I am in a unique position – as well as being the editor and content manager of Real Estate Weekly newspaper and REW.ca, I am also a Vancouver home buyer.
Having sold a home I owned in London, UK, following my emigration in 2010, I am in the process of buying a condo in Vancouver’s West End, where I am currently renting. I am in the very fortunate position of having a substantial down payment from the equity raised on my London apartment. And of course, because of my job, I have great contacts in real estate and associated industries to help me land my dream home. Otherwise, I am subject to the same highs, lows and vagaries of the home-buying process as all our readers.
Here I chronicle my home search and buying process and share all the lessons I learn along the way. I promise not to hold anything back, although names will be changed for anonymity!
Last time, I told you about how I unexpectedly found a great condo that fits all my needs, and had an offer accepted, subject to inspection and financing. Since then I’ve had just over a week to get those subjects removed and submit my deposit. And what a week it was!
It all started off smoothly enough. We had until Thursday to remove the subjects, so there seemed to be plenty of time.
Monday was home inspection day and I was able to take a couple of hours out of the office to attend. The inspector, let's call him Robin, was extremely thorough and on the whole seemed pleased with the unit and the building. Aside from a few interior wiring patch-up jobs that need fixing, there were no real problems identified – and my real estate agent Bob and I heaved sighs of relief. Robin later submitted his very comprehensive inspection report and I felt pretty good about everything.
Meantime, my mortgage broker Anna was working hard to find me the right mortgage – with a lender that not only offered me a great rate, but also features that will allow me to make larger payments on my mortgage if I’m able to do so. She first approached a series of smaller lenders – mortgage-only specialists, rather than the big banks – as smaller lenders tend to have much reduced pre-payment penalties.
Here’s where our problems began. These kinds of smaller lenders all require co-approval from a major mortgage insurer such as CMHC and Genworth – even if you have more than 20 per cent down payment. And these insurers all came back to Anna refusing to back the mortgage – on two grounds.
First, the contingency fund balance did not meet their minimum standards. Sure, it is a bit low for a 48-unit building, but that is because a huge amount of money has recently been spent on major projects, including a new roof, new sidings and re-piping (which I won’t have to pay for). Strata fees have now been raised to replenish the fund, so I had been comfortable with the situation.
Second, one of the insurers has blacklisted the building because of said work needing to be done – so obviously their records are out of date.
Anna called me on Wednesday to tell me that she hadn’t yet been able to get a mortgage because of the building, and warned me to reconsider buying the unit at all. This caused me a lot of concern as I had already made my peace with the low contingency fund – but was I making a mistake?
Anna said she could likely get me a mortgage with one of the big banks, which are less risk-averse, if I was sure I wanted to continue.
I decided that I was still confident in the building and urged Anna to start my mortgage application with the big banks immediately – but Anna pointed out we would need an extension, ideally until Monday, which of course would not go down well with the sellers.
Meantime, we know the listing agent was continuing to show the condo, in case my offer fell through – which meant there was a real chance of being outbid and the sellers refusing to grant an extension.
To add to my confusion and worry, my real estate agent Bob suggested I use the mortgage broker out of his office, who was telling him that there was no need to extend until Monday as she could get me a mortgage by Friday lunchtime. So Bob was advising me to switch brokers, while my current broker was doing everything she could to get me a mortgage, but it was taking too long!
Feeling pulled in every direction, after a lot of back-and-forths, I decided to stick with Anna, who was probably just being over-cautious in her time estimate. Bob and I asked for an extension with the sellers until the end of Friday, which they accepted as fortunately they had not received other offers.
Anna found me a good mortgage with Scotiabank, who sent their appraiser round on the Friday morning. The appraiser valued the unit at exactly my purchase price, and all conditions of the mortgage were removed by Friday afternoon. At the end of day on Friday, Bob and I were able to remove the subjects – by the skin of our teeth. And by Saturday afternoon, the deposit was paid. Finally, the condo is mine for sure!
A lot of lessons learned from this week. One is that real estate agents, home inspectors and mortgage brokers are all people too, with their different ways of working and dealing with people. Anna’s method seems to be to under-promise so that she can over-deliver – often a great tactic but not what I needed to hear at that particular moment! But I’m so glad I stuck with her, as I had a lot of faith in her.
Another lesson is to give yourself plenty of time to remove subjects – you never know what might happen…
Next I have to arrange my lawyer, go into Scotiabank to sign the mortgage papers, and start arranging things like insurance. Watch this space.