5 things to know when selling a home by yourself

It’s not as easy as it seems…

Is it worth it to try and sell your home on your own? Mark Weisleder writes about why you should use a real estate agent to sell your home.

 

 

 

 

 

 

 

 

 

Mark Weisleder: “Whenever I write about why you should use a real estate agent to sell your home, the mail pours in. I’m sure it will this week, too.

I am a real estate lawyer and write courses and teach industry players how to do their jobs more professionally and ethically. I also believe that in many cases you will be better protected and make more money selling your house if you use an agent. Not always, but in many cases.

Here’s why I think that:

You don’t have to pay upfront: Do-it-Yourself marketing companies are not real estate agents. You usually pay $1,000-to- $2,000 up front, for pictures, videos and to have your home listed on the MLS system. However, you get no money back if your home doesn’t sell. With a real estate agent, if your home doesn’t sell, you pay nothing, even though the agent may have spent a lot of time marketing and using all of their own and their company contacts to sell your home.

Abidding war is unlikely: Bidding wars are the norm in the GTA and other parts of Ontario. In virtually all cases, the home is sold by a real estate agent. The reason is that it takes experience to price the home properly. Second, the process is fair because no one knows what anyone else is bidding. With a private seller, there is no duty of confidentiality, so the seller can tell one buyer what another buyer is bidding. Buyers do not trust the process so there is no bidding war.

You negotiate on your own: When you do it yourself, it is difficult to know what a fair price is for your home. You might have to pay an appraiser to find out. When a buyer hears that you are saving commission, they will want to split the savings. So you don’t get all the commission savings and you also have to negotiate with a buyer who is likely represented by a real estate agent. This agent will use all their experience to figure out how low you will go, while giving nothing away about their own buyer.

Not knowing your obligations: Sellers cannot rely on the term “Buyer Beware.” You have to disclose problems with your home and you cannot hide or cover up anything. Otherwise, you can still be sued after closing. Who wants a court fight long after you move?

Lenders are more cautious when they see a private deal: I have seen deals collapse this way. In one case, the lender sent their own appraiser because they were concerned the buyer paid too much money. The appraiser agreed and the buyer’s loan commitment was cancelled. The deal died.

In another case, the seller was worried the buyers did not have proper financing. They wanted more proof about the buyer’s financial situation than the buyer was willing to give. Lawyers became involved when things could not be worked out amicably. When buyers are represented by agents, they are usually pre-qualified in advance so the seller can have comfort that they will have the money available to close the deal on time.

When you’re out for a walk this weekend have a look at the For Sale signs and see how many are represented by realtors. There’s a reason for that.

By all means, try and sell your house on your own, just beware that it’s not as easy as it looks.”

Mark Weisleder is a Toronto real estate lawyer. Contact him at mark@markweisleder.com

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10 tips for first time real estate investors

If you plan to five into real estate as an investment do some research first.

Many people consider investing in real estate as a way to build a nest egg and have tenants help you pay the mortgage. There are pros and cons to taking that leap, but if you do, here are 10 things to know.

1.Visit with a mortgage broker or your bank to determine how much money you can afford to borrow responsibly for your investment. www.RealEstateFinance.ca

2.Look for properties that generate a positive cash flow. What this means is that the rent that you receive from tenants should be enough to pay your mortgage payment, property taxes, utilities and insurance bills. Budget an additional ten percent on your overall payments to pay for minor repairs that will invariably arise. Currently this is very difficult to find in the Toronto area. Do not be afraid to expand your search to smaller communities, where you will be able to find more properties that match your search criteria.

3.Use an experienced local real estate agent who also invests in real estate themselves. Investors learn about the pitfalls only through first-hand experience, both good and bad, and you want that experience working for you as well.

4.Have any property inspected by a professional home inspector. In addition, find a contractor who you can trust to give you the right advice for any minor repairs or renovations that may be required, especially for older properties, in order to add the most value to your investment.

5.Consult with your accountant and lawyer as to how you will take ownership of the property. There are some benefits in taking title in the name of a limited company, in order to protect yourself against personal liability should someone get hurt on the property and for other tax planning purposes. However, on the other hand, you will also have to pay about $1,000 in incorporation fees and have to file a separate tax return each year for your company.

6.Keep proper records of income and expenses for your investment property. Do not mingle these with your personal bank account as it will become difficult to properly trace this when you have to file a tax return at the end of the year, regardless whether you own the investment in your personal name or in a company name.

7.If you are buying with a partner, make sure you have a proper partnership or joint venture agreement to protect both of you should things not work out as planned. In particular, provisions should be made if one of the partners wants to sell and the other one doesn’t, one partner is not paying their share of expenses or what happens if one of the partners dies.

8.Hire an experienced property manager to assist you in finding suitable tenants and dealing with any ongoing maintenance, repairs or other complaints by tenants. You do not wish to be woken up in the middle of the night to handle emergency repairs. Budget an additional $100 per month for this service.

9.Be careful not to buy and sell properties quickly. The Canada Revenue Agency may view this activity as business income. This means that you will have to pay tax on any profit you make on your investment. It is preferable to buy properties for the long term, rent them out and use your positive cash flow to reduce the amount of your mortgage owing, building equity in your property. If you then sell years later for a profit, it will likely be classified as a capital gain and thus one half of your gain will be tax free.

10.Don’t be afraid to walk away if the deal does not work for you, no matter how much time you may have invested in the property.

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Toronto Ranked 4th Most Attractive City in the World!

Toronto ranked 4th most attractive global city

Toronto attractive cityToronto… you are too hot. Yep, we’ve made the honour roll in yet another one of those global city rankings, this time based on attractiveness. The survey, conducted by Pricewaterhouse Coopers (or Pwc for short), puts London at the top of the heap, followed by New York, Singapore, and Toronto. Hurray? While it’d be nice to win this sort of thing, I suppose the 4th place ranking is a bit more worthy of bragging when one considers that we were the only Canadian city to make the top 30.

Of the various attractiveness markers accounted for in the survey, education, technology, transportation and general quality of life are crucial factors in the ranking. Toronto, you might be surprised to hear, was one of the highest ranked cities for transportation and infrastructure. Perhaps this draws the entire survey into question? Or perhaps we have it much better than we think.

Toronto ranked best in Canada for public transit (really)

Toronto ranked best in Canada for public transit (really)

Toronto transit best in CanadaToronto is the best city in the country when it comes to public transit. Yes, you read that correctly. According to a new report from Walk Score, we narrowly edged out Montreal for the top spot among Canadian cities. Of the 34 cities ranked, Vancouver rounded out the top three. Key criteria to the ranking, which is based on a score out of 100 (of which Toronto received 78 to Montreal’s 77), include types of service (light/heavy rail, buses), transit coverage, and frequency of routes/stops.

This must come as quite the shock if you find yourself regularly complaining about public transit in this city. Could other big cities really have it worse? Assuming the methodology is sound, the answer is a resounding “yes.” Because here’s the real mind-boggling part. While Toronto tops the list for Canadian cities, it also ranks a very respectable third when stacked up against US centres, surpassed by only San Francisco and New York!

Income For Life For Canadians

I recently read the book “Income for Life for Canadians” and it is a great read for anyone interested in buying real estate for investment purposes! It is specifically directed at Canadians and has some honest tips that most other investment “gurus” will not tell you. Be aware that most of these investment “gurus” are based in the United States and some of them have not even invested in real estate at all! The majority are making most of their income from sales of courses and seminars.  The following is the main key points to this enlightening book:

– The nicer the home and area = the better the tenants! This is very important if you want passive income from your investments instead of dealing with problem tenants in bad neighbourhoods frequently. With a great tenant, you will have a stress free investment that goes up in value much more quickly.

– The best “deal” and the cheapest house is not really the best deal. Usually the worst house on the street will need work before we can find a tenant and that costs money as well as loss in rental income with the home is vacant. With a home in move-in condition, you can immediately advertise and place a tenant to receive rental income right away and avoid costly repairs. Many times the repairs will run into problems that can cost much more than the initial quotes. If the home needs minor repairs like paint and carpeting this can be okay as long as the work can be completed in a week or two after taking possession of the home.

– A rent to own program can be much more profitable than a straight rental property. One of the key benefits of this program is that the tenant-buyers act like owners and they want to rent and keep a nice home they can eventually own. These are some of the best tenants you will ever have! (I can help you set up this program as well as find any tenants.)

– Rent to own is buying into demand. Most tenants are only renting so they can save up to buy a home. Make this process easier for them with the RTO program.

– Some of the most successful investors, myself included, do not do a single thing before renting out the home. They are investors, not contractors. Good homes always rent out faster and for more money, to better tenants!

Please contact me today for a free real estate investment consultation (we do not charge fees like the seminars and courses charge! Plus we will find you real properties to look at!) I can be reached by phone at 647-287-8744 or by email at info@kylebouchard.ca

Home Prices and Sales Keep Climbing in Toronto

Home prices and sales keep climbing in Toronto

Toronto Real Estate Board predicts growth will continue right through 2014.

T.O.

Resale condo transactions saw the biggest increase of any sector of the housing market, with sales up 27.8 per cent in December, year over year, the Toronto Real Estate Board said Monday. Pictured are condos in Toronto’s Liberty Village.

Neither weather nor warnings that Toronto’s housing market is overpriced managed to dampen a market that continued to defy the naysayers through a surprisingly strong 2013.

Total home sales were up 2 per cent last year over 2012 andhouse prices ended the year up 5.2 per cent, despite a wet spring and one of the snowiest pre-Christmas months in years, according to figures released Monday by the Toronto Real Estate Board.

The average selling price was $523,036 across the GTA, compared to $497,130 in 2012. Even the resale condo sector ended the year on a high, despite widespread warnings in 2012 around oversupply and dwindling demand.

“Both those numbers (gains in overall sales and prices) were high-side surprises,” says BMO chief economist Douglas Porter.

“The market is definitely too hot for comfort, but that’s more of a Toronto story than a Canadian story. I just can’t believe we will get another year where we will see a 5 per cent price increase. I suspect the gains will be more moderate this year.”

Sales were up 14 per cent across the GTA in December alone, year over year — in part reflecting the fact that December of 2012 was an even softer time for sales than usual — with the average sale price coming in at $520,398 compared to $477,756, says TREB.

The one thing that could take some heat out of the market — an increase in interest rates — could come later this year, but increases are likely to be gradual, economists and mortgage brokers predict.

Finance Minister Jim Flaherty warned in an interview with CTV on Sunday that Canada will face global pressure to raise rates in 2014 as the U.S. Federal Reserve pulls back on its stimulus efforts and the U.S. economy rebounds.

Even last year’s slight, and unexpected, bump up in long-term rates had an almost immediate impact on the Toronto housing market as buyers rushed to get in before 90- and 120-day mortgage commitments expired. That helped drive up sales for 2013 but is likely to result in somewhat dampened demand, especially among first-time buyers, in 2014, housing watchers expect.

The country’s largest real estate board predicts price growth will continue and exceed inflation in 2014, largely because demand for lowrise houses continues to far outstrip supply: New listings were down almost 4 per cent in December, which helped fuel frantic bidding wars in some highly sought after Toronto neighbourhoods close to the downtown and transit lines.

“The seller’s market conditions that drove price growth in the second half of 2013 will remain in place in many parts of the GTA. Some neighbourhoods, especially those characterized by lowrise house types like singles, semis and townhomes, will continue to have less than two months of inventory,” noted TREB senior manager of market analysis Jason Mercer.

Six months’ supply of housing inventory for sale is considered a healthy, balanced market. A shortage of listings has plagued the GTA market for more than three years now as baby boomers stay put and homeowners opt to renovate their homes rather than pay hefty real estate fees and land transfer taxes for properties that, in many cases, end up in bidding wars that have further pushed prices into the stratosphere.

Resale condo transactions, especially in the more affordable 905 regions, saw the biggest increase of any sector of the housing market: Sales were up 27.8 per cent in December year over year — 46.1 per cent in the 905 regions (accounting for just 374 transactions) and 20.7 per cent in the 416 region.

Resale condo prices were up 6 per cent in December over a year earlier, to an average of $343,943 across the GTA.

The biggest gains were in the City of Toronto, where sale prices were up about 7.6 per cent to $367,376, according to TREB’s figures, compared to price increases in the 905 regions averaging 4.6 per cent, bringing the average condo sale price in the suburban regions to $293,883.

Investors Own Large Number of Toronto Condos, But Still Less than 25% Says CMHC

Investors own less than a quarter of Toronto condominiums: CMHC

Annual housing report takes revealing look at Canada’s exploding condo sector

Less than 25 per cent of Toronto condo units are owned by investors, the CMHC has found.

Less than 25 per cent of Toronto condo units are owned by investors, the CMHC has found.

Investors are a “strong presence” in both Toronto’s and Vancouver’s condominium markets, but exactly how strong still remains unclear, even in the wake of a new report by the Canada Mortgage and Housing Corporation.

About 23 per cent of Toronto’s condo stock was being rented out by investor-owners in 2012, the federal housing agency says in its annual Canadian Housing Observer review, released Wednesday, which places a special focus on the national condo market this year, revealing some interesting details.

But the review only looks at condos rented via the MLS system and doesn’t include investor-owned units just sitting empty or rented via free websites like Craigslist or word-of-mouth.

“We think the number is closer to 50 per cent,” says veteran Toronto development consultant Barry Lyon. “The data they (CMHC) are using has some shortcomings. It’s only part of the story.”

Mathieu Labarge, CMHC’s deputy chief economist, acknowledged that “to complete the picture there’s a need for data,” and it simply doesn’t exist.

Nobody seems to know exactly where buyers, or their money, is coming from, why they are buying and how they intend to use the condo.

“What we have in terms of hard facts is what we released. We have round tables with the (condo development) industry on a regular basis and what we get is that investment activity remains limited.”

Local housing experts, economists and realtors also lack hard numbers, but anecdotal evidence suggests at least 40 per cent of Toronto’s condo market is investor owned and that the number is even higher — as much as 90 per cent — in some downtown skyscrapers close to transit lines.

It’s widely known that investors have helped drive record condo sales across the GTA the last few years and Laberge says those units have been critical to providing rental housing in a growing region where almost no new purpose-built rental apartments have been constructed in decades.

According the CMHC annual review, about 26 per cent of Vancouver’s condos were tenanted, rather than lived in by owners, as of last year, a number that has been growing right across Canada since 2007.

That figure is also being questioned, given concerns that have abounded in that market around foreign buyers looking to park money in Canada, but leave their units empty.

As the CMHC report notes, condo construction and ownership has exploded over the last three decades, from just 171,000 units in 1981 to 1.6 million in 2011, a rate of growth more than nine times faster than single-family homes.

Some 461,000 of those condos were being rented out in 2011, according to the report.

Condos accounted for almost half — 40 per cent — of all housing starts in Canada’s major cities in 2012.

Skyscraping condos dominate Toronto’s skyline far more than any other urban landscape in Canada — accounting for about 70 per cent of the total stock of condominium housing. But, across the rest of the country, highrises account for just 31 per cent of all condo types, followed by lowrise condo apartment buildings at 36 per cent and townhomes and row houses at 23 per cent.

While condos now attract a broad spectrum of buyers, they remain most popular with seniors and young adults: As of 2011, 19 per cent of condo owners were under the age of 35 and 29 per cent were 65 or older.

Just 16 per cent were couples with children, says CMHC. Some 42 per cent of condo owners live alone. Twenty-eight per cent are couples with no children.

And women dominate sales centres: They made up 65 per cent of all owner-occupied condominiums in 2011, and accounted for 76 per cent of owners aged 55 or older.

Condo construction in Toronto and Vancouver accounted for more than half of the country’s condo starts in 2012, says the comprehensive report, which looks at everything from affordable housing to the growth of factory-built housing in over 160 municipalities from coast to coast.