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Flaherty charges CMHC new risk fee on mortgages – Consult with Bruce Coleman, Vancouver Mortgage Broker

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Finance Minister Jim Flaherty is taking another step to curb taxpayers’ exposure to the housing market, by charging Canada Mortgage and Housing Corp. a new risk fee.

As of Jan. 1, the Crown corporation will have to pay the government a fee equivalent to 3.25 per cent of the mortgage insurance premiums it writes and 10 basis points on portfolio insurance it writes.

The fee is part of Mr. Flaherty’s continuing efforts to rein in CMHC’s activities and limit the risk for taxpayers. Earlier this week the International Monetary Fund said the Canadian government should do more to reduce its role in the mortgage insurance system and transfer risk to the private sector.

Steps that Mr. Flaherty has already taken in recent years range from tightening the rules that govern which mortgages are eligible for insurance, to capping the amount of insurance that CMHC can have outstanding at $600-billion, and restricting the ability of banks to buy portfolio insurance to reduce their capital requirements.

Mortgage insurance is mandatory in Canada when the borrower has a down payment of less than 20 per cent. It reimburses the bank if the borrower defaults on their mortgage. Portfolio or bulk insurance is something that banks can buy to cover large portfolios of previously uninsured mortgages.

CMHC estimates that the risk fee will result in a payment to the government of about $50-million next year, based on its projected insurance volumes, but that the hit to the Crown corporation’s earnings will be less than that because the fee will be amortized.

“We certainly don’t anticipate it to have any impact on the availability or cost of mortgage funding, so we don’t see it as a material event,” CMHC chief financial officer Brian Naish told reporters on a conference call Friday, adding that it will have a “very minimal impact on our bottom line.”

CMHC said it earned $452-million in the third quarter, up 20 per cent from a year ago, thanks largely to a reduction in net claims. The total amount of insurance in force fell to $559.8-billion, compared with $566.1-billion at the end of 2012.

Royal Bank of Canada analyst Geoffrey Kwan said that CMHC’s two private-sector rivals, Genworth MI Canada Inc. and Canada Guaranty, already have to pay a risk fee to the government of 2.25 per cent of premiums written.

The fact that CMHC’s new risk fee is higher than that likely reflects the fact that Ottawa provides more backstop to the Crown corporation, he added. The government guarantees 100 per cent of CMHC’s business, but only 90 per cent of its private-sector competitors.

Home Series: Don’t Neglect Your Vancouver Roof – Consult with Bruce Coleman, Vancouver Mortgage Broker

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Don’t Neglect Your Vancouver Roof

A roof is one of the areas that many home owners and prospective home buyers often neglect. As a buyer, you might ask some vague questions about it when buying  a home, and leave it up to the home inspector to provide you with an assessment. Or, as a homeowner, you might not bother with it too much until it’s too late.

Roofs come in many different building materials and are constantly subject to the wear and tear of the elements. All roofing materials used have a shelf life, but generally this is only for around 10 to 15 years. Even the sturdier metal roofs should not be overlooked and should be regularly inspected.

The roof is the primary cap on your home. Once you start to see or notice a leak or problem, it might be far worse than you think. Water may be seeping behind the drywall and getting absorbed into the insulation which can often happen with a slow leak. The result could be that the insulation could be starting to rot and mould can quietly grow and spread.

Leaks can be a challenge to locate because water can find some weird paths as water simply follows the path of least resistance. You might think your leak is right above you when it fact the actual area of the roof which has been compromised is actually at the opposite end of the structure.

You really should inspect your roof at least once a year. Looking at it from the yard isn’t necessarily going to reveal too much. If you know how to safely set up a ladder and have some idea of what to look for when examining a roof, that would be very helpful in identifying problems before they occur.

One thing you should always do in both spring and fall is to ensure that your gutters are free of leaves and check to see that water will flow down the troughs. This is especially important before winter comes because you don’t want water backing up under the roof and freezing, because this will cause expansion and gradual damage.

Other things to look for when checking the roof include the following:

• Check for missing shingles
• Check for shingles which are curling at the edges, have blisters or cracks or appear excessively weathered such as signs of extreme fading
• Check the attic, if you have one, with a good flashlight and this means the entire crawlspace if handy to look for water stains, mould or a mildew smell
• Check your ceiling and look for signs of water staining
• Check the metal flashing for signs of rust
• Check the shingles for signs of moss or algae
• Check for  roof sag and examine all roof ridges
• Check flat areas of the roof and look for water pooling

Should you spot any of these signs then you need to take immediate action because the worst thing you can do is to allow the condition to do nothing. The longer you let it go, the more damage you are going to have in the interior of your home.

Some roofing problems might only require some quality patchwork. If you have the skills then you could do it yourself. If not, then you will need as experienced contractor to perform the repairs or replacement for you.

When hiring a roofer, make sure you have checked them out and don’t settle on using just any roofing contractor that you pick from the yellow pages. Ask for references and make sure you call those references.

What Does a Vancouver Real Estate Lawyer Do? – Ask Bruce Coleman Vancouver Mortgage Broker

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What Does a Vancouver Real Estate Lawyer Do?

It’s a common practice and a wise move that any Vancouver home buyer uses the service of a Vancouver real restate lawyer when buying a house or condo. Given the average price of both types of properties this city, this is a major investment and the last thing you want to happen is get hit with an unexpected expensive or nasty surprise such an easement issue or outstanding property taxes.

Most people usually don’t involve a real estate lawyer until the transaction is about to be completed and after we have signed the purchase agreement. At that point, all we expect the lawyer to do is to perform a title search, register the deed and arrange to complete the money transfer.

However, some real estate experts suggest that it might even more prudent to bring a real estate lawyer earlier into the process to review the purchase agreement beforehand. Although we like to think that everything is going to be on the up-and-up, this is not always the case.

One example where the term “easement” is used instead of the word “encroachment” which can make a big difference when it comes property title insurance and additional legal costs.

When buying a condo, many developers have “special” incentives to entice a buyer into buying. You could be dealing with a condo agreement that can have up to 50 pages of legalise which might appear straightforward but can mean all whole different thing wrought with expensive surprises such as unexpected condo fees after you have already completed the deal and moved into the condo.

An area where getting a lawyer involved early in the process can be save you money is involves the financing of a property. A simple turn of the phrase such as the deal being “conditional on financing” is actually quite different to having it read as “conditional based obtaining the financing that the buyer actually wants.”

That’s the problem with contracts. The complexities of legalise means a contract can phrase things in a variety of subtle ways that can end up causing you grief and hefty out- of- pocket expenses down the road.

As buyers we expect that things will be fully explained to us and that any fine print will also be covered in the explanation, but this not always the case. Whether you read the contract, purchase agreement, financing documents in full or not yourself, the simple truth is that if you’re not a real estate lawyer, you could easily overlook something vital when reading through the paperwork.

A new home or condo buyer might also not realize that these additional fees can be added onto the purchase price such as installing your meters for hydro and water, landscaping, structural defects, charges for development and other expensive costs for example.

Finally, whatever you do, make sure you can an experienced real estate lawyer and this means one who specializes in real estate and not just occasionally dabbles in it as part of their overall legal practice. Do some research and check them out with the bar association.

You should also get a written quote and ask whether that includes all costs and expenses, and make sure that they will be accessible when you need to either talk to them or meet with them

How Do Vancouver Property Disclosures Work? – Ask Bruce Coleman, Vancouver Mortgage Broker

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How Do Vancouver Property Disclosures Work?

Every home or condo has its own distinct traits. Some home owners spend a lot of time in keeping up on their home maintenance with an attention to detail. Other home owners aren’t so fussy and let home maintenance slide. As a prospective home buyer, you don’t always get the full picture of what you might be buying.

Even though it is a requirement in B.C. that a home seller is required to disclose vital information about defects in their home such as leaks, mould, major repairs, foundation, and other issues, to their own realtor, or to you and your realtor, not everybody is as forthcoming and truthful as we would like to think.

Another problem that can happen is that even though the seller is being truthful about what they disclose, potential problems might exist which they are not even aware about.

In B.C. there is a quasi regulation that exists which does require that any maintenance or repair issues should be disclosed to all prospective home buyers. And, don’t forget that when you go to sell a home, these regulations also apply to you as well.

The biggest thing to remember is that any disclosure you receive should only be one part of the process because there is more you have to do to protect your interests.

B.C. Disclosure Laws Explained

First, you should know that the regulations that have put into pace will only provide you with limited protection. It always boils down to “caveat emptor” which means “buyer beware.”

The disclosure regulations is called the PDS which is an acronym for “Property Disclosure Statement” and was first introduced in 1991 through the efforts of the B.C. Real Estate Association. For condominiums it is also known as SPDS which means “Strata Property Disclosure Statement”, and for rural properties it is referred to as the RPDS or “Rural Property Disclosure Statement.”

In 2004, the B.C. Real Estate Association did amend the statement to specifically ask whether the home has been ever used as a marijuana grow-op or as an illegal drug lab.

How Useful is a Property Disclosure Statement?

The first thing to know is that a PDS is neither obligatory nor is it necessarily legally enforceable. The form is simply given to the seller to complete by their realtor. If the seller isn’t willing to complete one, then any prospective buyer might be wise to consider its absence as a “red flag” and be very wary about proceeding further.

Second, the property owner cannot necessarily be legally bound by what they disclose or include in the statement as it is simply designed for them to complete as best they can. There is no guarantee about the accuracy or the veracity of what a prospective buyer may or may not include.

The bottom line is that a PDS may actually not be as helpful as you think if you believe you have been deceived and want to take legal action against the previous owner. You may end shelling out a lot of legal expenses and end up having nothing to show for it except a big legal bill and expensive renovation or repair costs.

A PDS should only be used a guide and you need to check out the home further. Unless you are an experience contractor yourself, your best bet is to take the time and use an experienced home inspector to poke into the recesses of the home and uncover any potential problems they have found.

The rise of the miserable Canadian homeowner – Ask a Vancouver Mortgage Broker

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ROB CARRICK – The Globe and Mail

Consider the financial misery factor before you buy a house.

A poll to be released Tuesday by Manulife Bank indicates that almost 30 per cent of homeowners are very unhappy with how they’ve managed their debt and day-to-day finances in 2013, and only 43 per cent are very happy.
(Martti Salmela/iStockphoto)

That’s where the constraints of paying a mortgage and all the other usual costs of living leave you feeling frustrated and unhappy about your finances. Even real estate agents concede that such a phenomenon exists. “It’s been disturbing to watch runaway housing prices weigh down young families, constrain their daily lives, and make it near impossible for children to live in the same city as their parents,” a Toronto realtor said in a recent e-mail.

A poll to be released Tuesday by Manulife Bank amplifies this sense of a home handcuffing you financially. It indicates that almost 30 per cent of homeowners are very unhappy with how they’ve managed their debt and day-to-day finances in 2013, and only 43 per cent are very happy.

There are multiple explanations of why so many homeowners are unhappy with their finances. Some lack the restraint to live within their means, and then give in to inertia instead of taking action. The decline of middle class prosperity, which is being well covered in a Globe and Mail investigation called The Wealth Paradox, also plays a role. So do central bankers, who have created a new normal of irresistibly low interest rates to bridge us across the economic stagnation caused by the financial crisis five years ago.

But if homeowners are dissatisfied about how they’re managing their finances, we must also consider their single largest expense on month-by-month basis. That would be the mortgage payments they’re making on their homes.

The problem with housing is that it’s expensive compared to our incomes. I will document this further in an upcoming column, but for now let’s just say that mortgages plus other basic costs of day-to-day living, such as cars and daycare, may leave us with little money left over. And so we borrow more through credit lines and credit cards. That’s our unofficial second income.

The Manulife survey shows homeowners are not happy about how things are working out, which is noteworthy. We’ve been borrowing madly as a nation for the better part of five years now, and the story has so far been cast as one of imprudent behaviour. Here, we get a sense that there’s a cost in stress and angst.

This is particularly true for younger Canadians, according to Manulife. In the age 30 to 39 range, just when people are buying first houses, 38 per cent of homeowners are very happy with their debt management and 31 per cent are very unhappy.

Manulife believes these people can address their problems with better debt management techniques and solid advice. Maybe so. If they cut spending or use a budget, they could pay extra money down against their debt principal and get out of debt sooner. Consolidating high-cost debts in a low-rate line of credit or mortgage refinancing may also help.

But the best way of managing debt is to keep it under control from the get-go, and that brings us back to housing. The October resale housing numbers showed a modest pullback in sales nationally from the previous month, and that had some market watchers saying the market is slowing but stable because of reasonable levels of affordability.

If houses are affordable, then why are so many homeowners unhappy about their financial situation? We should talk more about this because we’re not living in a rising economy that lifts all households. Wage and salary increases aren’t raining down on us. Moreover, interest rates will at some point start to rise and make it even more difficult to manage our debts.

Will the financial burden of home ownership ease as you get older and presumably earn more? Depressingly, Manulife found that only 51 per cent of homeowners feel they will be able to retire debt-free.

Too many of us still think owning a house brings financial security and, in the past, it most certainly did. But houses have become so expensive in some cities that they now bring financial insecurity for those without well above average incomes.

Forget my lectures on this for a moment and listen to the silent voices recorded in the Manulife poll. A total of 2,132 homeowners aged 30 to 59 with household income of more than $50,000 were interviewed in September. Almost one in three of them isvery unhappy with how they’re managing their finances. Remember these voices if you’re stretching to buy a home.

Follow me on Twitter: @rcarrick

Chill out, retirement pessimists: Should we worry about seniors living in poverty?- Consult with a Vancouver Mortgage Broker

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ROB CARRICK – The Globe and Mail

The best of the web on money, markets and all things financial, as chosen daily by Globe and Mail personal finance columnist Rob Carrick.

Chill out, retirement pessimists
Some perspective can be found here on the debate about how badly prepared Canadians are for retirement. The poverty rate among seniors has fallen drastically since the late 1970s, although it has moved up a little recently.

Should we worry about seniors living in poverty?

The truth is few Canadians spend their senior years worried about basic living expenses. This has been lost in the retirement income debate.

One in five Canadians is worried about being able to cover basic living expenses in retirement. I reported this to audiences in Regina and Saskatoon last week, where I was invited to present the findings of our Sun Life Unretirement™ Index. But while it’s true that 22% told us that they are “not at all confident” about their ability to cover these expenses — and while it’s also true that another 49% said they are only “somewhat confident” — these Canadians are almost certainly more worried than they need to be. Despite the sometimes-overwrought debate about Canada’s retirement income system, we live in a country considered a world leader in the fight against senior citizen poverty. We have made tremendous progress on this front, thanks largely to the Canada Pension Plan (CPP), Quebec Pension Plan (QPP) and Old Age Security (OAS) programs.

I don’t mean to suggest that there aren’t ways to improve the retirement income system. I’m just saying we owe it to one another to be clear about the fact that few Canadian seniors live in poverty.

More on CPP and OAS in a moment.

Statistics Canada’s low-income data show that poverty rates among seniors fell off dramatically between the 1970s and 1990s. Our low-income measure (LIM) rate hit 33.1% in 1977. It fell to 3.7% in 1995, and has since climbed back up to 11.5% in 2009.

We saw these numbers begin to fall in the late 1970s, because that was when the first Canadians began receiving full CPP benefits. The rate fell further as members of workplace plans — which grew in number during the 1950s, 1960s and 1970s — began to retire.

Certainly it is worrisome that the LIM rate has risen since 1995. Still, the Organization for Economic Co-operation and Development (OECD) ranks Canada third-best among OECD countries in terms of providing seniors an adequate standard of living. In most OECD countries, the poverty rate is highest among children and seniors. Working-age citizens tend to have the lowest poverty rates, in percentage terms. It’s a different story in Canada, where the lowest percentage is among the elderly. We can thank CPP/QPP and OAS for much of this.

Working Canadians contribute to CPP and QPP with help from their employers. They pay out retirement, disability and death benefits to eligible recipients. A couple of specifics:

• You can collect CPP/QPP as early as age 60, although doing so will permanently reduce the monthly income you receive. The standard age to begin collecting CPP is 65. If you hold off, you’re paid more each month. You can delay receiving CPP payments until you’re 70.
• Your monthly cheque is based on how much you contributed and for how long. According to the Government of Canada website, the average monthly payout in March 2013 for a new pension taken at 65 was $596.66. The maximum monthly amount this year is $1,012,50. The same maximum applies to QPP.

OAS and the Guaranteed Income Supplement (GIS) are available to eligible Canadians regardless of their past or present employment status. Canadian residents quality if they’re 65 or older, a Canadian citizen or legal resident and they’ve lived in Canada for a minimum 10 years since turning 18. Non-residents qualify if they’re 65 or older, they were a Canadian citizen or legal resident before leaving the country and they’ve lived here at least 20 years since turning 18.

OAS benefits change each quarter. The maximum monthly OAS pension amount in Q2 2013 was $546.07. Depending on your income, an amount (up to 100%) of your OAS pension may be clawed back. Low-income Canadian residents are also eligible for the GIS. In Q2 2013, the top monthly GIS payout was $740.44. Visit this Government of Canada web page for details on OAS and GIS payments.

These are only high-level details, of course. For more information, visit these government web pages on CPP,QPP and OAS and consult a financial advisor.

Home Series: Some Vancouver Decorating Trends for 2014 – Consult with Bruce Coleman, Vancouver Mortgage Broker

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Some Vancouver Decorating Trends for 2014

With so many ideas floating around about what decorating styles to use in creating your ideal living space, it’s hard to know which way to go. Everyone’s sense of style and taste versus what they can afford to spend on decorating varies.

Every year, the decorating industry experts and style gurus come up with a whole new approach in terms of setting the new trends for themes and colours. As this year closes and 2014 approaches the old trends are put out on the back burner.

But, each New Year provides new ideas to incorporate into decorating your home to achieve a whole new look and maybe even a much fresher approach.

Here are what some of the decorating gurus are saying will be the in-thing for the coming year.

Colours

Here are some the hottest colours that are going to dominate in 2014.

Light Greens and Blues

Both are excellent color choices especially if you chose to go with a monochromatic style. Both colours tend to be very soothing. Blue is especially calming and you can go with something lighter like a teal blue, a light blue or even a turquoise. Blue seems to the in thing especially for living rooms and bedrooms.

Yellow and Orange

Yellow is a bold and sunny colour which is great for opening up smaller rooms or brightening up rooms which have exposure to the sun. Orange is also expected to be quite popular in 2014 and can add some fire and vigour to any room. Don’t go too bright though as that might too overwhelming. The gurus suggest a more subdued hue of yellow or orange might be more appealing.

White

White never really goes out of style especially again if you’re going with a monochromatic motif. White doesn’t have to too boring or sterile though because you can temper it and add some contrast such as creams or nude colours.

Pink

We’re not talking “shocking pink” here so don’t that your guy is going think it’s going to be too frilly. Some of these muted pink colour versions are incredibly appealing to the eye and blend in nicely in any living space.

What Else is In for Decorating in 2014?

Some of the other ideas put forth by the experts include the following:

Using More Metals

Metals have been relatively popular for several seasons, but for 2014, it’s not just going to the standard ones used in the past because the new focus is expected to be on brass in the coming year. This is considered a metal which has a warm appeal and can be incorporated into your home in a variety of different ways.

Art

Art is really going to huge this year. Not only can it be a great investment, art can really accent a room and the nice thing about it is that you can incorporate the art to reflect your own tastes. Traditional paintings always work but if you consider abstract pieces such as sculptures or abstract paintings you can also blend these either nicely into the overall colour scheme or use them as focal pieces. And, don’t forget that “bold” can also fit in if you do it right…

Fabrics

Cotton, wool and polyesters aren’t going to do it this year. The decorating seers are suggesting you be a bit more dynamic and go with either silk or even velvet to add a touch of elegance to your space.

Period Pieces

To add some contrast to newer furniture and even to give your room an extra bit of charm or use as contrast, an antique piece may give your room that extra bit of flair. Antiques can be anything from silver knick knacks to an eclectic armoire, or anything in between.

Home Series: Some Cool Ideas for Your Vancouver Basement Renovations – Consult with Bruce Coleman, Vancouver Mortgage Broker

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Some Cool Ideas for Your Vancouver Basement Renovations

Basements have a bit of a bad reputation and many people who have one tend to not fully develop and use them to their best advantage.

After all, the basement is “downstairs” so many folks out there don’t really do a lot with them. You prefer to focus on your living space upstairs on the ground and upper floors or even to the exterior such as landscaping or adding a deck.

However, even though the basement contains the core functions of our home such as the furnace, water heater and laundry facilities, there is still usually plenty of room to be creative and innovative to add some high value extra living space that can be very attractive to buyers.

With a little imagination and some careful thought to the materials, and of course, depending on your budget, why not transform your basement into something spectacular.

You can easily create a separate room that is functional and suitable to use as your utility and furnace room. Adding some shelving can help you neatly store away a lot of your seasonal toys or other memorabilia. The rest of the available space is all yours to play with and turn into something special.

The materials you use can vary ranging from simple sheet rock to something more elaborate such as using brick, stone, wood or even marble. How you use lighting and colour can also greatly enhance the appearance of the room depending on the motif and style that you want to adopt for your new living space. You can change the stairs and make them more suitable and eye appealing.

You are only limited by you imagination, the space you have to work with, and the amount you can afford to spend. Don’t forget that you can always use the equity you have built up in the house and obtain a HELOC or Home Equity Line of Credit to complete your dream project in style.

To ensure that everything is done to comply with the local building code, you will need to get applicable permits to perform the work. Unless, you’re especially handy, you would best be advised to contract the work to an experienced contractor.

Ideas for Your Basement Renovation

Here are some things to consider for your living space downstairs.

Living Room – Yes, you can actually have 2 living rooms instead of just the one upstairs. This would be an ideal situation especially if have younger children or teenagers. Everybody gets their own space to hang out and can be use for entertaining friends.

Media or Gaming Room – You can set up whatever electronic gadgets that you and your family are into, ranging from projectors and large screen televisions or game consoles or anything else. Of course, you could be more traditional and opt for a pool table, dart board and shuffle board motif.

Wet Bar – You could go all the way with this and make a really snazzy area to entertain your adult friends. A wet bar can be designed in a variety of ways ranging from a traditional wood bar to something more modern such as marble or other more expensive materials.

Wine Cellar – If you’re a wine connoisseur, then set create you very own wine cellar because it can perfectly suitable for a lower temperature.

Hoe Gym – Why spend a lot of money and time at a gym when you can do it all downstairs? You could even toss in a nice soothing sauna to ease away all those aches and pains from your strenuous work out.

Home Office – With all the hustle and bustle upstairs, it’s probably hard to finish a day’s work when things got to get done. With your home office downstairs you can work in peace and quiet, or have a separate office to manage you business if you’re self employed.

A Man Cave – Well, this can be anything you want it to be such as work or hobby area or just about anything that suits your particular “guy thing.”

Kid’s Playroom – It’s a good place to keep the kids localized and occupied. You could even install a camera so you can do what you’re doing upstairs and check out the kids at the same time.

Guest Room – If you get a lot of visits from family then rather giving up your rooms or bunching people all together, you can build a comfortable space for your guests downstairs, replete with bathroom facilities if you so choose.

The other cool thing about basements is that they can evolve over time and be changed according to your changing needs and desires. And, finally, the other neat thing about basements is that they be used in combination with all the potential ideas listed above.

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Antique pieces are a great addition for any home. They can be used as a valuable hobby or can as a special focal point to accent a room.

10 Best-Kept Secrets for Buying a Home – Ask Bruce Coleman, Vancouver Mortgage Broker

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Get the most out of your money with these handy home-buying tips.

• More from Buying & Selling: 20 Best-Kept Secrets
• Filed under: Home Buying, Home Staging, Remodeling

Buying Secret #10: Keep Your Money Where It Is
It’s not wise to make any huge purchases or move your money around three to six months before buying a new home. You don’t want to take any big chances with your credit profile. Lenders need to see that you’re reliable and they want a complete paper trail so that they can get you the best loan possible. If you open new credit cards, amass too much debt or buy a lot of big-ticket items, you’re going to have a hard time getting a loan.

Buying Secret #9: Get Pre-Approved for Your Home Loan
There’s a big difference between a buyer being pre-qualified and a buyer who has a pre-approved mortgage. Anybody can get pre-qualified for a loan. Getting pre-approved means a lender has looked at all of your financial information and they’ve let you know how much you can afford and how much they will lend you. Being pre-approved will save you a lot of time and energy so you are not running around looking at houses you can’t afford. It also gives you the opportunity to shop around for the best deal and the best interest rates. Do your research: Learn about junk fees, processing fees or points and make sure there aren’t any hidden costs in the loan.

Buying Secret #8: Avoid a Border Dispute
It’s absolutely essential to get a survey done on your property so you know exactly what you’re buying. Knowing precisely where your property lines are may save you from a potential dispute with your neighbors. Also, your property tax is likely based on how much property you have, so it is best to have an accurate map drawn up.

Buying Secret # 7: Don’t Try to Time the Market
Don’t obsess with trying to time the market and figure out when is the best time to buy. Trying to anticipate the housing market is impossible. The best time to buy is when you find your perfect house and you can afford it. Real estate is cyclical, it goes up and it goes down and it goes back up again. So, if you try to wait for the perfect time, you’re probably going to miss out.

Buying Secret # 6: Bigger Isn’t Always Better 
Everyone’s drawn to the biggest, most beautiful house on the block. But bigger is usually not better when it comes to houses. There’s an old adage in real estate that says don’t buy the biggest, best house on the block. The largest house only appeals to a very small audience and you never want to limit potential buyers when you go to re-sell. Your home is only going to go up in value as much as the other houses around you. If you pay $500,000 for a home and your neighbors pay $250,000 to $300,000, your appreciation is going to be limited. Sometimes it is best to is buy the worst house on the block, because the worst house per square foot always trades for more than the biggest house.

Buying Secret #5: Avoid Sleeper Costs
The difference between renting and home ownership is the sleeper costs. Most people just focus on their mortgage payment, but they also need to be aware of the other expenses such as property taxes, utilities and homeowner-association dues. New homeowners also need to be prepared to pay for repairs, maintenance and potential property-tax increases. Make sure you budget for sleeper costs so you’ll be covered and won’t risk losing your house.

Buying Secret #4: You’re Buying a House – Not Dating It
Buying a house based on emotions is just going to break your heart. If you fall in love with something, you might end up making some pretty bad financial decisions. There’s a big difference between your emotions and your instincts. Going with your instincts means that you recognize that you’re getting a great house for a good value. Going with your emotions is being obsessed with the paint color or the backyard. It’s an investment, so stay calm and be wise.

Buying Secret #3: Give Your House a Physical
Would you buy a car without checking under the hood? Of course you wouldn’t. Hire a home inspector. It’ll cost about $200 but could end up saving you thousands. A home inspector’s sole responsibility is to provide you with information so that you can make a decision as to whether or not to buy. It’s really the only way to get an unbiased third-party opinion. If the inspector does find any issues with the home, you can use it as a bargaining tool for lowering the price of the home. It’s better to spend the money up front on an inspector than to find out later you have to spend a fortune.

Buying Secret #2: The Secret Science of Bidding
Your opening bid should be based on two things: what you can afford (because you don’t want to outbid yourself), and what you really believe the property is worth. Make your opening bid something that’s fair and reasonable and isn’t going to totally offend the seller. A lot of people think they should go lower the first time they make a bid. It all depends on what the market is doing at the time. You need to look at what other homes have gone for in that neighborhood and you want to get an average price per square foot. Sizing up a house on a price-per-square-foot basis is a great equalizer. Also, see if the neighbors have plans to put up a new addition or a basketball court or tennis court, something that might detract from the property’s value down the road.

Today, so many sellers are behind in their property taxes and if you have that valuable information it gives you a great card to negotiate a good deal. To find out, go to the county clerk’s office. 
Sellers respect a bid that is an oddball number and are more likely to take it more seriously. A nice round number sounds like every other bid out there. When you get more specific the sellers will think you’ve given the offer careful thought.

Buying Secret #1: Stalk the Neighborhood
Before you buy, get the lay of the land – drop by morning noon and night. Many homebuyers have become completely distraught because they thought they found the perfect home, only to find out the neighborhood wasn’t for them. Drive by the house at all hours of the day to see what’s happening in the neighborhood. Do your regular commute from the house to make sure it is something you can deal with on a daily basis. Find out how far it is to the nearest grocery store and other services. Even if you don’t have kids, research the schools because it affects the value of your home in a very big way. If you buy a house in a good school district versus bad school district even in the same town, the value can be affected as much as 20 percent.