The Basics of Buying Real Estate in British Columbia
This is the latest revision of a post that has been with this Nanaimo real estate blog since its early days. I have shared it with almost every Buyer since I first wrote it over seven years ago because I think it is an important roadmap for them to have early in the real estate buying process. Since its first inception none of the steps have changed, only the particularities that are too specific for this blog. I have however tried to reword things for improved clarity. More than that, I have written a lot of other content that ties in with what I mention here and so some of it I have linked to in the content below. Of course, you don’t need to read all or any of those links or even this post in order to buy a property. My job is in part to make things easy as possible for you, and having a little access to info from the source is something some people like while others just want me to show them some places and make an offer. I am hoping to give people the home buying experience that suits them best.
Being someone whose profession keeps them continually immersed in the world of real estate, it’s sometimes easy for me to forget that in the eyes of most, it’s a world shrouded in mystery. People who don’t normally think about real estate daily tend to feel exposed if not vulnerable when they are faced with entering this new realm. 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 tell you that it’s not a world that is easy to safely navigate. The stakes are high and everyone’s life will be changed by whatever the outcome financially and experientially.
It doesn’t have to be intimidating though. 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. There are simply too many variables and possibilities for me to do this comprehensively but I can provide you with a general roadmap. As they say in commercials “actual experience may vary” which roughly translated in this case means “it doesn’t always go this way, but this is a typical, simplified 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 often, 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 is the reasonable way to go. I explain this to my clients as “it makes sense to look in your wallet before you go shopping”. You’ll be able to realistically know what you can afford before we go out looking and not have to do a U-turn halfway down the road. That kind of scenario is not fun for anyone involved.
I do recommend going to a Mortgage Broker rather than a bank, as they tend to give better, more customized, packages than banks and with faster service too. One of the reasons for this is that, like us Realtors, Mortgage Brokers don’t get a regular paycheck, they only get paid for the deals the put together. That person at the bank stays paid anyway. It doesn’t cost you anything to use their services, they get paid by the lenders even though they’re working for you. Chances are that you may already have a rate quote from a certain bank, well chances are the Mortgage Broker can connect you with that rate at the same bank but also connect you to all the other banks and their rates and a slew of other lenders you’ve not heard of who might just be a better fit for you.
2. Come Speak to Me
Now that you have an idea of what you’re able to afford, it’s time to find out what’s out there.
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 fully. You won’t like every idea I throw at you, and that’s expected. I’m trying to gauge your tastes, willingness and ability handyman wise, flexibility in budget among other things. Most of all I am trying to give you advice that will save you money.
What’s available in your budget is the biggest factor. Depending on where you’re moving from, you may be expecting more for your money or you may feel like you’ve suddenly become rich. (Human nature tends to make the former more common than the latter though.) I’ll find out what is most important to you and combined with various factors that come up in our conversation, I’ll help you find properties that are the best fit.
Once we have sufficiently zeroed in on what you need I’ll show you a list of properties from which you can choose what you’d like to view in person. This is a list which will change as some places sell and new ones come out, and also because prices on a couple of them change. I may also have some new suggestions not on the list that I think you will like that I will contact you about by email or phone.
When you are looking at listings, I recommend paying more attention to the measurable things like size, beds, baths, and location. The rest is subjective and as listings are a form of ad, the more subjective things are more open to interpretation. It’s when you go look at them in person that you find out what things are really like.
There’s no point in me finding you a home you’re not happy with, that’s a no win situation for all of us. I want you to get the best place possible for what you’re looking for and I want you to know that it is a good deal for you so that you don’t miss out on the opportunity due to hesitation. That’s the sort of thing that requires trust building and is also the sort of thing many clients have thanked me for doing years later.
3. Looking at Properties
As you look at places, you will hone your expectations and tastes for whatever sliver of the market you are looking at. I will be paying attention to your reaction of each property. It may not seem like it at the time, but I really am paying close attention to you in addition to paying attention to the property so that I can better understand how to steer you towards the best fit for you. My knowing how you feel and you listening to what I know will make this and every part of the process easier on all of us.
We will have set up a time to meet and start to go out and actually look at places. As a rule, I’ll need to set those appointments up a day ahead of time so we will have made this appointment before that and you will have let me know which properties you want to view. We usually meet at my office and hop in my car, and then go look at places together with a free exchange of info while we drive from place to place. This is a great time for us to chat about real estate, get to know each other and generally get a feel for the whole situation. Many a client have made life altering choices while sitting in the passenger seat of my car. (But they just as often go home and think about it as well.)
The looking at properties part is also 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 a property 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 will be able to find something that you enjoy if your expectations of what the market offers are realistic.
4. Making an Offer
This is when people’s emotions start to rise and it’s also when you really start to need me.
Up until this point I am guiding you in a pretty relaxed way and showing you options and mostly just giving you info and letting you decide what it is you want based on what’s available. Once we have found you a place you like enough to buy, we will try to see if you can get it at a price and terms that you find acceptable. I will write up an offer with you and we will begin negotiations. Once it has been sent in, it is a matter of you staying close to your phone while doing your best to stay calm.
Ultimately both you and the Seller have to agree key items in order for things to move forward but in almost every case the battle is mainly about price. 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 forward.
If all goes well, we come to agreement on both sides and we have have an accepted offer. This is where you will start to feel a sense of relief that the negotiations are over. The next thing is to write a cheque for the deposit which will be held in trust by my company and I start talking to you about our plan for removing the subject clauses.
5. Removing Subject Clauses
I have often found that many Buyers put all their emotional/mental energy into finding the property and negotiating for it but it’s actually not the most involved part of the process. Don’t get winded too early. An accepted offer is most likely going to mean that it will be your property in the not so distant future but we’re not done yet. The subject removal stage is when the real curve balls are most often thrown.
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 but it is ultimately down to whatever dates are agreed to in the contract.
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 Home Inspector to ensure that it is not in a condition that is substantially worse than it appeared to be when we first viewed it
- Approve a Title Search
- Approve a Property Disclosure Statement
- Get and approve a quote regarding fire/property insurance
If we can satisfy all these criteria then you sign the subject removal and then sold sign goes up. I’ll give you a high five and you’re mostly done with me until you move in. The other professionals you use, (i.e. Lawyer/Notary and Mortgage Broker) will still want to talk to you and get their share of documents signed though. I will of course be available if any loose ends pop up, but by and large the deal is done once subject clauses are removed and it’s a matter of doing some paperwork while we wait for possession day.
Then, You Move in!!
I’ll meet you at your new property 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 about the newborn, but it is a happy day for all involved.
All these and many other measures exist to protect you and I am here to guide you, so don’t feel intimidated by the process. It’s one of those things that sounds harder than it is. Really the hardest part is getting the money together which is something you’ve already done before speaking with me. 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 which is what I aim for.