Archive for category Property Management
Mortgage Bits: House Upkeep; What does it really cost to own a home?
Posted by Top Home Loans in Mortgage Advice, Property Management on December 13th, 2009
when purchasing a property, most buyer’s number one question is: how much are the mortgage payments? Buyer’s usually think that if they can afford the mortgage payments, then they must be able to afford the property.
Unfortunately, this is the furthest thing from the truth. Upkeep, especially on condos, can be as expensive, if not more expensive, than the property itself. For example, let’s take a look at the average property in Toronto.
In Toronto, the average property value is approximately $450,000. This property would produce the following upkeep fees if it is a free hold unit.
? Property taxes: 350/month
? Heating: 75/month
? Electricity: 100/month
? Cable and Internet: 120/month
? Phone Service: 60/month
? Repairs and Upgrades: 200/month
Total upkeep per month: $905
If you look at a condo, then you would also need to factor in condo fees and parking rental fees. These fees alone can be as much as an additional $1000 per month.
Keep in mind that as your property increases in value, so does your upkeep. All the upkeep items are aligned with values, so you should expect to pay more as your value goes up.
Unfortunately, just because you have the money to buy a property doesn’t mean that you should if you can’t afford the upkeep. Make sure that you calculate the upkeep as well as the mortgage payments before you decide to purchase a property.
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10 Steps to Buying a House without a Buyer’s Real Estate Agent
Posted by Top Home Loans in Mortgage Advice, Mortgage Rates, Property Management, Real Estate on May 3rd, 2009
- Never sign anything with a real estate agent unless you are making an offer to purchase.
- Make sure you fully understand your financial capabilities before searching for a property. Get a pre-approval from a bank and make sure that they confirm with you that you can get your financing fulfilled by the bank before making the offer.
- Make sure to find an extremely good, extremely honest lawyer and property inspector. This will be important when doing shopping. Make sure to research the real estate documents. An example of this is the OREA Forms.
Ask several real estate agents to be included on there distribution lists. They will email you listings as they become available. This will allow you to be sure that you are getting access to the most up-to-date real estate listings as they come available. It is, also, important to sign up with several agents mailing lists in order to ensure you are getting the most recent postings. You can also make bookmarks on potential properties, and potential neighborhoods to view frequently.- Begin tracking the real estate market in your area by frequenting different home listing websites frequently. Track open houses and visit the open houses as well. Track all your results in a easily defined database. By doing this you are building a list of comparable market prices to see if you are getting a good deal or not.
- Contact the listing agent to get a showing of the house that you are interested in. If the listing agent refuses to show the house to you without you having a listing agent, then threaten the listing agent by telling them that you will contact the owner if you aren’t able to see the property. How do you think the owner will feel about his agent refusing to show the house to a pre-approved potential buyer.
- When you find a house that you are interested in making an offer on, then determine what the fair market value is of the property. Use your market analysis to help you determine what some comparable properties are, and what the comparable property prices are. If you have been actively tracking properties, then you probably have a better understanding of the market than most agents. Ask the seller to complete a property information sheet. An example of this type of document is the Seller Property Information Statement.
- Make an offer. The agent may request that you sign either a buyer’s representation or a buyer’s customer service agreement. Only sign this agreement with the listing agent and no other agent. If you sign with another agent, then you would have thrown away all your hard work finding the property. Also, ensure that the form is for the specific property only. If the deal falls through and you do not get the property, then you will be stuck with a buyer’s agent. Your offer should be 2% to 2.5% than what you originally would of offered, and this is because of the difference in fees. This would mean that your maximum offer is at least 2.5% lower than the fair market value of the property based on your analysis. Make sure that you make the offer conditional on financing, inspection, and review of the offer by your legal representative.
- Once your offer has been made, now it is up to the seller’s agent to try to cut a deal with the seller. The seller’s agent will try to convince the seller to take the low priced deal by possibly getting a kick back from the real estate agent. Let the seller and the seller’s agent do the negotiation of the offer. The seller’s agent will also work harder for you because of the increased commission that they will receive. The worse case scenario is that neither the seller nor the seller’s agent is willing to renegotiate, and you have to walk away from the property empty handed.
- Obtain financing, clear the inspection, and have the lawyer review all the documents. If everything goes according to plan, then you will be able to waive the conditions, and you will be moving into your new home.
How to Buy a House without a Buyer’s Real Estate Agent, Part 1: Myths
Posted by Top Home Loans in Economy, Property Management, Real Estate on May 2nd, 2009
Many people have come under the illusion that it is required that a buyer has a real estate agent in order to purchase a property; however, for most people that are not well versed on real estate and the real estate market, then this is true; although, if you have an extremely good understanding of the process, then you may want to consider making an offer without a buyer’s agent.
Myths about not using a Buyer’s Agent
Myth 1: Buyer’s Agents are Free for Home Buyer’s
The most common myth is that a buyer’s agent is free to use. This is not the case because the buyer’s agent is paid 2.5% from the sale of the property. The seller’s agent pays the buyer’s agent the 2.5%. With most properties in many areas reaching prices of $350,000 on average, this could mean an additional cost of close to $9,000.
Myth 2: Buyer’s Agents have the Your Best Interests in mind
In theory, a buyer’s real estate agent should work to get the best possible deal for the buyer; however, the way that the current compensation structure is setup, the buyer’s agent has no motivation to get the best possible deal for the buyer. Instead, the buyer’s agent has two objectives. These objectives are to get you to buy the most expensive house possible, and to get you to buy a house as quickly as possible.
Most people, when shopping for a property, would like to get the lowest possible price on the property; however, the buyer’s compensation is based on 2.5% of the price of the sale of the house. Why would any buyer’s agent want to negotiate a good price for you, if they know they will loose money?
The second major problem is for the buyer’s agent to close quickly. This means that the buyer’s agent wants to get the buyer to close on the first property that they see. If the buyer’s cannot decide on a property or if the buyer’s offers keep getting refused, then this will cause the buyer’s agent to do more and more work. The buyer’s agent does not make money unless a property is sold, so the buyer’s agent will try to convince the buyer to overbid or to close quickly on a property so that they can make there commission. The buyer’s agent will put undue pressure on the buyer to make a bad offer and close quickly.
Myth 3: Real Estate Agents are Better Negotiators than You
A buyer’s agent has no reason to be motivated to get you a better price; however, the buyer’s agent will want to get you the highest price possible for two reasons. The first reason is that they will make more commission on the sale of this property. Secondly, the property values of houses in the area will go up causing the price of future sales to go up as well.
Myth 4: Buyer’s Real Estate Agents have Better Access to More Properties
A buyer’s agent will actually provide you with less listings then if you were to search yourself. This is because buyer’s agents will specifically find properties that pay the most commission. They will bring you to properties that do not fit your criteria; however, the properties will fit the real estate agents criteria for making money. For example, they will not bring you to private sale properties or low commission properties; instead, they will find the highest priced, highest commissioned properties to bring you to.
By not having a buyer’s agent, it allows you to look at all properties, and it allows you to make an offer without pressure.