Five reasons to get a mortgage financing pre-approval

So you think you’re ready to start shopping for a property? Whoa Nelly! While it may seem like you’re ready because you’ve done lots of online property window shopping and begun to feel confident about comparing market values, you’ve missed a crucial step in the process. Here are five reasons to get a mortgage financing pre-approval early:

checklist

Time savings

Does it make sense to look at a smorgasbord of properties that you have absolutely no chance of purchasing? Don’t you have better things to do with your free time than view half the condos in the city?

Secure a mortgage rate-hold

Once pre-approved, you will likely be guaranteed a particular mortgage rate for up to 120 days. This is can be very helpful in times when rates just happen to be on the up-swing. In the event of rates dropping, your mortgage broker will ensure you get the lowest rate possible.

Be ready to act quickly on the right property

You never know when the right property will present itself and you’ll need to act quickly. Pre-approval will put you in a position to act swiftly and from a position of strength when writing an offer.

Gain the upper hand in negotiations

If you are interested in a hot property and you find yourself pitted against a other buyers in a multiple offer situation, being pre-approved can make the difference. Imagine yourself as the seller: if you are courting several interested buyers and only one is pre-approved, which party would you sell to?

One final benefit – you may save your Realtor some aggravation (and time) if you are pre-approved before you begin viewing homes. And who wouldn’t want this?

I welcome any questions about selling or buying.
Feel free to comment here or contact me directly.

Intentionally under-pricing your property

The practice of pricing a property below market value has become popular recently in the Vancouver real estate market. The seller’s goal is to entice the maximum number of buyers, and therefore multiple offers, in the shortest time and to pressure them to battle each other in a bidding war until a clear “winner” is identified. A feeding frenzy may be the best analogy.

Bait ball 1

This strategy works best in hot neighborhoods where there are many more buyers than sellers. This is the worst situation for a buyer since it adds pressure to the purchase and often results in the need to eliminate subject clauses in order to have the best chance of “winning” the property in a bidding war. Sellers (and sellers’ Realtors) love this approach when it goes as planned.

There’s always a possibility that an underpricing strategy could backfire and not attract any buyers to an initial offering. This situation can be identified when a property comes on the market and then shortly thereafter the price is jacked up substantially.

If you can’t stand the added pressure as a buyer, bidding against multiple offers on an under-priced property may not be for you.

Shopping for Ranches – A Log Cabin on 20 Acres

 

Every once in a great while I get a chance to work with real estate buyers shopping for property outside of Vancouver. This opportunity recently presented itself so I dusted off my gum boots and other gear and prepared for a trip to the Okanagan. Past property research expeditions have led me to Gabriola Island, Vancouver Island, Washington State and as far north as Quesnel.

Log Cabin

We visited several majestic spots over two days; it turns out that you sometimes need to drive long, steep access roads to reach the great views. We also wound up looking at property at some less-than-majestic spots but like everything, you take the good with the bad.

The property that my clients settled on is a log cabin on nearly 20 acres about 45 minutes from Vernon in the Creighton Valley. As luck would have it, there was a river running though it. Okay, more like a seasonal stream or a brook. On a side note, I was caught red-handed removing some rhubarb from the property as the listing Realtor pulled into the driveway. I assured her that the rhubarb was strictly for due diligence purposes.

Renovations are underway with B&B rooms to be ready soon! Hopefully my clients/friends remember all my hard work when it comes time to pay for my stay at the B&B.

Can a buyer extend a conditional contract at their discretion?

This is a question I’ve often been asked by buyers and sellers. Situations do vary but in order to even contemplate being able to do this there must be agreement by the seller. Subject clauses will have deadlines (the date by which they must be removed by the buyer or seller – most often the buyer who is making the offer).  If the seller will not agree to extending the subject removal deadlines, then no amendment to the contact of purchase and sale will be possible and the offer will likely collapse.

Here are a few scenarios where the seller would be wise to agree to extend the subject removal deadlines:

1. When a buyer needs a little more time to secure financing and has shown good faith so far in their due diligence process.
2. When a buyer had an unforeseen emergency and has not been able to perform all the due diligence necessary by the original deadline.
3. When the market is softer and buyers are harder to find.

I would not recommend allowing a buyer to extend deadlines when they need more time simply because they have been lax in doing their due diligence such as: having a home inspection done, going through strata documents, etc. After all, time is of the essence in real estate.

5% Down – Available to some purchasers but not necessarily advisable

Just say no to 5% down. Unless of course you’re a gambler or expect a steep salary increase in the short-term or some sort of windfall is on the horizon… Here’s a convincing Globe and Mail article on the reasons why a low down property purchase may not be a prudent decision.

Photo courtesy USACEpublicaffairs.

Purchasing with 5% down is most likely not for the faint of heart. If there is a market downturn a property owner could quickly be in a negative equity situation. If property values do start to decline we could see mortgage lending rules tighten up and the minimum down payment requirement could increase.

So here’s the simple point: If you have to stretch yourself financially to buy a new home, you’re probably not ready to trade in your landlord for a lender. If you do press forward with just 5 per cent down, be prepared to stay in your home a while – potentially a long while.

If you must press on with your low down payment purchasing plans make sure you have a contingency plan, or better, access to emergency funds. If you do make a purchase with the minimum down payment and run into trouble in the future, I’m here to help 🙂

I welcome any questions you may have about selling or buying.
Feel free to comment here or contact me directly.

Underground Storage Oil Tanks (UST)

Did you know owners of properties in Metro Vancouver may have a potentially costly underground storage oil tank (UST) in their backyard? Clean-up and liability issues can come into play if the oil tank leaks and contaminates your property. If the contaminant originates on your property and then seeps onto adjacent properties, you could be liable for the mess and any clean-up on those properties. Ouch! 

Underground oil tanks were commonly installed on properties beginning in the late 1950s. Oil was the primary source of heating fuel for homes until natural gas replaced it due to lower cost and ease of connecting to utility gas pipelines. The oil tanks were usually just capped and decommissioned in place at this point – some with oil remaining in the tanks!

There are many companies in Metro Vancouver that use scanning equipment to check for buried oil tanks for a nominal fee. If there is any possibility that there may be a UST, doing the scan makes sense for buyers and is almost always advisable for sellers. Caveat emptor (buyer beware) is the best policy when it comes to oil tanks and avoiding the associated risks with buying a property where one may be lurking. The cost to remove a decommissioned tank that has not leaked is much less than a major environmental clean-up of a decommissioned leaky tank. Insist on full and proper tank removal documentation in the purchase contract if you are a buyer.

To complicate matters further, different municipalities around Metro Vancouver have different requirements to follow during removal. For further reading I recommend a great article by The Spagnuolo Group of Real Estate Law Firms.

I welcome any questions you may have about selling or buying.
Feel free to comment here or contact me directly.

Will the real estate market and prices remain stable in 2012?

Some interesting predictions from a new poll of Canadian financial strategists and analysts. Get out your crystal ball and get ready to play “Guess where the market is going!” http://cravecanada.com/wp-content/uploads/2008/08/vancouver.jpg As a REALTOR® I get asked almost on a daily basis what the market will do next. Unfortunately this is anyone’s guess. Of  the poll respondents, only 60% of these experts would even attempt a guess at the price forecasting.

The referenced article shares what might be on the horizon. If we do see a small drop in prices I don’t expect much in the way of a major market adjustment. Sure, people who bought with a very minimal down payment and are in a variable rate mortgage could feel the pinch but for the most part Canadian banks are conservative and don’t lend money easily.

Stay tuned here for updates on he market situation and for predictions on where the market is headed. Not from me directly of course, I gave up guessing long ago.

Do your homework and enlist the services of a well-recommended REALTOR® before undertaking a property search to best protect yourself.

I welcome any questions you may have about selling or buying.
Feel free to comment here or contact me directly.

Building permits way up in Vancouver

This just in: Canada-wide building permits are up but Vancouver seems to be the only bright spot for housing starts in BC. This explains why every block in this city seems to have several construction projects underway. Developers are clearly not anticipating any slowdown in the Vancouver market for new homes.

How to Improve Housing Options in Metro Vancouver

First post of 2012 so it seems fitting to start with a list of ideas on how to increase housing options. This article appeared recently in the Vancouver Sun and the writer makes a number of useful, if perhaps optimistic, suggestions on how home ownership might be made more attainable in Metro Vancouver.

The simplest suggestion mentioned to implement would be encouraging and allowing higher density (innovative design and more compact units). This would increase opportunities for people to remain in urban areas without breaking the bank. The main hurdle here seems to be nearby neighbors who fear their property values will fall as a result of additional density being built close by.

Another idea presented relates to having municipalities reduce the charges and fees (development cost charges) they assess for granting building permits as this is a major cost. One would hope that savings here would trickle down to property buyers.

Finally, higher density developments should first be considered near good public transit and the requirements for minimum number of parking spaces per property should be abandoned in some instances.

So that’s the wish list. Do I think any of these are likely to happen any time soon? No, but dreams are healthy.

I welcome any questions you may have about selling or buying.
Feel free to comment here or contact me directly.

The Condo Walk-through – Deficiency Hunting

I recently accompanied a client on their substantially completed new construction condo walk-through. This took place about two weeks before the buyer was to take possession of the new two bedroom condo in the Fraser area of Vancouver. Now I consider attending these inspections a part of my job as a full service REALTOR® but this one was scheduled for 7AM! This is not known as peak performance timing for most REALTORS®.

Nevertheless, I made my way to the building on time to meet my client and we then proceeded to wait for the developer’s representative who ended up being about 10 minutes late. On these outings I use a detailed checklist of potential problems to look for (see image for a sample).

These usually go pretty smoothly and this one was no exception except for some minor surprises. The best part of this inspection was when the developer’s representative opened the door to the laundry area and it was empty. The washer and dryer that were to be included as per the buyer’s contract were nowhere to be found.

Make sure your REALTOR® attends the walk-through inspection with you so they can provide expertise on what to be on the lookout for and to fully protect your interests.

I welcome any questions you may have about selling or buying.
Feel free to comment here or contact me directly.