Posts filed under 'Real Estate Matters'
It depends on what hat you’re wearing. Last time we looked at what’s involved from a Seller’s point of view; now let’s explore it from the other and perhaps more contentious perspective, that of the Buyer.
As a Buyer in today’s active and inventory-starved market, it’s entirely possible you will find your offer is one of several, even if yours was written first. Keep in mind the Realtor working in the Seller’s interest is duty bound to alert any and all prospective Buyers that an offer is forthcoming. It’s part of the Listing Realtor’s obligation to his or her principal.
So what can a Buyer do to help improve his/her chances? Consider making your first offer your best one, holding little or nothing in reserve. It should carry your best price as you likely won’t get another chance to improve it. Remember, other offerers will know they are competing as well. And make your offer as clean as possible. The fewer the terms and conditions you include, the more attractive it will be to the Seller.
Continue Reading April 13th, 2007
I had been anticipating her call for some days now. After several lengthy discussions with her and her family I had sensed they were close to making a decision, and so it was no surprise to hear her voice on the phone.
The strain evident in her tone was unexpected, however.
“Well, we’re ready,” she sighed. “We’ve thought it through and have finally decided. We’re moving. So tell me, what can we expect now that we’re faced with both buying and selling? It’s been some years now and we are more than a bit…well, bothered.”
Moving is never an easy task no matter how favourable the circumstances, but it wasn’t difficult to sense that her concern went beyond a financial one, or even the daunting prospect of uprooting after a good many years.
As her Realtor, I was glad to have some reassuring answers.
Continue Reading April 13th, 2007
by Ron Lambert, CFP
The Financial Planning Group Inc.
This is a question often asked of Financial Planners and it’s a difficult one to answer! Let me begin with the following comment: It is always a good idea to pay down debt, because debt is paid with AFTER TAX dollars.
Having said this however, there are certain things that should be taken into account before making this important decision.
Suppose that, through saving or perhaps an inheritance, you have accumulated $50,000. The mortgage is $50,000 and so it seems an easy decision. Pay off the mortgage. Simple! Or is it? $50,000 placed in a solid income-producing mutual fund should average about 10% per year. In other words, the $50,000 should produce about $5,000 per annum before tax.
A $50,000 mortgage with the usual amortization and about 10% interest should cost about $500 per month or $6,000 per year. Why not invest the $50,000, and have the earnings pay the mortgage? O.K., I know that amounts to only $5,000 per year. What about the other $1,000, you ask? Well, can you afford about $100 per month in order to make up the difference?
Chances are you can, and if so you still have the $50,000 when your home is paid off because you have spent only the earnings. Had you paid off the mortgage in the first place, the $50,000 would now be gone.
On the other hand, it may be prudent for you to pay off the mortgage. Suppose you had contributed regularly into an RRSP, thus ensuring a financially secure retirement. In this case, paying down the debt might make good sense.
This might also free up more money per month to allow for higher RRSP contributions.
Other considerations are your age and that of your spouse and dependents. When do you want to retire and what kind of income will you need at that time? What is your present financial situation? The considerations are many and varied and a Financial Planner will ensure that you are aware of all the options. Probably the most important of all these considerations is what do you really want to do?
The bottom line here is that there are no hard and fast rules. Each situation is unique. A Financial Planner will not make up your mind for you. The Planner will be able to give you solid advice to enable you to make an informed decision. Once your are aware of all your options, the right decision will usually be obvious.
I would be pleased to answer this, or any other question, you may have regarding your investments.
December 30th, 2006
As the population ages, more homeowners are finding themselves house-rich and cash-poor. Does the Reverse Mortgage hold an answer? Considering that the family home often represents 75% or more of one’s assets it is certainly an idea worth exploring, for the Reverse Mortgage offers a way of freeing up some of the equity in your home without your having to sell or move.
With a Reverse Mortgage - as with a traditional mortgage - the homeowner borrows money with the property as collateral. Unlike a regular mortgage, however, the debt piles up instead of being paid down month by month.
The mortgage is paid off at a later date, usually when the house is sold. Meanwhile, the borrower gets some cash while retaining ownership of the house.
The money you actually receive can be taken as a lump sum and/or a regular series of payments called an annuity. The annuity can be for a set number of years - term annuity - or for life.
Typically you can borrow up to 40% of the value of your home. The older you are the more you’ll be able to borrow. The income you receive will be a factor of your age, current interest rates, and how big an annuity you buy.
The Reverse Mortgage, then, allows you to stay in your home rather than be forced to sell or rent. It can provide for an income supplement, travel, or home care expenses. It can also serve as an estate planning tool, allowing the passing on of money to children now - perhaps allowing them to buy their own home - rather than years later as an inheritance.
But are Reverse Mortgages for everybody? Almost certainly not. All other money alternatives should be investigated first, such as selling and moving to a less expensive property as you’ll face a substantial interest penalty if you want to pay the mortgage off early. And you may find that the compounding interest on your loan has quickly eaten up a surprisingly large chunk of your home’s worth, especially if the house hasn’t increased substantially in value.
The decision may hinge on how badly you want to stay in your home. If you love it and none other will do, the Reverse Mortgage may be a solution. If another home will do, a Reverse Mortgage probably isn’t appropriate.
Consider: will your home and neighbourhood remain suitable to you as you grow older? Are you comfortable with the debt? Can you afford the potential penalties? A life or term annuity? (Life annuities are best for those 70 and older; those closer to 60 might want to consider a term annuity as your longer life expectancy will greatly reduce the size of your payments.)
A Reverse Mortgage is definitely not a solution to a short-term cash crunch. And its major drawback is that it reduces the size of the estate you’ll leave for your children.
And they can be complicated, each with advantages and disadvantages, so be sure to have any contract reviewed by an independent lawyer with experience in this type of transaction.
December 30th, 2006
by Lloyd Barnes
Lloyd Barnes and his wife Kathleen operate Penny-Farthing Antiques and Collectibles in Victoria, BC. Telephone: 250-658-4746
You have finished your spring cleaning and have found that you have a collection of unwanted articles. A good way to dispose of these items and also to earn a little money is to hold a garage sale. Here are a few tips which may help to make your sale a success.
Planning is important - answer the questions “When”, “What” and “How.”
WHEN
Chose a day convenient to most customers. Weekdays are obviously out as most people are at work. Sunday is Flea Market day, and many of your prospective customers will be at these markets. This leaves Saturday which, as it happens, is the most popular day. Start your sale at 8 or 9 AM and stay open until about 2 PM.
WHAT
The adage “What is one person’s junk is another person’s treasure” certainly applies to garage sales. You can sell just about anything - furniture, pictures, tools, glassware, china, silverware, linen, clothing, appliances, toys, books, magazines and even old paint. A word of caution - beware of selling potentially valuable items at bargain prices. If you have any doubt about the value of an object, don’t sell it at your garage sale. Take it to an auctioneer or antique dealer for appraisal and advice on the best way to dispose of it.
HOW
Advertise your event giving the time and place of your sale and some indication what you are selling. Place ads in local papers - some give cheap three day rates and supply “Garage Sale” kits. You can also put notices on local community bulletin boards for free.
Direction signs are very important as many customers cruise the area looking for sales. These signs should have your address and the time of your sale printed clearly in large letters. Place the signs at key intersections and along the routes leading right to your home.
Prepare your articles for sale. Clean items will sell better and will bring you more money. Price your stock fairly knowing that your customers will expect bargains and will barter. Remember, your aim is to get rid of unwanted articles and at the same time, make some money. Finally, a very important point - mark the price clearly on everything.
Ensure that you have enough tables. Card tables, TV tables, picnic/patio tables are very useful. If you need more table space, improvise using plywood sheets on boxes.
You are going to need some miscellaneous items such as change, wrapping paper and packing bags/boxes. You will require at least $30.00 in coins and low denomination bills. Newspapers will suffice as wrapping paper. Plastic bags are readily available from the recycle boxes at most supermarkets. The liquor store will give you some boxes - those with dividers are particularly useful for packing glasses.
Display your stock attractively on your tables, and put similar items together. Old sheets serve nicely as table cloths. Make sure you are ready for business by your advertised opening time.
Offer free refreshments such as coffee and, in summer, lemonade. This will get customers to stay, chat and most importantly, buy.
Some people known as “early birds” will arrive before your advertised start time, sometimes coming around the day before your sale. They could be your best customers, so if you have your stock ready, sell to them. However, if you do not want to deal with these people, stipulate “no early birds” in your newspaper ad.
You may be asked if you have anything else for sale. Beware of these queries as you could be persuaded to sell valuable items for next to nothing. In any case, for security reasons, never allow anyone to come into your home to view your possessions.
You will find that you are very busy at the start of your sale. If possible, have someone helping you at that time. Business will then drop off, and one person can usually handle the workload. When your sale is over, retrieve all of the signs which you posted.
You will undoubtedly have things left over at the end of your sale. You can still dispose of your unwanted articles in two useful ways. Either donate your goods to a local charity shop or sell them at an auction sale. Auctions of household goods are usually held weekly in most cities.
Your good planning will make your sale successful. As an added bonus, you will get to meet many of your neighbours. Have fun and enjoy spending your earnings.
December 30th, 2006
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