Real Estate Duncan Canada - Donald McClintock

Donald R. McClintock, B.A., M. Div., M.S.W.

Real Estate Consultant

“Caring For Your Real Estate Needs”

RE/MAX of Duncan
Telephone: 250-748-7200
Toll Free: 1-800-976-5566
Fax: 250-748-2711

Homebuyers Guide

For many people, especially first time buyers, the purchase of a home seems a daunting undertaking. In fact, hunting for, selecting and purchasing a home is one of the most exciting and interesting things we ever do! If we think of our home purchase as a memorable and enjoyable experience, it will be exactly that. Let’s consider the most important steps of the whole process.

1. Selection of Your Realtor.

Your realtor is a vital, primary resource to you, not only in assisting you to find your new home, but in the final determination of current market value, i.e., what you should reasonably expect to pay for a given property. Your realtor will negotiate the final transaction on your behalf. Afterwards, he’ll assist you in working through all the details leading to an unconditional sale, then final possession.

It’s important that your realtor be able to listen carefully to your needs, to assist you in clarifying your goals and expectations, and to be able to communicate openly and clearly with you. You should be able to feel relaxed and comfortable with your realtor because you’ll be working together for some time. Hopefully your relationship will be ongoing for many years.

2. Pre-Qualification by Financial Institution.

Ideally, before commencing your search for a new home, it’s important to receive pre-approved financing for your mortgage. Although you may be eligible to have up to 95% financing for your purchase, your total family income must warrant whatever level of financing you require. By knowing for certain how much of a mortgage you qualify for, and adding to that the amount of cash you have for your down payment, you’ll know the upper limit for your purchase.

Being assured of financing permits you to undertake a realistic search of property. When it comes time to make your offer, your position will be very strong if your realtor is able to assure the seller that financing is pre-approved. There’s nothing that softens a seller’s position faster than knowing that a buyer is in effect making a clean cash offer.

If you aren’t already pre-qualified at your first meeting with your realtor, most likely he’ll recommend a visit to your banker or a mortgage broker to determine the amount of mortgage for which you’ll be able to qualify.

3. Determination of Ideal Kind of Property.

There are five kinds of residential property for you to consider, ranging roughly from most to least expensive: Detached single family; Strata-Duplex; Townhouse; Condominium; and Mobile Home either on private land or on a leased pad. Aside from financial considerations, each type of housing has its advantages and disadvantages. For example, even though detached single family homes are perhaps relatively more expensive, they offer optimum freedom in terms of raising a family, enjoying a totally private yard, etc. On the other hand, a townhouse or a condominium might be considered ideal for a busy individual or couple who prefers not to have to be concerned about outside maintenance, and who doesn’t need a lot of private yard space.

Your realtor will carefully review with you all of your needs in order to determine what might be the most suitable type of property for you to purchase.

4. The Property Search.

Upon determining your price range and the type of property you want to purchase, you’re now ready to select properties to inspect and to consider. The most efficient way of doing this is through a computerized search of properties currently actively for sale, and perhaps recently expired. Having determined the most interesting possibilities, you might like first to drive by each of the properties for a neighbourhood inspection and to develop a first impression. Afterwards, appointments will be made by your realtor to inspect the interiors. Upon reaching the final 2 – 3 choices, you may wish to make a second appointment to make a more extensive inspection before arriving at your final decision about your first choice. This process will take less time than you might expect. Because you’ll only be looking at homes which are most likely to meet most, if not all, of your needs, every home you view will be a good prospect. Thus, you may find that after viewing only about half a dozen homes you’ll be ready to make an offer.

Sometimes people like to cruise the Open Houses being held every weekend. This is a good preliminary way to get in and out of a lot of houses quickly, and to gain some impressions of the kinds of things which really appeal to you. The chances are pretty good that you won’t actually find the house you’ll finally buy through this method simply because the homes haven’t been pre-selected based upon your own wish list. Please remember when visiting Open Houses to tell the host realtor, “We’re already working with a realtor…his name is Don McClintock.” The host realtor will appreciate this and will welcome you to have a look at the property.

Please remember that once you’ve selected your realtor he is going to work with you for as long as it takes for you to find just the right property. He’ll only get paid for his services after he writes your offer, negotiates your transaction, guides you through subject removals, and realizes final completion, i.e., your final payment for the property, your receipt of title and your taking possession of your home. Were you to decide on the spot at an Open House to make an offer through the host realtor, your realtor with whom you’ve been working all along would be paid nothing. Even if the host realtor urges you to write an offer because another offer is being entertained just then, simply call your own realtor with an urgent message and you’ll be looked after right away.

In case you might want to consider purchasing a home offered for sale privately, your realtor will still be interested in preparing your offer. There are major reasons for you to follow this course, rather than negotiating directly with the private seller. Remember, without a careful market analysis you have no way of being certain what a particular property is actually worth. Many people have bought their homes privately, thinking they were getting a great deal and then have learned to their chagrin later that they paid well above fair market value for their property! You’ll avoid this unfortunate trap by working steadfastly with your realtor from the beginning to the end of your home hunting exercise.

5. The Stages of Property Purchase.

Preparation of the offer. Once you’ve decided upon the property which you want to purchase, your realtor will complete a Current Market Analysis which will determine the range of value for the property you’re considering. This is very important because it removes emotion from the final determination of price. In the end, if the seller is stubborn, and you really must have the property, you may decide to pay a little above the top of the range of value. In that event, you’ll know what the current market thinks the property is really worth.

Before making your offer, you’ll be advised about a lot of issues pertaining to the property: length of time on the market, seller’s motivation if known, other offers being considered, time clause offer in place, etc. These considerations will help to determine your initial offering price.

Your realtor will prepare an offer which if finally accepted will be legally binding on both buyers and sellers. The offer will contain a number of subject clauses, i.e., subject to final approval of financing, subject to a satisfactory building inspection, subject to a satisfactory title search, etc.

Presentation of the offer and negotiation of final price. In presenting your offer, your realtor will emphasize its high quality, and will present it and you in the strongest possible light in an effort to convince the sellers that it is in their best interest to accept the offer as written. Recent sales of comparable properties will be laid on the table for the sellers’ information. This will indicate to them that your offer is based upon a current market analysis, and is not merely being made on a whim of your own.

If the seller makes a counter-offer, your realtor will advise you about your next step, i.e., accept the counter-offer, alter its terms in certain ways, etc. Then your answer will be conveyed in writing on the contract to the sellers’ realtor. All being well, a final agreed upon conditional contract will be realized.

Removal of conditions to achieve an unconditional contract. Upon achieving a conditional contract, it becomes necessary for the buyers to undertake to remove each of the conditions of the contract within the stipulated time frame. Your realtor will work very closely with you during this entire process so that you’ll understand thoroughly what’s happening at every step. As a guideline, usually about 5 business days are allowed for the removal of the financing conditions. Two further days would be allowed for the removal of the building inspection condition. The title search condition is usually removed at the same time as the financing condition. It takes literally a few minutes to do a title search. The main thing you’re looking for in a title search is whether there are any easements, covenants, or restrictions of any kind, especially pending litigation, which might impede your intended use and enjoyment of the property. Usually, mortgages on the title are of no concern since the seller has agreed in the contract to deliver title clear of all mortgages, except those that the buyers have agreed to assume, if any.

Once all conditions have been removed, the contract is rendered unconditional, requiring that all parties proceed to completion. Completion refers to the exchange of payment for title of the property. Both buyers and sellers are locked into the agreement. If either side reneges on the contract there are serious legal implications and repercussions. The wronged party is entitled to sue for damages which can be quite considerable. This is rarely a concern, but is mentioned here to help you understand the legal realities.

Completion. As mentioned, this term refers to the date when the money for the purchase of the property is tendered by the buyers’ lawyer/notary to the sellers’ lawyer/notary in return for clear title. The buyers’ lawyer/notary registers title in the name of the buyers at the Land Title Office. In a nutshell, the completion date is the date that buyers become the owners of their new property. Because it takes time for registration to take place after money has changed hands, the actual possession of the property will usually be one or two days after completion. If possession is to be the same day as completion, it will not occur until 5 p.m., instead of the more usual noon.

A very important detail with regard to completion is the matter of home insurance. It is vital that the buyer arrange to have the home fully insured, commencing no later than 00:01 a.m. on the date of completion. Sellers are advised to keep their insurance in place until the day after completion. This insures uninterrupted coverage, and indeed, an overlap of coverage on the property, thereby safeguarding the interests of both buyers and sellers.

Adjustments. This term refers to the day when the sellers’ obligation for certain things stops, and the buyers’ obligation begins. The most important of these is property taxes. The buyer will always be responsible for paying the taxes from and including the date of adjustment to the end of the calendar year. If the adjustment date occurs prior to the taxes having been paid by the seller by 1 July, the buyer will be responsible to pay the entire year’s taxes by 2 July. Therefore the buyer will receive a credit from the sellers for the sellers' share of the year’s taxes, to be deducted from the money tendered for the purchase. If the adjustment date occurs subsequent to the seller having already paid the year’s taxes, then the seller will receive a credit for taxes owed by the buyer. This credit will be added to the amount of the purchase price which must be paid by the buyer upon completion.

In addition to property taxes, other matters of concern are utilities. Normally the adjustment date will be set on a business day so that meters can be ready by utilities company personnel on the exact date. For this reason, completion and adjustment usually occur on the same day since completion must always be on a business day when the Land Titles Office is open.

Possession. This is the day when the buyers formally assume ownership in terms of having actual possession of their new home. Usually this occurs at noon a day or so after completion. This permits the sellers to clean the house, etc., after they have removed all of their possessions. Your realtor will normally meet you at your new home, hand you the keys, and inspect the home with you to ensure that it is in satisfactory condition upon your possession. In the unlikely event that there might be something of concern, your realtor will do everything necessary to attempt to ensure a satisfactory resolution of your concerns.

6. Ongoing Real Estate Consultation.

Your relationship with your realtor will be a strong one which will afford you the benefit of regular, ongoing consultation designed to meet all of your future real estate needs. Whether you might be considering the purchase of another property, the sale of your current property, or whether you might just wish to be kept abreast of the market, your realtor will be there to assist you and to provide you with whatever information you might require.

Copyright by Donald R. McClintock, Realtor

Victoria, BC

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