Frequently Asked
Questions

If you have a question about buying or selling real estate in Vancouver, check below for brief answers to many common questions. Don’t see your question covered? Ask our experts today.

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Working with a Realtor

Why do I need a realtor?

We believe that anyone who is considering buying or selling a property should have a real estate expert in their corner: an expert who knows the local market, will take the time to understand your unique goals and have your best interests at heart. Your home is one of the most significant financial investments you can make, so buying and selling a home is naturally a huge financial and emotional undertaking. Having a good realtor on your side can mean better access to property listings and odds of finding your dream home; access to more potential buyers to increase your options and chances of selling; stronger negotiation and contracts putting you in a better position to get the home or price you want; and finally, peace of mind along every step of the way.

How do I select the right real estate agent?

If you’re ready to buy or sell, it’s time to find a Vancouver realtor. A good real estate advisor should have a deep understanding of client service, be able to write an enforceable contract that protects your interests, have strong relationships with the real estate community, be expert negotiators, are local experts in your market and live and breathe the communities in which they serve. Most importantly, your real estate advisor should be staying on top of what is happening in the real estate market from both a micro and macro level throughout the process and advise where your home fits within the bigger picture and how you should adjust based on what is happening. You may have an idea of some of the realtors in your neighbourhood based on referrals from friends and family or signs you’ve seen in the area, but it’s critical that you take the time to meet with realtors in person to determine they are a good fit. At Resident Experts, we always encourage people to meet with at least three realtors to ensure they are partnering with the right person or team.

What are realtor fees in BC?

There is no standard commission rate, as per Canada’s Competition Act, in the real estate profession and compensation is agreed to between the seller and the listing agent. The typical formula for realtor commission is 7% on the first $100,000 and 2.5% on the balance in British Columbia, but can vary from brokerage to brokerage. Around half of the total commission of 7% on the first $100,000 and 2.5% on the balance is shared with a buyers agent who brings a buyer and offer that completes at the Land Title office.

Selling Your Home

When is the best time to sell my home?

Every home seller’s situation is different so you should discuss with your real estate advisor who is the expert in your local market. Usually, the more active times in the Vancouver market are Spring (February – June) and Fall (September – November) when there are typically more buyers actively looking.

How much is my home worth?

As much as we want to use market stats or BC Assessment to prove what our home is worth, at the end of the day, it is not science. Your home is worth what someone is willing to pay. There are lots of factors that weigh into the discussion around determining a list price for your home. Typically, a real estate agent will do a comparative market analysis (CMA) to look at recently sold homes in the area within the past 12 months, as well as active listings on the market to get an idea of who your competition would be if you were to put your property on the market. This is primarily how buyers and investors evaluate the value of your home. Factors such as macro economic trends, property appraisals or tax assessments may have some influence on the fair market value of your home; however, more often than not, this influence may be limited or inconsequential. One factor that has no influence on your property’s fair market value is the price you originally paid for your home. Even if you purchased your property recently, the local real estate market and the market value of your home may have dramatically changed. Book a complimentary valuation from Resident Experts to ensure you are getting the right expert advice.

Can I do it myself, or do I need a real estate agent?

Yes, but it’s an exhausting process. Some buyers and sellers can manage the process of buying or selling on their own but we truly believe working with an agent will make you more money in the end and save you a lot of time! It can also depend on what type of market it is. If it’s a sellers market, then some owners think that anyone can list a home but keep in mind you should be prepared for multiple offers, lots of negotiating, pre- home inspections and more. Using an agent can prove to be very valuable, save you a bunch of time, protect your interests and help you avoid any lawsuits. In a buyers market, there can be fewer buyers so using an agent can help you better reach every buyer group who is looking in your specific area. Download our free Sellers Guide for detailed steps of what the selling process looks like, and read this blog post on how to sell a home in Vancouver.

Do I have to pay taxes on the profit I made selling my home?

When you sell your home, you may realize a capital gain. If the property was solely your principal residence for every year you owned it, you do not have to pay tax on the gain. If at any time during the period you owned the property, it was not your principal residence, or solely your principal residence, you might not be able to benefit from the principal residence exemption on all or part of the capital gain that you have to report. Our recommendation would be to speak with your accountant to ensure you’re reporting correctly given your situation.

Should I do anything to my home before I sell it?

Selling your home can be a stressful process and the decisions you make prior to listing can have an impact on how smoothly the process unfolds. One of these major decisions is whether or not to invest in upgrading your home. A general assumption is that if you spend significant money upgrading your home prior to putting it on the market, it will justify a higher sale price thus increasing the return on the property. Does this mean that you need to do a major renovation to stand out from the competition? Not necessarily. Each property is unique. Check out our blog posts on the steps to prepare your property for sale and what to consider when upgrading your home.

Do I need a home stager? What are the benefits?

Home staging is worth it. Staging helps bring out the best in your home and provides a cohesive and personal experience to potential buyers walking through. Learn how to put your best foot forward by staging your home for the Vancouver real estate market.

Buying a Home

What does the search process look like?

Buying a home is a big, life altering decision, but it doesn’t have to be complicated if you have a real estate expert in your corner. So, the first step to starting your search should be to team up with a realtor. Download our free Buyers Guide for detailed steps of what the buying process looks like, and read this blog post on steps in buying a home.

What is home warranty insurance in BC?

According to the Homeowner Protection Act and regulations, new homes built in BC by licensed residential builders must be covered by mandatory, third-party home warranty insurance. At a minimum, home warranty insurance coverage includes:

  • 2 years on labour and materials (some limits apply)
  • 5 years on the building envelope, including water penetration
  • 10 years on the structure of the home

Learn more about Home Warranty Insurance on New Homes.

Should I sell my property first before I buy?

We recommend that you don’t list your home for sale without having something in writing from your current lender confirming that you qualify to move your existing mortgage to a new property. This will give your realtor clarity on the differential between the buy side versus the sell side of things and what pricing parameters we have to work with. It is important to determine whether you are in a buyers or sellers market. If it’s a buyers market, then there is value in selling first and taking a longer close. This obviously puts a timeline on finding a place but may give you opportunity on the buying side as home prices continue to trend downwards. Selling before buying also gives clarity on the equity you will have on the buying side. If you decide to buy first, sellers may or may not be open to a subject to sale in your offer and this can weaken your offer position, especially within a multiple offer situation. It is always hard to predict what the future holds in the Vancouver market. Get in touch with us today to see if buying or selling is the right first step for you.

Should I buy a home or rent?

It depends on your current situation, what your financial goals are and how real estate fits into your investment goals. If you are currently renting and able to create enough margin that allows for you to invest what you save at a rate greater than if you had a mortgage, then you might consider renting. If you are not able to create that financial margin with your savings, then having a mortgage can act like a forced savings plan and ensure you are contributing to your personal net worth rather than to a landlord’s. We recommend assessing your financial situation with a mortgage broker to determine whether you can handle a mortgage payment, which won’t be the same as your rent payment (think of all the extras like property taxes, strata fees, utilities, insurance, maintenance and repairs).

What is an easement?

An easement is a right or privilege one party has to use the land of another for a special purpose. For example, easements can be given to telephone and electric companies to erect poles and run lines over private property.

What are fixtures and hattels?

Things contained in a building or on the land are classified as either fixtures or chattels. The difference between a fixture and a chattel is very important to you because fixtures stay with the home when it is sold, but chattels depart with the old owner.

What does feehold ownership mean?

Freehold ownership, or a fee simple, is a type of home ownership in which the purchaser buying the property owns all the rights associated with the property, except the rights which are reserved for the crown. Visit the RECBC website to learn more about the different types of home ownership in BC.

Does leasehold ownership appreciate as much as freehold ownership?

Leasehold ownership means that a purchaser owns the structure and buildings on the land but leases the land from the owner or landlord. The land is leased for at least 50 years from the federal, provincial or municipal government,  regional district or approved public authority (native band, university, etc.). The buyer purchasing an interest under the lease is buying the right to occupy the property for the remainder of the term of the lease. In essence, leasehold ownership doesn’t typically appreciate the same as freehold. It does provide a more affordable option but the banks will typically require a 35-40% down payment making financing difficult for some buyers. Some lenders won’t even finance leasehold properties.

What does it mean when a leasehold property is pre-paid?

A pre-paid lease means that the landlord has paid the lease payments ahead of time or for the term of the lease. For non-pre-paid leases, you would typically need to pay a monthly lease expense to the landlord.

What does “Shares In A Cooperative” mean?

A co-operative, or co-op, is essentially a business in which you buy shares into. You buy a certain amount of shares and are allocated your suite. You don’t own it but you own shares in the collective whole of the building. Financing is really hard with co-ops. You need at least a 35-40% down payment. Some lenders won’t finance co-ops. Like leasehold, these types of properties don’t usually appreciate nearly at the same level as freehold ownership does.

What is a depreciation report?

A depreciation report is a key management tool for stratas. It helps the owners in a strata corporation plan and pay for the repair, replacement and renewal of common property and assets such as a roof, windows, elevators, parking membranes, lobby improvements and other items.

What do I do if there is no depreciation report?

Confirm whether the strata has had any other engineering reports that confirm the current condition of the building and its assets. If there are no reports, there could be significant risk! Buyer beware! Unknowns can be costly.

Financing

How much can I afford for a home?

Get a handle on exactly how much you have to spend with our guide on how to secure financing and consider the hidden costs of buying a home. Be sure to speak to mortgage broker and use a mortgage calculator to get an idea of a mortgage payment amount that best suits your needs. Contact us to refer you to a good mortgage broker in Vancouver.

How do I get pre-approved for a mortgage?

Mortgage pre-approval is how lenders determine if you fit the basic financial criteria for a home loan. You will need to provide basic information including the last two years tax returns, pay stubs and bank account statements. Mortgage lenders include banks, credit unions, loan companies, mortgage companies. You can use a mortgage broker to arrange the transaction by finding a lender for you. Check out these top mortgage tips from the experts at Primaria Mortgages.

What is the first time home buyer incentive?

Through Canada’s First Time Home Buyer Incentive, the Government of Canada provides:

  • 5% or 10% for a first-time buyer’s purchase of a newly constructed home
  • 5% for a first-time buyer’s purchase of a resale (existing) home
  • 5% for a first-time buyer’s purchase of a new or resale mobile/manufactured home

The incentive is available to first-time homebuyers with qualified annual incomes of $120,000 or less. A participant’s insured mortgage and the incentive amount cannot be greater than four times the participant’s qualified annual income.

How much do you need for a down payment in Vancouver?

A minimum down payment of 5% of the purchase price is typically required for homes under $1,000,000. A downpayment of 20% is required otherwise. The maximum amortization period is 25 years for down payments under 20% and 35 years otherwise. Mortgage default insurance or CMHC insurance must be purchased for down payments between 5% and less than 20%. Visit ratehub.ca to learn more.

What’s the difference between a closed or open mortgage?

A closed mortgage cannot be paid off, in whole or in part, before the end of its term. A closed mortgage is a good option if you’d prefer a fixed monthly payment and wish to predict your monthly expenses. Because there are often penalties or restrictive conditions if you pay an additional amount, a closed mortgage may be a poor choice if you decide to move before the end of the term or if a decrease in interest rates is anticipated. An open mortgage is flexible. You can typically pay off part of it or the entire amount at any time without penalty. This may be a good option if you plan to sell your home in the near future or if you intend to pay off a large sum of your mortgage loan. Most lenders allow open mortgages to be converted to closed mortgages at any time, though often for a small fee.

What’s the difference between conventional and high ratio mortgages?

A conventional mortgage is a mortgage loan that is equal to, or less than, 80% of the lending value of the property. The lending value is the property’s purchase price or market value – whichever is less. For a conventional mortgage, the down payment is at least 20% of the purchase price or market value. If your down payment is less than 20% of the home price, you will typically need a high-ratio mortgage. A high-ratio mortgage usually requires mortgage loan insurance. CMHC is a major provider of mortgage loan insurance. Your lender may add the mortgage loan insurance premium to your mortgage or ask you to pay it in full upon closing.

What’s a mortgage term?

The term is the length of time that the mortgage contract conditions, including interest rate, are fixed. The term can be from six months up to ten years.There are generally several term options for a mortgage and it’s important to weigh the benefits and costs of each. A longer term (five years, for example) may allow you to plan ahead and protect you from interest rate increases, but may not offer you flexibility, should interest rates fall.

Offers, Negotiation & Closing the Sale

When I find a home I like, how do I make an offer?

When you’re buying a home, making an offer can be a make it or break it moment. Your real estate agent should sit down with you to cover all the possibilities while you prepare the offer. Besides assessing the seller’s background and objectives for selling, as well as valuation information such as recent sales, you’ll want to account for any specific contractual contingencies that are unique to your area and desired property. Check out our home buyer’s guide to offers and negotiations.

What happens once I submit my offer?

After submitting an offer, we will likely need to negotiate! Price may be one factor but also open for negotiation are deposit, inclusions, dates for completion, possession and subject removals. We will ensure you know your budget and requirements prior to submitting your offer so you don’t commit to additional costs in the heat of the moment. Read our blog post to learn what the potential responses to your offer could be, and how to move on to the next steps in the buying process.

What happens if my offer is accepted?

Once both parties come to an agreement, the offer is considered “accepted” and the buyer will have a set period of time in which to satisfy the legal conditions (“subjects”) agreed to in the contract, such as completing a satisfactory home inspection report or securing financing. Only after all subjects are removed do you have a legally binding document.

What does the subject removal timeline look like? What are the steps in the process?

The subject removal is aperiod of time in which the buyer works to satisfy the conditions (“subjects”) listed on the accepted offer for a particular property. A typical subject removal period in Vancouver is 5 to 7 business days long. There are also subject-free offers, two-day subject removals, two-week subject removals and others; which depend on how the real estate market is, and how many other offers you’re competing with. Putting subjects in an offer is a safety net for buyers as it allows them to do their due diligence. If the buyer is satisfied they would proceed to “remove subjects” and pay the deposit so that the deal becomes firm.

Do I need a home inspection?

A home inspection is a visual examination of the conditions of the major systems of the home. Its goal is to identify and report on any existing major problems. A typical inspection takes about 2-3 hours to complete depending on the size and the complexity of the home. The home inspection will be accompanied by a written report that documents the inspector’s observations. The home inspection is designed to minimize risk, note eliminate it. The inspection report is just one of the factors to consider when making your final decision.

What happens if I don’t do a home inspection?

In today’s real estate market it is not uncommon for people to forgo a home inspection in order to make their offer more appealing, especially when there are multiple offers. If the property is expecting multiple offers a buyer may decide to do a pre-inspection to ensure they are confident in satisfying that condition before writing an offer. Home inspections help avoid unexpected and expensive problems – without it, you’re relying on sellers who may not disclose everything that’s wrong with the home or who genuinely may not know.

What should I do in preparation for the home inspection?

Both the buyer and the seller have things to do in preparation for a home inspection. For one, the buyer should choose a home inspector that is a member of the Canadian Association of Home and Property Inspectors (CAHPI) and be prepared to review the findings of the inspector report. The seller should provide unimpeded access to various parts of the home, ensure pets are locked up or removed during the inspection, and provide details of any previous major repairs/additions/renovations.

What is the difference between completion and possession?

The closing or completion date is the date that ownership and title to the home are transferred along with the payment of funds from the buyer’s lawyer/notary to the seller’s lawyer/notary. The possession date is the date the buyer is entitled to take physical possession of the home (when you get your keys!). Learn more about closing the sale.

What happens on the completion day?

On completion day, legal ownership of ythe seller’s property will be transferred to the buyer. The seller’s lawyer or notary will receive funds for the sale from the buyer’s lawyer or notary, and will provide the seller with a statement of adjustments. This list itemizes all costs payable at completion, including legal fees, taxes and other completion costs. Finally, funds will be used to discharge the seller’s mortgage, if applicable, with any remaining proceeds transferred to the seller in the form of a bank draft.

What are my potential closing costs?

Here are a few things that should be added to your overall budget as you plan for a home purchase: property transfer tax, property tax adjustment, mortgage loan insurance, appraisal fees, land survey, deposit, property insurance, title insurance, legal fees, GST, home inspection fee, and more. Learn more about the 12 hidden costs of buying a home.

As a rough rule of thumb, you should set aside 1.5-2% of the purchase price to take care of all the costs associated with closing the deal on your new home.

What do I do when there are multiple offers?

In a high-demand, low inventory market like Vancouver, you may find yourself bidding against other potential buyers. Some sellers will list their homes at a low price hoping to stimulate multiple offers. In order to help our clients avoid potentially overpaying, or missing out on a home they really want, we need to ensure the offer is strategic, competitive and reflective of what you are ultimately willing to pay for the property. During a competitive market we suggest the following to increase the chances of your offer being accepted:

  • Consider having a home inspection prior to offer submission.
  • In cases where there is a strata, the strata documentation needs to be read carefully and reviewed by the buyer and Resident Experts or your realtor.
  • Secure pre-approval of financing and determine if a bank appraisal is required.
  • Secure a bank draft for the deposit amount to accompany the offer.
  • Prepare a letter and photo of you and your family to present along with your offer. (We’ve found that helping to connect with the seller will often put you in a more favorable position.) Don’t knock it. IT WORKS!

Taxes

What is the Foreign Buyers Tax?

A new 20% tax was added to the Property Transfer Tax when a purchaser, who is not a Canadian citizen or permanent resident, purchases residential real estate property. For example, if your purchase price was $1.5M you would pay an additional $300,000 at the time of closing.

How much is the property transfer tax in BC?

The property transfer tax rate in BC is:

  • 1% on the first $200,000,
  • 2% on the portion of the fair market value greater than $200,000 and up to and including $2,000,000,
  • 3% on the portion of the fair market value greater than $2,000,000, andif the property is residential, a further 2% on the portion of the fair market value greater than $3,000,000 (effective February 21, 2018).

What is the City of Vancouver Empty Homes Tax?

Each year, every owner of residential property in Vancouver is required to submit a property status declaration to determine if their property is subject to the tax. Properties deemed empty will be subject to a tax of 1% of the property’s 2018 assessed taxable value. Read more about the Empty Homes Tax in Vancouver.

Are there any exemptions to the City of Vancouver’s Empty Homes Tax?

There are certain exemptions to the tax. For example, the main one being the rental exemption whereby the condo is “rented for residential purposes for at least six months of the current year, in periods of 30 or more consecutive days”. More exemptions can be found here.

How much is British Columbia’s Speculation and Vacancy Tax?

The speculation and vacancy tax rate varies depending on the owner’s tax residency. For 2019 and subsequent years, the tax rate is: 2% for foreign owners and satellite families and 0.5% for Canadian citizens or permanent residents of Canada who are not members of a satellite family. Learn more about BC’s speculation and vacancy tax here.

Are there any exemptions to the Speculation and Vacancy Tax?

Like the Vancouver Empty Home Tax, there are exemptions to the Speculation and Vacancy Tax. For example, there is a rental exemption: “Owners of homes occupied by a renter or by family or other non-arm’s-length persons for at least six months of the year in increments of one month or more at a time may be exempt (three months for 2018). For the owner to be eligible for the exemption, tenancy requirements must be met.” Read more about the tenancy requirements here.

What is BC’s “school tax”?

Unlike the new Speculation Tax and Foreign Buyers’ Tax, the school tax, starting in 2019, will be an additional tax applying to most high-valued residential properties in the province, including:

  • Detached homes
  • Stratified condominium or townhouse units
  • Most vacant land

The additional tax rate is:

  • 0.2% on the residential portion assessed between $3 million and $4 million
  • 0.4% tax rate on the residential portion assessed over $4 million

For example, if you owned a $4M home in Vancouver you would pay an additional $2,000 in property taxes. Learn more here.

COFFEE IS ALWAYS ON US

Real estate isn’t just about buying and selling. It’s about relationships. Let’s chat over coffee and see how we can help you find your next home in Vancouver.

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