Buyer's Check List - Before you look for a home

Content: Assessing whether you should be a homeowner Finding A Realtor Before you start looking at properties Understand the limitations of the risk management tools Writing an Offer

• Be realistic about your risk tolerance. Assessing your financial and life style stability is important. Unanticipated home repair costs or a change in a relationship, job loss/transfer or having children when you own a 1 bedroom or studio condo could threaten your success in homeownership (selling the property at a loss or risk foreclosure). Ultimately you should envision owning this property for a minimum 10 years to be in the best possible position to sell your property and recover your down payment, expenses and realize a possible profit.
• Can you afford a home in a neighbourhood that you are comfortable with and within acceptable driving distance to meet your lifestyle needs (i.e. work, hospital, recreational, educational, medical, family and child care needs). When the costs and time required to meet your lifestyle needs is more important, a homebuyer should seriously consider whether their buying capacity will allow for those needs to be met.         
• Know the costs of a buying a home to best evaluate your financial tolerance:
• Down payment
• Contract Deposit
• Regular Mortgage Costs (weekly, bi-weekly, monthly)
• Mortgage Appraisal Fees
• Mortgage Application Fees
• Mortgage Disability and/or Life Insurance costs
• Property Transfer Tax   
• Goods and Services Tax (on new or substantially renovated homes)    
• Property Tax and Annual Utility costs
• Survey Certificate fees
• Fire and Home Insurance costs
• Property Inspection fees
• Title search fees
• Legal/conveyancing fees
• Strata maintenance fees or manufactured home pad rentals
• Utility connection fees
• Moving Costs
• Change of Address Costs
• Know the costs and possible costs of owning a home to best evaluate your financial tolerance:
• Fire and Home Insurance
• Mortgage payments
• Property Taxes
• Annual Utility Costs
• Maintenance Costs
• Strata Maintenance Fees
• Strata Special Assessments
• Anticipated and unanticipated repairs
• Heating, electrical, security, or other required services costs
• Local improvement costs (electrical, roads, sewers, water etc.) 

Finding a Realtor

• Recommendations from friends and family is a good place to start
• What is their experience in the type of home and area you are looking for
• Check their history
• BC Real Estate Council can tell you how long they have been in business and if any complaints have been filed. Toll-free: 1-877-683-9664
• What is their current work commitments and how much time will they have for you?
• Do you get along? Communication is a critical component in working together.
• What you can expect from a Realtor     
• Find out about the different agency relationships you could have with a Realtor (The BC Real Estate Association has produced a brochure called "Working with a Real Estate Agent" that describes the agent's obligations to you.)       

Before you start looking at properties

Finding a home can be a very emotional process. Once you fall in love with a property it can affect your ability to make an objective business decision. Subject clauses are your only means to assess the property and its risks before being bound by the contract. Determining your risk management tools prior to becoming emotionally attached to a property may assist in making a better decision:

• Deposit: A deposit is required on all real estate transactions. You should prepare yourself for what would be an acceptable amount and having access to such funds. You should also review with your Realtor where the money will be held and under what circumstances the deposit will be (or not be) returnable. Note: Deposits not held by 'a middleman' (stakeholder) as defined under The Real Estate Act should be reviewed carefully.
• Secure your financing (mortgage)
• Know your price range and required down payment
• Interest rates, mortgage pay back features, and how long a mortgage lender will lock in an interest rate are negotiable. Shop around to get the best deal for you
• Once you have found the company(s) and mortgage lender(s) which best suits your needs request a mortgage certificate
• Ask your Realtor to provide a draft contract of purchase and sale on a property you are most likely to purchase (i.e. strata, single family or manufactured home) and have them explain what risk management tools are available. The subject clauses (conditions) could include assessing and approving the following:
• Property Disclosure Statement (PDS) (Note: Any statement you are relying on which may not appear on the PDS should be written in your contract.)
• Property inspections
• Title search
• Information from local governments
• Permits taken out and work inspected and passed on a property
• Whether improvements to a property was done with a permit
• Soil conditions of the area
• Water table (flooding, underground water streams)
• Anticipated growth (transportation and zoning)
• Reported problems with the property
• Building by-laws and whether buildings (or any improvements you plan to do) will conform with current setback requirements
• Survey Certificate (if available)
• Is the sewer and water connected?
• Possible local improvement costs (sidewalks, sewer, water, roads, electrical etc.)
• Mortgage financing clause
• Survey Certificate
• Confirmation of Insurability (Fire and Property Insurance)
• Strata property information      
• Form B Information Certificate 
• Minutes (2 years or more)
• Strata By-laws
• Financial Statements
• Engineer Reports (Report on whether the building is leaking or other reports dealing with structural or major housing component assessments)
• Locker/parking
• Developer Prospective/Disclosure on new construction
• Rental Restictions    
• Unregistered stratas
• Warranty clauses
• New Construction
• Form F (Limitation of rental period)      
• Partially completed, defects or repair clauses
• Walk-through inspection deficiency clauses
• Builders Lien Holdback
• Licensed Builder and Warranty Insurance clauses
• Mandatory Warranty Insurance clauses or Owner-Builder Declarations
• Occupancy Certificates
• Unauthorized or authorized accommodations (for secondary suites)
• Existing Tenancy Agreements
• Find a Property Inspector: Finding a property inspector or two ahead of time will ensure you can act quickly in a fast market. In a multiple offer situation, perhaps this will also allow you the option to have the property inspected before you write an offer.
• Evaluate the home inspectors experience in the type of property and area you wish to purchase
• How long have they been a property inspector and what is their background in terms of housing knowledge (education and previous construction experience)
• Find out what they inspect and what they don't inspect. (Note: This is particularly important with strata properties. The greatest risk of large unanticipated expenses to homebuyers in strata properties are building envelope failure (leaky condo) and common area issues such as repiping of plumbing, drainage problems and roof replacement. Homebuyers should have all common areas of buildings in a strata corporation inspected in order to minimize the risk of this problem)
• Do they carry Errors and Omissions Insurance?
• What is their policy regarding undiscovered problems?
• Have they had a claim against them?
• What information do they provide of the inspection?
• Will they educate you on housing maintenance? 
• Find a lawyer or notary public: Although most homebuyers retain the services of a lawyer or notary after the property is bought, if you come across a property that has an unusual situation, you may require an expert opinion or a special clause in your contract. Having access to a lawyer or notary could assist homebuyers to evaluate a difficult or unusual circumstance in a timely manner prior to being bound by a contract.

Understand the limitations of the risk management tools

If problems are discovered after you are bound to the contract, legal, litigation and repair costs can be crippling particularly if the other party is unwilling to resolve the problems:

• Property Disclosure Statement (PDS): A Seller wishing to hide a problem may not disclose a property condition. Some Sellers do not fill out the standard PDS or make a disclosure on a property. Any statement or representation you are relying on should be in writing.
• Mortgage: A mortgage appraisal or mortgage insurance willingness to underwrite a mortgage is not an assessment on the property condition but rather an assessment of the current market value
• Property Inspections: A property inspector can only assess what they can see. Should your property inspector note a potential risk, you should consider hiring experts or do more inquiries to evaluate the potential problem further. Examples are possible oil tanks, electrical, drainage, soil erosion, roof or plumbing problems, building envelope failure, mould or a previous marijuana/crystal meth operation.
• Local government inquires: Records may have been lost or incomplete, building by-laws could make a older property non-conforming (unable to rebuild in the same location in case of fire), zoning or transportation plans can change and local governments may be hesitant to provide information which may have some liability attached to it.
• Strata property information: Minutes may not clearly indicate the scope of the problems or the repairs. It is not uncommon for problems to be noted early in the life of a building but not mentioned again for many years. Building by-laws can change with a 3/4 vote of the owners. Financial Statements, budgets and contingency funds should reflect regular maintenance requirements, anticipated and unanticipated repairs or costs. If it does not, the risk of an assessment over and above the maintenance fees could be increased.
• Pre-construction or developer contracts of purchase and sale on new homes:  Contracts of purchase and sale written by the developer and their solicitor should be carefully reviewed. Ask your Realtor to explain anything you don't understand or have concerns with. If the Realtor cannot explain it, consult a lawyer or notary. Any conditions you are uncomfortable with are negotiable. Information on new construction marketing, disclosure and buyer's rights.            

Doing you homework before you find the right home will better position you to write an offer to reflect your risk management capacity, particularly in a multiple offer situation. Buyers often feel pressured to waive their rights to evaluate the risks of a particular property. If this is the case, here are some considerations:

• Write the offer as if it is not a multiple offer situation because you are unable to afford a potential problem.
• Try and do as much risk management as possible before writing an offer (i.e. Review the Property Disclosure Condition statement, Title Search, Strata Information and Municipal Inquiries as indicated above, and have an inspector come with you at a showing) to reduce the number of conditions in your offer without waiving your risk management abilities
• Consider writing a higher offer to make it more attractive for Sellers to accept your risk management conditions. Note: If a mortgage lender determines that the offer is over the property value, this could affect your ability to secure financing (a mortgage)
• Consider reducing the time of which you will remove your conditions (risk assessment).

Back to Information for Buyers