Money Questions

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    Natalie from Ottawa Asked:

    What is the best strategy for negotiating the price of a home in a seller’s market?

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    Negotiating in a seller’s market take’s expertise, let’s get our realtor, Sohail Dhanani‘s thoughts:

    Ask questions and stand out.

    Yup, that’s right, ask a lot of questions and do something different.

    Every agent and buyer is doing what the others are:

    1. Put in an offer at the highest price a buyer can afford… and then some in most cases.
    2. Waive the financing condition. (This scares me a little… and that’s a discussion for another time).
    3. Waive the home inspection condition. (Again a discussion for another time)

    Basically, go in high and go in firm.

    And by the way, in a hot multiple offers seller’s market, you have to do this… unfortunately.

    To tip the odds in favour of my buyer, there are several strategies that I implement to differentiate my buyer’s offer from the rest.

    First and foremost, one of the most effective strategies that I implement is that I befriend the listing agent and I try and get myself in front of the sellers.

    There are way too many agents that I’ve seen that think that the opposing agent is… well, their opposition. I don’t understand why an agent would ever think that of another agent!

    If I’m the buying agent on behalf of my client for a particular home and I’m dealing with a listing agent for that same home, then don’t we both have the same objective in selling a home?

    So if we have the same objective, why not befriend the other agent and the seller and gain as much information from them as possible?

    What does the seller actually need not just want?

    Of course, sellers ‘want’ to sell their home for top dollar, but what does the seller actually ‘need’?

    Maybe they have kids and they don’t want to uproot and move them during the school year and moving in only July and August is what they really ‘need’ as that’s what’s most important to them?

    Ask questions and find out the seller’s real needs.

    Additional strategies I implement to help my buyers win in a seller’s market are:

    1. Stand out and always present in person, no matter what instead of faxing or emailing in the offer.
    2. Stand out by creating a cover letter with a photo of the buyers and tell their story. Sellers want to know whom their home is going to. Facts tell, stories sell.
    3. Present a ‘bully’ offer early before the offer presentation date, if there is one. This way you’re not competing with other offers and present in person with a cover letter and photo.

    Remember, listing agents and sellers are people too! Treat them as such.

    Work together to determine what they really need, appeal to their emotions and create WIN-WIN.

    People buy and sell on emotion and follow it up with logic and rational.

    Happy bidding, errr… I mean buying!

    Limor Markman
    Answered on July 4, 2016 Ask Another Question
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    Melissa from North York Asked:

    How does a buyer representation agreement work? Do I have to sign one?

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    Our Realtor, Sohail Dhanani, is best equipped to explain the buyer representation agreement:

    To answer your second question, first… technically no, you do not have to sign a buyer representation agreement.

    Most, if not all brokerages and their respective sales persons will request a buyer client to sign a buyer representation agreement during the offer process if not before showing any homes. It helps protect the brokerage, the agent and the client.

    To answer your first question… The buyer representation agreement is a document that outlines the details of the working relationship between a client and the brokerage representing them.

    The document is actually between the brokerage and a client, and not the sales person.

    The buyer becomes a client of the brokerage itself.

    Now, I know that some people shy away from signing agreements and that’s okay.

    However, having the buyer representation agreement in place, or any agreement for that matter, lays out exactly what the terms of the relationship will be.

    The buyer representation agreement details:

    1. The parties involved in the representation agreement.
    2. The term of length, or the duration, of the agreement.
    3. The property type that the agreement is intended for purchasing or leasing.
    4. The geographic location of the property.
    5. The commissions that will be paid for the transaction.
    6. Multiple representation and what it entails.
    7. The agreements of conduct when a property is found.

    This, in my opinion, is a good thing!

    Having an agreement in place, leaves little to no room for miscommunication, misunderstanding or discrepancy between what the terms and responsibilities are between each party.

    The buyer representation agreement provides clarity.

    And clarity is power.

    Like it or hate it, the written word is very powerful.

    Speaking of the written word…

    I’m not a lawyer so please don’t consider this a legal explanation!

    If you’d like the exact legal explanation of what a buyer representation agreement is, please consult a lawyer.

    That’s my Disclaimer. 🙂

    Answered on May 16, 2016 Ask Another Question
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    Liz from Ottawa Asked:

    What is a mortgage pre-approval and do I need one?

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    The best person to fill us in on mortgage pre-approval is our Mortgage Specialist, Shawna Thompson:

    It’s boring but true a mortgage pre-approval is the first step to buying a house. I know I know… it’s not as sexy and fun as shopping for the house itself. But, a mortgage pre-approval is the bases for your entire home shopping adventure.  

    The average mortgage is longer than most marriages… so it’s important to start out on the right foot.

    Your agent/broker can compare your situation & needs. They will use this info to choose a mortgages for you and keep benefits and options in mind. The key is to fit your current needs with your long term goals.

    Aside from rates, other things need to be considered during a mortgage pre-approval. This is especially true for the first time home buyer.

    Choose an agent/broker who knows how to ensure you are in line with your goals.

    Goals like:

    ·         Paying off your mortgage faster

    ·         Securing a line of credit that is re-advanceable as you pay down your mortgage

    ·         And even using the equity in your home to pay down your debt

    Maybe you are buying your “starter home” and plan to sell for something bigger in a few years. Your agent/broker needs to start planing with the end goal in mind. This happens during your pre-approval.

    Final note: a mortgage pre-approval is not a guarantee. The lender always double checks your credit score and debt load before they issue a mortgage.

    A pre-approval isn’t permission to relax. Don’t make a tones of big purchases or miss payments. 

    And, always disclose everything to your mortgage agent/broker so there are no nasty surprises. Your job is to do everything in your power to keep your debt levels in line and not damage your credit rating.

    There’s nothing worse than missing out on your dream house. It’s not worth losing your deposit for a last minute expensive mistake.

    Shopping can wait!   

    Answered on April 22, 2016 Ask Another Question
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    Irene from Wassaga Asked:

    I live with my common-law spouse, but I’m not in his Will, if he dies am I entitled to our home?

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    Common-law spouse logistics is our lawyer, Rebecca Fisch‘s expertise, let get her thoughts:

    So this is a big one – and there isn’t a clear-cut answer. The first question I have is whether you are on title to the home, and if so, how?

    If you and your common-law spouse are both on title to the home, we would need to look at how title was registered. There are different ways that couples (or anyone that owns property jointly) can hold title. Typically, property is held either as joint tenants or as tenants in common.

    If you and your common-law spouse own the house together as joint tenants, then title automatically passes between the two of you on the death of the first. So if you were to die first, your common-law spouse would own 100% of the home. If your common-law spouse were to die first, you would own 100% of the home.

    If you own the home as tenants in common, things are a little bit trickier. Owning a home as tenants in common means that you each own a percentage of the home. So depending on how title was registered, you may own 10% or 50% or 99% of the home (or anything in between). In that case, if your common-law spouse were to die before you, your share of the home would be yours. That’s the good news. The bad news is that his/her share of the home would transfer to whomever he/she has chosen in their Will.

    This is obviously not an ideal situation, as you may end up sharing the ownership of your home with someone you have no intention of living with! Typically, if that happens the property would be sold and you would each walk away with the percentage of the sale proceeds that you owned.

    If you move in with a common-law spouse and are not on title to the home, things are far more complex. In that case, you should speak directly with a lawyer about how best to protect yourself in case something should happen to your common-law spouse.

    Moving in with someone brings a lot of joy as well as many challenges. Every situation is unique, and in each case I would advise speaking with a real estate lawyer and an estates lawyer about the implications of your decisions.

    Answered on April 15, 2016 Ask Another Question
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    mortgage insurance
    mortgage insurance
    Daisy from Brampton Asked:

    I just bought my first home. My mortgage provider offered me mortgage insurance…should I take it?

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    Mortgage insurance can be tricky, let’s hear what our Living Benefits Insurance Specialist, Adam Gordon has to say:

    For Most Canadians, a mortgage on their home is their single biggest investment; maybe their biggest liability.

    Most mortgage providers, such as banks and trust companies, will offer their borrowers a product called either mortgage insurance or mortgage life insurance.

    The product is sold on the concept that if an untimely death were to happen to the borrower, the mortgage insurance provider would pay off the remaining mortgage balance. This would allow the surviving family to have a home without any money owing on it.

    While this concept sounds great in theory, the challenge is that most people do not understand how mortgage insurance works, or how it compares to individually owned life insurance. 

    Here are a few key points for you to consider:

    Mortgage insurance is a product that is owned by your lender. Each time you either renew or change your mortgage provider, you have to re-apply for the mortgage insurance. If your health has changed at all, you may have a more difficult time getting approved for the new coverage.

    Individually owned Life insurance is a product that you own, not your lender. Life insurance can offer a contract that remains under your control for your whole life. Once your policy is approved, you do not have to re-apply for new coverage if you change your mortgage provider.

    Mortgage insurance charges the borrower the same amount of money every month, however the amount of coverage that it provides decreases every month. This is because each mortgage payment you make reduces the amount of “principal” that you owe your lender.

    Life insurance on the other hand does not reduce the amount of coverage you have, even as you pay down your mortgage. This can be important as we tend to have more financial responsibilities as we get older, not less.

    Lastly, Mortgage insurance providers often investigate a person’s health records after they pass away. This allows them to potentially find minor health information that can allow them to decline paying out a death claim.

    Life insurance providers do their health investigations up-front, before they even offer a policy. This is important as you do not want to pay for a product that will not be there for you at a time you and your family need it most.

    There are many more reasons to consider Life insurance versus Mortgage insurance, so make sure you choose the one that is truly best for you. Contact a licensed advisor to learn about the benefits and flexibility of Life insurance.

    Answered on April 11, 2016 Ask Another Question
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    Sarah from Calgary Asked:

    How can I decrease my home insurance premium?

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    We all want to have more disposable income and your home insurance premium is one cost that can be looked at. Let’s see what our Home and Auto Insurance expert, Ilana Corstine has to say:

    This is a common question and there are definitely some helpful things you can do to decrease your home insurance premium.

    1. Shop around 
    • When it comes time to renew your policy, it is a good idea to compare your coverage to what other insurance companies have to offer, as you may be able to get a better rate.
    • Pay attention to the details. You should look at the coverage amounts listed, the deductibles, and the exclusions as they may all differ from one policy to the next.

          2. Pay your premium upfront

    • For those of you who aren’t sure exactly what a premium is, it’s the price your insurance company charges for your home insurance policy, typically over the course of 12 months.
    • Paying your premium in full will save you the monthly charges – Approximately 3% extra depending on the insurance company.

    3. Consider increasing your deductible

    First, let me explain what a deductible is. A deductible is the amount you, as the policyholder, must pay out of pocket for an insured claim.

    Let me give you an example: Let’s say wind caused damage to part of your roof and it’s going to cost you $3000 to fix it. If you had a deductible of $1000, that means that you would be responsible for paying the first $1000 to fix the damage and your insurance company would pay the $2000 left.

     If you were to increase your deductible from $1000 to $2000 for example, it would lower your yearly premium because you’re agreeing to take on some of the risk yourself.

     4. Look for discounts

     Take advantage of certain discounts you may be eligible for. Here are some examples:

    • Claims free discount (this is based on your history of making claims in the past)
    • Non-smoker
    • New home discount (some insurance companies will offer a discount if you live in a newer home)
    • Multi-policy discount (if you bundle your auto insurance policy with your home insurance policy, you may be able to get a discount. You can check with your current home insurance provider to see if they give a multi-policy discount).

     5. Improve security

    • You may be able to decrease your home insurance premium if you install burglar alarms and smoke detectors that are connected to central monitoring stations.

     6. Reassess your coverage every year

    • Make sure your home insurance coverage accurately reflects the value of your possessions every single year.

    Ultimately, an insurance broker can always help make the process of easier by doing most of the comparison work on home insurance premium for you. Hopefully you’ve found these tips useful in helping you decrease your home insurance premium!

    Answered on March 28, 2016 Ask Another Question
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    Best time to buy a home
    Best time to buy a home
    Jeff from Mississauga Asked:

    Is there a best time of year to buy a home?

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    If there is a “best time of year to buy a home” our Realtor, Sohail Dhanani would know it, let’s get his thoughts:

    The short answer? The sooner the better. The long answer? Not exactly.

    The best time of year to buy a home depends on many factors. Being a realtor for over seven years, you learn buyer behaviour and market trends.

    If we look at Average Home Prices in Toronto, as with most major North American cities, you’ll notice a pattern of periodic dips in the curve in any given year. These dips occur in the months of December and August of each year. Hmm, when do most people go on vacation? December and August of each year. All things being equal, it appears that December and August are considered, the best time of year to buy a home.

    Best time of year to buy a home

    Sure, Average Home Prices in Toronto, as with most North American cities might be lower in December and August, but do we buy homes just based on price?

    No way, Jose!

    We buy homes based on many different factors… Location of home, size of home, proximity to schools, proximity to work, access to transit, grocery stores nearby, etc. I could go on forever with all the different criteria I’ve seen my client’s have over the years!

    Price is just one of the many criteria we have when buying a home. Would you buy a home just because it was a great price, but not in the best neighbourhood? What about if it was a great home, great price and not at the school that you wanted your child to attend? From my experience, many would not.

    Here’s another question… If many buyers go on vacation, could many sellers go on vacation during December and August as well? Yup, yup!

    There’s usually a dip in inventory available at that time of year as well. So many homebuyers may not find the home that they’re looking for, even though they may get the best price. The last thing that I’d like to offer for consideration is history has shown us that Average Home Prices appreciate over time.

    I have a saying that I like to share with my clients…

    “Real Estate is less about ‘timing’ the market, it’s more about ‘time-in’ the market.”

    Does that make sense?

    There is no one best time to buy a home for everyone… the sooner that we get into the market and buy a home, and hold on to the home, the sooner we get the great benefits of home ownership, including some of that sweet, sweet home price appreciation!

    Answered on March 4, 2016 Ask Another Question
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    Stephanie from Toronto Asked:

    When in the home buying process should I speak with a mortgage broker / agent?

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    The home buying process is confusing, this question is best answered by our Mortgage Specialist, Shawna Thompson:

    People often confuse when they should speak to a mortgage broker or agent in the home buying process.

    A lot of people start out casually browsing open houses to see what’s available. They figure when they find something they like they’ll make an offer and hit the bank – bing bang boom, no problem right?

    Ahh… problem. So you’re browsing and land on the perfect house and make your offer but your realtor knows you haven’t got your financing lined up.

    In a hot Canadian real estate market, not coming to the table with financing in place and mixing up the steps in the home buying process can lose you your dream house even if you are willing to offer more than another bidder.

    Sellers are savvy and so are realtors. They know that if you haven’t been to your mortgage agent yet, you don’t have a solid budget to work within or confirmation that you’ll qualify for a mortgage. This makes accepting your offer risky.

    Unfortunately there’s no class in school about how to buy a house that explains the home buying process and the truth is mortgages are boring and kinda scary.

    I know, mortgage shopping and learning the truth about your credit is as fun as bathing suite shopping in December. But here is the deal, in the same way that you wouldn’t want to hit the beach without a confidence check in the mirror, don’t house shop before talking to your mortgage professional.

    Shopping and browsing homes whether it’s your first or your last should be fun but the best part is getting the house!

    To make sure you’re shopping with confidence its key to make your first stop a chat with your mortgage broker/agent.

    They can help you build a budget; they’ll give you a clear picture of what the closing costs and down payment savings should be and they’ll arrange a pre-approval so you’ll be ready to shift from browsing to buying when you find the perfect fit.

    Don’t miss out on the perfect house; your first stop is a mortgage broker.

    Answered on March 4, 2016 Ask Another Question
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    Lindsay from Barrie Asked:

    What are the benefits of working with a mortgage broker / agent?

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    Who better to tell us the about working with a mortgage broker than our Mortgage Specialist, Shawna Thompson:

    I mean… banks do mortgages… and isn’t a mortgage just a mortgage?

    Sorry… not so fast! There is more to consider before you sign.

    Beyond “best rates,” remember we are talking about a 25 year commitment!

    Working with one banks’ limited selection is like only having 2 style options for jeans instead of shopping the whole mall. Fortunately by working with a mortgage broker/agent you don’t have to pick a mortgage like it’s the last man on earth, you have options!!! Sexy sexy mortgage options!

    A mortgage broker has access to more than 50 lenders. Their job is to be your personal mortgage shopper, outline the pros and cons of different products and keep an eye out for “sales” aka rate drops before you sign. Think of it like choosing to go au couture instead of shopping off the rack.

    The bank is limited to the products they offer and sometimes have broad sweeping conditions. For example, did you know that some conditions limit your ability to shop other lenders at the end of your term? This can put a damper on getting the best options for yourself in the future.

    Finally let’s consider motivation.

    A bank is motivated by making money on the money they lend. Do you think they’ll call you when rates drop or let you know that another bank has a better option? Not likely!

    A mortgage broker/agent is motivated by you. They aim to keep you happy with the best set of options and service and look to build a long term relationship with you. They are paid by the lender you choose so their service is Free! But at the end of the day they have no business without you.

    It’s like having a personal shopper who’s willing to tell you how your butt really looks in those jeans and shop the entire mall to ensure you’re look amazing and stay on budget!

    Answered on February 29, 2016 Ask Another Question
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    Jen from Toronto Asked:

    I’m renting a new apartment and my landlord asked me to get contents insurance. What does that cover?

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    Contents Insurance can be tricky to understand, let’s hear what our Home and Auto Insurance Specialist, Ilana Coristine has to say:

    Contents Insurance is also known as Renters or Tenants Insurance and it covers you for loss or damage to your personal property while inside your home and in certain cases, for property you have temporarily removed from your home. In this context, your personal property is anything that isn’t physically attached to the structure of the home you’re renting. If you own Specialty Property such as fine art or jewelry, those would need additional coverage in order to make sure you’re insured adequately.

    Contents Insurance is highly recommended because it not only protects your possessions, but it also covers you for Personal Liability and Additional Living Expenses. Personal Liability coverage is there to protect you should someone accidentally injure themselves while in your home. Additional Living Expenses coverage protects you in case you were to be temporarily displaced from your home, for example due to fire, flood, etc.

    With lots of insurance companies trying to get your attention, the task of finding a policy that’s right for you may seem overwhelming. Not knowing which insurance company to choose, your best bet is to always contact an insurance broker. There are no additional fees for using one and they work for you, not the insurance companies so you know you’re getting the best advice for you.

    In addition, given the low cost of Contents Insurance, it is always recommended where possible, to pay your premium upfront in full. That way you avoid the service fees that most insurance companies add on for choosing to pay monthly.

    All in all, Contents Insurance is a necessary investment if you are renting a home or condo, even just temporarily. You never know what can happen and so it’s always best to make sure you’re protected.

    Answered on February 27, 2016 Ask Another Question