Walk a Kb or Two in my Moccasins- Nobody 'splained it to me like that!

Simple answers to Complex Questions and Complex Answers to Simple Questions. In real life, I'm a Greater-Toronto (Canada) Realtor with RE/MAX Hallmark Realty Ltd, Brokerage. I first joined RE/MAX in 1983 and was first Registered to Trade in Real Estate in Ontario in 1974. Formerly known as "Two-Finger Ramblings of a Forensic Acuitant turned Community Synthesizer"

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Sunday, September 12, 2010

Exactly what is a "Link" style property. Please define

Q....Exactly what is a "Link" style property. Please define

from Zoocasa Ask the Pros

A...A link is a detached-looking home on a semi-detached sized lot.




Shrewd builders started joining homes by the garage (thus eliminating common walls), then by small above-grade extentions and then by small underground extentions.



The old rules said a detached house neede 5000 sg ft of land, a semi needed just 3500 SF



the link was a hybrid that made buyers happy.



The newer bylaws noticed the stupidity and switched to permitting any type of home and concentrated on ratios of building size to lot size.

Why are maintenance fees calculated by square-foot, not number of people residing in a condo?

Q....Why are maintenance fees calculated by square-foot, not number of people residing in a condo? Please think before you answer.

from Zoocasa Ask the Pros


A....Good question.




That's why newer buildings unbundle the heat and hydro from the maint fees(and many existing are retro-fitting to per-unit metering)



The water is at bulk rates so don't worry too much about that.



The concept flowed from the proportionate share of ownership that each unit was given in the original declaration.



The schedule for maintenance was just matched to that share.

bank forclosures

Q......bank forclosures

from Zoocasa ASK the Pros


A.....I think want you want is a slightly distressed property at a greatly-distressed price - yes?




Not to worry, all these are bought by friends of the bank, or by industry insiders.



Try looking for owner-occupied homes that have been for sale for more than 90days instead

How can you acquire a home with as little as 5% down? Or is this even a good idea?

Q..... How can you acquire a home with as little as 5% down? Or is this even a good idea?

from Zoocasa ASK the Pros


A.......If you can be approved for a 95% loan and you are confident prices will be higher for that property in 1-2-3 yrs (whenever the bottom is) then go ahead.




After the "dip" we're going to see rapid inflation/currency devaluation and home prices will soar



You gotta live somewhere and if you rent in the meantime, you'll get no return on your monthly investment.

Do I REALLY need a real estate agent? Why?

Q..... Do I REALLY need a real estate agent? Why?

from Zoocasa ASK the PROS

A....No.




But why not?



In most cases registrants do not charge you anything until after you've been paid your proceeds in full.



If they don't do as they promised ... they don't get paid.



If they don't do what they promised (get it in writing initially is best) call www.RECO.on.ca and complain ... the registrant will jump to any tune you call to avoid an investigation from the Real Estate Council of Ontario



Further when they do something that harms you you can sue them (thanks to the mandatory Errors and Omissions policy in place to protect you).

Should you go with a short or long-term mortgage?

Q.......Should you go with a short or long-term mortgage?

from Zoocasa ASK the PROs


A.....Robert Ede




Sept 12/2010

Rates are very close to the all-time low and will be low for 6-12 months before creeping up very slowly

NB Bank Prime s/be 4%+ CPI inflation





Take a variable prime less 0.5% to 0.9%



Take a 25 yr ammortization but make payment equal to what you would have been paying on a 5yr fixed.



You'll be amazed in 3yrs when you see how far ahead you'll be in principal repayments

I was wondering what the commission rate is for an outside agent bringing in a client?

Q......My brother wants to buy a new house in about a month or so and I was wondering what the commission rate is for an outside agent bringing in a client?

from Zoocasa ASK the Pros



A......; Imprecisely worded question, but generally (90+% of the time)the Buyer does not directly pay the Registrant for bring in an offer.

Fees to acquire a property could range from 0.5% to 3.5%




Typically (but by no means the only way) a Buyer contracts for a registrants services and that contract outlines the fees and allows for two contingencies a) agreed min fees paid thru the Seller's rep or b) in the event min fee from Seller is insufficient, how the 'topping up' will occur.

When is a front parking pad permitted?

Q.....When is a front parking pad permitted?


From Zoocasa ASK the Pros

A..... Robert Ede



A front parking pad is permitted on streets where permit parkin will not serve today's residents.



Narrow mutual drives were built for Model T era cars and just don't work today



Each street, each side of some streets and specific construction guidelines are all part of the need-to-know



Look for streets where some existing homes have little tin signs from the city denoting existing permits as a "early indicator" that it may be permitted (by municipality) on your target property.

What are the important things I need to make sure I find out before buying a condo in terms of the Condo Assoc and financial status ?

Q.... What are the important things I need to make sure I find out before buying a condo in terms of the Condo Assoc and financial status and how do I go about getting this info?

from Zoocasa ASK the PROS


A...... Robert Ede


http://www.robertede.com/

Nobody ever 'Splained to me like that!

Buying a condo is similar to buying an operating business.



You want to see audited statements of the revenue and expenses (for a few years)



You want to see the statement of assets and liabilities



You want to see the insurance agreements in place



You want to see their forward expense projections for the commonly-held impreovements (common elements)



You want to examine all the rules, regulations, bylaws and guidelines set out by the governing association for "life" in the corporation.



Fortunately, all this is a package. available from the Condo's Office on max 10 days notice for only $100

How much of a mortgage can I afford?

Q......How much of a mortgage can I afford?
from Zoocasa ASK the PROS

A....... Robert Ede




Quickly & assuming you have good credit and 5% down:



Take your Gross (ie pre-tax) Annual Family Income



Divide it by 40



Answer is the monthly payment you can carry including 1/12 annual taxes and est. monthly heat.



Subtract an allowance for 1/12 taxes & heat



Divide new answer by 5.25

= the # of thousands you can likely qualify to carry at 4% interest 25yr ammortization



EG

$90,000yr /40

=$2250/mth

less 300/mth (annual 3600 taxes)

less 200/mth (est.monthly heat)

=1750

div by 5.25 (factor per thousand at ~4% on a 25 yr ammm.plan)

= 333



You should be qualified for ~$333,000 mortgage

I'm on FindYourSpace.ca and PropertyGuys ..Why do i need an agent?

Q....... I'm on FindYourSpace.ca and PropertyGuys ..Why do i need an agent for Zoocasa ??

from Zoocasa Ask the Pros

A..... Robert Ede




What is your #1 Objective:



a)placing your home for sale as widely as possible at the lowest possible cost?



b)selling your home On time and at maximum "net" to you?



There are all kinds of sites and service providing "almost as good" as MLS(tm) coverage for promotion.



But only one Grand-daddy of them all.



It's the best site because buyers like it best and it actually produces offers .... it's then your job to see if the offers are good enough to accept.



Be good to yourself. USE the MLS(tm) system to YOUR advantage ie to get top price.



You can readily sell it yourself for 92% of Market Value .... but what's the advantage to YOU!!

As a first time buyer what resources would you suggest for understand the buying process?

Q.... As a first time buyer what resources would you suggest for understand the buying process?

From Zoocasa ASK the Pros

A..... Robert Ede




First Time Buyer.



Understand who is working for you and who is working "off" you.



A new home sales rep is working for the builder (albeit if they are registered, they are obliged to furnish you a "duty of care" and disclosure at the "customer service level"



Go to at least 3 first time buyer free-normally workshops.



Go to at least 10 open houses and discuss your "quest" with each rep there.



Go to your bank and get pre-approved.



Hire a registrant.



Have the registrant set up a "Prospect Match" for you (auto MLS (tm) search that gives you daily updates.



Drive by all of them



Start looking at the best that appears.



Ask your friends for recommendations re: Lawyer, Home Inspector, Mortgage Broker.



If you don't find anything, raise your price point by 20% ... if the house of your dreams is readily available at that price ... make adjustments in area or "quantity" of must have characteristics.

What exactly is a CONDO?

Q .......What exactly is a CONDO?

From Zoocasa ASK the PROS

A....Robert Ede



A Condominium is a space that has been given a Legal Description and marketable title as part of a condominium corporation.



It's a method of intensifying the use of a piece of land, controlling the shared maintenance and appearance and allowing people to own a small chunk of the whole, quite independently of anyone else.



A unit is sometimes at grade, sometimes 65 floors in the air, or 5 levels below ground, sometimes it has many levels, sometimes the space is surrounded by conrete or wood or metal or plastic and the newest ones have nothing built on them "Vacant Land" condos.



In addition you can find Leasehold Condos that are units in a structure that is on leased land

What is UFFI and how does it affect me?

A....What is UFFI and how does it affect me?

From Zoocasa ASK THE PROS

A ...... Robert Ede

UFFI is a substance that if improperly installed can emit formaldehyde gas (as does new particle-board furniture & cupboards, carpetting and the hunman body)




After a period of time (no matter how poorly-installed) it goes inert.



Some people are more acutely sensitive to formaldehyde gas than others.



It hasn't been installed in a long time in Canada and now it's just a "stigma"



Like a death in a house, former grow op/ chem lab, backing onto a hydro-corridor .... some people just will not buy it.



Others will buy it at a discount (often as a rental, not to live in)



Because of the diminished demand and the fact that you (and every registrant who knows about it) will have to disclose the fact ... you will sell for less.



If you're thinking about buying a UFFI house .... ask yourself it it's worth the bother.



Hence the diminished demand.

The buyer has contacted me about buying the house FSBO. What should I do?

Q ...

I had a listing contract for my house expired on Sept 10th. The agent brought me an offer on Sept 9th. We still don't have a ratified contract with the buyer. The listing agent has not asked for an extension of the listing contract. The buyer has contacted me about buying the house FSBO. What should I do?
 
from Zoocasa's Ask the Pros"
A .....
 
Robert Ede



Tell your Listing Broker about the Buyer's Back-door approach.



Have Listing Broker inform Buyer's Broker.



If Buyer contacts you again, tell him/her what you've done and tell him/her to continue bargaining in good faith thru same Buyer's rep.



In the meantime, truly examine your options (discounting completely the sell-it-direct-to-buyer-at a lower price idea).



If you've been for sale 65+ days and your "optimal completion date" is within 45 days (assuming buyer is meeting that date) ... offer a lower counter-proposal to buyer's last proposal in writing thru the brokers.



Sounds like buyer has the upper hand. Make an offer that appeals to him/her, so he/she can solve YOUR problem.

How much the CMHC insurance cost?

Q.....How much the CMHC insurance cost?

from Zoocasa Ask the Pros

A.... Robert Ede



High Ratio (ie the ratio of Mortgage Amount to Property Value) Mortgage Insurance is offered by CMHC and a few other smaller players in Canada.



The original idea (National Housing Act)was to support New-Home buying after WW2 by reducing down payments to 5% and allowing buyers to borrow one mortgage at First Mortgage Rates.

The Alternative was 10-15% down, with a 75% First and the balance at Second Mortgage rates (2-10% higher).



The program was extended to Resale homes in ~1975.



Now very few transactions have a second mortgage as part of the Agreement of Purchase and Sale.



Today the insurance premiums vary with the type of property and the ratio of loan-to-value 60%, 65% etc up to 95%



The One-time Insurance premium is paid by the borrower (added to principal most often) while the beneficiary of the policy is the Lender - covering THEIR shareholders' risk for lending outside 'conventional' (originally 75% now 80%) mortgaging guidelines.



To evaluate the worthiness of Hi-Ratio insurance as a Borrower, the cost of the premium must be considered as an ongoing "borrowing expense" vis a vis the expenses to create any alternative way of financing the subject.(ie "borrowing expenses" can be upfront broker fees, appraisal fees, legal fees, standby fees etc + the interest/yr).



NB the fee covers that mortgage for as long as that mortgage exists.

If you move and "port" the mortgage with you, the premium is "still paid & in effect" even though you moved it to another house (with the same lender of course).



The premium is "still paid & in effect" on that mortgage amount, even if you increase the principal sum (with the same lender)



Compare all costs - upfront as well as the ongoing monthly costs to carry + the opportunity to buy with a lower down payment.

Do I have any obligations to my agent once my listing expires

Q..... Do I have any obligations to my agent once my listing expires

From Zoocasa " Ask The Pros"

A.....
Robert Ede



Holdover Clause:



NB NB This same Holdover clause is written in the BUYER Representation Agreement



The "Holdover" clause continues the (original contract's) commission liability for a stated period after expiry(it's a fill-in-the-blank field).

It applies ONLY to any Buyer introduced to the property (or the owner) for the purpose of buying DURING the listing period;



UNLESS

-the property is re-listed with another registered real estate brokerage under a new listing contract entered into after the first contract's expiry date.



IN THE EVENT

that a formerly-introduced Buyer succeeds in purchasing the property (within the first listing's holdover period),



THEN the original Seller's commission liability to the original Listing Brokerage is reduced by the amount actually paid to the second Listing Brokerage for that same Buyer's transaction.



E.G. If Seller's 5% listing with Brokerage A expires and then Brokerage B re-lists the property and sells it to a Buyer formerly introduced to the Seller/Seller's property at a commission of 4% a few days after the expiry, then Brokerage A can claim the 1% difference.



BUT Brokerage A has to make a legal claim (likely Small Claims Court)AFTER the closing, prove the "facts" and then collect the money.



It's a Public Relations fiasco, but in blatant circumstances many Brokerages would pursue the claim.



NB The same Holdover clause is written in the BUYER Representation Agreement.

How do real estate agents get paid?

From Zoocasa " Ask the Pros"



Q ....How do real estate agents get paid?


A....Robert Ede

This is another "Backwards to First impressions" aspect of life ( and Buying/Selling Real Estate is the Quintessence of Life).



In a Seller's market, Buyers pay a premium over the Seller's net price objective which covers the commission.



In a Buyer's Market, Buyers are negotiated to the highest price possible and the Seller gets it's net proceeds after deducting the commission.



In both markets (in 95-99% of the transactions) the Buyer pays one "all-in" price on the agreement of Purchase and sale and the commission is paid from that sale price to the Brokerage(s).

What is a home inspection and should I have one done?

What is a home inspection and should I have one done?

From Zoocasa " Ask the Pros"




A....Robert Ede



Home Inspection is only as good as the Attitude, Skills and Knowledge of the person doing the inspection.

The process starts with the Seller; Buyer; Registrants & Inspector agreeing that no house is perfect.

Two Scenarios:

#1 House with several hidden problems that Seller is trying to conceal, let's call this worst-case at 25% perfect;
#2 House with normal wear & tear (ie is it 4yrs old, 34 yrs or 84 yrs) that has been kept up-to-date by original (house-proud)owner, call it best-case @ 99% perfect.


The majority of homes fall somewhere in between AND no house is perfect (I'm limiting this to mechanical, structural, major systems, land grading/drainage etc not easements, encroachments etc)

Most properties are 60-80% perfect and the only way to evaluate their imprections is to quantify (translate to money) the problems.

A home inspector's job is to by way of non-invasive tools, look (ie visually) for problems and imperfections and then outline the costs and urgency of affecting the repairs.

Sometimes it's not worth doing the repairs because another home at slightly higher price is available with far fewer problems and costs.

The formula is Purchase Price + Cost to Remedy deficiencies + Aggravation = Market Value

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