Victoria Home Buying Guide

Buying a home can seem overwhelming, but it doesn’t have to be! To help you understand the home buying process in Victoria, BC, we put together a Victoria Home Buying Guide, showing the steps involved when purchasing a property.

Step 1. Determine Your Budget

Before you begin searching for a home, it’s crucial to assess your financial situation and establish a clear budget. When determining your budget, a good rule of thumb is that your total monthly housing costs, including mortgage payments, taxes, maintenance fees, insurance, and utilities, should not exceed a third of your gross monthly household income. Additionally, total monthly debt, including mortgage payments, credit card payments, and car loans, should ideally stay below 40% of your gross monthly income. By knowing how much you can afford, you can focus your search on homes that align with your budget and preferences. This preparation will give you confidence during your search and help you negotiate effectively.

Step 2. Get Mortgage Pre-Approval

Start by checking your credit as your credit report significantly influences your mortgage approval and the terms of your loan, such as interest rates. It’s wise to check your credit rating before meeting with lenders, so you can address any potential issues in advance.

Contact potential lenders such as banks, trust companies or credit unions to inquire about their mortgage options and rates. You also have the option of consulting a mortgage broker which can help you find a lender. After comparing the mortgage options, choose your lender. Discuss tailoring your mortgage payment schedule to your unique financial situation. Many homeowners want to pay off their mortgages quickly, often by opting for more frequent payment installments.

It is important to get a mortgage pre-approval in writing. In competitive markets where demand is high and the supply of homes is limited, having written pre-approval is crucial. It gives you a significant advantage when bidding on your desired property. For instance, if a seller receives two similar offers but only one includes a letter confirming financing pre-approval, that offer is typically given priority.

Step 3. Determine What You Need and Want in a Home

Begin by identifying the features most important to you. Most people consider their needs for the next five to ten years. Determine the number of bedrooms you’ll need, whether proximity to schools and playgrounds is essential, or if a spacious backyard is a priority. Think about your daily commute—would you prefer to be close to work, or are you comfortable with a longer drive? It’s important to balance your aspirations with practicality. Start by creating a list of your wants and needs to help guide your search. Being clear about these aspects will make your home search more focused and efficient.

The property features to consider when determining your needs and wants are:

What type of home you prefer (detached house, townhouse, condo, vacation home, investment property)?
What is your desired location (community, proximity to work, proximity to schools, amenities, parks)? Does it have to be on a quiet street?
How many bedrooms and bathrooms are necessary? Do you need a family room?
Do you need space for a home office? Do you require storage or a hobby space?
What kind of parking facilities do you need and for how many cars?
Is a garden or outdoor area important to you? Do you need a fenced backyard for kids?
Do you need an additional suite for extended family or as a mortgage helper?

Step 4. Choose Your Realtor®

Choose an experienced Realtor® to guide you through the buying process. The following is a list of services you can expect to receive from a Realtor® when you buy a home:

Advising on the costs associated with buying a home, such as: mortgage, insurance, legal fees.
Helping you determine how big a home you can afford.
Informing you about the local lending market and offering helpful advice.
Providing you with a customized list of homes that best meet your needs (size, style, features, location, proximity to schools, shopping, etc.).
Arranging for you to view those homes that appeal to you the most.
Advising on zoning changes, taxes, utility costs and school and recreation services that could affect your decision to buy a home in a specific area.
Pointing out the merits of one home over another.
Assisting you in negotiating the terms of your purchase, which can be a nerve-wracking process for someone who is not experienced in negotiating.
Advising on the legal process required in obtaining the title and taking possession of your home.

Step 5. Search for Homes

Your real estate agent will enter your preferences in a New Listings Notifications System. You will start receiving automatic emails, informing you immediately when a property meeting your criteria is listed on MLS. This way, you’ll never miss an opportunity to explore a potential new home. Your Realtor® will arrange property showings for the properties that you want to see. Besides the new listings notifications that you received by email from your real estate agent, you can also explore listings on realtor.ca, onepercentrealty.com, or by attending open houses. If any property catches your eye, your Realtor® will schedule a private tour.

Your real estate agent will also help you assess your options. Determining the fair market value of a home can be challenging. A home value is impacted by various factors such as location, neighbourhood, proximity to amenities, lot attributes, property size, interior condition, construction type, and the current local real estate market. Your Realtor® will help you assess whether a property is priced fairly and is a good value for your budget.

Step 6: Make an Offer on Your Dream Home

An offer typically includes essential information such as your legal name and the seller’s, the property’s legal address, the price you’re proposing, and specific inclusions like appliances, lighting fixtures, or window coverings that you expect to be part of the sale. It also outlines the deposit amount, the dates for legal and physical possession, and any conditions that must be met for the offer to become final, such as a satisfactory home inspection or financing approval. Additionally, the expiration date of the offer is included. Since your offer is a legally binding document, it should be carefully drafted by a real estate professional or lawyer.

Ensure that the time frame in your contract is reasonable, especially if a condition on your offer is to secure a mortgage. It’s advisable to get mortgage pre-approval beforehand to avoid delays. Given the current market activity and increased scrutiny from lenders, mortgage approval might take longer.

Step 7. Negotiate Your Offer

After submitting an offer, be ready to negotiate on not just the price, but all key elements of the sale, including the deposit, inclusions, possession dates, and subject removal deadlines. When you submit an offer, they are three possible responses from the seller, as per the following:

Offer Acceptance: The offer is accepted without changes, and once signed by the seller, it becomes a binding legal contract.
Counteroffer: The seller may suggest modifications to your offer, such as price or closing dates. You can accept the counteroffer, propose another counteroffer, or decline it.
Rejection: The seller may reject your offer outright, and the sale will not proceed.

Be aware that in a competitive market with limited supply of homes for sale, you might encounter the situation of multiple offers. This case will require careful strategy from you and your Realtor® to submit a competitive offer that reflects what you’re ultimately willing to pay. To strengthen your negotiating position, especially in multiple offer situations, ensure you’re pre-approved for a mortgage before starting your home search.

When both parties agree on the terms, you will have an accepted offer, so the negotiation phase ends. You will then have a designated period to fulfil the legal conditions (“subjects”) in your contract, such as obtaining a satisfactory home inspection or getting your mortgage.

Step 8: Get a Home Inspection

Your real estate agent will likely advise you to get a home inspection. This will help you identify any potential issues with the home that you may need to address. Your Realtor® can guide you on whether to conduct a professional inspection before or after making an offer. This decision will depend on factors such as the age and type of the property and the likelihood of competitive bids.

Step 9: Finalize Your Purchase

Once the home inspection is done and you secured your financing, you can remove the conditions. When the legal conditions are removed, the offer becomes a legally binding document. Your real estate agent will do the paperwork for this.

Step 10. Completion and Possession Day

The Contract of Purchase and Sale will state the completion day for the transaction. On completion day, legal ownership of the property will transfer to you in exchange for the purchase price of the home. Both you and the buyer usually engage a lawyer or notary public to prepare the documents necessary to transfer the legal ownership. Your lender sends the mortgage funds to your lawyer, who will also provide you with a Statement of Adjustments. This statement details the costs payable, including the remaining balance, legal fees, property transfer taxes, and other completion costs. Your lawyer or notary then pays the seller, finalizes the necessary documents, and registers the property in your name at the Land Titles Office. At closing, you also provide your down payment (minus the deposit) and any remaining closing costs to your lawyer. Finally, your lawyer registers the home in your name and hands you the deed to your new property.

The possession day is the day when the buyer can move in or take control of the property. On the possession day, your Realtor® will give you the keys to your new home and you can move in. The completion and possession dates are not necessarily on the same day. For more information, click here: BC Financial Services Authority (BCFSA).