Geoff Hall

Hall Cassie Real Estate Group

Home Buyer's Guide

I wanted to take a break from market talk, graphs, and all that stuff.  What does the process of buying a property in BC actually entail?  Here's a quick step-by-step guide.   A good outline for the newbies, and a good refresher for the experienced!



1)      BC Property Transfer Tax (PTT) - this is a tax that is charged on title transfer for every property in BC.  This is unavoidable in 99% of cases.  It is calculated as 1% on the first $200,000 + 2% on the remainder of the purchase price.  For example, on $500,000 the PTT $8,000.  This is payable upon closing, and cannot be wrapped into the mortgage.   


There is an exemption for PTT on new build properties under $750,000, if you are declaring it your principal residence.  Leasehold properties are also exempt in most cases. 


More info here: https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax


2)      GST - This is payable on new builds in BC.  Generally it is a flat 5% on the purchase price.  GST can be rolled into a mortgage, unlike PTT.  On most resale properties, GST does not apply. 


Note: In most cases, GST does apply to properties that have been used primarily for short term rentals (AirBNB, VRBO, etc).


3)      Legal Fees - Your lawyer will handle the actual execution of the contract, directing funds from the bank and completing title transfer.  Legal fees will be approximately $1,800-2,000.  


4)      Down Payment - In most cases, the minimum down payment will be 5% on the first $500,000 + 10% on $500,001 to $999,999. If the purchase price is over $1,000,000 then it will be a minimum down payment of 20% on the whole amount. This applies to all home buyers who are purchasing their main residence, whether it is their first home or not.


For purely investment properties, the minimum down payment is generally 20%.  On some properties, notably those zoned for short term rentals, required down payments may be as high as 35%. 


On some properties, notably those zoned for short term rentals, the down payments can be as high as 35%.


Note: In the case of many leasehold properties and mobile homes, the minimum down payment will likely be 20%+. It is important to confirm with your mortgage broker what your specific lender will require before getting too far into the process.


5)      Deposit - The deposit is security for the Seller that you will not walk away from the deal once it becomes a “firm sale”.  In most cases, deposits are payable only once all subjects have been removed, and it is “firm”.  The deposit is payable by personal cheque, bank draft, or wire transfer.  It is held in a trust account, hands off to all parties to the deal.  Upon closing, the deposit goes to form part of the down payment.   Generally a good deposit is considered something like 3% of purchase price.


6)      Multiple Offers - On particularly desirable properties it is common to be in multiple offers.  It is a blind auction at that time, where you put your best foot forward and hope the Sellers choose your offer.  It is very difficult to attain any level of certainty during multiple offers, so that will be an adventure we’ll all be on together when it occurs.


7)   Finding a Property – The process of finding a home is pretty basic.  We will try to narrow down properties that fit your criteria, do a bit of research prior to actually viewing the property to make sure there are no big speed bumps, then schedule an actual showing.   Generally one day’s notice is appreciated for showing requests, to give the folks who currently live in the home time to prepare for the showing.  If the home is tenanted/rented, 24 Hour notice is generally required.


This is one we’ll work on together, as timing is important and requirements will be different for each property.



8)     Offer Process


a)     Offer - we would sit down and write up the purchase contract.  This includes things like price, deposit amount, inclusions (appliances, etc), subjects/conditions, and completion dates, and plenty of fine print.


b)      Acceptance & Subject Period - Once an offer is negotiated and accepted, the subject period begins.  This is when we will send the contract to your bank/mortgage broker for approvals, schedule the home inspection, review all pertinent info, have an appraisal, etc. This is often the most stressful time of the process, but don’t worry - it’ll all work out! 


c)       Deposit - Once all subjects have been removed, the deposit is due within two business days.


d)      Lawyer & Lender - Once the deal is firm, all paperwork will be sent to your lawyer and your lender/bank/mortgage broker so they can prepare the legal transfer and fund release for the mortgage. You will book a meeting to sign all paperwork at the lawyer’s office approximately one week prior to closing day.


e)      Utility and Service Transfer - it is very important to remember to transfer or set up your accounts with Shaw/Telus, Fortis (gas & electric), etc to make sure everything is ready for the….


f)      Closing/Possession Date - the title will transfer on the Closing Date, and you will receive full possession on the Possession Date.  Generally speaking we will have closing, then possession at 9:00 am the next morning.  For example, if closing is on May 31st you will get keys and ability to move in at 9:00 am June 1st.


Closing costs will include any prorated property taxes, strata fees, or other fees/levies, as calculated by your lawyer.  These will be added to your statement of adjustments upon closing.


9)      Open a bottle of champagne and enjoy!



Disclaimer


The above is for general guidance only.  Any specific questions about mortgage lending, taxation, or other potential legal consequences of buying or selling a property should be directed to a qualified professional in those specific fields.


The trademarks REALTOR®, REALTORS®, and the REALTOR® logo are controlled by The Canadian Real Estate Association (CREA) and identify real estate professionals who are member’s of CREA. The trademarks MLS®, Multiple Listing Service® and the associated logos are owned by CREA and identify the quality of services provided by real estate professionals who are members of CREA. Used under license.