Selecting a good Realtor® – If you are looking to make a deal selecting a good realtor is an important first step of the buying process. Select a good agent by asking friends for a referral or interview a couple of agents to find the right fit for you. Ask the agents lots of questions and make sure that you are comfortable with the person.
Find a property – Buyers should help the agent by sharing the important wants and needs (budget, area, size, pets, parking) of the purchase and provide feedback to the agent on the suitability of each property viewed. Vancouver Property Finder is a great way to learn the market!
Putting Together an Offer – Once a buyer finds something they like, tie it up! The buyer and the agent should work together to evaluate the property and put together an offer. Come up with a plan for your negotiation. Work out your bottom price and ceiling price. As well, consider what dates will work (if your renting you will have to give your thirty days notice).
Work with your agent to include safe guards called conditions or subjects. Subjects that are often included are: “Subject to Inspection,” “Subject to Financing,” and “Subject to… Strata Information” (in the case of a condo purchase). Generally it is recommended to make a subject or conditional offer regardless of how badly a buyer may want to purchase the property.
Negotiating – Your agent should be able to explain different scenarios and strategies with you. If you are looking to buy in competition the offer price will likely be starting at the list price or higher. If you are dealing with the seller without competition you may be able to negotiate the price lower than the list price. Work for a “win-win” deal. There always needs to be give and take in a negotiation and it is not often a one way deal. If you feel one side is being unreasonable be prepared to walk away. (It also helps to try to imagine yourself in the other person’s position and think how would you respond to the offer being made?)
Due Diligence – Once a subject offer is agreed to by both parties you have an accepted offer. Typically, (if it is a condo purchase,) it is suggested the buyer review the strata information first as this process only costs time for the review. Usually, you will have one week to do all of your due diligence. This period is to conduct inspections, arrange final financing approval and answer any other queries before the subject removal date. The process of Removing the subjects (in writing) creates a Firm Offer.
The inspection does cost a bit of money ($450-$700) but think of it as “insurance” (it could save you a lot more). If the buyer reads something in the strata documents that are not going to allow them to proceed (eg. No Pets) then the need for an inspection may not even be necessary. As well, there could be particular issues that the buyer may want to bring to the attention of a property inspector to review. So do the things that cost the least first!
Evaluating the Information – If you find something out, say from the inspection that is going to cost a lot (like the furnace is no longer working, or the strata has a large capital project looming, or there is a significant leak) all is not lost. Of course the buyer can choose not to proceed as that is why they put subjects in The Contract of Purchase and Sale to begin with. The buyer could also talk to the seller to fix the issue “to the buyer’s satisfaction,” or pay future costs up front. Finally the buyer could choose to renegotiate and have the seller discount the price to compensate. Each case is different and the buyer should only work with a solution that they are comfortable with.
Removing Subjects – Once the buyers are fully satisfied with the due diligence phase, the subjects need to be removed (in writing) to allow the contract to become binding. At this point the deposit also needs to be provided by the buyer to create a firm deal.* The deposit needs to come in the form of a Bank Draft and is given to your realtor®. If you have no subjects, the deposit is due upon acceptance of the offer. Typically, the deposit is roughly 5% of the sale price at least and would have been stated in your initial offer on The Contract of Purchase and Sale. The deposit, legally known as consideration, is required to make the contract binding. The deposit will be held in trust until the sale completes (and will be applied towards the purchase of the home.)
Dates – In BC we have three dates on the contract. The Completion Date (a weekday) is the date when the lawyers register the title in the buyer’s name and transfer money. This is normally a day or two ahead of the Possession Date and Adjustment Date (which are often the same day but not always). The Possession Date is the day that you get the keys and take possession of the property (often the day people move in). The Adjustment Date is often the same as the possession date because that is when the new owner starts paying for items (such as taxes and strata fees).
Title Transfer – Soon after the buyers offer to purchase is firm the buyer schedules an appointment with a lawyer or Notary Public a few days before the Completion Date to sign all of the documents and make sure that all of the details of the contract have been processed correctly. In BC, the Torrens System is used which incorporates a Land Title Registry. Traditionally, buyers and sellers met with the lawyers in advance because they physically had to go to the Land Titles Office to register all the paperwork with their office. However, now that can be done electronically.
Keys – Finally on the Possession Date the new owners typically meet with their Realtor® at the property to collect the keys to the new home. The buyer and agent should do a walk through together to make sure everything is as it should be according to the contract. *If registration of the property (on the Completion date) is delayed you will not get the keys until you are the registered owner! (This has ramifications when closing on a Fridays as the land titles office will not be open again until the next business day…typically Monday.)
Finally all there is left to do is, move in!
*If the buyer is going to be using RRSP’s or collapsing investments to be used for the deposit be aware that these processes can take time and should be worked out in advance of the offer process.