Monday, December 15, 2014
Could have, would have, should have! Learn from the most common mistakes people make when it comes to purchasing (or not purchasing) real estate so you can avoid the same regrets.
By Adena Leigh HGTV
Misunderstanding the Buying/Selling Process
According to a new survey by the Real Estate Council of Ontario (RECO), 38 per cent of homeowners wished they had a better grasp on the buying and selling process when purchasing their home. Make sure you're well versed on the intricacies of making a real estate purchase before you get pressured into a deal.
Not Buying Sooner
According to the 2012 TD Canada Trust First Time Home Buyers Report, 55 per cent of home buyers wish they would have purchased a home sooner to avoid wasting money on rent.
Not Making a Bigger Down Payment
On the contrary, 60 per cent of new home buyers wish they would have made a bigger down payment, which would likely require more time to save before getting locked into a mortgage.
Not Budgeting for Ongoing Costs
29 per cent of those surveyed said they overlooked some of the additional costs of owning a home like maintenance and utilities, while 13 per cent overlooked some of the fees associated with buying a home, such as inspection fees and land transfer costs.
Not Buying Closer to Work
So the saying goes, “location, location, location!” According to a Trulia survey, 15 per cent of homeowners wish they had chosen a home with a shorter commute to work.
Seeing More Houses
Buying a home is one of the biggest purchases a person can make, so it’s no wonder that RECO found that 21 per cent of homeowners wish they had shopped around more before making a decision on a house.
Interviewing More Real Estate Agents
Home buyers often focus more on shopping for a property than shopping for a real estate agent, but RECO reports that 9 per cent of homeowners wish they had spent more time researching and interviewing real estate professionals before selecting one.
Using All Their Savings
One mistake some home buyers make is putting their entire savings into the purchase of their home. Buyers should be prepared for unpredictable circumstances, like losing their job, before borrowing the maximum amount approved from the bank.
Not Getting a Home Inspection
Not getting a home inspection is a sure fire way to have regrets after buying a property. RECO reports that 15 per cent of homeowners wish they had had one when purchasing their home.
Not Buying Bigger
Sounds like home buyers tend to downplay their size needs, because according to Trulia, 34 per cent of homeowners wished they had chosen a larger home.
Wednesday, December 10, 2014
By Sarah Schmalbruch | Business Insider – Thu, 4 Dec, 2014
When you're the one in charge of your money, it's best to have some understanding of basic financial concepts.
But where to start?
Save some Googling with this list of what to know about money by age 30, created with the help of certified financial planner Mary Beth Storjohann, founder of Workable Wealth.
1. Net worth
"Your net worth is a measure of your financial health," Storjohann says. It's the result of your total assets minus the total amount you owe.
You're in good financial health if your net worth is well into the positives, and you have some work to do if your net worth is anywhere in the negatives. "Net worth can also be used to measure how far you've come over time," Storjohann says.
Inflation refers to the sustained increase in the price of goods and services. As prices rise due to inflation, you'll be able to afford less and less. Storjohann points out that the historical inflation rate is 3% per year.
"What's most important is whether your income is rising at the same rate as inflation," Storjohann says. If your pay is not keeping up with inflation, you won't be able to afford much a few years down the road.
"Liquidity is how accessible your money is," Storjohann says. Cash is the most liquid your money can be, because you can access it immediately. While the inaccessibility of certain assets, such as your home or your retirement accounts, gives them time to gain value, there are some cases where you want money at your fingertips.
"Your emergency fund should be in a cash account since it needs to be readily available in case of an emergency," Storjohann says. "Money you have invested in the stock market is not as available, because you risk losing some of it if you take it out."
4. Bull market
A bull market refers to a market that is on the rise, which is a good thing. That means that prices of shares in the market are increasing. Usually a bull market also means the economy is in a good state, and the level of unemployment is low. The US is currently in a bull market.
5. Bear market
A bear market is the opposite of bull. In other words, the market is declining. Share prices are decreasing, the economy is in a downfall, and unemployment levels are rising.
It sounds like a bad thing (and it certainly isn't good), but Storjohann says the most important thing to keep in mind is that the market is a "rollercoaster," meaning it's bound to go up and down and people shouldn't panic every time the market looks a little ursine. "Millennials have time on their side," she explains, "and over time money has the ability to grow."
6. Risk tolerance
Remember that roller coaster we were discussing a moment ago? According to Storjohann, risk tolerance refers to how comfortable you are with these swings. "It's about whether you understand the cycle or stress out about it," she says. How high your risk tolerance is determines how aggressive you can be with your investments.
Risk tolerance isn't just emotional — it depends on how much time you have to invest, your future earning potential, and the assets you have that are not invested, such as your home or inheritance. Major banks such as Wells Fargo, Merrill Lynch, and Vanguard provide online tools to help determine your own.
7. Asset allocation and diversification
Asset allocation — where you keep your money — depends on your individual needs and goals. It's also the basis of diversification.
The goal of diversification is managing the risk we touched on in point six — if you keep your eggs "all in one basket," as Storjohann describes it, what happens to your wealth if the basket falls and breaks? You're going to want some wealth stored elsewhere. "Diversification allows for balancing," Storjohann says. "You give up some upsides, but you lower some downsides."
Be aware that simply scattering your investments around might not be effective. To be effectively diversified, you have to be strategic about where you invest.
Interest can work for or against you, depending on the context.
When it comes to saving money, "Interest means your money is going to work for you," Storjohann says. When you put your money in a savings account at a bank, you're letting that bank borrow your money. Interest is what they pay you to borrow it; it's a percentage that can go up or down depending on the state of the economy.
On the other hand, when you borrow money from someone — think your credit card issuer — you pay interest to them for borrowing that money, just like the bank paid you to borrow yours. You'll keep paying interest until you've paid that money back, which is why it's important to stay out of debt, or if you're in debt, to pay it off as quickly as possible.
9. Compound interest
Compound interest is interest that you earn on a "rolling balance," and not on the initial principle, Storjohann says.
Here's an example: If you start off with $100 earning 7% interest annually, after your first year you'll have $107. The next year, you'll be earning 7% interest on $107 and not $100 (you'll earn $7.49 instead of $7).
It doesn't sound so impressive when we're discussing $7 at a time, but compound interest is the concept that powers the exponential growth of retirement savings. As Business Insider's Sam Ro puts it, "It's the deceivingly simple force that causes wealth to rapidly snowball."
Monday, December 8, 2014
In addition to analyzing the usual criteria of credit score, income and her down payment, lenders are now checking your clients social media sites. If the privacy settings are low, they can see everything the client has posted since joining Facebook.
What can this tell a lender?
1. your status of employment on Facebook is self- employed, but client has provide a letter of employment stating working at a company
2.The start date of your employment is showing 2 years at your employer, but your LinkedIn and Facebook status of a new job was only posted a month ago.
3. You mention having another business on your profile - lenders will then want to see your NOA's (notice of assessments) to confirm no other taxes owing, which might not be issue for some, many with back owing taxes however are then forced to pay immediately to close their purchase.
4. Your letter of employment states employed for 9 months- but your profile has updates of your travels abroad for the last 6 months though.
5. Say on a certain file the client has somewhat weaker credit (we all make mistakes and miss some credit and now CELL phone DOES show up on your credit bureau) and income has perhaps not been the longest tenure at your job or you're on contract, your down payment is minimal at 5% with further part of that being borrowed from your line of credit or "gifted from your parents" - so we as your broker try to make a case of your "Character" (one of the 5 'C's of credit) - stating you're a responsible person with high integrity and strong moral compass with the motivation to pay your bills on time as a high contributing member of society to offset your weaker Credit, Capacity, Collateral ….but…
Then lender/bank sees your most recent Facebook status is of you with your shirt off at your nieces communion, shot gunning a beer bottle and dancing on a table... this slightly contravenes the above statement regarding your character and could sway them.
For clients, job seekers and university applicants, here is an application to help you clean your Facebook history.
Monday, November 24, 2014
Discipline hearings signal need for fuller knowledge about two-unit homes
By: Bob Aaron Property law, Published on Fri Oct 03 2014
The Real Estate Council of Ontario (RECO), the body that licenses and governs real estate agents, is cracking down on representatives who advertise two-unit homes without making clear whether the second unit — usually a basement apartment — is legal.
Many agents typically use wording such as, “Agents and seller do not warrant legal retrofit status of in-law suite.” Descriptions like this could disappear in the wake of two recent decisions of RECO discipline panels.
Dan Plowman has been a successful real estate agent in Whitby, Ont. for 25 years. Last year, he listed a property, describing it as having “income potential” with “separate entrance/in-law suite.” The MLS listing for the property included the disclaimer that “we do not nor does the seller warrant the legal retrofit status of the ‘in-law suite’.”
That wording, however, did not appear on Internet listings, or on realtor.ca.
Wording like this is common in the real estate industry and is generally understood to mean that the basement suite is not legal. In my experience, Plowman’s listing used wording that thousands of Ontario agents have used and continue to use.
In a RECO discipline hearing, Plowman faced charges of acting unprofessionally by including information in an MLS listing which was either false, inaccurate, misrepresentative or misleading to consumers.
It was alleged that he failed to take steps to verify the legal status of the basement suite so that the appropriate language could be used in the MLS listing and available to consumers.
In an agreed statement filed at his hearing in June, Plowman admitted that he breached several sections of the RECO Code of Ethics and was fined $5,000.
The same thing happened this past May to Tammy Loeman, an experienced Hamilton real estate agent. She advertised a property with the remarks: “Fabulous home used as 2 family . . . own your own rental property or live in one unit and let the other one pay your mortgage.” She also marketed the home on web sites with the words “fabulous family home with income rental.”
Loeman acted for both buyer and seller in finalizing a purchase agreement. Unfortunately, the local zoning only permitted single-family dwellings. The buyer was an investor who intended to rent out both units for rental income.
His complaint was that if he knew the second unit was illegal, he would not have bought the property, or would not have agreed to the price in the contract.
At her discipline hearing, Loeman admitted that she acted unprofessionally by failing to determine and disclose material facts relating to the property. RECO fined her $10,000.
Under Ontario law, basement units that existed prior to November 1995 are exempt from meeting local zoning bylaw requirements (but not other safety standards). The discipline panel accepted that the basement apartment contravened the zoning bylaw, but in fact it may have been a pre-1995 unit and perfectly legal from a zoning viewpoint. As a result, the discipline decision could well be wrong in law.
It is not clear whether Plowman and Loeman were represented by legal counsel. What both Plowman and Loeman did is common practice in the real estate industry.
It appears that RECO now requires agents to confirm whether a basement apartment is legal — a complex task that involves determining whether the unit complies with zoning bylaws, fire code, building code, electrical safety requirements, and — in some municipalities — registration and licensing.
The problem is that municipalities will not tell owners or agents whether basement units are legal.