Buying a home can be one of the most exciting and rewarding expereince in your life. The pride of home ownership is one of life’s greatest joys and biggest accomplishments. It is an exciting time and there is a lot to learn so it’s natural that you will have questions along the way.
This guide is designed to give you an overview of the real estate transaction process and help provide clarity and peace of mind during the home buying journey. It will help empower you with key market information, industry knowledge and provide you every possible advantage to ensure you make informed decisions along the way. Educated buyers are able to make intelligent decisions creating a stress free and enjoyable home buying process.
Let’s get started!
THE PROCESS & TIMEFRAME
Buying a home in step-by-step methodical manor will help ensure each step of the process is smooth and well thought out.
A typical home buying timeline looks like this:
Step 1 Mortgage Pre Approval (1 – 2 weeks)
Step 2 Defining Home Criteria & Location (1 Week)
Step 3 Viewing Homes (1 – 4 weeks)
Step 4 Writing an Negotiating an Offer (1-2 days)
Step 5 Conducting Diligence (1 day – 1 week)
Step 6 Conveyance / Costs (1 day)
Step 7 Preparing to Move (10 - 90 days)
Step 8 Move In & Enjoy!
Step 1: Getting Pre-Approved for a Mortgage
The first step towards buying your home is knowing exactly where you stand financially and what size of mortgage you will be approved for.
Speaking with a mortgage specialist will help you understand your down payment and financing options and, most importantly, what price point you can afford.
The mortgage industry changes fast and interest rates can move at any time. Partnering with a mortgage broker to help you find the right mortgage product at the best rate is key to your home buying process.
Everyone has a unique financial situation and finding the perfect mortgage to match yours is the job of a mortgage Specialist.
The Benefits of getting Pre Approved
- Save you money. Rate guarantees and mortgage terms can save you money for years to come.
- Less stress throughout the process. You will know that you are ready and capable of buying a home.
- Save time by only looking at properties that you can afford.
- Get a better deal on the home that you want. Sellers like to know that buyers already have financing in place.
I work with a number of fantastic mortgage specialists and will be more than happy to recommend one to you.
There are a number of government incentives for First Time Homebuyers. These include Transfer Tax Exemption, First Timers Tax Credit & GST Rebates on new homes. Make sure you discuss these incentives with your mortgage specialist to see if they are a good fit for you.
Once you are pre-approved for a mortgage and know the price range of home you can buy, we can get into the fun stuff, looking at homes!
Step 2: What does your dream home look like?
Now it’s time to let me know where you want to live and what your home looks like. A good starting point is to outline all of the “must have’s” in a home.
- Are you looking for a condo, townhouse or a detached home?
- How many bedrooms and bathrooms would you like?
- Do you need parking? A storage locker? In-suite laundry?
- Would you like to be close to work? Transit? Schools?
- Do you prefer a newer building, older, renovated or a pre sale?
I am here to help sort through the options to find you the best house, at the best price and with as many of your wants and needs as possible.
Once I have a clear picture of what your dream home looks like, I will begin searching for all the options that match your criteria.
Finding your home can come from a multitude of places including the MLS, off-market and exclusive listings, brokerage listings and developer access.
You will receive emails of potential homes from me a few times each week and you can let me know which ones you’d like to have a closer look at.
Step 3: Looking at Homes
When you see a property you like we will set up an appointment to view it, or attend an open house. Properties are selling very fast in this market so we should plan on viewing homes as soon as possible. Getting in before the public can sometimes make all the difference in securing the home you want.
When viewing a property you want to take your time, envision yourself living there and where you would put your furniture and so on. Ask lots of questions, make sure you know the area well or let me inform you about all the features that are nearby, where the schools are, transit options, restaurants, cafes and everything that is important to you.
When you see the property that you really like and want to make your home, we move to the next step, Making an Offer.
Step 4: Making an Educated Offer
Great, you’ve found a property you really like, how do we make an Offer?
When it is time to make an offer on a property, there are a number of steps to take that ensure we are making a educated decision.
What is the condition of the property?
Each property has documents that are available that outline the condition and status of the building and, if stratified, the strata details. It’s like looking at the Health Chart of a property.
Is the construction solid? Is there a healthy reserve fund in place? Are there any special levy’s coming up? Are there reoccurring issues with the building? Does the property come with parking? Storage? Has the roof been replaced?
We will review all the pertinent documents that answer these questions prior to making an offer. If the building is in poor shape, it may be a good idea to keep looking at other options.
How much should we offer?
I will conduct a detailed Comprehensive Market Analysis complete with comparable active and expired listings, recent solds and historical data to determine the market value of the home.
From this data we will be able to determine approximately how much the home will sell for and what price we should offer.
When can we move in?
Owner Occupied vs. Tenanted vs. Vacant
Depending on the occupancy of the property, the completion and possession dates may vary greatly. If the property is empty, the seller will most likely want the buyer to take it over as soon as possible. Is this an option for you? If it is owner occupied, the dates will most likely be 2 to 4 weeks away. If the property is tenanted and the seller needs to give notice to the renters, it may take as much as almost 3 months before you can get the keys. These are all factors we will discuss on a property-by-property basis.
Do we include Subjects in our offer?
A Subject is a ‘condition that must be met in order for the deal to become official.’ Subjects are included in offers to allow the buyer time to perform diligence on a property.
The three most common subjects are:
Subject to Financing
This subject allows your bank or financer to appraise the property and determine whether or not it is worth what you have offered to pay for it. If you have offered $20,000 more than the bank thinks a property is worth, you may have to cover that difference in cash.
Subject to Inspection
A professional home inspector will inspect every inch of your potential home and the building (if it is a condo) to let you know the condition of everything inside and out. An extensive report will be provided and allow you the option to continue with the purchase or back away if the property is in poor condition.
Subject to review of documents
As discussed earlier, the ‘Docs’ outline the condition of the building and the strata and include reports such as the Annual General Meetings, Engineering Report, Depreciation Report, Property Disclosure Statement, Form B and Strata Minutes. These must be read to discover the status of the building.
Each property may have it’s own unique aspects that may require further subjects, again, these will be looked at on a case-by-case basis.
Subject Free Offer
The Vancouver market is very active and almost every property under $700,000 is going into multiple offers. In order to get an accepted offer in this type of marketplace you need to submit a Subject Free offer.
If you are in a multiple offer scenario and you have even 1 Subject in your offer and the other ones do not, your offer will likely not even be considered, even if it is the highest price. That is the reality.
So how do you submit a Subject Free offer and still be protected?
There are a number of ways to submit a Subject Free offer and feel good about it.
First is to have financing in place. Knowing exactly what you can afford and offering an amount lower than this will help protect you financially. Prior to making an offer I will be speaking directly with your lender about the specific property and the offer amount. Quite often the lender has financed other similar properties and can let me know their comfort level with the offer price.
Second is the inspection. If the building is newer, still under warranty and the documents show it to be in excellent condition, you may be OK to skip an inspection. Otherwise we can book an inspection prior to the offer date to have the information in place before deciding to move ahead with an offer, and if so at what price.
Third is reading the documents in advance of making an offer. Having a thorough understanding of the building’s condition, the strata, the reserve fund and the property disclosure statement will give us the knowledge required prior to making an offer.
With financing, inspection and documents in place, making a Subject Free offer will increase your chances greatly.
How To Win In A Multiple Offer Situation
With multiple offers the common place in Vancouver, how do you make your offer stand out?
There are 7 strategies I use for every multiple offer and they have proven effective time and again.
It is paramount we utilize each and every one of these when entering into a multiple offer situation.
- The offer must be Subject Free
- I touched on how this can be done in the previous section
- Deposit Draft is ready
- By having a copy of your deposit bank draft in hand when I present the offer shows how serious a buyer you are and instills confidence in the seller and selling agent that if they accept your offer, the deal is firm and binding right then and there. There is no standard deposit amount but a common practice in our marketplace is a deposit of around 5% of the asking price.
- Agreeing to the Sellers Dates & Terms
- In this market, the seller holds all the cards. If you have the ability to agree to the completion and possession dates that the seller wants, and any potential terms they require, this will increase your likelihood of an accepted offer.
- Cover Letter & Photo
- When we submit your offer we will include a letter that you’ve written and a photo of yourself. Why? To connect with the seller. The letter should talk about yourself and why you want to live in that particular property. Believe me, it works. I’ve won offers 100% because the letter connected with the seller. We weren’t the highest offer but the seller really liked my buyer thanks to the letter and we got the accepted offer.
- Presenting The Offer
- Given the chance I will always present the offer in person. This allows me to connect with the seller and their agent, read them your letter and show the photo, and ultimately increase our chances.
- Going in at your best price
- You essentially have 1 chance at winning in a multiple offer scenario. If you have the best offer and no one else will increase their offer after finding out they are not the highest, the property is yours.
- In the case that you are in the top 2 or 3 highest bids, and it’s close, the agent may reach out and let us know, giving us the opportunity to come up higher. At that point we will discuss the option of going higher, or if it’s just not worth it.
- Constant Communication With The Selling Agent
- Having a good relationship with the selling agent and communicating with them often throughout the buying process is key to increasing your chances.
What happens after the offer has been submitted?
- The seller may accept your offer – Congratulations, the property is yours!
- The seller may reject your offer – this most likely means they have accepted another offer with either a higher price and/or better terms.
- The seller may counter offer – they will change the price or term(s) and send it back to us. At this point we can either accept, reject, or counter back to them. Our negotiations continue to reach agreeable terms between the seller and yourself, or until I know an agreement cannot be reached and it is time to walk away.
You have an accepted offer! Now what?
Subject Free Offer
In the case of an accepted Subject Free offer the deal is effectively firm right then and there.
The next step is to get me the deposit Bank Draft within 24 hours which will be given to my Brokerage to be held in trust until closer to the completion date.
You will select a Lawyer or Notary to complete the transaction and distribute the funds. I work with them directly for all the necessary paperwork, and they will also have an on-boarding package for you. You will meet with them closer to the completion date to sign the necessary paperwork and provide the balance of the down payment.
I will be in contact with your financial lender to supply the documents they require to process your mortgage.
On the Possession Date we will meet at the property to do a thorough walk through and you the keys to your new home!
The offer has been accepted. Now we need to satisfy the conditions. This usually involves performing a home inspection, getting the rest of your personal information and the property information to your mortgage broker or bank, and arranging for the other information that might be necessary, like surveys, water tests and condominium documents. I will help you make the necessary arrangements to ensure that the entire process runs smoothly before the deadline.
Finding a Home Inspector
- Home inspections allow you to scrutinize the details of the home and save you from some unpleasant surprises. I would be happy to recommend a reputable home inspector.
- Ensure that the home inspector is a qualified professional. Being a member of an Association can reassure you are getting an experienced, knowledgeable professional.
- Ensure that in the end, you receive a detailed report that summarizes the condition of your home.
- You will want to be present at the end of the inspection so that the Inspector can go over his results with you, and allow for you to be able to ask questions while in the home.
I will send your financial lender all the details regarding the home along with the accepted offer. They will then be in contact with you to outline your options for borrowing the money required to purchase the home.
As mentioned earlier, there are a number of documents available for each property that outline its condition.
Once you have lifted Subjects, or have an accepted Subject Free offer, you will need to choose a lawyer or notary to handle all of the documents and procedures required to close on a property.
Lawyers are an invaluable member of your team whose job is to ensure that you get what you are paying for and in accordance with the terms of your agreement of purchase. Your lawyer will ensure:
- There is nothing on title that is not supposed to be there.
- The property taxes, utilities and condo fees, if applicable, are up to date.
- You have all the information that you need about your new home.
- Your mortgage lender is satisfied and that your mortgage is secured on property title as required by your mortgage agreement.
- You know exactly how much money you will need in order complete the transaction on closing day.
- They also ensure that the seller gets paid the purchase price.
Step 6: Understanding Closing Costs
Understanding and preparing for the closing costs in advance will allow you to budget accordingly, and ensure there are no last minute surprises.
Property Transfer Tax
When a residence is purchased, Property Transfer Tax (PTT) is applied. The tax is calculated at 1% on the first $200,000, 2% on the portion between $200,000 and $2,000,000 and 5% on the balance above $2,000,000.
If you are buying a newly constructed home, you must pay the 5% GST.
If the previous owner has paid the property tax for the entire year and you are buying the home half way through the year, you will be paying back to the previous owner half of the years taxes.
You can work with a lawyer or notary on the closing of the sale and their prices usually range from $750 to $1,500. Depending on how they outline their fees, this may be inclusive of the disbursements and land title registration fees. Always best to ask in advance.
You will need to obtain homeowners insurance that begins at 12:00 midnight on the day of the Closing. Pricing will vary depending on the type and size of home, as well as your individual coverage needs.
Step 7: Prepping to move
Typically you will have anywhere from 10 to 90 days to get everything ready for your home. It could be shorter or longer, depending on what you need and have agreed upon with the seller. The closing date is usually the same as your move-in date. It is a good idea to get things organized well in advance of the closing date to reduce the stress of the move.
•Lawyers: I will send your lawyer the information about your purchase. You will need to provide the lawyer with some additional information: insurance, down payment information, fee payments, adjustment payments and possibly other signed documents that they ask you for. You will meet with the lawyer about a week before the closing to finalize everything.
•Down Payment and Closing Costs: Make the necessary arrangements to have the funds available when the lawyer asks for it. Liquidating some assets can require some additional time.
•Movers: Whether you are using professional movers, renting a truck or getting a bunch of friends together, plan and organize it early.
•Insurance: The lawyers will need a copy of your home insurance before closing so that the financial institution will release the money to them. Call your insurance broker with the listing information. They might also want to know the age of the house, the condition of the roof, furnace, electrical system, as well as other general information.
•Change of Address: It’s time to start giving out your new address to everyone. Use my checklist to make sure you have everyone covered.
•Utilities: It is important that you call the local utilities to get their services changed into your name. These include phone, internet, television, gas, electricity, water, and any rental agreements. Remember, too, to cancel the services at your old address.
• Strata: If you are moving into a stratified building (condo) you may need to notify the property management company in order to reserve the elevator for your moving day, register any pets you may have, and to be added to the strata council.
Step 8: Move In!
On the Possession Day (normally 1 day after Completion date) I will meet you at the property with your keys! This generally happens around 11am and I’m happy to work around your scheduled and what time works best for you.
It is important to test all the appliances, garage doors, heating, fireplaces and so on to make sure everything is in the same working order as it was when you first viewed the property. If there are any issues they will need to be addressed within the first 24 hours of you owning the home.
And now, the home is yours!!! You get to enjoy it all you want.
I had a very specific home in mind, and you helped me find it, Dan. Thank you!! Dan is quick to respond to questions (and I had a lot), very knowledgeable, and extremely detail-oriented. It was an absolute pleasure working with him.
- Paige C.