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Top NutKoo blog entries for:   Thursday February 22, 2018     4:05:17

When to sell a house - Only the people who sold Nortel at $127 know for sure!

There are of course the obvious and forced reasons for selling: Downsizing, divorce, death of a partner, job re-location, foreclosure. Then there are the optional reasons for selling, such as up-size, move-up, better neighbourhood, newer property etc.. Whatever your reason for selling, make sure that you understand the current market conditions to maximize your returns. Current market conditions can be summarized by the following list:

  • Number of buyers vs. Sellers
  • This is simple supply and demand. The more buyers there, the better it is for for the seller.
  • Neighbourhood desirability
  • If you neighbourhood is up and coming, it might be time to cash in.
  • Property price
  • If you have a reasonable priced property that you bought a long time ago, you could have a demand. There are a lot more people looking for a $300,000 house then a $4,000,000 house.
  • Property condition
  • Aren`t we all a little bit lazy. If we follow that logic, then we can surmise that more people will be attracted to a move-in house vs. a fixer-upper.
  • Interest rates
  • The lower the interest rate, the bigger the mortgage one can afford. This translates into to higher prices that a buyer is willing to pay.
  • Unemployment rate
  • The lower the rate, the better it is for a seller.
  • Overall economic conditions
  • Upbeat-expanding economy is better for sellers then a downbeat-contracting economy.

Don`t sell for vanity reasons "my sister-in-law has a pool so we have to have a house with a pool"
Your so vain, you think this house is about you, don`t you, don`t you.

How to price your house for a quick sale - The financial formulation

  • Face reality
  • You have a great house that you have lived in the house for 20 years, raised 2 kids, re-modeled the kitchen and had some great barbeques. This emotional value that you put on your house will not equate to the same value for a buyer who has no emotional attachment to your house
  • Get ready for comparison
  • A buyer will always be comparing the house you are trying to sell with the ones they have already seen. They will then try to determine the price/ perceived value of your house to the ones they have seen.
  • CMA
  • Keep an eye around your neighbourhood, when a house goes on sale and is sold. This way you have an idea of the price range that you should put on your house to be competitive. This is also known in the real estate lingo as the “Comparative Market Analysis”
  • Overpricing
  • The real danger with overpricing a home is that, it will stay on the market longer then it should. As soon as something becomes stale on the market, buyers will smell the stink. The staleness of a listing means only a couple of things to a buyer :
  1. House is overpriced.
  2. Something is wrong with the house.
  • The price factor
  • It is a well know fact that buyers will base their decision to buy on a couple of factors such as neighbourhood, size of the house and price. If we were to quantify these 3 factors that a buyer will look for, we can summarize it as follows:
  1. Neighbouhood: 5%
  2. Size of the house: 5%
  3. Price of the house: 90%

Last but not least, you have priced your home properly, but how do you price it for a quick sale. Simply undercut your neighbours.

5 red flags to watch when buying - The burnt fish smell recombination

  • Odd Smell
  • Odd Smells can be caused by hidden water leaks or flood damage that could be developing mold.
  • Cold Spots
  • This can be poor insulation or improper construction in the floors or attic.
  • Poor neighborhood curb appeal
  • Not only should the home you are viewing have a warm and inviting feel from the outside, but the other homes in the neighborhood should have a similar feel. It does your home's value no good to be pristine and appealing if the neighbor`s homes have you wanting to run and hide.
  • Off-limits areas
  • A home viewing is never complete unless you see the entire home - closets, storage rooms and all. A closed and locked door during a viewing is a major red flag. Demand to see what is behind the door, or move on to another home.
  • Big Area rug
  • If the rug is in a odd place, what exactly are they hiding.

5 red flags to watch when selling - The photos from a $2.00 camera

  • The listing
  • Describe the house as accurately as possible and don’t use buzz words that everybody knows. An example of a buzz word that everybody likes to use is “Stunner”: Will your house stand-up to this expectation or will people be stunned by the duplicity of your description.
  • Photos
  • Having no photos with your listing because of privacy concerns or other reason will be a deal breaker. On the other hand, having ugly pictures whether due to lighting conditions or other reasons will also deter buyers.
  • Low price
  • The strategy of attracting a lot of buyers with a low ball may work sometimes to get a bidding war. On the other hand most sensible buyers will avoid bidding wars on a house whose price is too good to be true.
  • Restricting house viewing times
  • Unless there is an unusual time requested, such as midnight, don’t restrict the time somebody can come and see your house. Most people will move on to the next property if they cannot view your property at their convenience.
  • Assuming your mortgage
  • most people will arrange for their own financing and don’t want to be saddled by your current mortgage rates and terms.

When to buy your house - The financial house congruence.

The most important thing when buying a house is finance finance finance. Work out the numbers so that you are aware of how much money you will need to spend. The following is a good list to follow:

  • Decent down payment
  • Usually, this is 20% of the value of the home. You can put down less but then you will have to pay the mortgage insurance. Goto the CMHC to find more information on mortgage insurance.
  • Lawyer fees
  • This typically runs between $800 to $1500. A lot of real estate lawyers, now provide fixed closing costs. Look into that and avoid the $100 photocopying charge from the lawyer.
  • Moving costs
  • Do not always go with the cheapest. Check out how long they have been in business and see if you can find any reviews on their service.
  • Minor house repair costs
  • There will always be some sort of minor repair or improvement that you will be making to your new house. Put at least $1500 for minor or unforseen repairs.
  • Furniture costs
  • You know for sure that you will be buying some new furniture to go along with the new house. Don’t forget the new lawn mower and hedge trimmer!
  • 2-4 mortgage payments
  • There will be enough stress, when you move into a new place. Make yourself feel comfortable during the first couple of months with a little cash cushion.
  • 1-2 months of house expenses
  • Sock away $1000-$3000 for property taxes, hydro, water, electricity, phone, cable...

Arrange for a mortgage, before you start looking for a house. Be comfortable with your decision and take your time, then get ready to enjoy your new house.

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