Pay close attention to what you're buying

Lenders “Tag” Some Condo’s

January 2013 - Lender’s and Insurers are cautious due to the recent loss experience in the condominium market segment    Both CMHC and GE have stated to Brokers and Banks that they will no longer insure condo developments with post tension cable construction or with an “age restriction”.

Post tension cable is a construction method common in many apartment buildings constructed in the 70’s and early 80’s here in Calgary.  These steels strands, essentially like a steel rope are cast in both directions within a concrete slab.  This allows slabs to support more weight, minimizing the need for support columns thus maximizing space.  There now is concern that if moisture and oxygen penetrate the slab through cracks it can undermine the structure.  Post-tension has been a concern of lenders for some time.  Proof of an engineering report and proper maintenance usually allowed them to lend on these buildings.   Now the insurers are actually tagging these buildings as uninsurable.   Some banks are no longer funding mortgages on these buildings even if they are conventional or low loan to values.   This comes from the worry of high special assessments in future years to correct deficiencies.  If a lender finds the risk too high associated with a Post Tension building then so should the buyer.

Developments with age restrictions have been prevalent for years, the 2 most common are plus 18 “Adult Buidings”and plus 55. Essentially a marketing feature, these restrictions allow the developer to attract specific clients.  Lenders in the event of repossession want to ensure a large potential market for the property.  If you are purchasing a condo as your first home and as a building block to upgrade properties down the road you need to consider this as well.  Will an age restriction reduce appreciation and the market on resale?

It is getting harder to get approvals on small condominiums.   Some lenders have now set the minimum size at 600 square feet.  Lender’s worry that small condominiums have poor resale and a restricted market place.  I   recently placed a mortgage on a 485 square foot condo.   This was done by exception and was only considered because the client was an exceptionally strong applicant.

Lenders Reviewing Condo Documents

Any good realtor will stress the importance of a Condo Document Review and will encourage this client to walk away from the deal with the discovery of any “Red Flags”.  Some lenders are asking to review specific condo documents as part of their conditions.   The most common document requested is the audited financials.   They want to ensure the financial stability of the condo corporation, that the reserve fund is sufficient and that there is no litigation against the condo corporation.   Lenders may want to do there own review of the reserve fund study.   They may want proof that there are no restrictive bylaws such as an age restriction.    Some lenders have even asked for the percentage of rental units in the building as they associate less risk with an owner occupied development.

Greg Gullekson, Mortgage Broker
Dominion Lending Centres Westcor
403.244.9133
www.greggullekson.ca

Ask questions…pay close attention to the answers

January 2013 - While prices rise for single family dwellings in Calgary, an option that many new buyers consider is that of condo ownership.  In fact, last year 3500 condo apartments exchanged hands, representing an increase in sales of 11.5% from the year previous.  However, with 5700 new listings being put onto the market in 2012 many did not sell.  Why?

It’s been my experience that at times pertinent information is not properly disclosed at the time of listing.  While it is up to the buyer to do their own due diligence, it is also the responsibility of the listing agent to put a product out on the market that is properly represented. Is there post tension?  On one listing, this was answered ‘No’.  Upon an accepted offer, my client took the condo documents to a reviewer.  She paid $450 to find out there was post tension which was quietly snuggled away in one small document.  The listing Realtor acted surprised when I brought this important fact to his attention.  In addition, CMHC requested the condo documents and within 1 hour of receipt they flatly denied the financing due to post tension.  Is there an age restriction?  I heard recently of a divorced parent that had his 12 year old son stay with him every 2^nd week.  His Realtor assured him this would not be an issue in an age restricted building of 18 plus.  Within a month of moving in, someone reported the new owner to the Condo Board.  He requested an exception which was then denied by the Board.  He had no choice but to put his unit up for sale, resulting in a loss of $25,000.   Are there demands against the Condo Board?   A condo townhouse that I recently took my client to had a $6,000,000 loan against the condo board at an interest rate of 7%.  This loan was used instead of a special assessment for a building envelope.  Condo fees were doubled to pay for this loan; with only a marginal amount of the condo fee actually going toward the principal.  The question we had was, in 5 years when the loan comes up will the owners be tired of paying mostly interest with very little going to the principal?  Would they then just issue a special assessment to clear that amount?  Possibly.  So why buy into trouble?  What do the audited financials tell?  Last spring, one of my clients put an offer in on a condo in Renfrew.  On the surface, everything seemed to be okay.  However, upon closer review into the financials by the condo reviewer – over ½ of the condo fees were in arrears.  Besides putting a caveat on title, the condo Board (run primarily by one person) had little choice but to wait out the payment.  In addition, the property management company (run by this same person) had not taken a fee for 12 months, so another $25,000 was left on the books for payment. This left the question, if over ½ of the condo fees are not paid and $25,000 is owing to the property management company would the expenses be met?  A special assessment could be one strong option.   My client walked from the deal.

When a condo is listed and an offer is accepted, condo documents are to be handed over to the Buyer’s Realtor soon thereafter.  It is my professional opinion that a listing Realtor should have all of these documents when the condo is listed.   Having an understanding of the restrictions, by-laws, financials, reserve fund/study, the condo plan is essential to a sale.  When you think about it any person selling a product should know their product very well, as Realtors we shouldn’t differ.  Our buyer’s expect this.  After all they are purchasing something that may very well be the biggest expense of their life.   Never should it be the biggest mistake of their life.  Benjamin Franklin said, “An investment in knowledge pays the best interest.”

In 2012, a little less than half of all sales were condo sales (apartment and townhouse combined).  It’s a hot market and it can be an excellent stepping stone for someone wanting to enter the world of real estate (or someone tired of shoveling the sidewalk).   I do unfortunately see some scary stuff out there when it comes to condos but generally my stories are of success.  I see happy clients moving into their condos all the time. Finding the right one means asking a lot of questions, but more importantly it’s about listening carefully to the answers.

Jacqui Williamson, REALTOR, Certified Condo Specialist
Century 21 Bamber Realty Ltd.
403.245.0773
www.jacquiwilliamson.com

For Sale by Owner? or Not to FSBO

Ottawa caps CMHC insured Mortgages at 25 years, effective July 9th

 

June 2012 - “Finance Minister Jim Flaherty has outlined new rules aimed at reigning in a hot housing market and ensuring Canadians aren’t taking on more debt than they can afford”.   The most significant of these changes is the reduction of the maximum amortization from 30 years to 25 years which was the maximum amortization available in 2006.    It’s hard to believe but we are still feeling the ripple effects of the “US housing melt down” from 2008.   Although the average Canadian carries considerably less debt than the average American, Jim Flaherty is still cautious and concerned that Canadians avoid the American pit falls.

So how does the new 25 year amortization affect mortgage holders?   A mortgage of $300,000 at today’s best 5 year rate f 3.09%, on a 30 year amortization results in a monthly payment of $1,433, at 25 years $1,276.   Should this have a significant effect on our market?   Sure some buyers may have to redefine expectations perhaps by adding a cosigner or reducing credit card/consumer debt slightly before entering the market.   Should this stop any one from buying today?  NO!  Calgary pricing is still well below the height of 2008.   Look at today’s interest rates; it just doesn’t get any better than this.   Ultimately this short amortization benefits consumers resulting in huge savings in interest over the life of there mortgage.

Other changes, high end homes, refinances and debt servicing

Home buyers in the $1,000,000 plus bracket will no longer be able to get an “insured mortgage”.  A $1,000,000 home will now require a conventional mortgage with 20% down or $200,000.  This is considered to have a large impact on a small segment of the market.   This will result in market “dislocations”, essentially a listing at or slightly above $1,000,000 will priced at just under $1,000,000 to attract buyers needing mortgage insurance.  The reason given for this is that this will allow insurers to focus on the average Canadian.  I am very skeptical as to whether or not this segment will be affected.   I have never done a mortgage of this size that was not conventional.  Obviously some one in this market segment has more ability to save or access cash.

Once again as with previous changes, restrictions have been placed on refinances.  A mortgage on refinances will be restricted to 80% of the value of the home.   The last change in regulations restricted refinances to 85%.   Lenders generally associate a level of risk on any refinance or debt consolidation.   This measure is hoped to curb living on a home’s equity, and once again curb consumer debt.

A further curb on debt is now in place by the reduction in total debt servicing (TDS) from 44% to 39%.   This will limit how much debt a consumer can take on as a percentage of his income.

Conventional Mortgage

Conventional mortgages (those with at least 20% equity), considered a mortgage segment with less risk are going to be untouched by these new regulations.   Until we are told otherwise it looks like lenders will be continuing to offer a 30 year amortization on these products.   These mortgages need only an approval from the lender and not an insurer.   Banks will have more latitude in terms of exceeding standard debt ratios.

These new regulations may in the short term result in a flurry of activity………….and the market will return to normal.   Ultimately the consumers benefit from this measure.   Home ownership is still an easily attainable goal.

Greg Gullekson, Mortgage Broker
Dominion Lending Centres Westcor
403.244.9133
www.greggullekson.ca

To FSBO, or not to FSBO, that is the question:

June 2012 - FSBO is an acronym used to identify ‘For Sale By Owner’ properties.  You’ve likely seen these signs on people’s lawns - WeList, ComFree, Property Brothers, little fluorescent red signs from Home Depot. Is a FSBO truly a cheaper alternative to using the services of a professional REALTOR®? An owner may reason that they are saving real estate commission fees, but in reality is that cost saving being extended to a buyer?  Is the house priced correctly, is it marketed properly, what legal issues should the Seller and Buyer consider?  More importantly, will the property actually sell?

My experience is that most FSBO properties are priced incorrectly, usually they are overpriced.  Buyers, knowing they’re dealing directly with the owner expect a better price, but in reality they can pay an inflated price.  Owners may feel that since there is no commission to a REALTOR® they’ll just absorb this into the list price and the money will be theirs.  Is the buyer getting a deal?  Not really.   Then there are all the intrinsic problems that can result from a private sale.   This can include non disclosure of defects, initial deposit issues (where does that go?), land title review (are there caveats or encumbrances), real property report (is there one, is it current?) and a host of other potential issues.

This isn’t to say that FSBO’s don’t sell.  At times they do.  More often than not though, these properties stagnate on the market because they’re priced right out of the market.  Without the broad exposure found on the MLS system, advertising, open houses or professional photos an owner usually gives up.  Their first call?  To a REALTOR®.

Of course, listing a property with a REALTOR® is not a guarantee that the property will sell.  It’s not even a guarantee that the REALTOR® will do a good job.  Which is why choosing the right REALTOR® is so important.  No doubt you’d agree we up our chances for success when we use a professional to do what they do best.  I have found this to be true with a hairdresser, doctor, mechanic, plumber, insurance agent.   Why would it be different with a REALTOR®?   We’re licenced, insured, bonded, finger printed, governed, trained, experienced and have a multitude of resources at our fingertips.

To FSBO, or not to FSBO, that is the question.  I coin this line from Shakespeare’s famous soliloquy, where Hamlet passionately expresses ‘To be, or not to be, that is the question’.  It turns out this line, written into a play over 400 years ago still has a place in our vocabulary.  Interestingly, this speech explores the idea of consequences. So the real question?  When selling your home, what are the consequences of doing so on your own?  Will a REALTOR® be your best answer?  I believe so.

What’s happening out there right now?

According to the latest available statistics from the Canadian Real Estate Association, residential sales saw a gain of  4.84% in the MLS Home Price Index, secondly only to Toronto.    This increased the index to the highest level since 2008.  According to the Calgary Real Estate Board** the benchmark price for a single-family home in the city was $427,500 in May, up 6.6 per cent from a year ago while the townhouse price of $277,000 was up 3.0 per cent year-over-year. The benchmark price for an apartment was $245,400 which rose by 0.8 per cent from May 2011.  In Calgary, demand continues to outpace supply, keeping supply in seller territory.  This has resulted in buyer’s making quicker decisions.  This has reduced the amount of time homes stay on the market with seller’s getting figures closer to their list price.

Jacqui Williamson, REALTOR
Century 21 Bamber Realty Ltd.
403.244.9133
www.jacquiwilliamson.com

What's in a contract?

What’s in a contract?

 

January 2012 - In the business of real estate, those of us in the profession have a serious responsibility to our clients.  We need to protect our client’s current and future interests.  How do we do this?  A variety of ways but one that I believe to be very important comes from ensuring our clients understand and read the purchase contract prior to making an offer. After all this is where it starts, it is where it all hinges and ultimately where it will end.  

When you buy a property, the purchase contract contains clauses that you need to know about.  Small print if not understood can result in BIG problems. Here are a few highlights that I would like to mention.

·         The selling REALTOR® should always pull the Certificate of Title which will then list all encumbrances and encroachments on the property.  This document will also verify who the seller is.  You, the Buyer must understand that you are agreeing to assume any of these items on title.

·         Make sure the address, legal address and condo plan are correct. A wrong address can be quite a serious mistake. Make sure too that the parties to the contract are shown correctly.

·         A Real Property Report (RPR) with compliance must reach the Buyer’s lawyer 10 days before the possession date (Clause 4.4).  (Sellers make sure you have a current one with compliance before you sell!). RPR’s are not applicable to condominiums or to land without any structures on it. (Clause 4.11)

·         A condition, such as financing, condo documents, property inspection is something that must be satisfied before the contract is considered a ‘firm deal’.  (Clause 8.1)  A term of sale is something that must happen after the fact. (Clause 7.6)  Consider what this might mean to you and if you require a written term of sale.  

·         Under a purchase contract, the seller warrants that they are not aware of any defects in the property that is not visible and that renders the property dangerous or potentially dangerous or unfit for habitation.  If they sell without disclosing this, then they’ve made a false representation to the buyer.  (Clause 6.1 h) Note: the defect must be latent (not visible) as opposed to patent, which is why a property inspection is so important to a buyer.  (Caveat Emptor – buyer beware)

·         A purchase contract is intended to create legal obligations.  Make sure you read the contract and understand it.  If you wish, you can obtain legal advice prior to signing. (Clause 10.1)

·         If you are legally married and only one person is signing the contract, Dower consent may be required (Clause 10.7)

Last year in Calgary, a staggering $9.6 billion in residential real estate sales was transacted.  It is my hope that each and every Buyer that purchased one of those 47,627 properties understood what they were signing, that every REALTOR® representing their client completed the contract accurately.  You see, a contract binds the present with the future. It brings legality into an expectation of hope and promise.  It can go one of two ways.  Know your stuff, make sure your REALTOR® does too and no doubt you’ll have a positive experience.   That’s what is in a contract!

A Seller now has the option, if put in writing to decline documenting their conditional sale on MLS or attaching a ‘C/S’ sticker to their ‘For Sale’ sign. This new change allows for the Seller’s REALTOR® to continue to show and market the property until the sale becomes firm.  In the event the conditional sale does not go through, this new change would then allow a Seller to have a back up offer.  If an offer is strong and solid, it may be that a Seller will not want to market or have the property shown after it is conditionally sold and may wish it to be reported.   Buyers, this new change may affect you the most especially in the Calgary market which continues to heat up.

Jacqui Williamson, REALTOR
Century 21 Bamber Realty Ltd.
403.244.0773
www.jacquiwilliamson.com

 

 

Variable Rates Not As Enticing

January 2012 - The days of attractive discounts on variable rate or floating mortgages are now gone.    Statistically 37% of all consumers chose a variable rate over the last year.  With discounts at one time as high as prime less 0.9%, this allowed mortgage holders to enjoy floating interest rates between 1.1 - 2.1% over that last 3 years.    I have one major bank at prime -0.1% and one trust company at prime –0.2%.  The majority of the banks are now advertising variables at prime + 0.1%.

With the variable product high discount gone, clients are now gravitating to the attractive fixed rates now offered for 4 years at 2.99% (insured mortgages) and 5 years at 3.14%.  With fixed rates at these low levels virtually at prime, the stability they offer and solid signs of economic recovery, consumers have no real basis to complain.   With these current low fixed rates, consumers are now able to qualify for larger mortgages compared to the previous year.

Reviewing Personal Finances

Year end is always the natural time to review your personal finances.   No one should ever lose site of building equity or becoming mortgage free.   In January of 2011, the government made changes to mortgage regulations decreasing the amortization to 30 years and restricting refinances to an 85% loan to value due to concerns over increased debt levels in Canadian households.

Whenever I put together a mortgage, generally the first question a client asks is what their prepayment privilege would be?  Yet statistically less than 3% of mortgage holders ever use this option.   In today’s environment a good rate on a savings account would be 1.5%, so it makes sense to apply any extra cash against your mortgage debt at a higher interest rate.   I have one client who takes her year end bonus income and applies that to her mortgage.    She is now in the 7^th year of her mortgage and will be virtually mortgage free in 3 years.   Not every one has bonus income, but you can ear mark other funds such as tax refund for this purpose.

If your disposable income has increased over the last year, look at increasing your mortgage payment or going to an accelerated payment.    These strategies save thousands of dollars in interest and can easily shave 5 – 10 years off the life of your mortgage.

Consumers should take advantage of these low fixed rates.   There is always wisdom in transferring consumer debt to the low fixed rates secured by a mortgage.   Unsecured and secured lines should also be reviewed.  Rates on the lines vary by institution anywhere from prime plus 2% (5%) to prime plus 0.5% (3.5%).   Although secured lines offer the most flexible repayment privileges, the majority of consumers only pay off interest.   You should look at rolling these lines into a mortgage, enjoying a lower rate and making headway on the principle.   Prime has been low for a number of years; consumers have almost forgotten that it will increase with positive signs of economic recovery.

With these low rates and a healthy Calgary economy all is in place for a promising year in Real Estate…………

Greg Gullekson, Mortgage Broker
Dominion Lending Centres Westcor
403.244.9133
www.greggullekson.ca

Joining the 'Condo Club'

Follow Mortgage Insurers When Investing in the Condo Market

July 2011 - For many first time buyers affordability dictates whether a condo will become the first home they will buy, their initial investment in Real Estate.   After the market correction of 2008, there is significant value and opportunities in this segment for the entry level buyer.   Mortgage insurers (CMHC, Genworth & Canada Guarantee) and lenders; have closely monitored their loss experience of recent years.   As a result they are more selective in the condominiums they will underwrite.

If this is your first step on the property ladder, take the same stance as the insurer or lender.  If they find issues with a property are these indications that this is not the best place to invest your housing dollar?  When you upgrade to a better property a few years down the road, will this initial property maximizes your investment?   Will there be any obstacles to financing for a new buyer when your property hits the market? 

In the last year I have had condominium properties, not the applicant, declined for the following reasons:

• Some insurers and lenders are staying away from condominium developments with “age” restrictions such as plus 18 or 55 and up.   If a property goes into default, the insurer/lender wants no restrictions in the resale market.    Unless an age restriction is something you value or desire as an owner this may not be the home for you.  
• Pending litigation can also cause the insurer to say no……….This year I had a client make an offer on a condo, built in 2007.  In 2007 on completion the owners had launched a suit against the builder to cover initial deficiencies. In 2011 it was evident that this litigation was uncollectable.   The current board had not released the suit out of principle.  The condo fees and a small special assessment had taken care of all building issues.  The insurers were not willing to under take any further units in the complex with any form of litigation present.
• Some lenders are now asking for Condo Documents for review prior to approval.   Financials are reviewed to ensure that reserve funds are sufficient to meet the needs of the development.  If the board minutes mention special assessments, lenders want to confirm the nature and extent of the assessment.   In many cases they want to ensure the special assessment has been paid in full by the current owner.
• The square footage can also be an issue.  Very few lenders will finance condos 500 square feet and under, some have set the ceiling at 600 square feet.   Lenders have concern that in default, these smaller condos may have poor resale options. 
• Some lenders are staying away from condo conversions due to previous loss experience.
• Some buildings have been red flagged due to specific issues such as post tension, water penetration, mold etc. 

So what does this mean for entry level Buyers looking to the condo market?  Does this mean buyers should stay away from this market segment?   Not at all……., It means simply that you MUST do your due diligence with your purchase.  Select a REALTOR® based on their knowledge and experience in this specific area of the market.  Thoroughly review the condo documents provided.  If a lender has apprehension about a property, so should you.

Greg Gullekson, Mortgage Broker
Dominion Lending Centres Westcor
403.244.9133
www.greggullekson.ca

HOW DO YOU BUY THE ‘RIGHT’ CONDO?

July 2011 - In 2003 I bought my first condo in downtown Calgary, it was so exciting.  I wasn’t in the real estate business at the time so I relied on my REALTOR® to help me through the process.  In hindsight, I can see now that his knowledge of condos were limiting at best.  A few years later I became a REALTOR® and I quickly identified my need to learn everything there was to know about condos.  As a result I became a Certified Condo Specialist and then went on to become Condo President of my own building.  What I have learned with both experiences has been invaluable both for me as a professional and for my clients.

What can I share with you?  The process of buying the ‘right’ condo starts very early.  It begins with knowing what condo ownership means.  I tell my clients it’s much like buying into an elite club.  Your rather large membership amount means that you need to abide by all the rules and regulations of the club.  You need to know what is acceptable and what isn’t permitted in your new club.  You need to be involved with the other club members after all you’re attached to them both physically and financially.   The next step is ensuring you have a REALTOR® that knows all about condos.   They will guide, educate and help you during the buying process.   The REALTOR® I had in 2003 knew very little about condos, I don’t even recall seeing or hearing about condo documents.  My lawyer didn’t help me too much either.  She failed to advise me of and then discharge three Caveats attached to my property.  The first one was an age restriction (60 plus) on my title. As I roamed the halls later and checked my birth certificate – I couldn’t help but notice none of us looked anywhere near to 60.  The caveat from 1911 was not discharged either, but then again I didn’t see any harm in not allowing anyone in the building to run a prostitution house, gambling hall or a liquor canteen.  The 1905 caveat was lost, who knew what that one was about – maybe a grain elevator could never be erected there.  Nevertheless, when I went to sell my condo the Buyer’s Lawyer requested that at my expense these all be discharged.  In addition, on the possession day the lender decided not to release funds with the age restriction, eventually this was sorted out but not without my aneurysm flaring up.

How does one avoid potential problems?  Again, it starts early.  When I’m showing condos I like to talk to owners.   If they happen to be in the elevator or walking by us I want my buyer to hear what they think of the building and the Board.  When my client finds the condo they want and they are ready to write up a purchase contract - I always pull title.  The title identifies the owner, the original mortgage amount or other additional mortgages as well as restrictive covenants, caveats and easements.  These are all very important things to know.  When it comes to the  purchase contract,  under  ‘Additional Terms’ I insert two points that provide additional protection for my buyer, these are identified as special assessments or other financial obligations  that have been announced, levied or due on or before the possession date.  The Seller then becomes financially responsible for these.   When condo documents are received, review these thoroughly – particularly the Board minutes and By-Laws.  The condo reviewer will be quite thorough with the financials.   Then when you move in, join the Board.  Take responsibility for what happens within your club, be active, care. 

I was voted in as our condo Board President as a result of what I would consider, ‘a hostile takeover’ of the old and very incompetent Board.  Greg Gullekson and I successfully teamed up as he was also the Treasurer of our Board.  With much due diligence on our part we halted a special assessment that could have bankrupted many owners.  With hours of research and meetings with contractors we proceeded with a building envelope restoration at a cost that was 60% less than that of the original Board.  We exceeded the expectations of all owners in the end, with a building that looked spectacular.   

Condos offer a unique ownership opportunity.  A condo can be an excellent investment particularly to a first time buyer.  It can be a wonderful lifestyle choice too.  This is all dependent though on choosing the right condo.   Make sure your team of experts: REALTOR®, Mortgage Broker, Condo Reviewer, Lawyer, your personal advisors are worthy of joining YOUR club.   

Jacqui Williamson, REALTOR, Certified Condo Specialist
Century 21 Bamber Realty Ltd.
403.245.0773
www.jacquiwilliamson.com

Selling is more than sticking a 'For Sale' sign on your lawn

How long will these stupid low rates last?

 

July 2011 - A client made that comment last week, it made me laugh but at the same time it aptly summed up the last few months in the mortgage industry.   It seems as though lenders are scrambling to get the business out there.  We have had some rate hikes, but they are at best temporary, with not all lenders following suit.    

The low rates are attributed to the limited amount of home financing/refinancing in the Canadian market place.  But once again Calgary bucks the trend; in June 2011 sales were 7.6% over May 2011 and 3.06% over June 2010.   This attributed to confidence in our market, due to business expansion, new hiring and in-migration to our city. 

How do I take advantage of these low rates?

I literally have done only one floating/variable rate mortgage in the last 12 months.   The consensus among clients seems to be that free ride is soon to be over with the low prime.   With signs of economic recovery and the first signs of inflation an increase in prime is emanate.  Prime was to increase in September but it was felt the strong Canadian dollar was doing enough to curb inflation.   

So many of us have secured lines of credit.   Depending on the lender these are floating any where from prime plus 0.5% to prime plus 2%.   Translating this to actual rates this means these loans are floating at 3.5% to 5%.   Today this is relatively inexpensive financing, but what about in the next year?  With 5 year fixed money as low as 3.49%, why not convert to a fixed rate.    The other issue with secured lines is although they have most flexible repayment options, the majority of people only make interest only payments.   Once you have combined these with a traditional mortgage you can start to make some head way against principle.  

When rates are low it makes sense to consolidate consumer debt.    Consumer debt, car loans credit cards can all vary in rates from 8% to 22%.   The benefit of transferring them to a rate as low as 3.49% makes obvious sense, especially if you are just making minimum payments.   The other impact is on your monthly payments.   

	Amount	Payment
Current mortgage at 5.19% 30 yr am	$293,000.00	$1,597.00
Credit Card 1	$5,491.00	$178.23
Credit Card 1	$9,318.00	$279.54
Car  Loan	$35,000.00	$566.00
Total	$342,809.00	$2,620.77
New Mortgage at 3.49% 30 yr am	$342,809.00	$1,532.66
Decrease in monthly payment		$1,088.11

Refinancing literally saves thousands of dollars in interest and these savings can be easily quantified.   These savings can easily out weigh the penalty in breaking your current mortgage.

Renters should be comparing rent versus mortgage.   This is their opportunity to get a foot hold in the Calgary market place and take advantage of building equity and appreciation in the next few years.  At the 5 year fixed rate of 3.49%, 30 year amortization, a $150,000 mortgage will cost you $670.63.   Factor in condo fees and taxes; it may be equivalent to rent.

Greg Gullekson, Mortgage Broker
Dominion Lending Centres Westcor
403.244.9133
www.greggullekson.ca

Selling a home is more than just sticking a ‘For Sale’ on your lawn

July 2011 - At the end of June there were 6767 single family houses and condos were for sale in Calgary, of those 1979 sold.   Why did those 29% sell?  There are a number of factors that create home sales such as low interest rates, changing demographics and a thriving economy.  But the big question is if you are selling your property what REALLY sells it? How does your property stand out from the rest so that it falls into that 29%? 

When I sell a house (def. a building for human habitation) I’m a selling a home (def. a refuge).  Essentially I’m really selling a feeling or an experience.  Anyone can walk into a house and like it but that’s never enough, the buyer must LOVE it! They need to see themselves there and picture that home holding their happiness and their future memories.  So, what must a REALTOR® do to ensure a home will sell when it is listed on the market?

It starts early in the process of pricing it right.  Many people have the idea that their house is worth considerably more than comparable properties.  A comparable is a recent ‘sold’ property found in the same community.  An active listing is not a true comparable as this price can be easily inflated and as a result it can sit on the market forever.  A REALTOR® should always present a Comparative Market Analysis (CMA).   The CMA provides a suggested list price range and from there the Seller can decide what the home should be listed for.

Next, what about commission?  Keep in mind that those that offer discounts on commission may not offer the best service,  in fact they may provide no service at all!  Your goal is to have your home sold and this means the REALTOR® should work hard to make sure this happens.  While commission is negotiable, it is up to you and your REALTOR® to ensure that you truly get what you pay for.

What about a marketing plan?  Signing the listing contract and then sticking a ‘For Sale’ sign on your front lawn does not make for a plan.  I call this Placebo-Marketing. Maybe it will work; mostly it doesn’t.  In a competitive market such as Calgary’s, a Seller should not be deceived by a smoke and mirrors approach.    An active, proven and reliable marketing plan MUST exist and the REALTOR® should present this to their clients and then stick to it.   Will there be open houses?  What will the feature sheet look like? Will they advertise and where?  Ask all the questions and make sure you are happy with the answers.

So, all the paperwork is done – now what?  A REALTOR® can assist with staging, recommendations about how to prepare the property, and referrals to other professionals that may be needed.  Communication is key between a REALTOR® and Seller.  A Seller should always know exactly what’s going on.  As real estate professionals we should never answer for our clients without consultation.  Feedback on all showings, if provided should be communicated quickly.  If a Seller calls, emails or texts their REALTOR® they should hear back from them in a relatively short period of time.

If you decide to sell, choose your REALTOR wisely.  They may be the only difference between a ‘SOLD’ sticker and a dusty, tilting ‘FOR SALE’ sign on your front lawn.

Jacqui Williamson, REALTOR, Certified Condo Specialist
Century 21 Bamber Realty Ltd.
403.245.0773
www.jacquiwilliamson.com

Stay informed, in charge

Stay informed, sell your home

May 2011 (SPRING!) – When I buy anything I want to be absolutely sure that I’m getting a good deal.  I usually do this by comparing what I’m buying to what other suppliers or providers are offering.  In view of the fact that everything seems to be going up in price with most incomes not keeping up, a person is foolish not to check the competition out. 

In comparison to a few years ago buyers are in a very good position to purchase now.  The market has stabilized, inventory levels are healthy and prices have decreased.  Interestingly, the sales of homes in the higher price point ($700,000 and up) are selling on average faster than homes priced lower.  This primarily is due to the fact that Calgary’s economy is showing strength with higher income earners upgrading their homes.   It appears that there are many positive signs that we are in a vibrant real estate market. 

My experience as a REALTOR® has taught me some valuable lessons.  The most important being, my clients need to be and stay informed.  They need as much knowledge and education as possible in order to make a wise choice when it comes to the purchase of their home. When selling they need to be realistic and prepared.  One of the ways to do this is by providing them with a detailed report called a ‘Comparative Market Analysis’ (CMA).  This document, also referred to as a Market Evaluation compares their property with other homes that are in the same neighborhood, close to the same age and size, and with similar features.  The purpose is to show whether what they are selling is simply a good deal.  The CMA may use Active listings which aren’t always realistic as the listed homes could be overpriced.  It does however, show the competition and this is most important. It uses Pending sales (conditional sales) which aren’t yet true comparables until the house has sold. The most important comparable is what has Sold currently.  These are realistic prices that have met the test of time, successfully.  The CMA then breaks down average, low, high and median prices as well as price per square foot.  If a house is listed for $500 a square foot and the sold price for all other past listings is $400, I’d suggest that this is delusional pricing by an unrealistic seller.   

Pricing a home correctly is essential in selling it.  I always tell my clients that it reduces their stress, inconvenience and anxiety.  It attracts buyers and it eventually leads to a sale.  A CMA or Market Evaluation is free, and when done properly it will give a seller a realistic viewpoint of the current value of their home.  Buying or selling a home is a big deal.  Stay informed, stay in charge and create your own future. 

Jacqui Williamson, REALTOR, Certified Condo Specialist
Century 21 Bamber Realty Ltd.
403.245.0773
www.jacquiwilliamson.com

 

2011 Showing Promise 

May 2011 - After my “whining” over 2010, I have very little negative to report so far this year and seem to be enjoying a steady pace of business in 2011.   It seems the wait is over, Calgarians are no longer looking for further price declines and are confident in the stable market prices.  No longer sitting on the fence Calgarians are confident to make that first purchase, buy that rental property or upgrade to more suitable/desireable homes.    After our correction in 2008, analysts view the Calgary market as very affordable in comparison to other major Canadian cities.  At our peak in 2007 the average selling price of a single family home was $505,920 and condo $332,237, today the average single family home is at $460,315 and condo $285,799.

Calgary survived the recession with only minor cuts and bruises.   The economic outlook is more than just positive.   Indicators such as “office space vacancy” seem to indicate business expansion both in existing and new companies relocating to Calgary.  Oil and gas predict hiring an additional 13,000 workers in the next 3 years.   Alberta is well situated in the next few years as all our resources sectors are in demand not just oil and gas.  The global market place is looking to Alberta’s agricultural, fertilizer and forestry sectors.

We have witnessed these cycles before and they trigger both immigration and in-migration from the rest of Canada.   And what happens is housing demand begins to outstrip supply.   Pressure begins to be felt in the rental market, people shift to purchases of residential real estate.   Hopefully this will not result in the frenzy of activity experienced in 2007.

Today interest rates are still in favor for the buyer, with only minor rate hikes from 2010.   But how long with these low rates exist?   We are experiencing inflation for the first time since 2008.   Will we soon see increases in prime to curb inflation?   With 5 year terms as low as 3.89%, more and more of my clients are doing debt consolidations.   Credit card debt is not the only concern.   So many of my clients have at least a 1/3 or more of their mortgage debt floating through lines of credit at any where from prime plus 0.5 -2.00%.   The safety of today’s fixed rates should not be ignored.   We all have short term memories forgetting prime hovered between 6 to 7 percent in 2007.   In the last 12 months I have done only one variable rate mortgage.  

Greg Gullekson, Mortgage Broker
Dominon Lending Centres Westcor
403.244.9133
www.greggullekson.ca