Did you know
Clients are sometimes unaware of just how Real Estate works. Here are a few basic facts which will help to make buying and selling less confusing. For help with other Real Estate queries just ask Bob. There is no such thing as a dumb question in real estate !
In a normal MLS transaction in BC, the Seller pays all of the commission. The Buyer gets a free service from their designated Realtor.
There is no set rate for commissions. They can vary from 7% of the first $100,000 and 4% of the balance, to 6% of the first $100,000 and 3% of the balance etc. Always remember, you usually get just what you pay for. The listing Realtor normally shares 50% of the commission if the Buyer has another Realtor, and their companies will usually share part of that split as well.
The Realtor who lists the property normally pays all the advertising, listing fees, search fees etc. If the house doesn't sell, the Realtor absorbs all of those costs. The Seller pays nothing. (This is not the case with many low commission operations. Many of them charge a substantial fee, up front, regardless of whether the property sells or not.)
Realtors are designated to act on behalf of the company to represent their clients. In addition to good service, they must provide complete loyalty, obey all lawful instructions, maintain confidentiality, exercise reasonable care and skill, and account for all monies and property given to their care. Listings are always with Real Estate companies, and not the individual Realtors. Usually, different Realtors represent the Seller and the Buyer. Only in very special circumstances will a Realtor represent both parties in a transaction.
E&O Liability :
All Realtors carry insurance in the event some kind of error or omission occurs. The Victoria Real Estate Board and the BC Real Estate Council handle complaints from the public when an error occurs. Realtors are trained to handle the many complexities of Real Estate transactions but, as in all professions, some fail to keep abreast of the current standards of practice, and problems can result. Clients are protected in such situations.
Leaky Buildings :
Any structure built between 1985 and 2000 needs to be approached with caution. 1985 saw a change in the Building Code that attempted to stop air movement inside all exterior walls. Unfortunately, once water gets inside these walls there is no way for it to escape, and no way for the wall to dry out. With wood, water, lack of light, and some warmth, you have the perfect recipe for mould and rot. In steel and concrete structures, this recipe brings about mould and rust. Some moulds are highly dangerous. Ask Bob for more information on this tragic problem. He has been working on this complex issue for many years.
Homeowners Protection Act :
Significant changes in BC law brought about a series of protections aimed at ensuring that residences are properly built and properly warranted. When buying a home that is newly built or (fully) renovated, clients should look for the multi-year warranty program that offers protection against building failure. Ask Bob for more information.
Mortgage Brokers :
Did you know that mortgage brokers can frequently find you a far better financing package than your own bank or credit union ? And that their service is free ? Whenever you need financing or refinancing for a property, always check with a good mortgage broker. Bob has the names of several. They will get you the best rate, and lock it in for several months while you search. If the rates go up, your rate stays the same. If the rates go down, yours goes down with them. You can't lose !
CMHC is a government insurance agency that provides insurance for non-conventional mortgages (less than 25% down-payment). This allows lending institutions to loan money to buyers who might not otherwise qualify, and at rates lower than they would otherwise have to charge. There is a fee for the cost of this insurance, however, and your mortgage broker can tell you how much it will be.
Title Insurance :
Title insurance is very common in the United States. It is now common in Canada, and can be a very useful alternative to doing a site survey when buying a property. It will pay for the cost of correcting an encroachment at a later date that may have been discovered, even when identified prior to purchase ! It can be a very wise (and inexpensive) investment, especially when buying older properties, or ones that may have had additions done without a permit. A land survey can cost more, and doesn't provide this protection.
Property Transfer Tax :
In BC, all purchasers of land have to pay a tax on that purchase. First-time Buyers can be exempted, under a variety of rules. The tax amounts to 1% of the first $200,000 plus 2% of the balance up to $2 million, then 3% over $2 million. There are also taxes on purchases by foreign buyers, empty homes, and homes valued over $3 million. They need to be carefully considered before purchasing. The Real Estate industry continues to oppose these dreadful taxes but thus far to no avail.
Illegal suites :
Many, many, homes in Victoria have unauthorized additional accommodation in them. If family members occupy the suite, there is no problem, as long as it complies with the building code etc. But there is no guarantee, when you buy a house, that the use of the suite will continue to be ignored if it is occupied by non-family renters. A good rule of thumb is that if your tenants don't disturb the neighbours, you will likely not have a problem. The suite should, however, provide a safe environment for tenants to live in.
Building Inspections :
When buying a home, it is always a good investment to have a building inspector take a look at the property. They don't have X-ray vision, and they can't examine every nook and cranny of the house. But they can give you a good report on the general condition of the property, as well as point out any problems they have observed. A good question to ask them at the end of their report "Is there anything about this property that would stop you from buying it "? Strata buildings are far more tricky to deal with. Ask Bob for advice on how to handle this highly complex area of investigation. Eg. Simply inspecting the inside of a condo or a townhouse does not provide you all the protection you need.
Easements, Covenants, Rights of Way, etc. :
Always have your lawyer check the title of the property to see if there are any charges against the title that might dissuade you from buying it. Some are harmless, but others can seriously restrict your future use of the property. Always make this legal investigation a condition of your offer if you haven't already checked it.
Strata bylaws and regulations :
The Strata Act has made the rules of strata living more complex, but also more clear. Some of the things to look for are bylaws regarding pets, age, rentals, barbeques, etc. Also be aware that CMHC will not insure non-conventional mortgages in strata buildings that have age restrictions. Bob can help you understand this new Act, and investigate the different strata rules with you as well. Reviewing all strata documents from the past 2-3 years should always be a condition of your offer.
When you list your property for sale, you will be asked whether it is permissible to have a lockbox placed at your home. If you have a tenant, their permission is also necessary. This box contains the key(s) to your home, and can only be opened by a Realtor with a current, authorized, code number. It is generally a safe, and very convenient way to allow other Realtors to show your home to their clients without having to have you or your own Realtor there. (It's always a good idea for the Sellers not to be home during a showing.) A computerized record shows who opened the box, and when, and when they closed it up again. In many years of operation, these devices have been a safe and efficient way to get the maximum number of interested buyers to see through your home. Showings are always arranged with you in advance.
Oil tanks & other insurance issues :
On many older properties, oil tanks were buried beneath the ground (in some cases it was required by law). If you have a buried tank that is no longer in use you should have it removed or decommissioned (cleaned and filled with sand) before listing your property. Some of these can be unsafe, and some of them can pollute. If you think there might have been a tank somewhere on the property in the past, it's important to have a search conducted. Bob can give you the names of several good search or removal companies. This is but one of many items that could make your new home uninsurable. The age of the wiring, plumbing, roofing, high-risk earthquake zones etc. can render it uninsurable, even thought the current owner has it insured. Crazy, but true. Always make its insurability a condition of your offer if it's for a non-strata property. Most strata properties already have property insurance already in place, but much older buildings may also have insurability issues.
Just a word on pricing. No-one knows what a house will sell for, or how quickly, until the Seller and a Buyer finally agree on a figure. And that is what the property is actually worth. Realtors can be very close in their estimate of what might happen but, in a very active market, we can frequently be fooled. Buying a house is an emotional experience, and we never really know how people are going to react to a property, or its price, until we test the market. If you price a house too high, you will greatly reduce the number of interested buyers. If you price it too low, you will have far too many. The job of your Realtor is to try and help you choose a figure which reflect the right balance. After a couple of weeks of showings, and no offers, you need to think about the price level you have chosen. Every house will sell at the right price, but the most interested Buyers will be the ones that come to see it in the first week or two of the listing. After that, it will slow down, and the opportunity to sell will be weakened accordingly. It's an art, not a science.