A brief guide to buying real estate in Canada

Frank and Sue Gerryts are ex-Brits who are licensed realtors in British Columbia. They specialize in helping people relocate to B.C. - visit them at their web site: relocation2bc.com

We’re not in Kansas now, Toto

If you are moving to Canada, it is most likely that buying a home there will be one of your major investments. The house buying process is significantly different from that in the U.K. This guide will help you understand the differences and could even save you some money.

Use this guide to find out how it all works.

So what are the differences?

Rather than go into a lengthy explanation, I thought it would be best to draw out a few points that hopefully highlight the differences. While we work in British Columbia, most of what follows applies all across Canada.

The real estate industry is regulated

In the UK there is little direct control over the real estate industry. In Canada real estate agents, or realtors, must be licensed within their Province or Territory. The details of how they gain their license differs across Canada, but in each area they must learn the laws applicable to real estate there. For example in B.C. to gain a licence you have to take a course, and pass the assignments, before you take the 3 hour exam. This in turn is followed by a full week’s post-licensing training. The real estate board also requires us to complete a number of  hours of continuing education in order to keep our licences.

No more Estate Agent windows – thanks to the MLS®

In the UK each property is listed with an individual estate agent. Buyers are forced to look at all the local agents and see what they have to offer. As most people know, Canada has the Multiple Listing System or MLS®. This online computer system contains details of almost all property for sale anywhere in Canada. It is searchable, so you can easily find properties available in the areas you are looking for and with the characteristics you want. Note that realtors have access to additional information about properties that is not available to the public. Your realtor can use this information to help you decide on what to offer on a place.

In the main it is only brand new homes that are not available on the MLS®. They are marketed by the developer directly, often with show homes.

Why do Buyers need a realtor?

As all property is on the MLS® why would you need a realtor to help you buy. It is true that you can search for properties online. However when it comes time to make an offer, who do you go to? Unfortunately a lot of people from the UK are used to approaching the seller’s agent. In Canada this can be a problem because the listing agent is representing the seller. They are obliged to act in the best interest of the seller and owe them undivided loyalty. If you get them to act for you in the purchase, do you think they will have your best interests at heart?

The best thing to do is engage a realtor to act as your buyer’s agent. If you do so that realtor will owe you undivided loyalty – and be in a position to negotiate for you and protect your interests in the purchase.

What’s gazumping?

This term for someone offering more than you and causing you to lose your accepted offer is unknown in Canada. When you want to make an offer for a home, your realtor will draw up an offer as a legally binding contract. After some negotiation you will end up with an offer that both parties have accepted. At this point it is binding on the seller. In most purchases the buyer will have added some conditions which need to be satisfied – these are generally called “subjects” as they begin “subject to ….”

What kind of subjects?

The subjects that you have in your offer are there to protect you. They ensure, for example, that there is clear title to the property, that you can get financing on it and that it passes a home inspection. You will normally have 5-7 business days within which to do this. At the end of this time you must either remove the subjects – in which case the contract is binding on you as well as the seller. Or you can decide not to remove the subjects, thus leaving the seller free to look at other offers.

Home inspectors

A note of caution on home inspectors – unlike the UK, there are no restrictions on who may set up as a home inspector. It is important to look for someone who is qualified and comes recommended. Your realtor should give you a list of people.

Get your money ready

Your contract of purchase defines a couple of dates that are important. Firstly there is a time when a deposit is paid. In B.C. the convention is 5% of the purchase price is payable when the subjects are removed. You must have your money available at that time or you will be in default and may lose the home and be sued.

The other date is the completion date. This is when you need to pay the balance of the purchase price. This final stage is handled by lawyers who ensure that the title to the property is transferred to you and that any mortgage is registered on the title. Once again you need to have the money available at that time.

If you are depending on the sale of a home in the UK to fund the purchase in Canada, do make sure that the deal is binding before you enter into a purchase agreement in Canada. Most Canadian realtors do not understand how the system works in the UK and will not know that an English sale is not necessarily firm and binding. If your UK deal falls through you will still be committed to your Canadian purchase and may be forced to get bridging finance.

When do you get to move in?

In the offer you agreed there are two dates of interest. The first is the completion date when all the monies are due and when title is transferred to you. The other one is the possession date, which is usually a day or two after completion. This allows time for the any hiccups to be sorted out. The previous owners usually have the house cleaned during this time as they are obliged to leave it in the condition in which it was viewed when you bought it – which is usually spotless!

Homes include appliances

The usual practice is for the home to come with all the appliances. So you should expect to see as a bare minimum the stove, fridge, washer and dryer. Most homes probably also include a dishwasher and microwave. High end homes may include a lot more. These are all listed in your contract and appear on the MLS® listing as well. As electrical goods from the UK do not generally work in Canada, this is a useful convention.

Want to buy before you come?

As you can see the Canadian system is simpler and safer than that in most of the UK. Because offers, once accepted are binding on the seller, you can leave knowing that your house purchase is guaranteed to go through – if you want it to. You need to be well prepared in advance (financing arranged) and to have a good idea of what and where you want to buy (not always the easiest thing to determine from afar) – but given that, you have a good chance of leaving Canada knowing you have a new home to come to when you return to Canada as a landed immigrant. All the remaining paperwork can be done via fax and email too.

Frank Gerryts

Frank with his wife Sue are founding partners of relocation2bc.com – As licensed realtors who have moved from the UK to BC they understand all that is involved in moving countries. Their services include real estate but as their motto goes “real help not just real estate” – they know that there’s much more involved than finding your new home. Their web site is packed full of information for people moving to British Columbia and their weekly newsletter provides up to date information and advice. Visit them at http://www.relocation2bc.com