Passionate. Committed. Connected.
Buying or selling on Salt Spring? Book an appointment with Sandra Smith today.
Buying a home can be a daunting and stressful experience. I am here to help you through the various stages of this process. I will ensure that your best interests are met and that the process goes smoothly.
As your Salt Spring Island Home Finder, I am committed to offering you unsurpassed service in the Gulf Islands real estate market. It is my personal goal to exceed your expectations with hard work and integrity as I strive to help you find your piece of paradise.
This means I will keep you up to date on market activity and ensure you understand all the issues surrounding your southern Gulf Islands property. I can further connect you with services or resources you may need such as building contractors, building inspectors, water testing, septic inspections, surveyors, mortgage brokers, or anything else you might need.
When you are buying Gulf Islands real estate, let me put my skills, values, and market knowledge to work for you. Ready to make an offer on a home? I will complete a Comparative Market Analysis (CMA) beforehand, ensuring the price you are paying is reasonable. I would be honored if you would trust me in “helping you find your way home”.
The Buyers section of this web site is designed to help you become a better consumer of real estate. Knowledge is power and being informed when you are making such an important investment decision is paramount.
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FAILING TO USE THE SERVICES OF A REALTOR.
Buyers often make the mistake of thinking that using a real estate agent will cost them money, or that they will be able to better negotiate directly with the seller or seller’s agent.
When buying a home you can use the services of a Buyers Agent who will be committed to you and will negotiate the best deal to your benefit only. Your agent will be paid his/her commission from the seller, as the selling and buying agent will split the commission offered by the seller!
A Buyers Agent is a FREE service to you! He or she will save you time, money, and stress!
NOT UNDERSTANDING WHO THE AGENT IS REALLY WORKING FOR.
Your agent may actually be working as a sub-agent for the seller. This happens even when it is not his/her listing, but is a listing with the same agency. If at any point you are not sure who your agent is working for, always ask for clarification.
BEING BLINDED BY EMOTION
For most of us buying the family home becomes very emotional once we find that perfect place to call home. It’s important to have an agent to remove emotion from the negotiating process. Your agent can guide you through the process and provide you with the information you need to make an informed decision.
NOT HAVING A HOME INSPECTION DONE
Buying a home is the largest transaction most of us will ever do. This transaction usually takes place after just an hour of viewing time. There is so much to take in when looking at a new home that only a qualified building inspector can walk you through the entire process.
FAILING TO GET PRE-APPROVED AND SECURE A RATE GUARANTEE
This should be done before one starts shopping for real estate, not once the perfect house is found. This will ensure you are shopping in the right price range. It is also to have the rate guarantee to protect you in times of fluctuating interest rates.
Have your realtor do a comparative market analysis done before making an offer. The seller received this service when listing with a realtor and you are just as important as a buyer. A comparative market analysis will help you make an informed decision before you present an offer.
THE BUYING PROCESS
MAKING AN OFFER
Your offer will contain the standard details plus any conditions that are important to you, and become a legally binding contract.
YOUR OFFER WILL INCLUDE:
• date of offer;
• date and time offer expires;
• full legal names of both buyers and sellers;
• amount of your deposit, to be held in trust, and forming part of the purchase price;
• the total dollar amount of your offer, the sale price;
• amount of your cash down payment and details about your financing that will form the remainder of your purchase price;
• your desired completion, and possession dates;
• a list of conditions that must be met before the sale can occur (these are known as “subject clauses”);
• a list of chattels you wish to remain with the home and will be included with the sale price such as appliances, drapes, and blinds;
• your signature.
POSSIBLE SUBJECT CLAUSES
• satisfactory building inspection;
• arrangement of financing;
• sale of present home;
* It is your responsibility to use your best efforts to remove subject clauses in a reasonable amount of time. Your subject clauses should be escape clauses that will release you from the contract. You want your subject clauses to be as objective as possible. The amount of subject clauses and the nature of them may make your offer appear weak.
FIXTURES VS. CHATTELS
A fixture stays with the property when it is sold, and chattels will be taken with the owner to his/her new residence. It may not always be clear if there is something you want to stay with the home such as appliances or window coverings. They must be noted in the offer to ensure they are included in the purchase price.
A SELLER’S THREE OPTIONS
1) Accept the offer as it stands.
If the seller accepts the offer without making any changes, a legally binding contract has been formed.
2) Reject the offer.
3) Counter the offer.
If the seller makes any changes to your offer, it’s considered a counter offer. You now have the same three options as the seller: accept, reject, or counter. Counter offers may continue back and forth until an agreement has been reached.
* If the counter offer is not acceptable to you and/or you have changed your mind about wanting to purchase, you may reject the counter offer and walk away. The seller cannot enforce your original offer.
FIRST TIME BUYERS
Are you tired of paying someone else’s mortgage? Salt Spring Island real estate market is high-end; however, if you can afford to get into the market, it’s a good investment as Gulf Islands real estate prices continue to rise.
A few factors will continue to drive the market. Baby boomers are retiring, and Salt Spring Island is a retirement paradise. The 2010 Olympics will bring a worldwide market to our area, and for many buyers, it all starts with a casual visit to a beautiful island. Salt Spring will also continue to be a gateway to the new Gulf Islands National Park. Although prices seem high, real estate is still quite reasonable compared to other world island destinations.
You may need to put your dream home on hold and start with a modest starter home. How about looking for a home that will provide you with a mortgage helper. An in-law suite may give you the help you need to make mortgage payments. Chances are you are paying high rent and it is only going to go up. Homeownership will give you the stability of long-term living on Salt Spring Island.
WHERE WILL THE DOWN PAYMENT COME FROM?
• Savings and Investments
• Registered Retirement Savings Plans (RRSP): the government currently allows you to withdraw $20,000 per individual ($40,000 per couple) with no tax penalty as long as you pay the amount back into your plan within 15 years.
• Gifts or loans from family — if you are so lucky.
Have Sandra connect you with a mortgage broker who can discuss all financing options available to you. It certainly can’t hurt to explore the possibilities of home ownership.
WHAT CAN YOU AFFORD?
Going to your financial institution or a mortgage broker to be pre-approved is an important step in the home buying process. Taking the time to get pre-approved will give you the security of knowing how much you can afford to spend, and ensure you are looking at homes in the right price range.
Another important reason to get pre-approved is that the institution will usually give you a 60-day rate guarantee. This is a win-win situation for you the buyer because if rates increase, you have a guaranteed rate, and if rates decrease, the lender will apply the lower rate.
HOW DO LENDERS DECIDE HOW MUCH YOU CAN BORROW?
Lenders use two constraints in deciding how much money they will lend. They calculate your debt service ratio, and the lending value for your home. The lower value of these two constraints will be applied.
DEBT SERVICE RATIO
Most institutions will use a 30% debt service ratio when deciding what mortgage payments you can reasonably afford. This means that your total monthly payments plus estimated property taxes should not amount to more than 30% of your gross income.
If you have other payments such as a vehicle loan or credit cards, the lender will take these into account and a Total Debt Service Ratio will apply. This ratio generally used is 40%.
LENDING VALUE CONSTRAINT
When you do find the home you want and put forward the offer subject to financing, the lending institution will usually require an appraisal be done. The purpose of the appraisal is to find a lending value for your home financing. This, along with the Debt Service Ratio, will form the lending constraints for your loan, ultimately effecting its final size.
Other assets or investments will also affect financing, as well as the amount of your down payment.
(Information taken from “Working With A Realtor” brochure.)
When you choose to work with a realtor your legal relationship is referred to as agency. In the agency relationship you are the principal and your agent is the company under which an individual salesperson is licensed. In the agent relationship two things can happen: one agent acts for the buyer and one agent acts for the seller; or one agent represents both in dual agency.
ONE AGENT ACT FOR THE BUYER, ONE AGENT ACTS FOR THE SELLER
When a seller lists his or her property with a licensee, the licensee becomes an agent to the seller. As the seller you become the principal and the licensee becomes your agent. A buyer also selects a licensee to be his/her agent. Agents are legally obligated to protect and promote the interests of their principal as they would their own. An agent has the following duties:
1) Undivided loyalty: an agent must disclose all known facts to his/her principal and protect the principal’s negotiating power at all times.
2) To obey all lawful instructions to the principal.
3) An obligation to keep the confidences of the principal.
4) To exercise reasonable care and skill in performing all assigned duties.
5) The duty to account for all property and money placed in the agent’s hands.
This occurs when the real estate company is representing both the buyer and seller at the same time. It is important to note that both buyer and seller may be represented by different licensees, but if they are employed by the same real estate company this is dual agency. This forms a conflict as the company has promised full disclosure, loyalty, and confidentiality to both parties simultaneously. With the consent of both parties, these duties can become limited by forming a limited dual agency.
This new relationship involves the following limitations:
1) The agent will deal with the buyer and seller impartially.
2) The agent will have a duty of full disclosure to both the buyer and seller except for:
a) Price: the agent will not reveal the seller’s floor price, or the buyer’s ceiling price.
b) Motivation: the agent will not disclose any particular motivation factors of either party.
c) Personal Information: the agent will not disclose personal information to either the buyer or seller unless authorized to do so in writing.
3) The agent will disclose any physical defects to the buyer of which he/she is aware.
It is important to budget carefully for your closing costs as these can quickly add up. Be prepared for the following costs:
PROPERTY TRANSFER TAX
The British Columbia Provincial Government requires that Property Transfer Tax be paid before any property may be transferred to a new owner. The rate is 1% on the first $200,000 and 2% on any value over $200,000. Some buyers may qualify for an exemption. To find out if you are core contact the Property Transfer Tax office at (250)387-0604.
GOODS AND SERVICES TAX
If you are purchasing a newly constructed home you may be subject to 5% GST on the purchase price. If the home is under $350,000 a rebate will reduce the GST rate to 4.48%. If the home is over $350,000, the rate increases gradually until at $450,000 it is a full 5%.
If the current owners have already paid the taxes for the year, a tax adjustment will be calculated and you will need to reimburse them for your share of the year. This is calculated by the law office who does your conveyancing.
If the lending institution requires an appraisal of the property it may be your responsibility to pay for it – this is usually around $400.
The lending may require a survey certificate that establishes the boundaries of the property. The current owner may be able to provide you with a survey certificate which will save on costs.
MORTGAGE APPLICATION FEE
Lending institutions may require you to pay a mortgage application fee and this will vary among institutions.
MORTGAGE DEFAULT INSURANCE
You will be required to have mortgage default insurance on any mortgage loan that is in excess of 75% of the appraised value. The insurance premium protects the lender if you are to default on your required mortgage payments. The premium is paid directly to the lender and ranges from .5% to 3.75% of the loan value. The lending institution will often add this to the face value of your loan so this is usually not an upfront cost.
LIFE AND DISABILITY MORTGAGE INSURANCE
This is an option available to you. You can purchase insurance which will ensure that your outstanding mortgage balance is paid off if you die or become disabled. This is offered by the lender and will usually be a small monthly payment that will come out of your account the same day as your mortgage payment.
FIRE & LIABILITY INSURANCE
The lending institution will insist that you have coverage. The policy must also guarantee that the lender will receive the balance owing on the mortgage loan before any proceeds are paid out to you.
The transfer of property ownership form the seller to the buyer must be recorded in the Land Title Office in order to protect your interests as the new owner. This will need to be done either through a lawyer or a notary.
OTHER COSTS TO CONSIDER
• home inspection fees
• moving expenses
• deposits required by various utility companies.
CANADIAN REAL ESTATE IS A BARGAIN FOR FOREIGN BUYERS
Canadian property is affordable compared to real estate in other parts of the world. Although the American dollar has weakened, Americans can still get a lot more for their dollar than back home.
The climate of Salt Spring Island, British Columbia is idyllic. We enjoy an eight-month growing season to the delight of island gardeners. Many wonderful subtropical plants such as windmill palms and banana trees can be seen growing around the island. Although we are hit with the occasional snowfall this is rare and may happen once or twice a winter. Summers do not get unbearably hot, as we are usually treated to an ocean breeze.
BUYING PROPERTY THE RULES & REGULATIONS
If you do not plan on becoming a landed immigrant, buying property in Canada is very easy. If you plan to stay in Canada for six months or less, the government will consider you a tourist or non-resident. Your six months can be made up of various times such as two weeks here, four weeks there, etc… as long as you do not exceed your six months
BECOMING A LANDED IMMIGRANT
If you plan to live in Canada for more than six months annually, you will have to apply for immigrant status. To find out more information on this you should visit Citizenship and Immigration Canada at www.cic.g.c.ca/english/index.html.
David Aujla is a Canadian immigration lawyer who helps people immigrate to Canada. He offers immediate telephone consultations and free assessments.
David can help you in English, French, Hindi and Punjabi, with offices in Victoria and Vancouver, British Columbia. For some great information on becoming a landed immigrant visit www.victorialaw.com.
British Columbia welcomes business people from around the world who are looking for new business opportunities. For more information about moving your business to British Columbia, visit the B.C. Government Business Immigration Website.
When a non-resident sells Canadian property there is a system for withholding taxes. This is to ensure the non-resident complies with Canadian income tax law.
INITIAL WITHHOLDING AMOUNT ON SALES PROCEEDS
The initial withholding amount is 25% of the gross sales proceeds (before real estate commission and legal fees). The seller’s lawyer retains this amount until a clearance certificate is received form the Canadian Customs & Revenue Agency.
Non-resident sellers should file a Canadian income tax return for the year in which the sale occurs. Based on the Capital Gain amount, the 25% withheld will be adjusted accordingly.
RENTAL INVESTMENT PROPERTY
Non-residents who rent out their property must remit 25% of their monthly revenue to Revenue Canada. They must file a Canadian income tax return. Based on the profit or loss the 25% withheld will be adjusted accordingly.
*Regulations change and it is advised that you check all important matters with an accountant and/ or an immigration lawyer.
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