WAYNE COCHRANE’S REAL ESTATE
INSIDER March 2014
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Bang On!: Crunch the Numbers—Home Ownership is Affordable Curb Appeal Is a Must! Your Home: Many Costs in Addition to Purchase Price A Bidding War Means You Need a Strategy How To Ditch A Draft Wood Look Tile: Is This a Trend You Can Trust
Wayne Cochrane...www.mooving.ca Your Neighbourhood Real Estate Professional
MARCH ISSUE
Bang On!: Crunch the Numbers—Home Ownership is Affordable Written By Doug Wastell Home ownership can represent different things to different people: personal and financial success, a place where your personal style will tell the world who you are, a place where you make the rules, a coming of age, a time of freedom to live the way you want, a feeling of accomplishment or of having arrived at an important milestone. It’s also the biggest investment that you will likely ever make and done wisely it will underwrite your financial future. Unfortunately many people don’t realize how achievable home ownership has become and feel that renting is their only option. In reality, you could be paying as much in rent as it costs to own your own home. Though rent typically increases year after year, the principal and interest of most mortgage payments remain unchanged for the entire interest-rate term, providing stable monthly payments. Given the current incredibly low interest rates, the case is even stronger to buy rather than rent. So before you continue to write out those monthly rent cheques, and contribute to the financial stability of your landlord, take a few minutes to review the numbers.
For a starter new home priced at $219,900, the purchaser requires a down payment of 5%, or $11,000. On a five-year interest rate of 3.99% with a 25-year amortization period, the monthly payment for principle and interest would be approximately $1,097.73. It’s worth considering making payments more frequently. The savings can be considerable. Using the same example above, if you change the payment frequency to weekly payments of $253.33 you will save $1,509.04 over the length of the mortgage. If you can manage a slightly higher weekly payment (called an accelerated payment) of $274.44, the savings over the length of the mortgage jump significantly to $17,843.72 and shorten the length of your payments to 21.8 years rather than 25 years.
location in the city. Utilities would be extra, just as they would be in the new home. But the new home would win the race, when you consider that it would have new insulation, new windows and the newest technology for heating and cooling. Under the federal government’s Home Buyers’ Plan, first-time home buyers are eligible to use up to $25,000 in RRSP savings per person ($50,000 for couples) for a down payment on a home. The withdrawal is not taxable as long as you repay it within 15 years. To qualify, the RRSP funds you use must have been in your RRSP for at least 90 days.
Even if you already have enough money for your down payment, it may make sense to access your RRSP savings. Ask your financial planner if If the purchaser has a down payment this strategy makes sense for you. of 10% or $21,990, the story gets even better. The monthly payment A new home also gives you peace of with the same rate and amortization mind through comprehensive period $1,039.98. warranties provided by the builder and the Tarion Warranty Corp. This To all of these scenarios you have to mandatory program provides one-year against defects in add property taxes of approximately coverage $250 a month and a one-time fee for workmanship and materials, two years’ coverage on mechanical mortgage default insurance. systems and water penetration as well as seven years on major structural A comparable three-bedroom defects. townhome would rent from $1,000 to $1,300 per month, depending on the That vision of having your new home doesn’t have to be a dream. Doug Wastell is president of the London Home Builders’ Association
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WAYNE COCHRANE’S REAL ESTATE INSIDER Curb Appeal is a Must! Written By Blanche Evans If your home has curb appeal, you'll be able to sell it quickly and for top dollar. That's why REALTORSŽ rate exterior home remodeling projects as the most valuable homeowners can make.
If the buyer doesn't like what he sees, you won't get another chance to make any kind of impression.
Many homeowners are confused about which projects will provide the most return on investment as they prepare their homes for the market.
Eight of the top 10 most cost-effective projects are exterior projects.
The 2014 Remodeling Cost vs. Value Report, co-sponsored by the National Association of Realtors and Remodeling magazine, outlines the costs and resale returns on the most popular home improvement projects. Realtors know which home features are important to buyers in their area. Projects such as a new entry door, siding and window replacements can recoup homeowners more than 78 percent of costs upon resale. So why remodel anything if it's not going to give you back 100%? It's because the first impression a homebuyer gets is priceless. You want the buyer to choose your home, and quit looking for something better.
Give me a call... Wayne Cochrane EXIT Realty Metro wayne@mooving.ca (902) 830-4761 (902)
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So which home improvement projects will net the most return?
Replacing your front door with a steel entry will cost $1,100 on average, but you'll get nearly 97% of what you spent back in your pocket. The second most popular improvement is a wood deck addition, which will return over 87 percent of costs, similar to the return on fibercement siding. Vinyl siding returns a little over 78 percent of costs. A midrange garage door replacement returns nearly 84 percent while an upscale garage door replacement offers 82.9 percent of costs recouped. Wood window replacements recoup over 79% of costs and vinyl windows return nearly as much. Rounding the top 10 projects are an attic bedroom and minor kitchen remodel. These are important too, but
you've got to pique buyers' interest first. The good news is that the return for all projects is higher in the last two years. To find out what the best return on home improvements is in your area, talk with your REALTOR. Written by Blanche Evans
MARCH ISSUE Your Home: Many Costs in Addition to Purchase Price Written By Steve Jacques
When you decide to buy a home, you’ll find there are many upfront costs in addition to the purchase price. Plan early for these extra costs to help make sure everything goes smoothly. Deposit The deposit is paid when you make an offer to purchase to show that you are a serious buyer. The deposit will form part of your down payment with the remainder owing at time of closing. If for some reason you back out of the deal without having covered yourself with purchase conditions, such as financing or home inspection, your deposit may not be refundable and you may be sued for damages. Down payment A down payment is the part of the home price that does not come from the mortgage loan. The down payment comes from your money. You can buy your home with a minimum down payment of 5% if you have mortgage loan insurance from CMHC, while you will need a down payment of at least 20% for a conventional mortgage. Mortgage loan insurance If you make less than a 20% down payment, you have what is called a high-ratio mortgage. With a high-ratio mortgage your lender will require mortgage loan insurance that allows you to buy a home with a minimum down payment of 5%. You pay a premium for mortgage loan insurance that your lender will add to your monthly payments, or ask you to pay it in full upon closing. Professional fees You may be responsible for additional
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fees depending on your situation. For example, your mortgage lender may ask you to pay for a recognized appraisal — an estimate of the value of the home — in order to complete a mortgage loan. If the seller does not have a recent survey, or does not agree to get one, you may have to pay for one yourself. It’s also a good idea to include a home inspection as a condition of your offer to purchase. Closing costs There will be a number of costs associated with the completion of your real estate transaction, commonly known as closing day. For example, property insurance covering the cost of replacing your home and its contents must be in place on closing day. Your lender or lawyer may also suggest you get title insurance to cover loss caused by any defects of title to the property. You will also have to pay any legal fees and related costs as well as land transfer tax, if required, to your lawyer on closing day. Other costs You may have to cover several other initial costs including moving expenses, renovations or repairs, appliances and service connection fees. CMHC’s Homebuying Step by Step: A Consumer Guide and Workbook will lead you through the home-buying process. Download your free copy of the guide at www.cmhc.ca under the buying a home section. For more practical tips and helpful advice on home ownership, sign up for our free e-newsletter at www.cmhc.ca/enewsletters, download CMHC’s Ready, Set, Home mobile app at cmhc.ca/mobile and follow us on Twitter @CMHC_ca.
Steve Jacques is the Ontario manager — community development, research and professional services at Canada Mortgage and Housing Corp.
WAYNE COCHRANE’S REAL ESTATE INSIDER A Bidding War Means You Need a Strategy Written by Joseph Richer Though stressful, bidding wars are a seller’s dream. After all, when multiple buyers try to outbid each other for a property, it means more money. It’s a dream that has become reality for some homeowners as competition for available homes, particularly in the GTA and parts of the province where supply is limited, has resulted in some properties selling for $100,000 or more over the asking price. If you find yourself in a competing offer situation, referred to as a bidding war, and you’re willing to participate, understanding how they work. Having a game plan will help you avoid a nightmare scenario. First, this isn’t an auction and you’re not going to know where the leading bid stands so that you can respond accordingly. The only information that must be shared amongst buyers in a competing offer scenario is the number of offers that have been submitted to the seller, whether any of the buyers are represented by the same brokerage that is listing the property, and whether the listing brokerage has a commission agreement with the seller that may give that brokerage’s buyers an advantage. Only the seller and their real estate agent get to see the details of the offers. If you choose to participate, you need to make your top offer and hope for the best.
It’s important to point out that sellers are under no legal obligation to choose the highest priced offer. Other factors may play a role, such as the size of the deposit, closing date and other conditions attached to an offer. For example, they may accept a lower value offer with an earlier closing date because they already bought their new home and can’t afford to carry both mortgages at once.
newsletter has a useful overview of these costs; you can find it on our website (reco.on.ca) under Publications and Resources.
Finally, work with your real estate agent to get a sense of prices in the neighbourhood. How much have similar homes recently sold for? What are similar properties listed for now? This research may take some of the surprise out of the process by giving you an idea of what your In the heat of a bidding war, you target home may sell for. might be tempted to waive or strike out some conditions (for example, Joseph Richer is registrar of the making an offer conditional on Real Estate Council of Ontario financing, home inspection, (RECO). insurance, etc.) to make your offer more appealing. Be very careful about doing this because conditions protect you as the buyer. If you choose to waive or withdraw them, you’re taking a significant gamble. An accepted unconditional offer is a firm and binding legal contract. That means you’ll be on the hook if you end up having trouble securing a mortgage, or you find the home needs costly repairs once you take possession.
Having a game plan to guide you through a competing offer situation starts with crunching the numbers at the outset of your search to determine how much you can afford. Set a price limit and stick to it. That way, if you find yourself in a bidding war, you’ll know what you can The seller can accept your offer, comfortably afford. Don’t let emotion reject it or make a counter-offer. or competitive spirit drive your offer Some will send back a select price above that mark. number of offers to be “improved,” setting your budget, looking for a higher offer — but this When is not always the case. That means remember to factor in the extra costs the first offer you put in may be the that come with buying a home (legal only one you get to make. fees, land transfer tax, utility hookups, etc.). RECO’s latest consumer
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Brain Teasers Word Scramble: I have an eye but cannot see. I’m faster than any man alive and have no limbs. What am I?
smiontpusa
What is placed on the table, cut and passed but never eaten?
Go to www.mooving.ca - ‘Wayne’s Team’ and click on ‘Trivia Answers’ Page 5
MARCH ISSUE How To Ditch a Draft By Chloe Tse Canada’s record-breaking winter is bringing cold that is testing insulation all across the country. But even the greenest buildings can have their energy efficiency questioned when drafts sneak their way into your indoor space. Avoid paying for unnecessary heating costs by learning how you can ditch the draft that’s sneaking into your working environment whether you’re a retailer or a small office. Even the tiniest crack can let in the cold air while it allows heating costs to add up and indoor warmth to escape into the winter. Here’s a handy How To for ditching that dreadful draft.
door is always complete with fitted weather stripping — so make sure you’re checking this periodically through the year. If the draft is forcing its way through an entryway, it’s time to update the weather stripping (available in metal, vinyl, felt or even open-cell foams). Check the vents Depending on the building and the heating situation, it’s important to check vents to see if they’re active. Sometimes cold air will find its way into a warm room through an open vent and provide a draft. Make sure inactive vents are closed up to avoid letting in any unwanted circulation.
Locate the drafts Find them. Make it a fun quest because reducing energy costs is exciting and the reward is a lower utility bill. While some drafts are obvious because you can just feel them — some can be harder to figure out. Some experts suggest taking a lit candle and holding it by your doors and windows — the flickering flame will let you know where that draft is coming from.
If your building happens to have a fire place, the chimney is often the root of drafts. There are tons of ‘air-tight draftstoppers’ available for this.
Don’t get angry, just get even
Close the curtain on the cold
Now that you’ve found the crack responsible for making you shiver, plug it. Seal in your savings by making a trip to a hardware store to grab some caulk. While the idea of caulking a window frame may seem daunting — it’s actually very easy to do. Though it can be a messy task, the act of caulking is fairly idiot-proof and can be done in just a few hours. Plugging that unwanted gap will keep the cold air out and your heating costs where you’d like them to be.
While drapes are aesthetically pleasing and something folks often associate with decorating — they’re actually super practical. More importantly, they can contribute to insulating your indoor space. They are especially useful for buildings that have single-pane windows.
For more specific instructions on sealing up a window leak, we get into it here. Windows and doors are often the main sources for drafts. An energy-efficient
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For standard vents, commercial home hardware stores offer magnetic vent covers that can stop the cold air from entering your space. If the problem is an evaporative cooling vent, there’s a handy video here to save heat.
Give me a call... Wayne Cochrane 406-SOLD
WAYNE COCHRANE’S REAL ESTATE INSIDER Wood Look Tile: Is This a Trend You Can Trust By Jaymi Naciri
Added BNP Media: "It seems that everywhere you turn, another tile manufacturer has launched a new line that replicates these natural materials -and for good reason. With the technologies that are available today in tile production, the durability and ease of maintenance of ceramic, cost effectiveness and the green factor, it is no wonder why the appeal of these tiles has grown so big." So, we offer up four reasons we believe wood-look tile is here to stay. It actually looks like wood. Whether you are looking for a dark finish, whitewash, large planks, or parquet, you can find an option in tile. "Tile now ranges from a finish that's a dead ringer for dark stained walnut to wood from a well-weathered fishing boat in France," said Houzz. "With reclaimed wood so on trend, buying wood tile is an alternative to searching for the perfect hundred-year-old barn wood, and tiles are available in dimensions that wood is typically not." Added Heritage Tiles: "Tile manufacturers have expanded on the wood look design to create a huge variety of different wood looks from the traditional oak plank to tiles inspired by aged barrel wood. We also saw square tiles with wood look designs in different patterns, reminiscent of parquet flooring and was definitely unique while being very easy to install. Imagine the effort it would take to reproduce the same design in ordinary wooden planks!" It's cost-effective. Budget is always a consideration for interior design or remodeling, and flooring typically eats up a chunk of that budget. When it's wood floors, that chunk is a big one. Wood look tile provides a great looking solution that can keep the budget in check. You "get a luxurious look for half the
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price," said BNP Media. "Now that the industry has expanded, even more efficient, sustainable, believable products are being released. You are lowering the price without lowering the quality and beauty of a space." It's practical. Because you are dealing with tile, you don't have to worry about wear-andtear you might see with real wood in a high-traffic area or moisture problems in a kitchen or bathroom. "The strong trend toward faux wood tile is due to its contemporary, sophisticated look and durability," said JS Online. "Because it's waterresistant, you can use faux wood in parts of the home where moisture and water make real wood impractical, such as bathrooms, kitchens and foyers." Added HGTV: "We all love the look of hardwood flooring, but most contractors say it has no place in a moist bathroom. The next best thing may be faux hardwood porcelain tile. It looks fabulous‌is much easier to care for than real wood. And porcelain's natural resistance to moisture makes it an appropriate material for kitchen and bath applications." Choices are practically limitless It was the digital printing system that first gave wood look tile its push into the marketplace, said BNP Media, and those same technologies continue to push the product forward. These technologies "are transforming lessexpensive tiles like porcelain and ceramic, giving them the looks of marble, granite, agate, malachite, terrazzo, limestone and wood." "With new digital inkjet technology available, the always popular look of wood and stone are being recreated with limitless possibilities."
Our Verdict: Trusty Trends continue to move toward materials that provide a combination of good looks and ease of use, and that's exactly what wood look tiles offer. There is no limit to what you can find and how you can use, and options are growing as we speak. Written by Jaymi Naciri
WAYNE COCHRANE’S REAL ESTATE INSIDER
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Wayne Cochrane Real Estate Professional 902-830-4761 wayne@mooving.ca unless noted otherwise
Note: This is not intended to solicit clients currently under contract. The trademarks MLS®, Multiple Listing Service® and the associated logos are owned by The Canadian Real Estate Association (CREA) and identify the quality of services provided by real estate professionals who are members of CREA.
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