The ABC’s of Closing Costs

Text by Kathy Wiebe
 
You’ve found your dream home, the seller has accepted your offer, your loan has been approved and you’re eager to move into your new home. However before you get the key, there’s one more step—the closing. Also called the settlement, the closing is the process of passing ownership of property from seller to buyer. And as many buyers can attest to, it can be bewildering.

As a buyer, you will sign what seems like endless piles of documents and will have to present a sizeable cheque for the down payment and various closing costs. It’s the fees associated with the closing that many times remain a mystery to many buyers who may simply hand over thousands of dollars without really knowing what they are paying for. As a responsible buyer, you should be familiar with these costs that are both mortgage-related and government imposed.

Although many of the fees may vary by locality, here are some common fees:

Appraisal Fee: This fee pays for the appraisal of the property. You may already have paid this fee at the beginning of your loan application process.

Credit Report Fee: This fee covers the cost of the credit report requested by the lender. This too may already have been paid when you applied for your loan.

Loan Origination Fee: This fee covers the lender’s loan-processing costs. The fee is typically one percent of the total mortgage.

Loan Discount: You will pay this one-time charge if you have chosen to pay points to lower your interest rate. Each point you purchase equals one percent of the total loan.

Title Insurance Fees: These fees generally include costs for the title search, title examination, title insurance, document preparation and other miscellaneous title fees.

PMI Premium: If you buy a home with a low down payment, a lender usually requires that you pay a fee for mortgage insurance. This fee protects the lender against loss due to foreclosure. Once a new owner has 20 percent equity in their home, however, he or she can normally apply to eliminate this insurance.

Prepaid Interest Fee: This fee covers the interest payment from the date you purchase the home to the date of your first mortgage payment. Generally, if you buy a home early in the month, the prepaid interest fee will be substantially higher than if you buy it towards the end of the month.

Escrow Accounts: In locations where escrow accounts are common, a mortgage lender will usually start an account that holds funds for future annual property taxes and home insurance. At least one year and two months worth of homeowner’s insurance premiums will be collected in advance. In addition, taxes equaling approximately two months in excess of the number of months that have elapsed in the year are paid at closing. (If 6 months have passed, 8 months of taxes will be collected.)

Recording Fees and transfer taxes: This expense is charged by most provinces for recording the purchase documents and transferring ownership of the property. Make sure you consult a real estate professional in your area to find out which fees—and how much—you will be expected to pay during the closing of your prospective home.

Why A Condo May Be Right for You

Text by Kathy Wiebe

An option often overlooked by those desiring homeownership is purchasing a condominium or condo. The traditional detached single family home is not the ideal situation for everyone. For those just starting out, affordability may be an issue. An empty nester may want to downsize and not have the hassles of yard work and other maintenance. Or it can simply be that the traditional family home doesn’t suit your lifestyle.

When you own a condo, you own the title to the space within the wall of your living quarters. Common areas such as hallways, roofs, parking lots, green areas and pools are shared with the other owners in the complex. The more common type of condo is the apartment-style, in which you may have units on either side of you and above and/or below. However, there are other styles. There are units that are designed more like townhomes, with single or multiple levels and one or two common walls with neighbors. You may even find a condo in a building that was a multi-unit apartment converted to condo units.

Condos are attractive to many buyers because they offer them a chance to own their residence and build equity at what is usually a lower cost than a single-family detached home. Of course there are exceptions, such as the luxurious condominiums that many developers are building in downtown and affluent neighborhoods.

One factor to consider is that condominium owners generally must pay a condo association fee monthly. These fees defray the cost of maintenance, repairs and upgrades to the community’s common areas as well as the cost for the services of a property management company.

However, if you would rather spend your free time doing something besides mowing the lawn, painting the outside of your home, or waiting at home for the pool maintenance person, then a condo may be for you.

Other advantages of owning a condo are the amenities that may be part of your complex such as pool, tennis court, fitness center or clubhouse. These are some of the perks you might not be able to afford or even have room for if you were to purchase a single-family home.

Of course, as with all things, there are some disadvantages to owning a condominium, such as the lack of privacy that a single-family home affords. You are also confined to the rules and laws of the community association, which can run the gamut from how to display a satellite dish to the type of animals you keep.

Is a condo the right living arrangement for you? Make an informed decision by weighing the pros and cons. Talk with a real estate professional who is familiar with condominiums and the laws that govern them. Preview the various condos in your area to get an idea of how the properties are run. If your real estate professional has sold condos in any of these complexes, find out the type of feedback he or she has received from clients.

Condo living isn’t for everyone, but can be an attractive option for those who want to own instead of rent.

Private Listing vs Real Estate Agent

 Text by Jim Hiebert

Buy a private listing? Use an agent? Why should you use someone who seems to make a lot of money for nothing. Will Com Free really save you a lot of money? Here is a perspective from someone who has been an agent for a few years and has bought and sold over thirty properties in the last number of years.

There are many things to consider when you want to buy or sell real estate. You are dealing with large sums of money and want to make an excellent decision. Excellence demands input from someone knowledgeable. Some people rely heavily on their lawyer to make sure that they are making a correct legal decision. That is wise, and a move that I heartily encourage. You also need someone who knows what market values are and that happens to be the real estate agent. A good agent can tell you within a few thousand dollars how much a place should sell for. So how do you choose?

Trust. That is the one ingredient in looking for an agent. You should never, never use an agent whom you do not trust. Just because agent X has a place listed, does not mean that you should buy through him/her. You should choose an agent who has earned other people’s trust through his/her honest dealings with others. Ask your friends for a referral for someone they have dealt with and with whom they have been happy.

Hot market – who needs an agent? I can sell it myself and save myself a lot of money. Ever hear that? That is someone who has not experienced the power that demand has. When more than one person wants your property, you as an individual must choose which one to sell to. But when an agent deals with it, they can set up a bidding war, often netting you many thousands more that an agent can cost you.

Insurance. What kind of insurance can you buy to prevent someone suing you in the event that a crack in the foundation is discovered that might have the appearance of being covered up. With an agent you have the protection of their insurance in the event something goes wrong, or something is forgotten in the declaration of items in your home.

Spotting a good agent – Conflict of interest is the first big consideration for you in picking an agent if you can’t find a referral. If an agent has an interest in a development of their own, and wants to list your place, you are vulnerable to additional showings to help that agent sell more of their products. It’s a little like setting the fox to guard the hen house. You are helping to put temptation in their path that should not be there. Look at the RCMP – do they allow their people to work in the same area that they grew up in? Rarely – they are wise enough to know that temptation to let a friend get off would compromise their good name. When I was selling real estate, I talked to a fellow agent about jointly buying their wonderful property with lots of potential for development. He gave me a very wise answer – Jim, I sell real estate, I don’t buy it. Wisdom.

Working smart. How can you get an agent to work hard for you? Insist on them using the MLS system (Multiple Listing Service). It’s the numbers that create demand and that give exposure, giving you the best price if you are selling and the most options if you are buying. MLS also ensures that the other companies are aware of your product. If an agent unwittingly or purposely lists your property too low, there will be a huge demand because everyone loves a bargain. There are agents who have friends looking for just your kind of property, especially if it comes in thousands below market value. To avoid those pitfalls, back to TRUST.

Commission. We all want the lowest commission possible to save money when we buy or sell. But look at what motivates other agents to show your place – I’ll help you with the hard ones – it’s money. When you list, you need to ask the question – how much do you get, and how much does the selling agent get? Some unscrupulous agents have begun the practice of tilting the table their way so that more than half comes to them when they list a home. The opposite should be true – you want as much of the pie as possible going to the selling agent – they have the buyer. A technique that we have used to draw more attention to a property is to list at say 7 percent, and ask that 4 percent be paid to the agent who brings the buyer. When the agents look at what is available for their buyers, whose place do you think they’ll show first, the one where they earn 2 or 2 ½ percent or yours at 3 ½ or 4 percent? You pay no more, you just split it differently, and to your advantage – you are paying the bill after all.

These are a few of the techniques that have helped us. We can’t stress enough 1) to use your agent, not the one who has the property listed and 2) to choose an agent whom you trust. Period. Happy hunting!

Do You Need A Home inspector To Help You In Buying Your Home?

 Text by Lesley A. Baker

One of the largest investments a family will ever make is a home. If you are buying a home, you need to ask yourself this question; “Should I hire a home inspector to assist me in my purchase?” You might not realize the importance of hiring one right away, but perhaps if you knew how a home inspector could benefit you in the purchase of your home, you might change your mind.

What is the role of a home inspector? A home inspector specializes in inspecting every detail of your home. He will check to ensure the home you are buying is structurally sound and will provide a detailed analysis of the electrical, plumbing, appliances, pools or Jacuzzis, insulation, roof, flooring, water and even the air quality. Once you realize what a home inspector does you will ask yourself; “Can I buy a home without a home inspector?”

How do you choose a home inspector? You should be able to find one in the telephone directory but beware of whom you hire. A home inspector should carry an up-to-date licence or certificate from a home inspectors’ school and appropriate insurance, and should provide a list of previous clients as referrals. Over the years various tradespeople (contractors – builders – or painters), have taken on the role of home inspector without the proper training, licensing or insurance. This has caused some very costly and damaging home purchases. To prevent this from happening to you, take the time to check who you are hiring. A little investigation will save you a lot of grief and money in the end.

What does a home inspector charge? Home inspectors’ fees vary, but for a detailed and signed home inspection you will pay between $250-500. It is a one-time fee and with that you should receive a full-length document detailing an analysis of all the above-mentioned areas. Only once the inspection is complete and you receive your final documentation, are you required to pay the fee. The inspection takes an average of three to five hours to complete depending on the size of the home and added features, such as pools or Jacuzzis.

When you are in the market to buy a home, sellers may try to take short cuts, cover up damages or avoid discussing certain things. A home inspector asks the seller the hard questions, questions you may not think to ask, and then inspects each and every detail. Paying that one-time fee could save you thousands of dollars in the long run. Investigate and make your purchase with a wise and informed decision. Hire a home inspector and protect your investment.

Attract Buyers With A Home that has Eye Appeal

Text by Kathy Wiebe

The housing market has become much more competitive. Many communities are beginning to see homes remain longer on the market and the bargaining pendulum swing in favor of the buyer. This is called a buyer’s market, as the number of available homes outnumbers the buyers. As a seller, your challenge is to turn a buyer’s market to your advantage.

The right price is vital, because overpricing your home can cause you to eliminate potential buyers and lengthen the time that your home stays on the market. But equally important is making sure that you give your home a competitive edge by giving it creative eye appeal.

Many homeowners make the mistake of believing they are selling “their home,” but once on the market your home is actually a product. You need to create an environment the buyer can’t resist. In other words, do everything you can to make the home so attractive, charming, cozy, inviting, comfortable and exciting that a buyer will want to buy that lifestyle for himself/herself.

This can be accomplished by making just a few improvements to your home’s presentation. Here are some guidelines to make your property distinctive and memorable.

Eliminate Clutter
Have you ever noticed how model homes are perfect with no mess, clutter, or mass of personal belongings heaped about? There should only be a few exquisite and well-placed accessories on tables, desks, chests, etc. Also clear kitchen and bathroom counters and furniture of everything except decorative accessories. Put the personal things – cosmetics, toiletries, clothes, bills, papers and homework – out of sight. Tuck wastebaskets under counters or inside cabinets. Clutter and personal belongings detract from the important feature of the home.

Create a color theme
If you embark on any investment decorating, like painting, wallpaper, draperies or new furniture purchases, create a color theme that’s consistent. Wall-to-wall carpeting should be the same throughout the house. Neutral colors are best to please all tastes.

Rearrange the furniture
Just the slightest readjustments can make a big difference. Pull the furniture from against the walls to create a more intimate setting. Move furniture from one room to another. That extra armchair in the living room may create a cozy sitting area in the guest bedroom.

Create custom spaces
Luxury master bathrooms, decorator kitchens, built-in cabinets, computer workstations, exercise rooms, and children’s play areas are the kinds of features that generate sales appeal. Even if you don’t have these specific custom spaces, you can fashion them or suggest the potential for creating them.

Accessories, mirrors, plants and fluffy new towels can generate a feeling of luxury even in a plain-jane bathroom. Turn an extra bedroom into an exercise room if you’ve got the equipment or a lost space into a child’s play area or hobby center.

Keep it clean and pristine
Dust, vacuum, mop and polish on a regular basis. You’re not selling the furniture, but a high shine on wood furniture and floors can make a room sing. Touch up nicks on walls and make sure the porcelain sinks and tubs and metallic fixtures shine. Windows should sparkle. Keep yards and landscaping neat and attractive. Add color spots of flowers to perk up entry ways and yards.

Consult with a professional
There are decorator professionals trained to “stage” a home for sale. They are able to offer an objective view of what buyers are looking for in your competitive market. Depending upon location, neighbourhood, demographics and price range, the special touches that turn on buyers may range from splashy master bathrooms and gourmet kitchens to children’s play area or home office.

You don’t have to spend a great deal of money to give your property the competitive edge. Just try to imagine the kind of lifestyle your target buyer would enjoy, and use a few decorative touch-ups to create it.