This just in: a recent article in The Huffington Post suggests that many Gen Y would-be home buyers are in a position to buy property now. And by property they mean very small condos – some even with balconies! According to a recent poll done by a prominent real estate marketing company (which the article author happens to head), the savings rate of this 20-35 year old demographic is quite respectable.
It’s quite likely this data is skewed since it was collected from potential home buyers attending one of Key Marketing’s projects being offered for sale – InGastown. Yes, these were people already interested in buying a condo in the very short term. Seems to me this would not be a reliable sampling of this entire demographic – just the ones who hope to buy now in a particular project. The InGastownproject does have an interesting gimmick where you can trade your car in towards your down payment.
Finally, within this “article”, the author links to two projects his company is handling the marketing for. In these projects, Gen Y buyers can purchase a home for under $300,000. So, is this an actual news item on Huff Post or a paid marketing piece?
While it may not be a widely known fact, Realtors have been known to use “creative language” to describe properties and their characteristics. Not shocked to hear this you say? Let’s delve into some examples of this phenomenon.
RealtorSpeak: Cozy! Translation: Tiny. You may be able to touch two opposite walls with your body outstretched. You can always meet your friends at a cafe – who needs to entertain at home anyway?
RealtorSpeak: Needs TLC Translation: Needs everything including paint, flooring and all appliances. Maybe even a new roof and perhaps a new foundation due to the large cracks in the existing one.
RealtorSpeak: Not a drive-by. Translation: This thing looks atrocious from outside and we really need to get you inside to have any hope of you buying it. A late night showing would be preferable so you can’t see how awful the exterior is.
RealtorSpeak: Character house. Translation: Most likely quirky and often run-down. It will help if you are keen on a very old structure and don’t mind drafts around windows and sloping floors.
RealtorSpeak: Fixer-upper! Translation: A tear-down and not worth doing any fixing. Please bring thick-soled, steel-toed boots for the showing. Overalls and possibly a gas mask will be beneficial.
There are hundreds more real estate marketing euphemisms not mentioned here. Please let us know if you have some good examples of your own in the comments below.
A select group of first time home buyers in BC received a gift from the province in the recent budget announcement. If you purchase your first home in BC and it is under $475,000 (full exemption) or $500,000 (partial exemption) you may be able to avoid paying all or part of the BC Property Transfer Tax (PTT). This tax is calculated at 1% of the first $200,000 and then 2% of the remaining purcahse price above $200,000. This change is expected to only impact about 1700 buyers in BC in 2014.
The old threshold was set at $425,000 so this is a moderate increase and will help some buyers out that would have missed out on the exemption. The real estate sector has been lobbying with only moderate success for the BC government to increase this threshold for several years. The government seems to have made the smallest change possible while still being able to make this part of their budget highlights announcement.
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:
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.
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.
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.
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.
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.
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.
A home inspection performed by a licensed home inspector (not your uncle’s brother-in law even though he may have worked as a plumber’s helper in Saskatoon in the summer of 1983) should be a part of the due diligence for every property purchase. All sorts of interesting tidbits may come out of a thorough home inspection. Certain items can be more costly to remedy to others. A red flag list should include:
Health and safety concerns: mould, faulty construction, etc.
Roof replacement – one of the most costly home maintenance items
Heating/Cooling system problems – these systems, especially furnaces can be costly to repair/replace
Foundation issues – cracking, settlement, etc.
Other problems may show up on a home inspection report that should all be carefully considered when deciding whether or not to proceed with a purchase. Certain problems may necessitate further investigation by other specialists as home inspectors tend to be generalists.
A home inspection in the Lower Mainland usually starts from around $400.00. This cost is infinitesimal relative to property costs in our area and is money well spent.
I’d love to hear in the comments below if anyone has had particularly interesting home inspection results.