P O Box, 740,
38261 Cleveland Avenue
Toll Free: 1.800.617.5511
135-4370 Lorimer Road
Toll Free: 1.888.689.0070
1411 Portage Road
Toll Free: 1.888.689.0070
RE/MAX Sea to Sky Real Estate Squamish is dedicated to bringing you information which will assist you in the selling of your home.
- Understand the Definitions used in Squamish's Real Estate
- Working with a Real Estate Agent
- What are the associated Costs for Buyers
- What are the associated Fees for Buyers
- What are the Financing Criteria
- HST what is it and how does it affect the purchase of Properties
1. Understand the Definitions used in Squamish's Real Estate
The Agent is the real estate company under which the individual salesperson who is representing you is licensed.
REALTOR often used interchangeably with Licensee, Real Estate Agent or Salesperson and in BC, is licensed under the Real Estate Act. A REALTOR can use the term REALTOR if he/she belongs to a local board or association that enforces a strict code of ethics.
The Buyer often referred to as the Purchaser.
The Seller often referred to as the Vendor.
The Principal is someone who has engaged an Agent to act for and on his/her behalf either to buy or sell a home.
Dual Agency occurs when a real estate agent is representing both buyer and seller in the same transaction. Since the agent has promised a duty of confidentiality, loyalty and full disclosure to both parties simultaneously, it is necessary to limit these duties in this situation if both parties consent. If you find yourself involved in a dual agency relationship, before making or receiving an offer both you and the other party will be asked to consent in writing to this new limited agency relationship.
This relationship involves the following limitations:
- The Agent will deal with the Buyer and the Seller impartially;
- The Agent will have a duty of disclosure to both the Buyer and the Seller except that;
- The Agent will not disclose that the Buyer is willing to pay a price or agree to terms other than those contained in the Offer, or that the Seller is willing to accept a price or terms other than those contained in the Listing;
- The Agent will not disclose the motivation of the Buyer to buy or the Seller to sell unless authorized by the Buyer or the Seller
- The Agent will not disclose personal information about either the Buyer or the Seller unless authorized in writing;
- The Agent will disclose to the Buyer defects about the physical condition of the Property known to the Agent.
2. Working with a Real Estate Agent [ top ]
Buying a home is probably one of the most important financial transactions you will make in your life. So, it is necessary to understand the kind of relationship you might be entering into with a realtor, from an Agency such as RE/MAX Sea to Sky Real Estate Squamish.
Attached is a pdf. Document created by the British Columbia Real Estate Association, BCREA.
Your Relationship with the Agency
A realtor working for RE/MAX Sea to Sky Real Estate Squamish works within a legal relationship called agency. The agency relationship exists between you, the principal, and your agent, the company under which the individual salesperson, who is representing you, is licensed. The essence of the agency relationship is that the realtor has the authority to represent the principal in dealings with others.
Agents and their salespeople are legally obligated to protect and promote the interests of their principals as they would their own.
Specifically, the agent has the following duties:
- Undivided loyalty. The agent must protect the principal's negotiating position at all times, and disclose all known facts which may affect or influence the principal's decision.
- To obey all lawful instructions of the principal.
- An obligation to keep the confidences of the principal.
- The exercise of reasonable care and skill in performing all assigned duties.
- The duty to account for all money and property placed in an agent's hands while acting for the principal.
- You can expect competent service from your agent, knowing that the company is bound by ethics and the law to be honest and thorough in representing a property listed by their own agents in a single transaction.
When There Is No Relationship
You may also choose to use the services of a realtor without having any kind of agency relationship. This might occur, for example, when you are being shown a property by the seller's agent this agent may not work for RE/MAX Sea to Sky Real Estate Squamish.
However, if you choose to work with a seller's agent, that agent must still work within a manner which is legal and ethical. Their duty is still to provide you with accurate, honest answers to your questions, as well as access to all of these services:
- Explain real estate terms and practices
- Provide and explain forms used
- Assist you in screening and viewing properties
- Inform you of lenders and their policies
- Identify and estimate costs involved in a transaction
- Assist you in establishing your range of affordability
- Prepare offers or counter-offers at your direction
- Present all offers promptly
A realtor who is not your agent cannot:
- Recommend or suggest a price
- Negotiate on your behalf
- Inform you of his/her principal's top/bottom line
- Disclose any confidential information about his/her principal unless otherwise authorized
You should not provide a real estate agent who is not your agent with any information that you would not provide directly to his or her principal.
3. What are the Associated Costs for Buyers? [ top ]
These are the costs that a buyer of real estate is responsible for:
- Costs of Mortgage including:
a. Mortgage company's lawyer/notary
b. Appraisal (if applicable)
c. Land Title Registration fees
- Fire Insurance Premium
- Lawyer or Notary Fees & Expenses
a. Searching title
b. Investigating title
c. Drafting documents
d. Land Title Registration fees
a. Harmonized Sales Tax (on new construction)
b. Property Tax Adjustment
c. Property Purchase Tax
d. Sales Tax (if applicable)
- Strata maintenance fees (if property is part of a strata corporation)
- Survey Certificate (if required)
4. What are the Associated Fees for Buyers? [ top ]
There are fees associated with buying any home anywhere in world - here is a brief summary of the fees associated with buying a home both for residents and non-residents in Squamish:
- Property Transfer Tax: This is a Provincial Government Tax that applies to all transfers of real estate and is payable on the completion date. The rate of the tax is 1% on the first $200,000 of the purchase price and 2% on the balance.
- Harmonized Sales Tax: The HST is a 5% tax that applies to the purchase of new construction and on the resale of accommodations that have been rented out for short term or nightly rental. The payment of the HST can be deferred if the new purchaser intends to use the accommodation for short term or nightly rental at least 90% of the time and s/he becomes a HST registrant.
- Tourism Squamish Assessment Fees: These are quarterly fees payable to Tourism Squamish and are calculated based on the number of bed units (one bedroom equals two bed units) in the accommodation. If you are using the accommodation for personal use only and it is not available for rental more than 14 days a year, you may apply to pay a lower rate of this fee.
- Insurance: Buyers are required to arrange insurance on single family residential accommodations, and liability and contents insurance on strata-titled properties.
- Condominiums: Of special concern to condominium purchasers, there will be monthly maintenance charges, and the Strata Corporation is also entitled to levy special assessments for extraordinary expenses if necessary.
The above fees also apply to non-residents of Canada, however here are a few details that should also be understood:
- Withholding Tax on Rental Income: You may obtain an exemption from the 25% non-residents are required to pay to Revenue Canada by filling out a simple form called an NR6, explaining that the projected rental income is less than the anticipated expenses associated with the property. After filling out this form, you must also file a tax return with Revenue Canada.
- Execution of Mortgage Documents: Once the borrower has signed a commitment letter with the lender, the lender will instruct a lawyer or notary to draw the mortgage security. These documents must be couriered to the borrower for their execution in the presence of a notary public. What this means to the buyer is simply that sufficient time be allowed to courier the documents as faxes or other methods of transmission are not possible in this case.
- Methods of Payment: It is recommended that the purchaser open a bank account in Squamish for the transfer of funds. The balance of the purchase price must be paid by certified cheque or bank draft in Canadian funds. Since exchange rates fluctuate from institution to institution, from day to day, and depending on the amount to be exchanged, it is important to research this before the completion date.
- Completing the Transaction: It is critical to complete transactions on the designated completion date in British Columbia. The vendor has the option of cancelling the contract of Purchase and Sale should the funds not be paid on the stipulated completion date, and is entitled to retain the deposit. It is not uncommon for vendors who wish to continue with the transaction to demand interest or additional charges for extensions for late completion.
- It is important to note that some rules are different in Canada and you should be aware of them.
5. What are the Financing Criteria? [ top ]
There are two criteria for financing a home in Squamish:
- First, housing costs including the mortgage payment, taxes, utilities and strata fees cannot exceed 32% of your gross income. If you have no other debt, an exception can be made up to 35%. Total debt servicing, including all other loans and credit payments cannot exceed 40% of your gross income.
- Secondly, in a conventional mortgage, a down payment of 25% is required. The exceptions to this are high ratio, insured mortgages that are available for your primary residence with a minimum of 5% down payment. The insurance cost increases as the percentage of financing requested increases.
Higher Valued Properties
With higher valued properties, lending values decrease as the value of the property increases.
- For a property valued at or below $500,000, the conventional down payment of 25% is required.
- For the next $250,000, the down payment amount shoots up to 40%.
- For the next $250,000, 45%, and then 50% of the remainder.
- For example, with a purchase price of $800,000, the maximum mortgage allowed is $552,500. This applies to Canadian residents only, either owner occupied or investment properties.
For non-residents, the required down payments are slightly different.
- For the first $400,000, a down payment of 35% is required.
- For the next $300,000, a down payment of 45% is required,
- Then 50% for the remainder.
It should be noted that lending policies at Canadian institutions vary considerably. If you are interested in the exact situation that addresses the property you are considering, please contact our mortgage broker Michele Ellis, Global Mortgages 604.905.9063.
6. What is HST and how does it affect the purchase of your home? [ top ]
How does HST work?
The Harmonized Sales Tax is a 12% federal tax which in many countries is a "hidden" tax paid for by the manufacturer of goods and the provider of services and then added on to the cost of the goods or services by the seller, so that the end price would be the same: in one case, as a "hidden" tax, the tax is added in before the final sale, and in the case of a value added tax such as the HST, the tax is added at the point of sale. In Canada, it is no longer "hidden" but is a value added tax and in the case of real estate, it applies to the purchase of new construction and on the resale of accommodations that have been rented out for short term/nightly rentals.
The payment of HST can be deferred if the new purchaser is going to continue to offer the property for short term or nightly rental for 90% of the time and becomes a HST registrant. Becoming a HST registrant is a straightforward procedure of completing four forms. Once you are a HST registrant, you are entitled to claim credits for the HST that you pay, for example on legal fees, property management fees, and utilities such as electricity, gas, cable and telephone. You are then required to charge, collect and remit HST on the nightly rentals, which in some cases may be done through your property manager. You will be required to file an annual HST return as well.
HST on New Homes
When you buy a newly constructed home, condominium or townhouse, the entire purchase price including land is taxable. If the home is going to be your primary place of residence, it may qualify for a partial HST rebate, depending upon the sale price. If the property is to be rented to tenants, the full 12% HST is charged on the purchase price. The HST rebate is only available on homes lower than approx. $450,000 and even then a sliding scale is applicable to homes over $350,000.
HST on Resale Homes
There is no HST on the purchase price of a used residential property that has been occupied as a residence before you bought it. Used residential property includes an owner occupied house, condominium, apartment, summer cottage, vacation property or non-commercial hobby farm.
Used property can also mean a recently built house that is substantially complete and has been sold at least once before you buy it.
HST and Real Estate Deals
HST applies to most of the services provided in completing a real estate transaction. For example, 12% HST is applied to the real estate commission. The person responsible for paying the commission - usually the vendor, pays the tax. HST applies to many other services involved in real estate transactions.