1 - Steps of a Standard Real Estate Transaction
Buying or selling a home is an exciting and important time in a person’s life. Although it can be stressful, our aim at M Hawke and Associates Notaries Public is to make this transaction as straightforward and smooth as we possibly can. In this section, we have laid out the common steps to your real estate transaction.
STEP 1: The Contract
In most circumstances, a Buyer will make an offer to purchase a property by giving them a Contract of Purchase and Sale. This contract can be prepared by a Real Estate Agent, Notary, Lawyer, Buyer or Seller. Please note that a contract must be in writing and signed for any purchase of real estate in British Columbia. The Contract of Purchase and Sale usually includes the following details:
1) Legal Description and civic address of the property
2) Full legal names of all Buyers and Sellers
3) Purchase price
4) Subjects or Terms of the Offer
a. Usually, a contract will have conditions called subjects. Common examples of subjects are mortgage financing approval, obtaining insurance at reasonable rates, home inspections, etc.
b. All subjects must have a removal date. Ideally, your subject removal date should be at least two weeks before you obtain possession of your home. Your contract is not firm and binding until you have removed your subjects on or before your subject removal date.
5) Completion Date
a. This is the date that the money exchanges hands and you gain legal ownership of the property
6) Adjustment Date
a. This is the date on which the property taxes, utilities and any other financial costs like strata fees or pad rental are adjusted. This means that this is the date that we use to calculate the Buyer’s and Seller’s share of these costs.
7) Possession Date
a. This is the most exciting date – when you get possession of your home!
8) List of items included in the Purchase
a. Usually, anything that is attached to the wall is considered included in the purchase price. It includes things like tv mounts, shelves attached to walls, blinds, etc. This does not include appliances that are only plugged in or curtains. If you want the appliances included, you need to write down everything that you expect to be included in the purchase price.
The Contract of Purchase and Sale is a very important document that is legally binding on both the Buyer and the Seller. This is the first step towards purchasing or selling your home. It is highly recommended that you have the contract professionally prepared.
Once the Buyer has given the contract to the Seller, the Seller has three options:
1) Accept the offer as written;
2) Make a counter offer (This is the negotiation part of Buying or Selling a Home)
3) Reject the Offer Completely
STEP 2 – The Seller has accepted my offer. What’s next?
At this point, the Buyer and Seller have come to an agreement and there is a Contract in writing that has been signed by the Buyer and the Seller. Now is the time for the Buyer to get all of their ducks in a row so that they are ready to remove their subjects.
One of the first things that the Buyer should do is contact their bank, credit union or mortgage broker to get started on the mortgage approval process. Usually, your lender will want a copy of the Contract of Purchase and Sale for their files. The bank will use the contract, along with other information, to determine whether or not the borrower and the property meet the requirements for the mortgage. It is highly recommended that you do not remove your financing subject until you have confirmation from your lender in writing that you have been approved for a mortgage. Removing your subjects prior to receiving this approval could cause difficulty if the mortgage is not approved.
The next step would be to contact your home inspector. Your realtor should be able to help you with some referrals if you are unsure as to who to contact. You and your home inspector will book a time to go through the property and ensure a thorough home inspection. You should anticipate spending up to 3 hours for your home inspection. Let your realtor know when you have booked a home inspection so that they can let you into the property.
The Buyer should also start obtaining quotes for house insurance. Almost any house is insurable. It is simply a question of how much you want to pay for that insurance. Talking to insurance brokers at an early stage gives you time to think about what you want in an insurance policy and how much you are willing to pay.
If there are any additional subjects in the Contract, the Buyer will want to talk to the appropriate people or take the appropriate steps to fulfill those subjects prior to the subject removal date.
STEP 3 – The Buyer has removed all of their subjects. Is it officially done?
Congratulations on removing all of the subjects! Now, the Buyer and the Seller have a firm and binding deal. During the subject removal process, your realtor will ask you to choose a notary public or lawyer to handle all of the paperwork related to the transfer of the property. Once you have selected your notary or lawyer, your realtor will send the Contract directly to them; however, it is highly recommended that you also get in touch with your notary public of choice to ensure that they can assist you in a timely manner.
Once the Notary Public or Lawyer has received the Contract, they will call you to ask you for the necessary information to build your file. The information that is usually required is listed in numbers 2 and 3 on the next pages. After the notary or lawyer has built the file, they will call you for an appointment and you will sign all of your documents.
STEP 4 – Completion Date
You are now at the last stage – waiting for the phone call to congratulate you on your new purchase or the completion of your sale. Once we have made contact with you, you need to touch base with your realtor regarding keys. After that, all we can say is Happy Moving!