Frequently Asked Questions:
Q: Why do I need to use a REALTOR®?
A: As a buyer, it is beneficial to team up with a REALTOR® (Buyer's Agent) as he/she is very experienced in purchasing real estate. The most important duty of a Buyer's Agent is representing buyers during an offer and ensuring that their best interests are represented, all available information is made available to them, and keeping their personal information secure from the sellers and listing agents. The Buyer's Agent is also responsible for booking viewings and accompanies the buyers to all of the properties viewed. An experienced Buyer's Agent has seen thousands of properties and his/her knowledge is very valuable.
Q: Do buyers pay commission to the Buyer's Agent?
A: No, sellers pay the commission of both the Listing Agent and Buyer's Agent.
Q: How quickly can I view a property on MLS®?
A: This is variable depending on the sellers requests and the availability of the property. If a property is tenanted, 24 hours notice is required. Viewing information is made available to the Buyer's Agent on the MLS® server. A good rule of thumb is to allow one day's notice to arrange a viewing.
Q: Can I view For Sale By Owner properties with my Buyer's Agent?
A: Yes. The Buyer's Agent will contact the seller and arrange a commission before the viewing and try to arrange a viewing without the seller being present. These sellers are usually quite happy to have agents bring buyers through their properties as the commission negotiated is still much less than what they would pay with their property on MLS®.
Q: How do I avoid buying a leaky condo?
A: There is always the potential for some water damage to a building. Your Buyer's Agent will help you discover as much as possible about any condo complex you decide to offer on. Many buildings in Victoria have already had “remediation” and are deemed fully repaired of leaks and water damage. When writing an offer, after a price and terms are agreed upon, the buyers receive two years of strata minutes to read. If there are ongoing issues with leaks or repairs, it will be stated in these minutes. It is very important that buyers and their agents review these minutes thoroughly.
Q: What is a conditional offer?
A: When an offer is first written, it is usually conditional to such terms as financing, inspection, reading strata minutes etc. This simply means that the buyers and sellers have agreed on the main terms, price and possession date, but the buyers have several “conditions” or “subjects” to satisfy before the offer is concrete. A normal period of time for the buyer to satisfy these conditions is 7 to 10 days. After the buyers are satisfied and have arranged their financing, approved an inspection, strata minutes, etc., they “remove” the conditions and the property is considered sold. The property appears as “pending” sale on the MLS® system until the completion/possession date.
Q: What is a deposit?
A: Almost all offers are accompanied with a deposit. Depending on the sellers terms, this deposit may be required upon acceptance of the offer or upon the subject (condition) removal date. This amount is held in trust by a lawyer or a realty brokerage until the completion/possession date. If buyers forfeit the contract of purchase and sale, sellers may be awarded this deposit as damage. In effect, the deposit is a measure of good faith as it states the buyer is serious about the offer. The deposit may be used as part of the down payment and this is arranged through the lawyer/notary in charge of processing the sale. Deposit amounts vary depending on the buyers finances.
Q: What are the completion/adjustment/possession dates?
A: Completion date refers to the date that the title is transferred from the sellers to the buyers. This is the day the lawyers/notaries transfer the title and the buyers are registered as the new owners at the Land Titles Office. Adjustment date refers to the date (usually the same as the completion date) that taxes are adjusted to accommodate the transfer of title. The amount of property taxes is adjusted so both the sellers and buyers pay their amount of property tax applicable before and after the completion date. Possession date is the day the buyers are allowed to move into the property. This date can be the same as the completion date but is usually scheduled for the next day.
Q: What costs can I expect when purchasing a property?
A: Legal fees – a lawyer or notary is needed to transfer title of the property from the sellers to the buyers. This cost of this service is approximately $1500. A property survey may also be necessary for an additional fee. If the sellers already have a property survey certificate, this will be transferred to the buyers at no cost.
Mortgage fees – there may be fees associated with setting up your mortgage with your bank/mortgage broker. An example would be a property appraisal. Please consult your mortgage professional so you are aware of potential fees.
Inspection – a property inspection is always recommended and this costs approximately $500.
Property Transfer Tax – if you purchase a property above $450,000, the BC government collects a tax in the amount of 1% of the first $200,000 and 2% of the remainder.
HST – if you purchase a newly built property with a purchase price in excess of $525,000, HST will be applicable to the purchase price.
Q: Are first time homebuyers exempt from Property Transfer Tax?
A: If a first time homebuyer purchases a property under $500,000, they are exempt from the Property Transfer Tax on their first purchase only. There are also tax exemptions for newly built homes. More information is available online at http://www.sbr.gov.bc.ca/individuals/property_taxes/property_transfer_tax
Q: Can I use RRSP savings as a down payment?
A: First time homebuyers are allowed to withdraw RRSP's tax-free for a down payment. The RRSP's are paid back over a period of several years and the amount paid back yearly is not applicable to RSP contribution/income tax savings. Buyers are allowed to withdraw up to $20,000 from their RRSP's for down payment. If two buyers are making the purchase, each buyer may withdraw $20,000 for a total of $40,000. Please consult with your bank/mortgage professional for a full explanation.
Q: What is a leasehold property?
A: A leasehold is a form of property where buyers buy the right to occupy the land or building for a given length of time (decades – 999 years). It differs from a freehold purchase where the ownership of the property is purchased outright. Leaseholds often appear to be bargains as they are priced far below comparable freehold properties. Buyers need to speak with their bank/mortage broker and REALTOR® before considering an offer on a leasehold property so they fully understand the implications and are certain they can finance a leasehold property.
Q: What is a Property Disclosure Statement?
A: When a property is put on the market, sellers must fill out a property disclosure statement. This statement is a declaration of information from the sellers to the buyers of the property. This is a legal document and the sellers must answer truthfully. If sellers make a false declaration on this statement, they may be held liable in a court of law. Buyers must read and sign this statement as part of an offer.
Q: How do I get started with a Buyer's Agent?
A: To get started, simply meet with the agent and discuss what areas you are considering and what price range you can afford. The Buyer's Agent will set you up on a property search engine that will filter MLS® listings and send applicable properties directly to your email address. Search parameters to consider are areas of interest, type of property (house/townhouse/condo),minimum bedrooms and bathrooms, minimum square footage, pet and age restrictions, parking and more.
Q: How do I book a viewing of a property?
A: Call or email your agent to arrange a date and time to view the property. Have the address or MLS® number available when making the request. Please be on time for all appointments and be sure to call your agent if you are delayed.
Here is a Sample Contract of Purchase and Sale