Consumer Tips

Home - Purchase Of

1) Avoid closing the deal on a Friday, the end of the month or before a long weekend. Buyers can often face moving delays or higher moving fees as a result.

2) Interest is not automatically paid on deposits in real estate transactions unless there is a clause saying so in the purchase offer, the deposit is at least $5,000 and the closing date is at least 30 days away.

3) Most resale homes are G.S.T. exempt.

4) G.S.T. is payable on real estate commissions, legal fees, some disbursements and the cost of surveys or home inspections.

5) Unlike resale homes, new homes often have warranties covering defects such as wet basements.

6) While there's no legal guideline, the proper deposit for an offer is five per cent of the purchase price.

7) When buying a new home, look for the logo 2-5-10 year warranty. This logo is your only assurance that the home is built by a licensed residential builder and has the 2-5-10 year home warranty insurance now required by the Homeowner Protection Act - the strongest construction defect warranty in Canada. If you don't see it, inquire if the builder is licensed with the Homeowner Protection Office and ask for details on the extent of any existing home warranty that might be in place. Contact the Homeowner Protection Office at (800) 407-7757, email: hpo@hpo.bc.ca, or website: www.hpo.bc.ca.

REAL ESTATE AGENTS

Be sure to ascertain for who the agent you are dealing with is working for and govern yourself accordingly. He or she may be the seller's agent, your agent (buyer's agent) or a dual agent; that is:

SELLER'S AGENT: has agreed to to use his or her marketing expertise and network to position the property to its best advantage on the market, attract qualified buyers and effect a sale at the highest price.

BUYER'S AGENT: has agreed to use his or her knowledge of the buyer's budget, needs and wants. He or she promote the buyer's interest in purchase negotiations to effect a sale at the lowest price.

DUAL AGENT: since the agent has a duty of confidentiality, loyalty and full disclosure to both parties simultaneously, it is necessary to limit these duties in this situation, and gain the consent of both parties to continue in this limited capacity. This is called a dual agency relationship.

The agent will ask for written consent of both parties to continue in a dual agency relationship, with these limitations:

- The agent will deal with both parties impartially.

- The agent will not disclose to either party any information he may have been privy to in regard to either party's bottom line.

- The agent will not disclose the motivation of either the buyer or the seller, or any personal information, unless authorized to do so, preferably in writing.

HOME INSPECTIONS

A formal inspection is a must when buying a resale home. However be aware that home inspectors work in an unregulated industry. Anyone can establish an inspection business -- even with no training or credentials.

Ask friends or the Better Business Bureau for names of inspectors. Then check the inspectors' backgrounds as carefully as a good inspector would check out the house.

Make sure the inspector has liability insurance to cover anything that's overlooked, such as a leaky roof. Check out our Buyers Tip on Home Inspection.

CHATTELS AND FIXTURES

Chattels are stand-alone items such as stoves, fridges, washers and dryers. Fixtures are items that have been attached to the home, including shelves, carpets and lights.

A separate clause is often needed in the offer to purchase noting what stays with the house and what goes with the seller. WHEN IN DOUBT, SPELL IT OUT.

There may be a grey area between chattels and fixtures. For example, garage-door openers and central vacuum systems, could go either way.

DEPOSITS

If buying privately, be sure the deposit is paid to the seller's lawyer in trust, otherwise, getting that money back could prove difficult if the deal collapses.

CLOSING COSTS

Closing costs including legal fees and the lawyer's out-of-pocket expenses (plus G.S.T.) are only a few of the costs added to the final price of a home.

There are also closing adjustments, which include taxes, rental income and some utility charges.

As well add application and appraisal fees for the mortgage.

These costs can add up to 2.5 per cent to the final price.