The Vancouver Life Real Estate Podcast Episode 5 - How To Buy A Home In Vancouver
The Vancouver Life Real Estate Podcast Episode 5 - How To Buy A Home In Vancouver
EPISODE 5 - July 21, 2020
Purchasing a home can be one of the most exciting and rewarding experiences. The pride of home ownership is one of life’s greatest joys and biggest accomplishments. It is an exciting time and there is a lot to learn so it’s natural that you will have questions along the way.
This podcast gives you an overview of the real estate transaction process and help provide clarity and peace of mind during the home buying journey. It will help empower you with key market information, industry knowledge and provide you every possible advantage to help you make informed decisions along the way. Being educated allows you to make intelligent decisions that help create a stress-free and enjoyable home buying process.
We discuss each step in detail and the timeframe expected to navigate each one. By the end you'll have a thorough understanding of how to buy a home in Vancouver, the costs to do so, and the team you need to successfully reach your home buying goal.
How To Buy A Home In Vancouver
Dan Wurtele 0:02
Hi, and welcome to the Vancouver Life podcast.
Ryan Dash 0:06
This podcast is created to answer the most talked about questions when it comes to navigating the Vancouver real estate market.
Dan Wurtele 0:12
I'm your host, Dan Wurtele, a licensed agent and accredited Real Estate Investment Advisor based here in Vancouver, and I'm joined by my co host, Ryan Dash
Ryan Dash 0:22
Hi Dan. I'm also a local realtor and exhausted father of two, husband of one and really happy to be here.
Dan Wurtele 0:30
Let's get right into today's episode. Hi, and welcome to the Vancouver life podcast. Today we are talking about how you buy a home in Vancouver and the step by step guide to get there and the timeframe in which it takes.
Ryan Dash 0:48
Yeah, we're gonna look at the right times to recognize when you actually need to buy because it's likely actually earlier than you might think a lot of people get to a place where they're exploding at the seams when they need to buy a house. So we're going to look at when is and recognizing when a good time to buy is understanding that Vancouver is a very competitive place to buy in. And so that you may have ideas of what you really want, versus what you might actually get.
Dan Wurtele 1:18
So this episode is not just for first time homebuyers, these are for people that are current owners looking to move up or move down or move sideways. This is going to cover all sorts of aspects in the home buying process.
Ryan Dash 1:30
Yeah, I mean, a first time buyer, obviously there's there's a few other things that go on inside of your mind. But when you're a seasoned buyer, you've bought and sold real estate before. There's ways that we think we can improve the process to maybe make it less stressful and potentially more advantageous.
Dan Wurtele 1:49
Yeah, buying a home can be an exciting and rewarding experience. And of course, home ownership can be one of life's greatest joys and it's a big accomplishment, you know, so it can an exciting time. And, you know, there's a lot to learn. So it's natural that you're gonna have a lot of questions along the way. And we are here today to hopefully answer a whole bunch of those in advance.
Ryan Dash 2:09
Yeah. So I think, you know, we'll look at what it takes in terms of getting pre approved for a mortgage. Because I think that's understanding what you can buy, and what you can afford are very important steps in this. But I think even Dan, before we get there, why don't we just start talking about when is it a really good time to recognize that maybe I need a new place?
Dan Wurtele 2:39
For sure. There's, well let's start with renters. Do you know what I mean? People can if you are currently renting, and you are potentially, you know, thinking about being sick of paying rent to someone that you don't know or you want to pay that money to yourself, you know, you want to know, would you rather be paying down a mortgage and ultimately be building your equity
Ryan Dash 3:00
Yeah, I mean, I it's funny actually, you bring that up, I've got a client of mine who reached out to me the other day, about a year ago, we started looking for property, mostly based around that fact that he was sick and tired of paying off somebody else's investment. But then got distracted by some other things and time went on. And I guess that persisted and it got worse. And he gave me a call about a month ago saying how he's just had it paying somebody else's rent, it's when you can be paying a very, very similar number, and actually be paying down your investment with principal versus just straight interest.
Dan Wurtele 3:42
Yeah, it's always good to be educated to understand how those numbers work. You know, what is a five year for example, outflow look of just paying rent or paying down a mortgage, you know, and quite often, even if, let's say property values remain flat, you will still come out far ahead by paying down a mortgage as opposed to paying Down or paying rent and paying down someone else's mortgage.
Ryan Dash 4:04
Totally. You know, the other thing is, let's say you've got a variable mortgage rate too, and, you know, rates get slashed like they're currently doing, your investment will even improve while you own it, whereas that's never going to be the case when he rents something, you're always going to be paying that rent. So, I mean, there's a number of ways to look at that. But I think, you know, people also need to recognize, you know, if they're tired of making a commute to work, you know, you only have so many hours in your day. What does that value to you? What does that worth to you? You know, I personally, I spend a lot of time in my car. It's also part of my job, but, you know, for those that travel an hour each way to work or more, maybe you're not living in the right spot.
Dan Wurtele 4:52
And of course, there's always families, right, let's say, when you initially started home buying and you have a house now, you were you were single and all sudden you're married, all of a sudden you're pregnant with twins, right? That's gonna be a bit of a motivator that you should be probably looking for a new place because kids grow up quick.
Ryan Dash 5:10
Yes, do they ever. I mean, just speaking about my own process, you know, my wife and I were dating, and moved in with her into her one bedroom. And then we dated for a while and we got married. Before we actually started having our first child, we actually bought a two bedroom moved into that and had our first child. And that process was wonderful because we didn't feel a ton of stress. We actually had the space to accommodate change. I think where it gets stressful is when you do it in reverse order. Much like when we had our second child, and we're still in a two bedroom now, and really knowing that we should have probably moved to a three bedroom or a house before, but now we're exploding at the seams and it's becoming pretty stressful. Which kind of clouds your vision and, you know, it puts pace on to the process and getting a new home.
Dan Wurtele 6:07
And a lot of people too will track the market and make moving decisions based on that, you know, for example, in an upward market, you know, potentially you have a whole bunch of equity in your home, you are looking for some more square footage, and maybe you want to do a lateral move, you know, you want to sell your one bedroom condo that you now have built up, you know, 567 hundred thousand in equity and turn that into a three bedroom home a little bit further out of town. Alternatively, when the market goes down, there are opportunities for moving up because of course, let's say the average home drops 10% Well, that bigger home that you were eyeing has also dropped 10% but the difference in property in $1 figure between let's say your condo and a detached is much greater. So your move up can potentially be an easier move.
Ryan Dash 6:56
Yeah, and typically I think, you know, historically anyways in the in the news term, when the market has suffered money has gotten cheaper. So that dollar figure, as long as you don't lose your job and you're able to maintain income, that dollar figure might actually get easier to achieve based on the market as well.
Dan Wurtele 7:18
Exactly. So obviously, there's all sorts of reasons why you may want to move and or buy your first home. And of course, it's all about being educated so that you can make smart and sophisticated decisions when the time is right for you. So I think as a next step, let's kind of go through the process. And Ryan, you already touched on the first one, and that is, of course, understanding your finances and getting pre approved for a mortgage.
Ryan Dash 7:42
Certainly here in Vancouver. Almost nothing is cheap. So most people buy a property here with a mortgage and that means when you've decided that it's ready for you to purchase a new home. Whether it's your first one or not. You'll want to reach out to a mortgage specialists now you can either go to your personal bank, or you can go to a independent mortgage broker, a mortgage broker will actually go and shop major banks, potentially private lending should you need that sort of thing for you and get independent rates for you, so on and so forth. Whereas if you go to, you know, your standard bank, depending on the kind of relationship that you have with that bank, they may be able to offer you similar products or services for similar rates. But obviously, in one instance, you're getting somebody to competitively shop rates for you, and then the other one, you're banking on a relationship.
Dan Wurtele 8:41
Mm hmm And, of course, interest rates are incredibly important part of your decision making process, but you have to look a little bit beyond that as well and your mortgage professional will help you there. You know, what does it cost to potentially break the term? What is your term what makes more sense for you fixed variable or even a hybrid combination of both right, everyone's got unique situations. And so it's very important that they walk you through the steps. So you understand, essentially what your monthly outlay is. And of course, what it looks like on the other side of your term.
Ryan Dash 9:11
And this is like, whether you're dealing with a mortgage specialist at a bank, or you're dealing with a broker, ask a lot of questions at this place. At this point, this is where you want to be understanding every dollar, right, this is the biggest part of, well, one of the biggest parts of the deal here. So ask all the questions. If you don't understand something, ask again. You know, if you don't know the difference between a five year fixed rate and a variable rate, make sure that's clearly explained to you. Because you know, in one instance, you're going to be locked into a five year term at a certain rate, the other one floats with the market. So one is more risk tolerant and one isn't
Dan Wurtele 9:52
along with your mortgage Of course, you are going to need access to capital for the down payment and this is going to affect your interest or sorry, your mortgage as well, when we're talking about insured versus uninsured, do you have 5% down? Or do you have more than 20% down, and of course, being liquid enough or knowing when to be liquid to access those funds is very important, right? Perhaps your down payment is tied up in stocks, bonds, mutual funds, RSP, etc. So knowing the timeframe of when you're going to need to access those funds is important because last thing you want to do is get an accepted offer on a home and say, Oh, wait, I need two weeks to get the down payment. So that would be an issue. So again, that's just part of asking questions. And having us or your agent or your broker help explain when downpayment and funds are going to be required
Ryan Dash 10:39
when you make a deposit on a property in Vancouver is typically 5% of the purchase price. That forms part of your downpayment later on. So you'll need the deposit much sooner you'll need that liquid because you'll need to move those funds into a trust account, whereas the down payment can come sometimes A few months later,
Dan Wurtele 11:02
exactly. So now that you kind of understand where your downpayment is coming from and your pre approval amount, you have a very clear vision of what you can afford. And it's a very fundamental first step, right? There's no point in going to look at homes that you simply can't afford, it can be a little heartbreaking and discouraging. But knowing your buying power is a fantastic first step and allows us to go and work with you in finding the homes that are going to match not only your criteria, but your budget.
Ryan Dash 11:30
Yeah, it really helps set expectations too. You know, we live in a very competitive real estate market, and understanding maybe what property bracket you fit into what neighborhoods that you fit into, you'll also understand the level of competitiveness that's going on in those neighborhoods. So you'll start to get, you know, a mindset for what's going on. We've had buyers who have gone through, you know, making bids on multiple properties before maybe it's the third or the fourth one that they actually win. So understanding and putting the right mindset around understanding your finances and what it means to put all of your money into equity, and how that feels. The first time it's difficult, but maybe the third time, you know, you're ready for that, because you really want that property.
Dan Wurtele 12:18
Exactly. And also being pre approved, really helps your agent to have that conversation with the listing agent. It's part of the negotiation process, meaning that if there are two competing buyers for the same property, and you are pre approved, and the other one hasn't spoken with their lender yet, well, it clearly makes your offer far more stronger.
Ryan Dash 12:38
I couldn't agree more. Dan, it's having happened several times to me where, you know, the transparency that our clients give us allows us to negotiate at a much higher standard for them, we understand the whole picture, we can protect them better, or we can tell them when they need to step on the gas a bit more, right. Whereas if they hold that information back or they haven't gone about getting the information, it makes the job more difficult and in all honesty, the potential for disappointments much higher.
Dan Wurtele 13:09
That's right. So the whole getting pre approved process, you know, taking in consideration that your taxes are up to date and whatnot, you can expect it to take around one to two weeks. That's a good timeframe to outlay to get pre approved. And then after that, of course, is when you want to if you don't already have one, decide which realtor you want to work with.
Ryan Dash 13:32
Yeah, I mean, all biases aside here. Your realtor is going to be your confidant. They are the person you're going to share. Not just what property you want, but why you want it and why it's important to you. And potentially how you want to get it. You know, your realtor is going to develop a relationship with you is going to have to understand your needs and your wants. intimately so that they can do their job. properly. So it's very important. I think when you first sit down with somebody, that we're also able to establish trust and confidence very quickly, I think that's a very important part. And I would encourage tremendous transparency as well.
Dan Wurtele 14:17
Mm hmm. Yeah. I think like any big decision, you know, there's, you're only going to take advantage of interviewing 2, 3, 4 or five different agents to see which one fits you the best. And, you know, some of the kind of questions that you're going to want to ask or find out is, you know, what, what kind of experience do they have? Are they very professional and predominant in the area and property type that you're looking for? You know, and I think one great way to really find out about how they work because sure anybody can tell you anything is is talk to their past clients, you know, do a Google search, see, see what their reviews look like and, and definitely ask, say, hey, I want to talk to five of your past clients to hear their experience with you, because that's you're gonna truly hear how they operate.
Ryan Dash 15:03
Yeah, you know, I mean, that is certainly one avenue an avenue with which a lot of people go. The other avenue is, you know, Vancouver in particular, but our industry is a big referral industry as well. So we see, you know, a lot of we get a lot of calls, I should say, from, hey, you know, my, you did a deal with my buddy and he said, You were great. And, you know, this is what I'm looking for. You can go about it that way too. But, you know, I would still encourage you know, whoever you're dealing with to develop that relationship to at least ensure level of competency because, you know, there's how many Dan? 18,000 14,000 realtors,
Dan Wurtele 15:45
yeah, just under 14,000 right now
Ryan Dash 15:47
you know, there's 14,000 realtors in the province here. So there's plenty to choose from, you know, and there's rankings that are available. There's lots of ways to determine competency but really, you're gonna want to like the person you work with, because you're gonna have a lot of conversations with that person, and then they they really need to understand who you are.
Dan Wurtele 16:07
Yeah, you know, personally, we certainly take an approach that we want the clients that we have to be our clients for life, right? We're not transaction based, we, yes, want to get you into your first home. But we also want to get you into your second third. And we also potentially want to help not only your friends and family, but people who are looking to invest in properties as well, because we can help in that area.
Ryan Dash 16:28
Yeah, I mean, it's really important. I don't think Dan or myself are really transactionally based real estate agents. You know, we really focus on the whole vision of our clients, you know, not just that particular transaction, we want to look at, does this fit into the next 20 years of your property portfolio, if that's something you're trying to achieve, or maybe this is the house that you want to buy and you're not looking to sell it again for the next 15 years? Well, if that's the case, then we better make sure that we're finding you the right spot. So understanding who you are your needs and your ambitions in your life. It's really important for us.
Dan Wurtele 17:05
Mm hmm. Okay, so now that you've found a great realtor or realtor team to work with, kind of like what Ryan was just touching on, the next step will be to sit together and do an exploration, you know, talk to each other and have your agents and you connect and really get a firm understanding of what your needs are in your new home.
Ryan Dash 17:26
Yeah, and you know, you might have a list of things that you're going to need, right? Certainly bedrooms is typically up there with number one bathrooms would be number two, how many of each do you need? And why? You know, every family's got different reasons for what they need those things for. But, the other thing to understand is, especially in Vancouver, you've gotta, you got to understand that getting a property and getting 10 items out of the, you know, 10 out of 10 is a very difficult thing to achieve. That being said, you know, it is possible that you will get eight out of 10 or nine out of 10. And that's kind of the expectation that you need to have because property's very expensive here. And it's not always possible to meet everything that the clients are looking for. So having some wiggle room in terms of their expectations, you know, it really helps that person actually get that property sooner.
Dan Wurtele 18:22
Mm hmm. I think part of what we like to help with as well is let's say a client comes to us and say I love Yaletown. I want to live in Yaletown. Okay, awesome. Well, we can help with that. But I also want to mention, like most neighborhoods, one or two blocks can make a huge difference in where you live in not only let's call it noise or proximity to transit, but also developer buildings, right? We can know buildings pretty much inside and out in most neighborhoods. So we can certainly steer you in the right direction very early on.
Ryan Dash 18:53
Yeah, and again, that's going to come down from understanding each other right and having those open conversations. So I think now that we've established I want to work with Dan, and I want to buy a condo in Yaletown. How are you going to get those to me? How am I going to? What's the next step here? How do I get into them? Where do we go from here?
Dan Wurtele 19:15
For sure. Big next step. So as realtors we have, of course access to MLS just like the general public does. And we can initially get you set up on a nice property search that entails all of your search criteria. And we'll get you set up on a custom site that sends you every single home that currently matches all that criteria. plus all the new ones the second they hit the market because of course in a fast moving one like Vancouver, knowing first can potentially get you into home before someone else
Ryan Dash 19:44
and save you thousands, potentially.
Dan Wurtele 19:46
That's right. We also of course have access to off market listings, right we have a number of channels, that brokerages and realtors share that show potentially not only coming or upcoming homes, but the odd property that is listed off market some People like to keep their sale quiet. And you know, ultimately we have access to those as well.
Ryan Dash 20:06
I think it's a really important point. I think as long as I've been a realtor, you know, MLS is great. It shows you a lot of property. But oftentimes, I found that when clients get the property from MLS, there's either an accepted offer on it, or there's there's there's some sort of deal in progress. So having a network whereby we know about property that's coming to market before it hits the market, and preparing our clients for that has allowed us to win in multiple offers so many times. I really can't emphasize how important it is that that network exists, because it just gives our clients another avenue another way to find that house that they may not have got with someone else.
Dan Wurtele 20:54
And I think having a really good understanding of your needs can sometimes result in Surprising geographic relocation as an example, I had one client who was extremely adamant about a downtown one bed. And we saw we saw a few everything seemed to work, you know, some properties literally checked 99% of the boxes. But the more we looked, I realized what this person actually I think, might really enjoy lower Lonsdale. And so one afternoon, we took a trip out there and just kind of walked around the the key and the waterfront there and looked at a couple homes and had lunch. And guess what, one month later, they ended up buying a one bed and lower Lonsdale. And it was just because, you know, they didn't even recognize that area was right for them. You know, and having been through a lot of neighborhoods and a lot of homes. Sometimes, you know, we can share options like that that may ultimately work out perfectly for you.
Ryan Dash 21:46
Yeah, I mean, we do we see a lot of neighborhoods and we see them all the time. Right. And so you know, we there is often a demographic or a type of person that falls into a specific kind of neighborhood. And when those two match up, you know, it's magic. And oftentimes they're trying to find that and they don't know where it is. Right? And that's where we can come in and provide that expertise for you.
Dan Wurtele 22:07
Mm hmm. Of course, looking for a home is fun. It's a lot of fun, right? There's no doubt you're going to be jumping on your own favorite site realtor.ca or rew.ca, for example, and looking at homes, right? There's, there's no wrong way to find the home. You know, we pride ourselves in helping or sending you the ones that we think are best, but of course, you know, we're about having fun as well. So if you see something or your friend points went out, great, you know, we can explore that option as well.
Ryan Dash 22:32
We don't live inside inside your head, right? So you find something that, you know, you really, really like and maybe it was a little outside of the criteria that was given to either us or your realtor, by all means send them that property. It's, it's not about that.
Dan Wurtele 22:48
Exactly. And the fun thing is to you know, when you start looking at homes, you quickly realize that maybe you find something else that you didn't know you needed. Yeah. Or maybe you you know, thought need one thing? And actually, maybe that wasn't right. So you know, it is an exploratory process. And, you know, we really enjoy helping people walk through as many homes as it takes to really hone in on the perfect one.
Ryan Dash 23:11
I mean, Dan, have you gone? Do you have clients who were maybe looking for a one bedroom at one point and ended up with a two bedroom because they recognize the need that they didn't know they needed?
Dan Wurtele 23:21
Yeah. 100% and sometimes it's its budget as well meaning, okay, we've got a budget of x and we want a one bedroom Great. Well, if you just cross a bridge, that one bedroom becomes a one in den, right? Or that one in den becomes two, if you go another, you know, five minute drive out and all of a sudden you realize, okay, well, you know what, I didn't know, I liked Fairview. I didn't know I could still get to work in eight minutes. But I can get a second bedroom now. Well, okay, let's explore that as well.
Ryan Dash 23:45
Yeah, and that's a really, really good point. I mean, we're talking five minutes here for a difference of, you know, maybe an extra couple hundred square feet, right for roughly similar dollar value. Anyway, so now that you have an email in your your inbox, you've picked out three of the homes that you like. I've sent them back to you. And I told you I'm in love with them. What do we do next?
Dan Wurtele 24:07
Oh, you know what? I just thought of one thing too, though. Let's not forget about open houses. Oh, yeah. Right. I mean, come on. And this is a big driver of how people find homes fair. For example, let's say, hey, let's reference Yaletown again. And you You're quite positive, you want to live in the Yaletown area? Well, there's nothing wrong with going out on a nice sunny Sunday afternoon, and just kind of touring the area that you'd like and seeing, hey, there's an open house, there's an open house, go on and have a look. That's another way of finding homes and also just getting a good idea for specific buildings, right? Maybe there's a two two bed available in in building x. And you go in because you've never been there before. And you fall in love with the building. Well, great. Now we can target a one bedroom in the same building, whether it's available now or later. Or if Ryan and I have to go and knock on some doors and tell someone that hey, we have a potential buyer for you. Yeah, you know, there's many ways to get you into the right home. But yeah, next steps. So you found the absolutely Perfect one, and it is now time to make an offer. Right? So, Ryan.
Ryan Dash 25:06
Yeah, so I, you know, when we're ready to make an offer, typically, you know, I'm walking around the property with my clients and I know we're operating inside their budget or close to it anyways, I'm really looking for a gut check, I'm looking for that person or that couple to fall in love. It's kind of like a some sort of magnetic attachment to the property and you can kind of walk in and within about 15 seconds, you can see it on their face, they can't see it. But but us as agents, we kind of get that we understand that an offer is coming. So once we do that, it's certainly important to make sure that the list price the property that is being offered to market is actually worth what is what they're asking for. So I think you know, number one, it's really important to understand the value to do the homework on the property to run the numbers and make sure sure that we're operating inside of market values and to to then ask for property documents.
Dan Wurtele 26:07
Yeah, we have access to an immense amount of data regarding not only that property, but recent properties that have also sold in the immediate area. So we pride ourselves in a very deep dive, analytical look at the property to get what we feel is a true market value range of what this property should sell for.
Ryan Dash 26:26
Yeah, and I mean, not not just talking about condos either here, you know, we're also talking about single family homes. And there are property documents with those single family homes like we want to make sure for example, if it's 100 year old house, is there an oil tank in the backyard and has that oil tank been removed? Is there been a scan, if not, it changes the way we write our contract and the way we write our offer.
Dan Wurtele 26:50
Exactly our job in writing an offer is largely to protect you, the buyer, and we will be including items and terms and conditions and subjects. within every offer that protect you as a buyer, and that will give us time to do and perform due diligence to ensure that the property is in great standing both inside and out.
Ryan Dash 27:10
Right. So I guess when we make an offer maybe Dan, let's talk about your typical conditions inside of an offer. Let's assume that we're in a balanced market right now, we're not in a crazy aggressive market, a typical balance market. And the typical conditions that you'd see a contract.
Dan Wurtele 27:30
Of course, generally we always start with financing. So yes, you are coming and looking at a property that a you can afford and be you are already pre approved for financing pre approved for your mortgage. But we always put that in a to again, protect you but be it almost every time you can count on your land lender, excuse me, your bank coming by with an appraiser to see what they feel the value is on a property because sure this thing may have a value of let's call it $750,000 but if the bank comes in and they only think is we're seven, well, generally, the buyer can be on the hook for the discrepancy there.
Ryan Dash 28:09
Yeah. Or you're going back into negotiation at that point. That's right. And you're saying, hey, look, you know, we've got a discrepancy or $50,000 of value. And then you know, maybe you're splitting the difference. Maybe they have to come down the whole way in order for the deal to get done. Again, that would be a bit more contextual, but something that does happen.
Dan Wurtele 28:29
Mm hmm. Second up, we always put in subject to inspection. Very important that you get an inspector into that home, and they will do a thorough inside outside top to bottom look of the property and look for any type of red flags.
Ryan Dash 28:43
Yeah, there. I mean, the big one here in particular is we're looking for mold. We're looking for water. We're looking for damage in the property that you can't necessarily see to the naked eye. We've got something incredible Well, we work with an incredible inspector but in all honesty, they've saved us thousands saved our clients, thousands we've walked away from properties. You know, I remember I saw a property once, I think it was out in, in White Rock. And after the inspector came through, he showed us that water had actually been seeping through the wall from the exterior wall all the way through to the drywall on the other side. The reason we hadn't seen any mold yet was because it was a there was a heater underneath where the water, it was coming through and drying it. So it was, again, the buyer loved, loved loved the property. He was willing to spend the money, but we walked away from it, because inherently it would cost money.
Dan Wurtele 29:39
Yeah, depending on the size of the property, you're looking at an inspection fee of somewhere around 400 to $600. And that peace of mind alone or for uncovering a substantial issue. You know, it's worth it all day long. And we basically do inspections on 100% of our properties and that includes brand new builds.
Ryan Dash 29:59
Yeah, there's peace of mind that comes with an inspection. Also, we can talk a little bit about pre inspections too, because in the event that you are in a competitive market, you will want to maybe get your inspector in there prior to making an offer, but we can talk about that on another day.
Dan Wurtele 30:18
Mm hmm. So next up, we would put in subject to approving an insurance quote, right. There are obviously some buildings now where suddenly the deductible is upwards of half a million, if not a million dollars, and there are certainly very few insurers that are going to feel comfortable applying insurance to a property like that. And of course, you can expect your rates to be very high. So during the due diligence phase subject to insurance, you can go out, get a few quotes, we certainly have a number of great insurers that we recommend and make sure that hey, you are happy with the number that comes back for the cost to insure your new home.
Ryan Dash 30:54
Yeah, this is a relatively new issue that's come up but it's a global issue around world here. And in dealing with it, you know, we're seeing some interesting strata strategies, if you will, where they're putting together things like an insurance reserve fund, because in some instances, an insurer will give you a $500,000 deductible. So a building will actually put will hit all of the owners with a special levy and put $200,000 into a fund so that in the event that you know only $300,000 worth of damage takes place, the 200,000 kept in the kitty comes into play bringing it up to the half million dollar mark and your insurance kicks in. Which is, again, something that's brand new. I don't know how that works necessarily, but you know, it's definitely new and something we're learning a lot about.
Dan Wurtele 31:47
And Ryan you touched on a very important part and that is strata properties. One thing that we will always put a subject to within if you are if we are looking at purchasing a stratified property or condo etc, that we review The property documents and there are quite a few of them and essentially what this is, is looking into the AGM the strata minutes, a depreciation report if there is one, the insurance summary, of course we touched on and, and these documents are quite thorough, there can be hundreds of them. And we certainly you know what to look for, and we'll share this with you. And ultimately this gives us very good insight into the condition of the building both inside and out.
Ryan Dash 32:26
Yeah, and also how how the strata operates, you know, I mean, not all stratas are created equal that will tell you that, you know, I've been through some 40 year old buildings that look like they're only 10 years old, and that's due in place to good management. Being proactive as opposed as opposed to reactive. The inspector will look at the general condition of any apartment building. But really the the tell tale signs of what's happened over the last two years are going to be detailed in the documents and That's where we're going to look, try and uncover those red flags. And if we do, some might not necessarily be deal breakers, but they may allow us to go back find and save you a bit more money or renegotiate a better term or something to
Dan Wurtele 33:14
that effect. Mm hmm. Now, that's generally the subjects we'll look at, of course, on a detached property, there may be something else like Ryan touched on earlier being the oil tank and an oil tank scan. And then of course, every property is case by case, you know, is it tenanted do we have to look at what's happening with the tenant for example?
Ryan Dash 33:32
Yeah, because tenants have a ton of rights, nine tenths of the laws possession and we have to respect tenants rights. So understanding what you are contractually obligated to versus you know, what you actually think you can do? It's very, very, very important to understand that because the small claims court of the Civil Rights Tribunal the CRT I believe it is will sell those differences if they need to.
Dan Wurtele 34:03
Right so outside of subjects in terms now that we've generally kind of given you a good oversight of the other big items in the offer are of course price, you know, and we will discuss based on our market analysis where we think the property is worth and then potentially how much less we can get it for and where we start, right because every negotiation is a negotiation and, you know, we will have a number in mind that we will start with
Ryan Dash 34:28
totally, and I, sometimes you will get a property that's listed 50,000 or $100,000, under the market value. And that's a strategy typically by the listing agent to bring in as much traffic as possible into the property, at which point they're looking to generate multiple offers. So it is really, really important at this point that we're running our numbers and understanding that hey, even if this is $100,000 under $200,000 What it's actually worth, what is it actually worth, because that's what we need to determine in order to be competitive. And in order to get to that place.
Dan Wurtele 35:08
Very true. Outside of that, we include the deposit amount, which again is in and around 5% is typical, you know, we can't go case by case on that again, but you can expect about a 5% deposit to be included in the offer. Next up to is what we call dates. Dates are very important. Dates are two things. One being the completion date that is generally known as the date where the funds are transferred to the seller, and the possession date the day you get the keys.
Ryan Dash 35:40
Best day in real estate
Dan Wurtele 35:41
Best day. Generally, those are at least one day apart. Sometimes you can expect a two or three day gap in between. The purpose of that is the seller also needs to buy a home on the other side. And essentially, to try and keep it as short and simple as possible. What they're Doing is the receiving the funds from the sale on day one, they are paying for the new home on day two, moving into their home on day three, you move into your new home that they just sold on day four. So again, it's all very navigatable. And we can certainly, again, walk you through this, but that's kind of an overview of how the dates generally work.
Ryan Dash 36:21
Sure, dates, dates are also used often by realtors as a negotiating tool as well. So it's important to if you can be somewhat flexible with your dates, great. If not, you could expect you know the other side to maybe leverage that right.
Dan Wurtele 36:36
Mm hmm. Yep, of course, there's, we'll generally approach it knowing your preferred dates and the sellers preferred dates, and then we will navigate in between those two. And of course, you know, there's lots of options and ultimately, you know, sometimes we're buying time, right? Well, we'll $1,000 difference by you a month, sometimes.
Ryan Dash 36:53
Totally. I think you know what Dan's kind of talking about here too, is maybe something we've learned skipped over a little bit here. And it's a little bit of, for lack of a better term, the art of deal discovery, to see if your expectations as a buyer can line up with the sellers expectations. And if there's a deal to be had there, a lot of that takes place between the agents, and is something that we often reiterate back to our clients, and it helps us form the data that helps us determine the price points and so on and so forth.
Dan Wurtele 37:31
Of course, every deal is unique and it's our job to really uncover the true motivation on really the seller side, if we're representing you as a buyer, you know, and Ryan's absolutely right. Yes, we're talking very tactical here, but there is absolutely an element of a lot of communication, a lot of discovery, and a lot of kind of finding those those gold nuggets of what they are really after and then you know, leading into those. Okay, so I think one more thing to touch on on the offer here is, oh the time that we quote unquote leave it open, right when you when you when we submit an offer to the seller. There's another tactic here and that is how long we give them to reply. Always case by case again, it can range from a couple of hours to a few days, and it's largely gonna be driven by not only the current landscape of the market, but the property itself.
Ryan Dash 38:24
Yeah, and oftentimes, for example, we had a property that went to market I believe it was back in March of 2020. And it went to market. And then I believe six hours later, we had a accepted offer in place. And the way that that happened was the new buyer came in right at the start. They were the first showing six hours later, we had an accepted offer, and the reason that they came in so quickly, they offered 20 thousand dollars above the asking price and did so because they wanted to avoid any kind of competition, avoiding that competition actually save them money because we had a backup offer that was above that. So the tactic from the realtor the strategy employed, worked. And both the seller was very happy with the outcome. And the buyer was also very, very happy.
Dan Wurtele 39:26
Right. So there you go. So the time that you enforce the sellers to reply to you about your offer is very important. Again, right? Have they had that agent not been as experienced and they had left it open for, you know, a day or two, they would have exposed themselves to the potential of another offer coming in, which ultimately did and then again, now you've got two buyers competing for the same property which on the buyer side is almost you know, it's not the best case scenario. Let's just
Ryan Dash 39:54
say that and as a seller, you you now hold all the cards because you leverage the offers. Right?
Dan Wurtele 39:59
Right. Okay, so essentially, that's an offer in a nutshell. Once an offer is submitted, the sellers have three options. They can accept it right there. They can reject it flat out, or what most likely will happen is you can expect a counteroffer, they're going to come back to us and say, okay, we agree with ABC and D. But we're going to modify E and F, we're going to change the price. And we're going to ask for an extra week as an example, right? Everything is going to be up in the air as far as what's important to both sides. And that negotiation can ultimately go back and forth. offers can be countered a new number of times, until we ideally get to a point where both both parties are super satisfied and happy.
Ryan Dash 40:43
Yeah, until you hammer it out. And I think another thing to just clarify is, you know, if I make a counteroffer after my offer, my previous offer, no longer matters. It's really important to know that you can't go back once you've cancelled that offer and you've made a new one. So that being said, the other side could change it again and then you're back at it again. So,
Dan Wurtele 41:06
right. Okay, so now let's play out the scenario that Okay, great, we have what is now called an accepted offer. Hooray, congratulations, first big step here. Now what happens is we enter into the subject removal phase. This is essentially the due diligence phase. This is something that is determined in the contract earlier, and is generally somewhere between seven to 14 days, timeframe.
Ryan Dash 41:30
These these are the terms or the conditions subjects that we've put into the contract, typically the three or four that we talked about, just before this, so this is where our due diligence time starts ticking, and we send it in the inspector we now report the sale to the mortgage broker, so that the mortgage broker can start doing their into the deal, start getting the financing in order, maybe organized an appraiser if need be, to make sure that the accepted offer in place is inside of the market value.
Dan Wurtele 42:01
That's exactly it. This is, again, if we have a stratified property, this is the time that will take to review those documents and uncover any type of issues and report those back to you. Again, anything that does come up both through the inspection or through document review, insurance or other, we can technically at any point, go back to the seller's and bring these up and potentially reopen a negotiation, meaning, you know, if we find something major, but you know, we're okay with it as long as the price gets reduced 20,000 Well, that's something that we can approach case by case.
Ryan Dash 42:35
It really is case by case because if there's somebody else that's interested in the property,and now you want to go back and ask for a discount on something, well, maybe the seller might entertain the other offer.
Dan Wurtele 42:45
That's it the other party that's right, so it's not just Hey, there's a problem you're gonna get a reduction. It's sometimes you know, again has to be analyzed that hey, maybe that's okay. Because guess what, you love the house so much over time, you can get that thing fixed. Because if you don't, and you won't Want to give it up? Well, someone's willing to pay, you know, even more than you did, perhaps,
Ryan Dash 43:03
or no matter what any buyer that comes through that house is going to have to deal with it. So, you know, maybe you've uncovered something. And you're okay to go about that because you know that the next buyer in line is also going to discover that right?
Dan Wurtele 43:16
Great. So during that phase, let's say the inspection is clean enough, it's to your satisfaction, but documents are clean, you've obtained insurance, the appraisal came back right at asking price for some reason or sorry, offer price and then the bank says yes, you are financed, you are now able to what's called remove subjects. This is what will make the deal firm. And this is also the time when you will be paying the typical 5% down payment. Sorry, deposit rather sorry.
Ryan Dash 43:48
Yeah, that's right. So at this point, typically within 24 hours of the time that you remove subjects which will be one document that you'll sign off on you'll need to come up with With those with those 5% funds, those funds will then be put into the trust account at your brokerage and will form part of the down payment later on when you go and see your real estate lawyer,
Dan Wurtele 44:12
and hey, once those funds are handed to your agent, and they deposit them into their brokerages trust account, hey, congratulations, this deal is considered firm.
Ryan Dash 44:21
Yeah, you've got a sold property at that point. Nobody else can buy it from them, the deals done. And it's just about the rest of the contract and getting it executed.
Dan Wurtele 44:31
That's right. So generally, you know, you're going to look at probably six to 12 weeks out before the typical possession takes place. And so really, you're just now in a position where you get to be excited about your new home and maybe go and potentially buy some new furniture, get ready for possession day, which is the next big exciting day
Ryan Dash 44:50
Totally and that brings us to our next point, which is preparing to move and this is honestly it's pretty can be pretty stressful time most people's lives. On the flip side, it's also quite exciting because you're, you're moving into your new space you know so preparing to move, you're certainly wanna, you're gonna want to speak to your your movers another big item we see I guess it's not big but it's an item we see often in contracts is actually having your property professionally cleaned before you hand over the property. Again, this would be in in the deal, but something that you need to prepare
Dan Wurtele 45:30
Yeah, there's little logistical items to keep in mind as well outside of your movers, you know, you may want to notify your utilities and you know, get BC Hydro and cable and internet, all that type of thing, moved over to a change of address at your post office. And of course, if we are looking at a strata property again and you're not moving into the ground floor, you want to do things like book an elevator in advance.
Ryan Dash 45:52
Yeah, that can cost you $200 If you don't,
Dan Wurtele 45:55
Ryan Dash 45:58
Yeah, and then on possession day once you've got those things organized, it's just about moving your stuff in. At which point, typically, we will meet you at the property where we will hand over the keys to you and sparkling great condition. At which point, then you'll take over.
Dan Wurtele 46:18
Yeah, congratulations. That is basically the steps to buy a home. Now, Ryan, of course steps sound great. And people of course wants to know, outside of the purchase price, what does it cost to buy a home in Vancouver?
Ryan Dash 46:32
So outside of the purchase price, so
Dan Wurtele 46:34
yeah, what are the fees?
Ryan Dash 46:35
Yeah, so, you know, I mean, it often gets confused, but when you're employing a realtor to help you buy a property, you don't actually pay that realtor most of the time. Typically, what happens is when somebody puts their home on the market, they make an offering for commission, at which point so once we get involved in a contract here, if it goes firm, seller will actually pay me the realtor for bringing you the buyer to the deal.
Dan Wurtele 47:05
That's right. So buying agents essentially work for quote unquote free when it comes to how much you are paying them. After that GST is always something to consider. So, as a sort of overarching view of how this works, if you are buying a brand new home 5% GST is applicable,
Ryan Dash 47:25
it's never been lived in
Dan Wurtele 47:26
right. Now, if you are buying a resale home that someone has lived in, the general rule is that gx sorry GST will be exempt, you will not be paying GST on that property. There are outlying circumstances where it can be and again, it's case by case and that's something that we will be able to advise you accordingly
Ryan Dash 47:47
and having a good lawyer too
Dan Wurtele 47:49
Absolutely. Next up is what's called the property transfer tax.
Ryan Dash 47:56
Yes, it's unfortunately something that ever everybody here in BC pays on the purchase of a home and the way that property transfer tax is scaled is you would pay 1% on the first $200,000. So $2,000 in tax, the purchase price from 200,000 to 2 million, you now pay 2% on that. And then above 2 million, it goes up to 3%. And it can actually scale up from there too.
Dan Wurtele 48:29
And definitely note the property transfer tax is a cash payment that cannot be rolled into a mortgage so it has to be paid.
Ryan Dash 48:37
Dan Wurtele 48:37
unlike GST on a new build, for example, that can be rolled into included within a mortgage.
Ryan Dash 48:42
That's right, Dan, if I'm buying a new property though, do I pay GST? and PTT? because I think you do.
Dan Wurtele 48:52
The government loves to get their money first.
Ryan Dash 48:53
Yes, they do. It's unfortunate but like we said, property transfer tax is inescapable.
Dan Wurtele 49:00
Again, there are some incentives available and again, it's gonna depend on purchase price. And if you're a first time homebuyer, potentially leasehold land. But again, we don't want to complicate the situation now, but we would, of course, be able to advise accordingly should that be the type of property or scenario that you're in?
Ryan Dash 49:16
Yeah. Another one to really kind of be careful of, is whether or not you're a foreign buyer or not. foreign buyer tax here in BC is tremendous. We want to definitely make sure that you either have your PR residency, your visas in place, and if you don't, that you have that process going, so that I think it's typically a six month six to 12 month process, but once it's done, you know, you're not paying 20% on top of your purchase price.
Dan Wurtele 49:46
Mm hmm. Big one to know. And again, that's that will be uncovered in the initial discovery conversation with your agent.
Ryan Dash 49:53
Dan Wurtele 49:54
Okay, I'm talking looking at mortgages right now. The Odd lender may charge a mortgage applicant fee it's case by case, but that's something that you want to uncover early on in your conversation with them. Most won't, but again, you need to find out in advance, right You don't want to have any surprises.
Ryan Dash 50:09
Yeah, there may be an appraisal fee as well. Anywhere between three to $450 kind of thing. Where you may pay that is if you end up getting an accepted offer on a property but you don't buy it, but the bank has sent an appraiser through that is typically where you might end up eating that cost. If you go forward with the property and it's had an appraisal typically they just roll that cost into your mortgage.
Dan Wurtele 50:35
Home Inspectors, I think we touched on that earlier. Again, low end three to $400 high end if you're buying a bigger home of course that goes up six seven, you know is pretty typical for what you can expect to pay for a home inspection. Yeah.
Ryan Dash 50:51
Next is your your lawyers and your your notaries depending on which way you you choose they are very similar in terms of cost however, one can produce a whole lot more information than the other and you can expect to pay on a purchase anywhere from 900 to 1200 dollars for their services, mortgage disbursement fees, all that kind of stuff.
Dan Wurtele 51:12
That's right. There's something called adjustments as well, which is something to be aware of. Generally, this is in relation to property taxes and strata fees and whatnot. Meaning if you're buying a home in October, and the current owner has paid their property taxes for the whole year, you'll be ultimately reimbursing them for the remainder of the year that you're going to move in. And the same thing goes with strata fees. Let's say you're looking at a $400 a month strata fee. It's been paid, but you're moving in on the 15th you'll ultimately reimburse the seller the $200.
Ryan Dash 51:42
Dan Wurtele 51:43
All these adjustments are done with your lawyer at their office on the statement of adjustments, which is essentially how much is owed, how much has been paid, etc. And at the very bottom, you'll have sort of your your one line item, final amount that would be owed.
Ryan Dash 51:57
Yeah, it's an it's a essentially it's a net sheet. And then from there, you know, that really, I mean, if there's an insurance fee to that's maybe one thing we want to consider, sorry, we can bring that up. Likely insurance is going up now, especially if you're buying a condo would change for a home, obviously, but I think it's probably a good rule of thumb to expect anywhere from two to two and a half percent of the purchase price for your closing costs. So, you know, if you've got a home, let's say $750,000, not including GST, you could expect that $19,000 in costs on top of that, to actually be done with the transaction.
Dan Wurtele 52:43
Right. I think that's a great example and if you were planning to put a 5% down payment on that home, so let's say you're in for around 35, 40,000, that extra 19 on top, let's call it $60,000 is your hard cash cost to get into a home of that price point.
Ryan Dash 53:00
Yep. Yeah. And that that kind of really covers the offer process and in terms of what you could expect to both pay. And in terms of process,
Dan Wurtele 53:13
yeah, that's the whole home buying process beginning to end really. And, you know, this was designed to help you really just understand it. You know, having having a goal is one thing, but having a sort of point by point laid out plan in front of you is built and designed to help you get to that goal.
Ryan Dash 53:28
Yeah, I think the other thing to understand too, here is this was also I guess, explained. In a balanced market, the offer situation offers scenario can change drastically and dramatically based on market conditions. You know, I've had buyers who have bought three days after they saw a property and I've had buyers waiting outside the property to sign a contract. So you know, it really depends on the market conditions. The type of property and what you're looking at.
Dan Wurtele 54:02
Absolutely. So again, we will certainly have more podcasts about each of those scenarios in the future. But for now, we really hope this was helpful in having you get a good understanding of the home buying process. We do have a downloadable version of this on our website, it can be found at thevancouverlife.com/buying. And of course, we're always available to help answer your questions further that pertain to your specific scenario.
Ryan Dash 54:26
Yeah, very much. Looking forward to the next one and hope this was beneficial and value for you.
Dan Wurtele 54:34
There you go. Thanks so much for listening. We'll see you guys next time.
Ryan Dash 54:38
That wraps up this edition of the Vancouver life podcast.
Dan Wurtele 54:43
For more information on this podcast and to access a ton of free downloads, investment opportunities, current market info and homes for sale, you can find it all at www.thevancouverlife.com
Ryan Dash 54:58
Thanks and we look forward to bringing you More podcasts about Vancouver real estate