker.

Working with a Vancouver Real Estate Agent

Buying a home involves multiple steps. All real estate transactions are different; a seemingly simple agreement to buy a home can fall apart at the last minute. In many cases, a knowledgeable and experienced real estate agent could have saved the deal. An agent helps guide you along the course of purchasing your home and with minimal hassles.

The real estate agent can locate properties that meet your specifications. The agent or broker has information on Vancouver neighbourhoods, especially areas of high property value appreciation. Many licensees have inside knowledge of certain desirable properties before they hit the general market. A well informed and experienced licensee has access to information that helps make informed decisions.

Tasks handled by your agent ranges from scheduling showings of listings to finding other professional or trade people to help close the transaction.

In Vancouver, the property’s listing agent must attend showings, which makes last-minute showings a rarity. The Real Estate Services Act covers the requirements for licensees.

Obligations of the Agent

Some real estate agents/brokers work either for the seller or for the buyer. Other agents work both sides of a real estate transaction. Real estate buyers in Vancouver have a choice of working with a buyer’s agent or seller’s agent. A buyer’s agent represents your interest in the real estate sales transaction. The buyer’s agent ensures that you receive services and the latest information on new listings that have the features you desire. The seller‘s agent works for the interest of the seller.

For example, let’s say that you make a written offer to purchase a home for $225,000. You might tell the broker, “I really want this property and will be willing to go as high as $250,000, but don’t tell the seller I will go higher.”

A seller’s agent has the responsibility to inform the seller of this significant and important fact. However, an honest seller agent/broker should warn you of his or her obligation to convey important information to the seller.

A buyer’s agent/broker has a responsibility of confidentiality to the buyer, even though the seller’s pays the commission. If you deal with a seller’s agent, keep confidential information that you prefer the seller not to know.

The agent/broker agent should take the time to explain the dynamics of the real estate buying process in the Vancouver market. This includes a discussion of the variety of procedures and legal documents involved in Vancouver residential real estate sale transactions. This includes Purchase and Sale Agreement, Disclosure Statements, land surveys, and agency forms. The agent make sure that you understand the process, obtains your input and criteria for your home, and executes your plan.

Interviewing Real Estate Agents

In Vancouver, you are purchasing some of the priciest real estate on the planet. Do not make your decision based on a cursory short interview or because the individual whom you met at an open house seems like a nice person.

Follow the lead of many sellers. Some Vancouver home sellers spend hours interviewing three or four agents before making their final choice.

Use the items below as a starting point for your interviews. Grade the candidates based on their responses, and make your final selection.

• Determine if the agent has an active license that is in good standing. Obtain this information from the Real Estate Council of British Columbia.
• How many years’ experience does the candidate have as an agent or broker?
• Does the agent work in real estate full-time?
• What real estate designations has the candidate earned?
• Does the agent belong to the Multiple Listing Service (MLS), a database used by a network of REALTORS® to list properties for sale in the Vancouver region?

Ask each candidate about the agent’s relationship with you as the buyer. You want to find an agent with skill but also a persona that makes you feel comfortable. The person should have the experience you desire and the skills to negotiate the best price on your behalf. Do not reveal any information during the interview that you would not want revealed to sellers.

Choosing a Lawyer/Notary

Purchasing real estate in Vancouver has significant financial, personal, and emotional consequences for the buyer. Any number of legal issues can arise in association with buying a property. Vancouver real estate sales also involve a tremendous amount of paperwork.

Therefore, finding a knowledgeable real estate Lawyer to represent your interest makes good sense and is worth the investment. Hire a Lawyer before executing any legal documents. Once you sign off on any paperwork, you have a legal obligation to adhere to the provisions and conditions outlined in the document.

It is important to have a real estate Lawyer you trust who can provide you with the best legal advice and safeguard your rights and interests as a buyer.

Seek out referrals from family, friends, and business associates. Once you settle on some candidates, conduct interviews to find out about their experience representing buyers in the Vancouver real estate market. Discuss the services they will provide and the fees they will require.

After you’ve located a home you want to buy, your agent will walk you through the process of putting together an offer to purchase. Typically, the buyer’s agent presents the offer to the listing agent or seller on your behalf. In the hot Vancouver real estate market, properties in high demand may have several offers.

In some areas of Vancouver, competing offers will come in much higher than the asking price. Work with your agent to assemble a reasonable offer, including terms and conditions.

Components of a Real Estate Offer

Understanding the language of real estate offers helps you put together a solid offer representative of your best interests. Your agent can explain this part of the home-buying process, answer questions, and help draw up your Offer to Purchase. Components of an offer could include the following provisions:

• “Terms” include stipulations regarding financing, like the offering price for the property and the arrangement of financing.
• “Inclusions” and “Exclusions” refer to specifications contained within the offer that includes and excludes specific items from the sale of the property, such as appliance, drapery, or certain fixtures.
• “Deposit” denotes the funds put down as a token of the buyer’s assurance and seriousness in following through with the transaction. The deposit goes into an interest–bearing brokerage trust account and is applied to the purchase price at the closing. Your agent can give you advice and assistance on choosing an appropriate deposit.
• “Possession/Closing Date” refers to the date the lending institution put the funds for the purchase in place, when the buyer takes legal possession of the property from the seller.
• “Conditions” protect the buyer’s interest in the transaction. They list events that must occur before the transaction closes. Typical conditions included in an offer include items like “subject to obtaining financing in 30 days,” “subject to an approved home inspection,” or subject to the strata council accepting pets.”

It is not necessary for an offer to have conditions. Sellers prefer “firm offers” or those without conditions. On a hot property, a conditional offer could immediately eliminate you from consideration.

Include a time limit for the seller to accept your offer — normally 24 to 48 hours. If there are appliances, light fixtures, custom draperies, or other items you would like to include as part of the purchase, make sure you list them in the offer. If you need to sell your current home, make your offer condition upon selling your home by a particular date.

The seller could accept your initial offer, reject your offer, or present a counter-offer. The counter-offer may differ from your original offer in respect to price, conditions, closing date, or other items. Buyers and sellers often counter offers back and forth until one party accepts or rejects the offer, which ends the negotiations.

Acceptance of the Offer

Once the seller accepts your offer, you must complete the following tasks:

• Pay the agreed deposit, usually around 5 to 10 per cent of the purchase price.
• Have the property inspected by a certified home inspector, which is optional.
• Present a copy of the purchase contract and make final arrangements for financing with the bank or mortgage broker.
• Buy the necessary fire and liability insurance coverage.

Provide the seller with a written notice of the removal of any remaining “subject to” clauses. This action results in the offer to purchase or counteroffer becoming a legally binding agreement. Failure to meet a condition, or remove one, ends the contract.

About Home Inspections

Although home inspections are optional, many buyers feel more confident about their purchase when obtaining an inspection. A home inspection consists of a visual examination of key components of the home’s structure and heating, plumbing, electrical, roofing, and other systems. It is an emotionless method of evaluating the home and receiving objective feedback.

An inspection identifies any major defects in the property. The inspector advises the buyer about the working condition of mechanical systems and can provide an estimate of costs for any repairs or replacement.

Create a list of certified home inspectors from your agent, family, or friends. Find an inspector with credentials from an organization such as the National Institute of Building Inspectors (NIBI) or Canadian Association of Home Inspectors (CAHI). Avoid hiring an inspector whom you plan to hire to complete any work on the home. This eliminates any possible conflict of interest.

The home inspection is a condition that you must include in the offer to purchase along with a length of time for completing the inspection after the seller accepts the offer. After the inspection, the inspector prepares a report that details her findings. Schedule the inspection at a time when you can accompany the inspector during the actual inspection or walk through with the inspector after the completion of the report.

Some aspects of the inspector’s findings may require the assistance of a specialist for a more comprehensive evaluation. The cost of an inspection differs and depends on factors such as the size and location of the home, its age, amenities, or additional services like well testing.

You have found the perfect home for your family. The seller has agreed to your offer, conditions have been removed, and the financing is in place. Concluding the purchase of your home does not have to be stressful as you and the seller work out the remaining details of the deal — sometimes at the last minute.

You should report any minor issue to your agent and attorney to prevent small issues from turning into major problems that could derail the closing. An experienced real estate agent and attorney can make the difference between a tense or relaxed path to the closing table.

Vancouver Real Estate Closing Costs

Vancouver real estate buyers must pay a series of one-time fees to close the transaction. The closing costs you must pay depend on the situation. Typical costs include a real estate appraisal, title search, and legal fees. Some other costs incurred by Vancouver real estate buyers include:

Goods and Services Tax (GST): Equals 5 per cent of the purchase price for a new single-family home, townhouse, or condominium. It also applies to substantially renovated properties. There is a GST rebate offered for properties and buyers that meet certain criteria. You must pay the GST to receive a rebate.

Property Transfer Tax: Vancouver real estate buyers must pay a property transfer tax, which is calculated based on the following formula: 1% on the first $200,000, 2% up to $2,000,000, 3% up to $3,000,000 and 5% on the remaining purchase amount. If you are a foreign national an additional PTT must be paid. First-time buyers may qualify for a waiver on homes purchased for $475,000 or less.

Prepaid Property Tax and Utilities: Buyers must reimburse the seller for the portion of prepaid property taxes and utilities from the date of possession to the year-end.

Mortgage Loan Insurance: Mortgage loan insurance from the Canadian Mortgage and Housing Corporation is a requirement for property purchased with less than 20 per cent down payment.

Interest Adjustments: If you receive the mortgage funds outside the standard period, you will have to pay the interest that accrued. For example, if you close the 15th day of a 30-day month, you will need to pay the lender the interest amount due for the remaining 15 days of the month.

Fire and Liability Insurance: Mortgage lenders require buyers to present proof of this coverage for financial protection against loss by fire and enable the buyer to cover potential losses. The amount of the insurance must cover the full value of the property.

Your attorney should provide an estimate of the closing costs a few days before closing. You will need to pay this amount along with any balance remaining for the down payment at the closing. You will have to make a payment before signing the legal documents required to transfer ownership and receive the keys to your new home.

Final Steps to Closing

The buyer’s attorney needs to gather information regarding how you will hold title to the property, such as “joint tenants” for a husband and wife. The attorney must also conduct a title search of the property records and obtain the property tax information and other information to prepare the Statement of Adjustments.

Many of the duties of your attorney take place during the closing process. Activities include:

• Performing a title search to see if the property has claims or obligations against it
• Clearing up any claims before closing the transaction
• Overseeing and verifying the proper preparation and accuracy of closing documents, including title transfer, mortgage paperwork, and property transfer tax forms, and Statement of Adjustments

Once your attorney receives all the documentation for the real estate agents and the lender, he or she will start the work necessary to close the deal by the agreed to date.

You will receive a Statement of Adjustments before the closing date. This document shows an itemized list of the money coming in and going out. Some items, you and the seller will share, such as property tax or water bill payment. The most important item for you to pay attention to is the amount of the money you will need in addition to the mortgage to close the deal.

You will meet with your attorney 24 to 72 hours before the closing to deliver any required funds — closing costs and the remaining down payment. Make payments in the form of a certified cheque, inter-bank transfer, or bank draft.

Your lawyer consummates the transaction by registering the transfer and mortgage paperwork. He or she also arranges for the seller’s attorney to receive any funds. After your attorney informs you of the completion of all necessary tasks, you can pick up the keys to your new home from your real estate agent as determined by the “possession date” spelled out in the Contract of Purchase and Sale.