Posted by admin on February 22, 2011 | No Comments
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Filed Under: Buyers, Vernon Real Estate
Posted by admin on February 22, 2011 | No Comments
This truly is a multi-faceted question. The MLS system still maintains a large inventory. The North Okanagan residential listings, combining both single family homes and strata homes is already numbering close to 1300. Many more listings are expected to arrive on the marketplace as Winter gives way to Spring. More listings means the laws of supply and demand are activated. When sellers outnumber buyers, buyers maintain the stronger position when making offers. As long as that situation is present, downward pressure on prices continues and prices inch downward.
A change in this pattern may be just around the corner. I am pleased to be able to say that there appears to be a lot more interest from buyers. I am getting a considerably higher number of inquiries and more showing appointments are being booked on my listings. I assume this is true for many other Realtors®. That is certainly a welcome market indicator after several months of a less than exciting market.
Buyers are likely back on the scene because it is simply a good time to buy. Prices have been corrected and our record low interest rates have moved only very slightly upward on some of the fixed rate mortgages. According to many reports that cross my desk, the economy is showing renewed strength. The bond markets will reflect that and the mortgage interest rates will be raised, accordingly.
One has to think this is an excellent time to buy. If enough buyers make their move and make a purchase soon, that will curb the decrease in prices. So, as long as the economy continues to recuperate, the possibility of a return to increasing prices is feasible. Although, I can see it will take a while to consume the excessive number of listings. I would just be pleased to see the prices stabilize, never mind rise.
My hope is that this renewed interest from buyers is the beginnings of a return of a healthy, balanced market.
Originally published in the Vernon Morning Star Feb. 20, 2011. To suggest topics for future articles or to ask Jane questions, email her at jane@vernonrealestate.ca or call 250.503.3755. Previous articles published in the Morning Star appear on Jane’s website – www.vernonrealestate.ca
Posted by admin on February 9, 2011 | No Comments
It is customary to tender a deposit when making an offer to buy real estate. Usually within 24 hours of acceptance of the offer, all or part of the deposit is collected from the buyer and placed in a trust account. Most often it is the real estate company who is representing the buyer who places the buyers’ deposit into their trust account. Occasionally, there are some special circumstances and the deposit is placed in the buyers or sellers lawyers trust account. In all scenarios, the buyer can only take their deposit back with the written permission of the seller.
But, why is the deposit important? It used to be that it was necessary to show what is legally called “consideration.” Even the sum of $1.00 was considered necessary to make a contract binding. This has not been the case for many years. Consideration has evolved to be simply that the parties are both receiving some benefit by entering into the contract. Those benefits can be defined by the sellers’ expectation of receiving money and the buyers’ expectation of receiving ownership of the property.
So “consideration” is not the main point of the deposit.
The deposit is intended to demonstrate the good faith of the buyer. It is felt that buyers would not tender deposits unless they are seriously interested in contracting to buy the property. Americans call deposit monies “earnest monies” – very appropriate words. That is exactly why we care about deposits and about the amount of deposits. The higher the deposit, the more peace of mind the seller has.
The deposit is normally returned to the buyer if they are unable to remove their subject clauses. Examples of this would be subject to financing or subject to satisfactory home inspection. But when in those cases, both the sellers and buyers signatures are required when releasing deposit monies back to the buyer. In the case of the seller refusing to sign the deposit release form, the money is forthwith paid into court and a judge will decide the fate of the deposit monies. This is extremely rare. As long as the buyer has made sincere and reasonable efforts to remove their conditions, there are typically very few problems with the return of deposits.
Filed Under: Buyers
Posted by admin on February 9, 2011 | No Comments
This can happen, but it’s extremely rare. Perhaps you have put your property on the market and in less than a week you get an offer. Maybe that offer is at or close to your asking price. Your first thought may well be that you have not asked enough for your property.
When your Realtor© does their market analysis they look through the most recent sales on the properties sold that are the most comparable to yours. When your Realtor© looks at the sold prices on three or more properties they can establish a value range pretty quickly. The other information your Realtor© gathers is what price homes currently on the market are asking. Your Realtor© in most cases will supply you with a printout of both the sold and competing listings, which you should review with them. They can go over individual points and features of the various properties with you and help you see the pattern in the prices shown.
In a competitive market such as this one, the best way to catch the attention of buyers, is to list at a price just a little less than your most obvious competitors. The buyers who have been shopping immediately see true value when they view your new listing and voila! You get to sell in a short period of time. So it’s really competitive pricing that gets a sale quickly as opposed to actually under-selling.
In some markets we have even seen listing a little lower than your worst competition create a situation where multiple buyers write offers. The Seller is nearly always the winner in this situation. They often end up with a sale price that is higher than their asking price.
Filed Under: Sellers
Posted by admin on February 1, 2011 | No Comments
When listing your home or property, it is critical in all but the hottest of markets, to ask the right price. The first thing to consider is what prices have recently been obtained in your area or in areas of equivalent value, on homes/properties similar to yours. This is when a knowledgeable Realtor® is your best ally. Many times your Realtor® has toured or shown the properties they use in their analysis. Realtors® know how to adjust for critical pricing differences like lake views vs. view, or view vs. non-view. Garage vs. carport, finished basement vs. unfinished basement, hardwood vs. carpet, dated vs. up-to-date and so on. This list is a long one, but I am sure you understand the concept.
Realtors® can also evaluate the accuracy of the sold data. By that, I am referring to their ability to know if a property was priced under value, or if there were two or three buyers competing on the purchase which would likely have driven the price upward. They often know if there was a Seller who sold too low because there was particular motivation to sell. They may know if a property had some particular unique feature that “certain” Buyers would pay more for than an average buyer.
To get the price right, accept that you must meet or beat the competition. Don’t kid yourself. Expecting buyers to make an offer on an overpriced listing will only end in a Seller’s disappointment. When Buyers go out looking at property they make a shortlist of properties they like enough to consider. When they see one they like, and it’s overpriced, it seldom if ever, makes it to their shortlist. The reason is simple. No one wants to spend more than they have to. Remember, these purchases are usually made with hard earned dollars. Buyers automatically migrate towards the listings that are delivering the best value.
The next factor is how quickly you need or want to sell. Faster sales require discounted prices. Perhaps only a two or three percent lower price will make the difference between a good listing and a great one. If Buyers can see it’s a great deal, they will make the offer with little hesitation.
Also, assess the competition. Are there a lot of properties similar to yours currently on the market? If supply exceeds demand, prices need to be lower. If demand is high and the inventory of listings is low then the opposite is true.
Don’t be concerned if you have to lower your price to meet current market conditions. If you buy on the same market you sold on, you presumably will also be buying at a lower price. You’d be none the worse off.
A policy when pricing your property to sell, is to put yourself in the Buyer’s shoes. Look at your price through the Buyer’s eyes. It will help you keep focus on how very important the right asking price is.
Originally published in the Vernon Morning Star – November, 2009. To suggest topics for future articles or to ask questions, email Jane at jane@vernonrealestate.ca or call 250.503.3755.
Filed Under: Sellers
Posted by admin on February 1, 2011 | No Comments
Back up offers are offers that are accepted by a Seller, after they have already accepted an earlier offer. The back up offer is accepted “Subject to the Seller ceasing to be obligated in any way under the previously accepted Contract of Purchase and Sale on the subject property by a certain date”. Realtors® are very careful in assisting the Sellers they are representing so as to prevent the Seller from inadvertently being under contract to sell the same property to two different Buyers.
An interesting question arises when the Seller and the first Buyer wish to amend the first contract. Does the second Buyer have a right to protest that any change to the first contract constitutes a collapse of that first contract? The answer is “that depends”.
In a recent Provincial Court of British Columbia decision the court concluded that amending non fundamental terms of the contract did not cause the first contract to collapse. In that particular case only the completion dates and deposit amount were being changed.
What if something as basic as the price were changed? The court ruling might well have had a different outcome.
Bottom line is that if you are a Buyer in backup position and you become aware of changes on the first contract, get legal advice. If you really want to be able to buy that property you’ll need your lawyers’ opinion as to whether or not you can challenge that amended first contract.
Originally published in the Vernon Morning Star – July, 2009. To suggest topics for future articles or to ask questions, email Jane at jane@vernonrealestate.ca or call 250.503.3755.
Posted by admin on February 1, 2011 | No Comments
Recently, I had a call from one of my readers. She was wondering how to go about selling the vacation timeshare she had purchased several years ago.
A timeshare interest is defined as a person’s interest in a timeshare plan. A timeshare plan is a plan in which the persons participating each have a right of recurring use for a certain number of years, of all or part of the land/property/condo/hotel room. A timeshare plan does not require that the persons acquire an ownership interest in the land/property/condo/hotel room. We see them most often applied to resort properties in holiday destinations throughout the world. There are many different types and systems of timeshares and ownerships. The buyer pays a certain price at the outset plus an annual fee of roughly $300 – $700 per share per week depending on size of unit, location and quality of the resort, etc. etc. There are probably annual fees both higher and lower than this. I’m just using figures I have seen myself in various timeshare offerings I’ve read about.
Most timeshares I have seen cost at least $5,000 per week at the outset, in addition to the annual fees. I have also seen them priced at $40,000-$50,000 and more. It’s my observation that timeshare resales are sold for less than the original prices paid, although I suppose that may not always be the case. Timeshares are commonly in exchanges so that the owner can “trade” their resort time for that time in a resort elsewhere in the world. I understand that the better the location of your timeshare property, the more easily it trades for other destinations.
Timeshares are not to be confused with fractional ownerships and perhaps I’ll explain that in a future column.
But, to get back to my reader’s question of how does she sell it. Canadian Realtors don’t normally do this for three reasons. Firstly, there is usually no interest in the land so we’re not licensed to do this. Secondly, we have little or no training in this field. Thirdly, we may have to charge a fee of perhaps a third or a half of the value of the share just to have a budget to promote and advertise.
I think most timeshare owners go to the most reputable timeshare resale companies they can find. They also go back to the company where they originally bought it as that can be a source of buyers. For example, existing timeshare owners may want to pick up additional weeks so they can vacation longer. Or perhaps happy vacationers at the resort want to buy a timeshare so they know they can get that same time next year. Another method to find buyers is the vacation section of your local newspaper. Would-be holiday’ers read those ads when they are thinking of booking their next vacations and may consider the option of a timeshare purchase.
To seek out reputable timeshare resale companies may be a daunting task. If you find a company you think you may like to deal with, do check with the Better Business Bureau or the equivalent in that country before proceeding.
Always seek a good lawyer to assist you in asking the right questions and to read over anything you may be asked to sign.
By the way, I have no substantial expertise in this subject. I only know the little I have learned in talking to timeshare salespeople a few times while on my holidays, and to friends and clients.
It does occur to me that this might be a better time to purchase a timeshare, if you are so inclined. Because of the U.S. recession it’s likely there are some lower prices being offered.
Thank you to my reader for suggesting this topic.
Originally published in the Vernon Morning Star – January 29, 2009. To suggest topics for future articles or to ask questions, email Jane at jane@vernonrealestate.ca or call 250.503.3755.
Filed Under: General Information
Posted by admin on February 1, 2011 | No Comments
It will take more than one of these articles to explain the details of the anticipated new Harmonized Sales Tax. This week I’ll give you the basic information I have received so far on this topic.
Firstly, the HST will not apply to sales of used residential homes. In general, HST on real estate will be applied in the same situations as the GST is applicable currently.
The HST is to take effect July 1, 2010. If you entered into a contract to buy a new home on or before Nov. 18, 2009 and you take ownership or possession after July 1, 2010 you will pay GST, not HST. If you enter into a contract to buy a new home after Nov. 15, 2009 and take over ownership prior to July 1, 2010 you will pay GST, not HST. If you enter into a purchase contract on a new home after Nov. 18, 2009 and take over ownership after July 1, 2010 you will pay the HST and you will probably be eligible for the New Housing Rebate (assuming it is your principle residence).
Why is November 18, 2009 an important date? The answer is that was the day the government announced their HST proposal.
Under the current GST rules, the New Housing Rebate trailed off the zero at a purchase price of $450,000. In the new HST proposal that limit will be raised to $525,000. The total New Housing Rebate on a home bought at $525,000 is eligible for a rebate of $26,250. That is the maximum rebate, and home purchases costing more than $525,000 will still only be able to get the rebate of $26,250. If you buy a home for less than $525,000 the rebate is less. For example, on a purchase price of $450,000 the rebate drops to $23,150. Of course, the gross amount of the tax, being based on the purchase price, would also be less.
The formula is as follows. Buyers of new homes will be eligible for a rebate of 71.43% of the provincial portion (7% of the HST’s 12%) of the HST paid on a new home up to a maximum rebate of $26,250. I can see most new home buyers will be well advised to go over the tax calculation with their accountants prior to solidifying their purchase contract.
More information is available at www.fin.gov.bc.ca/rev.htm
Originally published in the Vernon Morning Star – April 6, 2010. To suggest topics for future articles or to ask questions, email Jane at jane@vernonrealestate.ca or call 250.503.3755.
Posted by admin on February 1, 2011 | No Comments
If you are holding back and still paying rent, this is the time to “move on”. Five percent down payments are still allowed. Interest rates are at an historic low. Prices in our area have not yet started to rise. Selection of homes is good, although I do see early signs of lack of availability in certain price ranges and certain types of housing. That factor is usually the first sign that price increases could soon follow. Canada’s economy is showing steady signs of growth. In my opinion, this is an ideal time to buy real estate.
If you are buying your first home, you can withdraw up to $25,000 from your RRSP to use as a down payment. That amount is equal to 5 percent down on a $500,000 purchase. In our area $500,000 buys a lot of house! Probably more than you need. You can buy a good home for much less and therefore you could elect to take less out of your RRSP. Of course, you will have to pay back your RRSP over time to use this program. If you buy a home at $425,000 or less and it is your first home, you are not required to pay the property transfer tax. Considering that tax is 1% on the first $200,000 and 2% on the balance, it means a considerable saving to the first time home buyer.
Some lenders will even provide you with the down payment. In return they loan to you at the posted rate (today that is 5.25%) or a little more and lock you into your mortgage for 5, sometimes 7 years. Prices don’t need to rise much at all, over those 5 to 7 years, to more than pay you back. Paying rent for that same time period is simply money gone with nothing to show for it.
This would be the time to either call the banker who knows you best or your chosen Realtor®. Your Realtor® can provide a list of lenders and/or mortgage brokers whom they know to be good at what they do.
This spring could well be a narrow window of opportunity. It may be best to act now, rather than hesitate and later wish you had.
Originally published in the Vernon Morning Star - March 28, 2010. To suggest topics for future articles or to ask questions, email Jane at jane@vernonrealestate.ca or call 250.503.3755.
Filed Under: Buyers
Posted by admin on February 1, 2011 | No Comments
Last month Ottawa took some gentle steps towards less liberal lending policies. I think there has been more made of this than there needs to be. What is billed as major changes by some media is more like gentle tweaking.
Before I elaborate on these changes, I’d like to dispel a rumor. Buyers including first time buyers, can still purchase with 5 per cent down.
The first change is that the lenders must now calculate the buyer’s qualification formula based on the posted five year rate. For any of you out there placing mortgages over the last few years, you are probably aware that lenders negotiate their rates, they feature “specials”, or they give lower interest rates to especially good clients. The posted rate is the non-discounted rate and it can be found posted weekly on the Government website www.bankofcanada.ca/en/rates/interest-look
To qualify for a mortgage, lenders take 32%, depending on their policy, of one twelfth of the borrowers wage before income tax. That gives a monthly figure that the borrower is allowed to use for principal, interest, property taxes on a mortgage and heat costs. The lender then calculates to see how many borrowed dollars that monthly amount can service. With the change, the lender must make this calculation using the posted rate of interest, even if the buyer is borrowing at a lower rate of interest. The result is there is a fairly small difference in the amount buyers may qualify to borrow. F.Y.I., the shorter the term, the lower the interest rate usually is.
The second change is a tightening on equity take-out refinances. Homeowners were borrowing to as much as 95% of the value of their existing home. As an example, an owner has owned their home for enough years that they only owe 60% of its CMV (Current Market Value). Previously they could increase their existing mortgage all the way up to 95% of the CMV and use those dollars as a down payment on a revenue or vacation home, or a new car, or any way they so chose. Ottawa has intervened and said that they can no longer refinance to 95% of CMV. Now a borrower can only go to 90% of CMV. So the borrowing power for a person in a $400,000 home is reduced by about $20,000.
The third change applies to non owner occupied homes. Lenders will now require 20-25% down and amortization periods no longer than 30 years. This I think, will be barely noticed by this type of buyers. The reason being that most buyers buying second homes or investment homes borrowed the 20-25% down payment against their primary residences in order to avoid paying costly high ratio fees to CMHC. By putting 20-25% down, secured by their existing home, they are able to use what is called “conventional” financing and no CMHC fees are payable in this circumstance.
So all in all these policies won’t change anything radically. Ottawa is just trying to avoid the loose lending practices that got the United States in such hot water.
Originally published in the Vernon Morning Star - March 14, 2010. To suggest topics for future articles or to ask questions, email Jane at jane@vernonrealestate.ca or call 250.503.3755.
Filed Under: Buyers
