Jane Field and Louisa Cochrane

Timeshare Resales

Posted by 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

HST and Real Estate

Posted by 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.

 

Filed Under: Buyers, Sellers

The Time to Buy is Now

Posted by 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

Changes to Qualification

Posted by 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

Patent Defects

Posted by on February 1, 2011 | No Comments

 In my last column I described what latent or hidden defects were.
 Patent defects are a little different.  They are the problems with properties or homes that a buyer would observe if that buyer was making what is referred to as a “reasonable inspection”.
 The courts have taken the position that it is incumbent on buyers to be careful.  More and more, home inspections are considered to be a standard of business practice in today’s home buying process.  So, the courts increasingly will have an expectation that a buyer would not buy a property without at the very least, taking a good look at it.  A judge may well take the position that the buyer had an opportunity to have a home inspection.  So, if the buyer chose not to do a home inspection then perhaps Caveat Emptor or “let the buyer beware” would prevent that buyer from a successful legal action against a seller.
 Generally, the seller is not obliged to point out patent defects to prospective buyers, unlike latent defects.
 Examples of patent defects would be things like an aging roof or a cracked window.
 To have the smoothest pre sale and post sale experiences I think it would be best if sellers disclosed everything, both patent and latent.  That way it eliminates or greatly reduces the likelihood of future legal entanglements.
 I also think buyers should routinely have home inspections.  I know these inspections are not foolproof, but they go a long way toward preventing a buyer from purchasing a problem they didn’t count on.

Originally published in the Vernon Morning Star -  February 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, Sellers

Latent Defects

Posted by on February 1, 2011 | No Comments

Selling a property through Realtors in most places in North America including in British Columbia, requires a sellers Property Disclosure Statement.
 The form British Columbia Realtors use contains, amongst many other  revealing questions, a clause which reads as follows. “Are you aware of any material latent defect as defined in Real Estate Council of British Columbia Rule 5-13(1)(a)(i) or Rule 5-13(1)(a)(ii) in respect of the Property or Unit”.  Rule 5-13 is explained as “Material latent defect that cannot be discerned through a reasonable inspection of the property, including any of the following:
a defect that renders the real estate,
(i) Dangerous or potentially dangerous to the occupants
(ii) Unfit for habitation”
Bottom line, if you are a seller and you fail to inform a buyer about any defects in the home or property you are selling, you could wind up in court.  If you think the age old rule of caveat emptor (let the buyer beware) still protects you, please know that it may not in the case of a latent defect.  It is only useful for patent defects which I will explain in my next article which is to be published February 21st, 2010.
 A few examples of latent defects would be perhaps a missing vapor barrier in the walls or ceiling, blocked drains, insufficient ventilation or the like.   Buyers are expected to “reasonably inspect” what they are buying.  This would reveal patent defects but not necessarily latent defects.   Private buyers especially should be aware of this.  Realtors will have a Property Disclosure Statement filled out and signed by the sellers.  But, with private sellers you don’t automatically get that same protection.
 Home Inspections are always important.  I recommend them to every buyer as do most, if not all Realtors.  But if you’re buying privately, it’s that much more important.  Private buyers would be well advised to obtain a written statement from a seller, either getting the seller to reveal any defects or stating that there are none, whichever is appropriate.
 Whether buying privately, or with the helping hand of your favorite Realtor, you want to be sure that the Property Disclosure Statement, or written statement from the seller are incorporated into and form part of the contract of purchase and sale.  Doing it that way gives you as a buyer, a greater ability to have recourse against the seller, should you discover that knowledge of latent defects has been withheld from you.

Originally published in the Vernon Morning Star -  February 7, 2010.      To suggest topics for future articles or to ask  questions, email Jane at jane@vernonrealestate.ca or call 250.503.3755.

 

Filed Under: Sellers

An Ounce of Prevention

Posted by on February 1, 2011 | No Comments

 Is worth a pound of cure.  A stitch in time saves nine.  These old adages also apply to your real estate investments.
 To protect the value of your home and rental properties plan on doing something to upgrade and update every year.  Preventing your home from ever getting run down is key to getting the best return on your investment.
 For instance, as winter breaks up you’ll perhaps see a loose gutter,  peeling fence paint or your concrete driveway surface declining.  In all these scenarios you are best to remedy them as soon as possible to prevent further deterioration.
 If you do something each year to update your home then it neither becomes too dated, nor too expensive to fix.
 When it comes time to sell, most of us are on a rapid agenda.  To try to do all the work at once is too expensive and too time consuming.  As a result, many of us just clean and tidy and put it straight on the market.  This is clearly not the best way to get top price on your investment.
 Homes that come onto the market that have never been allowed to become run down, that have always received proper maintenance and updates, outsell their peer properties.  When that pride of ownership is evident, buyers see it right away. These are the homes that get buyers competing with one another and that yield the highest sale prices.
 If you think about it, the reason for the better price is two fold.  Firstly, it’s simply that the buyer can move right in and doesn’t face having to do any immediate work.  But the other factor is trust and confidence.  If a home is in pristine condition and it is obvious that it has always been kept that way, the buyer determines that the seller is the kind of person who takes care of things.  The buyer quickly interprets that they are not apt to be faced with unexpected repairs.  They are then prepared to pay a higher dollar for that peace of mind.

Originally published in the Vernon Morning Star -  January, 2010.    To suggest topics for future articles or to ask  questions, email Jane at jane@vernonrealestate.ca or call 250.503.3755.

 

Filed Under: Sellers

Property Tax Deferral

Posted by on January 27, 2011 | No Comments

Did you know that you can defer payment of your property taxes if you have attained the age of 55?  Previously you had to be 60 years old.  This is effective for the 2007 tax year.
To better familiarize you with the tax deferral program here are the basics.  If you are a property owner who is either a Canadian citizen or a landed immigrant and you or your spouse are 55 or older and you have lived in British Columbia for at least one year, you are qualified to apply for the deferral program.  You can also apply if you are a widow or widower.  If you are a physically disabled person as defined under the Guaranteed Available Income for Need Act you are also likely eligible.  In all cases this is only possible on the taxes on your principal residence.
The deferral tax amount is charged a modest two percent below the prime rate / 2% below the province’s borrowing rate.  The tax deferral program appears as a lien on the title to your home.  The taxes are paid when you sell your property or they are paid out of the proceeds of your estate.  So, if you are not concerned that the value of your estate will be diminished, this is an ideal way to keep your expenses down.  The hope is that this program assists homeowners in being financially able to remain in their homes for longer.  I see on the Government of BC website that currently about 11,000 BC households have chosen to defer their property taxes.
Other requirements for a successful application are that you must have and maintain a minimum equity of 25% of your BC Assessment stated value.  That means after you have accounted for your mortgages or lines of credit or any other charge against your home.  You must also maintain fire insurance on your home.
It is possible to defer all or part of your taxes, whichever you choose.
I have looked over the website www.sbr.gov.bc.ca/rpt (click on property tax deferment) and found a few more details, but nothing too difficult. It’s easy to understand and I recommend you visit that website.  You can also go to the local government agent’s office if you prefer or phone 250-387-0555.
 f you intend to do this you must take your application form along with your current mortgage statement to the government agents office before your tax due date.

Originally published in the Vernon Morning Star -  March 2007.      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

Sales of Estate Properties

Posted by on January 27, 2011 | No Comments

In most cases the estate paperwork is either complete or nearly complete when the estate property is presented to the marketplace for sale, but not always.
As a buyer you want to be able to rely on the title being able to be passed to you without being entangled in any legal problems of the estate. Realtors make it their business to check with the estate executor(s) and their legal counsel so as to clearly understand what, if any problems may have arisen and if delays are expected. If the passing of the title cannot occur, then it is likely that the buyer will not be allowed possession of the property either. For most buyers, that would be a problem.
It needs to be clear if there are unexpected claims to the estate. For a judge to sign the Letters Probate, she/he must be of the opinion that the wishes of the deceased are being carried out and that there are no other lawful claimants that need to be heard.
If Letters Probate have been granted and there has been no contradiction with the Wills Variation Act, then it’s fine for the Seller to proceed with a contract to sell the property. However, if there is doubt, realtors commonly add the following clause. “Subject to the Seller receiving the following by a certain date
1. copy of the Letters Probate
2. assurance that everyone entitled to claim under the Wills Variation Act has waived or released his or her claim against the property. This condition is for the sole benefit of the Seller.”
There is protection in the clause for the Buyer to, as if the Seller can’t get the Letters Probate etc. by that certain date, the Buyer would be made aware of the delays. The Buyer can then decide whether or not they wish to extend their purchase contract.
I am occasionally asked by Buyers if they can get an extra good deal by buying an estate property. My experience has been that most executors/executrix are very cautious that they get real market value for the property. They feel responsible to the heirs to do so.
Whether you are buying or selling estate property, it’s always best to get legal advice. Problems do not often occur, but it’s best to be careful.

Originally published in the Vernon Morning Star -  Feb 2007.      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

Watch your Assessments

Posted by on January 27, 2011 | No Comments

The deadline for appeal of your property assessment is rapidly approaching.  The final date for filing a written request for review is January 31, 2007.  You can file in person by taking your written request to your local BC Assessment Office.  In the Vernon Assessment area the address is 2820 – 28th Street.  You can also fax your request to that office.  The fax number is shown on the assessment notice you just received in the mail.  Locally, the fax number is (250)545-5603.  If you prefer the convenience of filing for an appeal using the Internet, you can do so at www.bcassessment.ca
Also on the www.bcassessment.ca website is a well prepared data bank of home sales.  The sale dates range from Jan. 01, 2006 to Oct. 31, 2006.  When you type in the area your property is in, up to 100 recent and at least somewhat comparable sales are revealed to you.  This helps you have some idea about the data which the tax assessor had access to when he or she formed the opinion of market value as at July 1, 2006, that appears on your tax assessment notice.  You can also readily look up the assessment values and recent sale prices of homes in your neighborhood or similar neighborhoods. 
Chances are that once you’ve received this material you will understand and agree with your assessed value (of course, I am assuming you have access to the Internet).  However, every year I see a few assessments that one could and should disagree with.  Remember, you have a greater familiarity with your property than the assessor does.  Often its years between visual inspections by the assessment authority.  You may even have more detailed knowledge than the assessor, of properties that were used as the sales comparables.  There are just too many properties out there for the assessors to be fully familiar with all of them.
Your Realtor can possibly be of some assistance in your appeal.  We can provide copies of sold data to you that we feel are relevant to your property.  You can present that data at your appeal meeting or even attach it to your request for review.  Your Realtor can also give you their opinion of whether or not they think your assessed value sounds reasonable.  If you are thinking of selling this year, this would be a good time for your Realtor to do an evaluation.  Then you’d have the current opinion of value for both tax and sales purposes.

Originally published in the Vernon Morning Star -  Jan 2007.      To suggest topics for future articles or to ask  questions, email Jane at jane@vernonrealestate.ca or call 250.503.3755.

 

Filed Under: Sellers

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