FAQ for Buyers
Can I get out of an offer if I have a financing condition? Do I have to prove I didn’t get financing?
This seems to be an oddly frequent question – odd because if you get to the point of having made an offer, I’d like to think your Realtor would have explained the financing condition to you. A financing condition is defined as “a requirement that is fundamental to the very existence of the offer.” A breach of a condition allows the Buyer to get out of the contract and obtain the full amount of the deposit back. If your offer is conditional on financing, you have a duty to seek financing in good faith (meaning you can’t just change your mind about the house the next day and back out of the deal saying you couldn’t get financing). Whether or not you have to prove you didn’t get financing depends on the wording of the clause your Realtor used. We usually use a clause that says that the financing obtained must be ‘satisfactory to the buyer in their sole and absolute discretion‘, meaning that the terms, interest rate and lender need to be satisfactory – not just that someone has agreed to give you a mortgage.
Can I avoid paying land transfer tax?
I love this question. No, you cannot avoid paying land transfer tax. Unless you don’t buy land. And yes, a condo is considered land.
What happens if my Home Inspector misses something?
This is a great question! Unfortunately, most (probably all?) home inspection companies in Toronto limit the amount of their liability to the cost of the inspection. So if they miss a $10,000 problem, you’ll likely only be able to recover the amount you paid for the home inspection (usually around $500). Before a home inspection, you’ll be asked to sign an agreement that will detail the home inspector’s liability. It will also detail the limits of what they are inspecting – for example, most Toronto home inspections don’t include looking for termites or mould, and, of course, the inspector can’t see behind walls and under floors.
What is the normal number of days for closing on a house or condo?
There really is no ‘normal’ in real estate closings- we’ve seen closings as short as 2 weeks or as long as a year. When an offer is made, the Buyer and Seller agree to when they want to close, depending on their own personal and financial situations. Typically in Vancouver, we see closings in the 30, 60 and 90 day range.
Is 20% down needed in Vancouver?
Generally, in British Columbia, a first-time Buyer needs a minimum 5% downpayment to buy a house or condo, though banks will require you to get insurance if you default (i.e., don’t pay your mortgage). If you have less than a 20% downpayment, your lender will require you to get insurance through a company such as Canada Mortgage and Housing Corporation. If you’re having a hard time coming up with 5% down, check out our Downpayment Strategies for the First Time Buyer blog.
I thought I qualified as a first-time buyer but I didn’t. Do I lose my deposit?
If your offer is conditional on financing and you discover that you don’t qualify as a first-time buyer during the conditional period (meaning that you won’t get to use up to $25K of your RRSP’s as a downpayment and aren’t eligible for first time buyer rebates and tax breaks), then you have a legitimate reason not to waive your financing condition. If you don’t waive your financing condition, you get your deposit back. If your offer is firm – meaning that there are no outstanding conditions, you are obligated to close on the transaction or risk losing your deposit and getting sued. Talk to your lawyer or REALTOR asap.
What’s required to buy a house in British Columbia?
Generally, you’ll need at least a 5% downpayment to buy a house in British Columbia. If you have less than 20% downpayment, you’ll be required to purchase CMHC insurance (which provides protection for the lender). Lenders will also look at your income and ability to pay a mortgage, the amount of debt you owe and your credit history. If you aren’t a resident of Canada, you’ll be required to have a larger downpayment.
How can I buy a house if I have no money and bad credit?
More importantly, WHY do you want to buy a house if you have no downpayment and bad credit? This is how our friends in America got into problems. If you want to buy a house, take the time to save a downpayment and fix your credit rating. Owning a home isn’t a right. Prove to yourself that you can be responsible enough to own a home by taking control of your financial health.
Who pays land transfer tax in British Columbia– the Buyer or the Seller?
British Columbia land transfer taxes are always paid by the Buyer. Sorry.
How can first-time Buyers conquer their fears?
Do your research and work with a REALTOR, who understands the needs of first-time Buyers. Spend some time defining your real goals, take time in making the decision to purchase a condo or house and don’t spend all the money the bank is willing to give you.
How much is a bank appraisal?
Many lenders require an appraisal (meaning they send in an independent appraiser to justify how much you paid for a specific property before they give you the mortgage). Fees for appraisals are in the $300-$500 range, but many banks (including RBC) will pay the appraisal fee for you.
Should I wait to buy a house in Vancouver?
That depends on what you’re waiting for. If you’re busily saving for a downpayment or waiting to get a salary increase to be able to afford the house or condo you want, then waiting is a good idea. If you’re waiting because you want prices to come down, recognize that’s a risky proposition unless you have the ability to predict the future. We’ve had Buyers who have been waiting for prices to come down for years and can now no longer afford to buy a house.
Do I need a real estate agent to buy a home?
No. You can buy a home by yourself, with the help of a lawyer or with a real estate agent. Real estate agents represent Buyers and are paid by the Seller. They can help protect your interests by providing guidance on neighbourhoods and specific condo buildings/houses, negotiate prices, help with obtaining financing/home inspections/contractors. Of course, I’m biased, but if you’re about to make the biggest financial investment of your life, wouldn’t you want to do it with someone who lives and breathes the real estate market every day?
What happens if I waive the financial condition and then don’t get financing?
Bad, bad things will happen. You NEED to confirm your financing during the conditional period, otherwise you risk losing your down payment and getting sued. There’s no point in having a financing condition if you don’t take the opportunity to make sure a lender will give you a mortgage during that period of time.
If I buy a pre-construction condo or townhouse, do I have to pay land transfer tax?
Yes. Buyers always pay land transfer tax even for a new home.