December 29, 2008
Your Home-To-Be
You’ve filled out your wish list and figured out how much you can afford. Now you’re ready to grab your car keys, your checkbook, and… wait! Let’s not jump the gun.
Before you even think about going shopping for your home there are a few more things to consider. Are you excited about that new home community that just popped up down the street? Or are you set on the castle after all? Or maybe you’re just looking for a good deal.
The Worst House on the Best Block
You may have heard this before: It’s always better to buy the worst house on the best block than the best house on the worst block. Here’s an extreme example. Say you live in a 2500-square-foot colonial that’s only two years old. You happen to look out your breakfast nook window one day and find that the lot next door is being cleared. “That’s nice,” you say — until you find out that your neighbor’s new house is only as big as your living room. What does that mean to you? It means your property value is going to fall. Why? Because the value placed on your house also takes into account the homes surrounding your property.
What does this say about your new neighbour? She’s one smart cookie. Her property value will increase because she’s living next door to your beautiful abode. This doesn’t mean you can’t despise her. Go ahead. We’ll understand.
Once you’ve transcended your petty emotions, though, you should know that many communities have covenants to prevent such an event from happening. But you can apply this rule to any neighborhood. The least valuable home benefits from the more expensive homes and the most valuable home is harmed by the lower valued homes. Keep this in mind while you are shopping.
Now, on to our different home types.
New Home — One of the main advantages to a new home is… it’s new! New homes have new appliances, new plumbing, new roofs, new boilers, new electrical systems, etc. You get the point. You shouldn’t expect to outlay money for repair costs anytime soon, and most new homes come with five- or 10-year warranties. Another advantage is the design process. If you sign a new home contract early enough in the building process, you can make some, if not all, of the decisions about the interior and exterior design.
One important thing to note about buying a new home is that most new home communities welcome real estate agents. So here you should have a strong buyer’s agent. It’s important that your interests are represented; don’t count on Joe Builder and his agent to represent you. That friendly agent at Happy Acres legally represents Joe Builder and not you. As we’re fond of saying in Fooldom, “Do your own research.” In this case, find out all you can about the builder.
The grand model unit that Joe Agent shows you — while Bach suites lull you into a delighted reverie from the in-wall speakers — is sure to have a luxury bath, a finished basement, an upgraded kitchen, and designer wallpaper and floor coverings. It’s important for you to know that your new home will likely not have all these options unless you pay for them. You could spend tens of thousands of dollars more than the base price for those goodies. Does it sound suspiciously like buying a car? It is, in this regard anyhow. Sit down and decide which options you must have and which options you could live without. Also keep in mind that you can always make certain improvements after the house is built.
Also, everything is negotiable. As with all home purchases, don’t hesitate to ask your agent to negotiate on price, options, and closing costs. If you’re looking to make a deal on your new home, you’re in a strong position if the builder has a completed house without a buyer. That vacant house isn’t making a dime for him and he’s likely to want to unload it as quickly as possible. If you’re not in a hurry to move in, some builders will actually sell you their model and then lease it back from you. Usually you’ll get a great deal on a well-optioned and designed house and a guaranteed return on your investment.
Resale Home — In some parts of the country it’s downright impossible to find a new home. An older home or a resale is a house that’s had at least one owner. When shopping for an older home, remember it’s not going to be perfect. There are likely to be repairs or alterations that you’re going to want to make prior to occupancy. It’s often best that you consider this in your offer rather than ask the owners to fix them.
It’s a good idea to purchase a warranty for a resale home. The cost is usually only a few hundred dollars and your agent can help you choose the one that’s best for you. As an added incentive, many home sellers purchase home warranties. These cover the home while the owner is trying to sell it and for a certain period of time after it’s sold. Also, definitely pay the few hundred dollars to have a home inspection. It’s better to find out the roof needs to be repaired now, rather than two days after you close and the first storm hits.
Fixer-Upper — Buying a fixer-upper is a good way to own a home that you ordinarily wouldn’t be able to afford. If you’re a handyman or a handywoman, or you know someone who is, this could be the home for you. The real estate industry has placed an annoying little word on the difference between the improved home’s value and the price you paid plus the repairs — sweat equity. For instance, if the improved house is worth $150,000 and you paid $130,000 for the house and $10,000 in repairs, your sweat equity (arghhh) is $10,000. Again, you should definitely have a home inspection with this house, and have a contractor give you an estimate on repair costs. Also, ask your lender about special loans with which you can build the repair costs into your mortgage.
A fixer-upper may not be for you, especially if you have small children. Keep in mind that there will be various disruptions, with rooms being closed off, different teams of workmen trooping in and out of the place, the kitchen potentially becoming unusable for a period of time, and so on. And that assumes that all the work goes as is planned, and on time. Weigh the potential savings against the potential disruption of your home life.
Power of Sale — Another option in finding a better price is a foreclosure home. This is one in which the previous owner could not make the payments, so the mortgage company or note holder has taken possession of the house.
Foreclosures come in all shapes, sizes, and states of disrepair. Some look as though they’re about to be condemned; others are in pristine condition. Any home can be foreclosed on, so don’t be surprised to find foreclosures worth a million dollars or more. Look for many incentives when buying foreclosed homes — decreased prices, closing cost assistance, quick closing incentives, low down payments, and special loan programs, just to name a few. If you’re interested in this type of home, find a real estate agent who specializes in Power of Sale properties and knows the tricks of the trade.
Now you have a pretty good idea about how much you can afford and what kind of home you want. You’re not quite there, though, but you’re in the neighborhood.
July 15, 2008
Phantom real estate bidding report slammed
Toronto Real Estate Board task force argues system already in place to address ethics breach.
A Toronto Real Estate Board task force report that found no additional enforcement is needed to curb phantom bidding completely misses the mark, says a prominent local realtor.
“TREB evidently doesn’t think that ethics is their responsibility,” said Michael Manley, owner of Prudential Properties in the Beach.
“They should be putting some internal mechanism in place because right now, there is nothing at TREB to deal with this,” Manley added. “They are leaving it all up to RECO (the Real Estate Council of Ontario) to enforce.”
Manley was reacting to a TREB task force report presented to TREB members on their private website yesterday on the contentious practice of phantom bidding, which involves fabricating an offer to spark a higher counter bid.
The report said RECO – which regulates agents and brokers – already has all the enforcement tools it needs to investigate and prosecute agents who flout the rules.
The issue of phantom bids was pushed to the forefront last year when Manley ran for president of TREB. During the campaign, he vowed to stamp out the practice – which many agents agree is widespread in Toronto – through an online mandatory bid registry system.
TREB president Maureen O’Neill said yesterday the report was for internal use only and would not be made public. However, the Star was able to obtain a leaked copy.
In its findings, the seven-member task force concluded “the RECO code of ethics is the only avenue to deal with” phantom offers.
Any agent or broker involved in such tactics is “committing a criminal act,” said O’Neill, who agreed with the six-page report’s findings. She said members of the public can complain to RECO if they have an issue with how agents handle bids.
But Manley said this approach is akin to shutting the barn door after the horse has bolted.
“They are going after agents after they have already broken the rules instead of setting up a system that helps prevent that type of activity in the first place,” Manley said.
He said requiring agents or brokers to register all bids online is the only real solution to the problem.
The report said a registry would be cumbersome and unworkable.
“For instance, it wouldn’t allow for last-minute bids,” said O’Neill who had initially backed the idea.
O’Neill said TREB will issue pamphlets and hold education sessions to help end unethical tactics.
June 4, 2008
Common Home Selling Mistakes
Mistake #1 — Placing the Wrong Price on Your Property
Every seller obviously wants to get the most money for his or her product. Ironically, the best way to do this is NOT to list your product at an excessively high price! A high listing price will cause some prospective buyers to lose interest before even seeing your property. Also, it may lead other buyers to expect more than what you have to offer. As a result, overpriced properties tend to take an unusually long time to sell, and they end up being sold at a lower price.
Mistake #2 — Mistaking Re-finance Appraisals for the Market Value
Unfortunately, a re-finance appraisal may have been stated at an untruthfully high price. Often, lenders estimate the value of your property to be higher than it actually is in order to encourage re-financing. The market value of your home could actually be lower. Your best bet is to ask your realtor for the most recent information regarding property sales in your community. This will give you an up-to-date and factually accurate estimate of your property value.
Mistake #3 — Failing to “Showcase”
In spite of how frequently this mistake is addressed and how simple it is to avoid, its prevalence is still widespread. When attempting to sell your home to prospective buyers, do not forget to make your home look as pleasant as possible. Make necessary repairs. Clean. Make sure everything functions and looks presentable. A poorly kept home in need of repairs will surely lower the selling price of your property and will even turn away some buyers.
Mistake #4 – Trying to “Hard Sell” While Showing
Buying a house is always an emotional and difficult decision. As a result, you should try to allow prospective buyers to comfortably examine your property. Don’t try haggling or forcefully selling. Instead, be friendly and hospitable. A good idea would be to point out any subtle amenities and be receptive to questions.
Mistake #5 – Trying to Sell to Lookers
A prospective buyer who shows interest because of a “for sale” sign he saw may not really be interested in your property. Often buyers who do not come through a realtor are a good 6-9 months away from buying, and they are more interested in seeing what is out there than in actually making a purchase. They may still have to sell their house, or may not be able to afford a house yet. They may still even be unsure as to whether or not they want to relocate.
Your realtor should be able to distinguish realistic potential buyers from mere lookers. Realtors should usually find out a prospective buyer’s savings, credit rating, and purchasing power in general. If your realtor fails to find out this pertinent information, you should do some investigating and questioning on your own. This will help you avoid wasting valuable time marketing towards the wrong people. If you have to do this work yourself, consider finding a new realtor.
Mistake #6 — Being Ignorant of Your Rights & Responsibilities
It is extremely important that you are well-informed of the details in your real estate contract. Real estate contracts are legally binding documents, and they can often be complex and confusing. Not being aware of the terms in your contract could cost you thousands for repairs and inspections. Know what your are responsible for before signing the contract. Can the property be sold “as is”? How will deed restrictions and local zoning laws affect your transaction? Not knowing the answers to these kind of questions could end up costing you a considerable amount of money.
Mistake #7 – Signing a Contract with No Escape
Hopefully you will have taken the time to choose the best realtor for you. But sometimes, as we all know, circumstances change. Perhaps you misjudged your realtor, or perhaps the realtor has other priorities on his or her mind. In any case, you should have the right to fire your agent. Also, you should have the right to select another agent of your choosing. Many real estate companies will simply replace an agent with another one, without consulting you. Be sure to have control over your situation before signing a real estate contract.
Mistake #8 – Limiting the Marketing and Advertising of the Property
There are two obvious marketing tools that nearly every seller uses: open houses and classified ads. Unfortunately, these two tools are rather ineffective. Less than 1% of homes are sold at open houses, and less than 3% are sold because of classified ads. In fact, realtors often use open houses to attract future prospects, not to sell the house.
Your realtor should employ a wide variety of marketing techniques. Your realtor should also be committed to selling your property; he or she should be available for every phone call from a prospective buyer. Most calls are received, and open houses are scheduled, during business hours, so make sure that your realtor is working on selling your home during these hours. Chances are that you have a job, too, so you may not be able to get in touch will many potential buyers.
Mistake #9 – Choosing the Wrong Realtor
Selling your home could be the most important financial transaction in your lifetime. As a result, it is extremely important that you select the realtor that is best for you. Experienced real estate agents often cost as much as brand new agents. Chances are that the experienced agent will be able to bring you a higher price in less time and with fewer hassles.
Take your time when selecting a real estate agent. Interview several agents; ask them key questions. If you want to make your selling experience the best it can be, it is crucial that you select the best agent for you.
March 11, 2008
Calling their fluff:
How to spot the home stagers’ tricks at work
When you go house hunting in downtown Toronto, you’ll struck by a disturbing similarity in what you see. The furniture at many resale homes looks suspiciously fresh and new, the art hanging on the walls seems all-too-familiar and the rooms are just soooo squeaky clean. After looking at a few of houses, you’ll start to recognize the signs that a home stager has been at work. Let’s face it, how many of us have furniture that matches perfectly? You can tell as soon as you walk into a staged home that this is something that belongs in an interior design shop, not your average family’s home.
Remember: no matter how beautifully decorated a home may be, its true value hinges on practical considerations — how much space it offers, the neighborhood, how many bedrooms and bathrooms it has.
Here’s how to make sure you don’t get taken in by a stager’s tricks:
Beware of old panes
The best tipoff that a home stager has been at work is a beautifully decorated home with old windows. Why? Because a complete set of new windows is expensive — think $10,000 or so — and most stagers won’t bother to put them in. But if the windows are old, you have to wonder what other secrets the house may be hiding.
Measure, measure
Stagers are notorious for making small rooms look larger by renting undersized couches, tables and chairs. “I staged a house in Rosedale that had a great third-floor master bedroom,” says Toronto home stager Debra Gould, “but it was awkward because the stairwell and entrance to the room were really small.” She ended up renting dressers from a kids’ furniture store because she couldn’t get adult-sized dressers up the stairs. Imagine the shock the new owners must have felt when they tried to move in their own furniture. To make sure you don’t have a nasty surprise, pack a tape measure and write down the dimensions of all key rooms.
Avoid showrooms
The showrooms in many new condo developments use pint-sized furniture, large mirrors and other space-expanding tricks to make the units appear larger than they are. “If you’re looking at something in a new complex,” says Feisal Panjwani, a senior mortgage consultant with Invis Inc. of Vancouver, “ask to look at another suite that hasn’t been done up. You’ll get a feel for what the home will look like with regular furniture and appliances.”
View it live
Most real estate agents insist that viewing the house when it’s empty gives you time to examine it at leisure. But a better option is to view it around suppertime when the owners are present. When someone’s in the place, you get a better sense of the house. Is there enough counter space for the dinner dishes? Does the kitchen feel spacious with two or three people in it? You can imagine what it would be like to live there yourself.
Come out of the closet
Stagers often empty out closets to make them look larger than they really are and give the illusion of plentiful storage space. Be aware of the trick and make sure you know exactly how much storage space you’re getting. Ever wonder where all the jackets, shoes and coats are in the homes ypu see because they certainly aren’t in the closets. Ask to see other storage areas.
Tune out the noise
Any good stager tries to create a relaxed, elegant mood. Jazz on the stereo, a roaring fire in the hearth, fresh flowers and homey scents are just some of the tricks you’ll encounter. The only defense? Close your eyes and imagine the same room with kids yelling and yesterday’s newspaper spread out on the floor. Reality may not be as pretty as the staged version, but it’s a much better guide to value.
February 24, 2008
The future of real estate search?
Rotten Neighbor: it might just be the next best thing to the MLS when selecting a home to buy … or not.
What is Rotten Neighbor? According to their press release: Rotten Neighbor is the first real estate search engine of its kind allowing you to rate and review good and bad neighbours before and after you move so you can make a smart real estate decision. How? By user contributed information on neighbours and neighbourhoods in Toronto as well as helping you understand Toronto neighbourhood trends. No matter if you are looking for townhouses, condominiums, single-family homes, or apartments Rotten Neighbor can help you find your dream neighborhood. See local neighborhood trends in Toronto and compare your neighbours to other neighbours in Toronto. Join the Rotten Neighbor community to get in touch with your Toronto neighbours and discover the best neighborhoods for you.