The Canadian Real Estate market can be a difficult one to understand.
Below are common questions I’m often asked by international buyers and locals alike.
At present there are no restrictions on international property buyers in Big White, Kelowna and surrounding areas. Transactions are in Canadian dollars. Your agent can provide you with all the information you need.
In Canada both the buyer and the seller normally use an agent to represent them and act in their client’s interests. Best practice is for each party to have their own agent acting for them, and the good news is that as a buyer your agent’s costs are zero. Any commission for both the buyer’s agent and the seller’s agent is paid for by the seller. Full disclosure is required by all agents. Your agent should explain each step of the journey as your purchase plans progress.
When selling property a selling agent can represent your interests and should include your property in the MLS system, thus ensuring maximum coverage and marketing for your property. Having your own selling agent means your agent is acting for you. Full disclosure is required by all agents and you will be asked to sign a disclosure document by your agent before they can legally act for you. Your agent will explain each step of the process as your sale progresses.
When a buyer makes an offer on a property the offer is made in the form of a contract. Normally the contract will include conditions that need to be met by either the buyer or the seller before the contact can be enforced by either party. There is normally then a 2 week period for the conditions to be waived and then a deposit is due from the buyer to be held in trust by the buyer’s agency. There is usually then another 2 weeks before completion. Your agent should have all the necessary contract details and will be with you throughout this process.
Once the buyer makes an offer and the seller accepts no other party can outbid the buyer. This holds until such time as the negotiations break down or conditions cannot be satisfied. Gazumping is not a thing in Canada. Accordingly sellers are careful about entering negotiations where unrealistic offers are made. Having an agent act for you minimises the chances of your offer being ignored.
Each time an offer or counter-offer is made by either party it is done by updating the contract. Don’t be alarmed by cross-outs and handwritten changes. Your agent will get you to initial the changes and that’s standard practice. Your agent will guide you through each of the steps in this process.
There are conditions you will want to include in your contract. Such matters as the availability of your finance, satisfactory property inspection, the financial standing of a strata corporation and any liens or covenants on the property to mention just a few that may be relevant to your particular purchase. Your agent should explain this to you.
Most properties at Big White are sold fully furnished and equipped which means what you see on inspection is what you get. Sellers will remove sentimental items, personal artwork and sports equipment. Your agent should let you know what’s included and ensure it’s written in the contract.
A Goods & Sales Tax (GST) of 5% of the agreed value is payable by the seller in some instances. New properties, properties that have been in a rental pool and properties with major renovations typically fall under the GST. GST can often be deferred if the property is to be rented once the new buyer takes possession. Your agent can provide some information in regards to GST and will know whether you need to be referred to a specialist.
Property Transfer Tax (PTT) is a tax paid on all property sales on a sliding scale dependant on the property price.
A Registration fee is payable by the owner to register their title. This is paid on settlement and will be managed by your notary or solicitor and be included in your settlement amount.
Your notary or solicitor will organise settlement which includes accounting for all monies, ensuring necessary documents are pre-signed ready for settlement, receiving a bank cheque (or bank draft) for the outstanding balance plus any extras, registering your title, receiving the title deed, forwarding of PTT and GST (if necessary) and taking you through what you are buying. Your agent should be able to assist you to find a representative that suits your individual needs.
We highly recommend you have a Canadian Bank Account. This can only be done in person. This will make easy settling on your property and making the various payments property ownership require ie: Strata Fees, Property Taxes, Utility bills, etc easy. Your agent can help you with options for opening a bank account and explain why it is so important to open one.
There are several types of title for property in Canada. These include: freehold, leasehold and Strata Freehold. Your agent will explain what type of title you are buying. It is common for a Strata Corporation to be involved in property and it is worthwhile investigating how well run the Strata is and how strong its financials are.
As a seller you pay the agent’s commission, which includes the buyer agent’s and seller agent’s commission. The rate will depend on the agent you choose.
Prepare the property’s relevant documentation and have it ready. This approach will help the buyer with waiving their condition. You should ensure you have your original purchase package available for the notary or solicitor who is acting for you to access the title deed and prove purchase price for Capital Gains Tax (CGT).
Property sales may be subject to CGT. As an international seller 25% of the gross proceeds may be withheld until you get your clearance certificate from Revenue Canada. Having an agent who is well-versed in the sale process for internationals is imperative.