When selling your home, what you see your REALTOR® doing is only the tip of the iceberg. The years of study and experience allow your Realtor to provide immediate value for home sellers
Thursday, November 3, 2016
Resale Issues Buyers Don't Think About
Resale Issues Buyers Don't Think About
Remind your clients that even if these “adverse situations” wouldn’t bother them as home owners, they could be the bane of their existence as sellers.
In 2002, when I first got my real estate license, I took a class at my brokerage about how to show properties. Seems silly, right? How hard is it to unlock the door? But this class was about practical ways to make sure the buyer focuses on the most important factors of a home. I still follow some of the tips from this class today. One of them was to advocate caution to a buyer considering a house with an “adverse situation.”
What’s that? It’s a condition that will affect the resale of the property. I remember the instructor saying, “When my past clients call me up and ask me to sell the house I helped them buy, I don’t want to then explain to them the fact that they back to a major road will affect their value.” That hit me. No, it’s not the agent’s job to choose the home for the buyer, but they do deserve to know that if they purchase a home with an unchangeable adverse situation, it will always sell for less than similar homes and may stay on the market longer.
Selling is stressful no matter what the market is like, but in a flat or down market, it is 100 times worse. So since we can’t predict the future, I prefer to talk to buyers up front about adverse situations — deal killers, I call them — so they know what they’re getting into. And what might those deal killers be? These are the six I run into most often in my business. If you’ve dealt with others, leave a comment at the bottom of the article.
- Power lines: I hadn’t considered this one a deal killer until one of my first buyers backed out of a sale contract because she feared the power lines behind the home would give her cancer. Then I learned just how popular this myth is, as buyer after buyer has brought up a similar concern ever since. Just like fears about cell phone radiation, people have come to worry that the low-level radiation from high-voltage power lines will make them sick — even though governmental studieshave not found such a link. But perception is everything in the pursuit of a sale. Many people also find power lines aesthetically displeasing, so you may want to warn your buyers of the trouble they could face at resale.
- New subdivisions: Brand-new homes are a big draw for many buyers, but if your clients are looking in a subdivision that will be under construction for years to come, you may want to advise them that resale could be difficult for the foreseeable future. They’ll be competing with brand-new construction for however long developers are building in the area, and that will make their lives difficult for many reasons. Beyond the appeal of new homes, builders also have deep pockets and can offer many incentives to buyers that traditional sellers can’t. Don’t set your clients up to compete with that if they might want to relocate in five years.
- Neighboring a business: I once had a neighbor whose home backed up to the rear of a grocery store. Guess when grocery stores get their deliveries? All night long. Those delivery people didn’t care who was sleeping at 4 a.m. or whether they were being too loud for the new mom next door with a baby she was trying to put to sleep. Now, not every business is going to be this disruptive all night long, but just let your buyers know that if their neighbors aren’t home owners just like them, they may have issues to deal with.
- Environmental concerns: In my area in Arizona, the west-facing backyard is an immediate deal killer. During summer sunsets — a time of day when many people are home — the back of the house heats up even hotter than it usually is around this neck of the woods. Not an enjoyable experience when you’re trying to relax after a long day. It also makes barbecuing on the back patio unbearable. Your location may have different adverse situations depending on the environment in your state. In Washington, where my brother sells, he tries to avoid homes in forested areas that might be in danger of burning down.
- Subtle noises: When buyers tour homes, they’re listening for noise from nearby airports, train tracks, or highways and major roads. They’re probably a little more oblivious to the barking dog next door or the neighbor with parrots and a full aviary in their yard — or a chicken coop. Sometimes these noises are only passing aggravations and aren’t permanent, but you should tell your clients that if they hear it now, they’ll probably hear it in the future. And that can affect the next buyer’s opinion when they’re ready to sell.
- Peculiar ideas of privacy: Speaking of noise, highways and major roads are an obvious problem at resale, but some buyers prefer backing to a busy road rather than another home for privacy reasons. If your client is one of these people, you should tell them they’re a rare breed. For most people, the privacy benefit won’t outweigh the disturbance of the noise. Make sure your buyers understand the tradeoff they’re buying into.
With all that said, you’ll have buyers who won’t mind any of these adverse situations. My home, for example, is in the flight path of a small nearby airport. It occasionally sounds like these planes are landing on my house. Why would I buy such a home knowing how it will affect my resale? It was an awesome deal — and I mean awesome. I was lucky enough to find it right at the bottom of Arizona’s market in 2011. I knew what I was buying, and I know what I will face when I sell. For me, the value was there. So while you should keep your buyers informed of the challenges homes might pose at resale, at the end of the day, you always follow their lead.
Friday, January 15, 2016
Thursday, April 2, 2015
Saturday, September 27, 2014
What income does it take to afford a house on a national basis and in eight cities of Canada?
What income does it take to afford a house on a national basis and in eight cities of Canada?
As Per Canadian Real Estate Association House value release in May lwt us calculate Hypothetically:
A 5-per-cent down payment and a five-year, fixed-rate mortgage at 2.99 per cent. To calculate how much income is needed to support the resulting mortgage payments, we’ll refer to the gross debt service ratio, or GDS.To carry a home and be in a position to afford other living costs, strive for a GDS of 25 per cent or less.
For that average-price home on a national basis, the mortgage payment would be $1,930. Add an estimated $333 in property tax per month and $120 in heating and you end up with $2,383, which on an annualized basis is 32 per cent of $89,363. That’s the minimum income you’d need to afford a house at the national average price.
Statistics Canada’s most recent numbers are from 2011 and they show that median family employment income was $64,730. To bring that up to 2014 levels, three years of 2-per-cent income increases were factored in. That brings the median family employment income to $68,692, which is still short of the minimum income needed to buy the average national home.
Toronto and Vancouver's median family employment income is less than half of what’s needed to afford the average house because of high house prices.
Calgary’s estimated income levels are a little below where they need to be for a family to afford the average home.
The affordability picture is brighter in cities such as St. John’s, Halifax, Winnipeg and Saskatoon because the cost of carrying an average home is much better aligned with incomes.
Montreal’s actual household income well below the estimated income required to carry the average house.
Source: Globe and Mail
As Per Canadian Real Estate Association House value release in May lwt us calculate Hypothetically:
A 5-per-cent down payment and a five-year, fixed-rate mortgage at 2.99 per cent. To calculate how much income is needed to support the resulting mortgage payments, we’ll refer to the gross debt service ratio, or GDS.To carry a home and be in a position to afford other living costs, strive for a GDS of 25 per cent or less.
For that average-price home on a national basis, the mortgage payment would be $1,930. Add an estimated $333 in property tax per month and $120 in heating and you end up with $2,383, which on an annualized basis is 32 per cent of $89,363. That’s the minimum income you’d need to afford a house at the national average price.
Statistics Canada’s most recent numbers are from 2011 and they show that median family employment income was $64,730. To bring that up to 2014 levels, three years of 2-per-cent income increases were factored in. That brings the median family employment income to $68,692, which is still short of the minimum income needed to buy the average national home.
Toronto and Vancouver's median family employment income is less than half of what’s needed to afford the average house because of high house prices.
Calgary’s estimated income levels are a little below where they need to be for a family to afford the average home.
The affordability picture is brighter in cities such as St. John’s, Halifax, Winnipeg and Saskatoon because the cost of carrying an average home is much better aligned with incomes.
Montreal’s actual household income well below the estimated income required to carry the average house.
Source: Globe and Mail
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