November 5, 2013
Tips on Preparing your Home for the Market
There are more than 20,000 homes for
sale in the Lower Mainland, so making
home stand out for potential buyers is vital. It is especially true in today’s buyer’s market.
First, work with your Realtor to get the maximum exposure for the home. Then prep both yourself and your home for sale day.
Say to yourself, “This is not my home; it is a house—a product to be sold.” Make the mental decision to let go of your emotions and focus on the fact that soon this house will no longer be yours. Picture yourself handing over the keys and envelopes containing appliance warranties to the new owners.
Say goodbye to every room. Don’t look backwards—look toward the future. All sellers want their home to sell fast and bring top dollar. Well, it’s not luck that makes that happen. It’s careful planning and knowing how to professionally spruce up your home. Here is how to prep a house and turn it into an irresistible and marketable home.
Dawna Johnson, an Accredited Staging Professional Master (ASP) says the idea behind staging is to allow rooms to show themselves. Think clean and simple: when prepping a home for sale, get rid of clutter, clean and, if necessary, stage rooms with rented artwork, flowers.
“If your home is vacant, it’s soulless,” Dawna warns. “Without staging, it will probably remain on the market for many months.” She has this practical advice for making a home sparkle:
- Apply orange oil to cabinets that appear dry, which will renew their
- Put out large bowls of fruit such as polished apples, bright oranges, luscious grapes
- Arrange colourful and fun cookbooks on the kitchen counters
Dawna believes in bringing the outdoors inside through the use of greenery and plants, creating clean, crisp spaces and arranging furniture with plenty of room to walk around.
She says bathrooms are essential to dress well. “Bathrooms should look open, airy and delightful,” says Dawna. One of her favourite tricks is to add baskets filled with spa items such as small towels tied with ribbon, bottles of lotion and scented soaps.
The front and back yards often need staging, too. For patios and decks, Dawna brings in plants and potted flowers and makes sure decks are clean and clutter free. Your Realtor has been through many open houses and will be able to provide other tips on getting your home sale-day ready.
November 5, 2013
Making an Offer 101
When you’ve found the home you want to buy, it’s
easy to get caught up in the excitement and let your emotions get in the way of reality. But actually making and closing the deal is a step-by-step process that requires a cool head.
REW.ca spoke to four experienced Realtors to provide an overview of what to expect, from making an offer, to the purchase agreement, right through to receiving the keys to your new home.
First off, your agent should know your price range, what kind of down payment you can afford and whether you have a mortgage broker or not, says Greyfriars Realty’s Joanne Bonetti.
“The more information your Realtor has, the better they can work for you,” she says.
The first step is to get pre-approval for a mortgage in order to know how much you can afford and to be ready to make your purchase.
“Mortgage brokers have connections at a variety of financial institutions and are experienced in dealing with them,” says Bonetti. “In addition, your bank will pay your mortgage broker on your behalf, so there is no cost to you.”
You’ll also need cash for your deposit, so make sure you have liquid assets. Your deposit cannot come out of your mortgage.
Okay, this is “The One”
Once you’ve found the right home, your Realtor’s office will do a title search to make sure there are no liens on the property and find out about any issues that are on the property title.
It’s also important to get a written disclosure of all known defects, because not all defects appear on the title itself.
Joanne Bonetti advises, “The law now requires sellers to make complete disclosure of known material defects. Make sure you get it in writing, and take time to consider how these defects may affect what you’re prepared to pay.”
If everything is fine, then your Realtor will help you to negotiate your purchase agreement.
Putting in an offer
“Your Realtor will write an offer and present it as quickly as possible to the seller’s agent,” says Cathy Chin of RE/MAX Central in Burnaby. “I believe a buyer gets better representation if their Realtor presents the offer in person, rather than by fax or email.”
The prospective buyer should hear back within 24 hours as to whether the offer has been accepted or not.
“The only exception to this rule is if the seller lives out of the country or is on holidays… it just means it will take a bit more time,” she adds.
What happens next is either acceptance of your offer, or a counter-offer by the vendor asking for a higher price or different terms. That will start a round of counter-offers ending in acceptance or rejection.
Don’t get your offer rejected
The problem Cathy Chin encounters most often with buyers is the offer—either it’s far below market value or it places too many terms and conditions on the sale.
Many Realtors agree. Although it’s a Realtor’s job to present each and every offer, the RE/MAX City Realtor says that “a lowball offer for a market value home will only insult and anger the seller, and will probably take you out of the running even if you were to provide a reasonable counter-offer.”
“Prior to putting in the offer, I would do a market comparison showing my buyer the selling prices of comparable homes in the neighbourhood or in comparable neighbourhoods,” he says.
If a vendor counter-offers at a higher price, ensure that you know exactly how much you can afford before you start negotiating. You don’t want to get caught up in the heat of the moment and end up with costs you can’t afford.
But money isn’t the only consideration. Terms and conditions (“subjects”) can trump a higher bid, say all four veteran Realtors.
“Terms such as a completion date or an offer with no subjects can be more appealing to the seller than a higher offer,” says Bagry.
Contract of Purchase and Sale
Once a seller has accepted your offer, you sign the Contract of Purchase and Sale. This is when most buyers hire a lawyer or notary public.
“A lawyer or notary public prepares the documents to legally transfer the property as well as ensure the seller has the rights to sell the home and will make sure the seller’s mortgage is discharged,” says Cathy Chin.
According to Fred Brome of RE/MAX West Coast in Richmond, these items are typically included:
Your legal name, the name of the vendor and the legal civic address of the property.
The price you are offering to pay.
- Things included
Any items in or around the home that you think are included in the sale should be specifically stated in your offer. Some examples might be window coverings and appliances.
- Amount of your deposit
This is to protect the seller. If you change your mind and decide not to buy the home, not only do you not get your deposit back, but the seller could sue you. Deposit amounts are usually about 5 per cent, but can be less for a quick closing or more for out-of-country buyers who can’t be sued. The deposit is held in trust with either the buyer’s agent or a lawyer/notary once the deal is firm, meaning when subjects are removed or an accepted offer no subjects.
- The closing date
The closing date is the day you take possession of the home. It is usually 30 to 60 days after the date of agreement. But, it can be 90 days, or even longer.
- Request for a current land survey of the property
- Date the offer expires
After this date the offer becomes null and void.
- Strata documents
If you’re buying a strata property, you need to see the strata corporation minutes and any engineer’s reports, including the depreciation report.
- Other conditions
Other conditions may include a satisfactory home inspection report, a property appraisal, and lender approval of mortgage financing. This means that the contract will become final only when the conditions are met. In real estate-ese the term is, “all subjects are removed.”
Rarely, but sometimes, at the last minute a sale doesn’t go through.
“It can happen … for instance, a builder sees a sold sign and realizes the owner owes him money and he slaps a lien on the home, or the day before completion the owner dies,” Cathy Chin says. “Extremely rare but it does happen.”
In the end all four say: “Do your due diligence, because it’s buyer beware.”
November 5, 2013
Variable Mortgage Suddenly Looks Good
Is it a good time to go with a variable mortgage
rate? It’s the age-old question lingering on the minds of home buyers; variable options offer traditionally lower pricing, but are subject to any fluctuation of the Prime rate. However, the most recent Bank of Canada announcement has thrust the consideration back into the spotlight; abandoning their rising rate bias may indicate variable rates have gained a few more years of low-interest certainty.
In the announcement on October 23, the Bank maintained their Overnight Lending Rate, which sets Prime, at one per cent where it has been since September 2010. The monetary policy analysis points to slowing economic growth in Canada and on a global scale, spurred by recent economic and political setbacks in the U.S. As a result, the BoC has backed away from previous attempts to predict a timeline for a stronger economy, meaning current stimulus measures could remain in place until 2015 or 2016, and not end next year as previously anticipated.
As a result, variable mortgage rates may become a more viable possibility for buyers looking for a longer term rate commitment.
Fixed Rates Aren’t Filling The Gap
Low variable rates are made even sweeter by today’s stubbornly higher interest environment. As of today, there’s an 83 basis-point spread between the lowest five-year variable rate at 2.
4 per cent, and the lowest five-year fixed at 3.23. While fixed rates dipped moderately at the beginning of the month, they rose again as the U.S. ticked closer to its October 17 debt default deadline. While yields have recovered to three-month lows since, lenders have yet to catch up with fixed rate discounts – after all, they say the banks take the elevator up when it comes to prices, and the stairs down.
The Pros and Cons Of Going Variable
With that spread, it’s tempting to go the Prime-based route. It’s a difference of $157 a month in payments (assuming the average Canadian home value at $368,000, five-year term, 25-year amortization and no CMHC mortgage default insurance—oh, and no change to Prime, of course!). However, determining whether variable is a fit involves more than your comfort with r
Con: The Mortgage Qualifying Rate: This may come as a surprise for some first timers—it’s actually more difficult to successfully qualify for a variable rate mortgage. While the rate is lower, buyers’ financials will need to meet the criteria for the bank’s posted five-year rate to qualify. This is to protect buyers’ affordability should Prime rise. The qualifying rate also applies to buyers with fixed terms under five years, in case rates are higher when it comes time to renew.isk and your zeal for discounts.
The government implemented this rule in April 2010 as a response to the U.S. housing crisis unfolding at the time. There, many buyers of promotional subprime rate mortgages found themselves unable to afford their homes when their temporary rate discounts ended, contributing to the onslaught of the Great Recession. Canadian policy makers took heed, and built affordability safeguards right into the qualification process.
Pro: A Longer Low-Rate Outlook: The low interest rate environment is one of the few upsides to stagnant Canadian economic growth. The Bank of Canada cut its Overnight Lending Rate, which sets the tone for Prime and liquidity between banks, at one per cent following the recession in September 2010, to allow for continued spending in Canada and economic recovery. Economists expected our economy to reach capacity in 2014, signalling the end to recovery and the need for such stimulus measures—but that’s now been revised to be a few years down the road. As a result, low variable options will stick around for longer.
Con: It’s Unpredictable: Because variable rates are tied to currently underperforming economic conditions, we can expect them to stay low for a while—but this is also the exact reason they’re so unpredictable. Canada’s economic performance is dependent on a multitude of factors. We’re very closely linked to growth in the U.S., and new international developments, such as the recent CETA deal, may also contribute to a sunnier future outlook. The takeaway—the prognosis may be dour now, but it isn’t permanent.
Pro: You Can Always Flip To Fixed: A great feature of variable rates is their low commitment level. Should the Prime rate heat up unexpectedly, or should fixed rates suddenly take a dramatic tumble, variable borrowers can lock into the fixed term counterpart of their current rate.
SOURCE: REW.ca By: Penelope Graham RateSupermarket
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