By Tony Wong
A more robust than expected Greater Toronto Area spring real estate market has the Canada Mortgage and Housing Corporation significantly upping their sales and pricing forecasts.
The federal housing authority now says prices in the Toronto area market should increase by 4.3 per cent this year to a record $451,000 for the average home, according to a report released Monday.
The CMHC had earlier expected in their forecast released at the end of 2010 that prices would go in the opposite direction this year, falling by 0.4 per cent or $428,000.
Sales were also initially forecast to drop by 3.6 per cent, but now they are estimated to be 2.5 per cent below 2010.
“Interest rates have been much lower than expected, so that has given the market a boost for longer than we thought,” said Shaun Hildebrand, CMHC senior market analyst.
That trend may continue. The Bank of Canada meets May 31 to determine whether they should raise their key overnight rate, but a weaker than expected economy has most economists figuring that decision will come much later in the year than expected.
“Home prices have largely benefitted from the ultra-low interest rate environment on the back of the Bank of Canada’s highly accommodative monetary policy stance,” said TD Bank economist Shahrzad Mobasher Fard.
Another reason that average prices are elevated is a lack of listings, combined with the fact that more expensive homes are selling in relation to lower priced homes, skewing prices upward, said the CMHC.
Through the first four months of 2011, one in eight homes sold for above $750,000 and one in twelve condos sold for more than $500,000.
“A rising number of wealthy immigrants, a large share of high income earners, downsizing empty nesters and homeowners with substantial amounts of equity,” are factors in the market, said the CMHC.
When interest rates start to rise again, likely by September, this could eventually put a wet blanket on sales in the second half, especially for sensitive first time buyers, said Hildebrand.
“The elevated level of household indebtedness, which will be further exacerbated by the upcoming monetary policy tightening by the Bank of Canada – will put a damper on the growth rate in home prices as Canadian households become more cautious,” said TD Economist Mobasher Fard.
While Ontario led housing activity in 2010, they will lag the rest of Canada this year and into 2012, said CMHC Ontario regional economist Ted Tsiakopoulos.
“Consumer buying patterns, particularly in more expensive Ontario markets will increasingly shift to less expensive housing over the next few years,” said Tsiakopoulos. “After sharp increases early this year, Ontario home prices will grow closer to inflation as markets move to a more balanced state.”
While the CMHC sees prices still moving upward in the Toronto market, the TD Bank sees average prices coming down across Canada, particularly in cities that have seen major price climbs, such as Vancouver.
Helping you is what I do!
Tuesday, May 31, 2011
Friday, May 27, 2011
Buying A Home After Bankruptcy
Experienced bankruptcy lately? You may wonder if you will still will be able to get a home loan. You may also be wondering if buying home after bankruptcy is a good idea for you.
While bankruptcy can make your mortgage loan approval difficult, it is still possible to get approved. In fact there have been more and more, bad credit loans coming out all the time.
They are called the Subprime lenders; they are focusing more on helping individuals with poor credit in buying home after bankruptcy.
This is happening mostly because bankruptcies are still on the rise and there is an increasing number of people with bad credit who are looking for home financing.
Just to give you a bit of an overview here are some very good reasons to consider after bankruptcy buying home:
Increase your credit rating. When you make your payments on a regular basis, you will be able to develop your credit rating. Once your pre-payment penalty is done, you should be able to refinance your credit loan for a much lesser interest rate.
After your bankruptcy has been for ended 2-3 years, you ought to have a much easier time qualifying for a lesser interest rate mortgage loan.
You will be able to own an asset. If you are just renting a home then you are absolutely throwing your monthly payments away. Why not just buy a home, over time, its value will increase and you are working you way towards owing an asset.
Once you have bought your house, as soon as 6 months or so later, you might be able to take out an equity loan on your home and consolidate any other debt that you might have since your bankruptcy or debt that could not be included in your bankruptcy.
Taxes and student loans will not be discharged in a bankruptcy. You may also want to use the extra cash to invest in a business venture or for needed home improvement.
It is very tempting to buy an new home, new car, do some renovations, etc., after bankruptcy discharge you have no debt left. You will probably feel like you can afford a larger house payment due to the financial experience that you have.
But it is not that easy so here are some factors to consider before committing yourself to a new house payment.
The Pre-payment penalty. This penalty is usually about 6 months worth of house payments. And usually lasts from 2-3years. Once you sign those mortgage papers you absolutely have to make those payments. If you don't have the amount of the pre-payment penalty in savings, you are locked into making the payments or losing the house.
The Two Year Mark. Keep in mind that after 2-3 years from the date of the bankruptcy discharge, mortgage loans will be much easier to get. With a small down payment, you might even be able to get a mortgage loan without a pre-payment penalty.
So, if you are within 6 months or so from the 2 year mark. It would be smart to wait it out and have more mortgage loan options.
Borrowing Too Much. This is the most common mistake that we usually get into. If you do decide to buy a house, buy one that you know you will be able to afford. Don't max yourself out on credit, living right up to the edge of your income.
If your income suddenly drops, you'll want to make sure that you can still afford your house payment. Be conservative with how much home you need to buy.
Most of us always think that bankruptcy is the end of our credit life. But don not despair because I know some people that have been in to bankruptcy but has been able to get up again and rebuild there credit quickly most of them has even been able to buy a new house.
Bankruptcy will show up on your credit report for 10 years. That means that every mortgage lender will certainly see that fact when evaluating your mortgage application.
Although it may be difficult to find a bank to give you a mortgage it's certainly not impossible. Banks want to make money and you may find one that's willing to take the risk.
While bankruptcy can make your mortgage loan approval difficult, it is still possible to get approved. In fact there have been more and more, bad credit loans coming out all the time.
They are called the Subprime lenders; they are focusing more on helping individuals with poor credit in buying home after bankruptcy.
This is happening mostly because bankruptcies are still on the rise and there is an increasing number of people with bad credit who are looking for home financing.
Just to give you a bit of an overview here are some very good reasons to consider after bankruptcy buying home:
Increase your credit rating. When you make your payments on a regular basis, you will be able to develop your credit rating. Once your pre-payment penalty is done, you should be able to refinance your credit loan for a much lesser interest rate.
After your bankruptcy has been for ended 2-3 years, you ought to have a much easier time qualifying for a lesser interest rate mortgage loan.
You will be able to own an asset. If you are just renting a home then you are absolutely throwing your monthly payments away. Why not just buy a home, over time, its value will increase and you are working you way towards owing an asset.
Once you have bought your house, as soon as 6 months or so later, you might be able to take out an equity loan on your home and consolidate any other debt that you might have since your bankruptcy or debt that could not be included in your bankruptcy.
Taxes and student loans will not be discharged in a bankruptcy. You may also want to use the extra cash to invest in a business venture or for needed home improvement.
It is very tempting to buy an new home, new car, do some renovations, etc., after bankruptcy discharge you have no debt left. You will probably feel like you can afford a larger house payment due to the financial experience that you have.
But it is not that easy so here are some factors to consider before committing yourself to a new house payment.
The Pre-payment penalty. This penalty is usually about 6 months worth of house payments. And usually lasts from 2-3years. Once you sign those mortgage papers you absolutely have to make those payments. If you don't have the amount of the pre-payment penalty in savings, you are locked into making the payments or losing the house.
The Two Year Mark. Keep in mind that after 2-3 years from the date of the bankruptcy discharge, mortgage loans will be much easier to get. With a small down payment, you might even be able to get a mortgage loan without a pre-payment penalty.
So, if you are within 6 months or so from the 2 year mark. It would be smart to wait it out and have more mortgage loan options.
Borrowing Too Much. This is the most common mistake that we usually get into. If you do decide to buy a house, buy one that you know you will be able to afford. Don't max yourself out on credit, living right up to the edge of your income.
If your income suddenly drops, you'll want to make sure that you can still afford your house payment. Be conservative with how much home you need to buy.
Most of us always think that bankruptcy is the end of our credit life. But don not despair because I know some people that have been in to bankruptcy but has been able to get up again and rebuild there credit quickly most of them has even been able to buy a new house.
Bankruptcy will show up on your credit report for 10 years. That means that every mortgage lender will certainly see that fact when evaluating your mortgage application.
Although it may be difficult to find a bank to give you a mortgage it's certainly not impossible. Banks want to make money and you may find one that's willing to take the risk.
Friday, May 20, 2011
Home prices continue climb
Garry Marr Financial Post May 17, 2011
Canadian home prices continued their upward march in April, driven by strong investor demand in Vancouver, as cracks in the Toronto condominium market may be starting to appear.
The Canadian Real Estate Association said yesterday the average price of a home sold in April in Canada was $372,544, up 8% from a year ago. It was the third straight month that the average price rose 8% on a yea-over-year basis but the Ottawa-based group cautioned that the figure was skewed due to “surging multimillion-dollar property sales in selected areas of Greater Vancouver.”
The group also shrugged off slow April sales, which dipped 4.4% from March on a seasonally adjusted annual basis and 14.7% on an actual basis from a year earlier. The slow sales are said to have been driven by new mortgage rules that came into effect April 19 and made borrowing tougher, leading people to rush into purchases in March.
The same sort of impact was felt in April 2010. Purchases moved forward to avoid mortgage rule changes, higher interest rates were feared and the harmonized sales tax loomed in two provinces.
“This makes it difficult to compare,” said Gregory Klump, chief economist of CREA. “Changes to mortgage regulations that took effect in April 2011 likely sidelined a number of first-time homebuyers. By contrast, higher-end homes sales in Greater Vancouver and Toronto had their best April ever.”
Worries about the sustainability of the housing market could be stoked by a report from Urbanation Inc., which monitors the Toronto condominium market. The group says more than 50% of condominiums purchased in the last year were by buyers who do not intend to occupy their units and plan to rent in many instances.
Condominium rents in Toronto in the first quarter of 2011 were $2.11 per square foot compared to $2.09 a year earlier, a 0.8% increase. Condominiums being registered now and ready to be occupied are priced for sale at $450 per square foot range while newer units are going for $550 per square foot.
“What happens when these newer units hit the market?” said Ben Myers, executive vice-president of Urbanation. “At $550 per square foot a 750 square feet [condominium] is $413,000. You put 25% down and you have a mortgage of $310,000. Take a five-year variable rate mortgage at 3% with 25-year amortization and you get $1,475 a month mortgage. Your condo fee is $345, property tax is another $345 and you are up to $2,200 in carrying costs. That’s a huge [operating] loss [given the average rental rate would bring in just under $1,600/month]. People are buying these for capital appreciation.”
Don Lawby, chief executive of Century 21 Canada, says the housing market has been affected by foreign investors — notably Chinese — who have reacted to tougher tax rules in their home country by investing abroad.
“They are buying investment properties and not just in Vancouver but to some degree in Ontario and Calgary,” said Mr. Lawby, adding many of those investors are not concerned with carrying costs. “They are not afraid to offer above price and they are not afraid to get into a bidding war.”
Nevertheless, Mr. Lawby says while these investors are skewing national averages, he maintains the overall numbers are small and the impact on the larger market minimal.
Toronto-Dominion economic analyst Leslie Preston said while April numbers present a market with falling sales and rising prices, she agreed market conditions were exaggerated by some one-time issues.
“I think the effect in April was a little larger and I would expect to see a bit of bounceback in May because of the decline,” says Ms. Preston. “But we have been calling for awhile now for a mild softening in Canadian housing markets overall this year, particularly as interest rates rise.”
Canadian home prices continued their upward march in April, driven by strong investor demand in Vancouver, as cracks in the Toronto condominium market may be starting to appear.
The Canadian Real Estate Association said yesterday the average price of a home sold in April in Canada was $372,544, up 8% from a year ago. It was the third straight month that the average price rose 8% on a yea-over-year basis but the Ottawa-based group cautioned that the figure was skewed due to “surging multimillion-dollar property sales in selected areas of Greater Vancouver.”
The group also shrugged off slow April sales, which dipped 4.4% from March on a seasonally adjusted annual basis and 14.7% on an actual basis from a year earlier. The slow sales are said to have been driven by new mortgage rules that came into effect April 19 and made borrowing tougher, leading people to rush into purchases in March.
The same sort of impact was felt in April 2010. Purchases moved forward to avoid mortgage rule changes, higher interest rates were feared and the harmonized sales tax loomed in two provinces.
“This makes it difficult to compare,” said Gregory Klump, chief economist of CREA. “Changes to mortgage regulations that took effect in April 2011 likely sidelined a number of first-time homebuyers. By contrast, higher-end homes sales in Greater Vancouver and Toronto had their best April ever.”
Worries about the sustainability of the housing market could be stoked by a report from Urbanation Inc., which monitors the Toronto condominium market. The group says more than 50% of condominiums purchased in the last year were by buyers who do not intend to occupy their units and plan to rent in many instances.
Condominium rents in Toronto in the first quarter of 2011 were $2.11 per square foot compared to $2.09 a year earlier, a 0.8% increase. Condominiums being registered now and ready to be occupied are priced for sale at $450 per square foot range while newer units are going for $550 per square foot.
“What happens when these newer units hit the market?” said Ben Myers, executive vice-president of Urbanation. “At $550 per square foot a 750 square feet [condominium] is $413,000. You put 25% down and you have a mortgage of $310,000. Take a five-year variable rate mortgage at 3% with 25-year amortization and you get $1,475 a month mortgage. Your condo fee is $345, property tax is another $345 and you are up to $2,200 in carrying costs. That’s a huge [operating] loss [given the average rental rate would bring in just under $1,600/month]. People are buying these for capital appreciation.”
Don Lawby, chief executive of Century 21 Canada, says the housing market has been affected by foreign investors — notably Chinese — who have reacted to tougher tax rules in their home country by investing abroad.
“They are buying investment properties and not just in Vancouver but to some degree in Ontario and Calgary,” said Mr. Lawby, adding many of those investors are not concerned with carrying costs. “They are not afraid to offer above price and they are not afraid to get into a bidding war.”
Nevertheless, Mr. Lawby says while these investors are skewing national averages, he maintains the overall numbers are small and the impact on the larger market minimal.
Toronto-Dominion economic analyst Leslie Preston said while April numbers present a market with falling sales and rising prices, she agreed market conditions were exaggerated by some one-time issues.
“I think the effect in April was a little larger and I would expect to see a bit of bounceback in May because of the decline,” says Ms. Preston. “But we have been calling for awhile now for a mild softening in Canadian housing markets overall this year, particularly as interest rates rise.”
Tuesday, May 17, 2011
A Second Home: Take it or Leave it?
For many, wanderlust is just a part of life. You buy a beautiful home somewhere, settle down, have a family, but there is always a part of you that’s itching to get away. Vacations are part of that wanderlust; the chance to get away someplace beautiful. And then you see it. The local newspaper at your vacation destination, and lo and behold, there is a real estate section right there. Dare you even look? You can’t afford it, can you? Two homes? Is dual home ownership for you?
A second home can work for you, but you have to go into the process knowing what to expect. If you’re looking to get rich quick, don’t count on it. According to recent data, the price of real estate in areas that are deemed “Vacation Markets” has risen twice as fast as real estate in other areas. So, not only is a second home in your destination of choice going to cost you a pretty penny, it’s no longer a well-kept secret anymore and the chances of you flipping it to make a quick buck are slim.
The best piece of advice a possible vacation home buyer can heed right now is to buy for love not for money. Recent sharp downturns in vacation markets like Naples, Florida, Lake Tahoe, Nevada and Cape Cod, Massachusetts, have shown that trying to turn a profit in a vacation market is close to impossible. But there is a bright side to all of this. With the housing bubble going poof all across the country, those that are looking to sell will be doing so at lower prices. Now could be a great time to buy a place that you’re planning on keeping for a long while.
But how do you know if you have your head on straight about the whole thing? Well, take some time and evaluate the pluses and minuses of buying another home. Once you’ve decided on an area, spend some time there to make sure you like it. If it’s going to be a vacation home, you’ll want the scenery to be relaxing (if that’s what you’re looking for) or exciting (if that’s what you go on vacation to experience). A final check should be the bottom-line cost. If the price of the two houses makes up more than one third of your total income, you’ve spent too much.
Buying property is a huge investment for everyone, even the rich. Take the time to properly evaluate the pros and cons before you decide to own a second home or you could find yourself on a permanent vacation.
A second home can work for you, but you have to go into the process knowing what to expect. If you’re looking to get rich quick, don’t count on it. According to recent data, the price of real estate in areas that are deemed “Vacation Markets” has risen twice as fast as real estate in other areas. So, not only is a second home in your destination of choice going to cost you a pretty penny, it’s no longer a well-kept secret anymore and the chances of you flipping it to make a quick buck are slim.
The best piece of advice a possible vacation home buyer can heed right now is to buy for love not for money. Recent sharp downturns in vacation markets like Naples, Florida, Lake Tahoe, Nevada and Cape Cod, Massachusetts, have shown that trying to turn a profit in a vacation market is close to impossible. But there is a bright side to all of this. With the housing bubble going poof all across the country, those that are looking to sell will be doing so at lower prices. Now could be a great time to buy a place that you’re planning on keeping for a long while.
But how do you know if you have your head on straight about the whole thing? Well, take some time and evaluate the pluses and minuses of buying another home. Once you’ve decided on an area, spend some time there to make sure you like it. If it’s going to be a vacation home, you’ll want the scenery to be relaxing (if that’s what you’re looking for) or exciting (if that’s what you go on vacation to experience). A final check should be the bottom-line cost. If the price of the two houses makes up more than one third of your total income, you’ve spent too much.
Buying property is a huge investment for everyone, even the rich. Take the time to properly evaluate the pros and cons before you decide to own a second home or you could find yourself on a permanent vacation.
Monday, May 16, 2011
Why I wouldn’t sell my home myself
By Mark Weisleder - Moneyville
Since writing about whether you could create a bidding war without an agent, I have received numerous emails from sellers, real estate agents and companies that provide “for sale by owner” services on the pros and cons of selling by yourself.
Allison Philpot sold her home in Ottawa using a For Sale by Owner marketing service. She listed her home for $419,000, and was able to create a bidding war after her first open house. She received a top bid of $429,000, which she accepted.
The buyers seemed like nice people, as they lived in the community. Unfortunately, they later terminated the deal, relying on a condition in the offer, although Allison suspected that they just found a house that they liked better. The second bidder was no longer interested.
She then dealt with another buyer, who was represented by a buyer agent. Allison later admitted that she was out-matched in the negotiations, and eventually sold her home for $405,000. In addition, she agreed to pay the buyer agent a commission of approximately 2 per cent or $8,000. So her net selling price was $397,000.
After the fact, she reasoned that had she used an agent from the start, she would have probably sold for about $430,000, and that even if she paid $20,000 in commission, she would have netted $410,000, or $13,000 more, without any of the aggravation.
Still, Allison states that had she not gone through the experience herself, she would probably have felt that she had overpaid the agent.
The buyer who walked away from the first deal later told Allison that he would never try and buy a property again without an agent, as he found the process way too stressful himself.
I received many emails from real estate agents talking about their additional network of potential buyers that they bring to every sale, as well as their own experience in qualifying potential buyers in advance and protecting sellers from unusual clauses that are sometimes inserted into agreements. Many agents in Vancouver are now setting up marketing events overseas, as more and more foreigners are looking at Canadian real estate as a safe haven to invest. More buyers mean better prices for sellers.
I spoke with Patrick Sullivan, a vice-president for Com Free, a company that provides services to assist home owners selling by themselves. These tools include a guide to assist the seller in determining the sale price, staging the home for sale, conducting open houses and preparing for negotiations. He suggested that there is no real harm in a seller trying to save money selling by themselves. They can sell with an agent later if they are not successful. He also claims that Com Free listings continue to grow and that they have many success stories. However, because they have no contract with the seller, the seller is not obligated to tell them how long it took to sell and what the property sold for, so it is difficult for Com Free to state how their seller compares with sellers who use an agent.
If you plan on doing this by yourself, at a minimum either have your lawyer look at the contract before you sign it, or make the deal conditional on your lawyer’s review and approval of the agreement. In my opinion, no marketing service can properly prepare buyers or sellers to deal with the stress and emotion that will invariably be involved with any real estate negotiation. It is not easy. Every buyer, seller and property are unique and will require a successful strategy to win.
Whatever method you choose to buy or sell your next home, be prepared and fully informed before you start.
Mark Weisleder is a lawyer, author and speaker to the real estate industry.
Since writing about whether you could create a bidding war without an agent, I have received numerous emails from sellers, real estate agents and companies that provide “for sale by owner” services on the pros and cons of selling by yourself.
Allison Philpot sold her home in Ottawa using a For Sale by Owner marketing service. She listed her home for $419,000, and was able to create a bidding war after her first open house. She received a top bid of $429,000, which she accepted.
The buyers seemed like nice people, as they lived in the community. Unfortunately, they later terminated the deal, relying on a condition in the offer, although Allison suspected that they just found a house that they liked better. The second bidder was no longer interested.
She then dealt with another buyer, who was represented by a buyer agent. Allison later admitted that she was out-matched in the negotiations, and eventually sold her home for $405,000. In addition, she agreed to pay the buyer agent a commission of approximately 2 per cent or $8,000. So her net selling price was $397,000.
After the fact, she reasoned that had she used an agent from the start, she would have probably sold for about $430,000, and that even if she paid $20,000 in commission, she would have netted $410,000, or $13,000 more, without any of the aggravation.
Still, Allison states that had she not gone through the experience herself, she would probably have felt that she had overpaid the agent.
The buyer who walked away from the first deal later told Allison that he would never try and buy a property again without an agent, as he found the process way too stressful himself.
I received many emails from real estate agents talking about their additional network of potential buyers that they bring to every sale, as well as their own experience in qualifying potential buyers in advance and protecting sellers from unusual clauses that are sometimes inserted into agreements. Many agents in Vancouver are now setting up marketing events overseas, as more and more foreigners are looking at Canadian real estate as a safe haven to invest. More buyers mean better prices for sellers.
I spoke with Patrick Sullivan, a vice-president for Com Free, a company that provides services to assist home owners selling by themselves. These tools include a guide to assist the seller in determining the sale price, staging the home for sale, conducting open houses and preparing for negotiations. He suggested that there is no real harm in a seller trying to save money selling by themselves. They can sell with an agent later if they are not successful. He also claims that Com Free listings continue to grow and that they have many success stories. However, because they have no contract with the seller, the seller is not obligated to tell them how long it took to sell and what the property sold for, so it is difficult for Com Free to state how their seller compares with sellers who use an agent.
If you plan on doing this by yourself, at a minimum either have your lawyer look at the contract before you sign it, or make the deal conditional on your lawyer’s review and approval of the agreement. In my opinion, no marketing service can properly prepare buyers or sellers to deal with the stress and emotion that will invariably be involved with any real estate negotiation. It is not easy. Every buyer, seller and property are unique and will require a successful strategy to win.
Whatever method you choose to buy or sell your next home, be prepared and fully informed before you start.
Mark Weisleder is a lawyer, author and speaker to the real estate industry.
Monday, May 9, 2011
Home buyer beware when going it alone
By Mark Weisleder
Many people who go it alone when buying a home turn up at open houses or contact the seller’s agent directly, thinking they can save half of the commission and get a better deal.
I’m not so sure it’s that easy. These buyers do not understand that the seller’s agent is working solely in the best interests of the seller, not them.
If the house you like is selling for $400,000, you may assume that the commission payable is 4 to 5 per cent, or between $16,000 and $20,000. But all commissions are negotiable so this may not be true.
The buyer may get the salesperson to bring the commission down to 2 per cent, thinking that they can save between $8,000 and $12,000. What these buyers fail to understand is that rather than focus on the commission savings, they should focus on getting the house for the right price, not overpaying or finding unwelcome surprises after closing.
These things can include defects in the home, neighbours from hell, all night parties from student residences, a new development that may affect privacy or problems with water in the basement or roof leaks.
Buyers think they know how to negotiate, but most don’t. They say things to the salesperson to try and establish a rapport, thinking they can get inside information on the sellers. This can include comments on what they like about the house compared to others they have seen, whether they have already sold their own home or what they can afford. What these buyers fail to realize is that the seller agent is obliged to pass all this along to the seller. The buyer has thus weakened their bargaining position.
Professional buyer representatives usually insist that they show buyers a home without the seller or the seller agent being present, so that buyers are free to make any comments about the property. If the seller or seller agent there, the buyers are told not to say anything in their presence.
A buyer agent may check the title registry to determine whether there are any mortgages on title and will thus see whether the seller is in financial difficulty. This is information a buyer needs in order to negotiate.
In addition, buyer agents can act as an objective third party to remind you exactly how much you can afford to spend, so that you do not get carried away in any bidding war. This is the biggest mistake buyers make, which is buying with their heart instead of their head.
Buyer agents will have up to date information about government programs, whether it is using your RRSP or qualifying for a land transfer tax credit that can assist the buyer.
However, before deciding to work with a buyer agent, you need to interview them carefully. Remember, you are trusting this person with what may be the largest investment decision of your life.
Before hiring a buyer agent:
1. Get references from people you trust and then interview at least three agents.
2. Ask about the professionals they work with, including home inspectors, insurance agents, mortgage brokers and planners.
3. Find out whether they have local knowledge of the area you are interested in, which can include neighbourhood conditions.
4. Check out their websites and look at all their twitter and Facebook pages.
5. Limit the buyer agreement to 30 days and only for the local area you are interested in, so that if you are not satisfied for any reason, you do not have to wait long to exit this agreement.
By being prepared before you buy a home, you will find the right home for the right price. Shouldn’t that be the goal of every buyer?
Many people who go it alone when buying a home turn up at open houses or contact the seller’s agent directly, thinking they can save half of the commission and get a better deal.
I’m not so sure it’s that easy. These buyers do not understand that the seller’s agent is working solely in the best interests of the seller, not them.
If the house you like is selling for $400,000, you may assume that the commission payable is 4 to 5 per cent, or between $16,000 and $20,000. But all commissions are negotiable so this may not be true.
The buyer may get the salesperson to bring the commission down to 2 per cent, thinking that they can save between $8,000 and $12,000. What these buyers fail to understand is that rather than focus on the commission savings, they should focus on getting the house for the right price, not overpaying or finding unwelcome surprises after closing.
These things can include defects in the home, neighbours from hell, all night parties from student residences, a new development that may affect privacy or problems with water in the basement or roof leaks.
Buyers think they know how to negotiate, but most don’t. They say things to the salesperson to try and establish a rapport, thinking they can get inside information on the sellers. This can include comments on what they like about the house compared to others they have seen, whether they have already sold their own home or what they can afford. What these buyers fail to realize is that the seller agent is obliged to pass all this along to the seller. The buyer has thus weakened their bargaining position.
Professional buyer representatives usually insist that they show buyers a home without the seller or the seller agent being present, so that buyers are free to make any comments about the property. If the seller or seller agent there, the buyers are told not to say anything in their presence.
A buyer agent may check the title registry to determine whether there are any mortgages on title and will thus see whether the seller is in financial difficulty. This is information a buyer needs in order to negotiate.
In addition, buyer agents can act as an objective third party to remind you exactly how much you can afford to spend, so that you do not get carried away in any bidding war. This is the biggest mistake buyers make, which is buying with their heart instead of their head.
Buyer agents will have up to date information about government programs, whether it is using your RRSP or qualifying for a land transfer tax credit that can assist the buyer.
However, before deciding to work with a buyer agent, you need to interview them carefully. Remember, you are trusting this person with what may be the largest investment decision of your life.
Before hiring a buyer agent:
1. Get references from people you trust and then interview at least three agents.
2. Ask about the professionals they work with, including home inspectors, insurance agents, mortgage brokers and planners.
3. Find out whether they have local knowledge of the area you are interested in, which can include neighbourhood conditions.
4. Check out their websites and look at all their twitter and Facebook pages.
5. Limit the buyer agreement to 30 days and only for the local area you are interested in, so that if you are not satisfied for any reason, you do not have to wait long to exit this agreement.
By being prepared before you buy a home, you will find the right home for the right price. Shouldn’t that be the goal of every buyer?
Tuesday, May 3, 2011
Rate of Home Price Appreciation Stabilizes after Post-Recession Recovery
Home values continue to rise, according to Royal LePage
TORONTO, April 12, 2011 – The Royal LePage House Price Survey released today showed the average price of a home in Canada increased between 3.5 and 4.3 per cent in the first quarter of 2011, compared to the previous year, as markets continued their post-recession recovery. While the rate of year-over-year price appreciation slowed slightly in the first quarter, home values continued the upward climb, which first began late in the second quarter of 2009.
Low interest rates and a recovering economy continued to fuel activity in Canada’s housing markets over the past year, which has led to country-wide increases in average home prices. In the first quarter of 2011, the national average price of a detached bungalow rose 4.3 per cent year-over-year to $341,355, while standard two-storey homes rose 3.5 per cent to $379,388 and standard condominiums rose 4 per cent to $237,919.
“The rate at which Canadian homes are appreciating may well have peaked for the next year or so,” said Phil Soper, president and chief executive of Royal LePage Real Estate Services. “We expect house prices will continue to creep up, but most of the excess demand created by the initial drop in interest rates has been satisfied, and affordability continues to erode slowly, allowing the listings supply to catch up. In most markets, lower single digit percentage increases are more likely for the balance of the year.”
In the first quarter of 2011, certain markets such as Vancouver, Montreal and Halifax continued to experience significant price gains compared to the same period a year earlier, largely due to favourable regional demographic shifts and healthy local economies.
“Canada’s real estate market has maintained momentum coming out of 2010, indicating that the post-recession recovery is continuing,” Soper added. “While low interest rates continue to drive demand, the tepid pace at which employment levels are improving is tempering the rate of home price appreciation in many Canadian cities. The exception to this trend can be seen in markets like Vancouver, where foreign buyers, particularly from China, are driving demand in select mid-to-high priced markets, and driving up the regional average reported home prices at a surprising pace. In Montreal and Halifax, demand from first-time buyers and purchasers of luxury homes are creating significant year-over-year gains in home values.”
Among the best performing markets in the first quarter of 2011, Vancouver’s standard two-storey homes increased 9.7 per cent year-over-year to $1,083,750. Detached bungalows in Montreal rose 7.6 per cent year-over-year to $276,343 and standard condominiums in Halifax rose 13.1% year-over-year to $191,500.
Meanwhile, year-over-year price appreciation softened in St. John’s where the market is cooling down after an extended period of double digit price increases. In Saint John, detached bungalows dropped 6.3 per cent year-over-year to $178,000. While the medium-term prospects for the housing market in Alberta’s major cities remains very positive, the city of Calgary in particular is still adjusting to the rapid pace at which home prices appreciated in the middle of the past decade. The average price of a standard two-storey Calgary home was down 2.1 per cent year-over-year to $423,122.
REGIONAL MARKET SUMMARIES
Halifax witnessed the largest year-over-year price gains in Atlantic Canada, and some of the highest gains nationally, including the largest increase in standard condominiums rising 13.1 per cent.
Montreal continued to post strong gains as standard condominiums posted a year-over-year increase of 8.7 per cent, while detached bungalows rose 7.6 per cent.
Ottawa’s first-time buyers continue to drive the housing market as the region saw year-over-year price appreciation ranging between 5.2 to 5.9 per cent across all housing types surveyed this quarter.
Toronto’s detached bungalows and standard condominiums made healthy gains increasing 4.5 per cent and 3.7 per cent respectively. Demand for detached bungalows was driven by first-time buyers concerned with potentially rising interest rates and developers who are rebuilding or renovating the homes into larger units.
Winnipeg’s standard two-storey homes posted strong year-over-year gains rising 7.1 per cent to an average price of $297,125, second only to Vancouver in growth and tied with Halifax for this housing type.
While Saskatoon’s housing market posted modest changes, the three housing types surveyed in Regina made healthy year-over-year gains ranging from 3.2 per cent to 5.4 per cent.
Edmonton’s housing market stabilized with year-over-year price changes ranging from minus 1.8 per cent to increases of 2.3 per cent. Calgary’s house prices saw modest year-over-year depreciation across all three housing types surveyed as a result of an increase in inventory. This coupled with low interest rates has presented attractive opportunities for potential buyers.
Driven by low interest rates, single family homes in Vancouver again dominated house price gains as two-storey houses rose year-over-year by 9.7 per cent. Although inventory is down slightly from last year, listings are keeping pace with demand.
TORONTO, April 12, 2011 – The Royal LePage House Price Survey released today showed the average price of a home in Canada increased between 3.5 and 4.3 per cent in the first quarter of 2011, compared to the previous year, as markets continued their post-recession recovery. While the rate of year-over-year price appreciation slowed slightly in the first quarter, home values continued the upward climb, which first began late in the second quarter of 2009.
Low interest rates and a recovering economy continued to fuel activity in Canada’s housing markets over the past year, which has led to country-wide increases in average home prices. In the first quarter of 2011, the national average price of a detached bungalow rose 4.3 per cent year-over-year to $341,355, while standard two-storey homes rose 3.5 per cent to $379,388 and standard condominiums rose 4 per cent to $237,919.
“The rate at which Canadian homes are appreciating may well have peaked for the next year or so,” said Phil Soper, president and chief executive of Royal LePage Real Estate Services. “We expect house prices will continue to creep up, but most of the excess demand created by the initial drop in interest rates has been satisfied, and affordability continues to erode slowly, allowing the listings supply to catch up. In most markets, lower single digit percentage increases are more likely for the balance of the year.”
In the first quarter of 2011, certain markets such as Vancouver, Montreal and Halifax continued to experience significant price gains compared to the same period a year earlier, largely due to favourable regional demographic shifts and healthy local economies.
“Canada’s real estate market has maintained momentum coming out of 2010, indicating that the post-recession recovery is continuing,” Soper added. “While low interest rates continue to drive demand, the tepid pace at which employment levels are improving is tempering the rate of home price appreciation in many Canadian cities. The exception to this trend can be seen in markets like Vancouver, where foreign buyers, particularly from China, are driving demand in select mid-to-high priced markets, and driving up the regional average reported home prices at a surprising pace. In Montreal and Halifax, demand from first-time buyers and purchasers of luxury homes are creating significant year-over-year gains in home values.”
Among the best performing markets in the first quarter of 2011, Vancouver’s standard two-storey homes increased 9.7 per cent year-over-year to $1,083,750. Detached bungalows in Montreal rose 7.6 per cent year-over-year to $276,343 and standard condominiums in Halifax rose 13.1% year-over-year to $191,500.
Meanwhile, year-over-year price appreciation softened in St. John’s where the market is cooling down after an extended period of double digit price increases. In Saint John, detached bungalows dropped 6.3 per cent year-over-year to $178,000. While the medium-term prospects for the housing market in Alberta’s major cities remains very positive, the city of Calgary in particular is still adjusting to the rapid pace at which home prices appreciated in the middle of the past decade. The average price of a standard two-storey Calgary home was down 2.1 per cent year-over-year to $423,122.
REGIONAL MARKET SUMMARIES
Halifax witnessed the largest year-over-year price gains in Atlantic Canada, and some of the highest gains nationally, including the largest increase in standard condominiums rising 13.1 per cent.
Montreal continued to post strong gains as standard condominiums posted a year-over-year increase of 8.7 per cent, while detached bungalows rose 7.6 per cent.
Ottawa’s first-time buyers continue to drive the housing market as the region saw year-over-year price appreciation ranging between 5.2 to 5.9 per cent across all housing types surveyed this quarter.
Toronto’s detached bungalows and standard condominiums made healthy gains increasing 4.5 per cent and 3.7 per cent respectively. Demand for detached bungalows was driven by first-time buyers concerned with potentially rising interest rates and developers who are rebuilding or renovating the homes into larger units.
Winnipeg’s standard two-storey homes posted strong year-over-year gains rising 7.1 per cent to an average price of $297,125, second only to Vancouver in growth and tied with Halifax for this housing type.
While Saskatoon’s housing market posted modest changes, the three housing types surveyed in Regina made healthy year-over-year gains ranging from 3.2 per cent to 5.4 per cent.
Edmonton’s housing market stabilized with year-over-year price changes ranging from minus 1.8 per cent to increases of 2.3 per cent. Calgary’s house prices saw modest year-over-year depreciation across all three housing types surveyed as a result of an increase in inventory. This coupled with low interest rates has presented attractive opportunities for potential buyers.
Driven by low interest rates, single family homes in Vancouver again dominated house price gains as two-storey houses rose year-over-year by 9.7 per cent. Although inventory is down slightly from last year, listings are keeping pace with demand.
Monday, May 2, 2011
Selling house not just about highest price
Garry Marr, Financial Post
The number one question you need to ask yourself if you're selling your home this spring is: How do I net the most money?
It's not how do I get the most money for my home. It's how do I keep the most money in my pocket after paying all my expenses, including commissions and fees.
Discounters are popping up everywhere now that they can access the Multiple Listing Service. Then there's still the full-service broker who promises a better price and ultimately more money in your pocket.
A settlement last year between the Competition Bureau and the Canadian Real Estate Association, which represents about 100 boards across the country and almost 100,000 agents, allows consumers to have "a mere listing" on the MLS. Being on the MLS system is key since about 90% of transactions are handled by organized real estate.
A poll commissioned by LawPro and TitlePLUS, which sells title insurance, was released Tuesday and it shows confusion still exists in the marketplace.
The poll found even though 72% of Canadians were not aware of the changes made to the MLS, 45% of Canadians would still consider selling privately or using a real estate lawyer to help them sell.
"What these findings show us is that there is an appetite among Canadians to conduct the sale of their home privately," says Ray Leclair, vice-president of TitlePLUS.
So you can be a do-it-yourself real estate agent and use the MLS. But do you want to?
Market conditions have to factor into your decision. There hasn't been a U.S.-style collapse here, but it's no longer a seller's market, meaning you don't just stick a sign in the ground and wait for the pigeons to flock. You're going to have to work.
"For the discount that you're getting, am I willing to take the gamble that my house is being shown at its optimum," says Gary Siegle, Calgary-based regional manager for mortgage broker Invis Inc., about private selling.
He says the industry has been sticking to its guns when it comes to commission rates -generally around 5% of the purchase price -so if you're using an agent, the negotiation might be on the service being provided for that commission.
"The professional service real estate agent is not going to give [commission up] just because someone has access to the MLS. They have to articulate the value more to justify their fee," Mr. Siegle says.
Phil Soper, chief executive of full-service firm Royal LePage Real Estate Services, says the industry has not moved much off commissions since the agreement with the government.
"I think the impact in the market in the first year postchanges has been in the low end of the market," says Mr. Soper, who says that narrow segment of the market is less than 15% of the overall sales volume.
He says for sale by owner or FSBO companies are now merging their operations with independent agents so customers also get an MLS listing as part of their service. "I don't think they are actually selling any more houses. The listings are just showing up on more websites than they used to," Mr. Soper says.
One of those FSBO companies is PropertyGuys.com. Walter Melanson, managing director of the Moncton-based company, says he currently has about 9,000 active listings across the country.
"I watch the comments [of the major real estate companies] and they say nothing has changed and nothing will ever change and that's the way they built their mousetrap," Mr. Melanson says.
What he and others are doing is creating a service that allows you to list with his company for as little as $399. When you sign up, his website hooks you up with a registered real estate agent who doesn't do much but put your home on the MLS, for an extra $299.
The company's Ontario representative, a licensed real estate agent, has close to 1,000 listings. She's based in Hamilton but accepts listings from as far away as Elliot Lake, so she's not doing too many showings.
"We want someone to compare how much it costs to sell your home using PropertyGuys to, say, Re/Max. You do that math and you'll see quite the difference," he says.
It's no small amount. When you consider the average home is now selling for close to $375,000, at 5%, that's $18,750 in commission.
However, consider if you do choose do it yourself on the MLS, you are forcing buyers to jump through one more hoop. In the case of Property Guys, the buyer has to click on the MLS broker's listing office and then punch in the listing number before he's directed to the seller.
"The bounce rate is amazing," Mr. Melanson says. "Who wouldn't look for their dream home and make that extra click? Our data says people will make that click. We've had to deliver magic within a narrow set of rules."
But you have to wonder whether that extra work will affect your sale price at the end of the day. If you save $20,000 in commission, what's the point if your house sells for 5% less?
Market conditions ultimately play into any decision. It comes down to whether you think your agent can earn that commission by getting you a better price or meeting a goal of selling your home in the time frame you want.
The number one question you need to ask yourself if you're selling your home this spring is: How do I net the most money?
It's not how do I get the most money for my home. It's how do I keep the most money in my pocket after paying all my expenses, including commissions and fees.
Discounters are popping up everywhere now that they can access the Multiple Listing Service. Then there's still the full-service broker who promises a better price and ultimately more money in your pocket.
A settlement last year between the Competition Bureau and the Canadian Real Estate Association, which represents about 100 boards across the country and almost 100,000 agents, allows consumers to have "a mere listing" on the MLS. Being on the MLS system is key since about 90% of transactions are handled by organized real estate.
A poll commissioned by LawPro and TitlePLUS, which sells title insurance, was released Tuesday and it shows confusion still exists in the marketplace.
The poll found even though 72% of Canadians were not aware of the changes made to the MLS, 45% of Canadians would still consider selling privately or using a real estate lawyer to help them sell.
"What these findings show us is that there is an appetite among Canadians to conduct the sale of their home privately," says Ray Leclair, vice-president of TitlePLUS.
So you can be a do-it-yourself real estate agent and use the MLS. But do you want to?
Market conditions have to factor into your decision. There hasn't been a U.S.-style collapse here, but it's no longer a seller's market, meaning you don't just stick a sign in the ground and wait for the pigeons to flock. You're going to have to work.
"For the discount that you're getting, am I willing to take the gamble that my house is being shown at its optimum," says Gary Siegle, Calgary-based regional manager for mortgage broker Invis Inc., about private selling.
He says the industry has been sticking to its guns when it comes to commission rates -generally around 5% of the purchase price -so if you're using an agent, the negotiation might be on the service being provided for that commission.
"The professional service real estate agent is not going to give [commission up] just because someone has access to the MLS. They have to articulate the value more to justify their fee," Mr. Siegle says.
Phil Soper, chief executive of full-service firm Royal LePage Real Estate Services, says the industry has not moved much off commissions since the agreement with the government.
"I think the impact in the market in the first year postchanges has been in the low end of the market," says Mr. Soper, who says that narrow segment of the market is less than 15% of the overall sales volume.
He says for sale by owner or FSBO companies are now merging their operations with independent agents so customers also get an MLS listing as part of their service. "I don't think they are actually selling any more houses. The listings are just showing up on more websites than they used to," Mr. Soper says.
One of those FSBO companies is PropertyGuys.com. Walter Melanson, managing director of the Moncton-based company, says he currently has about 9,000 active listings across the country.
"I watch the comments [of the major real estate companies] and they say nothing has changed and nothing will ever change and that's the way they built their mousetrap," Mr. Melanson says.
What he and others are doing is creating a service that allows you to list with his company for as little as $399. When you sign up, his website hooks you up with a registered real estate agent who doesn't do much but put your home on the MLS, for an extra $299.
The company's Ontario representative, a licensed real estate agent, has close to 1,000 listings. She's based in Hamilton but accepts listings from as far away as Elliot Lake, so she's not doing too many showings.
"We want someone to compare how much it costs to sell your home using PropertyGuys to, say, Re/Max. You do that math and you'll see quite the difference," he says.
It's no small amount. When you consider the average home is now selling for close to $375,000, at 5%, that's $18,750 in commission.
However, consider if you do choose do it yourself on the MLS, you are forcing buyers to jump through one more hoop. In the case of Property Guys, the buyer has to click on the MLS broker's listing office and then punch in the listing number before he's directed to the seller.
"The bounce rate is amazing," Mr. Melanson says. "Who wouldn't look for their dream home and make that extra click? Our data says people will make that click. We've had to deliver magic within a narrow set of rules."
But you have to wonder whether that extra work will affect your sale price at the end of the day. If you save $20,000 in commission, what's the point if your house sells for 5% less?
Market conditions ultimately play into any decision. It comes down to whether you think your agent can earn that commission by getting you a better price or meeting a goal of selling your home in the time frame you want.
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