BUY A BC HOME 'THE EASY WAY'

Across British Columbia, advocacy groups and licensing laws now encouage buyer representation.  From locating suitable properties to contract negotiations and settlement, seek a  BC real estate agent who will be YOUR representative in buying  BC real estate.

If you are a Buyer your preferred situation is outlined in Box 3.  If you are a Seller your preferred situation is in Box 1. 

Using a Buyer's Representataive offers the consumer many benefits.  A  Buyer's Representative will:

• Evaluate the specific needs and wants of the buyer and locate properties that fit those specifications
• Assist the buyer in determining the amount that they can afford(pre-qualify) and show properties in the price range and locale the buyer has determined.
• Assist in viewing properties and either accompany the client on the showings or preview the property on behalf of the client to ensure that the identified specifications are met.
• Research the selected properties to identify any problems or issues to help the consumer in making an informed decision prior to making an appropriate offer on the property.
• Advise the client on structuring an appropriate offer to purchase the selected property.
• Present the offer to the seller's agent and seller on client's behalf.
• Negotiate on behalf of the buyer client to help obtain the identified property.  Keep in mind that the buyer agent will be doing so with their clients best interests in mind.
• Review and explain all legal documents to their buyer client.
• Recommendations and assistance in securing appropriate financing for the selected property
• Provide a list of potential qualified vendors, e.g. movers, attorneys, and carpenters, if these services are needed by the buyer.

Buying a home can be a "hair-raising" experience. It can be a roller coaster of emotions... finding the right place... securing the loan... moving in. And if you're like most of us, your home will be your largest investment. The emotions over such a large and personal purchase can often cloud good business judgment.

Many home buyers do very little research before "diving in" and investing their hard-earned money. Before doing that, doesn't it make sense to be as informed as possible? That's what this report is all about. It's designed to help you avoid common, critical mistakes many  BC real estate buyers make. If you follow these 10 suggestions, with the help of the right BC real estate professional, you'll make a good sound business decision that you'll be happy and proud of for years to come.

1. Build a team - a good BC realtor will have well established relationships with lenders, lawyers, notary publics, qualified home inspectors and other professionals. These professionals are there for your benefit and your buyer's agent can make all the introductions.

2. Get Pre-qualified - Lenders will provide you with a certificate of pre-qualification. By getting pre-qualified, you know exactly what financial parameters to stay within. Your buyer's agent and lender will consult with you and help you get qualified for the loan that best fits your needs. Many times, they are able to get you a larger loan than you may have thought possible.

3. Interview your BC realtor - Sit down with a competent buyer's agent and honestly discuss your BC real estate goals. Spend time up front to assure yourself that this BC realtor is going to be your  realtor of choice. You want to make a good sound business decision that you'll be happy and proud of for years to come. Your  realtor could play a major role in guiding you through to the correct decision.

4. Become Completely educated - a professional buyer's agent will walk you through the buying process step by step (even before you start to look at houses.) This process will: clarify the use of any documentation; preview different types of contracts; highlight pitfalls to watch for; show how to view properties; review the negotiation process; reveal hidden costs; and, identify other elements of making a home purchase. This approach helps to eliminate the stress in buying a home. Make sure you take the time to do this, believe me it will pay off in spades. The CMHC consumer guide and workbook is a good reference manual. (I frequently pass it on to clients after our brief consultation)

5. Know your market - get an overview of the market and start by identifying the type of market you are buying in, is it a balanced, buyer's or seller's market? Is the market changing? Ask your BC realtor.

6. Property selection - once your buyer's agent comes to realize your goals he can screen out the homes that don't meet your needs or your budget. A good BC realtor will keep you informed daily of any new listings that fit your search criteria. E-mail transmission has become a standard method of communicating this information. As you view properties, take notes and give each house you have viewed a nickname. This process will be fun and it helps in making references when you communicate with your partner.

7. Strata properties - require a little more reading. Make sure you review the minutes of the strata meetings (at least two years). Study the bylaws and financial statements and take the time to talk to the property management people. Your BC realtor will protect your rights contractually as you take the necessary time to review these important documents. Make sure a professional inspector inspects the property.

8. Comparable Market Analyses (C.M.A) - insist on reviewing a C.M.A. on any property you are considering purchasing. The C.M.A. will give you details of houses for sale, recent sales, and expired listings in the area of your choice. It will guide you to a fair offer and worn you of potentially overpriced product.

9. Conditional offers - once you've found a home that meets your needs and your price range, your BC realtor can draft and present the vendor with an Offer to Purchase. Most offers are conditional offers. For example the offer is good only on the condition that you obtain mortgage financing or that the house passes a home inspection. A good BC realtor will assure using conditions on the contract that best suit your buying situation.

10. Loyalty Breeds Loyalty - Be open, honest and up-front with your team. Hard feelings and disloyalty will cause headaches, delays or may even keep you from getting into the home you worked so hard to locate. Take the time to select the right team in the beginning and your first home purchase will be a simple, easy and profitable experience you'll have fond memories of... for years to come.

My hope with this report has been to educate you and help you avoid the pitfalls many home buyers go through. I hope you found the ideas valuable and if there is ever any way I can be of service to you or anyone you care about, please contact my office. Your initial consultation is always completely free of charge and you're under no obligation of any kind. We'll sit down for 60 minutes... no high-pressure, just plain, honest talk about what it's going to take to achieve your personal goals. Go ahead, pick up the phone and give me a call. I'd love to hear from you!

When you are considering buying  BC real estate, you will need to have additional funds set aside for closing costs. These costs can add up to a substantial amount. The following is a list of the most common costs, with an indication of prices. Check with your BC realtor to learn what the costs will be in the area where you are intending to purchase.

Purchasing Cost Summary

Definitions

APPRAISAL ($350 to $Thousands)

Lending institutions usually require an appraisal to be done to confirm the property value, and to make sure that it is the kind of property they will mortgage - for example, some lenders will not finance hobby farms or heritage designated homes.

It is not part of the appraiser's function to look for structural problems. For that task, you need a building inspection.

The appraiser will consider the size of the property (both land and buildings), the location of the property and the condition of the main house to determine a 'replacement value'. She or he will then compare the property with a few recent sales of similar properties in the same area.

The appraiser will arrive at a dollar figure that, in his or her professional opinion is a fair market value for the property. It is not unusual for the value to be the same as the purchase price of the property.

Problems can occur if the appraised value is lower than the purchase price and you are making the minimum possible down payment. In most cases, the lending institution is obligated to lend mortgage money based on the lower of the purchase price or the appraised value.

When the appraisal is below your purchase price, you have 4 choices:

• renegotiate your purchase price,
• collapse the deal,
• come up with the difference between the appraised value and the purchase price - over and above the equity you already have, or
• pay for another appraisal to be done by another firm. Sometimes different firms will arrive at different prices, but this is a gamble.

There are occasions when you may be willing to pay higher than the appraised value - for example, when there is more than one offer at the same time, the vendor will choose the 'best' offer. Or perhaps this is the house of your dreams and you are willing to pay extra to buy it.

ASSESSED VALUE

Local property taxes (which pay for items such as municipal services e.g. police, fire and ambulance departments, sewers, sidewalks etc.) are calculated based on the assessed value of your property. Appraisers working for the local tax authority will give each property an estimated value based on its approximate size and location.

These values are rarely accurate when it comes to fair market value, but are sometimes used by the lender (instead of a full appraisal) when the loan amount is low compared to the purchase price.

It should be noted that not all provinces / local governments use this system for determining property taxes.

BUILDING INSPECTION ($350 to $600)

A building inspection (also called a home inspection) will identify problems with a house. For example, is the roof leaking or needing replacement? Do the beams have woodrot? Is the foundation sinking? An inspection does not give any indication of property value.

The building inspector will usually give you a list of necessary repairs and sometimes an approximate cost for each.

You should make your purchase agreement subject to a satisfactory building inspection. What if there is a problem? Your BC realtor with you. There are various solutions, depending on the problem.

• You could decide the problem is minor and accept the property as is.
• You could try to negotiate a reduction in purchase price.
• The vendor could fix the problem to your satisfaction.
• If any major structural faults are found, or if the combined total of minor problems is in excess of an agreed amount, you can refuse to remove the 'subject to...', walk away from the deal and have your deposit refunded.

In order to claim this rebate, certain conditions must be met. These include:

     $6,300.00 X ($450,000.00 - B) / $100,000.00

B  is the fair market value of the home being purchased.

For example, assume the value of the home is $400,000.00. The rebate would equal:

     $6,300.00 X ($450,000.00 - $400,000.00) / $100,000.00

The rebate would equal $3,150.00.