Posts Tagged home buying
Refusing to Chase; The Top of the Housing Market
Posted by Top Home Loans in Investing, Mortgage Advice on April 23, 2010
‘Buy low, sell high’ is the first rule of investing. This rule does not say ‘buy high’ anywhere within the rule. The first thing an investor would look for is deals on investments, and buy these deals. In the housing market in Canada, we are at high prices, while the US is in the low stage of the market.
To express this even further, in canada the housing prices have more than doubled over the last twenty years; however, household incomes have remained stagnant after being adjusted for inflation. The average house price in Canada is more than double the average house price in the US, yet our average household incomes are fairly consistent between the two countries. Why is there such a gap between the two?
Regulations, and one of the major regulations that protect Canada’s inflated house values is that Canadians are not able to walk away from their houses without legal ramifications, whereas in America, most home owners can walk away from their properties, and they will only lose their equity that they have built in their residence.
The market does always have a way of balancing things out; when housing prices are too large in one location, and lower in another, people will migrate to different locations to be able to balance the economy out.
This leads back to what this article is really about: Canadian home prices. If you are looking to purchase as an investment, it is looking more and more likely that house prices will be depreciating over the next several years. If you are purchasing a place to live, then it is not as much as a issue. If you are purchasing property to invest, then it may be a bigger headache than you think at this time.
Do you think Canada is a good place to invest in real estate? What do you thin house prices will be in a few years?
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A Real Estate Agent’s response to a Buyer’s Questions
Posted by Top Home Loans in Economy, Investing, Real Estate on June 15, 2009
The following is a list of questions the buyer asked, and the real estate agent’s response:
Why is the home owner selling?
The Answer: The home owner is selling to move closer to work. The seller is selling because he had been there since 2003.
Both of these answers are incomplete and it seems as if either the real estate does not know the client, or does not care enough about the buyer to find out the answer. The response seems to be either a guess or made up.
Is the home owner buying another property?
The Answer: The real estate seemed uninterested in this question and did not provide a response.
The selling agent almost always helps the seller purchase the seller’s next property in the process of selling there current property. If the seller is not interested in this question or does not know the answer, then it is likely the buyer is not buying again. This leads me to believe that the seller is not interested in home ownership after this experience.
What was the seller’s original Purchase Date and Purchase Price?
The Answer: July 28, 2004 for $307,000
The seller’s agent knew the answer, which is a good thing, but this property was listed in 2009 at only $365,000. This is a bad sign because the property only increased in value by 18% at the posted price which is only 3.6%/year. The final selling price ended at $345,000 which makes this even worse.
How long has the property been listed for? Has it been relisted?
The Answer: The property listed has been extended past the regular 90 days.
The seller is unwilling to negotiate a fair price. This has caused the listing to extend a long time, and the seller has no motivation to move within a short period of time. An unmotivated seller makes for poor negotiation.
What time frames is the seller looking to close for: 30/45/60/90 days?
The Answer: The seller has not started looking for another house, so they would prefer a longer closing.
This tells the buyer that the seller is not motivated to sell, and the seller is not interested in negotiating prices. The seller is not searching a property currently, and is not interested in selling unless the right price comes along.
Can a Seller Property Information Statement be completed?
The Answer: The seller will not complete one.
This is a major turn off, and any seller that is unwilling to complete this form for an offer, is not interested in selling. This is sometimes a deal killer because there is a lot of information on this form that a buyer needs to know.
What chattels are included with the purchase?
The Answer: All major appliances are included.
It is fairly standard for the major appliances to be left with the residence. This does not affect the negotiation of the price.
What fixtures will be included?
The Answer: All lighting and drapes will be included.
This is fairly standard as well. This does not affect the negotiation of the price.
Would a clause be included in the agreement that states if any unstated repairs are required in the inspection, then they will be covered by the seller?
The Answer: The seller is unwilling to make this agreement. Make the offer conditional upon inspection and review the inspection upon completion.
It sounds like the real estate is gambling that your inspector will not pick up on certain things, and you will be stuck with a lemon of a property. If the seller is unwilling to guarantee the property, then something must be wrong with it.
Is there any plumbing, electrical, or flooding issues?
The Answer: No issues.
The seller does not have to be honest about a question like this. Once again, the real estate agent may not know the answer or may lie to get the sale.
What is the history of the house? Has there been any fire, flooding, major damage, or major crime?
The Answer: Nothing to the real estates knowledge of this type of thing.
The seller does not have to be honest about a question like this. Once again, the real estate agent may not know the answer or may lie to get the sale.
In conclusion, some serious issues are apparent. The first issue is that the seller is unwilling to negotiate at all, and with the high price, this makes for a bad combination. It also appears that the seller is trying to hide something about the house. Maybe there is some hidden damage or a history with the house. The seller does not have any motivation to move, so it may be difficult to secure a proper moving date. This is definitely a house you would not want to be interested in.
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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 3, 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.