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- 8 things to look for
- 7 ways to get more
- 6 homebuyer mistakes
- Building a New House
- How much of a down payment do you need?
- Crea News
Eight things to look for when buying a house
Homebuyers usually worry that their dream home will turn out to be the lemon of a lifetime, and with good reason. It's not uncommon to find that the foundation is secretly crumbling or that termites are eating the garage. Maybe it's sitting on top of an ancient Indian burial ground? Not the greatest selling point for future resale.
Don't get taken in by a pretty face. A house might look great, but do your homework. Research the house and the area, and if there is a major drawback, consider whether it's worth the reduced price. With the help of industry insiders, realtors Kelvin Neufeld and Drew Scott, we give you a list of house flaws that require special consideration before signing your life savings away.
1. It was a drug operation
Marijuana grow operations are big money, with expert growers making millions of dollars a year. Setting up an operation in a basement or attic is worth the risk. Many communities target grow-ops by watching for a spike in a home's energy usage. Grow-ops require enormous energy consumption to keep the greenhouse-type environment going round the clock.
Imagine what that kind of moisture and humidity can do to a home in terms of structural damage and mould growth. W Network's "Property Brothers" co-host Drew Scott says if you can get the property for $100,000 lower than market price, for example, you might be getting good value. The lasting damage, though, is an image problem. "Even if the city says you've rectified the damage, and the house is safe, the stigma that comes with a grow-op is always there. That scares away the majority of buyers." And if it was a crystal meth lab, forget it, says realtor Kevin Neufeld. "The carcinogens from those chemicals get absorbed into the walls."
2.Someone died there
Another social stigma that scares away buyers is death. If someone died in the house, particularly in a violent way, it could reduce the resale value. Even if the house has a silly reputation for being haunted, it could worry the more superstitious type of buyer. W Network's "Property Brothers" co-host and realtor Drew Scott says it's his policy to always disclose such details to buyers. He'll also refuse a listing if he knows it will be an impossible sell, unlike realtors who love the challenge of selling any house, even one that could be straight out of Amityville Horror.
3.It’s located under power lines
It's been more than 30 years since a fear of power lines was triggered in the general population. In 1979, a study suggested that power lines were causing cancer in Denver children. The issue snowballed in the media throughout the late '80s and '90s. Today, nobody knows for certain if power lines do cause cancer, but the perception persists that the area underneath power lines is a no-go zone. As well, says 34-year-real estate veteran Kelvin Neufeld, they're just plain ugly.
4.It’s under a flight path or near a railway
W Network's Drew Scott recalls the time that he was looking at a house for a client. The owners had failed to disclose that they were living next to a loud train that would roll by three times a day, morning, afternoon and night. Scott checked out the property himself at different times of the day and discovered the train noise. When he told his buyers, it killed their interest and saved them a lot hassle. Another way to check out a property, Scott says, is to "talk to the neighbours."
5.It’s on a super busy street
Houses on busy streets are estimated to sell for 10 to 15 per cent less than the market value of comparable homes on quieter streets. If you do buy a home on a busy street, make sure you are getting fair value. And if you are selling one, make sure it's got attributes that compensate for the high traffic. In order to get the most money for a home on a busy street, it should present perfectly and have an emotional appeal so that its major flaw is overlooked, say our industry experts. Installing double-paned windows would help, too.
6. It’s near a graveyard
It depends on the buyer, of course. Living across from a graveyard could either spell peace and tranquility, or a case of the jitters. Cities like Vancouver and Toronto are increasingly becoming home to people with diverse cultural backgrounds, according to a recent study released by University of Toronto's Cities Centre director David Hulchanski. That means the mix of values is changing. For example, living next to the dead could be more of a no-no for some cultures than others. Consider your market, say the pros. Know who is buying the homes in your area, and what that market is demanding so you can gauge whether that house will have resale value down the road.
7. There is a party house on the street
We all know the house. It's a rental, full of university students who bust loose every weekend, sometimes throughout the week as well. When they throw a party, it seems like the entire university campus is invited, and the good times roll until the wee hours of the morning. Neighbours can call the police all they want. The city can levy fines. If it's an absentee or negligent landlord, there's little to be done but wait until they graduate. As well, the house probably looks horribly neglected, with hubcaps in the weed-filled yard. If there is any indication that your potential dream home is within vicinity of such a house, you might want to have a talk with the neighbours and get the lowdown.
8. There could be an oil tank in the yard
For some cities, such as Vancouver, the buried oil tank has become synonymous with black mould and asbestos siding. It spells trouble. Back in the days when oil was the house's fuel, everybody had an oil tank in the yard. Once it became obsolete, it was often just left to rust. If the oil tank is full it may require a permit and special environmental handling for removal. If the oil has leaked into the ground, including the neighbour's property, the cost of remediation could go into the four-figure range. Buyers in areas where oil tanks are a concern therefore ask for certification as proof that the oil tank was properly removed. Disclosure is often required. If proof isn't available, then the buyer or seller will often arrange for a search using a metal detector or samples taken from the soil. Oil tanks aren't the end of the world, but they can be a major headache.
http://money.ca.msn.com/banking/homebuyersguide/gallery/gallery.aspx?cp-documentid=28270432
Seven ways to get more for your home
When "staging" a house for sale, there are rules of thumb that apply in any market: de-clutter your rooms, remove personal photos and other items that make it harder for potential buyers to imagine this as their home, make sure that there are no burned-light bulbs in fixtures, make the place smell like home with some cinnamon potpourri or other light, evocative fragrance.
All of that said, however, there are larger investments that can ensure that your "for sale" sign generates maximum traffic - as well as top dollar. The trick is to be disciplined and strategic, ensuring that you keep colours and fixtures neutral and that you don't splurge on lavish upgrades in a house and neighbourhood where it's not the norm. Where to focus? Here's a list of the key things to do before listing your house.
1.Curb appeal
Use a critical eye to edit or embellish your garden; power wash your driveway; ensure that the front door looks fresh and inviting and has a new mat in front of it; buy some planters and put a seasonal arrangement in them.
In the backyard, create an appealing deck area with gleaming BBQ and scrubbed outdoor furniture. Remember, you want people to project themselves into the scene.
Costs: This is the area where elbow grease - and the least expensive acquisitions - generate the biggest return. Planters and plants will cost under $100 and a new BBQ and cover (especially at this time of year) can also have big impact for a few hundred dollars.
2.Basic maintenance
Ensure that most jobs in the category of "basic maintenance" are well in hand. That means re-shingling an old roof, windows and doors in good repair, fresh paint inside, upgrade exterior siding and out, a modern, fuel-efficient furnace.
If you haven't done a full energy retro-fit, consider other ways that you could improve the environmental-profile of your house. Utility and fuel costs are on the rise and addressing that is a potential selling point.
These may be big-ticket jobs, but they are among the first areas a home inspection will focus and the result of that report will be used as a bargaining lever by potential buyers. Even worse, it might deter them from getting that far into the process.
Costs: Vinyl and aluminum siding can look worn and dated. On average - depending on the quality of the product - replacing about 1,250 square feet of existing siding would cost around $13,000 or $10 to $11 per square foot.
A high-efficiency gas furnace (installed) will cost $3,000 to $5,000.
Replacing a 2,000 square foot roof will start at around $5,000 depending on the choice of shingles (25 or 40-year), the pitch of the roof, the number of skylights and the need for flashing and other detail work.
3.A lick of paint
Re-painting a house gives it a crisper look but remember to pick neutral shades of warm colours. No matter how much you love it, be sure to get rid of your pink living room and artistic flourishes such as wallpaper and borders. They look dated and stale.
If you have hot water radiators, get them boxed and painted to match the wood trim or walls. Installing crown mouldings is also an easy and inexpensive way to make a principal room look "finished."
Costs: Again, with some DIY spirit, this job can be tackled for under $1,000. Depending on the size of your house, getting a professional on the job will cost about $5,000.
4.What's cooking
Kitchens have increasingly become important place for family and friends to gather - they're an integral part of entertaining. That means that certain cosmetic features have become standard: granite counter tops; easy-to-clean ceramic tile floors; ceramic sinks; modern cabinet fronts; stainless steel appliances. Don't neglect small touches like an elegant, swan-neck faucet and updated drawer pulls and cabinet knobs.
Cost: There are several options for granite counter tops: the better the quality and the fewer the seams, the higher the price. Granite can also be used as a dramatic backsplash behind counters.
Tiles are the cheapest fix and run about $4.00 per square foot for 3/8" thickness. Modular granite pieces starts at about $25 per square foot. Both tiles and modular granite pieces can be installed by DIYers with good skills. Slab granite is the real deal: no seams, custom measured and installed professionally. The installed cost starts at around $40 per square foot.
In terms of appliances, a Wolf 48-inch dual-oven gourmet stove costs $5,000, a Sub-Zero wine fridge is $2,500, a built-in Miele cappuccino maker runs $2,000, a stainless steel double sink is $1,000 and an ultra-modern faucet is $800.
5.Hit the floor
If you don't have hardwood floors in the principal rooms, you need to get it. And opt for a medium-tone that goes well with the furniture other people may have - nothing too light or dark. Laminate floors are less expensive but they look it.
When it comes to the carpeting on stairs and bedrooms, have it cleaned or replaced. Spend extra on a half-inch under pad and a 27-ounce density carpet to give it cosy feel and more luxurious look. Remember to stick to a neutral colour.
Cost: Depending on the style and quality, ceramic tiles run about $5 to $20 per square foot. Natural stone for a kitchen or foyer will be $10 to $30 per square foot. Hardwood is $6 to $15 per square foot and laminate is $4 to $10 per square foot.
Expect to pay about $6,500 for 2,500 square feet of installed carpet with a 10-year warranty.
6. Closet case
Storage space always commands a premium, but go a step further when you de-clutter your cramped closets and invest about $2,000 in a closet system with melamine-surfaced shelves (wood is too pricey) and baskets for storage. Do the same in your garage to create a sense of spaciousness and utility.
Cost: A bare bones DIY kit of rubberized wire racks starts at $75-$200 for a 4x9 closet and you can double that with additional features like shoe racks. A DIY system with particle board shelves runs closer to $300 to $600 and require considerable assembly. A closet organizing company will charge $600 to $1,700 for a system with laminate shelves while a solid wood custom-designed system starts at about $2,000 and can go as high as $30,000 for shelves of cherry wood or pecan.
7.Flush with success
Bathrooms get as much scrutiny as kitchens so this is a space that requires special attention. If you don't have the full spa already installed, there are still things you can do to enhance appeal: remove any carpeting; install a well-designed toilet; install new cabinet doors; change faucet styles and install double sinks; replace your mildewed shower curtain with sliding glass; re-grout tiles to look immaculate; splurge on a fancy shower head or steam feature. Again, avoid colour and go with basic white. It looks cleanest too.
Costs: An air jet Jacuzzi tub is $2,000 and a glass-enclosed shower stall with massaging shower head is $4,000. Heated floors go for about $2,000 ( for a 10 x 12-foot space)
http://money.ca.msn.com/banking/homebuyersguide/gallery/gallery.aspx?cp-documentid=25702368
Six homebuyer mistakes that can cost you
The most dangerous home buying mistakes and how to avoid them.
Canadians love buying houses. So much so, that roughly 70 per cent of us own our own homes.
What's more, two-thirds of repeat homebuyers believe their next house purchase won't be their last, according to a recent survey by TD Canada Trust.
More than 23 per cent said they plan to move again within the next few years — which isn't that surprising since one in five repeat buyers have owned more than five homes to begin with.
What's the one thing all these folks have in common? They've all made some mistakes along the way, including several of our readers. But that doesn't mean you have to as well.
Whether you're getting ready to buy your first home or moving up a bit in the world, be sure to avoid these common pitfalls.
* Gallery: Homebuyers' guide to overcoming fears
Mistake #1: Buying a house you can't really afford
Just because lenders are willing to loan you all that money doesn't mean you should take it. They're going to want it back.
Buying more home than you can afford can quickly derail your ability to fund other important items such as retirement savings and your kids' education — not to mention the odd evening out.
The first rule is that your monthly housing costs should not exceed 32 per cent of your gross monthly household income. Housing costs include monthly mortgage payments, taxes and heating expenses and, if applicable, half of your monthly condo fees.
At the same time, most experts say your total monthly debts, including your mortgage, should not exceed 40 per cent of your income before taxes.
And, as a further guideline, your down payment should be a minimum of 10 per cent and really shouldn't be less than 25 per cent if at all possible.
Mistake #2: Underestimating your ongoing costs
Don't forget that the closing costs for sealing the deal can easily add up to another three or four per cent of your home's purchase price.
Initially, this will include a home inspection, legal fees, the land-transfer tax, and moving expenses. Later on, you'll have to factor in property taxes and homeowners insurance as well.
If this is your first purchase, be sure to include some money for new appliances, additional furniture and tools, as well as lawn care and snow-clearing equipment.
Then, in addition to your mortgage, there are regular maintenance fees which, depending on the age of your house, will likely total an additional one to two per cent of the purchase price per year.
Mistake #3: Not shopping for the right mortgage
Because interest rates have been so low and most sellers want to deal with buyers who've been pre-approved for a loan, some homebuyers are too quick to secure a mortgage without fully exploring their options.
That's crazy, since if you go to three different lenders, you'll likely find that each one differs slightly. How many lenders should you contact before settling on a mortgage loan? Three is probably enough, but if you have the time, check out as many as you can.
Mortgage brokers are great resources here because they really do try to shop around and secure the lowest possible rate — and, since they're paid by the lender, there's no additional cost for you.
Mistake # 4: Believing everything you hear
Most people are sincere but it's still better to steer clear of verbal agreements and commitments unless they're also on paper.
Once you've fallen in love with a house, take 100 or 150 pictures with an inexpensive digital camera to protect your investment, suggests reader "Done like dinner". Write down the serial numbers of all appliances as well.
Why? Because a few people simply aren't honest: "The previous owner of my home switched all of the appliances and brought in his old ones from his cottage," Done like dinner writes. Draperies and light fixtures were switched as well, he notes.
Be sure to check with the current homeowners, however, before snapping photos or you may run into future privacy issues.
Mistake #5: Not hiring a home inspector
No matter what, you should never buy a home without having it inspected — even if you're purchasing a brand new place.
While not everyone can be a Mike Holmes, steer clear of home inspectors who're recommended by a realtor (they're more likely to refer you to someone who won't jinx the sale) or well-meaning relatives.
When you do find someone, ask for their credentials and detailed references.
Once they get started, be sure to follow them around. If nothing else, it's a good chance to learn what makes a house tick.
Rather than simply providing you with a checklist, the home inspector should provide a written report reviewing every major home system.
The entire event should take about three or four hours, result in a written report within a day or two reviewing every major system, and cost about $400 to $500.
And buy during the mild weather, suggests "march-angel-04": "We thought we were covered but when the snow melted we saw all the things that the home inspector couldn't check. We need a new roof, our driveway is cracked and our deck is rotten — all things that would have been clearly visible had we waited until spring."
Mistake # 6: Not researching the neighbourhood
What good is finding the home you've been waiting for, if you're not sure about the community in which it's located?
Make sure the neighbourhood is a good fit for your lifestyle. What's the commuting distance? What about traffic? Are there recreational facilities and parks close by?
How close are you to shopping, schools and libraries? Even if you don't have children, living near good schools raises your property value.
Visit the neighbourhood several times at different times of the day and week, and be sure to check out your potential neighbours.
"I got so caught up in looking the house up and down that I neglected to look across the street," says a disgruntled "Ron D". "It turned out that my neighbour across the street owned two houses side by side, and he would rent the house that he wasn't living in to some real winners with whom there were many problems."
http://money.ca.msn.com/banking/homebuyersguide/article.aspx?cp-documentid=25932405
Building a New House
Finding the perfect combination of house and location can often be a challenge. Perhaps you have found a lot with a lovely view, privacy and mature vegetation. The only problem is the house. The World War II-era foundation is cracked, the kitchen is the size of a closet and none of the bedrooms will accommodate your furniture. Rather than passing up the purchase, consider whether it is feasible to renovate or rebuild. Once you have done a careful analysis of the renovation costs, it’s time to weight them against the costs and benefits of rebuilding from the ground up.
One of the greatest benefits of building a new home is freedom of choice. You can choose the size, layout, style and other features of your home. As you write your wish list, consider these factors:
Size: Will you be adding to your family with children or accommodating elderly parents? If so, anticipating future needs will ensure your home will be suitable for years to come. However, keep in mind that size directly affects the cost. Most builders provide a price based on square footage. As well, there are long-term expenses: a large home will cost more to heat, light, cool and furnish. If you choose a large square footage, consider building upwards rather than outwards to minimize the size and cost of the foundation.
Style: Although new home construction is an opportunity to express your individuality, be careful about venturing too far from the norm. A cutting-edge design may be difficult to sell in the future. Also, consider the styles in the neighbourhood. For example, you may not recoup the costs of building a high-end, 4,000-square foot home in a neighbourhood of moderately priced bungalows. Shape: Be aware that the shape of a home can affect the cost of construction. A rectangular or square home is the least expensive to build. The more angles and corners, the more labour and materials will be required.
Materials: Energy efficient materials and building techniques can substantially reduce heating, cooling and lighting costs over the long run. Technology is constantly improving and you may be pleasantly surprised at the current ‘pay back’ on some items. Solar water heaters pay for themselves in 8-10 years and, considering that they have a lifespan of approximately 25 years, you can enjoy 15 years or more of free water heating! Can you think of any building materials that are dropping in price? Solar panels are one of the very few. Increased consumer demand has resulted in a reduced cost-per-unit. This gives homeowners more incentive to use solar panels to supplement their energy needs and/or provide emergency power. There is also a wide range of energy-efficient options in flooring, insulation, roofing and windows.
Mobility: If you would like to spend your retirement years in the house, design with mobility in mind. This means creating the space to accommodate a wheelchair or walker. Traditional bathrooms and kitchens are too small to allow someone in a wheelchair to turn around. The Canadian Housing and Mortgage Corporation recommends allowing a manoeuvring space of 75 x 120 cm (30 x 47 in.) in front of or beside all fixtures including the bathtub, shower and storage spaces. Pocket doors save space within the bathroom. Countertops in the bathroom and kitchen should be lower than traditional at 86 cm (34 inches) to 91 cm (36 inches). Single lever taps are the easiest to use by someone in a wheelchair and anyone with arthritis.
Site Characteristics: Building on a flat lot usually costs less than building on a slope. Costs will increase if the builder needs to remove large trees or rocks before laying the foundation. Types of Plans Custom home plan This option typically requires the assistance of a licensed architect and an experienced contractor. However, your vision is essential to the process. Consider using design software to help you work out the details. It allows you to express your ideas in a format that is much clearer to the architect than handmade drawings! Ideally, purchase software that is compatible with your architect’s professional design programs.
Even with the assistance of technology, your design may require some adjustments by an architect particularly in terms of structural soundness. For example, the frame must be able to support the weight of the roof and an upper floor (if applicable) and withstand a certain level of vibration (such as in a minor earthquake). An architect may also be able to suggest cost-savings such as designing in two-foot increments to reduce lumber waste since lumber is usually sold in two-foot increments. Once the architect has completed the design, you will need to hire a building contractor who will coordinate the work of framers, electricians, plumbers and other tradespeople. Be sure to check references when selecting a contractor. Get the project scope, responsibilities, cost and timelines in writing.
Lastly, communicate with your contractor frequently and, ideally, at the worksite. Existing house plan Today, you can choose from thousands of home plans. Catalogues of plans are available for sale at most bookstores and on the internet. Once you find a home design you like, you can purchase the blueprints and other information that a contractor will require. Pre-fabricated homes This option promises to be faster and easier than starting ‘from scratch’. When you order one of the ‘pre-fab’ home plans, the manufacturer delivers the blueprints, pre-cut lumber, windows, doors needed to complete the home. Packages vary by manufacturer so carefully read the details and ask for a list of references.
If, in the end, you decide to build a new home, you are embarking on an adventure that will reward you for years to come.
Figuring out a couple of simple things can make those intimidating home ownership numbers easier to deal with: knowing what you can afford to spend on a home, and finding the most manageable way to finance it.
So how much of a down payment do you need?
If you can afford a down payment of 20 per cent or more of the purchase price of the home, yours will be a conventional mortgage. Going this route will lower the amount of your monthly principal and interest payments and reduce the total amount of interest you pay over the life of your mortgage and you will not require mortgage default insurance.
The cost of your mortgage insurance will depend on the amount you borrow and the percentage of your down payment. Typical premiums range from 0.5 per cent to 2.9 per cent of the loan amount you need to purchase your home. There are several ways you can manage these costs, including incorporating the premiums into your mortgage principal.
Doing the math:
According to the Canadian Real Estate Association (CREA), the average Canadian resale home sold for approximately $365,000 in February.
Assuming a five year mortgage term with a fixed four per cent, 25 year amortization and taking into consideration CMHC fees:Down payment 5% 10% 15% 20% Money down $18,250 $36,500 $54,750 $73,000 CMHC premium 2.75% 2% 1.75% 0% CMHC fee $9,535.63 $6,570.00 $5,429.37 $0 Mortgage amount including CMHC fee $356,286 $335,070 $315,679 $292,000 Bi-weekly payment $861.68 $810.37 $763.47 $706.21 Total interest cost $205,231 $193,010 $181,841 $168,198
Over the life of the mortgage, including the CMHC Fees, you will end up paying an extra $37,000 (approximately) in interest payments when putting down five per cent compared to 20 per cent. Your bi-weekly payments will also be $155.47 more, or $4,042.22 a year.
After you've looked under the cushions of the couch and in the pockets of old coats, some of the most common strategies to saving money and increasing your down payment include:
Using RSP's to help with your down payment
If you've been diligent with your RSP contributions, this will pay off now, as money saved in an RSP could be the golden ticket to home ownership. As a first-time home buyer, you have the option of using your RSP funds toward your down payment. You may withdraw up to $25,000 from your RSPs for a home purchase (up to $50,000 per couple). You then have 15 years to repay your RSP. If you are considering this option on your path to home ownership, a mortgage specialist can help you get comfortable with what's required, and what the numbers mean for you.
Whether you choose a conventional or high-ratio mortgage, one thing is almost always certain — the larger your down payment: the lower your bi-weekly instalments, the greater your cash flow and the more you save in interest in the long run. And like gold bars, the savings could stack up nicely.
Next week: The final installment of our four part series on real estate: Location or price — where to find value when home prices are high.
http://money.ca.msn.com/investing/patricia-lovett-reid/article.aspx?cp-documentid=28117156
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