"Variable or fixed? It's no contest"

This article appeared in the Globe and Mail issue of October 31, 2011 by Rob Carrick.

"Fixed-rate mortgage is your best bet; banks have snuffed out variable-rate discounts, while prime rate has dipped," he further says.

"Variable-rate mortgages are so over.

Go fixed rate if you're arranging or renewing a mortgage, and think hard about the four-year term. If you take in all the recent developments in the mortgage market, this is the most logical strategy.

Variable rate mortgages are being sold at the prime rate in many cases right now, which is 3 percent. The traditional discount off prime? Snuffed out by the banks. They've decided they aren't making enough money from discounted variable-rate mortgages, so goodbye discount for the most part. If you shop around, maybe you'll get 0.2 of a point off prime.

Now for the fixed alternative. Global economic uncertainty and sluggish growth mean you'll pay in the area of 3 percent for a four-year term." The preceding is a quote from the article.

Very important information to know if you are arranging a new mortgage or renewing one. The complete article can be read by clicking on Real Estate News- Recent Developments on the right column- 2 pages.

Ten Tips For Getting a Fair Price for Your Home

Mortgages

Ten tips for getting a fair price on a home


Amy Fontinelle

Investopedia.com

Published Thursday, Sep. 08, 2011 2:34PM EDT

Whether it's a buyer's market or a seller's market, all homebuyers have one thing in common: they don't want to get ripped off. But how do you know if you're getting a fair deal on the home you're prepared to place an offer on? Read on to find out how to evaluate the price of any home so you can make a sound investment decision.

Research recently sold, comparable properties

A comparable property is one that is similar in size, condition, neighbourhood and amenities. One 1,200-square-foot, recently remodeled, one-story home with an attached garage should be listed at roughly the same price as a similar 1,200-square-foot home in the same neighbourhood. That said, you can also gain valuable information by looking at how the property you're interested in compares in price to different properties. Is it considerably less expensive than larger or nicer properties? Is it more expensive than smaller or less attractive properties? Your real estate agent is the best source of accurate, up-to-date information on comparable properties (also known as “comps”).

Check out comparable properties that are currently on the market

In this case, you can actually visit other homes and get a true sense of how their size, condition and amenities compare to the property you're considering buying. Then you can compare prices and see what seems fair. Reasonable sellers know that they must price their properties similarly to market comparables if they want to be competitive.

Look at comparables that were on the market recently but didn't sell

If the house you're considering buying is priced similarly to homes that were taken off the market because they didn't sell, the property you're considering may be overpriced. Also, if there are a lot of similar properties on the market, prices should be lower, especially if those properties are vacant. Check out the unsold inventory index for information about current supply and demand in the housing market. This index attempts to measure how long it will take for all the homes currently on the market to be sold given the rate at which homes are currently selling. (For further reading, see Selling Your Home In A Down Market.)

Consider market conditions and appreciation rates in the area

Have prices been going up recently or going down? In a seller's market, properties will probably be somewhat overpriced, and in a buyer's market, properties are apt to be underpriced. It all depends on where the market currently sits on the real estate boom-and-bust curve. Even in a seller's market, properties may not be overpriced if the market is on the upswing and not near its peak. Conversely, properties can be overpriced even in a buyer's market if prices have only recently begun to decline. Of course, it can be difficult to see the peaks and valleys until they're history. Also consider the impact of mortgage interest rates and the job market on the economy. (Knowing your mortgage choices is important. For more information, read Shopping For A Mortgage.)

Are you buying a for-sale-by-owner property?

A for-sale-by-owner (FSBO) property should be discounted to reflect the fact that there is no 6 per cent (on average) seller's agent commission, something that many sellers don't take into consideration when setting their prices. Another potential problem with FSBOs is that the seller may not have had an agent's guidance in setting a reasonable price in the first place, or may have been so unhappy with an agent's suggestion as to decide to go it alone. In any of these situations, the property may be overpriced.

What Is the expected appreciation for the area?

The future prospects for your chosen neighbourhood can have an impact on price. If positive development is planned, such as a major mall being built, the extension of light rail to the neighbourhood, or a large new company moving to the area, the prospects of future home appreciation look good. Even small developments like plans to add more roads or build a new school can be a good sign. On the other hand, if grocery stores and gas stations are closing down, the home price should be lower to reflect that, and you should probably reconsider moving to the area. The development of new housing can go either way - it can mean that the area is hot and is likely to be in high demand in the future, increasing your home's value, or it can result in a surplus of housing, which will lower the value of all the homes in the area.

What Is your real estate agent's opinion?

Without even analyzing the data, your real estate agent is likely to have a good gut sense (thanks to experience) of whether the property is priced appropriately or not and what a fair offering price might be.

Does the price feel fair to you?

If you're not happy with the property, the price will never seem fair, even if you get a bargain. Even if you pay a little over market value for a home you love, in the end, you won't really care.

Test the waters

Even in a seller's market, you can always offer below list price just to see how the seller reacts. Some sellers list properties for the lowest price they're willing to take because they don't want to negotiate, while others list their homes for higher than they expect to earn because they expect to negotiate downward or they want to see if someone will make an offer at the higher price. If the seller accepts your price or counteroffer, you'll get an indication that the property probably wasn't worth what it was listed for and you have a good chance at getting a fair deal. On the other hand, some sellers may underprice their properties in the hope of generating lots of interest and sparking a bidding war. Unlike on eBay, however, the seller doesn't have to simply sell to the highest bidder: Sellers can reject any and all offers that don't meet their expectations. If you have your heart set on the property, be warned that some sellers may be offended by lowball offers and refuse to work with you if you chose to employ such a tactic. Also, when you offer less than the list price, you may increase your risk of being outbid by another buyer. (For strategies that will help you to come out on top in any negotiation, read Getting What You Want.)

Get an appraised value and a home inspection

Once you're under contract, the lender will have an appraisal of the property done (usually at your expense) to protect its financial interests. The lender wants to make sure that if you stop making your mortgage payments, it'll be able to get a reasonable amount of its money back when it forecloses on your home. If the appraisal comes in at considerably less than your offering price, you may not be getting a fair deal. In fact, the lender may not even let you purchase the home unless the seller is willing to bring the price down. A home inspection, which is completed after you're under contract, will also give you a way to gauge your offering price. If the home needs many expensive repairs, you'll want to ask the seller to make the repairs for you or discount the purchase price so you can make them yourself.

Conclusion

When you're shopping for a home, it's important to understand how homes are priced so you can make a sound investment and reach a fair agreement with the seller. Using these tips, you'll be able to make a confident and well-informed offer on any home in any market.


© 2011 The Globe and Mail Inc. All Rights Reserved.

How To Protect Your Home From Burglars

12 ways to burglar-proof your house
September 05, 2011

There are some simple steps you can take to make your home more burglar proof.

SHUTTERSTOCK A friend of mine recently told me about a break- in at her home. The front door was smashed off the frame and all her jewellery was stolen. The loss of heirloom pieces that had belonged to her mother was devastating.

As a result, she installed an expensive burglar alarm system including cameras at both the front and the back of the house.

While Statistics Canada reports that alarm systems and motion detectors have led to a steady reduction in home break-ins in recent years, they may not deter a determined thief. They should be combined with other measures that help keep burglars from finding your home an attractive target.

Here are some things you can do at little or no cost:

1. Take your name off your mailbox: This will prevent thieves from calling 411 to get your phone number. Many thieves will call a house they are planning to rob first to see if you are home.

2. Never leave a note on the door: If you are going out and expect a delivery, resist the temptation to leave a note on the door asking the post office to leave the package with your neighbour.

3. Stop mail or newspapers: Before you go on vacation, stop mail and newspapers. Even if you leave town for a weekend, have a neighbour pick up these items plus unsolicited fliers.

4. Get a yappy dog: Dogs are not free, but if you have one that barks when people come to the door, pay attention. He may know something you do not. Even the most affectionate puppy like mine can scare away bad guys.

5. Prune trees or shrubs: If you have verdant greenery close to the house, tame it regularly so burglars do not have a place to hide.

6. Hide you spare key carefully: A key left under the door mat, on the ledge over the door or under a flower pot is an “open door” invitation to a dishonest person. Be more creative, or leave it with a neighbour.

7. Doors and windows: Always lock doors and windows and change the locks if you move into a new home or lose the key. Combination locks are becoming more popular because it is easier to change the code than replacing the whole lock. Put security bars on basement windows and secure sliding doors with a stick or a metal bar.

8. Don’t leave valuables in the open: If a thief can see valuables like art, electronics, jewellery or silver through a door or window, you could become a target. Consider a bolted down, fireproof safe.

9. Make the house look lived in: Have the grass cut and the driveway shovelled when you are away. Keep a car in the driveway. Use timers on lights, radios and TVs. Don’t put a message on your voice mail announcing your absence.

10. Put neighbours on alert: Let your neighbours know how long you will be away and if someone is coming to feed the cat. Make sure they have a way to contact you in case they see something strange happening around your home.

11. Don’t widely advertise your plans: Never mention you are going to be away to strangers or tweet your plans to all of your 10,000 followers.

12. Hire a house-sitter: Getting a friend to house-sit while you are away is a great way to keep your house safe from burglars. And if you have pets that need care, in-house care for them could be an added bonus.

Desperate, dishonest people are hard to deter. But they may also take the path of least resistance. With a little preparation, you may be able to prevent that path from leading to your front door.

Also see: How to protect your password from hackers and 7 ways to protect your credit cards on vacation.

What to Know About Holding Open Houses

Back to Will an open house help sell your home?
Will an open house help sell your home?
September 02, 2011

Mark Weisleder

Shutterstock I am often asked whether a seller should agree to open houses when they put their home up for sale. Some say it helps the agent find new clients and does nothing to sell the home. Others say it is necessary to find the largest number of potential buyers. Which is correct?

In practice, there are two kinds of open houses. One is limited to real estate agents, so they can conduct research in the area and be able to recommend the right homes to their buyer clients. The second is open to the general public. This can include nosy neighbours who just want to see your home, buyers who don’t have nearly enough money to consider putting in an offer and even criminals who are there to either steal something from the home during the open house or check out the security system so they can come back later.

Open houses will lead to more exposure for your home and more feedback from potential buyers. On the other hand, since we have so much information available to buyers on the Internet, such as video tours of the entire home, wouldn’t it make more sense to wait for a truly interested buyer to schedule a private appointment to see your home? That shows more commitment.

Still, in a seller’s market, where there are more buyers than available properties, open houses are a good idea so the maximum number of buyers can see the property in a very short time period.

If you do agree to conduct an open house, here are some tips:

• Make sure proper home staging is done in advance so your home appeals to the maximum number of potential buyers.

• Do not stay in the house during the open house. You are more than likely to volunteer too much information, including why you are selling. This will hurt your negotiating position later.

• Make sure your agent will be there the entire time.

• It is not against the law to ask for identification in order to allow someone to enter your home. If they refuse to provide it, tell your agent to refuse them entry.

• Sometimes criminals will come in pairs; while one distracts the salesperson, the other is going through drawers. If a lot of people are expected make sure your agent brings an assistant.

• Ask your agent to check all windows and doors before they leave your home to make sure everything is properly secured.

• Remove all valuables or store them in a safe, if you have one in the home. This includes your laptop and any discs that may have your personal information on them.

• Keep all of your bank and credit card statements out of view, as this could lead to identity theft if someone takes them.

• Take pictures of each room so you can check later if something is missing or damaged during the open house.

Whatever you decide regarding an open house, make sure you are properly prepared in advance.

Also read:

Bully bids a symptom of market madness?

More Mark Weisleder columns

Mark Weisleder is a lawyer, author and speaker to the real estate industry. Email him at mark@markweisleder.com

Do Your Research Before Selling Your House On Your Own!

Back to Should you sell your home on your own?
Should you sell your home on your own?
July 15, 2011

Marc Weisleder

Should you sell your house on your own without an agent?

Shutterstock Everyone wants to sell real estate these days. That is what happens when you have one of the hottest markets in North America.

It means new choices for consumers when buying or selling, but it appears more than 90 per cent of Canadian home sales still involve a professional real-estate agent. The statistic is the same in the United States, where discount brokerages have been operating for the past 10 years. The question is, why?

It is easy to attack real-estate agents and the commissions of up to 5 per cent for buying and selling. But what do you get with the alternatives?

Last October, organized real estate and the federal Competition Bureau reached a deal that allows sellers to use discount brokers and have their listings posted on the MLS system at a discounted fee of a few hundred dollars. Home at Ease and Realtysellers in Toronto are among those offering this service to consumers.

There are also for-sale-by-owner companies, such as the PropertyGuys and ComFree, which will sell you a package so you can sell by yourself, including having your property listed on the for-sale-by-owner website. For an extra charge, you can list on a national MLS website with a registered broker. Their packages cost between $500 and $1,000.

Lawyers are trying to sell real estate through a similar website called propertyshop.ca, where they will also help you negotiate and close your deal, for a fee of around 1 per cent to the buyer and 1 per cent to the seller.

You can also use a public auctioneer to sell your home, for a fee of around 2 per cent to 2.5 per cent total commission.

For-sale-by-owner companies claim to have a unique system for selling real estate. Yet they are not licensed to sell real estate or give advice to consumers. They are not regulated, yet they help people sell their largest investment, without providing any guidance about the pitfalls, especially when hidden defects are not disclosed to buyers.

They are not there to help during the difficult contract negotiations, where mistakes of judgment and in the contract itself can easily be made. Still, more and more sellers are using these services to try and save the commission. Buyers must therefore be very careful before signing anything with a private seller. This includes verifying the lot measurements by asking to see the seller’s deed and survey, conducting a home inspection and asking the seller to represent that they have never had issues with water penetration into the home, or to provide details of any corrective action taken.

Discount real-estate brokerages that merely post listings on an MLS system are not, in my opinion, providing the due diligence required of their provincial codes of ethics. Buyers must therefore conduct the same due diligence noted above before committing to any purchase.

Lawyers can assist with negotiations and can certainly close a deal. However, lawyers are not salesmen or marketers. Will they be there at 11 p.m. to help reach a deal? Do they have the network of buyers and sellers that agents build up over the years, not just from this country, but from all over the world?

With auctioneers, you may pay less in commissions, but are you sure they will attract the most buyers, to get the price you want?

Real-estate agents are far from perfect. For every consumer who tells me about a great experience, I hear many more about incompetent agents who do not properly protect their clients, whether it is overpaying in a bidding war, not listening to requests or receiving unwelcome surprises after closing. I believe the real-estate industry needs to do more to properly mentor new agents, and to reduce the number of part-time agents who don’t do a proper service to themselves or their clients.

In all cases, buyers and sellers need to do a lot of research and ask questions before selecting anyone to assist with buying or selling their next home. Remember, if it was easy, everyone would be doing it.

Also read

Why I wouldn’t sell on my own

Yes you can sell without an agent

Mark Weisleder is a lawyer, author and speaker to the real estate industry. Email mark at mark@markweisleder.com

June Market Watch Released

Greater Toronto REALTORS® release June Resale Market Figures

Toronto, July 6, 2011 – Greater Toronto REALTORS® reported 10,230 home sales through the TorontoMLS® system in June 2011 – up 21 per cent compared to June 2010. This number represented the third best June result on record behind 2007 and 2009. The number of transactions during the first six months of 2011 amounted to 48,189 – down by 4.5 per cent compared to the first half of 2010.

“The strong June result capped off an interesting first half of 2011,” said Toronto Real Estate Board President Richard Silver. “The pace of sales was a bit sluggish at the beginning of the year, but rebounded in May and June. Because of the positive affordability picture, home buyers remained confident in their ability to purchase and pay for a home over the long term.”

The average price for June transactions was $476,371 – a 9.5 per cent increase over June 2010. Through the first six months of the year, the average selling price was $467,169 – almost an eight per cent increase compared to the same period in 2010.

“While sales have been strong, we would be on track for a record number of transactions in 2011 if not for the decline in listings so far this year,” said Jason Mercer, the Toronto Real Estate Board’s Senior Manager of Market Analysis. “Tight supply meant more competition between home buyers and an accelerating annual rate of price growth in the second quarter.”

“Home owners will likely react to the stronger price growth by listing their homes in greater numbers. A better supplied market would result in more moderate price increases,” continued Mercer.

Toronto Housing Demand Surging!

GTA housing demand surging
July 06, 2011

Tony Wong

Those cranes on the Toronto skyline aren’t going to disappear anytime soon.

Building permits in Ontario were up by 15 per cent or a seasonally adjusted $2.17 billion in May, compared with $1.89 billion in April according to figures released Wednesday by Statistics Canada.

Much of that was because of the strong condominium market in the Toronto area, and intentions to build commercial projects. Residential permits rose 22 per cent to $683 million in Toronto, while non-residential projects which include commercial, industrial and institutional building, rose by 24 per cent to $488 million.

“Ontario rebounded from the recession with significant momentum,” said a report by Scotiabank also released Wednesday.

Building permits are considered a forward looking indicator of future economic activity. Developers who take out permits today will likely break ground in the following months, buying supplies and creating jobs.

While the province looked to be in relatively good shape, the bank said significant challenges still remained for the province, including a high Canadian dollar and a subdued economic recovery in the United States.

The bank said housing activity would likely slow in the second half of the year as high home prices alongside moderate income growth is expected to dampen affordability.

However, there hasn’t been much evidence of that in the Toronto market in the first half of the year.

Toronto existing home sales are up by 21 per cent in June from a year earlier, according to figures released Wednesday by the Toronto Real Estate Board.

The average price of a home in June was $476,371, up by 9.5 per cent from the same time a year ago.

“Housing demand is currently surging in the GTA but remains flat and relatively soft for all of Canada,” said housing analyst Will Dunning. “Economic confidence is in a weakening phase in much of the world, and this should rein-in expectations, hopefully reducing the frothiness, although not yet a bubble in the GTA.”

The Toronto board said this was the third best June on record for sales, behind 2007, which was the all time high, and second-place 2008.

“The pace of sales was a bit sluggish at the beginning of the year but rebounded in May and June,” said TREB president Richard Silver in a statement.

A strong June capped off a half year that wasn’t quite as strong as 2010 and down by 4.5 per cent, but solid by historical standards.

One problem, according to analysts, is that listings have been down. In June, active listings were down by 24 per cent compared with last year, creating a supply issue.

“While sales have been strong, we would be on track for a record number of transactions in 2011 if not for the decline in listings so far this year,” said Jason Mercer, the board’s senior manager of market analysis. “Tight supply meant more competition between home buyers and an accelerating annual rate of price growth in the second quarter.”

Also read:
Cheaper real estate fees are coming