Purchasing Guide
It is not only possible for foreigners to buy a home in Metro Vancouver, but many foreigners do invest in property in the area; it is by no means uncommon. There are no residence or citizenship requirements in order to purchase property in BC, and all properties for sale are available for purchase by non-Canadians.
Having said that, purchasing a property can present a bit of a challenge for foreigners, for landed immigrants, and/or newcomers to Canada. The reason lies not in a shortage of available properties but rather in overcoming the mortgage hurdle, for those requiring financing (obviously for those who can purchase a property outright, this is not an issue). Because of the typical lack of local credit history of the person applying for the mortgage, it can be difficult to find banks willing to finance such a mortgage, even with adequate income and financial security. One of the best ways to overcome this challenge is to begin immediately to work on building up your local credit history. Open a credit card account (this is sometimes challenging too, but most people should be able to get a low-limit credit card immediately), buy a car with financing (this type of financing is easier to get, but can mean higher interest for newcomers to the area), and always pay ALL of your bills on time, no matter what type or how insignificant they might seem.
Since buying a property is one of the largest and most important purchases you will make in your lifetime, it is advisable to take the process slowly—the financial implications of a wrong decision can be quite costly. There are two ways to approach this decision process, and although both require hiring a realtor, the main difference lies in whether you engage a realtor before or after you arrive.
1. Rent a place in a location that is convenient and comfortable for you for at least one year. This can be more of a challenge if you have children due to schooling considerations. Next, hire a real estate agent you feel comfortable with (take your time selecting the best one to suite your needs). Then spend your free time visiting various communities and neighborhoods, viewing as many open houses as you can; be adventurous. At the open houses, talk frankly with real estate agents and let them know what kind of place you are looking for. Early on in the game, new friends and co-workers will doubtless recommend certain areas to you; do not let this deter you from exploring a variety of areas. What is great for one person is less than desirable for another. For example, if your workplace is located in Richmond, living in Richmond might be heartily recommended by co-workers and perhaps even a boss, and certainly, for some, living in this area might be ideal. But perhaps you are the type of person more suited to the Vancouver lifestyle…or Port Moody lifestyle…or West Vancouver…you get the idea. Feel free to take recommendations into consideration, but try not to let this be the deciding factor in where you will ultimately settle. Also, one area might look really attractive to you at first, until you investigate it further, and then you might find out it isn’t really suitable at all, particularly for your children (but do remember cross-boundary schooling is allowed).
2. Make arrangements with a local real estate agent before you arrive in Vancouver to get an idea of what is available. Describe in detail the kind of property you are looking for; be very specific. Then, let the agent do the legwork for you, and when you arrive, you can spend your time viewing properties that are specifically targeted to your needs (rather than a random assortment). Real estate agents typically work with a mortgage broker, and this can make things easier for you if and when you decide to put in an offer on a place. A mortgage broker is a kind of go-between, between you and the bank. They will do all of the legwork for you and obtain the best possible mortgage with the lowest possible rates for you. Their services are typically free, for you, the buyer, as they are paid by the lender. It makes sense to use a mortgage broker, as they often have access to loans and interest rates you, as the layperson, would not, and they also know all the right questions to ask and can persuade the lender to extend financing to you (when they might not be so inclined were you to simply ask on your own behalf). Mortgage brokers work on your behalf, not the banks’.
Mortgage Brokers/Firms
There are any number of mortgage brokers in Vancouver, and probably the best way to find one is to use the same method as for finding a real estate agent—ask around, search online, visit prospective brokers to see if you feel comfortable working with them. Finding the right broker can make all the difference between a stressful experience, and a stress-free experience. You can take a look at the sample brokers listed below to see if one of them might be a good match. If not, keep searching. You will find the right one with a little perseverance.
- Karin Hoehn— http://www.mybcmortgage.com/index.html—Senior Independent Mortgage Broker, based in the Tri-Cities area
- Meridian Pacific Mortgages— http://www.meridianpacific.ca/home/
- Averbach Mortgages— http://www.averbachmortgages.com/
- The Mortgage Centre, Rowan Smith— http://www.mortgagelocator.ca/
Purchase Process
1. Documents needed:
- Confirmation of employment –document should be written or typed on paper with company letter head (should state person’s title, date of employment, and annual salary, excluding overtime and bonuses, as this is unpredictable, but should be mentioned).
- T4 or W-2 or equivalent –document that shows gross, net, and pension contributions from the previous year (or two). If you are already a property owner, then a statement from the bank/mortgage company is recommended. Also recommended is a recent property assessment stating the value of the property plus a letter from that bank stating the account is in good standing and the type of account.
- Additional documents that may help: three most recent pay stubs; three most recent utility bills (electricity, phone) and credit card statement (this will help demonstrate that monthly payments/obligations are met), letter from previous/existing landlord stating length of tenancy/rental, and that payments were made in a timely manner.
2. As soon as you decide upon purchasing, you should engage a mortgage broker straight away. Your broker can get you pre-approved for financing, and can secure the best and lowest rate for you as well. Per the down payment, this can be anywhere from 5% to 35% (5% is the minimum for those with a Canadian credit history, and 25% to 35% is typical for foreign purchasers—those without a Canadian credit history).
3. Once you decide upon the property you would like to purchase, you must put in a written offer (through your real estate agent). The offer should contain any details that are important to you, and will be conditional pending the home inspection (which is done if and when the offer is accepted) and financing. Once the offer has been accepted and signed both by you and the seller, it is a legally binding contract.
4. When the seller receives your written offer to purchase, he or she can then: accept the offer as it is, reject the offer, ignore the offer, or make a counter-offer. When you receive a counter-offer, you then have the same options the seller has when he or she receives your written offer. If the counter-offer from the seller is not acceptable to you, you can walk away from the deal. The seller cannot return to your original offer. At the time of making an offer, you will usually also make a deposit which is held in a trust account.
5. Sign the Contract of Purchase and Sale (will list the completion day for the transaction). You can take possession of the property on the completion day, which is the same day you can move in.
Comprehensive and detailed information on the home buying process can be accessed through a publication put out by the Real Estate Council of British Columbia (RECBC). This guide is very thorough and will help you understand the complexities of the home buying process: http://www.recbc.ca/pdf/Buyinghome.pdf. For finding a home inspector, very often real estate agents work with specific home inspectors and can provide a referral, but if not, it is extremely simple to locate one yourself through the yellow pages. Alternately, you can go to the website of the Canadian Association of Home and Property Inspectors (BC) and use the home inspection finder link, accessible from the homepage: http://www.cahpi.bc.ca/.
Buying Process Strategies
- Limit your offers to properties that are reasonably priced/within your price range.
- Be fair; don’t offer substantially less than the asking price. Remember, most properties come with multiple offers.
- Offer as much as the property is worth to you; when multiple offers are on the table, make your “best offer.”
Market Trends
The housing market in Vancouver has been steadily bolstered by the influx of business-class immigrants from Mainland China, particularly in the past two years. The average detached home price in certain “hot spots” is up by as much as 46% since 2009; a home priced at $1,165,007 in 2009 now costs, in 2011, $1,698,925. The demand for homes in areas such as Westside Vancouver and Richmond has been great, and many have sold over the asking price (in some cases by as much as 50%) with multiple offers on the table. In these areas specifically, it seems to be very much a seller’s market, which, for buyers, is rather dismaying news, but the Bank of Montreal warns that the housing market in BC may be overvalued and the current bubble could burst. For some, it could make sense to rent rather than try to buy into an overinflated market. Other areas, however, have not seen the same inflated growth rates and other parts of Vancouver and the Metro area are much more affordable.
Helpful Links
- Six Important Things You Need to Know Before Mortgage Shopping — http://mybcmortgage.ca/my-broker
- Mortgage Broker’s Association of BC— http://www.findabettermortgage.ca/ (also offers a mortgage broker finder)
