Multi Residential: a few red flags....

Multi-Residential Asset Class: A couple of tips

This past week I took some investors to view a mutli res building. The building had furnished suites. Furnished suites command a higher rental rate and can compete with rates on short term hotel rental accomodations.
Some red flags:
1. Cmhc won't finance using the income stream provided in the financials. It will take out the premium and look at rental rates fore unfurnished units when it does its market valuation. That will have a substantial affect on the amount it will loan and subsequently the amount you may offer

2. Furnished suites can result in very short term leases. Too much transition can be a serious issue

3. You'll want to make certain that the leases stipulate something around the "wear and tear" of the chattles provided by the landlord. Last thing you want is a tenant demanding a more modern lcd tv

4. You'll want to really know who your tenants are and where they're coming from that they require furnishings to be provided.

CAPS in general:
In low to mid market were seeing caps these days around 5.5 percent. With interest rates low and some unwilligness by investors to look into equities (there are those buyers who see real estate as a sound investment) and one that you can't overlook market lift on top of the CAP. Still make sure you're getting positive leverage. Take you're yield (net income/purchase price relative to cash on cash (net income less annual mortgage/equity).

For more tips or red flags, please don't hesitate to get in touch.

Best,
Michael Gruenstein MBA CSC Sales Representative
Re/Max Realtron(ICI/Res)
Blog: http://mgruenstein.blogspot.com

C:416.271.2066
mgruenstein@trebnet.com

Real Estate as an Investment in Toronto

Quickly we're going to look at two vehicles for very different real estate investors.

New condos are still arguably a decent place (with some risk) to invest money over a short term horizon and look for a small but healthy bang for your buck.

If you are fortunate enough to be tied to a broker who has an in with a solid developer, you may be invited as an investor to buy into the development well before it is built. In most cases a developer need sell up to 70% of the units at preconstruction phase in order to tie up the financing they require.

Often this 70% can be sold through these relationships with buyers at this stage buying in for 10%-15% below the planned market value. The remaining 70% will get sold to the average Joe Buyer at a higher rate.

Many would argue that buying in at preconstruction should net you 25k-50k plus depending on the developer, location and when you pull th trigger to sell. Some developers will allow you to "assign" (sell the deed prior to closing to another party) and you should still be seeing a pretty penny for this hurried transaction.

Why does this work?

1. Since 70's there's been few buildings built as rentals. I'm talking about high rises. Most have been developed as condos so renters need somewhere to live

2. we still have 100k plus immigrants a year coming to Toronto to look for work. Before they buy a home many rent. You hold the stock!

A second investment is a small apartment building.

In the Toronto core these days, you're looking primarily at 5-6% returns. Not sexy but certainly better then the bank's GIC rate. You need to be prepared to work though. It's a job. The supply of these buildings is in tight order so Sellers are having their way. You need to look past the cap rate and look as a buy and hold. As such the real opportunity lies in the areas inflation If you can find a building buried in a residential area that is seeing growth...all the better.
The one downside is that rental escalations are tied to the CPI and last year that wasn't showing much growth. As a result, rent increases for existing tenants who wish to renew at a low .7%. But there are accounting advantages on taxes for both property and depreciation.

Much more can be said and needs to be addressed.

If you have the interest and time, please don't hesitate to call me direct.

Stay cool....

Michael Gruenstein MBA CSC
mgruenstein@trebnet.com

Toronto Housing Market: What's the Latest? Plus..some tips.

There hasnt been an abundance to write about.

Market in Toronto continues to churn out listings slowly.

Homes that show well and in sweetspots are still seeing multiple bids.

Interestingly, there may be a bit of a ceiling these days on just how high buyers are willing to bid upwards. We all know bank appraisals are getting a good deal more stringent.

Also days on market in a number of areas has slowly been on the rise.

Is this the typical slowdown we see each summer? Or is this the sign of ano inflated market begining some degree of a correction.

Economists will argue yr over yr prices have not been rising in a bubble formation as the litmus test is comparing wage growth relative to inflation of housing prices and theyve been rising together thus far. And we always talk about Toronto as a world class city with affordable (on relative scale) prices.

We do collectively know that interest rates cant stay this low BUT when will they go up? US debt levels, strong loonie, Eurozone nightmares, not so hot economic growth, a weak second quarter and slowdown economies in developing nations dont exactly scream for heightened rates.

BUT...they did infact raise rates at many banks yesterday on fixed rate mortgages.

2 litmus tests you should know around financing your home:

1. When you buy..know that a 2 percent increase in rates on a 4 percent mortgage will increase payments by 50 percent. Make sure if you think rates are going in that direction that you are confident in 5 yrs or less when you renew, that you can afford this increase.

2. This is a barometer as to whether you should rent or buy. Some use this. Take the monthly rental payments for the year. Divide the price of the house by these payments. If the number is less then 15..theres ano arguement that it may make sense to own a house. If the number comes in 20 or above..it makes sense to rent.

I didnt make this up and frankly i dont know who to credit. If you dont like it..dont use it!

As always, send in your questions/concerns to my email and my best!

See my website @ http://www.TheSmithsBuyAhouse.com.

Michael Gruenstein MBA CSC Sales Representative Re/Max Realtron http://www.TheSmithsBuyAHouse.com http://www.PropertiesintheGTA.ca Blog: http://mgruenstein.blogspot.com O:416.782.8882 C:416.271.2066 mgruenstein@trebnet.com

Multiple Offers/Bidding Wars...How it all goes down!!

Multiple Offers/Bidding Wars...."The Stage Production"
No other topic is seemingly so searched on google, as multiple offers on a home, these days.

Heres my take...for what its worth.

Dont let the stage production take you in. This is a chance for sellers and agents to get something going.

Act 1:
Listing appears and the (drum roll).."Offer Date" appears. Buyers get excited and nervous.
Act 2:
Sellers provide preinspection. "Hurry Up Offense".

Act 3:
Showings begin. Typical pattern begins. Agent open house followed by showings, a weekend of open houses and the offer date

Act 4:
Listing Agents update listing with a time for offers to be registered.

Act 5:
Offer day comes.

Act 6:
Buyer Agents call to find out how many offers are coming in and keep nervous buyers abreast.

Act 7:
Offer Time. Anxious buyers and their agents park in a row or line up at listing agents office

Act 8:
Agents present. Buyers wait to find out if they get to make it to second round.

Act 9:
Crown the king and queen. "We have a winner"

Act 10:
Most parties leave beaten up and their agents leave knowing their work is still cut out (some are okay with that, others are scarred!)

Heres the thing. This isnt new folks! When you were in school, you competed (well some of you) for the highest marks. On the soccer field you competed to win. This is a competition and the winner isnt always the winner because they played the game better or were better prepared. Sometimes somebody better suited to meet the mortgage payments, chose to stop short as they lost the idea of "value" on this particular property.

Dont let the production sweep you away. Study the market, understand value, offer what the house is worth (not to you but according to the comps); utilize the knowledge of your agent and understand that their are some benchmarking strategies.

And it wont be the last house...even in a market with seemingly not much inventory!

Good luck!!
Michael Gruenstein

Buying a Home..Who else can you ask for help?

I was out with some buyers yesterday and showed them that there is a periphery or secondary cast of characters that can help do your homework when you're targetting a home outside of the agent's, home inspectors, sellers and lawyers.

When we got to the house yesterday a very kind nanny was there to greet us. She wanted so badly to be part of the action! So...I involved her as much as I could. I asked questions that I never dreamed I'd get answers to...

1) Any clue why these guys are selling...Response: "i know they've had a number of issues with recurring water". Wow...that's a goldmine to uncover.

2. Have there been a lot of showings here? Have you seen the same agents come back a few times? No not really. Seems a little quiet. I know the homeowners were talking last night about it feeling sluggish. Loving this.

When we were outside looking at the front of the house there happened to be a roofer redoing the house right next door.
Why not, I thought. "Excuse me Roofer...from your vantage point...do you notice anything odd about the roof on this house OR does it look fine? Immediately he was thrilled to let us know that there seemed to be some standing water on the flat roof. Again, this is all very helpful.

Across the street a neighbor was standing outside. Neighbors love to talk. We went and discussed the neighborhood for a bit. Schools, neighbours, traffic, safety, parking situation, etc. Nothing like learning first hand from a 10 year home owner on the street. Geez, we got names of babysitters, where the loud dogs lived, the house number of the old lady who does tailoring.

My point here is that if you and your agent are not "pushy" and "professional" there's no harm in asking open ended questions to learn more then the static MLS offers. Keep your eyes and ears open at all times. There's good info that you can learn from those who have no vested interest in your potential transaction!!

Please send any questions to mgruenstein@trebnet.com
And check out my website at http://www.TheSmithsBuyAHouse.com
Thanks-
Michael Gruenstein MBA CSC

Multiple Offers/Bidding Wars...."The Stage Production"

No other topic is seemingly so searched on google, as multiple offers on a home, these days.

Heres my take...for what its worth.

Dont let the stage production take you in. This is a chance for sellers and agents to get something going.

Act 1:
Listing appears and the (drum roll).."Offer Date" appears. Buyers get excited and nervous.
Act 2:
Sellers provide preinspection. "Hurry Up Offense".

Act 3:
Showings begin. Typical pattern begins. Agent open house followed by showings, a weekend of open houses and the offer date

Act 4:
Listing Agents update listing with a time for offers to be registered.

Act 5:
Offer day comes.

Act 6:
Buyer Agents call to find out how many offers are coming in and keep nervous buyers abreast.

Act 7:
Offer Time. Anxious buyers and their agents park in a row or line up at listing agents office

Act 8:
Agents present. Buyers wait to find out if they get to make it to second round.

Act 9:
Crown the king and queen. "We have a winner"

Act 10:
Most parties leave beaten up and their agents leave knowing their work is still cut out (some are okay with that, others are scarred!)

Heres the thing. This isnt new folks! When you were in school, you competed (well some of you) for the highest marks. On the soccer field you competed to win. This is a competition and the winner isnt always the winner because they played the game better or were better prepared. Sometimes somebody better suited to meet the mortgage payments, chose to stop short as they lost the idea of "value" on this particular property.

Dont let the production sweep you away. Study the market, understand value, offer what the house is worth (not to you but according to the comps); utilize the knowledge of your agent and understand that their are some benchmarking strategies.

And it wont be the last house...even in a market with seemingly not much inventory!

Good luck!!
Michael Gruenstein MBA CSC

Visit my website @ http://www.TheSmithsBuyAHouse.com
mgruenstein@trebnet.com

Condo Investing Basics

Quick Condo Tutorial:

Theres been a lot of info of late around condos in the media

Why? Probably has to do with the fact that 6 of 10 solds are condos right now in GTA

The appetite for condos is huge!

And thats a good thing as theres no shortage of supply.

Who is buying? Investors are playing a big role.

Foreign investors to be clear.

Are condos a good investment?

The idea of buying a resale condo and renting it out often doesnt better your cash flow. It takes care of much of the expenses until you hopefully see capital appreciation and sell. But you need to hope that there arent too many like minded investors as youll lose some of your competitive advantage in a strong market should a number of units find their way to MLS.

New condos may be a better choice for an investor. Here you do need patience and the initial downpayment of 25 percent. All goes well if you buy off spec and the units appreciate yr over yr for the 3 yrs until the condo is registered then youre in a good position. Again, you wont be the only guy to have this idea so hopefully the mls isnt flooded with listings.

What some investors will do is beat the lunch crowd and look to sell paper before registration to lessen the competition.

Though theres no shortage of this manouver either. Have your realtor email you the supply in many new condos of those owners looking to assign their offers prior to closing.

Btw..a crude measure for rental rates can be 2.10-2.30 per sq ft depending on a number of factors.

So do your homework and understand the market and the workings of the deal. Nothing is a slam dunk but ______ and ______.

Cheers,
See my website @ http://www.TheSmithsBuyAHouse.com

Do we Buy first or Sell first? What does the Agent wasnt us to do?

This is naturally one of the first questions I get asked. And the truth is, I don't think there is a right answer. I believe you have to weigh your options depdening on your situation. Your situation depends on a few factors not least of which include 1) area of interest and turnover in that area,
2) will your bank assist you in bridging should you need to carry 2 mortgages even for a month or two
3) how quick do you think your house will sell--relative to your neighborhood and immediate comps
4) do you have a contingency plan as to where you could live in the event you sell first and can't buy in time
5) how long have you studied the market
6) what's your risk tolerance

Look, in a market like today's with seemingly not an abundance of supply in many pockets in TO, the arguement may be that your house, all things being equal should sell fairly quickly but the supply may not be great in the area of interest and result in high demand and multiple offers on the place you want to buy making the purchase end more complicated then the sell.

Alternatively, some banks will just about mandate these days that you sell first so you know what you're dealing with in terms of money to buy and they won't have to set up any extra financing for you or hold their breath that your current house doesn't sell quick enough

There are a few strategies that can help reduce the anxiety and put you in the driver's seat. If you sell first, try and ask for a long closing date to insulate yourself with time to purchase your new house. Of course, inventory narrows in the dead of the summer so keep that in mind as it does in the dead of the winter.

If you buy first, come up with a number (emergency number) that if you had to give away your house you could easily fetch. Of course, you'll get more then that number but insulate yourself so you don't buy too much and then put the pressure on to turnaround and get an unrealistic dollar on your current home.

The job of a good agent extends beyond listing and negotiating homes. It's helping you stay grounded and not getting overly emotional in a market like today's so one can make as informed a decision factoring in all costs involved as well as how the bankers are going to view the transaction.

Some believe that agents like when you buy first as it immediately puts pressure on you to sell your house quicker and gives the agent leverage on you. If that's the kind of agent you feel you have...yikes!

If you have further questions (and you really should) around this..please don't hesitate to call or email anytime.

Best-
Michael Gruenstein MBA CSC
Re/Max Realtron
http://www.TheSmithsBuyAHouse.com
mgruenstein@trebnet.com

Knob and Tube --what a Buyer needs to understand

I'm not a home inspector and I'm not an electrician. I've been around enough inpsections at this point and bought and sold enough homes in areas like Leaside and yonge and lawrence to know a thing or two.

Here's the deal. Knob and tube is considered by insurers to be a riskier form of wiring. It's not grounded and in the insurers world, safer wiring has come to replace this older wiring. Many homes still have knob and tube wiring and it powers the house just fine.

But...over the last few years and certainly over the last few months, it appears there's been a movement of fewer and fewer insurers looking to underwrite homes with knob and tube wiring.

When you inspect the house you purchase, the home inspector is able to give you some sense as to whether or not the house has any active knob and tube wiring. That's pretty much the extent of what an inspector can provide. Unless the inspector opened the walls and had complete access to the attic, etc., they really have to go on an educated guess based on location of house; age of house and any reno's done where wiring may have been updated.

Now, when you go to get insurance on your house, the insurer will ask if there is knob and tube. When you reply --yes..you will learn the position that particular insurer takes. They may tell you they have no interest in insuring you and to look elsewhere; tell you they will insure and provide you with a binding letter to remove all within 60 days of ownership or at least reduce to say under 25% or 10%.

A client of mine learned this week that TD Insurance who for years was insuring knob and tube homes, has walked away from this business (unless you hear differently).


Some insurers will provide you with a binding letter and then mandate that you have a certified electrician come to the house and infact verify the exact percentage of knob and tube and then slate that into a sliding scale of premiums.

The best you can do is call around insurers and learn their positions before you buy.

There are some niche players who underwrite these homes, few questions asked.

At the end of the day, the arguement is...if you're buying a house to reno, you're going to be updating the wiring to run you're high efficiency appliances so the current state of the wiring doesnt mean much.

Also, paying a premium to insure is an annuity. It often pays to get rid of the knob and tube as a one time fee and update.

These decisions of course find their way into the calculator along with your other costs depending on the exact house you buy.

Do not be afraid of knob and tube and do not pass up a great house because it has it. By the way, most homes with knob and tube are also of the vintage to have water boilers in the basement to heat the house. Guess what....these boilers are often insulated with a thing called "asbestos".

Want other things to worry about....
buried oil tanks
lead pipes
tree stumps blocking old clay pipes carrying out sewage

I'm just joking around. The point is...know the age of the house you're buying. Know what to look for. Alot money for work that may need to be done and if you're lucky enough to find a great character house in one of the best locations in this great city-enjoy it!!

Cheers-
http://www.TheSmithsBuyAHouse.com
mgruenstein.blogspot.com
mgruenstein@trebnet.com

Who is enjoying the Toronto Real Estate Market these days?

Well the answer to that really depends on what side of the coin you land. Simply put, if you're a Seller in a hot pocket in the city and you've priced the listing well----it's a great time to be a Seller. Supply continues to be low and interest rates are very low. I laughed when I spoke to my Banker this week and told her that for the first time as far back as I can remember, it would make sense to pay off a line of credit with a mortgage (at these rates).

That said, let's look at the flipside of the coin. Buyer's are stumbling over each other's feet in hot pockets. I was on an offer presentation last week where there were 20 plus offers on a semi detached in one of the most sought after areas in the city.

Respecting the privacy code, I won't get into details, but the house sold way above asking. I personally wouldn't feel comfortable repping a buyer and winning in that bid. But hey...if the Buyer is happy (and if they get their finaning), who am I to talk?

It's been very tough to be a Buyer in many areas. Buyer's trying to beat the clock on interest rates and avoid multiple offers may do themselves a favour and pack their bags and leave the market behind.

If you're a intelligent Buyer these days, you're still viewing supply; you're studying the market; you're okay with not purchasing "outliers" (those that sell well beyond what comparables would suggest); you're okay with a bit of a bump in rates; you're understanding the process of purchasing; you're well positioned with an agent who has a few avenues outside of MLS to hedge that you'll hear about any/all opportunities and you're not on MLS.ca every 10 minutes making yourself crazy! I keep hearing how "fun" that is. It's not "fun"! If I really wanted tickets to see the Leafs play the Habs, I wouldn't wait and check a single website every 10 minutes hoping some tickets pop up. I'd "work smartly" to get those tickets and explore every avenue available.

I used the Leaf example because Leaf tickets are almost as expensive as buying a house!!!

Stay level headed Buyer's. We're all hoping to see more inventory these days. There is hope yet!

Something bigger then Real Estate>>> http://www.tjzmommy.blogspot.com

I decided that over this long weekend, I'd like to pay tribute to an old friend and her family and pass on her story and her life. This is her story. http://www.tjzmommy.blogspot.com Please read and please find it in your hearts to give.

Updates on market and strategies will follow after the longe weekend.

Best,

Michael Gruenstein MBA CSC
Re/Max Realtron
http://www.TheSmithsBuyAHouse.com
http://www.mgruenstein.blogspot.com

When Bully Offers don't work...Enter the..."Poison Pill". DEADLY

When Bully Offers arent enough. So you bud the line because youre not waiting 7 days for offer date youve got a stellar offer with no conditions and you want this house. So you register your Bully and wait to hear if the seller is enticed. The Seller isnt. Based on showing numbers and lack of inventory, the Seller has decided to wait for the actual Offer Date.

Advantage:Lost!

But wait, surely theres something "new" out there that can keep you alive and force the hand of the Seller in the wake of 10 competing bids on offer date!

Welcome the slowly increasing practice...the "Poison Pill" Offer.

Buyer Agent brings in what they believe to be the best offer and gives the Seller 20 min to decide or the offer is dead. A really risky move that can backfire but one just worked leaving 6 agents getting calls in their cars that the Seller just accepted the Poison Pill Offer and all 6 who have yet to present are done for the night!

What's next?

To learn more or chat around this..call or email anytime

Cheers-
Michael Gruenstein MBA CSC
Sales Representative Re/Max Realtron http://www.TheSmithsBuyAHouse.com http://www.PropertiesintheGTA.ca Blog: http://mgruenstein.blogspot.com O:416.782.8882mgruenstein@trebnet.com

Preapproval Certificate VS Mortgage Disbursement -You were preapproved but your house was rejected!

I'm going to make this entry quick. Really, this is your bankers or mortgage specialists job to explain....but it impacts you and me and some financiers aren't doing a good job explaining how this works.

When you go to your bank of choice and apply for a mortgage, you are taking the first step, looking to be "PREAPPROVED". Let's not get technical. All the bank does at this stage is look at your credit scores and your income and debt levels and ensure that you'd be able to service the extra debt burden known as the mortgage with your current income stream and your current debt obligations and that no more the 35% of your income is being eaten up by paying your monthly mortgage.

On top of the mortgage amount the bank preapproves you for...you then put your downpayment. The total of which will determine the HOUSE PRICE you can afford.

Now, you're well into the game of looking at homes. You've located a home and are bidding on it. You win in the bids. NOTE******* your bank sometime before the closing date will send an appraiser to the property. The focus now shifts from you being able to afford the debt to the bank believing that you paid the right amount for the house. Should they dispute that number, they will forward the mortgage amount but you will now have to increase your downpayment to offset the lowered valuation. Remember the bank is using your house as collateral in the event that you go bankrupt or the market shoud correct, the bank wants to feel as good as they can that you paid "market value" for the home you purchased.

In today's environment with low inventory and plenty of bidders, some buyers are paying wacko dollars for homes. Maybe they didn't understand that the preapproval differs from the final mortgage disbursment which takes place following the bank satisfying themselves with the purchase price on the agreement. Some deals are struggling to close of late b/c the valuations the buyers aloted to the home just don't add up.

So now you know that the bank first approves you as a Buyer. Later and only after you buy does the bank approve the actual house!!

This needs to be understood by erach and every buyer and again a claim can be made to use an agent who knows what's going on in the area of interest to you!!

Keep the comments and questions coming by email.

Cheers-

Michael Gruenstein MBA CSC
mgruenstein@trebnet.com
http://www.TheSmithsBuyAHouse.com

Calling all Inventory?? Toronto Market not supplying the homes

Well for the last few weeks us realtors have blamed the slow inventory roll out on the obvious---March Break!

March Break is done and the inventory isn't there...yet.

So buyers are scrambling to buy homes and tripping over each other.

I've seen some mind blowing sales of late in areas like Allenby and Yonge and Lawrence for example.

Homes are going for big bucks! Winning in multiples these days can get one sided. It's tipping towards the sellers side with the prices some homes are selling for.

I've said it in a previous blog...be careful if you're a buyer in this market. Yes, it is challenging to figure out market value sometimes and there is a range of values. But, paying beyond this range can create problems. The most obvious problem is the financing on the property. Some bank appraisals are coming in lower then the price the buyers pay for the house. The buyers are left to make up the shortfall.

Why the lack of inventory?

My best guess is that the tradeup is getting expensive.

Take a small family of 4. Suppose they live in a detached valued at 700k in a decent neighborhood. Now, they require a main floor family room, a 4th bedroom, an office as well as a rec rm in basement and a driveway for 2 cars. That very house in the same area they fell in love with may now be 1.2 million. After they net say 400k after remaining mortgage, they may have a downpayment saved up of 50k-100k and they require a 600k-700k to trade up. Some are prepared to do this...while others are not.

So if the 700k homes aren't opening up then the market stalls. All the while with low inventory what was 600k before is the new 700k!

So it's tough. But, the arguement remains that this is our new reality and people are typically better owning and building equity, all else being equal.

There is still nothing like owning a home. And when people today see what it costs to rent relative to interest rates on a purchase, it still makes sense to buy.

Here's the thing ...affordability and bubbles are measured by the rise in income relative to the rise in home prices. Over the last many years, they've risen in tandem which doesnt suggest an overheating or bubble. But..lack of inventory confuses everything!

Cheers-

Michael Gruenstein MBA CSC
http://www.TheSmithsBuyAHouse.com
mgruenstein@trebnet.com

Buyer too smart for his own good! New campaign slogan "Buy Responsibly"

True Story:

A buyer of mine lets call him "Jack Bum" and me had been looking at homes together for the better part of 7 months. Let me give you a rundown of the value added "Jack Bum" received:
-mls listings on day 0
-non mls and exclusive listings thru my contact base (so he's seeing more product then just about any buyer out there)
-explained market value and pricing using 3 different methods so he could go into the market with as much confidence as possible. Homes are priced all over the map and selling all over the map
-lessons on strategies for setting up for offers and how to best position yourself in multiples
-countless hours of coaching

So...heading into month 8, this buyer decides to stop in at an Open house on his way home. He puts in an offer with the listing agent.
He buys the house. Feels guilty and doesnt want me to know.,

Finally I find out. I inquire as to which house.

Here's where we both lost out.

The particular house that he bought had been on the market for 2 years with 4 different agents. The house wasn't discussed as it was above his range.

This time around the house was still above his range but less so. The 4th agent dropped the price a tad. Jack Bum had no time to waste and put an end to our 7 month relationship for the big victory.

Punchline: House had been marketed for years. The owners were prepared to take much less then asking price but felt that in this kinda market maybe they'd find someone desperate enough to get into the area and they'd overpay. Jack Bum wins!!

I had to tell him that going around me probably didn't save him any money (many agents don't have that sizable reduction if they double end a deal, if any deduction).

Anyhow, I had to inform my client that if he thought he saved 10k, I could have saved him six figures b/c everybody in the industry who worked the area knew that these sellers were leaving town and needed to sell.

I lost a good client and my too smart client lost over 100k easily.

Moral: Don't be too smart and too desperate to get a house. "Buy Responsibly". This may be my new campaign slogan.

For more information, call or email,

Michael Gruenstein MBA CSC
http://www.TheSmithsBuyAHouse.com
http://www.mgruenstein.blogspot.com
mgruenstein@trebnet.com

Happy Hour--the realtor meets the disgruntled buyer over drinks

Two guys in their 30’s enter a Toronto Bar in the trendy distillery district. It’s happy hour. At least that’s what the clock is flashing. Mike, a 30 something Toronto born realtor sticks to his Friday single malt while Trent spices it up with a Caesar. It’s minutes from taking place. That is…the small talk that ends a work week. Mike’s business relies on his networking ability and though it’s been a tough week and he’d prefer to stick to the head down on the bar approach, that little voice inside him tells him he needs to reach out and follow the real estate mantra of “adding prospects to a database”.

So here it is. The moment: ”Hello, I’m Mike. Let me guess..Bloody Caesar? Either you’re not much of a drinker my friend or you’re going light as it’s been a pretty good week for you?”
“50% accurate Mike. I’m Trent and I’m not much of a drinker. If I were, I’d probably skip the food coloring of the Clamato and hit the vodka”.
“Talk to me. What’s got you down Trent”?
It’s nothing really. In the big picture it’s really nothing. Or maybe it is. Maybe it’s my future? I’ve been shopping for a house in this Toronto market for well over a year. I’ve been listening to the pundits and naysayers explain that we’re on the cusp of a 25% correction anytime now. Yet, the US continues to pump money out and hold interest rates low so something’s a miss. Even when the Canadian economy looks to keep rates low, corporate earnings, demand for commodities and a strong dollar seems to foster an environment that seems anything but corrective in nature. I just feel like I’m never buying a house in this market. To make matters worse, there’s almost no inventory to speak of, so when a house that shows well hits the market, there’s a backlog of buyers interested in it creating a multiple offer situation that ends up with a sold price well out of the reach of our budget. We were once 700k buyers so 649k homes were our game. Now it looks like we’re gonna have to somehow get excited by 599k list prices. A 599k house isn’t what we imagined buying. So I drink this Caesar wishing I was toasting a victory this week, instead we lost 2 more homes.”
“Trent, your story is being echoed across the city. And on top of your purchase price you now have stricter mortgage rules (which may be a good thing depending on how financially sound you are) and you have 2 land transfer taxes and increasing property taxes just around the corner when they’re reassessed in 2012 for the next 4 yr cycle.”
“Mike with all due respect, you’re kind of like the enemy. You must be having a good time Mike. Agents are digging this market, no?”
If you’re on the right side of the equation, it can be fun and financially rewarding. My business like many realtors is split between listing properties and filling buyer mandates. When I take a buyer to see the few listings available, the Buyer is already flash forwarding to just how much competition he will face on the date of offers. 70 plus cards are falling out of the bowl used to contain the agent’s cards who have showed the property. Sometimes were not even making it to the date of offers with some buyer really gunning for the house and attempting to squeeze the seller by looking at an offer prematurely, known as a “bully offer”. If the Seller likes it..the house never makes it to day 7.

“Look Trent, agents are not the most liked group out there. What the public doesn’t understand sometimes is that we can report to work every day and work an honest 30 days and not bring home a dollar. Every agent will tell you the story about the long time client who suddenly disappears and once they’re confident with the market they buy through the listing agent (usually a big mistake) or they invite their mother law in to finalize the deal and collect the commission. Being a realtor is not about collecting easy money. You’ve got to have thick skin and you have to learn to size up people to determine if they’re going to be loyal to you. So yes, listing property in today’s market is pretty straight forward depending on the area. Some still need a real push and clever marketing especially if priced at the absolute top of the range”. But working with buyers has become an exercise of hand holding and constant dialoguing convincing the buyer that you are the right fit; more inventory will come; you are using alternative methods to find a house for them; and proving over and over that your knowledge of the market is unmatched” Finally you have to look your buyer in the eyes and explain that though the house is asking 799k, it should sell for well above, perhaps as high as 920k depending on how low it was priced; the competition (in this market of late, little); the comps that have sold; and of course the number of offers that hit the day of. So in effect, you are the buyer agent whose traditional job it was to help your Buyer bid down the asking price, now bid up the purchase price. It’s a different role Trent, even in the last decade I’ve been working my tail end off to get Buyer’s into homes. The final twist…some buyers are simply overpaying for the property. Yes, they were preapproved based on their earning for a mortgage of x amount. But when they bring a firm offer and purchase, remember the bank has yet to appraise the property. About 1 week before close the bank will appraise and they may come back to you and say that the money you paid doesn’t align with the number the bank has appraised the house at. To save the deal the Buyer may need to come up with the 100k difference and raise their down payment. So knowing market values, and doing your homework may be more important now, than ever before.”
“Trent you want to own a house. I’d like to sell you a house. Fortunately I have patience; knowledge; proven strategies for negotiating deals and resources that should get you comfortable even before we start seeing homes. Bottom line…it’s getting harder for you the Buyer and it’s certainly not getting any easier for me the Agent. The way I see it…we can both sit in a boat being rocked by waves or we decide to grab the oars and move in the right direction. What do you say I buy you one more drink Trent? Such a pleasure to be quoted 22.00 for drinks and not have to pay one dime over. Wait…with so much demand for scotch, I suppose we could orchestrate a bidding war?
Michael Gruenstein is a GTA realtor. He recently had the pleasure of working with a first time buyer couple. The couple, John and Jill didn’t know it when they signed on, but they were about to have a heck of an experience. From multiple offers to understanding market values to home inspection limitations to title searches and the games that are played, this young couple were put through the ringer.
When the couple finally bought a house, they joked that their realtor should write a short story on their experience so others could learn alongside. Michael took it one step further and created a website that traced their experience from the initial interview to getting the keys on closing. The website and blogs (regularly updated) serve as superb resources for those entering the market for the first time or those buyers looking to downsize who have been out of the everchanging market and need a quick refresher course.
http://www.TheSmithsBuyAHouse.com and
http://www.mgruenstein.blogspot.com

Buyer's Beware....Don't rock the boat too hard and tip it.

Was that a catchy title? Maybe I'm getting better at this?

Here's the deal. We've talked about the lack of inventory primarily in the central Toronto core. It doesn't take an economist to understand that if prices are going up and interest rates are still at all time lows AND it's springtime AND there's a lot of buyers needing roofs over their heads....then there's going to be competition for good homes. Good homes may be defined as those near transportation or major arteries, with parking; decent layouts; updated (either by way of mechanics or by renos OR both).

So, I like many agents have experienced a number of multiple offers over the last few months. Always nice sitting with the Sellers on these nights. The Buyers duke it out until 2 are left standing. The 2 (or maybe 3) combat UFC style for the house with the ultimate winner crowned.

Here's where the "don't rock the boat" part comes in! Buyers may fall in love with a house, know they can afford it, be tired of losing and decide to go "all in" to win the house. So, they spend a "big buck". "Big bucks" may be okay if it's the "right" house for the buyer given their budget and their circumstances and assuming they've done their homework and then some. However we need to distinguish "big bucks" from "sky high dollars". The latter can be the "boat rocker". The latter can create an issue that both the Buyer and Seller (yes Seller too) may need to think about.

You see, if the Buyer is getting mortgage financing (especially if the Buyer isn't getting a conventional mortgage and is putting the house in the care of CMHC hands to be insured)...there will be an appraisal done. Now, if the bank disputes the value paid for the house, the Buyer may find themselves either shopping for other sources of financing OR figuring out quickly sometime near closing how to increase their downpayment to make up the difference they thought the bank was financing!

Appraisals are often finalized weeks before closing, so the Buyer and Seller often don't know until there's little time to correct. In some cases, little can be done and the deal doesn't close. Is this happening? It is.

I'm very adamant with my Buyers that they stay well within a reasonable range and encourage them to have open communication and cement a strong relation in this kind of market, with their banker/mortgage specialist.

So, Buyer's this should be good news to you. Get out there. Again, do your homework. Know your budget and have a good grip on market values and comps. If your agent can make you see where he/she is getting his/her valuations from and it makes sense to you---great. If you get the feeling your agent is looking to get paid and they're encouraging you all to quickly to put that "huge number" on the offer...ask yourself if this is the best move for you.


Happy March Break to those lucky enough to have time off. For the rest of you, it's a great time to give me a call and talk about the market.

Visit my website http://www.TheSmithsBuyAHouse.com

Best,

Michael Gruenstein MBA CSC
ReMax Realtron
416.271.2066
mgruenstein@trebnet.com
http://www.TheSmithsBuyAHouse.com

Multiple Offers...Are they good? Are they fair?

I'm not going to define "good" and "fair". I'm just going to mention that it's been my experience over the years that one party favors the practice and another can't stand it. Where it gets really interesting is when the party that favors it, turns into the party that wants it abolished.

When you sell your house...if your house shows well and is priced under market value or damn close (especially in a market with low inventory and low rates) you'll likely do quite well and be happy that you attempted an offer date. Why with some homes selling 100k or more above ask...it's gotta be great to be a seller with 13 offers on the table.

But wait...where did you stand in the realm of the offers submitted. Were you the victor? How much did you beat the second in line? Often this kind of thinking will make many buyers crazy. I've always told my buyers to somehow pretend that they're the only ones bidding on the house that night. It's a great house and we decide what fair market value for the property is based on the work we've put in. That way win or lose, most of the buyers feel like they put their best foot forward and didn't go in to lax or to bullishly.

With the practice of multiples all too common in this market, sellers are having a field day (again if they've priced well and show well).

But...these sellers will taste the other side when they become buyers, should they be buying in the similar market.

So...maybe it is fair and the shoe fits both feet so to speak?

The clear winners are those downsizing and putting money in the bank, but if youre young and moving up...you're at a good stage in life too!! Just not when you're buying a house in this market.....until you win.

Inventory should increase. The competition often helps level the playing field somewhat. Also with headlines in the media these days about household debt and rates to rise and new mortgage rules to hit soon, it's possible it'll be a kinder place for buyers. So keep learning the market and get a good agent. They do add value. Not sure they do. Visit my website @ http://www.TheSmithsBuyAHouse.com

best-

Michael Gruenstein MBA CSC
416.271.2066
mgruenstein@trebnet.com

Random Thoughts on Toronto Housing Market by Michael Gruenstein

I'm going to throw out a bunch of random facts/ideas that may be of use to you if you're looking into the real estate market this spring: pt 4 in list below is a little out of context (just saying)

1. Bully offers are back.

There's been little supply in many areas and pent up demand. An urgency by some buyers to beat the March 18th deadline and keep their preapproved low rates is causing some buyers to do whatever it takes to get a leg up before the offer date.

2. Taxes-

there are 2 forms as a buyer. The first is the landing tax or the land transfer tax. A toronto portion and a provincial portion are paid by the buyer on closing. Note, there are rebates on both at source when you're a first time buyer

The second tax is property tax. Propety tax is little understood. In Jan 2008 the city did their appraisals from which to base a tax billing for the next 4 yr cycle. The increase of the 2008 amount over the prior period is then divided in 4 payments and each yr the value of the house increases and hence the taxes paid as a percentage of the house increase as well. Until we get to the 2012 cycle.

3. Order of Payments in an Offer-

If you successfuly bid on a home and win then you have 245 hrs to supply a certified cheque. It holds the house while you preform your due diligence. This deposit money is often approx 5% of the purchase price of the house. If you're taking this money from an RSP, make sure you order the funds out 90 days in advance or they won't be ready. The deposit forms part of the ultimate downpayment you will pay in addition to any adjustments plus land transfer plus moving costs plus borrowed funds on close.

4. I'm up to 2 afternoon delight showings now. I walk in with clients and find a couple of lovers showing the utility offered in the bedroom. Always fun!

5. A home inspection is limited and needs to be treated as such. Note obvious restrictions include in winter months-inability to study the foundation where it meets the earth, limited roof access, inability to check if a/c works and always limited ability to determine just how much knob and tube wiring is active. Really it's guess work. You're taking the house in similar condition to how it read the date of the inspection.

6. When you get a new mortgage on a property and take posession, theres typically a interest adjustment date for your first payment. you are paying an interest payment pro rated for that month. this may provide some breathing room.

7. if you're a commercial buyer right now---banks are tough to squeeze money out of and cap rates aren't very aggressive. but still a good investment if you can find the right one.

8. though we're seeing some positive numbers from the US, labor and housing markets are still not looking good. Most recently Canadian inflation looked tame and with the strong loonie, it doesn't look like there's imminent pressure to raise rates. Though the Middle east conflicts are certainly raising oil and gold prices and ultimately that could lead to globabl inflation. something to watch.

9. work out the scenario with your individual lender in terms of how bridge financing would work in the event you needed funds short term as you're taking posession before your current residence closes. don't leave this for last minute.

10. ask a lot of questions! there's so much more to know, including how to valuate properties in a market that should soon see prices all over the map!

Thanks,

Michael Gruenstein MBA CSC
http://www.TheSmithBuyAHouse.com
mgruenstein@trebnet.com

why must you be such a "bully"? simple..to get the house I want!

It's back folks. It's Spring. It's buying season in the GTA. Interest rates are low with a push for the next little while with the new mortgage rules.

So you're looking in a hot neighborhood for your next or first house. You're out their hitting the pavement (hopefully scouting the inventory as early as you can with a competent and effective value adding agent).

I once wrote a blog and refer to this on my website http://www.TheSmithsBuyAHouse.com---those using MLS.ca are almost sure to be out of contention. You're just not buyers. You're lacing up your skates in the 3rd period frankly.

It's happening more then some would like whereby an offer date is set and then somebody swoops in and steals the house from right under you and its off the market. In most cases, you had a fair shot at it...so don't complain to me.

Get in and see homes early. If you're interested your agent should know how to make sure your in contention from the beginning. 2 homes this week decided to change the offer date because a "bully offer" (typically a verbal offer to listing agent giving the sellers the price they'd be willing to not wait around for the dogfight to get and the closing they require). In some cases, the listing agent ammends the listing an hour before and has no interest in calling the other agents to see if their interested buyers can mobilize. That's not good form.

Most other agents will call around to find out if any other interested parties would bring an offer in advance of the posted offer date (sorta in the best interest of their sellers to collect as many as they can). Sellers get antsy and if a number is dangled infront of them that makes sense and excites them, they realize it may not be their in a few days and so they oblige to look at the offer prematurely.

Voila...the house is sold! How you doing on MLS.ca. It's day 2 of this listing and guess what...chances are it didn't hit MLS.ca but it's already sold!

Not every seller or agent subscribes to bully offers. Infact most don't. But it's worthy of knowing about and taking precautionary steps.

How you ask??? I'm giving free (and pretty good) advice too often I'm told. I need to keep some competitive advantages for my clients!

If you're looking towards the market these days; new mtg rules; multiple offers; pricing and valuations have made the landscape a little tricky to navigate.

Call or email anytime. Be happy to speak.

Cheers-

Michael Gruenstein MBA CSC
http://www.TheSmithsBuyAHouse.com
mgruenstein@trebnet.com
416.271.2066

Residential real estate is cookie cutter!

I was out with a good friend the other day. He's a bright guy and usually a nice guy. When he said to me that "residential real estate is cookie cutter" I was a little surprised.

For those of you who know me, I wasn't going to intimidate my old 6'4 pal with my built.

Best rebuttal would be a challenge. By the way I sold this guy a house last year. And it was a pretty complicated deal so I'm not sure where he got the idea it was easy.

Here's the scenario I gave him;

A buyer locates a house they love. There's an offer date on the property.

After viewing the house they need to devise some strategy for the offer date.
-How much will they offer?
-How many offers will they compete with?
-What have comps sold for? If comps are plentiful, you use the best available and make all your adjustments-time; size; lot size; mechanics; parking situation; basement; # washrooms; ensuite; bedroom sizes; location on street; street itself, etc.

The inspection reveals that some work needs to be done;
-new roof
-new furnace
-grading issues
-knob and tube wiring exists. Not sure how much at the time of inspection. They have some work cut out around insurance issues.

The survey reveals that there is an easement at the back of the property. It's a substantial easement. The easement no doubt affects the use and enjoyment of the property.

A family room addition was completed in 1999. There's been 2 owners since so permits aren't available. It's being sold "as is" The survey does not show the family room addition. It's an existing survey.

The parking is a mutual drive with a pad park infront of the house. Though there is no legal permit for the pad. The owners claim it has been grandfathered and can be used as is. There may be some considerations here that affect enjoyment, use, resale value.

The mechanics are updated though it's known that these homes all contained oil tanks some 70 years ago. There's some investigating necessary around the oil tank.

It's an estate sale. Closing may be complicated while awaiting a certificate of appointment. The closing may also be pushed back week after week so make sure you have a contingency plan if you have a house to sell.

On the finance side, you may have some work and costs involved in the event that you close on your purchase prior to getting the equity out of the sale of your current address.

At this point my big buddy conceded that there's a few issues that he may have overlooked.

I've always been okay with the fact that I'm not doing rocket science for a living but I do have specialized knowledge and the more transactions I see, the more I can say no two are the same.

Cheers--

Michael Gruenstein MBA CSC
http://www.TheSmithsBuyAHouse.com
http://www.PropertiesinTheGTA.ca
mgruenstein@trebnet.com

Looking Inside A House....at its "guts"

Here's me (an agent not an inspector) giving you some basic advice when you start looking at homes.

Not unlike us, homes get tired. Some get really tired. Nothing is built to last (forever). Most homes work in 20 year cycles. I've written about this before I'm pretty sure. But 90 blogs later...I'm losing track.

Anyway, a furnace, air conditioner, roof, windowws, plumbing and wiring make up most of the mechanics of the house.

If you've located a house you like...here's the tough decision if it turns out that the house is nearing that 20 yr cycle.

What's your budget like after land transfer tax and some renos that you'd need to do to be satisified with the property. I ask because in the event that the furnace and all other mechanics have had their day...you may be looking at 25-50k in mechanical work that you may need to put into the house the first year you take possession.
You'll wanna factor that into your offer price.

The Sellers are responsible for keeping the house in "working order"...so if the mechanics are old but heat is being distributed and the windows aren't cracked, they have every right to say it's in working order. Of course, you have every right to offer what you feel the property is worth.

THE LUCKY homebuyer finds the house at the 5 year mark on most mechanics and a seller who has taken to servicing the mechanics regularly.

Knob and tUBE:

Many older homes have this wiring. In some cases it has been replaced where renos have been done, for ex a kitchen. But bedrooms and some fixtures still have working strands of the wiring. The tricky part with this wiring is that the inspector can only "guess" at how much of this wiring is in the house. Basic removal of receptacles for light switches or in an unfinished bsmt it may stand out. Otherwise you really don't know until you buy. Once you buy, you have options. A few insurers will cover at a premium, others will mandate that if you can prove that less the sat 20% of the house has knob and tube...they're ok to insure, still others will force you to rid the wiring within a specified time period.

Asbestos:

I get asked about this all the time. Asbestos is like a band aid that is used to insulate pipes and keep the contents warm. It can be found above a water boiler in the basement; it can be encased in ductwork; it can even be in certain glues as a mold on older linoleum type floors. So when you do renovations you want to hire a team that is conscious of the age of the house and takes caution when removing old boliers or flooring for example. Undisturbed asbestos is not much of a concern for you.


Water:

Water is a problem for all homeowners and most homes have seen water. When you look at older homes in say North Toronto you may find markings on ceilings and patchwork. You're probably right to guess that it is water. Here's the thing: if it was the sight of water but was taken care of and just the owners did a crappy patch fix on the ceiling---that is one thing. What you need to concern yourself with is if water is still "active". If it is...this can be a costly repair and you better budget for it.

Thought I'd arbitrarily point these things out. They came up last night during a showing with some clients and I felt it worthy of a quick blog.

For more information about homes or the market...don't ever hesistate to call.

Best,

http://www.TheSmithsBuyAHouse.com
http://PropertiesinTheGTA.ca
mgruenstein@trebnet.com
416.271.2066

Sellers Beware: Home Inspection Complete and Abatement Requested

Sellers see this all the time. A Buyer makes a conditional offer. One condition involves a home inspection.

Of course any seller of an older property in the City of Toronto will be concerned about what gets revealed during the inspection and how the Buyer reacts when the Inspector reviews his findings.

The Inspectors in the City are pretty good and from my experience, very few are out there to ruin a deal. Some are though. Most inspectors pass on their findings and then the concern is how the Buyers take this information.

Here's an example. I sold a property (my listing) a few days back. It was a 60 year old detached. The wiring had been updated over the years. It had an oil tank and an old furnace. As well as an older roof. Otherwise the property was in impeccable condition for its vintage.

I've explained this before in a different blog; mechanics in a home have a lifeline. Major mechanics like a roof may last 15 years, a furnace 15-20 and windows 15 yrs. The hope of any Buyer interested in a specific property is that the mechanics have been updated recently. In some cases it's a total victory. In others, the mechanics may all be reaching their natural lifespan. In the latter case, there's going to be a caution from the Inspector that the major mechanics may last a week after closing or months but even years.

Often Buyers will go back to the Seller asking for an abatement (money off the purchase price). So...should the Seller comply?

Well that all depends. How much demand is their for the house? How much are the Buyer's asking for? Is it a good deal and worth losing some money to finalize this deal? These need to be explored.

Technically speaking...the Seller is responsible to deliver the house in working order including all mechanics. If the day of the inspection the mechanics are in working order, they should be in similar working order on the date of closing.

A resale property is just that. It's not really the responsibility of the Seller to see to it that they purchase a new furnace for the Buyer or a new roof for that matter.

This issue creeps up a lot. Its a delicate line. Deals can fall apart over this; require further negotiations and certainly close to the Seller standing pat or giving in to some form of an abatement.

Its been said many times but a "good deal" is one where both parties feel they've "won".

Cheers-
Michael Gruenstein MBA CSC
http://www.TheSmithsBuyAHouse.com
mgruenstein@trebnet.com

Are we missing something?Are these new mortgage rules to slow down a bubble and restrain people from getting over their heads? Really? Not so fast!

I don't mean to sound like a cynic here.

Truth is that over the last few years the banks in Canada have come up with creative ways to reduce the chances of a housing bubble.

In an environment where the US has such low interest rates; a strong loonie; emergency lending rates; people willing to go into great debts...naturally borrowing is going up.

Inflation being light or reasonable and the strong dollar domestically doesn't leave room to cool the market by raising rates.

So tinkering with mortgage rates and rules to keep people away from market who may find themselves buried when rates rise (the very same ones who may look to ammortize over 35 years to make it affordable to buy) is the next best idea the government has.

If we slow down borrowing and the heated res market, then perhaps a bubble won't burst and consumers won't find themselves in deep shit. When consumers run 70% of your economy, if they go belly up (or down), you've got big problems in your economy!

Here's the thing...guess what has happened in these 3 recent instances:

1) HST is introduced
2) Mortgage rates and home lines of credit rules are tweaked so that buyers must satisfy 5 yr fixed heightened rate to qualify
3) Mortgage rules changed so that buyers can't amortize over 30 years and you can tap less of your houses value for money

In each one of these circumstances, there is a deadline for the rules to kick in.

The net result::

There is a surge of activity in the markets. Buyers feel like they better run to the bank and leverage the existing rules and buy. So more homes sell. In fact the numbers spike. And then the arguement is that they should taper off when the new rules hit.

I also can't help but wonder about the timing. Introducing further rules to restrict the ease of mortgage credit and having a commencement date of 60 days....that takes us right to the heart of the "spring market"....the busiest season for buyers.

Buyers will come out of the woodwork and figure out ways to get excited and work on their banks. Banks are still in the business of loaning money. Hey in the US, the banks are keeping rates low so money gets lent.

Anyway, what I'm suggessting is that all these attempts to slow a bubble and restricty those buying homes, when passed thru the media with a looming date of changing rules, seem to get the mortgage lenders, banks, realtors and buyers and sellers excitable and we actually get a further push into the market!

Real Estate Myths....when buying or selling in GTA

Whether you flip homes for a living or are looking to purchase your first home, there are many myths about buying or selling. Be cautious: Here are just a few that immediately come to mind in the 10 min I have before going out to do an offer for a cherished buyer of mine.

Myths:

1. Your first offer is your best offer.

No doubt this was invented by a Realtor who was looking to close a quick deal and fire up the paperwork. I've had offers the day of a listing release that didn't compare to the one that came in 3 weeks down the road. I do believe there is a "right" buyer for your house. And I do believe the "best offer" is just that..."the best offer for .....you"!

2. In multiple offers, you'd better have the biggest offer price.

Not always the case. Preparation and a clean offer can be worth more to a seller than 10k. If the seller needs a quick closing date or needs to have a clause that he/she can extend the closing date...if a buyer can meet these specific needs...this can help win the house. Your agent needs to learn the motivation and needs of the Seller before the offer presentation.

3. Selling in the spring market gets you the biggest buck.

Not always. There's a lot of competition in the spring market. If better featured homes then yours sell for x amnt, then you may have to settle for less. Probably a truism when you have the best looking house on the street. Sometimes selling in the dead of winter with no competition is the best time to sell.

4. Prior to selling...redoing the bathrooms or kitchen will net you a lot more then the cost of renovating these areas.

If you use high end finishes and make sure that your choices are neutral and you have good layouts and user friendly space to work with...yes, it should be the case. But if you bang out a mediocre bathroom or kitchen, depending on the price point, if the buyer thinks that its not suitable, he/she will not pay your for the upgrade in the way you hoped. Frankly, if they're going to redo it anyway, you should have left it alone in the first place. You may now be eating into your return.


5. The best home inpection company will find the issues with the house.

While there are better inspectors....if you purchase a house in the winter, depending on the exact day...most companies will not be able to look through the snow and ice on the roof to detail the state of the roof like they would in the summer. The snow around the perimeter of the house makes finding foundation cracks on the exterior more difficult too. Also, you can't test the A/C in freezing weather. So no matter the inspector, winter buying has some risks.

6. Always sell before you buy or buy before you sell.

This is the toughest one. You need to know your specific circumstances. You need to determine|:
-whats the inventory like to buy in my range
-what's the competition like to sell my house
-will your bank help you bridge finance? what are their specific rules and costs?
-if you sell first do you have a plan B if you don't find the house you're looking for?
-if you buy first...lowball what you'll get for your house so you're not surprised

7. Seller always keeps the deposit if the deal doesn't go through.

Luckily I haven't been thru this scenario. Here's the thing. The money is held in trust with the listing brokerage. In order for it to be released to the Seller it has to be legally directed. In other words, the Seller may have to go to court to get the money. The Seller may sue for damages should the seller have to resell property in a less hot market. For specifics here...speak to your lawyer.

8. If you buy a house with a legal pad park then it automatically transfers to you upon close.

New rules state that the new buyer must reapply for the legal permit to be in order.

9. If the current owner has a street parking permit for his second car, then you'll have no trouble getting one too.

Better double check with the city here. Many streets actually have waiting lists for street parking. You can check prior to making an offer of the status of this so you aren't buying a parking 3 streets away!!

10. All agents do the same job! So I will use my sister in-law who is part-time!

No way will I accept this. I work too hard to accept this.
Go to http://www.TheSmithsBuyAHouse.com and learn more around this and me!!

Cheers-

Condo's-Good Investments? What's going on out there?

Are Condos a good investment?


You'll get many different answers here, depending on which economist you ask, which builder you ask, which renter you pole, which realtor you interview and which condo owner you ask and finally which building you are focussing on when you ask this question.

Look, in the perfect world, one would buy a condo off spec from the builder and pay entry level prices. Then the condo would be built and owners absorb their units. If the market is participating with low interest rates and a large buyer pool (particularly first time buyers)--you're going to likely be happy with your investment should you decide to sell.

That game is old. Where it gets tricky is when you factor in economic realities. So for those who bought say 5 years ago and moved in a year ago and decided to sell...it may not be quite so simple. Whats going for them is, 1) interest rates are low 2) strong pent up demand 3)prices have increased.

Now the tough part. If everyone decides to do the same at leverage this strong market, multiple units hit the market at the same time. So now a buyer is left scratching their head at the numbers and whats going on in this building that everyone wants out. For some it has been drilled into their heads that home is where you lay your hat and if you bought and immersed yourself in the purchase of your condo, you'd likely live there upon completion. Often not the case. With that many units for sale, naturally the supply outstripping demand, buyers have the upper hand on negotiations but still may not feel great about moving into what feels like an "empty" building.

I just ran into this scenario in the central core. On MLS my buyer and me found 3 units available. When we got there, the concierge showed me 25 lockboxes. There were so many available that sellers didnt want the impression that everyone was selling. So they asked the doorman to advertise the units for sale and let agents know they exist upon requesting the keys for the units booked through MLS!!

Another issue with new construction that you just won't know until down the road is the mix of renters versus owners. Renters dont have the same vested interest in the upkeep of the building and have little interest in talking the building up and continuing the marketing job after the developer has left the building, the same way that the owners will.

That said, we also run into a square footage issue in Toronto development. At 500-600 dollar a sq ft and little new inventory being built in the 1000 plus sq ft range (for obvious reasons...a developer can squeeze more units in and there are more buyers in lower range then higher range). So new construction is often built with open concept and light colors and big windows and tall ceilings to create a larger feel. The good news is that the finishes often rival those of detached homes. And if youre lucky and do your homework, you can find a good split plan open concept building that suits your needs. Layout in this ftg is everything in my opinion.

Finally, its the age old arguement of fees. It's true that the sexier buildings are often sold with the pool, gym, billiards room, concierge, spa, dining room, movie room, etc. All those amenities clearly increase the fees. If you're going to use the amenities-wonderful. If you're not, think twice.

Often older buildings have stronger reserve funds/savings for rainy day stuff. But...older buildings may soon need replacement of windows, furnaces, roofing, refurbishing of units and common areas and this can result in a special assesment (temp increase in fees for a period of time to top up the reserve fund after the fixes are complete.)

Reserve funds are always an issue. Often buyer can't see the documents of the condo corp until they come to a conditional agreement. If the condo just had a big withdrawal, you need to analyze for what purpose? Are you going to buy and get caught with the letter in your mailbox that fees are going up for a period so as to replenish the reserve fund? How old is the building? Typically lifeline of mechanics is 15-20 yrs. You'll wanna try to learn when mechanics were last updated and what service contracts there are available as well as who is responsible for the mechanics.

Look, at the end of the day, I strongly believe you want to build equity. Renting does not achieve that. Detached homes are quite expensive for many buyers and condos can offer a great simplified lifestyle.

Theres pros and cons to the condo lifestyle for sure. Often money decides quickly which direction you will go. Now if you edge towards condo shopping...there's lots to know!


As always, I'd love to hear from you. Email anytime. And thanks for all the questions thru the website http://www.TheSmithsBuyAHouse.com

Michael Gruenstein MBA CSC

2011 Housing Market: Up or Down?

With 2010 behind us....well kinda behind us.

To be fair were going into 2011 with much of 2010.

In 2010:

Goverment kept rates at emergency lows
Gvt introduced HST on new home purchases
Gvt made mortgage rules tighter so that it was more difficult to get a mortgage
Gvt offered no home tax credits

Net Result:

After a 20 percent leap in prices post 2008 recession in 09, prices continued to grow in 2010 more modestly.

Inventories for back half of year were down in many neighborhoods

Canadian household debt hits damn near 150% of income (thats very high)

So...what's in store for 2011??

Canada not really in position with dollar at par to increase interest rates to further strengthen dollar and cripple manufacturing so tough talk is that there may be further mortgage crunching to make even more difficult to get a mortgage

Inventory always increases in the summer months

Ford may tackle second land transfer tax

Once stimulus wears off in US so long as employment doesnt go up, rates should go up and as rates go up, typically fixed rates on mortgages increase

It really will boil down to supply and demand. How many ppl will list their homes. Theres always a ready supply of buyers. If buyers with good credit are out and sellers are scarce then prices will moderate.

530 pm BNN is going to make an arguement about the success of the 2011 real estate market. I will be tuned in.

Happy New Year to all.

******Sign up to get free listings sent to your inbox 24-48 hrs in advance of mls.ca. Your competition is on it.

Michael -

http://www.TheSmithsBuyAHouse.com
mgruenstein@trebnet.com