An increased demand on Saanich and Greater Victoria housing and real estate has tempted many to jump back into the market.
Which is why now is as good a time as any to review the most common mistakes made by buyers and sellers.
An internal survey of the B.C. notaries from November 2015 identified the most frequent mistakes and misunderstandings made by people either selling or buying B.C. residential real estate. Notaries would know, as they provide conveyancing or other legal services on more than half of all real estate transactions in B.C.
“In many cases, buyers or sellers haven’t correctly calculated or anticipated all of the costs involved with the purchase or sale of a home, which can lead to unwelcome surprises,” said Langford notary Kristy Martin.
In other cases, sellers from a private sale have come to notaries without having used a real estate agent and are undervaluing their homes, said Charmaine Van Tine, a notary in Saanich.
“In today’s seller’s market in Greater Victoria, a real estate agent can provide a more accurate assessment of what the current market value is of a home.”
Trying to go about selling a home without a real estate agent isn’t the only time notaries are seeing mistakes but it does suggest risk.
“Lenders look at realtors as the first line of defence against fraud and money laundering,” Van Tine said. “When a realtor is not involved in a transaction, lenders may require the buyer to pay for title insurance.”
In response to the November survey, the Society of Notaries Public of B.C. put together a list of the most common mistakes, including many listed below.
First of all, you need to look beyond the purchase price to understand the property transfer tax, or PTT, and other eligible exemptions.
The PTT is charged on the agreed price of a property at a rate of one per cent on the first $200,000, two per cent between $200,000 and $2 million, and three per cent for anything higher.
An equal amount, the remaining 50 per cent, would be paid to the government by the non-exempt partner.
As of Feb. 17 any Canadian citizen or permanent resident purchasing a newly-built home priced up to $750,000 as a principal residence to live in for at least a full year may also be exempt from the property transfer tax – a savings of up to $13,000. Partial exemptions are available for new housing valued up to $800,000. Also, first time purchasers of a used home below $500,000 qualify for a full or partial exemption of the property transfer tax.
When looking at purchasing a pre-owned home, if one or more of the purchasers don’t qualify as a first-time home buyer, only the percentage of interest that the first-time home buyer has in the property is eligible for exemption. For example, if one partner qualifies and owns a 50 per cent interest in the purchase of a $475,000 home with a partner who has previously owned a home, 50 per cent of the tax amount would be eligible for the exemption, which would mean a tax exemption of $3,750.
Buyers need to budget for all of the costs and fees typically involved in purchasing a home: property valuation fee, site survey, home inspection (an area unto itself), adjustments for city/municipality property taxes, adjustments for local utilities (water and sewer), adjustments for strata fees, property transfer tax, property insurance and binder fee, legal fees, title insurance and GST (and transitional rebate).
Sellers also need to budget. There are costs and fees typically involved in selling a home beyond a real estate commission such as: GST on the real estate agent’s commission, pre-payment penalties on mortgage discharges, holdbacks of strata fees, adjustments for city/municipality property taxes, adjustments for local utilities (water and sewer), adjustments for strata fees and legal fees.
Be sure to consider the difference between the completion date and the possession date. The completion date (or closing date) in a real estate contract is the date the property is transferred, and the money for the purchase is transferred from the buyer to the seller. The possession date is the date the buyer has the right to take possession of the property, also known as the move-in date.