Real Dilemma - Buy First or Sell First..?

Our family is growing and we’re ready to move to a bigger home. Should we buy first or sell first? 

There is no “right” answer to a dilemma like this; it’s a personal decision that should take into account your current circumstances and tolerance for risk. Or, more accurately, which kind of risk you prefer. Buying first increases the risk of higher expenses. Selling first increases the risk of having to live “between homes”.

BUYING FIRST:

The downside to buying first is if you are unable to sell your home fast enough, you will find yourself owning two homes at once. The result is you could be paying two mortgages at the same time, not to mention all the other costs of home ownership. Also, you may have trouble obtaining a mortgage for the new home. Before you make an offer on your new home and potentially find yourself in this situation, carefully weigh whether you’re financially able to pay for two homes at once.

Buying first can make the house hunting experience more enjoyable. Without a closing date looming on your existing home, you’ll have time to wait until the right home comes up for sale. It can also be less stressful knowing that if your offer is unsuccessful, you have time to wait for the next opportunity to come up.

ESCAPE CLAUSE

As a buyer with an existing home to sell, you can protect yourself by adding a condition to any offer you make . In addition to the highly recommended conditions on financing and inspection, you can also make your offer conditional on the sale of your current home which in Real estate language called Escape Clause. That means if you’re unable to sell within a specified period of time, you’re able to back out of the transaction. However, it’s worth pointing out that this condition will likely make your offer less attractive to the seller because of the uncertainty for them.

SELLING FIRST

The biggest benefit of selling first, aside from removing the risk of owning two homes at once, is you’ll know how much money the sale brought in, which will help determine how much you can afford to pay for the next place. As helpful as that is to know, the challenge is that you’ll find yourself in a race against the clock, with your closing date looming. If you’re not careful, you may end up rushing the process and settling for a home that isn’t ideal for you, or paying more than you planned because you feel pressured.

HAVE A CONTINGENCY PLAN

Regardless of whether you buy first or sell first, it’s a good idea to have a contingency plan in case your closing dates don’t align, leaving you with two homes, or no home, for a period of time. If the sale of your home closes first, you might consider a short-term rental or moving in with family or friends. If the purchase of your new home closes first, you might need something called “bridge financing” to cover the down payment and other closing costs until the sale of your current home closes.

The best advice is to speak with your real estate professional. They have the knowledge and experience to help you decide which decision is better suited to your circumstances, and because they won’t be as emotionally invested in the decision as you, they will be able to provide more balance to your decision-making process.

courtesy from toronto star

Land survey outlines what’s really yours

Bob Aaron: Get the details of property you’re buying in all-important survey.Without a land survey home buyers cannot know the full extent and measurements of their title.

A land survey be made a compulsory part of every real estate transaction.A clause to that effect should be a part of the standard form agreement of purchase and sale, or at the very least added to every contract as part of a schedule.

In lay terms, a land survey shows:

1. The size of a parcel of land
2. Its location relative to nearby lands, roads, or geographical
features
3. The location of public and private improvements such as
buildings, pools and fences, relative to the property boundaries,
and
4. The physical features of the property.

Title insurance, as valuable as it is, is no substitute for knowing that the homeowners have valid title to all the land underneath the house, that they own the driveway, and that a utility easement is not running beneath the living room.

In 2002, the law firm Miller Thomson prepared a report for the Alberta Land Surveyor’s Association. It concluded, “Using title insurance as a replacement for a (survey) would be like purchasing theft insurance and then leaving the car door unlocked with the keys under the floor mat. Your car may not be stolen, but you increase the likelihood by acting in a careless manner.”

Sellers often tell their agents that they do not have a survey, when in fact they received one at the time of their purchase. Although using an old survey entails some risk since it is not current, many historical surveys are available online for a modest fee fromwww.landsurveyrecords.com . I think it’s fair to say that a land survey exists for every home built in Ontario in the last 30 or more years, and I have often seen century-old surveys showing the same house that is standing today.

NEW HOME VS RESALE ..WHICH IS BETTER

Question: We’re starting a family and looking to buy our first home. We like the idea of buying a newly-built home, but we’ve been kind of shocked by the prices. We thought a new home a little ways outside the core would be cheaper, but they don’t look cheap to us! What’s up? Is buying an old fixer-upper a better choice?

New Homes:

New home construction often happens in suburban areas that are underdeveloped, therefore can offer more in terms of living space and property size. Urban infill projects are the exception, as they are utilizing prime city space and are limited in size.

The ability to choose custom finishings in a new home appeals to a lot of people. Instead of having to inherit someone else’s choice of flooring, cabinetry and countertops, you have the opportunity to select your own. And who can forget that everything is new, and never been used – including the bathrooms!

Finally, new home purchases come with a warranty. Coverage by province, but typically protect you against delayed closings, defects in construction, basement foundation and much more. In Ontario, Tarion provides all new homes with coverage.

Most builders price condos and homes at anticipated future market value. This means a potential buyer will be paying what the builder thinks the home will be worth when it is completed and occupied.

An additional cost needs to be taken into consideration when contemplating a new home. HST/GST is applied to the price of a new home and can significantly increase your overall costs.

Newer homes can take advantage of advances in materials technology and construction standards.

Resale Homes:

Existing homes tend to be in established neighbourhoods, which can give an accurate sense of what the community will be like to live in. From existing infrastructure, schools and businesses serving the area, you can paint an accurate picture with some diligence.

An existing community will have a record of sales performance that can be tracked through historical data. This allows you to better determine value when deciding location and which home to purchase.

Many older homes have been built to last with sturdy materials and fine workmanship.

 Resale homes are exempt from the tax(HST/GST).

Buying an older home that requires some TLC can allow you to unlock some of the hidden potential of that home, whether it be for use and functionality or value down the road.

Resale home prices tends to be cheaper than builder's price.

Whatever decision you make, both options have their pros and cons. Once you’ve determined which considerations are most important to you, your choice starts become clearer.

CLOSING COSTS

I’m buying my first home. What are some of the costs I should plan for, besides the purchase price?

For  first-time home buyers it’s so important to understand the full cost of buying a property.

1. Deposit : Require at the time of offer. This deposit is part of the
                   Down payment.

2. Home Inspection : A home inspection is the most widely
                 recognized pre-closing cost. It may be seen as an optional
                 expense but it’s also a smart one is because a qualified
                 home inspector, engineer or contractor can identify
                 underlying problems with a home’s major systems, like
                 heating and electrical. in a rural area, you should also have
                 the septic system inspected and water testing conducted
                 for the good of your health.

3. Appraisal : Some lender may require, as a condition of financing,
                that you pay for an appraisal or survey of the property to
                ensure the home’s value matches its sale price.

4. Land Transfer Tax :  A land transfer tax is up to 2% of the
                purchase price. In Toronto, an additional tax of up to 2 %
                applies. As a first-time buyer, you should talk with your real
                estate agent about whether you are eligible for a refund of
                the land transfer tax.

5.Legal fees : Your lawyer will conduct a title search on the home to
                 ensure the seller can actually sell the property and that
                 there are no liens against it. They will also register the deed
                 and mortgage for you.

6. Refund to Seller : You may also need to refund the seller for pre-
                paid expenses — property taxes, maintenance fees,
                utilities, hot water heater rental fees.

7. Insurance Policies : Three different insurance policies round out the
               closing expenses.
               1. mortgage insurance: if your down payment is less than
               20 per cent of the sale price.
               2. Title Insurance : will protect you against title fraud, errors
               in surveys and encroachment issues with neighbours.
               3. Home Insurance : You need to get Home Insurance
               before the closing which will depends on what type of
               insurance you are choosing.

8. Moving Expenses : Some gas, hydro and water companies charge
              a hook-up fee and you’ll need to pay if you want to forward
              your mail from your old address.


9. Renovation or Upgrades : Some house are in move-in condition ,
              some may need little TLC. dated kitchen and broken fence.
              A fresh coat of paint, some window coverings, or perhaps a
              shiny new fridge and stove also add up.

 Understanding the full cost of buying a home will help to budget for these final touches. 

FINAL RESTING PLACE

Buy now or you could end up in the suburbs until the end of time.

It sounds like your typical real estate pitch but this one is for your final piece of land, your burial plot. Prices are rising fast and what used to cost $200 to $400 in the 1970s in a central area of Toronto might be closer to $18,000 to $24,000 now.

Your final resting place is not unlike any other property choice, desirable locations are going to cost you more money. You can spend as little as $1,600 in Toronto for a plot and funeral, if you keep it simple and are cremated, or blow $50,000 on a plot and a swanky affair.

Plots:

Prime real estate in Toronto’s core can run close $15,000, for an adult grave although most locations are stackable so that’s the price for a couple. There may be an extra fee when the second person is buried.

Head to the greater Toronto area suburbs and that same adult grave is closer to $2,000

Crypt:

Finding one in the city is tough enough. Price comes down to what “floor” you’re on. They stack them and the second level — eye level — can cost you the most. Those spots are easily $45,000 for a couple. Once again, the suburban option will save you money with prices close to half that.

Niches:

An indoor single niche for cremated ashes can cost about $7,000 in Toronto’s core with outdoor niche’s available for half that.
Back in the suburbs, that single indoor niche is less than $2,000.
It’s important to note all these prices are guaranteed for eternity, if you pay up front.

Mausoleum

At the Mount Pleasant Group of Cemeteries, a private family mausoleum goes for $500,000

A funeral can easily run $10,000 to $12,000 on average and with many operators demanding 50% up front.

Selling your own home

I can’t decide whether I should sell my home myself or hire a real estate agent. What are the pros and cons of each?

Before you decide to sell your own home, consider how much time and expertise it will take. Also, know that commission rates with real estate agents are negotiable.

When the time comes to put your home on the market, it can be tempting to handle the transaction yourself, referred to as a FSBO — For Sale By Owner. After all, who knows your home better than you?

Going the FSBO route means you’ll be responsible for everything : — 1. Setting the right price,
2. Advertising your property,
3.Making yourself available to let interested buyers in to take a look,
4.Reviewing offers,
5.Negotiating terms and
6.Managing the paperwork once an agreement is reached.

One of the challenges you will face is getting the attention of homebuyers, who largely turn to the Multiple Listing Service (MLS) to identify available homes that meet their needs. Only registered real estate professionals have the ability to post listings on MLS. Some real estate brokerages now offer a “mere posting” service, where your property is listed on MLS for a fee, but leaves you responsible for all other facets of the transaction.

Even if you don’t use a real estate professional to help you sell your home, you may still end up paying commission — to the buyer’s representative. That’s because in a traditional sale, the commission for both representatives is typically paid by the seller. As a seller in a FSBO scenario, it’s your choice whether you agree to pay a buyer representative’s commission. If you don’t, the buyer would have to pay and may see it as a disincentive to purchasing your home.

There are significant benefits to working with a registered real estate agent, including valuable consumer protection. The There are three pillars of that protection are knowledge, professional standards and insurance.

Registered real estate professionals must complete ongoing, mandatory continuing education. That means they’ll be fully prepared to help you navigate the selling process, including determining how best to market and show your home to buyers, deciphering paperwork and negotiating on price and terms.

Your real estate professional is also required to uphold professional standards that emphasize fairness, honesty and integrity, and follow rules and regulations protecting consumers. In the rare instance that something goes wrong and you want to complain, RECO will investigate and take steps to hold the real estate professional accountable for their actions.

The final pillar of protection, insurance, has two facets:
1. Deposit insurance provides the buyer with peace of mind knowing their payment will be held in trust and insured against fraud, insolvency or misappropriation.
2. Real estate professionals must hold errors and omissions insurance to pay for damages and legal costs arising from claims related to a real estate transaction.

 Working with a real estate professional, however, can save you time and effort, and affords you protections that don’t exist in the FSBO scenario.