Balanced conditions provide a stable backdrop for today’s home buyers and sellers

If you're planning on finding your next dream home, then you're probably going to view several homes on the market that meet your criteria.

You will want to make the right purchasing decision for you and your family. So, it's wise to be savvy when viewing properties for sale. Here are some ideas on how to do that.

• Bring a notepad. Take notes, not only of the home's characteristics, but also of how you feel. For example, can you imagine yourself happily cooking up a storm in the kitchen? Do you see yourself entertaining family on the back deck?

• Bring a measuring tape. Will the furniture you plan to bring fit? Your dining room suite? Your home fitness equipment?

• Ask about maintenance. Is the property in a good state of repair? Will anything need to be replaced soon, such as the windows?

• Bring a camera. Take lots of pictures of the home's exterior features. Don't make the mistake of thinking you'll remember how everything looked.

• Check out the area. Do other homeowners take good care of their properties? This shows pride of ownership. How is the noise level? Is there a playground, or another area feature nearby?

• Make a list of compromises. For example, are there only two bathrooms instead of three and, if so, can you live with that?

• Make a list of bonuses. What features does the home have that, are not a necessity, but would be nice to have? For example, an entertainment bar in the basement recreation room.

• Remember your budget. Is the price within your range? Can you afford to buy this home?

The savvier you are when viewing properties on the market, the more likely you will be to find your next dream home.

What are the differences between buying a brand new home or a re-sale one? There are alot of factors to take in consideration besides the age. Yes, it is very nice to own a property that no one has lived in before, but there are downsides to buying new as well. Here is a list of pros & cons associated with each. Be informed and make the best decidion!

Brand New - The Pros

1) Personalized Choices

When purchasing a brand new home, you may be able to upgrade or choose certain items such as siding, flooring, cabinets, plumbing and electrical fixtures and have these installed for you prior to taking possession.

2) Latest Codes & Standards

With any new construction the latest building codes, electrical and energy-efficiency standards will be applied. You can feel safe knowing that you are getting a product with the most recent safety standards.

3) Low Maintenance Costs & Open Bylaws

Since the building is brand new, you will general find lower monthly maintenance costs in strata properties. The building will fall under the required warranty coverage so there is not a need to have a large contingency fund at this stage. You will also find the most open bylaws with new construction. As time goes on and problems arise restrictions on pets and rentals are usually imposed.

4) Builder Warranty

In British Columbia, builders must be licensed by the Homeowner Protection Office and arrange for third-party home warranty insurance. As a minimum, homes built by Licensed Residential Builders must have the
2-5-10 Year Home Warranty Insurance - the strongest construction defect insurance in Canada. Some new homes have warranty insurance coverage that exceeds the minimum requirement.

Brand New - The Cons

1) Price is Non-Negotiable

When you are buying directly from the Developer the asking price for strata properties is generally firm and there is no room for negotiation. The only negotiable items when buying brand new units are usually the extra items, such as storgae lockers and parking stalls, or the deposit structure, but even this is not guaranteed. The purchase price, for the most part, is set in stone.

2) Sales Tax Applicable

GST/PST sales tax applies to all brand new construction. This means that when you purchase a brand new home you must pay the 5% GST and 2% Transitional Tax or PST on top of the purchase price. There are some government rebates that a purchaser may be eligible for as a first time home buyer buying a property under $450,000, but the sales tax must still be paid upfront at closing and rebates (if eligible) will only be for a portion of the tax amount.

Some sales centres for new construction homes will include the NET sales tax within the purchase price. This means that they are including the tax amount payable AFTER eligible rebates. In return, you must assign your rebates to the developer at the time of purchase.

For more information about the GST New Housing Rebate program, visit the Canada Revenue Agency website at, http://www.cra-arc.gc.ca.

3) Extra Costs

Don't be fooled by the show suites - these units usually have all "extra upgades" that are not included in the purchase price, which can add up to be anywhere from an extra $20,000 on top of the purchase price! So if you want to add the shelving units, fancy appliances, and crown moulding you see in the show suite, you better be ready to pay for them!

4) Buying from a Floor-Plan

When you are purchasing a pre-sale, you are making the decision to buy a unit largely based upon the building model and floor-plan. You do not actually SEE the home that you are buying. Athough you may be using the show suite as a guideline, the end result may come out quite differently than you were anticipating. In addition, the contract of purchase and sale prepared by the Developer usually contains a variance clause, allowing the final unit to vary by a specified degree from the original floorplan. This means that in the end there could be a wall where there was none before, or that the square footage may be slightly different than the original plan. Unless you can see the actual unit, you do not really know exacly what you are buying.

5) Things can Change

Issues can arise during construction and dates can be post-poned, or even moved earlier! The contract of purchase and sale prepared by the Developer usually contains a clause allowing the Developer to push or pull the dates a certain number of times upon giving notice to all purchasers. So when you think the Completion Date will be next May, it may end up being next winter and there is nothing you can do about it.

6) Developer's Contract of Purchase & Sale

Pre-sales do not use the same standard contracts that are used when purchasing re-sale homes. Rather, pre-sales have a contract of purchase and sale that has been drafted specifically for the Developer. This means that there are extra clauses inserted that allow the Developer to extend dates, etc. These contracts are much more lengthy than standard contracts and they must be read in full so that you know exactly what you are getting into. In addition, the sales representatives at the presentation center, like the contract, are working for the Developer. If you do plan to buy a pre-sale unit, bring in an outside Realtor to examine the contract and best represent you.

Re Sales - The Pros

1) Price is Negotiable

Unlike pre-sale units, the final purchase price for re-sale properties is almost always less than what the Seller is initially asking (unless a hot market with multiple offer situations). With the guidance of a Realtor, you can negotiatie the purchase price by any amount, depending on the current market situation and the motivation of the Seller, and you have the potential to get the property for anywhere from $2,000 to $100,000 less than asking!

2) No Sales Tax

Unlike brand new homes, you don't have to pay GST or PST on re-sales, as this sales tax is only paid once when a property is purchased for the very first time.

3) What You See is What You Get

You are not buying a property based upon a floorplan or building model and there is no "variance clause" allowing the final product to come out differently. What you see is what you get! 

4) Your Contract of Purchase & Sale

Re-sales use a standard contract of purchase & sale that is drafted, with the guidance of your Realtor, to fully represent you. You can ask for anything you want in this contract and anything can be negotiaited with the Seller. You are not using a contract of purchase & sales that has been specifically drafted to represent the Developer's interests.

5) Established Neighbourhoods & Amenities

Newly developed areas may take years to establish the proposed schdools, shopping malls and services, but these will all be in existence in previously developed areas.

Re Sales - The Cons

1) Warranty Coverage

The older a building gets, the less warranty coverage it has. After 10 years you fall out of the builder's 2-5-10 warranty coverage and it becomes increasingly important to have a healthy contingency reserve fund for strata properties. Detached homes will also fall out of this coverage after 10 years, at that point any major repairs will be at the cost of the owner.

2) May need Updating or Repairs

Before purchasing a re-sale home it is very important to examine whether any major repairs are needed, as these can ultimately cost you money. Make your offer subject to a professional inspection in order to fully evaluate whether the previous owner has kept the home well maintained, or whether you will need to make major repairs. If big repairs are needed, this should ultimatley be reflected in the negotiated purchase price.

3) Higher Maintenance Fees

As strata properties age, maintenance fees go up in anticipation, or need, of upcoming repairs. A well-prepared strata will have a repair plan and budget that keeps on top of all maintenance so that strata fees are kept in moderation while building repairs are carried out. This is why it is important to write an offer subject to review all strata documents in order to determine the competency of the strata council.

If you're listing your home for sale, then of course you’ll want to make the best impression possible on potential home buyers. But, just to have a little fun, say you don't want to sell your property. What could you do to discourage those who view your home?

Well, you could have your pets in the home during viewings. That will certainly make it uncomfortable for some buyers – especially those with pet allergies.

You could also leave personal items around, such as family pictures and trophies. That will make it more difficult for a buyer to imagine himself and his family living there. It might even make him feel a bit like an intruder!

Clutter in bedrooms, closets and other areas of the home will make those spaces feel less spacious than they really are, as well as make visitors feel uncomfortable.

If you really want to turn off a buyer, then put off doing any minor repairs. A dripping tap, flickering light, dent in the wall, or other maintenance issues are certain to gain a buyer's attention. 

If all that doesn't shoo away a buyer from your home, then stick around during a viewing and follow him and his family from room to room. That will certainly make him feel uneasy.

Of course, we're just having a bit of fun here. When you put your home on the market, you want to sell it.

It’s easy to avoid all the pitfalls described above and ensure potential buyers appreciate the full value of your home.

So when you’re preparing for a showing, think of ways you can make your property appear its best, and make the buyer feel welcomed and comfortable viewing it.

Want more ideas on how to sell your home quickly and for the best price? Call today.

News Release

Real Estate Board’s message this election: Help reduce the PTT

VANCOUVER, BC – April 23, 2013 –  BC voters head to the polls on May 14 and the Property Transfer Tax (PTT) is a top election issue for the Real Estate Board of Greater Vancouver (REBGV).  

The REBGV has launched a campaign to raise voter awareness of the need for the next government to reduce the PTT. 

“Our goal is to send a strong message to this year’s candidates that it’s long overdue for government to reduce the burden of the PTT on home buyers,” Sandra Wyant, REBGV president said.

To support this campaign, people can “like” our Facebook page at facebook.com/helpreducetheptt.

The province introduced the PTT 26 years ago. It was structured to add 1 per cent on the first $200,000 of the purchase price, and 2 per cent on the balance. The government of the day touted the PTT as a wealth tax, as just 5 per cent of homes in Greater Vancouver sold for $200,000 or more. 

Since 1987, home prices have increased substantially. Yet, after all these years, the tax’s structure hasn’t changed. Today, 96 per cent of homes in Greater Vancouver sell for more than $200,000.

“It’s time to relieve some of the unfair tax burden the PTT places on home buyers and we’d like to know where the candidates and parties stand on this issue,” Wyant said. 

The PTT adds $10,000 to a $600,000 home. It annually generates $780 million for the provincial government. This money goes into general revenue to fund public services. 

The PTT is paid each time a property changes hands in the development process. When a developer buys raw land, the developer pays the PTT. When a builder buys lots from the developer, the builder pays the PTT. When a home buyer buys a home from the builder, the home buyer pays the PTT. Every time that same home is sold, the next buyer pays the PTT.

The REBGV is asking candidates if they would support increasing the one per cent threshold to $525,000 from $200,000. This would mean that on a $600,000 home, the PTT would be $6,750, instead of $10,000, saving home buyers $3,250. 

“We know it would be difficult for any future government to replace the revenue generated from the PTT, but this is a case where the notion of tax fairness needs to apply,” Wyant said. “The next government of BC should adjust the PTT to better reflect the tax’s original purpose,” Wyant said.

When you’re looking for a new home, you want to find one in a great neighbourhood – or, at least, in a neighbourhood that is on the upswing. How can you tell if a particular area is improving? Here are some common indicators:

• Pride of ownership. Take a walk around the neighbourhood. Do you get a sense that people take good care of their homes? Are the lawns mowed? Is the landscaping trimmed? Are flowers planted? Homeowners are more likely to look after their properties when they like where they are living.
• Home improvements. Are people investing in their homes? Are they getting their driveways re-done? Their windows replaced? Are there signs of home improvement projects? If so, this is a clear indication that homeowners like the area enough to invest in their properties.
• Real estate sales activity. Do homes tend to sell quickly in the area? Do they sell for a good price? If so, the neighbourhood is probably in demand. If people want to live there, it's a desirable area.
• Business investment. Are businesses investing in the surrounding area? Is there an increase in the number of upscale shops, health clubs, restaurants, and other commercial enterprises that often locate near desirable neighbourhoods?
• Community involvement. Are there signs that the community plays an active role in the look and lifestyle of the neighbourhood? Are there neighbourhood picnics, yard sales and other get-togethers? Check Facebook.com to see if the neighbourhood has a community page.
• City plans. Find out what plans the city has for the area. Will there be road improvements done in the near future? Are there any major construction projects on the schedule, such as a new school or community centre. Although such projects can be disruptive in the short term, they may improve the neighbourhood – and, as a result, boost the value of any home you buy – in the long-term.

Of course, the best way to find out the desirability of a neighbourhood is to talk to a good REALTOR® who knows the area. Call today.

With the reintroduction of the GST/PST tax regime on April 1st, we have received some questions about how this will affect the real estate market. The short answer is: There will be a minimal effect; some people will win, while others will lose. However, we must break down its effects into 3 separate categories: New Construction, Resale, and Fees.

New Construction

This category is the one that is likely to be most influenced by the change back from HST to GST. All new residential construction will be taxable at the 5% rate rather than the previous 12%. However, the government will also be eliminating the New Housing Rebate, and adding a 2% transitional tax (for a total 7% rate, down from 12%). With the lower tax burden, there should be a net savings for buyers of newly constructed real estate in B.C.

But that's not the end of the story. The change back from the HST to the GST & PST will result in higher construction costs as government rebates for input costs are eliminated. That means that while the tax burden may go down on these homes, the cost base will go up.

The net result is that for homes valued at more than $525,000, the overall cost will likely go down, while homes that are valued at less than $525,000, the overall cost will likely increase.

For more details, see the government's GST/HST info sheet: http://www.cra-arc.gc.ca/E/pub/gi/gi-132/gi-132-e.pdf.

Resale

The change back to GST should have little to no effect on the resale market as 'used' homes are not subject to HST and will not be subject to GST or PST. There is no change to the Province of B.C.'s Property Transfer Tax, which will remain the same: 1% on the first $200,000; 2% on the balance.

Fees

The change back to GST will apply to the fees associated with a transaction and will lead to a slight decrease in these fees. That said, many of the fees currently associated with transacting a home already charged both GST & PST so there will be no change; however, the taxes on a realtor's fees will decrease by 7%. For a $1,000,000 home, real estate commissions typically average around 2.95% of the purchase price. A tax decrease of 7% on this amount means that the typical realtor commission should decrease by roughly 0.2065% of a home's purchase price.

Taking all of this into account, it is clear that the change back to the GST will have a positive effect on the market, but only slightly so. That said, depending on your asset class, you may end up behind.

To learn more, please feel free to contact me at the address above.

By GoldenGirlFinance.com

All of the recent changes to Canadian mortgage rules make it pretty clear: Regulators want to dissuade first-time homebuyersfrom purchasing a property with nothing down. Yet, despite changes that did away with 100 percent financing back in 2008, and the recent barring of cash-back mortgages by the Canada Mortgage and Housing Corp., buyers can still manage to take a step up the real estate ladder with little upfront cash. The question is - does it make financial sense?

Let’s weigh the options….

Why it's best to have a robust down payment

While saving for a sizable down payment can be a huge financial burden, it's an investment that can save you a considerable amount of cash in the long run. Remember – the smaller your down payment, the riskier you look to a bank. Low down payment home mortgages require more leverage, and high leverage borrowers are open to a substantially higher risk of bankruptcy.

While larger down payments inherently help lenders, they also benefit borrowers in a variety of ways. This is especially true for buyers who are planning to sell in the early years of their residential mortgage. With the recommended 20 percent down payment, you'll generally have enough equity built in to your property to cover closing costs, even if there has been a 10 percent decline in the market value of the home.

Alternative down payment options

Coming up with tens of thousands of dollars for a down payment isn't always an option, especially when you're a young, first-time homebuyer. Houses are expensive - no ifs, ands or buts about it! At a time when the average Canadian home price hovers around $356,000, the Canadian Association of Accredited Mortgage Professionals has found that more than one-fifth of all renters have less than $5,000 put away for a down payment.

So what's a cash-poor house hunter to do?

For many, the answer is to seek out an alternative down payment source.

Borrowing from nontraditional sources

When buying a home in Canada, you generally need a minimum down payment of 5 percent of the purchase price of the home. It's worth noting at this point that legislation prohibits you from borrowing that 5 percent from your mortgage lender if that lender is a bank or federal trust company.

However, you're free to borrow your down payment from a number of different credit sources. Popular choices include a line of credit, personal loan, or even a credit card. Of course, tossing your down payment onto your VISA isn't the most responsible way to manage your investment (don’t do it!).

If you're thinking about borrowing your down payment, get ready for some serious interest charges. More often than not, the interest rate on a borrowed down payment will be much higher than that on your mortgage, or have a riskier variable rate, at the very least.

The cash-back option

It's worth noting that any lender who isn't federally regulated (like a credit union, for example) can still offer cash-back down payment mortgage products. Not surprisingly, the interest rates on these offers are astronomical. Homebuyers are also required to come up with the cash for closing costs, including legal and inspection fees, as well as land transfer taxes, and other fees.

Be wary: There's speculation that the loophole that enables some institutions to offer this product will be eliminated in 2013 through new mortgage insurer and/or provincial regulations.

The RRSP Home Buyers’ Plan

First-time homebuyers are encouraged to take advantage of the government's Home Buyers’ Plan (HBP) in order to draw upwards of $25,000 from their RRSPs in order to fund their down payment. And while this is a great option, it comes with a few red flags. First, draining your retirement savings in your 20s and 30s means you'll risk losing years of tax-deferred investment gains. Secondly, any installments that aren't paid back before the deadline are taxed as income on that year's income tax statement. Statistics show that as many as one-quarter of HBP participants miss or underpay on an installment.

Going with a gifted down payment

Generous relatives are often willing to help fund a down payment through a financial gift to a first-time homebuyer. In most cases, however, lenders will only consider gifted down payments from a parent, grandparent or sibling.

It's important to note that a "gifted" down payment is very different from a personal loan from a relative. With a gift, there's no expectation to pay the relative back. If you're borrowing money from a relative in order to make ends meet, this is not a gift. It's an additional liability that your lender will need to consider as it increases a borrower's debt obligations.

Proceed with caution & get advice

When it comes to buying a house with someone else's money, always remember to be careful. Just because you qualify for a cash-back mortgage or have enough squirreled away in your RRSP doesn't mean you're ready to shoulder the responsibilities of a mortgage. Talk with an accredited mortgage broker and your trusted financial advisors before you make your final financing decisions.

Did you know that, next to heating and air conditioning, your lights consume most of the energy in your home? In fact, you can lower your electricity bill quickly – and substantially – simply by being smarter about lighting.

First, consider replacing your conventional light bulbs with the energy-saving variety. You've probably seen these at your local home improvement centre. Compact florescent light bulbs, for example, use up to 75% less energy.

Second, lower the wattage in some outlets. Is it necessary to have a 100 watt bulb in the furnace room? Try a 60 watt bulb.

Finally, think before you turn on the lights. Do you really need them on? Perhaps there's an alternative, such as opening a window blind to let in more sunlight.

When you see a new home you like on the market, it's easy to get distracted by all the features you love – the wrap-around backyard deck or the spacious rec room with plenty of space for entertaining. You just need to make sure that in all that excitement you don’t overlook any expensive maintenance issues that could be just around the corner.

Nothing lasts forever. The major components of every home – from the furnace to the roof shingles – need to be replaced eventually. Knowing when such maintenance issues are likely to arise can help you make a smarter decision about the home you're considering.

How do you do that?

When viewing a property, ask for the age of the major components of the home, such as the roof shingles, furnace, air conditioner, water heater, and appliances. Roof shingles may look merely weathered in spots – and you might think they have years of service left – when, in fact, they're due to be replaced in a year.

Also pay close attention to the backyard deck, fencing, flooring, and windows. Do any of those components look aged, worn, and in need of repair or replacement sometime soon?

Finally, don't forget to check the kitchen and bathrooms. Sinks, faucets, bathtubs, showers, and cabinetry have a life-span of about 10-15 years.

Of course, there are things you can't see, such as wiring, plumbing, venting, and other components of a property that may require maintenance soon. That's why it's so important to make any offer to purchase a home conditional on passing an inspection by a qualified home inspector.

Want more ideas on buying the right home for you? Call today.

There has been a lot of mortgage news recently as the Big Banks fight for market share with record-low mortgage rates. Last year, we covered how BMO Bank of Montreal started the mortgage wars by offering a 2.99% 5-year fixed rate mortgage. Other lenders followed suit, matching the 2.99% rate, but generally offering only a 4-year option. After a month, RBC Royal Bank signaled the end of this war by raising its rates by 50 basis points to 3.49%. Other lenders followed RBC's lead in order to shore up their profit margins.

One year later, in preparation of the Spring Housing Market, BMO is once again offering a posted 2.99% rate while other lenders are offering a 2.89% 5-year fixed rate mortgage, much to the consternation of the Minister of Finance

(http://www.theglobeandmail.com/report-on-business/economy/housing/flaherty-warns-banks-over-igniting-mortgage-war-as-bmo-cuts-rates/article9251525/).

As a consumer, given the current fixed and variable rates available, what should you do?

Since 1975, variable rate mortgages have proven to be more financially beneficial 82% of the time. That said, some experts are now saying that given historically low rates, we may now be in that 18% period where it makes more financial sense to lock into a fixed rate mortgage. Remember the current rate is far below the historical average, which, since the 1950s, has generally remained north of 6% for the majority of that time.

Some things you should consider when choosing between a fixed- and variable-rate mortgage:

Choose a variable-rate mortgage if:

• You think interest rates will remain at the same level or lower during the term of the mortgage
• You think there's a possibility that you may sell prior to the end of the term and wish to avoid pre-payment penalties
• You can afford a possible rise in rates and do not worry about it

Choose a fixed-rate mortgage if:

• You think interest rates will rise more than the difference between your current fixed and variable rate mortgage options
• You have no plans on selling your home during the mortgage term
• You want to know what your payments will be and have peace of mind that they will not change

Something else to consider is that some lenders will allow you to first enter a variable-rate mortgage and then switch or 'lock-in' to a fixed rate mortgage if rates begin to rise.

In the end, your personal situation is unique and you should speak to a professional broker or mortgage specialist to determine what the best option is for you. If you wish to speak to someone, please contact me at the address below.