T H I R T Y I N T H I R T Y
For the entire month of November we challenged ourselves to answer 30 real estate related questions in 30 days. We picked the top 30 most commonly asked question from our clients and industry enthusiasts. These questions dealt with all things real estate, from choosing a realtor, to learning about strata property contingency reserve funds to looking at the best times to refinance a mortgage, we covered it all…well most of it!
We chose to do this challenge to offer up our industry expertise and knowledge to help educate both our clients and anyone else who is interested in buying, selling or just looking to become better versed in the real estate market. To find the entire 30/30 video collection check out both @glennfeldstein and @brittanywhiterealestate reels on instagram.
If you have any more questions you would like answered or further questions on topics we have covered don’t hesitate to reach out.
1. When should you choose your realtor?
You should choose your realtor around the same time as you start shopping around online for new property. Once you start to attend in person showings and open houses it will be highly beneficial to have your realtor with you to ensure you have the right knowledge and tools to have a successful home buying experience.
2. How do you choose a realtor?
When choosing a realtor it is important to do your research. Talk to friends and family about referrals and past experiences. Look on google reviews to get an idea about other people in your community’s experience with different realtors. It is also important to interview different realtors to ensure you pick one that is going to best suit you and your needs. Remember your realtor is there to help you make the biggest purchase of your life, so choose someone you feel you can trust and have great communication with to ensure a smooth and positive experience. Like all relationships trust and comfortability comes with some time. Best to start early.
3. How do you value a property?
When valuing a property the best place to start is by looking at comparable properties based on several different factors such as the sq ft of the unit, the lot size, renovations, location, views ect. These factors can vary depending on whether you are looking at an attached property (townhome, condo, or duplex) or a detached property (single family home). For an attached property it is important to look at the price per sq ft of the unit. For a detached property the dirt itself is very valuable so it is important to look at the lot size as well as the price per sq ft of the house.
4. Is the assessed value of a property the same as the market value of the property?
The short answer is no. The assessed value of a property is not the same as the market value of the property. BC Assessment estimates the assessed value of most properties (e.g. residential homes, industrial, commercial and investment properties) as of July 1 every year. Each January, your annual assessment notice provides a value based on the market value of your property as of July 1 last year. Assessed values are for tax purposes. This assessment does not take into consideration any upgrades or renovations done on your home as BC Assessment does not go inside the homes. When establishing the market value of a property many other factors are taken into account, such as, current market trends in the past 1-3 months, comparable properties and renovations.
5. Why would I pay more than the asking price?
The asking price is not always the market value of a property and it is important to not confuse the two. There are a variety of strategies that influence a seller’s agent to set the asking price. For example, sometimes a seller lists a property at a low asking price to trigger multiple offers. Other times a seller will list a property at a high asking price to leave room to negotiate down.
6. How long does it take to buy a home?
There is no standard timeline for the home buying journey. The amount of time it takes to buy a home can vary largely between buyers. The average time it takes generally falls between 4- 6 months. This time period is divided into two main phases. The first is the shopping phase which can range anywhere from 1-3 months. The second is the closing phase which can average between 6-8 weeks.
7. When is the best time to buy a home?
The best time to buy a home is when YOU feel ready. If you are an investor it’s important to look further into the numbers to ensure that you will be profitable.
8. Should you choose your realtor or mortgage broker first?
There is not an exact order for choosing your realtor or mortgage broker. To buy a home you need to go to your mortgage broker to know how much you can afford to confidently go look at properties and you’ll need a realtor to go look at those properties with you. In order to sell your home you are going to need your realtor to know how much your property is worth so that you can go to your mortgage broker and give them that value to see what your next bump up is going to be.
9. What is a mortgage stress test?
A mortgage stress test is a mandatory qualifying test put out by the federal government through the minister of finance to protect the borrower and mitigate the mortgage default risk. If you are buying a home the mortgage rules will have a direct effect on how much home you can afford. You have to prove that you can still make your monthly mortgage payments if interest rates were to rise in the future. The minimum qualifying rate is based on either the benchmark rate of 5.25% or the rate offered by your lender plus 2% – whichever is higher.
10. Is a deposit and a downpayment the same thing?
The deposit and the downpayment are not the same thing. The deposit is the money that you put down to secure the property that you are purchasing. In other words you are proving that you are serious about buying the property. There is no standard set amount on how much the deposit must be but for a purchase price under $1M most sellers will want at least 5%. The closer to $1M the higher the deposit should be. At the time when you are writing an offer to purchase with your real estate agent they will let you know what the required deposit amount is. That amount all depends on the purchase price and how quickly you will be closing on the sale.
The deposit is applied against the purchase price of the property when the sale closes. The deposit will become part of the down payment. The down payment is the money that you put up front when you purchase a property. The full amount of the down payment is payable 1-3 days before closing.
11. What percentage do you need to put down for a down payment?
This is dependent on the price of the property you are purchasing. If the price of the property is less than 500,000 the down payment can be as little as 5% if this is intended to be a principal residence. If the price of the property is less than 999,999 the down payment will be 5% on the first $500,000 and 10% on the portion between $500,000 and $999,999 for principal residence. If the price of the property is over 1,000,000 or is a non owner occupied investment property then the down payment must be 20% or greater.
12. What is a subject clause?
A subject clause is a condition written into the contract that is there to protect the buyer and ensure the appropriate due diligence is completed on the property. You are allowed to do due diligence before you pay your deposit to make sure the property checks all the boxes.
Due to the competitive nature of Vancouver’s real estate market, oftentimes we want to limit subjects as much as possible to make the offer more compelling to the seller. This doesn’t mean Buyers are going into an offer blind, just that they have done their due diligence ahead of time.
13. When do you do a home inspection?
This is dependent on whether or not you are heading into a multiple offer situation. In a case where there are multiple offers it is best practice to complete a home inspection prior to the offer presentation. This helps in reducing the amount of subjects attached to the offer, making it more compelling to the seller. If a multiple offer scenario does not occur and an accepted offer is in place with condition to inspection then the home inspection can be done during the due diligence period, usually 7-10 days.
14. Should you hire a home inspector for a new construction property?
The short answer is yes. For new construction the buyer will get an opportunity to complete a deficiency walk through which allows the buyer along with a trained home inspector time to walk through the property and identify any imperfections. Even in new construction human error can occur which is why it is always important to have eyes and ears in the property before move-in day.
15. What is a depreciation report?
The depreciation report is a report prepared by engineers for strata titled properties. It outlines each specific component of the building or complex, from the building envelope to the carpet in the hallways, it sheds light on how much life each component has left and the approximate replacement/repair cost of every feature. This helps the strata corporation to plan and manage key renewals and repairs of the common assets throughout the property. It is a window into the future, outlining how much it will cost to maintain the building so that strata can plan ahead and be prepared.
16. What is a Contingency Reserve Fund for a strata property?
The contingency reserve fund is set up for strata properties. This fund is built over the years by the strata corporation. Each owner puts in a certain amount per year and has a vote when it comes to the allocation of funds spent. The fund is then utilized to repair and maintain common assets of the building. When looking to purchase a unit in strata titled properties it is important to know how much is in the fund. If the fund is low, the building could have recently undergone some renewals. So simply investigate that.
17. What closing costs should you expect?
Closing costs are the additional costs of the purchase price or sale price. These costs are dependent on whether you are a buyer or a seller. The closing costs for buyers will include a home inspection, lawyer fees, property transfer tax and GST if it’s a new build. The closing costs for sellers will include real estate commissions, lawyer fees and if more than one mortgage needs to be discharged there could be an additional fee (small) for that.
18. What and how much is property transfer tax?
Property transfer tax is tax payable to the government on all real estate purchases both residential and commercial. The taxable amount will be 1% on the first 200,000, 2% between 200,000 up to and including 2,000,000, and 3% on the portion between 2,000,000 and 3,000,000. And 2% on any portion over $3,000,000.
First time home buyers are exempt from property transfer tax for properties below $500,000. Another exception to the rule is an additional transfer tax for foreign nationals and corporations of 20% of the purchase price.
19. What is the completion vs possession date?
completion date is when the money for the property and the title is transferred into the buyer’s name. the buyer is now the owner. It is important for buyers to have property insurance set up and ready to go by completion date NOT the possession date.
Possession date is usually 1-2 days after the completion date. This is also when the new buyers will receive their keys to start moving in.
20. How does a realtor get paid?
A realtor is paid by the seller. The listing realtor and the seller agree on the full commission. Out of that the listing realtor offers a portion to realtors working with buyers in order for them to bring their clients to the property. The listing agent usually keeps about 53%-54% and the rest will go to the buyer’s brokerage.
21. Why do realtors charge different commissions?
There is no standard commission that realtors have to charge. Each realtor will charge a different amount based on various factors such as the marketing costs, their experience, affiliated brokerage, ect. There are a lot of realtors that will charge discounted commissions but in turn put in limited work (you get what you pay for).
When people talk about the difference between a discount brokerage vs a full service brokerage it ultimately comes down to the level of service they’re providing, where they are spending their marketing dollars, what kind of photos and videos are being taken.
22. Are real estate commissions negotiable?
The short answer is yes. There is no standard set commission. A realtor can charge what they want. Every realtor has a different business plan and therefore will charge a different commission structure. The important thing to note is that your realtor should be able to explain to you why it is that they are charging that commission and how they are going to get your home the most exposure to obtain the highest price.
23. Do you pay GST on Real Estate?
GST is only payable on new construction. This includes new condo developments, new single family houses and can also include a property of which over 90% has been renovated. GST is 5% of the purchase price and only paid upon completion of the property. Exceptions to this rule are new home buyer GST rebates and some rental GST rebates. For Sellers, GST is payable on commission.
24. How long does it take to sell a property?
There is no exact timeline regarding the sale of a property. Selling a property can be split into two phases. The first being a prep period in which the seller alongside their realtor will prepare the property for market. In this period they will spruce things up and have photography and marketing materials completed.
The second phase occurs when the property has been listed. Due to the current climate of Vancouver’s real estate market, referred to as a “seller’s market,” meaning low inventory and high demand, it is likely to expect a multiple offer scenario. With that in mind the listing will generally be on the market for up to one week to allow time for buyers to view the property before the offer presentation. The actual completion and possession dates will be negotiated and are typically 1-3 months.
25. Should you sell first or buy first?
This really depends on what it is you are selling and how confident you are that it’s going to sell quickly. It is important to note that not everything sells right away so if you are planning to buy before you sell you must be prepared for the worst case scenario, you may be carrying two mortgages at one time. More often than not you are better off selling first and knowing how much money you have and then begin to shop for a new place.
26. Should you refinance?
When speaking with clients a couple things always come up. The value of their home regardless of whether they are thinking of selling or not and interest rates. As interest rates are relatively low right now. It is a good idea to look into refinancing depending on what kind of mortgage you have and what kind of penalty you will have to pay. The best thing to do is to reach out to your mortgage broker to find out if refinancing makes sense for your situation. You may even have enough equity in the property to get a line of credit and start looking at investment properties or renovate.
27. Should you hire a property manager to manage your investment property?
This is dependent on how much time you have and how well versed you are with the residential tenancy act. If you are out of town you will definitely want someone local. A property manager is going to help with photographing and marketing the property along with tenant vetting and rental rate negotiations. A property manager will also help to take care of any unforeseen issues that arise during the course of the rental. Property managers generally charge anywhere from 8%-10% of the monthly rental income for unfurnished properties and slightly higher for furnished properties.
28. Why should you hire a realtor?
There are many different reasons as to why one should hire a realtor when shopping for a property. For one, it is always helpful to have someone in your corner representing you and protecting your best interests. A realtor will be able to assist you in navigating the real estate market and help you to strategize during negotiations. If you are contemplating buying or selling a property unrepresented, we suggest you spend some time chatting with a couple realtors to at least find out how they can assist you and what to watch out for.
29. What is a cap rate and what is a good cap rate?
Capitalization rate is a way to value investment properties. To find the cap rate, take the net operating income and divide that by the current market value, this will give you your cap rate. So what is a good cap rate? Anything between 4%-10% would be considered good.30. Should it matter what brokerage your realtor works at?In our opinion yes. Certain brokerages provide different levels of service to their realtors, this includes, marketing, networking, education and mentorship. In addition, some brokerages have various affiliation with publications all over the world which can help provide greater exposure for your property.
30. Should it matter what brokerage your realtor works at?
In our opinion yes. Certain brokerages provide different levels of service to their realtors, this includes, marketing, networking, education and mentorship. In addition, some brokerages have various affiliation with publications all over the world which can help provide greater exposure for your property.