10 terms first-time B.C. homebuyers should know

Whats the difference between the deposits and down payments, completion dates and possession dates?

1. Deposits and down payments: The deposit is the up front money a buyer puts down to secure the home prior to completion, in the form of a bank draft. This amount is generally 5%, howoever your Realtor may be able to negotiate less if the rest of your downpayment is tied up in investments.  The down payment is the total amount that a buyer puts down to contribute toward the purchase. Where people get confused is that the deposit forms a part of your down payment. And the rest of the purchase is funded by the mortgage. There are cases where a buyer’s deposit equals their down payment if they’re only putting down five per cent. Whereas if you’re planning on putting 10% down then the five% deposit forms a part of your final down payment.

2. Subject removal: It’s the Buyers time to do their due diligence. In a balanced market, this is usually about 7 business days. Standard subjects are the conditions that need to be met before the buyer moves forward with the purchase — including arranging finances, inspection, reviewing the property disclosure, reviewing and approving title, ensrureing the home can be insured, and reading strata documents if applicable. Once you’ve checked those boxes, you’re ready to hand in the deposit, and become a homeowner.  If during the subject removal period you weren’t satisfied with something, like the inspection or strata documents, you would be able to back out of the contract due to issues discovered. Your Realtor will advise further on this topic. 

3. Subject-free (cash): A subject-free offer means that, rather than having a conditional period after the acceptance of the offer, the buyer only has the 3 day rescission period to back out of the offer. It doesn’t necessarily mean that you don’t do your due diligence, it just means that you do it before you know if you’re going to get an accepted offer. It’s a lot more heavy lifting upfront but you may need to utilize this option if you are in a multiple offer situation. 

4. Completion date: This is the day that the title and funds transfer from buyer to seller. You should expect to sign paperwork with the lawyer, anywhere from 3 days prior to this date, up until the final date in some cases.

5. Possession date: Break out the Champagne; you are now ready to spill some on your new floor. This is the day you actually get your keys.  Typically this day is 1- 3 days after Completion, but could be longer.  

6. Property Disclosure Statement: Has there been any fire or water damage, have there been any special levies or proposed special levies, what’s the maintenance fee, what’s included in the maintenance fee? These questions and more are answered by the seller in this statement, and is available to the Buyer prior to writing the offer, in most cases.

7. Special levy/assessment: This is an amount needed for an upcoming project, such as roof repairs or window replacement, that a strata is planning. The strata will vote on whether funds will come from the contingency fund, or if a levy will be required to be paid by owners.  The amount owed, will be based on the square footage of your unit.

8. Contingency Reserve Fund: The CRF are the funds that a strata has saved away for any upcoming repairs and building maintenance.  Money for the fund comes from a monthly maintenance fee paid by each unit. The fee also pays for the caretaking of a building’s common areas.

9. Title search: This document includes details of the home itself, including the registered owner and any third party charges to the land, unit or building.  It’s a document you want to review prior to removing conditions, to ensure there are no liens or charges that will affect the use of the property in the future.  

10. Listing price vs. market value: This is a tricky distinction for a lot of first-time homebuyers.  The listing price is more strategy-based. A seller can list for more or less than market value. Just because someone lists for $400,000 doesn’t mean that they want $400,000 or that they’d sell for $400,000.  Part of your Realtors job is to provide a CMA (comparative market analysis) to provide an estimate of the value, in today's market.

We have experienced agents on our team that are First Time Buyer specialists, call us today