Category: Information For Buyers

Useful Information And Tips For Real Estate Buyers

Buyers Could Use Real Estate Pre-Sale Advice

Information For Buyers

Real Estate Floor Plan Pre-sale HomeI found this article on the Vancouver Sun online. I thought it was important to post because there are a number of pre-sale units in Kamloops for sale, specifically in Sun Rivers and the Dunes Golf Course in Westsyde (Westlinks). Buyers have to know what they are signing when committing to these pre-sale contracts. It’s important to get legal advice or involve your Realtor to help negotiate the pre-sale contract. Just because a developer is asking ‘X’ amount for a pre-sale home, doesn’t mean that the price and terms are not negotiable. After all, real estate purchases are negotiable. Buyers have to get educated and informed when it comes to pre-sales. It is very easy to get caught up with the beautiful, colorful displays and convincing sales people. I have included the article below written by Derrick Penner.

When British Columbia’s real estate cycle was on the upswing, many condominium buyers reaped the rewards of buying so-called pre-sale condominiums which, in many cases, were worth more on closing than the agreed purchase price. Now the cycle is on the downside and a growing number of buyers are finding themselves compelled to honour contracts they signed to complete purchases of units that have fallen in value. They have few options to get out of deals even if they don’t qualify for a higher mortgage.

Pre-sales can be “a win-win transaction” for both buyers and sellers, in the words of an advice pamphlet produced and distributed by the Urban Development Institute and the B.C. Real Estate Association. They allow buyers to pick homes they want to live in, and give developers certainty about their ability to sell and finance projects they are taking the risk to build.

If buyers try to walk away after signing a deal, they can be sued by developers, and risk losing not only the deposits they paid to secure units, but the difference between the current, lower market price, and the price they agreed to pay the developer in their contracts. “What the biggest risk [in pre-sales] is,” said Kenneth Pazder, a Vancouver real estate lawyer, “[that] what you essentially are doing is, you’re playing a futures market in real estate.” Buyers put down a deposit, usually about 15 per cent, and trust that the price they agree to pay reflects the home’s value on completion of its construction when they have to take ownership. “How sophisticated is the average [buyer] to do that?” Pazder asked.

At least six different developers are suing some 74 different buyers for not completing the purchase of homes they’d signed contracts to buy. Pazder is in discussions with a number of buyers who want to counter-sue developers. Developers are required to file disclosure statements that outline their projects’ details and pass them on to prospective buyers. Pazder’s advice for buyers considering pre-sale purchases is to seek legal advice to understand the contracts they are signing and the disclosure statements they are agreeing to accept.

The B.C. Real Estate Development and Marketing Act (REDMA) allows developers to sell real estate before it is built, and sets out the conditions developers have to meet in doing so. One of the conditions is that buyers have a seven-day right-of-recision period — the ability to cancel the contract — if they change their minds. Pazder advises clients to use that period to get a legal opinion on the contract, and to bail out if that opinion is negative. It will cost a buyer $300 or $400 for the service, Pazder said, but he reckons it is worth the fee to understand the potential risks a buyer is assuming in signing the contract.

“Sometimes people feel that they know the price, [the purchase] is going to close in two years, and that’s good enough,” Pazder said. “Then the problem is when, like now, things go sideways.” Pazder said one of the most common questions he gets these days is how buyers can get out of their contracts.

Often, Pazder said, the buyers’ problem is that they can no longer secure a mortgage to complete the purchase at the price agreed to in the contract. Their bank or lender can lend them funds based only on their unit’s current, and lower, market price.

Pazder said contracts often contain language that allow a developer to seek damages greater than the deposit, if the amount the developer has to cut the price of a unit to sell it in the current market exceeds the value of that deposit when a buyer walks away from the contract. Pazder added that in the current market, pre-sale buyers will want to try to limit that clause: “You want [the clause] to say, ‘If I don’t complete the purchase, this deposit is forfeited as liquidated damages as the sole remedy of the developer.’ ”

He added that buyers will also want to look at firmer language around the completion dates for construction of the units and clauses allowing the developer to make changes in finishings or unit layouts that also give them an out. The Urban Development Institute and B.C. Real Estate Association pamphlet includes a checklist of items that are required to be in a disclosure statement.

Mortgage Rates: Time To Get Pre-approved or Rethink Your Mortgage

Information For Buyers, Information For Sellers, Real Estate Information

This article is from the Vancouver Sun written by Fiona Anderson. Many Kamloops residents are getting great rates on their mortgages; both refinance and pre-approval rates. Now many first time buyers have a chance to own a home. Read below for the full article.

Have a fixed-rate mortgage at 4.5 per cent or higher? Then you should be refinancing, says Steve Moffitt, senior mortgage consultant with Equimac Mortgage Centre in Vancouver. “There’s never been a better opportunity historically, never, for doing a refinancing, ” he adds.

If only it were that simple. In fact, determining whether you should refinance or not depends largely on the penalty you will pay to get out of your current mortgage, and the amount of money you could save with a new one.

The first part of the equation — the penalty — is not easy to calculate. Most fixed-term mortgages charge the greater of three months’ interest or what’s called the “interest differential.” This latter amount is the difference between the interest you would have paid for the remainder of your mortgage term and the amount the bank can earn lending out the money now.So if you have a five-year mortgage at 5.25 per cent with three years left to go, and the bank’s current three-year rate is 4.5 per cent, you’ll have to pay the difference.

Often the amount of the penalty is about the same as the savings to the borrower, “so it’s a wash,” says Feisal Panjwani, a senior mortgage consultant with Invis. Moffitt’s magic number of 4.5 per cent uses the penalty of three months’ interest, which he says he sees often. But which penalty will apply really depends on the particular mortgage. So both Panjwani and Moffitt encourage people to ask their mortgage professional to crunch the numbers for them.

The current best five-year fixed-rate available is 4.19 per cent for most borrowers, Panjwani says. And he believes the rate could go as low as 3.99 per cent in the near future. The best variable rate is the prime lending rate set by the banks plus 0.8 percentage points, which today translates into 3.3 per cent. With rates that low, everyone who currently is paying 4.5 per cent or higher should probably do the math because there could be thousands of dollars in savings.

One way to save may be switching from a fixed- to a variable-rate mortgage, because with the variable rate so low, the savings are more likely to outpace the penalty costs, Panjwani says. But because the rate does change, “that’s risky,” he adds.

Some people are refinancing their mortgages not for the savings but rather to lock in today’s low rates for five years, Panjwani says. For example, if someone has three years left in their mortgage term, they may not save any money in the first three years of the new mortgage because of the penalty. But they have guaranteed today’s rate for two years after that. Keep in mind, however, that there are costs associated with refinancing that have to be added to the equation, Panjwani says.

One group of borrowers who need not worry about refinancing are those who were already in variable-rate mortgages. In the past, those rates were calculated as prime less a premium, and some outstanding mortgages chop off as much as 0.9 percentage points. With prime now at 2.5 per cent, those people are paying 1.6-per-cent interest. That number can’t be beat, especially considering prime could go down even further. “Anyone on a variable floating below prime, I would say those people should probably hang onto that mortgage,” Panjwani says.

The low mortgage rates also have buyers knocking on lenders’ doors. Last month, 40 per cent of Panjwani’s business came from purchasers rather than those looking to refinance. While the split is normally 50-50 between the two, in the last few months only about 20 per cent were purchases, he says.

Carolyn Heaney, an area manager with BMO Bank of Montreal’s business development group, says her bank has seen a lot more first-time homebuyers. The combination of low mortgage rates and lower prices means people who have wanted to live in a particular area but couldn’t afford it now can, she says.

At the current variable mortgage rate, a $200,000 mortgage with a 25-year amortization, would have payments of about $980 a month, she says. At a fixed rate of 4.39 per cent, the payments would be about $1,100. “So it’s very affordable for people to get into the market,” Heaney says.

The 9 Biggest Real Estate Relocation Mistakes And How To Avoid Them

Information For Buyers, Information For Sellers

For Kamloops and surrounding area real estate listings click here.

Kamloops has a large number of people relocating to and from the city annually. Moving to a new city can definitely be an adventure, but it can also be very stressful. I have outlined eight common mistakes people make when relocating to a new city.

1. Not Getting Informed
It is always a good idea to research your new community by contacting the chamber of commerce, tourism department, municipality or library. Ensure you compare the cost of living in your new community to what you are used to.

2. No knowledge about home price and not ready for showing
Completing repairs definitely helps with the sale of your home. Often small things like chipped paint, worn caulking and sticky doors distract potential buyers from appreciating the great things about your home. Have carpets cleaned, and go through your home and wipe down all the door frames and doors. Make sure you get a Comparable Market Analysis (CMA) completed by one or two Realtors to ensure you list your home competitive, realistic price.

3. Not planning for a temporary home between destinations
You may need to set up temporary living arrangements until you move into your new home. The time period could be a couple days to a couple months. Depending on the time period, you have options from a hotel room to a short term rental agreement.

4. Not being pre-approved for a mortgage
Buyers who are pre-approved for a mortgage have more negotiating power. Sellers are eager and more willing to negotiate with pre-approved buyers.

5. Not completing a professional home inspection
This applies for both the home you are selling and the one you are buying. Ensure you are educated about the new home you have purchased and also upcoming issues that may arise with your current home when it sells.

6. Not enough time to address children’s concerns
During relocation a child could feel lost, sad, angry or confused. Sometimes, under the stress of completing so many details, the temptation is to get settled as quickly as possible so everyone feels at home. Talk to your children before, during and after the process. They will feel safe, cared for and comfortable. Become familiar with your new neighborhood. If possible, set up a meeting with new teachers and other children in their new school before moving. Try to avoid moving in the middle of a school year.

7. Not using local, licensed professionals
Every area is different. It is important to be aware about what all the local neighbourhoods and communities have to offer. Each neighbourhood has positive and negative aspects about them (i.e. proximity to schools, transit, etc). Ensure you are informed about each and every area you are thinking about living in. Your Realtor can find you a home that matches your needs. You will save time and energy by having a professional do the work for you. Besides, your Realtor should have information to give you on local schools, transit, local amenities and other important neighbourhood characteristics.

8. Not clarifying your employer’s relocation policies
It is very important to go through your employer’s relocation policies carefully especially for the amount of reimbursement. Keep all your receipts and records of your expenses related to the move, as moving expenses are deductible under certain conditions established by Revenue Canada.

Thinking about relocating to Kamloops? Click here for all Kamloops real estate listings to help you with your decision.

If you need relocation assistance, I have a number of resources that will help make the move easier for you and your family. Contact us  anytime with your questions.

Buying Kamloops Real Estate: How The Buying Process Works

Information For Buyers, Information For Sellers

Buying a home or investment property in Kamloops is a big decision. There are many steps to take along the path to finding that perfect property. Many buyers have no idea how to buy a home and don’t know where to start. Here is a guide for buyers who are a little foggy about the home buying process from start to finish.

1. Get Yourself Representation: A Realtor is your best resource for information. A Realtor is a free resource for buyers (commission is paid by the selling party) and will represent your best interests for the entire transaction. This Realtor will organize and accompany you to all appointments, answer any questions you may have and provide you with detailed information on all the properties that interest you. If there are any questions that you have about a property and it requires further investigation your Realtor will help discover all the answers you need.

2. Writing An Offer To Purchase: Once you find a property you want to make an offer on. Your Realtor will write up all the necessary paperwork creating a legal contract for the purchase of the home (Contract of Purchase and Sale – CPS). The details in this document are the dollar amount of the offer, the deposit amount (held in trust at the buyers agent’s brokerage), the day you want to have the keys to the property, items that you want included in the sale (i.e. appliances, window coverings, etc), subjects in the offer (i.e. Home inspection, Financing, etc.) and any other details important to your purchase.

3. Explanation of Subjects: Many buyers are not informed about how the contract works. When you make an offer there are standard “subjects” in the offer. These subjects (depending on whether the property is a strata, freehold, mobile, bare land/lot, etc) are different for each offer. To keep this relatively short I will outline the standard residential and strata subjects which commonly are:

– Subject to Financing (obtaining approval for a mortgage).
– Subject to a home inspection.
– Subject to a property Title Search: Any right of ways, easements, etc. are detailed on title as well as all registered charges against the property such as mortgages and liens.
– Subject to a Building Information Report from the City of Kamloops or Thompson Nicola Regional District.
– Subject to fire/property insurance.
– Subject to the buyer being satisfied with the Property Condition Disclosure Statement (PDS) which is provided by the selling party.

For Strata properties there are further subjects such as the buyer will approve:

– Form ‘B’ which details strata fees/financial information regarding the strata.
– The strata plan, amendments and/or changes.
– Current Bylaws and Financial Statements of the Strata corporation.
– The minutes from the strata council meetings.

The subject removal period is commonly between five to ten business days after the contract is accepted. It can be shorter or longer and must be agreed to by both parties.

Once the subject removal period is near expiry, the buyer can do one of a few things: remove the  subjects, making the offer unconditional, extend the subject removal period or not remove the subjects and walk away from the offer due to the inability to fulfill one of the subjects. In a nutshell. If a buyer does not remove subjects the offer is finished.

4. Legal Conveyancing: Once subjects have been removed the CPS (Contract of Purchase and Sale) is unconditional and goes to the Lawyer or Notary for legal conveyancing. At this point the buyer and seller have committed to completing on the offer to purchase.

5. Final Steps: Between the time of “completion” (meaning the title is being transferred, mortgage is put in place, etc) and “possession” (you have the keys to get into your new home), your Realtor will do a walk through of the property to ensure that all the included items are in the home, it is left in the condition expected and that there are not any other issues with the property before possession. This short time (usually 24 hours) will give your Realtor time to ensure that any issues are dealt with before you move in. Ensure that you get a moving checklist from your Realtor which will help to ensure you get all the necessary things done before you get possession, simple things like arranging Hydro, changing your address, etc. These things can be easily overlooked during this busy and exciting time.

6. Welcome Home: Possession day, you get the keys. Your Realtor will meet you at the property, give you all the important items and information, and walk through the home. At this time you can address any questions about the property.

7. Follow Up: Your Realtor should follow up with you within a week after possession. He or she will want to ensure your move went well and that there are not any issues or further questions.

Contact us anytime to start your home search or to ask any questions! 

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