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4 Questions First-Time Home Buyers Frequently Ask

I don't make any secret of the fact that I love working with first-time home buyers. What's not to love? They're excited, energetic, and listen to everything I say... I LOVE these guys!!!

Seriously, first-time home buyers are fun to work with and most are already quite savvy and know a thing or two about the market. However, there are a few questions that I get asked over and over again that I thought I would address today. It's not that I mind answering these questions, as anyone who knows me will tell you I like to talk, but I thought that there may be someone out there who could benefit from these tips.

Q. Why use a Realtor?

A. Why the heck not? Give me one good reason why you wouldn't use the services of a professional Realtor when it's absolutely FREE to you, the buyer. Yes, I know that there are millions of Internet resources out there these days that allow a buyer to do a lot of home shopping from the comfort of their home. And yes, MLS is easy to use, open houses are great to pop into, and with all the new construction there are show homes open most days from 12pm-5pm. Before making a move, buyers can do a pretty good job and getting a feel for the market.

Still, I repeat; use a Realtor. A Buyer's Agent will work FOR YOU not the Seller, not the developer. A Buyer's Agent has the market knowledge, the negotiating skills, and the area information that you simply won't have. I can't count the number of times I have sat down with buyers and carefully made a list of their needs and wants in their new home. After looking at numerous homes that match their criteria and getting a feel for how the buyers react when actually looking at a home in person I can usually pin point exactly what it is that they want and find it for them. Sometimes, in fact very often, this is a home that does not meet most of the criteria on my buyers list but as their Realtor I know them well enough to know what they are looking for. That's what a professional Realtor should be doing for their buyers.

Q. Am I [too fussy / too picky / too indecisive / not ready] to work with a Realtor?

A. Of course not! Purchasing a home is a HUGE deal. You certainly should be picky, fussy, indecisive, and take a lot of time looking prior to making a decision. If you don't look around first how can you possibly know you've found the right house when you do see it? A good Realtor will understand this process and will be happy to take all the time you need to find the right home. Sometimes this is a very long process and sometimes it goes quicker. Still not ready to commit to a Realtor? Leave your options open. Go into open houses, show homes, and presentation centers to your heart's content but tell every agent you meet "I'm working with a Realtor". Leave your options open. If you find something you like or decided to ramp up your search with a more focused buyers tour you will have the option to approach a Realtor about working for you prior to going back to take a second look at your dream home.

Q. What does it cost to move?

A. There are a few large costs associated with purchasing a home that buyers should be aware of. In British Columbia, new construction will have GST and possibly a transition tax held over from the phasing out of HST. There is a rebate if you intend to live in the home you purchase but this tax and the rebate all changes depending on when the home you are looking at was built and when it will be finished. For a rough calculation, add 5.2% to the purchase price of new construction, that's not the number set in stone for every property but will give you an approximate idea on the cost.

Also take into account BC's Property Purchase Tax. If you are a first-time home buyer who has never (ever) owned property anywhere in the world you can sign an exemption for this tax at the lawyers office prior to your home purchase finalizing. For this exemption to apply your purchase price must be under $425,000 and there is a partial refund for homes up to $450,000. If you have owned property previously (and yes, this includes being on title for a home you have never lived in to help someone else qualify for their mortgage) you will be paying this tax of 1% on the first $200,000 and 2% on the balance.

You will need a lawyer or notary to do the paperwork for your purchase. Pricing for this differs, purchasing a detached home is cheaper than purchasing a condo or town home in most cases, if you have a mortgage it will cost more than if your purchase with cash. Budget $1000 for legal fees so you can be pleasantly surprised when it's less than that.

Additionally, make sure to budget for setting up your utilities and for hiring movers, renting a moving truck or buying beer and pizza for your buddies.

Q. How does insurance work on strata title properties?

A. Condos and town homes, strata title properties, have the insurance for the building itself and the complex covered in your strata fees. When you are looking at the price of strata fees factor in the fact that you are not paying a separate bill for insurance every month. What you will insure in a strata property is your contents. This differs for everyone depending on the value of the contents in your home but is a very cheap insurance and should only cost roughly $20-$25 per month. A word of caution, when insuring for a strata title property, ask your insurer to provide a rider for the strata insurance deductible. In layman's terms, you should be insuring to buy down the deductible for the huge policy that the strata has. In the event that you cause damage to a strata complex (start a flood or a fire for example) and you are found to be a fault, you may be responsible for the strata's insurance deductible. This deductible can be anywhere from $10,000 to as high as $100,000 or more. Purchasing a rider for this strata deductible will buy down that cost to a more reasonable personal deductible of $300 or $500 depending on your personal coverage.

In Conclusion

I hope that helps answer some of the most common questions and doesn't turn you off the whole house shopping process entirely. Remember, I am always happy to chat about buying a home and you can call, text or email me with questions anytime.

Now get out there and do some house shopping!!!