Q: Should I renovate my home before putting it up for sale?

A: The following is a list projecting which home improvement initiatives often produce the best results upon resale value. Naturally these numbers are not rock solid. There are many factors including your local housing market and what kind of improvements you undertake.

Kitchen Remodel (minor) – 125%

Basement Remodel – 98%

Bathroom Addition – 96%

Kitchen Remodel (major) – 92%

Bathroom Remodel – 90%

Exterior Paint – 90%

Master Bedroom – 86%

So, here you can see that home improvements to kitchens and bathrooms, pay excellent dividends. Not only that but they are often the most enjoyable changes for your everyday living.

Scope of Improvement
Often with home improvement, the small changes often add up to more than the sum of their parts. The larger the scope of the home improvement, the more risk you will incur. That said, risk could turn into a high pay-off. You really have to know who your market is and what they are looking for. The following is a list of small changes you can make, which will make a huge difference:

Upgrade or add ceiling fans

Add new doors

Fresh paint

Garden Sanded and stained deck and fence

Wallpaper

Fad = Bad
What is chic today can be the stifled snicker-inducing mistake of tomorrow. Take into account shifting social values. For instance, public space is rapidly dwindling. People, more and more, are looking for space where they can casually entertain. There are no more block parties, no more picnics in the park. Take this into account. Add a deck, it is the new standard for home ownership.

Cost
Do not expect that if you put $20,000 into a renovation, you will automatically see $20,000 added to the value of your home. However, even if you only can recoup $10,000 of that, if you are there long enough you easily get $10,000 of use from a new kitchen. You should also think about doing as much of the home improving yourself as you can. Having a hands on approach will give you flexibility, and a new understanding of your home, that you can apply to other home improvement projects. It will also save you lots of cash.

New Windows
Not a good resale investment at all. You can tell the buyer that you just added new windows, but that doesn’t really matter. Unless you can demonstrate a significant savings on your electricity and heating bill there is really no point. Therefore, replace windows if they need to be, but never just before you are selling your home.

Creating New Space
Whether this means taking space that was poorly used before, or adding an addition, it can be a good idea. It is often important to look at design before functionality in this case. If you are improving your basement, don’t put in a bar. Instead leave the space open to interpretation. Leave it open, leave it clean. Like blank slate. The same can be said for studies, solariums and offices. Let the buyer decide.

Q: What is the Depreciation Report?

A: Depreciation Report is a report that states all the deficiencies or upcoming work a development will require. These reports are a new, not-quite-mandatory legal requirement for all forms of strata properties that have more than four units. A strata may exempt itself from the requirement to prepare such a report every three years only by passing an annually renewable resolution that is supported by three quarters of the owners.

However, “If a strata chooses to exempt itself, the presumption may well be that it has something to hide,” Tony Gioventu, the executive director of the Condominium Home Owners Association of B.C. said.

Gioventu said the legislation is “the most important change in the industry in 40 years” and, although some strata owners will grouse at the cost, it will ultimately be good for both owners and potential buyers.

For owners, it will ensure future needs have been assessed, and make the future cost of ownership far more predictable.

“Special levies, as we know them now, are often unexpected,” he said. “That shouldn’t be the case in the future. Strata owners might still decide not to raise monthly fees and build a large contingency fund, but at least the owners will know when special levy is coming and how much it might be.”

For buyers, “it will make it much more difficult for sellers or for strata councils to withhold information.”

More detailed information on this legislation and its implications can be found on the CHOA website at www.choa.bc.ca/updates.html

Q: Should I get my REALTOR to present the offer to me or should I allow the Buyer REALTOR to present?

A: This depends on how well you can maintain a poker face. Realtors choose to present an offer to the Sellers directly because they get to gauge how good their offer is and how much room there is to negotiate. They will also look for clues as to which Seller to focus on as this is probably the decision-maker. Their job as Buyer’s REALTOR is to gather as much clues possible to support squeezing your price so if you think you have a hard time showing no emotions, then it is better to have them present to your REALTOR and your REALTOR to you so your REALTOR can protect your negotiating position.

Q: Should I buy my property first then sell or sell my property first then buy a new one?

A: To ensure your negotiating position is not compromised, it is best to first sell your home then make a purchase unless you can afford to hold 2 properties comfortably. If you had already made your purchase, you may be forced to accept a less than ideal price on the property you are selling because you cannot afford or wish to lose money by holding onto both properties. Moreover, keeping a vacant property is not the best way to maximize your returns, everyday a property sits vacant, it is costing you money. Things like property tax, mortgage payments and hydro bills will keep accruing even when it is vacant.

I never liked to have my clients in such a position but if the mistake is already done, I will advice you not to talk to your neighbors about your new purchase as they may take it that you will be pressed to sell your property at a lower price. Remember I mentioned that most of the time, it is your neighbors who has friends or families that wish to move into the neighborhood?

Q: Which REALTOR should I pick to sell my home?

A: Choosing the right REALTOR to sell your place is never easy because every REALTOR has different specialties and work in different neighborhood with different marketing strategies. It is always advisable to interview at least 3 REALTORs before coming to a decision.

What should you look for? How knowledgeable is the REALTOR on the area where your property is located? Can they service the active Buyers in the neighborhood? (E.g: If your neighborhood is mostly Chinese, it is likely a Chinese will buy your property and hiring a REALTOR that speaks Chinese will ensure that the REALTOR will be able to market your place to them more efficiently.) Is this REALTOR responsive? Can I communicate with this REALTOR effectively?

Q: Why did all of the REALTORs I interviewed quote me a different price on my home? What should I list it for?

A: Different REALTORs view the market differently, we may see different comparable properties therefore arriving at conclusions. Most REALTORs would have found some properties they feel is comparable to yours and explained why, listen to why they feel it is comparable to yours, see if it makes sense to you.

These are some of the things I look at when I find a comparable property:

Location of property (different areas have different pricing, you can change the interior or exterior of a house but you cannot change it’s location)
Lot size (this is important as we know lots in Vancouver always worth more than the house, even your tax assessment will agree)
What type of house (if your house is a 2 level house, I cannot exactly use a 3 level house as comparable because it is different, a Vancouver Special is also in its own class as these were built when the setbacks are not so strict therefore offering more finished area.) *If you are to tear down a Vancouver Special, there is no way you can build the same size 2 level house on the same lot.
Age of house (comparing a 2 year old house to a 20 year old house is not a good comparable)
Number of finished kitchen (this is becoming increasingly important as Buyers now prefer to have a mortgage helper)

Everyone thinks a REALTOR should be telling you how much you should list your property for, this is not true. You are in the driver’s seat and whatever price you wish to list your property for, I will comply. I can only advise you to keep to a certain price range because I have researched and concluded that comparable properties in recent sales or current competition are priced in this range.

Q: My television, mirror or bookcase is mounted on the wall, can I bring that with me to my new property?

A: Will It Stay? Chattel vs. Fixture

With flat-panel TVs mounted on walls, and stainless steel appliances strategically used to stage homes, buyers are including more chattels and fixtures in their offers to purchase these days.

(Examples of chattels: fridge, stove, microwave, Fixtures: Built-in dishwasher, exhaust fan, faucet and hardware.)

Is it safe to assume that if a fixture is not listed as an exclusion in the purchase agreement, then it’s automatically included with the property? Not always! I’ll give you an example.

My Seller recently bought an LCD TV and wall mount bracket to hang it on, not long after we accepted an offer. The prospective buyers are very excited about having the TV all ready for them when they move in; they assume it is permanently attached and so comes with the house.

However, while the wall mount is attached to the home, and thus considered a fixture, my TV is attached to hooks that hang from the mounting bracket – making it a chattel.

As such, their realtor should specifically list the TV in the “Chattels Included” section of the offer.

Legal Fight over Chattel

If the buyers move in and see my TV is gone, they’re on the horn with their lawyer and the legal fees for both parties start to rack up quickly.

I’m sure after a lengthy explanation, a few photographs and a lot of added stress, the buyer’s would realize that the TV was not included and the deal would close anyway.

As the seller, I’m left with a larger legal bill and an upset buyer. The buyers are left with having to purchase a TV they thought they’d already bought with the house!

The point is: If you want something in your new home, include it. If you’re not sure, include it. If there’s any doubt, include it.

It may seem odd to put a storage shed, central air conditioning, or even a garage door opener as inclusions – but full disclosure for both parties will ensure everyone knows what stays and what goes.

The end result should be a smooth transaction where both buyer and seller get what they expect.

Q: My appliance broke down after the new buyers did their home inspection, do I still have to fix it?

A: Yes you will have to fix it because it is stated in the contract of Purchase & Sale that the property should be in the condition that the Buyers viewed so when they viewed the property, the appliance was in working condition, therefore when they received possession of the property, it should be in working condition too.

Q: What do you charge to sell my home?

A: I charge 7% on the first $100,000 and 2.5% on the balance to sell a property. Out of what I charge, I always pay 3.255% on first $100,000 and 1.1625% on the balance to Buyer’s REALTORs because I believe in providing my Sellers with the greatest exposure possible therefore I never give Buyer’s REALTORs a reason not to sell your property to their clients.

Example:

Purchase price on property is $1,000,000My fees are (TOTAL fees payable by Seller):

7% on first $100,000 = $7,000

2.5% on the balance (2.5% on $900,000) = $22,500

HST: ($22,500+$7,000) x 12% = $3,540

Total = $33,040

Out of my fee, Buyer’s REALTOR receives:

3.255% on first $100,000 = $3,255

1.1625% on balance (1.1625% on $900,000) = $10,462.50

HST: ($10,462.50+$3,255) x 12% = $1,646.10

Total = $15,363.60

Q: Do I have to pay commission to the REALTOR who paid money to advertise my house but did not sell?

A: No, the REALTOR’s commission is earned only if they have sold your home.

How Much Should I Expect to Pay on Closing Costs?

Whether you’re looking to buy your first home, or trading up to a larger one, there are many costs – on top of the purchase price – that you must figure into your calculation of affordability. These extra fees, such as taxes and other additional costs, could surprise you with an unwanted financial nightmare on closing day if you’re not informed and prepared.

Some of these costs are one-time fixed payments, while others represent an ongoing monthly or yearly commitment. Not all of these costs will apply in every situation, however it’s better to know about them ahead of time so you can budget properly.

Remember that buying a home is a major milestone. Whether it’s your first, second or tenth home, there are many important details to address during the process. The last thing you need is unbudgeted financial obligations cropping up hours before you take possession of your new home.

Read through the following checklist to make sure you’re budgeting properly for your next move.

Property Taxes

Depending on your down payment, your lending institution may decide to include your property taxes in your monthly mortgage payments. If your property taxes are not added to your monthly payments, your lending institution may require annual proof that your taxes have been paid.

Survey Fee

When the home you purchase is a resale (vs. a new home), your lending institution may ask for an updated property survey. The cost for this survey can vary between $700- $1,000.

Property Insurance

Home insurance covers the replacement value of your home (structure and contents). Your lending institution will request proof that you are insured as it protects their investment on the loan.

Legal Fees

Even the simplest of home purchases should have a lawyer involved to review all paperwork. Shop around, as rates vary greatly depending on the complexity of the issues and the experience of the lawyer.

Mortgage Loan Insurance Fee

Depending upon the equity in your home, some mortgages require mortgage loan insurance. This type of insurance will cost you between 0.5% -3.5% of the total amount of the mortgage. Usually payments are made monthly in addition to your mortgage and tax payment.

Moving Costs

The cost for a professional mover can cost you in the range of:

$50-$100/hour for a van and 3 movers, and

10-20% higher during peak demand seasons.

Maintenance Fees

Condos charge monthly fees for common area maintenance such as grounds keeping and carpet cleaning in hallways. Costs will vary depending on the building.

Local Improvements

If the town you live in has made local improvements (such as the addition of sewers or sidewalks), this could impact a property’s taxes by thousands of dollars.

Land Transfer Tax

Property Transfer Tax is payable by the Buyer when they make a purchase on a property, it is a land registration tax. It must be paid when an application for a taxable transaction is made at any Land Title Office in British Columbia to register changes to a certificate of title. Property Transfer Tax is payable on the fair market value of the property being transferred.

Property Transfer Tax is calculated as follow:

1% on the first $200,000 of the fair market value (which is usually the agreed price)

and 2% on the balance.

Example:

Agreed price on property is $1,000,000

1% on first $200,000 = $2,000

2% on balance ($800,000) = $16,000

Total: $18,000

*First-time Homebuyers incentives

For more info on Property Transfer Tax, please go to:http://www.sbr.gov.bc.ca/business/property_taxes/property_transfer_tax/ptt.htm

Home-Selling Tips

“…discover how to protect and capitalize on your most important investment..”

Because your home may well be your largest asset, selling it is probably one of the most important decisions you will make in your life. To better understand the home selling process, a guide has been prepared from current industry insider reports.

Understand Why You Are Selling Your Home

Your motivation to sell is the determining factor as to how you will approach the process. It affects everything from what you set your asking price at to how much time, money and effort you’re willing to invest in order to prepare your home for sale. For example, if your goal is for a quick sale, this would deter-mine one approach. If you want to maximize your profit, the sales process might take longer thus determining a different approach.

Keep the Reason(s) You are Selling to Yourself

The reason(s) you are selling your home will affect the way you negotiate its sale. By keeping this to yourself you don’t provide ammunition to your prospective buyers. For example, should they learn that you must move quickly, you could be placed at a disadvantage in the negotiation process. When asked, simply say that your housing needs have changed. Remember, the reason( s) you are selling is only for you to know .

Before Setting a Price

When you set your price, you make buyers aware of the absolute maximum they have to pay for your home. As a seller, you will want to get a selling price as close to the list price as possible. If you start out by pricing too high you run the risk of not being taken seriously by buyers and their agents and pricing too low can result in selling for much less than you were hoping for.

When Getting an Appraisal is a Benefit

Sometimes a good appraisal can be a benefit in marketing your home. Getting an appraisal is a good way to let prospective buyers know that your home can be financed. However, an appraisal does cost money, has a limited life, and there’s no guarantee you’ll like the figure you hear.

Tax Assessments – What They Really Mean

Some people think that tax assessments are a way of evaluating a home. The difficulty here is that assessments are based on a number of criteria that may not be related to property values, so they may not necessarily reflect your home’s true value.

Ensure You Have Room to Negotiate

Before settling on your asking price make sure you leave yourself enough room in which to bargain. For example, set your lowest and highest selling price. Then check your priori-ties to know if you’ll price high to maximize your profit or price closer to market value if you want sell quickly.

Appearances Do Matter – Make them Count!

Appearance is so critical that it would be unwise to ignore this when selling your home. The look and “feel” of your home will generate a greater emotional response than any other factor. Prospective buyers react to what they see, hear, feel, and smell even though you may have priced your home to sell.

Invite the Honest Opinions of Others

The biggest mistake you can make at this point is to rely solely on your own judgment. Don’t be shy about seeking the honest opinions of others. You need to be objective about your home’s good points as well as bad. Fortunately, your REALTOR® will be unabashed about discussing what should be done to make your home more marketable.

Get it Spic n’ Span Clean and Fix Everything, Even If It Seems Insignificant

Scrub, scour, tidy up, straighten, get rid of the clutter, declare war on dust, repair squeaks, the light switch that doesn’t work, and the tiny crack in the bathroom mirror because these can be deal-killers and you’ll never know what turns buyers off. Remember, you’re not just competing with other resale homes, but brand-new ones as well.

Allow Prospective Buyers to Visualize Themselves in Your Home

The last thing you want prospective buyers to feel when viewing your home is that they may be intruding into someone’s life. Avoid clutter such as too many knick-knacks, etc. Decorate in neutral colors, like white or beige and place a few carefully chosen items to add warmth and character. You can enhance the attractiveness of your home with a well-placed vase of flowers or potpourri in the bathroom. Home-decor magazines are great for tips.

Deal Killer Odours – Must Go!

You may not realize but odd smells like traces of food, pets and smoking odours can kill deals quickly. If prospective buyers know you have a dog, or that you smoke, they’ll start being aware of odours and seeing stains that may not even exist. Don’t leave any clues.

Be a Smart Seller – Disclose Everything

Smart sellers are proactive in disclosing all known defects to their buyers in writing. This can reduce liability and prevent law suits later on.

It’s Better With More Prospects

When you maximize your home’s marketability, you will most likely attract more than one prospective buyer. It is much better to have several buyers because they will compete with each other; a single buyer will end up competing with you.

Keep Emotions in Check During Negotiations

Let go of the emotion you’ve invested in your home. Be detached, using a business-like manner in your negotiations. You’ll definitely have an advantage over those who get caught up emotionally in the situation.

Learn Why Your Buyer is Motivated

The better you know your buyers the better you can use the negotiation process to your advantage. This allows you to control the pace and duration of the process.

As a rule, buyers are looking to purchase the best affordable property for the least amount of money. Knowing what motivates them enables you to negotiate more effectively. For example, does your buyer need to move quickly? Armed with this information you are in a better position to bargain.

What the Buyer Can Really Pay

As soon as possible, try to learn the amount of mortgage the buyer is qualified to carry and how much his/her down payment is. If their offer is low, ask their REALTOR® about the buyer’s ability to pay what your home is worth.

When the Buyer Would Like to Close

Quite often, when buyers would “like” to close is when they need to close. Knowledge of their deadlines for completing negotiations again creates a negotiating advantage for you.

Never Sign a Deal on Your Next Home Until You Sell Your Current Home

Beware of closing on your new home while you’re still making mortgage payments on the old one or you might end up becoming a seller who is eager (even desperate) for the first deal that comes along.

Moving Out Before You Sell Can Put You at a Disadvantage

It has been proven that it’s more difficult to sell a home that is vacant because it becomes forlorn looking, forgotten, no longer an appealing sight. Buyers start getting the message that you have another home and are probably motivated to sell. This could cost you thousands of dollars.

Deadlines Create A Serious Disadvantage

Don’t try to sell by a certain date. This adds unnecessary pressure and is a serious disadvantage in negotiations.

A Low Offer – Don’t Take It Personally

Invariably the initial offer is below what both you and the buyer knows he’ll pay for your property. Don’t be upset; evaluate the offer objectively. Ensure it spells out the offering price, sufficient deposit, amount of down payment, mortgage amount, a closing date and any special requests. This can simply provide a starting point from which you can negotiate.

Turn That Low Offer Around

You can counter a low offer or even an offer that’s just under your asking price. This lets the buyer know that the first offer isn’t seen as being a serious one. Now you’ll be negotiating only with buyers with serious offers.

Maybe the Buyer’s Not Qualified

If you feel an offer is inadequate, now is the time to make sure the buyer is qualified to carry the size of mortgage the deal requires. Inquire how they arrived at their figure, and suggest they compare your price to the prices of homes for sale in your neighbourhood.

Ensure the Contract is Complete

To avoid problems, ensure that all terms, costs and responsibilities are spelled out in the contract of sale. It should include such items as the date it was made, names of parties involved, address of property being sold, purchase price, where deposit monies will be held, date for loan approval, date and place of closing, type of deed, including any contingencies that remain to be settled and what personal property is included (or not) in the sale.

Resist Deviating From the Contract

For example, if the buyer requests a move-in prior to closing, just say no, that you’ve been advised against it. Now is not the time to take any chances of the deal falling-through.