Home Buying Process in Detail

Buying a home is exciting. It also involves important decisions that will affect you and your family. Spending some time getting to know the process, your needs, preferences and the situation can take some of the mystery and pressure out of home buying. The more you research and learn the better the outcome will be for you. And remember, you are not alone, there are many professionals to help along the way.

While this page contains quite a bit of information, it does not go into detail on everything that may be required based on your situation and the type of home you are purchasing. For example, if you are buying a home with a suite, then zoning will be important, an acreage may have a septic and well, and condos have many additional factors to consider (see Strata Ownership). A good Realtor® will identify additional considerations for you.

  

The Decision to Purchase a Home                   Actively Looking for a Home to Buy

Think About Your Needs and Wants                 Making an Offer

Getting to Know the Market                              Due Diligence, Checking Things Out.

Review Your Financial Situation                        Removing the Subject Clauses & the Close

A young artist in the Comox Valley  




The Decision to Purchase a Home


Overlooking Georgia Strait from a driftwood perch in Comox.  

The decision to purchase is the first step of the home buying process. The more time you can take here and throughout the process, plus your willingness to come back to this step and reexamine your reasons for buying, the more confident you will be that you have made the right decision with the home you buy. Taking your time is something you will see me mention frequently, it is worth repeating as it can be very helpful.  With the market moving quickly as it is now, being clear on why and what you want to purchase will help immensely once you start actively shopping for a new home.

First, you may find yourself thinking about whether or not to purchase and you may decide to explore the idea. The thing to think about is why you want a new home? Is it because of an increasing family, marriage, divorce, downsizing, or are you a first time buyer wanting to build equity? The reasons are varied and unique for everyone. Buying a home is a major life change and a large investment and it carries some costs which you will want to consider carefully. Buying a home will change your financial situation and commitments, and your lifestyle. It is an emotional as well as an intellectual decision.

The next step iwhat and where you will buy.  You need to get to know the market to see what is available and at what price. You also need to think about your needs and your financial situation. If you own a home, getting to know the market will help you assess its value. If you would like a free home evaluation please contact me. I'll let you know how the market values your home and discuss with you what you may want to do to prepare it for sale.

A Realtor and a mortgage professional can be very helpful at this stage. The mortgage professional can look at your financial situation and let you know what is possible, or in some cases, what you can do to prepare for purchasing. The Realtor can discuss what the market is currently doing, the various options for you, the approximate price for a home and other costs. Feel free to talk with us even if you have not reached the decision to make a move. We work with people who spend years at this stage of the process, some deciding not to move in the end.  Buying a home is a big decision and it is best if you take the time you need to make the right decision.

When is the last factor here. Like the other factors this is personal to you and your situation. Hopefully you can take your time to get familiar with the process, choices and decisions. However, sometimes life happens and the decision to purchase a new home comes quite quickly, making the process time fairly short. If so, you will still follow the same process, just go through it quicker.



Think about your needs and wants

 

This is a time to be practicable and also to dream a little. A new home should meet your needs, but also give you personal satisfaction and pride. It's a decision that should feel right.

Take some time to explore and define what your dream home would look like. Write down both what you want and need. The kind of things to consider are the number of bedrooms and bathrooms, layout, garage or carport, views, waterfront, neighbourhood, the need to be close to school or work, rural or urban. Other things to consider are home style, types of homes and types of ownership.  See Types of HomesHome Ownership and Strata Ownership for more details.

As you start exploring listings on PCS or the internet you will find attributes and items that appeal to you and some that do not. This can include house styles, layouts, age, material used, landscaping, location and many more. The more you look the more defined will be your list on what is preferred, OK and will not work for you.

 

Chrome Island, one of the last remaining manned lighthouses on the Eastern side of Vancouver Island, is located off the southern tip of Denman Island.


Tip: Finding the right home sometimes involves some compromises. It can be useful to be clear on what is an absolute must have and what is a nice to have. If you are shopping with a partner, this can involve some discussion.

 


Getting to know the housing market

Getting to know the market can be fun, and with the internet and search tools it is easy. As mentioned on the Home Page you have some choices in search tools, but I prefer PCS as it shows you what price a home sold for (not just the asking price) as well as any price changes and days on the market. This is helpful information which other searches don't provide. The graph shows that PCS is also the preferred tool of buyers. See PCS for more on this search tool.

Browsing the market allows you to learn about home prices, the style of home you prefer, where you would like to buy a home and what features of a home are important to you. It will set a knowledge foundation and give you confidence with the choice you make. In getting to know the market you are also getting to know your preferences, which is especially important for first time buyers. Time spent here is time well spent and it's never to early to start. Some people have used my PCS tool for years before they are ready to buy.

You can also find valuable information about the market from my Market News page, which covers the Vancouver Island market, as well as housing and mortgage forecasts, and is updated quarterly.


Tip: The buying process is not necessarily step by step. As you are getting to know the market you may go back and reexamine what you need and want. That is one of the benefits of getting to know the market before you  actually start shopping for a home, the ability to go back and rethink things.

 


Review your financial situation


A mountain bike rider negotiates a "skinny" on the Buggered Pig trail in Cumberland.

After some browsing of the market you will likely find some homes of interest to you, and you will need to know what is within your financial comfort level. I recommend speaking to a mortgage professional to help you examine your choices. Mortgage calculators found on the internet and PCS can also help, though there is more to consider in a mortgage than just the rate. See Mortgage Information for more details.

Getting pre-approved for a mortgage before actively looking is always a good idea, as is considering how much debt you want to take on. You don't have to use the full amount the bank is willing to lend you, you may want to consider your other financial needs and leave some room for the unexpected.

There are a number of different types of mortgages such as fixed, open, variable and closed, and a range of features which can affect the rate you will pay. 
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The mortgage contract is a legal document that has a number of terms such as requiring you to pay property taxes, insure and maintain your home, and it gives the bank the right to foreclose if you don't comply with the terms of the mortgage. Policies and practices of lenders can be different, and they change over time. It is important to have a qualified mortgage profession to help you through this step. 

This step along with getting to know the market will go along way in determining what is comfortable for you. For definitions of mortgage terms, see Mortgage Terms.

While you may not have any thoughts of selling before the mortgage term is complete, now is the time to be clear on what the penalties are if you pay the mortgage out early. Ask questions and have them show you the wording and explain the penalty with examples. You do not want any unpleasant surprises if you need to sell while still under a mortgage.


Tip:  Shopping around can make a difference. A half of a percentage difference in the mortgage rate can be several thousand dollars over a five year mortgage.  But remember, there is more to a mortgage than just the rate, such as the penalties and ability to make extra payments.


Actively looking for a home to buy

Once you’ve gotten to know the market, determined what homes appeal to you and what will work for you budget, you can start exploring the market directly by viewing homes and neighbourhoods.

This step can be both exciting and stressful. Shopping for a new home is exciting, and it is also a major decision and investment that can be stressful. Allowing yourself time here can reduce the stress and lead to a decision you are comfortable with.

While knowing what you want and need beforehand is important, often as people start looking at houses, they adjust what they are looking for based on what they are seeing. This is quite common, and being willing to go back and reevaluate what you want and need can be useful.

The Realtor can make a difference here as well. As I say at the bottom of this page, I do not sell, I service. I will take the time to provide you with information and explore your options in order to help you find the right house. (see Choosing A Realtor)

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Hikers along a system of boardwalks in the Paradise Meadows region.



Tip: Things can change depending on what you see, sometimes we don't know what we like or don't like until we see it. Often I see people start looking for one thing then end up purchasing something different.


Making an Offer


A small artisan distillery creates spirits using honey, in the heart of the Comox Valley.

You have found a home that works for you and want to make a offer. Making an offer involves several steps and a number of professionals may help you along the way. Your Realtor will lead you through the process and advise when other professionals are needed.

The question is what to offer, or more importantly, what is fair market value? (See Market Value for more on this topic.) The time you spent browsing the market will be helpful, as you have compared many homes and have seen what they have sold for. Your Realtor will also help by doing some market comparisons of what similar homes sold for in the area, and discussing current market conditions and other relevant information.

The Offer is a legal contract and you should take the time to review it carefully with your Realtor. It can be helpful to do this before you are ready to make an offer so you get comfortable with the document. The offer contains much more than just a price. Other important terms are the deposit, dates, items included such as appliances and "subject to" clauses that allow you to do your due diligence. An offer that is accepted with subject to clauses is a "conditional offer" with the conditions being the subject to clauses (the legal term is conditions precedent). If the buyer of the home "collapses," or withdraws from the contract for reasons covered in the subject to clauses (financing, poor inspection, etc.) then the deposit is returned to the buyer (except in some very rare and extreme cases). Reasons for the collapse must be covered in the subject to clauses and cannot be because the buyer has changed their mind or a better place has come available. Once the subject to clauses are removed the contract is "unconditional" and if the buyer does not complete the transaction they will likely lose the deposit and would be in breach of contract.

Usually the seller does not have any subject to clauses, although they can, such as in the case of the seller accepting a backup offer. Once an offer is accepted, it can't be replaced with another offer, but the seller can accept a backup offer that is subject to them being released from the original offer. There are advantages and disadvantages for both the seller and the buyer making a backup offer that should be explored with your Realtor. Other subjects a seller may have include subject to the seller finding a new home. Also, foreclosures usually are subject to court approval. (Buying foreclosures is a different process and I have set up a website examining this process:  comoxvalleyforeclosure.com.)

 


The deposit is a sign of good faith to the seller that the buyer is serious. Many buyers will not view a home that has an accepted offer so in effect the seller is taking it off the market while the buyer does their due diligence. In the markets on Vancouver Island the deposit is usually 1-2% of the price. The deposit is held in trust by the Buyer's Realtor's company. If the offer collapses, the deposit is returned once both the buyer and seller have signed off on it.

The negotiations are where it is determined if the buyer and seller can agree on what fair value is for the home. Price, dates and appliances are the most common items that are negotiated. Sometimes comparable recent sales are provided with the offer to support the price. There is often an exchange of information and positions during negotiations and what is said or not said can be important. A common mistake made is trying to get into the other party's head and out flank them. The reality is you only know what information the other party presents to you, which may or may not accurately reflect their motivation or situation. It is best to focus on what is important to you, present that with our rationale, and work toward reaching an agreement. Emotions can get high and it is better to try to remain calm and not take things personally.

  

Sandstone potholes near Nymph Falls, a popular swimming area on the Puntledge River. 



Due Diligence, checking things out


A lone skier on Linton’s Loop on Mount Washington with Georgia Strait and the Coast Range Mountains in the distance.  

After the offer is accepted the subject to clauses give the buyer time to do their due diligence, which is where the buyer checks the home and property and matters affecting it. This is something the buyer is expected to do and the old saying "buyer beware" applies. This period is usually two weeks though when the markets are busy can be up to three weeks. This step involves banks for financing, and inspectors for the various inspections. 

Listed below are the more common subject to clauses. You will see that they are important in protecting your interests, and it is important to have a well written offer which includes all relevant subject to clauses. (Other subject clauses may be included, depending on your needs.)

Subject to financing ensures that you are able to get the mortgage you need, otherwise you will not be able to complete the transaction. Being pre-approved (approved for a mortgage of a certain value) helps to speed this process up, but the bank will still want to approve the home since it is the security for the mortgage and they want to ensure that it has enough value to cover the mortgage. This is usually done with a home appraisal, which the bank may or may not charge you for, and may or may not roll into the mortgage.

Subject to approving the Property Disclosure Statement (PDS). The PDS is a series of questions about the property that the seller is expected to answer "to the best of their knowledge." The PDS also states that the buyer must do their own due diligence and not rely solely on the PDS. This and the inspection clause should contain the phrase "reasonably affect the property's use or value."

Almost always the seller provides a PDS; though not required to by law, it is the practice. If the home is a rental and the seller does not live there, then the PDS may not have any of the questions answered. The seller is required to disclose any material latent defects that they know about either in the PDS or in another written form. "Material" means of some value, "latent" means can't be seen or discovered in a normal inspection and "defect" means just that. Normal wear and tear is not a defect.


Subject to a home inspection.  This is a very important step and it is highly recommended to do an inspection. Inspections will cost you between $400 to $600 depending on the size of the home.  A septic inspection will cost about $450 to $550 and is also recommended if there is a septic.

The inspections are very thorough as the inspector will go completely through the home from the basement or crawl space to the roof and attic looking at just about every facet of the home. While they can't see through walls, they have technology such as infrared cameras that can help identify hidden problems. It detects changes in temperature and can give a sense if there are insulation issues or water issues. If required, the inspector can certify wood stoves as needed for insurance purposes.
Read More

I always write my inspection clause to include checking building permits, zoning and bylaws so the buyer will be aware of any issues there beforehand. Sometimes renovations or building was done without permits, and we can examine the impact of that.

Subject to the state of the title allows you to check the items on title, if any, and their impact on you. The most common are covenants, easements and right-of-ways, and these are more common with rural properties, though urban ones can have them as well. Title and items attached to these are legal documents and as such should be discussed with a lawyer if you have concerns. The type and nature of these can vary quite widely, and again the phrase "affecting the use or value" is used in this clause.

Subject to obtaining fire and property insurance. This is important, as you don't want to buy a place you can't insure or where the insurance is expensive.

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"Blues Brothers" participants in the Nautical Day annual Build, Bail and Sail event struggle as their makeshift craft sinks at the start line.



Removing Subject Clauses and the Close


A full moon rises over Hornby and Denman Islands, within  the Strait of Gerorgia near the Comox Valley. 

As mentioned under Making an Offer, the offer with subject clauses is a conditional offer, once the subjects are removed then the offer becomes unconditional. This is important in that once unconditional if the buyer does not complete the contract, called the close, then they will very likely lose their deposit and may be liable to the seller for any losses they have incurred.

Sometimes the due diligence will discover something that will lead the buyer to ask for concessions, usually on the price. If the seller is unwilling to provide those concessions, the buyer can collapse the contract and the deposit will be returned in all but extremely rare circumstances.

The wording of the subject to clauses are important. "Subject to the Buyer obtaining financing" would not protect a buyer who, perhaps with poor credit, discovers that they can only get a mortgage at a high interest rate.  Whereas "subject to the Buyer obtaining financing satisfactory to the Buyer" would protect the buyer in this instance.

If changes to the terms, such as dates and price are agreed upon, the contract must be modified with an addendum prior to the addendum removing subjects is provided. Otherwise the contract is unconditional and the seller is not required to make the agreed upon changes.

Once the subjects are removed the realtors provide all documents to your lawyer or notary who will prepare the documents necessary to transfer the legal ownership to you.  There are a number of things they do to protect your interest including:
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This process usually takes a couple of weeks.


     About Gerry

Information and Interpretation
Selling or buying real estate is a major financial endeavour with many factors to consider. While you have a wealth of information available to you on the internet, interpreting that information is another matter.

This is where I come in. Not only do I research and provide you the information you need, I take it to the next level and analyze and interpret that  information for you. I will tell you what I think, what we do is up to you.


As a client, your Realtor works for you, and this is a principle I hold dear.  I see my job as providing you with information, interpretation, services and guidance, not to push you on a course of action.

Unparalleled Service
I have a simple code, I don't sell, I service. I assume my clients are perfectly able to make their own decision once they have the information they need. I spend my time providing information, guiding people through the process, and making sure all the bases are covered, not in high pressure sales.

Over the years I have received very complementary feedback from clients. See Client Feedback.

Integrity
Integrity, simply defined, is being honest and fair. This is further enhanced by one of a Realtor's prime duties, which is not to put anyone's interest above their clients, including their own.  This a duty I take very seriously. My personal outlook after over 30 years in business, is that whenever I experience high pressure sales I start to question the integrity of the person selling me.  Are they looking after my best interest or theirs?

Gerry Chwelos, REALTOR®

PEMBERTON HOLMES LTD.

Tel: 250-8975465

All images on this website are copyright protected. Most photos provided by Boomer Jerritt.

Copyright © Gerry Chwelos 2017