First Time Home Buyers Advice for Vancouver

Are Foreclosures Necessarily Good Value in Vancouver?

by Jon Lumer

Everyone in Vancouver is looking for a deal. Rental rates are jumping to catch up with the sharp increase in property values and many tenants (as always) are looking at home ownership as a way to avoid paying rent to their landlord and start paying it to themselves, or at least their lender. Meanwhile, investors made dizzy by the capital appreciation they’ve witnessed in Vancouver over the last three years are desperate for a piece of the action or hope to expand their current holdings.

Many of these potential buyers, be they first-time home owners or investors, believe that picking up a foreclosed property could be their ticket to good value and an otherwise unachievable square footage in the neighbourhood of their choosing.

Is this a reasonable strategy? What are the potential pitfalls? What exactly is a foreclosure anyway?

A foreclosure usually occurs when an owner defaults on the mortgage payments to their lender and the lender decides their best option is to seize the asset that was mortgaged (the house or strata unit), sell it under the authority and supervision of the courts, and pay themselves out from the proceeds of that sale. The owner of the property is still entitled to whatever is left once all claims against the property have been settled.

Does this make foreclosed properties vulnerable to low bids? Not necessarily. In fact, the system is set up precisely in order to ensure that fair market value is paid for the property and the owner is not getting less for the home than what they should reasonably expect.

Once the court has authorized the lender that has foreclosed on the property to place it on market, a REALTOR©, acting for that lender and not the owner, will market the property while keeping good records of her efforts, market conditions and comparative market analyses, as well as any showings that result from the marketing.

If a bid is received that the lender accepts, a court date will be set. The lender will not accept a bid far below market value for the property, as they know the court is unlikely to allow such a sale to proceed, and the court has final say on the matter. This first bidder may negotiate with the lender and may submit a “subject offer,” but the terms of the contract are destined to be largely unfavourable to the buyer.

Why is that?

Be A Presale Condo VIP!

Find Out About New Presales & Get Access to VIP Openings & Special Promotions!

  • Should be Empty:

Foreclosed properties are sold “as is, where is.” That means the buyer has no recourse if they are unsatisfied with the state of the property on possession. There will be no guarantees regarding any chattels, or even fixtures, the buyer may have seen while viewing the property. The danger of receiving the property in a sorry state is particularly acute if it is not vacant. This is quite different from the scenario most buyers will face when negotiating (through their agent) directly with the owner of a property.

The first accepted offer price will become public knowledge. Any interested buyers may now inform themselves of the value of that initial offer and present themselves at the court date to present their own offer. They must bring a bank   Continue Reading…

November 2016 Real Estate Board of Greater Vancouver Statistics Package with Graphs & Charts

 

Home sales and listings just below 10-year average

Home buyer and seller activity remains near historical averages in the Metro Vancouver housing market.

Residential home sales in the region totalled 2,214 in November 2016, a decrease of 0.9 per cent from the 2,233 sales recorded in October 2016 and a decrease of 37.2 per cent compared to November 2015 when 3,524 homes sold.

price-chart-from-1977-to-november-2016-for-vancouver-real-estate-mike-stewart-realtor

Last month’s sales were 7.6 per cent below the 10-year sales average for the month.

“While 2016 has been  Continue Reading…

Leaky Condos, Rainscreening, and Buying an Older Condo in Vancouver

There are very few expensive risks in the real estate market here in Vancouver.

Buying into a building with a bad envelope or leaky condo is one of those few extremely expensive risks here in Vancouver.

Why there are Leaky Condos in Vancouver

Here in Canada the federal government changed the building codes in the early 1980s to increase the Energy Efficiency of buildings in response to the energy crisises of the 1970s and 1980s.

Basically the federal government mandated that between 1981 and 1999 buildings should have airtight or sealed walls.

Traditional building technology in Canada allows for breathable walls where water can drain out if it gets inside the walls.

This change to the building code worked fine for the rest of Canada where Winters are cold and dry. In Vancouver and the south coast of BC, it did not work very well.

Vancouver and the south coast of BC are in a temperate rainforest with a lot of wind blown rain.

Many of the buildings built between 1981 and 1999 had water blown into the walls that couldn’t drain out for evaporate.

This caused massive issues with mold, rot, rust, among other things.

There are still many buildings that have this wall system that have not been repaired.

Fixing Leaky Condos or Face Sealed Buildings

These buildings will eventually fail and/or need to be repaired and will need to be repaired with what is called rain screen technology.

If the envelope fails in the building starts leaking you have problems with financing condos in such a building.

If you can’t finance a condo with a mortgage you can’t sell it or if you can sell it, you may have to take a big discount.

Even if it doesn’t start leaking but it needs to be repaired the cost of that repair is in most cases quite high.

I am not suggesting don’t buy into an older building.

If you want to purchase an older condo, you should be very mindful of the building envelope systems.

Please have a look at this great article on Rainscreening on Wikipedia.

BC Property Transfer Tax (PTT) First Time Buyers Exemption Limit Raised to $475K from $425K

Government reduces tax burden on first-time buyers

First-time home buyers received welcome news in today’s provincial budget. Any REALTORS® currently working with first-time buyers will want to share this news with them as soon as possible.

The government has announced, effective February 19, 2014, under the Property Transfer Tax (PTT) First-Time Home Buyers’ Exemption program, qualifying first-time buyers can buy a home worth up to $475,000. The previous threshold was $425,000.

The partial exemption continues and will apply to homes valued between $475,000 and $500,000.

With this change, the government estimates  Continue Reading…

How to Buy a First Home 15 – Subject to Inspection & The Contract of Purchase and Sale

First Time Home Buyer Safety – Subject to Inspection in the Contract of Purchase and Sale!

In Episode 14, we talked about Subject to Financing and how this is a powerful way to protect a first time home buyer when it comes to financing. Today we are going to talk about the Subject to Inspection clause in the Contract of Purchase and Sale and how this can protect a new home buyer in Vancouver.

What is an Inspection When Buying a Home in Vancouver?

An Inspection or Home Inspection as they are commonly referred to in Vancouver is when the Buyer has a qualified and certified Home Inspector check over the physical condition of the property that is of interest.

In most cases the Home Inspection is done after there is an accepted offer and the Home Inspector checks the following:

  • The exterior envelope of the home (be it a condo or a house) that including, the foundation, parking garage, the roof, the walls, etc as well as the drainage systems and any out buildings or features on the grounds of the property
  • The interior of the home and all its mechanical and structural systems including plumbing, electrical, flooring, wall systems like drywall, ventilation, windows, skylights, etc

At the end of the Home Inspection, the Buyer receives and inspection report which will clearly lay out the condition of the property and any issues the property may have.

Thinking of Selling?

Use this form to find out how to sell your home sooner and for more money.

  • Should be Empty:

Why do We Use Subject to Inspection?

Quite simply, a Home Inspection is designed to protect the  Continue Reading…

How Vancouver Realtors Split Commissions

Are Real Estate Commissions Split in Vancouver?

Yes! When a Realtor is hired by a Seller to list a property for sale, the Listing Contract states that the Seller will pay this Realtor (Sellers Agent/Listing Agent) a commission should the property sell during the period in which the Listing Contract is in force.

Now, if a prospective seller was to calculate what they would have to pay in terms of commission (Want to know how much quick? Check out this Realtor Commission Calculator!), some might think it a lot of money to go to one person, but that’s not really what’s going to happening!

Real Estate Commission Splits = Buyers Agent Bait?

In Vancouver, The Sellers Realtors (Sellers Agents/Listings Agents) split around HALF  Continue Reading…