Real Estate Curve

“How long has it been on the market”? This is a question many buyers of real estate ask. The thought behind it is often one of two things. Either there’s something wrong with the home or the pricing is too high. Both of these notions may need clarification. Let’s deal with the first thought.

Under the closest scrutiny one could argue that there is something “wrong” with every home. The real question here is: – does pricing of the home reflect what is being offered. In this case what is “wrong” with a home may be exactly what makes it “right” for some one who appreciates the opportunity and the reflected price.

Regarding the thought of over-pricing, it must be considered that where a home is extremely unique, a long marketing time may be necessary in order to obtain market value while pursuing a buyer with the same unique interest. On the contrary, with atypical homes, a long period of time on the real estate market may point toward inferior marketing but mostly toward over-pricing regardless of what is “right or wrong” with the home. However, sometimes when homes are reduced and buyers ask “how long has it been listed” the proper response is “at that price only…weeks”. By illustration and a bit of exaggeration to make the point, suppose a home is on the market for 2 years at $300,000 and the seller reduces it to $250,000. Then, while the buyer is asking “how long has it been listed”, there are 5 offers being presented, followed by the hollow apology “Sorry it’s sold”.

It is obvious then that both notions for “time on the market” may be incorrect. While you can always make an offer and succeed, it’s always best to ask yourself “does the pricing of this home reflect what is being offered” to avoid disappointment. Your REALTOR® will usually provide a real estate pricing analysis of the home in order to help you make the determination.

Title Insurance companies provide insurance for buyers and mortgage lenders against several kinds of title risks that can affect real estate trades including survey errors, legal description errors, negligence, forgery, liens and other encumbrances. Many lawyers now prefer their home buyer clients take out title insurance even if there is a recent survey.

While title insurance represents one more cost burden for closing, there are some cost savings enjoyed because title insurance was purchased. For example you would not need to pay for these otherwise required expenses:

• Zoning compliance certificate
• Tax certificate
• Hydro, water and gas certificates
• Law Society levy

This cost savings can amount to between one half to two thirds of the title insurance cost, depending on the title insurance provider and the area involved. In 2003, title insurance cost is about $300.

For information about local Title Insurance companies in your area and for an update on the cost or features contact your local real estate agent or lawyer.

Especially for an older home, and even for a newer one, a home inspection is a valuable service to a home buyer. A home inspector will walk you through a 1 ½ to 2-hour visual inspection of the home to determine its condition and that of its systems. Inspectors will assess which components are not performing properly as well as inform the prospective buyer of areas where repairs may be needed in the future. Inspections are also a good way to get a better understanding of the upkeep required on a variety of systems such as furnaces, plumbing and roofs.

Following the inspection, the buyer should be given a written home inspection report of the details of the inspection, plus a maintenance schedule and an estimate of the lifespan and replacement cost of the home’s systems. Home inspectors typically go over this report with the home buyer.

Your real estate agent can assist you by supplying names of home inspection companies and their contact info. When selecting from this list it is important that you enquire about the reputation, number of years in the business with experience in residential construction, and if they are a member of an association that will investigate consumer complaints. Note there is no formal licensing of home inspectors, but many home inspection companies adhere to the standards of practice established by the Canadian Association of Home Inspectors.

Before you start looking for a home, you should be aware of the real estate closing costs involved and be able to have most of these funds available before you even start the search. Besides the minimum 5% down payment, which the mortgage company requires, you will need to have the following amounts at hand.

Lawyer’s fees and expenses: normally $900 to $1100
Land Transfer Tax: varies, but on a $100,000 home, costs about $750
Home Inspection: $275-$350 not mandatory, but an excellent idea
Bank Appraisal Fee: $250, but the bank may waive it
Mortgage Application Fee: $250, Banks can sometimes waive this
Mortgage Insurance Premium: ranges from 0.5% to 3.75% of the mortgage amount
Survey: $600 – $800 if necessary
Estoppel Certificate: $50, but only applies to condos
Service and Utility connection: depends on the company

This summary of closing costs for real estate are meant to provide an assist to you but should not be relied upon. For a closer examination of costs it is best to contact your real estate agent or lawyer.

Why are lawyers required when you buy real estate? It is not a legal requirement to use a lawyer, but it will save you a lot of time and frustration and make the sale much smoother. Lawyers specializing in real estate will be well worth the cost. For their fee, they will:Search the property’s title to ensure there are no existing mortgages or liens registered against it;

Search the City Zoning Department to make sure the property complies with zoning;

Search gas, water and hydro records to determine whether there are any appears or work orders attached;

Determines if property taxes are paid;

Prepares the land transfer tax affidavit;

On closing day, goes to the Registry Office to register the deed and mortgage.

In addition to their fee, you are responsible for the lawyers “disbursements”. These include fees the lawyer paid on your behalf, plus any long distance calls, photocopies, etc. Other closing costs include your share of the property taxes, and leftover heating oil, if applicable. The Statements of Adjustments will itemize all amounts.

Many real estate transactions require bridge financing. This occurs when the closing date of the home you are selling may not match the date of the home you are buying. In fact you may not receive the proceeds from the sale until after you want to purchase. With a “firm” sale of your home you can usually “borrow against the sale” of your home. This is what is referred to as bridge financing or obtaining bridge loans. This financing (the bridge) is advanced and then paid back once the sale of your own home closes at a later date. It is replaced by the new and “final” mortgage.

Bridge financing loans are often necessary because of conflicting interests on the part of buyers and sellers with regards to their own timing. This is especially the case when the sale of other homes may be involved. It also occurs when closing dates of home sales do not match by design. In some cases home buyers want to take possession of the home they have purchased prior to the closing of their own home sale so that they can perform renovations before moving into it.

The cost of bridge financing varies. There is certainly mortgage interest cost – similar to regular mortgage loans. There may also be a set up fee, which is sometimes negotiable, depending on the circumstances.

One way to prepare for the costs of owning a home beyond the mortgage payment, insurance and taxes, is to know the expected life expectancy of your home’s components.

Such knowledge doesn’t supersede the use of a home inspector when buying a home, new or old, but it can help you develop a savings plan so you are prepared for the inevitable.

Sooner or later you’ll have to repair or replace many of your home’s parts — inside and out.

Knowledge of components’ life expectancies is what homeowner associations use, in part, to build a reserve fund designed to spread, over time, the cost of the inevitable.

When the roof goes, the appliances conk out, or the paint begins to fade, it’s a lot easier to come up with the cash if you’ve already got some socked away for just this kind of rainy day.

Last year, the National Association of Home Builders, along with the Bank of America developed the “NAHB/BoA Home Equity Study of Life Expectancy of Home Components” to help you take the guess work out of preparing for the worst.

The report suggests you use the timelines as a general guideline. Local weather conditions, use habits, regular maintenance — or the lack of it — can all affect the life expectancy of many components.

Personal tastes for contemporary upgrades, remodeling needs and other factors may also dictate replacing parts before their useful life time is up.

In any event based on a comprehensive telephone survey of manufacturers, trade associations and researchers NAHB developed information about the longevity of housing components.

From the foundation to the rooftop, here’s a quick look at how long, on a national average, some of the most common home components are expected to last.

If you’re planning to put your home on the market in time for spring, now’s the time to get it ready to show.

But wait, it’s still a buyer’s market. What can you do to catch the buyer’s eye and get them to make an offer?

It’s going to take more than a fresh coat of paint and a new welcome mat. A buyer’s market raises the stakes, and you’ll find you need to do a lot more work on your home than you think, if you want to get the highest price possible.

You’ve heard that you should clean, paint and repair, but that may not be enough. If your home is cluttered and in disrepair, buyers won’t pay top dollar.

Knowing how buyers reason should help you pick which updates are most likely to help you sell your home.

Let’s take the most basic selling suggestions and explore why these are such important mantras.

  Do you know why you will not be killed or maimed by carbon monoxide? What steps have you taken to ensure this toxic, odourless, colourless gas — universally known as The Silent Killer — does not become an unwanted guest in the spaces you consider safe?You may have taken precautions in one area, but all these essential locations must be equally safe: your home, garage, cottage, ski chalet, car, recreational vehicle and workplace. The same cautions apply when staying with friends or away on holiday.

Each year, adults, children and families fall prey to this deadly gas. Symptoms of this fatal invisible contaminant have often been mistaken for those of flu by family members and physicians. Even exposure to low levels of CO can cause health problems, brain damage or death. What specific actions have you taken to be sure tasteless, toxic CO cannot leak into your sleeping rooms and other spaces where you live, work, play and breath?

The blood test for exposure to CO detects the degree of poisoning by measuring the level of carboxyhemoglobin, a compound formed when CO combines with red blood cells to replace oxygen in your blood. This reaction reduces the oxygen supplied to the brain, heart, vital organs and other body tissues. CO poisoning symptoms include:

• Headache, dizziness, blurred vision
• Nausea or vomiting
• Muscle weakness
• Confusion and compromised judgement
• Fatigue and extreme sleepiness

Infants, small children, pregnant women, unborn fetuses, frail or unwell adults, people suffering from heart or respiratory problems, and pets may succumb to poisoning more quickly and exhibit symptoms sooner.

Carbon monoxide is a by-product of incomplete combustion of fossil fuels, that is, there is not enough oxygen available to completely consume gas, oil, coal or wood. CO is produced in car exhaust, poorly-ventilated gas heaters, indoor fires and tobacco smoke. You’re vulnerable if you are near, or you breath air that is near, a fuel-burning gas furnace, boiler, engine, water heater, open fire or oil burner.

The danger from CO is two fold:

1. Poor installation or maintenance, or equipment breakdown can produce this invisible gas.
2. Poor ventilation can cause the gas to accumulate or to enter areas of human activity.

The solution is to attack both these failings in all the spaces you and your family use. Which of the following safety steps have you taken to protect yourself and your family?

• Visual and auditory alarms that sound before dangerous or fatal CO levels are reached are essential. Install officially-approved CO detectors with low-level alarms, according to manufacturer recommendations, inside bedrooms and on every level. Maintain the detector by regularly testing each unit, replacing non-rechargeable batteries and cleaning as directed by the manufacturer. (Smoke detectors are not CO detectors. Avoid installation in areas where conditions may trigger false alarms, like humid bathrooms or directly above fuel-burning appliances which may release CO on start-up. )
• Insist on proof that all fuel-burning equipment and required flues are properly installed, according to manufacture guidelines and building codes.
• Read the manuals to learn which annual check ups and what regular maintain is recommended by manufacturers of furnaces and other equipment. Do not try to save money by do-it-yourself maintenance when you have not been trained to service fuel-burning appliances. For instance, professionals know how to read flame colour on a natural gas furnace, water heater or stove to be sure combustion does not produce CO. Hire professionals to inspect flues, pipes and connections annually and to keep them clear of animal nests, rust, cracks, leaves or ice.
• Ensure proper ventilation for fuel-burning appliances, particularly in newer homes with higher standards of insulation and air exchange, so unwanted gases cannot accumulate inside.
• Make sure your appliances are not time-bombs, since out-dated appliances and furnaces may not just be energy hogs, they can also produce CO.
• Never operate a charcoal barbecue, gas-fueled chain saw, fueled camping gear or other equipment that could produce CO inside your home, garage or tent.
• Never leave a car running in an attached garage, particularly with the door closed, and ensure the house is sealed against garage fumes.
• Never use a gas stove or oven as a heating source, even in an electrical black out.
• If you are a tenant, make sure your landlord does all of the above or call your local municipal office to find out what you can do to ensure your living space is CO free. (Many municipalities have CO detector installation bylaws.)
• If you are a landlord, make sure you carry out all of the above, and instruct tenants on how to continue the CO safety zone into their own unit.
• Pay attention to complaints of nausea, muscle pain, headaches, dizziness and fatigue from yourself, family and guests.
• Carry out regular drills (perhaps when you practice fire escape routes). Then, if a CO alarm sounds, everyone knows what to do—get outside, breath fresh air as quickly as possible and then call 911. Because the gas has no smell, treat every alarm as a danger warning.

Compliance with this CO prevention and detection list, in all the spaces you enjoy with your family and friends, will allow everyone to breath freely and safely.

Written by PJ Wade