Mississauga Real Estate Blog

Well, if you have not heard the news, Canada Mortgage and Housing, the government run mortgage insurer announced it will be cutting back the 40 year amortization mortgage to 35. Also in the announcement is the fact that you must have 5% down instead of 0%.

This is not a bad thing when you look at the overall picture of the market. Right now our neighbours to the south are suffering a major market adjustment. By the time the US finally starts to recover, they could be looking at Real Estate worth half of what it once was. So why is this.

1. Anyone with a heart beat could get a mortgage. In fact I am sure there was a few given to those that are no longer living as well.

2. You can actually get more money then your home is worth. Home is worth 200k and debt was 300k. It is funny as well as ridiculous all in the same breath. The question I have, why bother paying it off when your value goes down so low and you owe so much.

3. The interest on these loans is tax deductible. I am sorry Mr. Bush. How much is the country in debt?

4. There is over 1 million foreclosures, yup, 1 000 000 powers of sale. Now for all you bargain hunters, that truly is the place to get a deal.

So what is CMHC really saying. Simple, put up a little, not a lot of your own money so you the buyer has an invested interest in the property and actually work on paying the debt off. Chances are you will fight a little harder to keep your home instead of running away at the first sign of stress.

So is this going to slow down all the first time buyers in the market. It might in the short term, but this also gives you a chance to set a goal and save that 5 percent. I can guarantee that once you do that you will truly feel different about the home you are buying.

Talk to you soon.

Todd

So did you hear…….. the market is going to have a soft landing. Of course if turkey’s could fly you can imagine the way they would land. It would not be pretty but they would be alright.

So what does a soft landing mean. Apparently we will only see a 2% increase this year in values. Well this is where I start getting frustrated with the media. HELLO! 2% and you make it sound like the market is over. If you were to go south of the border right now and went to maybe 45 States, they would be jumping up and down and would have a party. So let’s see, last year the market went up 5 to 8 percent and now perhaps only 2 percent this year. What if the market went down 10 percent. That means if you bought a home in the last 2 years you lost money, if you bought a home 3 years ago you would have only made 5 percent. Now based on the latest prediction you have made money every year that you have owned your home and 2 percent this year.

So to all of those in the media, perhaps you could actually report the actual truth or perhaps that will not sell enough papers or make people listen or watch the news. It almost seems that they would prefer to report bad news over good. Now I don’t mean paint everything with rose coloured glasses but let’s be real. In 1989-1990 the market tanked and not by 5 or 10 percent. In a 6 month period values dropped 20-30 percent and it left everyone scrambling.

So to all of you that are looking at buying real estate, do yourself a favour. Find out if the seller gets the newspaper delivered or ask if they watch the news every night. Chances are they think the sky is falling and you might just get a deal.

Talk to you soon.

Todd

The newest marketing in the world for real estate has started off with a bang! With the launch of our new M.B.E. program, Maximum Billboard Exposure, our first two featured homes have sold and with incredible results. Our first featured home sold in multiple offers and for the highest sale price ever for this model. Our next featured home was a little different. The client called us after having their home on the market for months and not one offer. After cancelling their listing and going with us, the M.B.E program kicked in. With an incredible 27 showings and the buyer of the home actually finding the home on the billboard, we had this one sold in 7 days from the time the home was featured on the billboard.

Now I am not about to say that the only reason these homes sold were because of the billboard, but think about it for a minute. Everyone advertises in newspapers ( yawn) even we do. Of course everyone is on the MLS. So why not take it one step further. Now we have marketing that is about your home and your home only and it’s huge. 200 sq ft. That’s right, the entire billboard features a home. You will see that most of our billboards will be converting to homes and for a good reason. We want to give you the best chance to sell your home and this just increases the odds for you.

So if you are afraid that your home will not sell or you are on a deadline, then maybe M.B.E is right for you and your home. You could be the next happy seller.

Talk to you soon

Todd

For those of you that have read my blog in the past, you know that I can be very opinionated. Now just so you know I have my opinion on what is going to happen to Real Estate prices, but it is only 1 opinion. So how about you. What do you think? If you have read this so far, how about your opinion. I would like to hear from everyone out there. This could be very interesting. I will share my opinion on prices and market conditions once I have a few replies. But I will give you a hint, it is a good time to own rental properties and I don’t mean over priced condos.

Talk to you soon.

Todd

My first comment……..Don’t do it!

Years ago when homes took 3 months to a year to sell the thought of putting in an offer conditional on the sale of your home was very common. Now fast forward to the year 2008. This condition is very rare and let me give you the basic reasons why.

1. The market has been strong for so many years that the average time on the market for a well priced home is around 30 days.

2. A lot of the sellers that are moving have purchased new and have a definite closing from the builder and want to ensure the closing. The thought of waiting for 30 days to see if the offer firms up is not very desirable.

3. When you are negotiating the price, the buyer will pay for that clause. That means the seller and the agent do not look at the offer as being serious and if you want that condition to be accepted then it will cost more money to purchase the home. I advise my client to ask for $10000 for that condition. What happens if you do not sell your home. The owner is stuck with a stigma on the home and 30 days lost in the market. Don’t forget and all agents should tell the buyers this, the home is marked as SOLD CONDITIONAL. So when this happens the average agent just passes by the listing on mls. Once again the seller is allowed to continue to sell the home, but the activity drops when it is marked this way.

Of course the thought of owning 2 homes will keep most people up at night, so here are a few suggestions.

1. Talk to your mortgage specialist and find out if you can bridge finance. This means carry 2 properties at the same time ( Stephanie our mortgage specialist is great to ask)

2. Purchase a home with a longer close so that it will give you time to sell yours. You can sometimes move the closing up if both parties agree.

3. Get your home in the market so you can actually see what the value truly is. It is better to know what you are going to end up with in your pocket before you spend more then you can afford.

4. If the market get slower you will be in a better spot to negotiate a better deal.

Now just so you know I have skimmed over just some of the basics and if you would like to know more about this kind of condition, feel free email me and I will try to help.

Talk to you soon.

Todd

So where did I leave off the last time. Oh yes….multiple offers and NOT OVER PAYING! So as a buyer the worst thing you can hear from your agent is there is another offer on the home you want to purchase. So for some this means that they run away without even trying to buy the home. You see everyone thinks that you have to over pay as soon as another offer comes in. This is not true. Of course this is all dependant on the number of offers and how good your agent truly is. Now I won’t say that the agent can control the other offers, but they can do the homework in the area and really break down the value of the home. Also they need to know the style of the listing agent as well as how many offers are registered. This is important because you really don’t want to put in an offer thinking there is one other and at the time of presentation there is 6. So keep this in mind. Always have your agent contact the listing agent one hour before presentation so you know how many offers there will be.

So let’s talk dollar and sense ( yes I know cents, but I am talking about common sense). Never and I mean never let your agent talk you into paying a price that you are not comfortable with. If an agent says the only way you can get this house is you have to pay $450000 and you only planned to pay $430000, then go with your number. Now of course this depends on the facts, figures, your financial comfort and if you are okay losing the home if it indeed goes for the higher price. Now of course a good agent will try to at least get the sign back for you then it will be in your ball court. This will not always happen if there is a clear winner. Remember this is the moment most sellers dream about and they are hoping to get a great price. Now let’s figure out some simple numbers.

For argument sake, lets say the same home has sold recently for $425000 and $430000 this one is listed for $429900. They are all very similar in upgrades. So how much do you pay.

1. If there is only 1 other offer, do not go crazy. In most cases full price will do the job. You might even get it for a thousand or two less then asking. But keep in mind there are ways to make your offer strong without money. If you are able give the seller their closing this will help. When it comes to appliances, if they have them negotiable or excluded, leave them out. If you remember my blog about appliances, it will help now, ( if not give it a read when you are done this one). And of course conditions. You should always keep conditions in when possible, but you can always shorten them. Instead of 5 days make it 3 or even 2. Make sure your bank is ready to get financing done.

2. Lets say there are 5 offers. Chances are someone will be giving a firm offer. That means no conditions. Now as far as price goes it will be over asking, but by how much?. The chances are 1,2 or 3 offers will be a little less then asking or asking price. Then there will be that offer that will be a few thousand over asking and of course the winner will be closer to 5000 over asking. Keep in mind that 5000 is just over 1 percent of the asking price, which is not alot. If the market stays strong and the average increase per year is 5 % to values, by the time the home closes it will be at market value.

Now I have had to generalize with this one a fair bit and that is because every situation is different. The important thing is to know what the market value is and to know what is happening during the offer. But in the end I always ask one question. If the house is sold to someone else for $2000.00 more then you were willing to offer, will you be okay with that? The reason is that gut check that you must try on yourself. This is not a car, a shirt or even golf clubs, this is a home and it could be yours, you just have to make sure you don’t overpay and you are happy with the result in the end.

Talk to you soon.

Todd

NO!

I am not sure where the perception that power of sale properties can be sold for what is outstanding on the mortgage came from. Now I do understand that the general buying public may not have a full understanding of this, but you agents out there, GET AN EDUCATION! How do you expect to negotiate for a client when you have no idea what a power of sale is. So I would like to help a little here, especially for all of you readers that actually would like to know the truth about power of sales.

A lender, could be a bank, a investment company or a private party that holds a mortgage on the property. Now to keep this easy I am not going to talk about first, second or third mortgages. Let is start off with a first mortgage. Lets say for ease, it is a bank who gave the first mortgage. That means the borrower who got the mortgage from the bank used the title of the property as collateral for the loan,the mortgage. In the documents the bank agrees to give the mortgage ( the money) providing the borrower makes the payments set out in the agreement and makes them in a timely matter. This could be set up in weekly, biweekly or monthly payments. In return the bank is being paid  interest  for this loan. Now if you are a high ratio mortgage ( this means that you put down less then 20% down-payment) then you will have to have Mortgage Insurance. This is required. Right now there are 2 major insurers of mortgages in Canada ( and more coming soon) CMHC which is run by the government and Genworth which was part of G.E. So these corporations charge a fee for mortgage insurance. Between 1 and 3 percent depending on amount of deposit, risk and mortgage amount.

Once a property is taken power of sale the lender ( the bank in this example) has a duty to sell the property for market value. If the property value is $300000 and the mortgage is $240000, the bank cannot just sell it for the mortgage amount. Now perhaps that is where people get confused. Many years ago people could buy for the amount outstanding, but times have changed and now a property must be sold at market value. In this case once all the interest charges and costs to sell have been covered, the borrower would be entitled to the left over amount.

So if it has to be sold at market value, why do most people see power of sales as a deal. Well they can be if you are a handyman. Now I am not going to say that all power of sales are in bad shape, but a great deal of them are. Why? Simple! The borrower did not have enough money to pay the mortgage so they generally do not have the money to fix the home. The bank will give them notice that unless they pay up the arrears on the mortgage they will evict them, so the borrower normally leaves in haste and does not care about the damage on the way out. When this happens the value can drop 5 to 8 % in damages from normal market value. There is where the deal is found. Most power of sales need work, but like any home people will pay for the ones in good shape. Ask yourself this. If you have 2 identical homes side by side, one has bad paint terrible carpet and sells for $280000 and the one next door has beautiful paint and stunning hardwood through out and sells for $310000, which one sold for market value? They both did. Based on the condition of the homes, they both sold for market value. The difference is the one that sold for $280000 gets to pick the colour of paint and hardwood so then it will be the exact home they want.

So power of sales can be a deal, but not because they are cheap, but because they are generally a diamond in the rough.

Talk to you soon.

Todd

I felt it necessary to write a quick Thank You to all the Mothers of the World. As a Realtor I get to view thousands of properties. But I have to tell you. Mothers make a house a HOME! Now I am sure most of you don’t wish for your Realtor to be too sappy, but I have to make this point. Most men will miss out on the little details that give that home the extra touch. I mean lets be honest guys, what colour are the towels in the 3 bathrooms in the house. I bet you know who makes the flat screen TV you have though. Of course when buying or selling you need the mix, but us men generally don’t have that eye for detail. After-all, if I asked the man of the house to put out a nice vanilla scented tea light to change the smell of the home, I am sure I will get a strange look. Fortunately I listen very well to my wife so I know what that is, but I do have to cut more guys a break.

Now my Mom passed away when I was a child from cancer and for 20 years everything in the home stayed exactly the same. Now I am not sure if that was because my dad, my brother or myself had any idea what to do or if she had just done such a great job decorating. So what if you are not a budding designer or you do not have a mother, wife or interior designer to make that house a home. Well here are a few tips.

1. Plants. It never hurts to have a few flowers or plants in a home. NOT too many that it looks like a rain forest, but enough to add a little colour and fresh scent.

2. Towels. That’s right guys, I am picking on towels again. When you have a towel bar in a bathroom, it is not there to hang magazines, it is there for…..you guessed it….towels. If you have to keep it simple, do it. Fresh white towels always look nice, cleanly folded and layered if you can. Also it never hurts to use nice clear glass containers with some sand or shells in it on the counter in the bathroom.

3. Kitchen counters. Keep them clear. It is alright to leave a knife block ( as long as there are knives in it), a nice coffee machine( either with fresh brewed coffee or nothing) and maybe a spice rack. Don’t leave every small appliance out that you own and make sure the kitchen sink is spotless. This will tell someone how you live.

Now I could give you a huge list of what not to do and what to do, but it would take a mother to truly implement it. Really the point is on this Mothers day is to say thank you to all the mothers out there that make their house a home. We know they do it with love and fortunately for us, with style. Thanks Mom!

Talk to you soon.

Todd

Yes! Multiple Offers. Every sellers dream. The thought of getting thousands of dollars over the asking price. Oh could it be better then that!

Well ( here comes Mr. Reality Realty). The idea of tens of thousands over the asking price only happens when there are a few factors in place.

1. The home is very unique. Perhaps the location or size of the lot is very rare that multiple people want it.

2. The market is hot. In other words prices are going up almost daily. ( unfortunately we are not there today)

3. There is no homes available or for some builders they are at the end of a subdivision or have released a new phase ( back to number 1).

4. The owner and agent have listed the home below market value to encourage the feeding frenzy.

Of course there are other reasons that create this, but those are the major ones. There is also holding offers until a certain day, but that is old school and most people know they are being set up. So in a multiple offer how do you gauge how much you should pay. I mean of course you don’t want to over pay, but if this is the one for you, you probably do not want to lose it. Jay and I just had a client of ours pay 25000 over the asking price. So did she over pay. No not even close. In fact the house appraised even for more then she paid. So how did this happen. Simple, the listing agent under priced the home and there was 8 offers. Now just so you know, 2 other offers were very close, but here is the thing. This home had a value of over 340000 and the client paid 335000. So really they did get a decent deal and in the end the owner did well enough. The fact is we were working for the buyer so we did not want to over pay.

So the question is how did we know what was the correct price to win the offer and not over pay………………I will give you the answer in the next section of …The Art of Negotiating.

 Talk to you soon.

Todd

So I was just out on a showing with a client. She is a wonderful person and she has decided to look at homes while her husband is at work so she can narrow down the search. Just so you know this is very common. Sometimes the husband or wife will do the leg work. We went to one home that they had seen together at an open house yesterday so that I could give them my opinion. So as I walk thru the door , I am face on with fresh hardwood floors, new trim, new pot lights and a beautiful kitchen. As we proceeded thru the rest of the home it was finished with more beautiful floors, lighting and stunning bathrooms. So you would think I was ready to give this a stamp of approval and get another sale done.WRONG! This one was a clear case of SMOKE and MIRRORS. So what does that mean? Well simply put, all show. This house I am sure was a candidate for “Take this home and Flip IT”. The owner has gone in and taken the home and made it look beautiful from the surface. But when you truly look at the home it has no storage, tiny tiny bedrooms, original electrical, older furnace, and cheap( yes I said CHEAP) fixtures. Now if you walk thru a home like this real fast, it is very appealing, but slow down long enough and you will see thru the smoke and mirrors.

So how do you avoid getting caught in the hype. Simple, look at the home several times. Get a second opinion. Take a look at the room sizes, see if your furniture will really fit. Make sure you have enough storage and finally a HOME INSPECTION. Make sure you hire a good home inspector. This is very important. They will help see past the fluff and see what is real.

As for my client, we are going back out later this week to look at more homes. This last one was just smoke and mirrors.

Talk to you soon.

Todd