Professional and free of charge service to the buyers
As the buyer’s agent I get paid by the sellers so my service to the buyers from consultation to searching ,showing and negotiation is free of charge.
Steps you should take before start looking for a property:
1.Get a preapproval from your bank or a mortgage broker
2.set your price limit and mortgage payment that you are comfortable with and put aside enough money to cover the appraisal fee, lawyers fee, surveyors(is not applied to the condominiums), Property Purchase Tax and the HST(new homes).
3.find your desired neighborhood
4.Hire a realtor
Shopping for a new home can be an emotional experience. It’s also time-consuming and comes with a myriad of details. Some buyers, however, caught up in the excitement of buying a new home can overlook some items. Their home purchase turns into an expensive process. These errors generally fall into two areas:
- Paying too much
- Buying the wrong home
When you have a Realtor you trust and systematic plan before you shop, you’ll be sure to avoid these costly errors. Here are some tips on making the most of your home purchase:
Bidding without sufficient information
What price do you offer a seller? Is the seller’s asking price too high? Is it a deal? Without research on the market and comparable homes, you could spend thousands more than other homes that have sold in the same area. Before an offer is presented to the seller, your Realtor should offer to do a comparative market analysis on the value of the home based on market conditions, condition of the home, and the neighborhood and its amenities. Without knowledge of the market, your offer could be too high.
Buying a miss-matched home
What do you need and want in a home? Sounds simple. Yet, clearly identifying your needs and bringing an objective view to home shopping, leaves you in a better position. Sometimes, home buyers buy a home that is too large or too small. Perhaps they didn’t consider the drive to work, the distance to school, or the many repair jobs waiting for completion. Plan ahead. Use your needs list as a guideline for every home you view.
Before you sign any document, be sure the property you are considering is free of all encumbrances. As part of their services, a realtor can supply you with a copy of the title to ensure there are no liens, debts, undisclosed owners, leases, or easements and restrictive covenants which would affect building a garage or other upgrading plans you have for the property.
Outdated real property report
Before the purchase is completed, an updated survey is essential. This report will indicate boundaries and structural changes (additions to the house, a new swimming pool, neighbor’s new fence which is extending a boundary line, etc.). A survey is the home seller’s obligation to provide.
For $ 400 – $ 1500 a professional inspector will conduct a thorough inspection of the home. This way, you’ll have an idea of the cost of future repairs. Your Realtor will make the final contract subject to a favorable report and always avoid Grow Ops.
Shopping without pre-approval
It only takes a few hours to a few days to get financing pre-approval. When you are shopping for a home, this gives you more power. A seller is more likely to consider an offer from a serious buyer.
Remember additional closing costs
Besides the funds for the purchase of a home, you’ll need funds for items such as loan fees, home insurance, legal fees, inspections, title insurance, etc.
Rushing the closing
Before you sign, ensure that all documentation clearly reflects your understanding and conditions of the transaction. Has anything been forgotten? Don’t rush. You could lose money, financing, or even the sale.
Ten questions to ask a strata corporation
1 What bylaws and restrictions govern the property? Are there grandfathered clauses?
2 What is the date of the last depreciation report? Is a copy available?
3 Have engineering reports been done on the strata and are reports available?
4 How much is in the contingency reserve fund? How are funds invested?
5 How much are the monthly strata fees and what do they cover, for example, common area maintenance, recreational facilities, garbage collection, hot water, heat, cable?
6 What repairs have been made in the last decade, for example, major plumbing, roof, windows?
7 Have there been special assessments in the past five years? What did they cover and what was the cost per unit?
8 What percentage of units are owner occupied? What percentage are rental units?
9 Is there pending litigation, for example, for leaky condominium repairs?
10 What is the deductable on an individual unit?
First Time Home Buyers please go to : www.mikeshafie.com/firsttimehomebuyers
If you buying a condo:
Contingency Reserve Funds and Special Levies
1. What is the Contingency Reserve Fund?
Strata corporations must have a contingency reserve fund (“CRF”) to pay for
common expenses that
- usually occur less often than once a year; or
- do not usually occur.
The contributions from strata owners to the CRF should be included in every
budget approved at an annual general meeting.
Usually, CRF contributions will appear as a single line item in the budget, and the
budget will not detail any specific use of the CRF.
Separate sections within a strata corporation have a duty to establish their own
operating fund and CRF for common expenses that relate exclusively to the
section. However, common expenses shared by different sections cannot be
included in separate section budgets, and must be included in the strata
corporation budget as a common strata corporation expense.
Strata lots that are differentiated as different types of strata lots in a bylaw do not
have the power to establish their own operating fund and CRF.
2. Contributions to the CRF
Usually, CRF contributions are based on the unit entitlement of each strata lot in
the strata corporation. Contributions to the CRF are approved in the annual budget
and collected through strata fees.
If the strata corporation has separate section budgets, CRF contributions for that
section are usually based on the unit entitlement of each strata lot in the section.
Contributions to the separate section CRF are approved in the separate section
annual budget and collected through separate section strata fees.
[Note: strata corporations with separate sections will usually have both separate
section budgets for section expenses and a strata corporation budget for expenses
common to strata lots in all sections.]
The following may also be added to the CRF:
- surplus funds from the previous year’s operating fund; and
- surplus funds from a special levy, as long as the surplus funds owing to each
strata lot is $100 or less.
3. Minimum/Maximum Contributions
The amount that a strata corporation must contribute to the CRF is based on the
total annual budgeted contributions to the operating fund for the fiscal year that
If the amount in the CRF is:
- less than 25% of the total annual budgeted contribution to the operating fund
for the fiscal year that just ended, the minimum contribution to the CRF must
be at least 10% of the total contribution to the operating fund for the current
- 25% or greater but is less than 100% of the total annual budgeted contribution
to the operating fund for the fiscal year just ended, the contribution to the CRF
may be of any amount; or
- equal or greater than 100% of the total annual budgeted contribution to the
operating fund for the fiscal year just ended, any contribution to the CRF must
be approved by a resolution passed by a ¾ vote at an annual or special general
4. Depreciation Reports
A depreciation report may be used to assist a strata corporation in determining the
amount that it should be contributing to the CRF. However, a depreciation report
is only a guide for the strata corporation. CRF contributions ear marked for a
certain purpose in a depreciation report can actually be spent for any purpose for
which the fund may be used.
A depreciation report may never be used to lower the CRF contribution below the
minimum contribution required by the Act.
The depreciation report should estimate the repair or replacement cost and the
expected life of each major item of the common property (e.g. the roof) or the
common assets (e.g. playground equipment).
At this time there is no standard prescribed form which must be used for a
Strata corporations may want to consider including the following items when
preparing a depreciation report:
- electrical system
- heating system
- plumbing system
- exterior walls
- carpeting and furnishings
- interior and exterior painting
- parking facilities and roadways
- recreational facilities
This list is not exhaustive and a strata corporation may prepare a depreciation
report for any common property or assets belonging to the strata corporation.
5. Expenditures from the CRF
Expenditures from the CRF must be:
- approved by a ¾ vote at an annual or special general meeting; and
- consistent with the purpose of the CRF.
6. Unapproved Expenditures from the CRF
An unapproved expenditure will only be permitted:
- if the expenditure is necessary to ensure safety or prevent significant loss or
- if the expenditure does not exceed what is required to ensure safety or prevent
loss or damage; or
- if the expenditure is for the purpose of paying an insurance deductible
required to repair or replace damaged property.
If an unapproved expenditure occurs a strata council must inform owners as soon
as possible about the expenditure unless the expenditure was to pay for an
7. Investing and Managing the CRF
The CRF can be invested or held:
- in an insured account at a savings institution in British Columbia; or
- in an investment permitted by section 15 of the Trustee Act (see attached
must be accounted for separately from other monies held by the strata
corporation or separate section;
- must include any interest or income earned on the CRF;
- can be used to secure a strata corporation loan by approval of a ¾ vote; and
- can be lent to the operating fund to cover temporary shortages resulting from
expenses becoming payable before the budgeted monthly contributions to the
operating fund to cover these expenses have been collected.
- a loan made to cover a short term temporary shortage in the operating fund
must be repaid by the end of that fiscal year; and
- if a loan is made, the strata council must inform owners as soon as feasible
of the amount and purpose of the loan
- a loan made to cover a short term temporary shortage in the operating fund
8. Claim to Monies in the CRF
When the sale of a strata lot occurs, the seller is not entitled to a return of
contributions to the CRF.
9. What is a Special Levy?
A special levy is monies collected for a specific purpose:
- where the expenditure has not been included in the annual budget because it
was either not contemplated or because of the infrequency of the expense;
- where there are insufficient funds in the CRF; or
- where a decision is made not to use monies from the CRF.
10. Preparing a Resolution for a Special Levy
A resolution approving a special levy must:
- set out the purpose of the levy;
- state the total amount of the levy;
- state the method for determining each strata lot’s share of the levy;
- state the amount each strata lot must pay; and
- state the date(s) by which the levy must be paid.
11. Approving and Contributing to a Special Levy
A strata lot owner will contribute to a special levy:
- in the same way that strata fees are paid, which is usually by unit entitlement,
but may be by some other method, if the strata corporation has approved by
unanimous resolution, an alternative method of apportioning strata fees; or
- by a fair division of expenses.
A special levy must be approved at a general meeting. The vote necessary to
approve a special levy will be:
- a ¾ vote if contributions to the levy are apportioned in the same way as strata
fees are apportioned; or
- a unanimous vote if contributions to the levy are apportioned by a fair division
of the expense rather than the way that strata fees are apportioned.
When a strata lot is sold, if a special levy is approved before the strata lot is
conveyed to the purchaser:
- the seller will owe the strata corporation the portion of the levy that is payable
before the date the strata lot is conveyed to the purchaser; and
- the purchaser will owe the strata corporation the portion of the levy that is
payable on or after the date the strata lot is conveyed.
12. Expenditures and Uses of a Special Levy
Monies collected for a special levy must only be spent for the purpose of the
The strata council must inform owners on how monies raised from a special levy
have been spent.
The special levy can be used to secure a strata corporation loan by approval of a
13. Excess Special Levy Funds
The strata corporation must return excess funds from a special levy to the owners
in the same proportion that the levy was collected, if there is at least one owner
entitled to more than $100.
If no owner is entitled to more than $100, the strata corporation may deposit the
excess funds in the CRF.
Why do Mortgage Rates Change? What Factors Affect Fixed and Variable Canadian Mortgage Rates?
There are many factors that influence the health of the economy; unemployment, inflation, consumer confidence and the housing market, just to name a few. Let’s take a look at the factors that influence fixed and variable mortgage rates.
Factors that Affect: Fixed Mortgage Rates
The main factor affecting fixed mortgage rates is Government of Canada bond yields. Fixed mortgage rates typically move in alignment with government bond yields of the same term.
Fixed Mortgage Rate: a fixed rate enables you to “lock in” a predetermined rate for a set period of time, or the term, with the most popular fixed term being 5 years.
Bond Prices and Bond Yields (Negative Relationship)
The price of bonds have a negative relationship with bond yields. In other words when bond prices increase, bond yields decrease, and when bond prices decrease, bond yields increase. Bonds are typically considered safer investments than stocks, especially Government bonds and as such bond prices typically decrease when the market is booming, and increase when the market is dipping.
Bond Yield: the return an investor will receive by holding a bond to maturity.
Bond Yields and Fixed Rates (Positive Relationship)
Generally fixed rates have a positive relationship with bond yields and increase and decrease along with bond yields. In other words, when bond yields increase, fixed rates increase, and when bond yields decrease, fixed rates decrease.
Stock Market is Booming – Bond Prices Decrease, Bond Yields Increase, Fixed Rates Increase
When the stock market is booming, investors are more likely to make a higher return on investing in equities (i.e. the stock market) than investing in bonds. Thus the demand for bonds decreases, meaning that the price of bonds decreases, and the bond yield increases. As such, fixed rates will likely increase.
Stock Market is Dipping – Bond Prices Increase, Bond Yields Decrease, Fixed Rates Decrease
On the other hand, when the Canadian economy becomes less stable and stocks do not look as enticing, investors are more likely to invest in safer investments such as bonds. Thus the demand for bonds increases, meaning that the price of bonds increases, and the bond yield decreases. As such, fixed rates will likely decrease.
Example – 5 Year Bond Yield vs. 5 Year Fixed Rate
For example, if the Government of Canada’s 5-year bond yield increases, the 5-year fixed mortgage rate would normally increase as well. There are some periods where they may not move directly in sync with each other, but this is the general trend.
Factors that Affect: Variable Mortgage Rates
The Bank of Canada is responsible for changes to variable mortgage rates because they determine the target overnight lending rate.
Variable Mortgage Rate: fluctuate monthly and is based on the mortgage lender’s prime rate.
Variable Rates and the Overnight Rate
The overnight rate changes the cost of lending/borrowing short-term funds and therefore influences the Prime Rate. Since variable mortgage rates are linked to prime rates, when prime rate goes up, so will your variable mortgage rate and monthly payments.
Overnight Rate: the interest rate which large banks borrow and lend one-day funds amongst themselves. It is also known as the key interest rate, or the key policy rate.
Variable mortgage rates are advertised as Prime plus or minus X%, for example Prime –0.60%, which means that the interest rate you pay is directly related to the Prime Rate, and will fluctuate whenever this changes. Link to Prime Rates page for all of the banks.
Let’s say the current overnight rate is 0.5% and the major banks prime rate is 2.50%, and at that time the variable mortgage rate is – 0.50% (thus 2.00%).
If the Bank of Canada increases the overnight rate from 0.5% to 0.75% (an increase of 0.25%), the banks will likely follow suit and increase their prime rate by the same 0.25% to 2.75%. Your variable mortgage rate will thus also change due to this increase in the prime rate, making your new variable mortgage rate 2.75% – 0.50% = 2.25%
Closing costs to the sellers
1-Lawyer or Notary Fees and Expenses:
-attending to execution of documents.
2-Costs of clearing title, including:
-discharge fees by encumbrance holders,
3-Real Estate Commission.
4-Capital Gain ( if applicable)
Closing costs to the Buyers
1-Lawyer or Notary Fees and Expenses:
-attending to execution of documents.
2. Property Appraisal Fee
3.Land Survey ( if applicable)
4.Property Purchase Tax ( Property Transfer Tax)
5.Good and Services Tax (New Homes)
6.CMHC or Genworth Premiums ( non conventional mortgage)
7.Foreign Buyers Purchase Tax ( 20% in most of of BC)
Property Transfer Tax ( Property Purchase Tax)
Property Transfer Tax. Home buyers in BC pay a provincial Property Transfer Tax (PTT) when they buy a home. The tax is charged at a rate of 1% on the first $200,000 of the purchase price and 2% on the remainder up to and including $2 million. The PTT is 3% on amounts greater than $2 million.,
To qualify for the First Time Home Buyers’ exemption you must meet all of the initial eligibility criteria. To retain the exemption, there are also requirements which must be met in the year following the transfer. For complete information on all of the eligibility criteria, please see:
Bulletin PTT 004, First Time Home Buyers’ Program
Instructions for Completion of the First Time Home Buyers’ Tax Return
First Time Home Buyer’s Program- Follow Up
To claim the exemption you must file a First Time Home Buyers’ Property Transfer Tax Return (FIN 269) and the appropriate Land Title forms at the Land Title Office when you apply to register your property.
If you do not qualify at the time of registration, but you meet all the requirements by the first anniversary of the registration date, you can apply for a refund of the tax paid. Applications for refund must be made within 18 months of the registration date.
The B.C. government has announced it is raising the Speculation and Vacancy Tax on Dec. 31 from 0.5 per cent to two per cent for foreign owners and for satellite families, the majority of whose income is not reported on a Canadian tax return.
Some new exemptions to the tax will be brought in while others currently in place will be phased out.
“When we introduced the Speculation and Vacancy Tax, our province was at the peak of a real estate crisis and moderation in the market was long overdue,” said Finance Minister Carole James.
Based on the data collected from the first year, the government says the tax is working as it was designed to — capturing speculators, foreign owners and people who own vacant homes.
The next phase of the tax brings:
An exemption for property owners who are members of the Canadian Armed Forces while in active service and their spouses.
An exemption for people who own properties which are only accessible by water.
An end on Dec. 31, 2019, to the exemption for foreign owners of vacant land.
The exemption for empty strata properties in buildings where rentals are banned will be phased out by Dec. 31, 2021.
A strata title allows individual ownership of part of a property — generally either an apartment or townhouse — with shared ownership in the remainder of the building.
Under the new rules announced Tuesday, if the strata lot remains unoccupied, even if the building’s bylaws prohibit rentals, the tax will be levied.
What is GST for Real Estate?
So what does that mean for Real Estate and how does that apply to buyers of homes? Much like paying GST on household items or clothing, the same principle applies to buying a new or presale home. There is a GST that needs to be paid when purchasing a new or presale home. This GST is only for brand new properties.
This means that you do not have to pay for GST on resale residential properties. Any property that is not brand new and has been used for residential purposes in the past are exempt from GST. Essentially, the GST has already been paid for at the first point of purchase.
When buying a home, an experienced realtor can help you figure out if GST is included or not in a sale.
GST on New Homes in BC
The GST on new or presale homes in BC is a 5% Federal Tax, that is paid at the time of purchase. This GST on Real Estate is on the sale of brand new properties in BC.
The details of payment on the GST should be included in the Contract of Purchase and Sale. When buying a new home, make sure to verify if the GST is included in the listing price or if it will be added on top of the listing price.
For example, imagine that the listing price of a brand new property is $1,299,000.
When GST is included, the buyer will pay $1,299,000 and the GST is covered within that price.
On the other hand, if GST is added on top of the listing price, the buyer will pay $1,299,000 + $64,950 (5% of listing price), bringing the total payment up to $1,363,950.
Again, this only applies to brand new properties and will not be applicable for resale residential properties! Be sure to double check whether the GST is included in the listing price or if it is an additional cost on top, as it will make a difference in your total payment.
What is the GST New Housing Rebate?
The GST New Housing Rebate is a partial refund on the GST portion paid on purchases of brand new properties. There are certain criteria that need to be met in order to be eligible for the GST New Housing Rebate and the amount received also varies depending on the purchase price of the new home.
Depending on the province of Canada, the buyer may be subject to the Harmonized Sales Tax (HST). In this case, the buyer may be eligible for an HST rebate on a new property. For example, homebuyers living in Toronto are subject to a 13% HST when purchasing a new home. This is not the case for British Columbia and there is no HST to pay on a purchase of a new property.
How much is the GST New Housing Rebate?
If your new home is priced below $450,000 before tax, there is an eligible partial rebate of the 5% GST paid on the purchase of a new or presale home. The rebate amount varies, however, there is a portion of the rebate available in all the provinces of Canada. If the new or presale home is priced above $450,000 before tax, there is no eligible GST New Housing Rebate to receive.
The GST New Housing Rebate is broken down into three different rate scales: Maximum Rebate (36%), Partial Rebate (<36%) and No Rebate (0%).
Maximum Rebate = 36%
To qualify for the Maximum Rebate, the purchase price of a new or presale home must be $350,000 or less, and the property must be a principal residence. The rebate is 36% of the 5% GST with a maximum rebate of $6,300.
Partial Rebate = < 36%
To qualify for the Partial Rebate, the purchase price of a new or presale home must be more then $350,000 and less than $450,000, and the property must be a principal residence.
No Rebate = 0%
If the purchase price of a new or presale home is over $450,000, and the property is a principal residence, it does not qualify for a GST New Housing Rebate. In this case, the buyer is responsible for paying the full 5% GST as per the Contract of Purchase and Sale.