Blog.ByTheOwner.com

The Globe and Mail has a few interesting articles with tips on obtaining a new mortgage and also paying down your mortgage.

A guide for mortgage virgins

Haggling over your first mortgage

How to be house rich and not house poor

Of course ByTheOwner.com helps people save thousands of dollars in real estate commissions when they sell, so we are in favour of any advice that helps Canadians save money when it comes to their home. The above articles talk about financially smart decisions such as “Make sure you have a big down payment”, “avoid buying a home that you can barely afford”, “negotiate a good mortgage rate with your bank”….

Educating yourself, and doing the math on how much you will really be paying for items such as mortgage interest, mortgage insurance, CMHC insurance, and real estate agent fees can make an incredible difference in your financial situation.

Once you do the research, you can discover that, for example, your mortgage interest paid over a 35 year period is actually more than the purchase price of the home (a home purchased for $350,000, can actually cost you $700,000 over 35 years). Good advice is to pay down your mortgage as fast as possible in order to reduce the interest that you pay!

Another realization about excessive costs often comes when owners decide to use a real estate agent to sell their home. For example, if you purchased a home for $350,000 and then sell it with a real estate agent for $370,000, you would discover that you would not be making any money on the home because the real estate agent commission would be $19,425 ($18,500 + $925 in gst). If you include the other costs involved with buying and selling (legal, land transfer tax), then using a real estate agent will actually mean that you lost money on your home, despite the fact that the value went up by $20,000!

ByTheOwner.com

Get ready for July 1st, 2010! That’s the scheduled date for the implementation of a new “Harmonized Tax” (HST) that will combine the GST and the PST. The new combined tax rate will be 13%. This new tax will have a large impact on the costs associated with buying or selling a home. Currently only GST (5%) is charged on:

- Your legal fees
- Advertising cost
- Real estate agent commission
- Home Inspection
- Mortgage Insurance
- Title Insurance

However, on July 1st, 2010, the tax on these services will be 13%. Here is the increase in costs for a real estate transaction:

- $1000 in legal fees: You will pay $80 more!
- $500 ByTheOwner.com Pkg : You will pay $40 more!
- $15,000 Commission: You will pay $1,200 more!
- $400 Home Inspection: You will pay $32 more!
- $300K Mort. Insurance: You will pay $960 more!
- $200 Title Insurance: You will pay $16 more!

The most expensive part of selling a home is the commission charged if you use a real estate agent. At an average of $15,000 in commission, currently, this equals an additional $750 in GST. The new HST would mean that the seller would need to pay $15,000 plus $1,950 in HST. This will make the entire cost of using a real estate agent for a $300,000 home to be $16,950. Yikes!

The best solution to avoid spending $16,950 of your hard earned money, would be to sell your home with no agent and use ByTheOwner.com.

The power of the internet can be amazing. It was slightly more than a decade ago that internet began to become popular around the world. ByTheOwner.com began 12 years ago, in 1997, in Quebec City. Over the past 12 years, ByTheOwner.com has seen thousands of our customers sell their homes privately and save thousands of dollars in real estate fees. A recent testimonial from Gus and Gina, in St. Thomas, Ontario, mentions that the Buyer came from Alaska!

It really shows the power of the internet and the exposure that ByTheOwner.com provides our customers. (ByTheOwner.com has a frontpage link partnership for fsboalaska.com. )

Gus and Gina have now sold 2 homes with ByTheOwner.com for a combined savings of approximately $23,000 in real estate commissions (5% of selling price). Congratulations to Gus and Gina!

ByTheOwner.com

ByTheOwner.com’s main goal is to educate the public on the process of selling a property, so that everyone will be able to sell, without an agent, and save thousands of dollars in real estate commissions.

In order to educate the consumer, we have lots of information available on our website, we have a “guide to selling your home privately”, and we have a professional real estate sales coach available for all our customers.

One of the most common questions we receive is about the deposit. How much should the deposit be? Who keeps the deposit? Does the seller keep the deposit if the deal falls through? What happens if the deposit is too low? Here are the simple answers to questions about the deposit:

How much should the deposit be?

Deposit amounts can vary per city and region. There is no “one specific amount” or “one specific %” for a deposit amount. For example, in Sudbury, deposits can be under $1000. In Toronto, some deposits can be more than $30,000. Regardless of the size of deposit, the amount has little bearing on the whether the sale of the home will go through or not. A good benchmark would be 1% of the purchase price, but if you receive an offer with a lower deposit, the offer should not be rejected simply because the deposit is too low.

When should the deposit be given?

Most offer to purchase documents allow the deposit to be given either “here within” or “upon acceptance”. The most common way (and the most practical) is to give the deposit “upon acceptance”. This means that the deposit is only given when the offer is accepted.

To whom should the deposit be given?

The deposit should be made out to the seller’s lawyer “in trust”. Deposit cheques need to be deposited into a “trust account”. Under no circumstance should a deposit cheque be made out to the seller. The deposit cheque needs to be deposited into a “trust account” because this money is held “in trust” and then the money is applied to the sale of the home when the deal closes.

Does the seller keep the deposit if the deal falls through?

The seller does not keep the deposit if the deal falls through. This is a common misconception. The deposit money still belongs to the buyer.

How does the deposit get returned?

If the deal is not “firm” and there are still conditions to be met (ie. financing, home inspection…) then most conditional clauses will contain the wording that “the deposit shall be returned to the Buyer in full without deduction”.

Once a deal is “firm” and there are no more conditions, then there are only 3 ways that the deposit money can be released from a trust account.

1) A mutual release from both the seller and buyer: If the offer has been accepted, but both the seller and buyer change their minds, then they can both sign a “mutual release form” and the deposit money will be given back to the buyer

2) A court order: If the deal falls through and either the seller or the buyer decide to sue each other, only the court can decide when the money will be returned.

3) Fullfillment of the contract: If the offer is accepted and the deal closes, then the deposit will be released from the trust account and become a part of the funds used to purchase the home.

Deposits are a very simple part of a real estate transaction. Most parts of a real estate transaction are quite simple. ByTheOwner.com is here to educate every person about real estate, so if you would like any information, please don’t hesitate to give us a call or send us an email.

ByTheOwner.com

A recent Globe and Mail article discussing bidding wars seems to also indicate the value of location.

The old saying goes…”What are the three most important factors in real estate?” and the answer is “location, location, and location”. This can be a difficult concept for some sellers to grasp: A home in the city of Toronto might be worth $700,000, but the exact same home in a suburb might be worth only $350,000. Sometimes a seller with a less valuable location tries to sell their home for a higher value because they are comparing it to a better location. This also raises another real estate saying…”Be sure to compare apples to apples and not apples to oranges”.

To illustrate the point, here is a home that recently sold in Vancouver.

The positive features of this home include a basement apartment and a renovated kitchen. The negative features include a small yard, with a view of a condo development, and a master bedroom that is only “slightly more” than 100 sq ft.

How much would this home be worth in your neighbourhood?

The answer to that question could be anywhere from $60,000 to $1,142,000 depending on location. In this particular case, the home was located in Kitsilano, a suburb of Vancouver.

The home sold for $1,142,000!

Location, location, location!

ByTheOwner.com

There are some important differences between 1st and 2nd time home buyers. Let’s examine some of the differences in regards to the aspects that go into buying a home.

Location:

Location is a very important part of buying a home. However, this is an area where 2nd time buyers often use their experience to make a better choice than 1st time buyers. Often location is over looked by 1st time buyers. They tend to be more excited about simply “owning a home” rather than considering where the home is located. It is usually after your first home purchase when you realize: “This street is noisy”, “My commute is really frustrating”, “This neighbourhood might have a few “bad apples”…

In regards to location, you will often find that 2nd time buyers will be looking in a smaller geographical area, and often in one particular neighbourhood. “I want to live in Woodbridge”, “I want to live near Mill Pond”. This is because 2nd time home buyers realize the importance of the location.

Price:

There are also differences between 1st and 2nd time home buyers when it comes to price. Generally speaking, 2nd time home owners can afford a more expensive property because they have built up equity in their home. However, when the housing market crashed in late 2008, 2nd time home owners did not want to sell because their home had dropped in value. It was 1st time home buyers who were driving the market in late 2008 because they didn’t need to sell. So it’s important to know that 2nd timers have to sell their home in order to buy another home. But generally speaking, 2nd time home buyers buy in a higher price bracket.

The Home:

The layout of the home becomes a much more important factor for 2nd time home owners. Again, this is something that is learned from experience. It’s interesting that features such as a large ensuite, kitchen, mudroom, or foyer become very important to 2nd time home buyers. This is because they realize that these are the areas of their home that they use the most. Most 2nd time home buyers could do without the formal living room or dinning room because they realized that they didn’t use these rooms. The condition of the home can also make a big difference, although this is more based on the individual. Sometimes 1st timers will see an outdated home and lose interest, whereas an experienced home buyer would look at the size of the rooms and realize that “it just needs some paint”.

Patience:

1st time home buyers are usually so excited to buy, that they can make a quick, rash decision to buy. (Why do you think that new home sales have those red “sold” stickers on the lot diagrams? 95% sold out! Better buy now!”). 2nd time home buyers will know what they are looking for and will be willing to wait until they find the home that they want.

This information can help the private seller!

If you are selling privately, you should be aware of your target audience (without stereotyping of course). If you have a high end home in a great neighbourhood, then your buyer will, most likely, be a 2nd timer. This means that the buyer could be more “picky” and little items (like a smaller ensuite) could make the difference in selling to that particular buyer. This can frustrate the seller “They don’t want to buy because of that?”. That’s right, because they are a 2nd time buyer.

If you have a home that is priced in the range of 1st time home buyers, you should be prepared to act quickly. You could try to update your home so that it looks like a new condo or new townhouse, which are competing, with your property, for the 1st time buyers.

Of course the above are generalizations and perhaps a little too over simplified, but it’s good to understand your ideal buyer (target market) and try to have your home appeal to them as much as possible.

ByTheOwner.com

Our customers often write great testimonials describing their selling experience. Reading what our customers thought about selling privately and about ByTheOwner.com, is a great way for our company, our current customers, and our future customers to learn and get great advice.

Often our testimonials will mention that our local rep and customer service was outstanding, real estate agents were a pain, and that selling privately was easier than the customer thought it would be. Oh yes, and most will mention the unbelievable amount of money they saved. Recently we have received a lot of testimonials from customers who are using the words “fast”, “weeks”, and “days” to describe their selling experience. Here are a few testimonials from the past two weeks that mention the speed of their sale:

There are many more customers who have sold just as fast. Click on the testimonials above to read more than 1000 testimonials from ByTheOwner.com customers.

ByTheOwner.com

August’s results show that record sales were set in many Canadian cities.The current housing market appears to be operating in a unique situation that is ideal for both buyers and sellers. This is a rare situation because both sides of the equation have multiple factors on their side.

BUYERS - It’s a great time to buy

- Low Mortgage Rates: Mortgage rates are still at all time lows and they are forecast to remain low until next summer.
- More Choice: The slow down in sold homes at the beginning of the year has caused a higher inventory of available properties.
- Lower Prices: The slow down also caused home prices to decline (But they are increasing quickly).

SELLERS - It’s a great time to sell

- The Market Is Hot: The best time to sell a home is in a hot market.
- Winter Is Coming: December is the least favorable month to sell a home. It is the month with the lowest average price and the month with the fewest sales. Fall, on the other hand, is a great time to sell. Your home looks great in fall!
- Private Sellers Save Thousands Of Dollars!: Of course the best part about selling is saving the commission!

ByTheOwner.com

Summer has come and gone and the fall real estate market is here. People are going back to work and kids are back in class. September is usually a very active month so let’s take advantage of this moment to attract as many potential buyers as possible! Get ready for a new Open House Month!

(more…)