I wrote a post with this title three years ago and have found it to be so useful for so many people that I have since started printing it out and handing it to my buyers. The basic principles outlined have not changed, but I feel it is time to revive this info from the archives by rewriting it and reposting it.
Being someone whose profession keeps them continually immersed in the world of real estate, it’s sometimes easy for me to forget that it’s a mysterious world for most people. People often feel exposed if not vulnerable when they consider entering it. This is of course why there are so many Realtors in the world. Despite what those “sell it yourself” websites and systems tell you, the fact that Realtors are still here in large numbers tells you that it’s not something that’s as easy as they claim. This post is for anyone who is thinking of buying real estate in B.C. If you’re from abroad, then there is more to this, so to start, I recommend reading this post and having a browse through my section on “Buying As a Non Canadian“.
Now, it doesn’t have to be intimidating. I’m going to outline the process for you so that you’ll have an idea of what to expect when you choose me as your Realtor. (Ok, that was a little tongue in cheek, but you can’t blame a guy for trying.) You can also get a deeper understanding of all of this by joining my mailing list by entering your email address on the right.
There are simply too many variables and possibilities for me to do this comprehensively, and too much info for me to write in a readable fashion. Keep in mind that this is intended as an outline, much like the table of contents of a book or an article in wikipedia. Plus as they say in commercials “actual experience may vary” which roughly translated comes out as “it doesn’t always go this way, but this is a typical experience”.
So here it is, the basic stages of buying a property in B.C.
1. Talk to a mortgage broker and get pre-approved.
I say this to people so much, and for good reason. It really should be the first thing you do. Going to talk to a mortgage broker and finding out how much you can borrow before looking at houses makes a lot of sense. I always explain this to my clients as “it makes sense to look in your wallet before you go shopping”. Then, you’ll want to decide how much you want budget on payments per month. A mortgage calculator is handy as a guideline for this. I do recommend going to a mortgage broker rather than a bank, as they tend to give better, more customized packages than banks and more quickly too. One of the reasons for this that mortgage brokers don’t get a regular paycheck, they only get paid for the deals they put together. And it doesn’t cost you anything to use their services, in essence they get paid by the lenders even though they’re working for you. Ask them for more info on this if you’re curious.
2. Come speak to a Realtor. (That’s me.) Now that you have an idea of what you’re able to afford, it’s time to find out what’s out there. By the time you’ve found this blog or spoken to a mortgage broker, you’ve probably already spent hours upon hours looking at listings online at realtor.ca/mls.ca and various websites where Realtors show their goods. This isn’t a bad way to do things, but it is very inefficient and until you speak to a Realtor you’re probably not getting the best search results despite all the time you’re putting into it.
I can’t speak for other Realtors, but here’s basically how I usually do things. I’ll sit with you and listen to what your wants and needs are. Then, I’ll start to introduce you to the possibilities of what is out there and throw various ideas at you to help you explore your options. Depending on where you’re moving from, you may be be expecting more for your money or you may feel like you’ve suddenly become rich. I’ll try to find out what is most important to you and combined with various factors, I’ll help you find properties that are the best fit by using a variety of electronic resources, plus my knowledge/experience with the market, plus my connections plus my simply paying attention while I’m out there looking at properties every day.
This is the beginning of a process that requires continual communication between us. So stay in touch! This communication is important for a variety of factors that I won’t go into here, but one that I will mention is that things can and often do happen fast and I will need to be able to reach you quickly and easily. As you look at places, you will hone your expectations and tastes. I’ll need to know how these things are changing. My knowing how you feel and your listening to what I know will make this and every part of the process easier on all of us.
Once I know what you need and want I’ll give/send/show you a list of properties that you choose from that you’d like to view. This is a list which will change as some places sell and new ones come out, and prices on a couple of them change. I may also have some suggestions based on what I think you will like. Regardless, I’ll tell you not to put too much emphasis on the photos and comments in the listings. They are a form of ad after all. It’s when you go look at them that you find out what things are like.
3.Looking at properties. We’ll have set up a time to meet and start to go out and actually look at places. We usually hop in my car, and then go look at places but we can go in separate cars too. This is the part where you find out that the properties often look quite different in person than they do in the listings, sometimes better, sometimes worse. Sometimes you find something that suits you right away and sometimes you have to look for a while. Sometimes you have to adjust your expectations and/or price range. Eventually, we should be able to find something that you enjoy.
Perhaps I should mention that I don’t double end properties as a policy. This is rare for Realtors, as it’s a method for making a lot more money, but I frown on the ethics of it. Read more about it here if interested. (It’s halfway down the page.)
4. Making an offer. This is when people’s emotions start to rise. You’ve found a place you like and now you try to see if you can get it at a price and with terms that you find acceptable. The thing is, the seller has to find the offer acceptable too in order to progress to the next stage. Expect a couple of days of negotiating before you find out whether you have to go back to step two or three again or if you can continue to the next step.
If all goes well, the next thing is to write a cheque for the deposit which will be held in trust by my company. This will form part of the purchase price, but you’ll get it back if you have to collapse the deal legally. (The idea is that if you don’t collapse the deal legally, they keep the money. Something I’ve yet to see happen.)
5. Removing Subject Clauses A lot of people (clients) put the bulk of their energy and focus into the negotiating part of the deal, but it’s actually not the most involved part of the process. Removing subjects is. Subject clauses are the parts of the contract where the sale of the property is “subject to” a variety of things that need to be done by a certain date before the contract can proceed to closing. The time period for this is usually less than two weeks after an offer is accepted. Depending on the type of property and the particularities of the sale, you will have different clauses to remove. But for the sake of example, let’s say you’re looking at a house and the situation is pretty basic/common, you and I will have to get the following done before the sale is finalized:
Get the go ahead from your mortgage broker regarding financing
Have the property inspected by a professional inspector to ensure that it is not in a condition that is substantially worse than it appears (It’s important to note that real estate in B.C. is sold “as is, where is” meaning, that there is no warranty.)
Approve a Title Search
Approve a Property Disclosure Statement
Arrange fire insurance for the property
If we can satisfy all these criteria then you sign for the subject removal and then you’re done with me until you move in. The other professionals you use (i.e. Lawyer, Mortgager Broker) will still want to talk to you though.
THEN, you move in! I’ll meet you in front of the property in question on the happy day and hand you the keys. That’s when everyone jumps with joy, hugs me and promises to name their first born after me. Ok, I’m joking, but it is a happy day for all involved.
All these and many other measures exist to protect you, so don’t feel intimidated by the process. I’m here to help.
It’s one of those things that sounds harder than it is. Many of my clients get to the end of the buying process and say “What? That’s it? I just bought a house?!”. What they don’t know is all the goings on behind the scenes that made it easy for them to get to that point. That’s not a bad thing though, it just means things have been done properly and that things went smoothly.
One of the first things I ask every buyer is “Are you pre approved?” I imagine that sometimes people think that I am being nosy about how much they can afford. In reality, I just want to know if they know what they can afford.
I don’t even ask what amount they’ve been approved for. All I need to know is that they can get a mortgage for the sort of place we’re looking at. The rest, as far as I’m concerned, it between them, their Mortgage Broker and the Lender who is supplying the funds. Ultimately, this all boils down to affordability for that buyer.
You see, if a buyer goes out and makes an offer on a place and then it turns out they can’t afford it they have wasted a lot of time, stress and probably some money (on things like inspections or perhaps trips to the town they are moving to) before finding out it was for nothing. This is why I ask this question so early on. It saves everyone a lot of headache.
Even if you don’t qualify for a mortgage on the kind of place you had in mind, that conversation with the mortgage broker is still a positive thing. Why? Because now you have a plan. You will know what you need to save in order to get what you had in mind, or better still, you will know what you can afford now. If you’re not in a postiion to afford anything yet, at least now you know what you need to do. All positive steps.
If you come to me with a modest budget, I’ll tell you what your options are. I’m a big believer in leveraging your assests to make your financial life down the road easier. I’ll throw some ideas at you which you may not have thought of on how to do that. That said, an awful lot of people prefer places that are move in ready and cozy over the money maker. Either way, once you’ve worked out your finances, I can tell you what your options are before honing in on a section of the market to take a close look at and choose from. Using market knowledge to get the Buyer the best fit for them is a big part of what us Realtors do.
And this is in short, how you build the framework of your plan with helps from professionals. It costs you nothing to get the plan together. It only costs you money to go through with it.
I have an unspoken policy of maintaining the integrity of this blog by not making posts that are about specific listings. This, however is too big to keep to myself. The Hawthorne Development (click here for the map) has had a major reduction in prices across the board. Major. There’s a lot of units in there and in my opinion the pricing up until a few months ago was too high for the market, and more recently it has been about right but not quite low enough to sell in large numbers. Just a few minutes ago I got my fingers on the price changes that are currently being processed. I have cut out the parts of the documents that show the agreed to price changes, scanned them and included them below. What you see below is insider information as some of it will show up on the MLS and some won’t, but Im allowed to share it.
Even one of these units is a good deal at the new prices. The sort that don’t come up very often. What you see below is a long list of such deals. I am well familiar with these units as I have done a number of open houses there and have often thought about how they compare to other complexes in Nanaimo. I wouldn’t put this up on my blog if I didn’t think it was a big deal. Click on my name below to go to the contact form on my main website if you have questions.
Some details on the images below: You’ll notice that one of the pages says “on MLS” and that one says “not on MLS”. The prices on the left are the old price (which weren’t that bad, but not quite low enough to be a great deal) and the new prices on the right.
Here is the website where you can have a look at the development. I can send you individual listings and additional info by email if you contact me. Of course, I can also take you to see the properties.
The seasons have turned. It is now spring. The crocuses have been up for about a month now and daffodils have revealed themselves as well. Robins abound and the nicer weather has a way of making people feel good and do things like moving up in life.
The spring market means more Buyers, but more Sellers too. Realtors have a lot more on their plate and this is the time when we usually get a good indication of what the rest of the year will be like.
As I always say though, the best time to buy has more to do with your ability to afford payments than anything else. Market wise, there are only good times to buy and better times to buy as I have explained many times in other posts. Sellers, the same basic principles apply in this market as any other and keep in mind that although yoour property will look better now than it did in the winter, so will the other listings the Buyers are looking at. The specifics of how to make your particular place stand out is part of what you hire Realtors like me for.
Regardless of what I write on this topic, it will only be a summary of general principles. You see, in some ways houses are like people. They are all unique, some more than others, and certain qualities will make an individual more popular. The more of those qualities they have, the more popular they are.
Before we get into what those qualities that create the dollar value are, let me point out something that should probably go without saying: Different strokes for different folks. Not everyone wants the same thing and sometimes I see people really happy with a place that most people really wouldn’t be happy with. Some people really don’t mind living next to a busy road or in the crazy part of town. The good news for them is that they save a ton of money on their happiness!
Those of us who have more mainstream tastes will be trying to find a balance of the following list. Think of this list as ways to add value to your home as a Seller and some food for though on how to avoid paying for more than you need if you’re a Buyer:
Space: (Inside and out) Not a lot to say about this one as I think it’s obvious.
Number of Beds and Baths: In a house, less than three bedrooms is going to make quite a difference in desirability/cost. Having a second bathroom is a bonus for many and a necessity for others. If you’re a Buyer on a budget, think about what you really need now and in the future. You may find that it makes more sense to not have that extra bedroom and settle for something more modest or you might decide to rent it out for some help with your mortgage until you get more settled financially or your family grows by one.
View:In Nanaimo, we have lots of ocean views and mountain views. Both add value, especially the ocean view. Even so, it is in such demand that properties, particularly in hilly North Nanaimo, are crowded together on the hill in such a way that they can all share a piece of the ocean view. A home with a sweeping unobstructed ocean view (no roofs, trees or powerlinesat all) will fetch a pretty penny. On the other end of the spectrum, a house with a view of the reclusive neighbours ever expanding junk collection… well let’s just say it’s not a selling feature.
Age: People like new. The asking price of new properties, which is plus tax, reflect that. I do tell my Buyers that all properties look good when they’re new though and that it takes a little time to see what kind of quality it really has. This is why I’ll generally steer my buyers towards something that is a couple of years old so they can have the feeling of a new home without having to pay quite as much and know that it has been “tested” first.
Condition: This one is also common sense really and is related to the last one but it of course also applies to older properties as well. A home that is properly maintained will hold its value better than one that isn’t. Less work to be done is great and even if it is dated with its shag carpet and wood paneling, if it has “good bones” it’s a decent house for someone who doesn’t mind doing the updating rather than paying more for a place that already has it done. At least being “move in ready” is a big plus even if dated. Most people don’t want to do work before they move in. Only the keeners who want to save some money and understand how to do it actually do this.
Location: Also common sense. Actually so much so that it is my opinion that most people focus on this detail more than I think they should. But yes, an important factor. Being next to the train tracks or on the wrong side of them will drop that price considerably. Being on the waterfront or in a quiet spot that is still close to amenities will have that affect in the other direction.
Quality/Style of finishing: When people talk about finishing they generally mean things like flooring, paint, trim, counters, doors, light fixtures and so on. Newer is almost always reacted to as nicer and this applies both inside and out. Sadly, a lot of do-it-yourselfers know this and not much more. So they try to fix up their home themselves hoping to add value but botch up the job and end up having the opposite effect. To those people I say, make sure your buddy who helps you do it actually has professional experience or hire someone who does. You see, nine times out of ten when a homeowner proudly tells me “I did this myself!” I’m thinking “Yeah, I can tell…”
Light: Lots of light feels like lots of space. This is part of why when us Realtors say to use “light neutral colours” we mean some sort of off white. It lets people imagine their own stuff and ideas in there but it also makes for a sense of space. Lots of light also makes people feel happy and for the lack of a better term, “free”. Doubly so if it’s natural lighting. Those who are into gardening or energy efficiency like natural light even more so being south facing is a bonus for them.
A Sense of Urgency: When a property is fairly fresh on the market it will, as a rule, attract better offers than one that has been sitting there for a while. This has everything to do with pricing it right in the first place in a way that will attract Realtors and their Buyers alike. A buyer will typically look at 8-15 places in person after having looked at hundreds online in the same price range with similar criteria before making an offer. They will usually have a plan B as well. If you’re selling your property it has to be number one on that list. Not second or third. Number one. And if it really is a good deal, a Realtor who brings some Buyers through who don’t end up buying it for whatever reason will often bring through others buyers because they see value in the property the whole time knowing that it might get snatched up by some other Buyers.
Just about every contract of purchase and sale I’ve ever seen has included a subject clause that says that the offer is subject to the Buyer’s review and approval of a title search.
A title search is a government issued document that shows who has what rights to the property. In addition to who the owner is, what kind of ownership they have and who they have a mortgage with, there are a wide variety of things that can and do appear on title which may affect the property’s use or value. Sometimes, there are things on the title search that prevent the property from being sold at all until they are dealt with. However, such things should be dealt with at the time of listing so the Buyer or their Realtor rarely have to.
As a Buyer, you, your Realtor and your Lawyer will need to make sure that there is nothing on title that could be a bad surprise for you down the road and this is why we make the offers subject to the review and approval of the title search.
I will warn you that the answer to the above question is in my eyes, nebulous. It’s case by case in terms of the strata and your own tastes and financial situation.
After a great deal of reflection on the matter, I have come to the conclusion that (in most cases) it is more of a lifestyle decision than a financial one. You see, there are many pros and cons in either decision in terms of things financial and otherwise. Sure, you could micro analyze this for each and every individual combination of Buyer and property, but we’re talking about homes here. The finances are a big factor, but there are so many others that add up to the result of how happy and satisfied you are with where you live. The rule of thumb being to buy something you can comfortably afford first and foremost. The rest is, again, down to your tastes and plans.
First off, you may be wondering what a strata fee actually is. This is one of those points where I could give a very long an technical, jargon filled answer on but I won’t. The short of it is that the monthly fee you pay when you live in a townhome or condo for example. The money is generally used for maintenance of the shared parts of the complex (called “common property”) and management. It may also include certain utilities like hot water or heat for example. What you get for that money will vary from complex to complex. I have seen places that are as low as $85/mo and as high as $350/mo. Generally the cheaper fees mean you get less offered but the size and price of the property are also a big factor.
On a related note, are pad rental fees for mobile homes in mobile parks. Pad rental fees ( the monthly fee you pay for having your mobile in the park) which we see for mobile homes in their parks those are typically $300-350 in our area. Rent is technically different from a strata fee, but it is money you pay monthly when you own a property.
But let’s focus on strata fees.
The point of stratas is that there are all sorts of things that are shared. It’s cheaper to build one big building with lots of units than it is to build the same number of houses with the same square footage. They are therefore, as a rule, cheaper to buy. The roof, siding, windows, parking, landscaping , lobby, and potentially other things are shared and need to be maintained and managed. If there were not strata fees, these things would simply get dirty, overused and then ruined.
If you buy a house, you don’t have to pay the monthly fee, but you do have to pay for the repair and/or replacement of the roof, siding, windows, parking, lanscaping etc. and unless you’re the sort of person who really plans ahead with their money, you won’t have been making monthly payments towards that expense years before it arrives.
But which is a better deal? I’ve tried to figure this one out by estmating maintenance costs of houses to the owner vs. the ongoing strata fee. I’ve really thought about this hard and I’ve decided that it is too much a case by case thing in terms of which complex, which house as well as in terms of the Buyer’s financial habits and to come to a firm decision on.
You see, if a condo building is properly managed, and if there are no bad surprises in regard to the craftmanship of the shared areas of the building, the regular fee will ideally cover the ongoing maintenance and repair of the common areas. This way, a big all at once special assessment fee shoudn’t happen. (But they do sometimes, which is another post in itself. Mostly it was an issue in certain stucco sided complexes built in the 90′s but it also happens when the strata owners get together and vote to have lower fees ignoring the need to save for impending major repairs like a new roof.)
If it’s your own house, you won’t have to pay a monthly fee but you will have to pay for the big expenses like a new roof, new windows, new siding or what have you all at once. The same pitfalls exist in the single fmaily home as well. If you try to cut corners and don’t do proper maintenance or repairs or if the home was shoddily built you will be more likely have a major expense on your hands all at once. However, as the building is not shared, you can decide your own fate and not have to hope that as a group the right decisions are made. Also, it bears mentioning that you could even save for such repairs but imposing a monthly savings plan on yourself. You might even invest that money and watch it grow while it waits to be used.
I could easily talk more about things like the effect on equity based on how much you’re paying per month, whether it’s cheaper to share a roof or what have you among many people instead of just for yourself or whether the small portion that goes towards paying for management makes it not worth it. So much to consider.
In the end, I think the main thing to think about is a combination of what you’re able and willing to get mortgage wise and what lifestyle makes sense to you. Here is a list of food for thought when trying to decide on whether to go strata or single family:
Your average strata is smaller and cheaper than your average house.
A strata is less for you to think about in terms of maintenance.
Your freedom to do what you want with a strata is more limited and the decisions made by the group may not make sense for you.
Stratas are more likely to be withhin walking distance to amenities which is a plus for convenience but may mean less quiet. New ones have better sound proofing though, but then again same goes for houses.
They typically have no yard, and even if they do it’s probably not big or exclusively yours. That may be a good thing or not depending on your preferences.
Some stratas have a clubhouse which may include things like a pool table, guest rooms, an exercise room and space to hold private parties.
I have to remind myself once in a while that people coming to this site don’t necessarily know Nanaimo very well if at all. If you’re one of those people, this is for you. Please browse this blog and my main website for more info like this.
The Following is written by a guest blogger, a Mortgage B roker by the name of David Dyck. He works at Dominion Lending Centres. I was already aware of the recent changes of mortgage law but I believe in the addage “Write what you know.” which is why I am glad to add a broader perspective to this blog. I am hoping that David will continue to share useful mortgage info with us.
The Finance Minister of Canada has made a couple changes to the way banks can lend mortgage money in order to slow down some of the consumer spending we as Canadians love to indulge in. The average house hold credit debt in Canada is nearly $30,000 .00 per home which shows we are not shy when getting into debt for the things we want is a possibility. I believe the new lending practices are a means by which to make consumers choose between home ownership or keeping up with the neighbours on credit card spending because, with the new rules in regard to mortgages, payments will be higher and potential investment capital will be lower.
Rule #1: Refinancing amounts will drop from 90% Loan to Value to 85% Loan to value which means that when the time comes that you would like to use your equity for investments/pleasure there will be less capital to use potentially putting some people in a tough spot.(For those of you unaware how Loan to Value ratios work lets say I wanted to borrow $1000 at a 90% LTV the bank would give me $900 and I would have to come up with the remaining $100 myself)
Rule #2: Amortization periods will be decreased from 35 years to 30 years thus shorting the amount of time given to pay off the loan as well as increasing monthly payments .
These rules which are to be law as of March 18 2011 are intended to tighten the reigns on potential new home owners and make them think twice before going and buying an 60 inch tv or other frivolous items. The government wants to keep our mortgage default as low as possible thus making Canada a respected player in the world economy based on our excellent lending and banking practices. In short if a new home is on your horizon an indepth look at your personal finance and plans for the future is completely necessary.
See this photo? This isn’t the title screen for “The Day After Tomorrow”. This is a composite photo that was just released by National Oceanic And Atmospheric Association (NOAA) on the day half of North America was in the grip of a severe winter storm.
Now take a good look at where Nanaimo is. You’ll need to click on it for a good look.
That’s right. It’s green. Green! That’s a normal thing for us in the “winter”. Sure, we get four or five snowfalls a year but it’s usually all gone in two days or so. It’s a different kind of Canada out here.
Being someone whose profession keeps them continually immersed in the world of real estate, it’s sometimes easy for me to forget that it’s a mysterious world for most people. People often feel exposed if not vulnerable when they consider entering it. This is of course why there are so many Realtors in the world. Despite what those “sell it yourself” websites and systems tell you, the fact that Realtors are still here in large numbers tells you that it’s not something that’s as easy as they claim. This post is for anyone who is thinking of buying real estate in B.C. If you’re from abroad, then there is more to this, so to start, I recommend reading this post and having a browse through my section on “Buying As a Non Canadian“.
