Zoocasa, (https://www.zoocasa.com/) the online real estate brokerage owned by Rogers Communications Inc., has become the latest to bow to renewed pressure to stop publishing highly coveted data on home sales.
The web-based brokerage, which acts as a referral service for roughly 500 agents across the country, announced on Friday that as of March 4 it will stop sending out a popular daily e-mail detailing the price of recently sold homes.
The Toronto Real Estate Board sent a letter to all members this month warning that those who violate strict rules on sharing sales data could lose access to the Multiple Listings Service, the lifeblood of most realtors. The letter also prompted Bosley Real Estate to strip data on sales from a mobile app it offers to prospective home buyers.
The warning by the real estate board is the latest development in a battle that has been raging for years over how much data real estate brokers can make public, particularly online. While Canada's largest local real estate board allows traditional bricks and mortar brokerages to hand out data on recent sale prices to clients, it has been cracking down on the growing number of online-only real estate brokerages, known in the industry as "virtual office websites," that have been offering the same data in bulk to the public.
Under current rules, online brokerages can only provide data to subscribers, not on publicly accessible websites, and only with the permission of the buyer and seller. The real estate board warned that some virtual brokers have recently been pushing the limits.
"TREB has agreements and rules in place," the board said in a statement e-mailed to The Globe and Mail. "But more importantly, there are laws and regulations, including privacy, contractual and [regulatory] rules that apply with which TREB and realtor members must comply."
Industry players, however, say the recent crackdown is a sign that the real estate board is trying to reaffirm its position on the issue ahead of an upcoming hearing in front of the federal Competition Tribunal in May.
Last year, the Supreme Court of Canada refused to hear an appeal of the case between the board and Canada's Competition Bureau, setting the stage for yet another round of tribunal hearings. The case is being closely watched across the country and will have major implications for all of Canada's real estate boards and brokers when it's finally settled.
Darryl Mitchell, Zoocasa's broker of record, said the company is confident that its daily newsletter, which had thousands of subscribers, met the TREB guidelines. But it didn't want to risk straining its relationship with the board. "I suppose there's two distinct ways of doing business and that's just waiting until somebody sends you a legal letter and shuts you down, or trying to co-operate with what they're trying to do," he said. "We felt we should try and work with them instead of against them."
A thorny issue for the industry is the fact that sales data is usually posted to TREB's database right after a deal has been finalized, but before the transaction has actually closed, meaning subscribers to sales lists are able to access information on deals that are technically still in progress. That has left the board in the awkward position of trying to comply with privacy laws, while also facing pressure from the Competition Bureau to make information more publicly available.
"They're caught in this middle ground," Mr. Mitchell said. "We said we really don't want to be on the opposite side of the battle with TREB."
Toronto real estate broker Fraser Beach, whose past legal battles with the real estate board helped land the issue on the radar of the Competition Bureau, said he has no plans to shut down his own daily newsletter which links roughly 30,000 subscribers with the real estate board's sales data.
"I'm taking it day by day," said Mr. Beach, who received the same warning letter as all other brokers, but hasn't been sanctioned. "I really don't think that there's any legal or more problem with this," he said. "But that's not to say that, basically with impunity, the Toronto Real Estate Board could sever my access to the MLS information, which would virtually put you out of business."
Online real estate site Zoocasa has relaunched under new ownership, with plans to add in-house services and wider search functionalities.
Previously owned by Rogers Communications Inc., the site was shut down last month, with Rogers citing lack of fit with the company's overall plans.
A group of real estate and technology investors has swooped in to save the site, which will be headed by Lauren Haw, a Toronto-based broker with Keller Williams Referred Realty and sales director at scholarhood.ca, a site that helps families find homes in desirable school districts.
Zoocasa originally launched in 2008 with startup funding from Rogers, aiming to be a site where real estate agents would pay to advertise their services to buyers. It then expanded into its referral service, which vetted real estate agents and let prospective buyers and sellers search for a real estate agent using detailed criteria, such as by language or type of property.
It modelled itself after U.S. websites such as Trulia or Zillow, which attract customers by offering data on house sales and detailed demographic information about neighbourhoods and prices.
Ms. Haw did not disclose the purchase price or the identities of the other investors. However, she said the buyers had been exploring a purchase for some time.
"There's been a lot of industry chatter and we were excited about the traffic the site was getting. This was not a spontaneous decision," she said in an interview Thursday.
While Ms. Haw said the site will retain the same search technology and tools that users are familiar with, there will be several big changes.
"Our mission is to give home buyers access to the best possible real estate tools and information while providing a premium level of in-house customer service," she said.
This will be achieved in part by hiring a group of in-house agents to work with clients and ridding the referral service Zoocasa was known for altogether.
"[Zoocasa] sold leads to agents who registered on the site and collected referrals, but we think it's better for us to have control over the entire experience," said Ms. Haw. "The only agents serving clients who visit the site now will be those on our team who have the training and experience."
This in turn means Zoocasa will no longer offer rebates for buyers and sellers on the commissions they paid to agents they found on the site.
"We won't be offering rebates to clients to work with Zoocasa agents. It's hard to offer a discount on a premium service and nearly impossible to hire great agents at a discounted rate," insisted Ms. Haw.
The site plans to hire the in-house agents on an as-needed-basis, beginning in the Greater Toronto Area. The agents will be "experts within their regions and experienced at serving both buyers and sellers," and earn a negotiated commission on the sales they make, as is the practice in the industry.
Along with maintaining services such as its home appraisal tool Zoopraisal and the exisiting mobile app, the site will also look to add new functionalities such as tighter search parameters, more frequent data updates and a school neighbourhood search ability imported from scholarhood.ca.
"Scholarhood has been very successful and we will be keeping it up while allowing Zoocasa to provide the same information," said Ms. Haw. For now, she sees the two sites as operating in parallel with no plans to fold one into the other.
Keller Williams Realty will be providing the administrative and back-end support for the site. While newly hired agents will come from any number of brokerages, they will be technically considered Keller Williams agents once on the Zoocasa team, Ms. Haw said.
prepare your condo for sale this spring
Preparing your condo for sale should be done іn a way which is structured and planned to maximize your return for the least cost. Here are my top 10 tips to do so, in no specific order, as some might be more or less important to your situation. For a few thousand dollars in spending you may see returns in the 5 figure range!
A bigger condo with a great layout is always more desirable, so creating the illusion of more space can be one of the most important things you do when listing your condo for sale. Conversely, having a space which is full of “stuff” can have the opposite effect, leaving prospective buyers moving onto better options that seem less cramped for space. A well laid out and decluttered space can make a unit feel much larger than its true square footage, but how do you go about doing this?
Pack away 30-40% of your things like boxes, knick knacks, remote controls, liquor bottles and excessive décor items / pictures. The same goes for closets and storage areas. Don’t just pack all your clutter into your closets as prospective buyers will look inside them and it doesn’t give a great impression. Organize your items into 3 separate piles: 1) Donations, 2) Storage, or 3) Landfill. The idea is to purge as much as possible (I think it’s best to aim to donate most of the items you aren’t storing as we don’t create needless garbage). Load items to be stored into your locker or rent a storage space to hold them while you’re property is listed.
A fresh coat of paint is one of the best ways to freshen up your property and gives you the biggest bang for your buck. Bold colours are usually a turn-off to prospective buyers, so to appeal to the most people go for neutrals. Lose that electric blue bedroom and neon green bathroom.
Pro Tip: Light colours will help smaller rooms look bigger. Try Benjamin Moore Revere Pewter or Balboa Mist to add a welcoming “Greige” colour.
Don’t neglect Baseboards, Doors and Ceilings – they may need a fresh coat of paint too, but go for off white for these. Lastly prior to painting, make sure to fill in holes or deep ruts with a patch or putty, then sand down till smooth before painting or priming. If you don’t have faith that you can paint the unit yourself, trust the job to a professional. The cost you incur will likely be returned to you 2-3 times at least in sale value.
New buyers want to be able to imagine themselves living in your space, so lose your 8th Place Beer League trophy and your degrees from the University of Phoenix. This also goes for personal/family pictures, religious objects, and Polly the puppy’s chew toys. Potential buyers are trying to picture themselves living in your space, so make it as easy as possible for this to occur. Crazy as it sounds, but someone may in fact dislike your property because of what they think of your tastes, beliefs, or lifestyle. Take your time and look through your condo and try to eliminate anything that is overly personal or individual to you.
4) FIRST IMPRESSIONS
Just like the curb appeal of a detached home, a great first impression in a condo is crucial to capture and hold a buyer’s interest. From a large character mirror, to a beautiful piece of art, to a clear uncluttered sightline of the view, you want to focus on the best attributes of the property to get that WOW factor. It’s true that a prospective buyer will usually decide within the first 15-30 seconds or less if they have an emotional response to a space and would in fact consider buying the home, so the importance of the first impression cannot be overstated. Wow them when they walk in and continue that impression throughout the property.
In all of my listings that are vacant, I recommend to the seller that they stage the unit. Firstly, staging can create a warmth and welcoming atmosphere which simply can’t be replicated in the empty shell of a vacant unit. Some of the main benefits of staging are that it allows a buyer to see where they can potentially place their furniture, how to use a space and how much space there is once furniture is in place. Stagers also use the most modern and trendy furniture and décor items which elevate the value of your home by creating a rich luxurious atmosphere and it has been proven to net you a higher sale price and sell faster.
Work on that Honey-do list you’ve been procrastinating on for the last few years including the leaky faucet, the loose hardware on the cupboards, and the picture holes in the wall. Consider replacing that worn out carpet with a high quality laminate, hardwood or new vinyl flooring. Want a cost effective upgrade in your kitchen? Switch out those old school laminate countertops for a sweet looking quartz alternative. If you aren’t handy yourself, bring in a handyman or contractor to take care of it.
Go ahead and splurge on a professional cleaner and request the “deep clean”. These specialists will do everything you hadn’t even thought about or wouldn’t be willing to do. They’ll clean all of the interiors of your appliances, getting into all those nooks and crannies, clean out the grout and other areas of your bathroom, and finally all the neglected spaces in your bedrooms and windows. It’s really worth it if you dislike cleaning like I do!
Lighting is very important, and you would be surprised how easy it is to forget about all the bulbs that have burned out over the years. You want your home to be as bright as possible. Lighting makes an incredible difference to how a home looks to potential buyers. If you have dated light fixtures (it’s OK, a lot of us do), take a quick trip to your favourite lighting or Big Box store and pick up some modern ones. If you really want to go to the next level and your ceilings can allow it, pot lights are something that every buyer covets. Not to mention the fact that they light up a room like Clark Griswold’s rooftop at Christmas.
9) PACKING BOXES
Referring back to #1 on this list requires reducing clutter, and while Costco and the LCBO might be cheap options for boxes, it sure isn’t convenient and you may end up with some oddly shaped ones. An investment under $100 will get you proper packing supplies and reduce your stress. Even better, consider Frogbox – reuseable boxes that won’t fall apart (green bonus: they’re environmentally friendly). If you’re going to be moving a lot of items out of your condo, consider renting a storage locker or look into some other convenient options.
10) PAPERWORK & KEYS
Go ahead and cut an extra set of keys for your Real Estate agent. They will need it to leave in a lockbox or at the concierge for private showings. Buyers and agents will have many questions, so start digging out your paperwork now. Items to have ready: Utility bills, tax bills, renovation details and receipts, warranties, mortgage details, and rental contracts.
One very important document to prepare in condo sales is to order the Status Certificate. This document is the bill of health for your condo corporation and can make or break a deal during the conditional sale period.
Lastly, it is equally important to hire an experienced listing agent who will also guide you through the home preparation and staging process, so you don’t have to do it alone. Keep in mind a realtor will likely need around two weeks to schedule and prepare the marketing.
New House or Resale house (old house)?
The Pros and Cons
Many who are thinking about buying a property always have the same questions in their minds, would it be better to buy a new home or old home? With so many things to take into consideration when choosing a living space like distance from work and family, community feel and home layout, answering the question new or older can help narrow your choices and give your more focus.
Let us lay down some PROs and CONs to consider when choosing your new property. This will help you have an idea on what to give more importance in comparison to what you had in mind before.
The Pros and Cons of a New Home
· Contemporary and modern design and style
· Some flexibility on design during construction phase
· Cheaper to maintain (new appliances and fixtures means fewer repairs)
· Cheaper to operate (energy-efficient construction)
· Extended warranties, some up to 10 years by the contractors
· A cohesive neighborhood , consistent layout, common areas and resort like amenities (for subdivisions or villages)
· A blank canvas on the wall that you can personalize depending on your taste
· Frequently have a homeowners association (helps protect resale value)
· The same design and layout with others in the area (For subdivisions and some villages)
· Higher price because of upscale amenities and current construction costs for a more ample space or a reasonable price with limited living space
· Limited room for price negotiation
· Generally smaller or no yard or extra land area
· Potential for monthly homeowner dues
· Risk of poor construction and materials
· Frequently less character, or homogenous design as you would have the same with others around
Of course, not all home buyers are the same in looking at things, so ones PRO might be another ones CON. Fortunately, there are ways to make sure the house you’re buying is really the house you want:
Can I trust the developer?
· Check the builder’s track record. What else have they built? Were previous projects completed on time, on budget, and without any problems between the builder and buyers?
How will I feel living in this neighborhood?
· Walk the streets. Know if you are comfortable with your neighborhood. There might be illegal settlers that might be of security threat to your living space, or noisy vehicles like tricycles passing through your home.
I want to customize my own home
· Picture your OWN home, not the model home. You can certainly have the granite counters, surround-sound home theater, and luxurious chandeliers you saw in the model home, but they’re not included. You will pay extra for them.
You might have an option of changing the floor plan of your home that would mean much more cost than opting to just personalize your living space to make it fit your specifics.
I can bargain
· Bring your own agent. If the builder has a real estate agent on site, the agent will be more than happy to help you. After all, on-site agents work for the builders who hire them. Guess whose best interest might be (but not to generalize) more inclined to the builders who pay them and not with you.
The Pros and Cons of an Old (Resale) Houses
High Availability: More choices, more styles to choose from
· Lower price compared to newly built houses: You have either a choice of comfortable space, that would make it a little pricey than an option of less space for a lesser price.
· Price may be more negotiable
· Track record: Many repairs already made (which in most cases secures the durability of the house)
· Established neighborhood
· More maintenance since the home has already aged, things tend to break or wear out
· Less energy-efficient resulting from old structural design and old electric components which can be more costly to operate
· Older design, older appliances and amenities, means that you might have to change all the fixtures in the home to avoid further damage than what it already has.
· Might be a lot of repainting and renovation needed to redo what the past owners might have left behind.
· And, the most obvious, is that it has already been lived in. If you are not comfortable in living in a house that has been previously used, then this might not be an option for you.
As with new construction, there are ways to make buying a resale home less scary:
I want to be sure of the quality of what I’m buying
· Have the home inspected. You do not want to find out the foundation is rotten or the roof needs to be replaced after you have bought it and just after you moved in. You can ask assistance of architect or other professional, it is worth the expense.
I want a better price
· Consider a counter-offer. If the inspection reveals fixable flaws, propose the seller do the repairs or negotiate for a better price of an amount of more than estimated cost (there are always surprises while performing renovation)
I must be resilient
· Expect the unexpected. Pipes leak, foundations crack, and PESTS! You’ll just have to get used to dealing with it.
Facing the reality and brave it
· Be honest with yourself. If major repairs are required, you’ll either have to do them yourself or bring in the professionals. Which either ways means more to spend on your end.
Put it all together and the bottom line on resale homes is this: Don’t buy someone else’s problems unless you can tackle the solutions. Find a house you like, consider its pros and cons -- objectively, as well as emotionally -- and think about the compromises you’re willing to make. The more logically you approach buying the house, the more you’re going to love living in it.
Either be it old or new, you should:
Why settle for someone else's choices when you can select your favorite cabinets, counter tops, appliances, carpets and flooring? Because you saw it done in the model home it doesn't mean that you have to do the same with your own, your new home will reflect your style, not someone else's taste.
Choose a Floor plan and Room Layout that Meets Your Needs
Since it is YOUR home, make it as close to “YOU” as possible. Imagine what you want to do with the space and do it. You don’t need to stick to the old floor plan of the house, if you want to make that extra bedroom as your home office space, then so be it. There will be no limit on what you want to do with your private space.
All New, Under Warranty
A used home likely has tired products that may soon need replacing. Your new home -- and the products that comprise it -- are brand-new and under warranty. What's the cost to replace a roof (for a house), appliances, countertops or fixtures in your home? Those components of your new home feature the latest designs and building materials and should offer you years of comfort and enjoyment before needing replacement.
Energy and Cost Savings
Today's new homes are far more energy efficient than homes built just five years ago. Why settle for single-pane windows (that might be too hot in the summer and too cold for the rainy season) in a used home? Replace it, and take a look at how it will help you save money.
Many new homes are built in lavish master-planned communities with resort-style community centers, pools and clubhouses. But it doesn’t mean that resale homes have not. It might be a little less grand than being in a new one. But hey, you are looking for a home you can live in and maybe build a family in, the most important is that you made it your own, and you are comfortable with it.
State-of-the-art circuit breakers, emergency lights and alarm that warn you if there are strangers in your home. Cabinets, carpets and paints that use fewer volatile organic compounds, so that you and your family can breathe easier, all of these whether you buy resale or a new home.
That New Home Feel
A used home was someone else's dream, not yours. It reflects their choices and family memories. You may learn to love avocado-green appliances (and you may be willing to scrub stained countertops or grease-encrusted ovens and cooktops) but you can always make it feel like brand new. For you, this is still “a new home” so make it be like new. This will be your dream home, and no longer someone else’s.
What is status Certificate?
A status certificate (formerly known as an Estoppel) is a report on the current state of a condominium corporation, prepared by the Board of Directors, which offers a financial snapshot of the well-being of the building and information on those who run it.
“Since you’re buying a unit in a building and not a whole property, it’s a good idea to see how the building is managed, if there are pending lawsuits and what the financial situation is like,”.
When buying a resale condo, it’s extremely important you obtain a copy of, and carefully review, the status certificate with your lawyer before being locked into your purchase.
Typically, a status certificate is part of a package that also includes the condominium declaration (outlining the building’s by-laws, rules and regulations), a copy of the insurance certificate, financial statements and a summary of the most recent reserve fund study.
Many offers on resale condominiums are conditional upon the review of a status certificate package by the buyer and his or her lawyer. This clause is not part of the standard agreement, however, and should be added to an offer by your realtor.
“I put it into all my contracts,” said Savel, “because you don’t want to end up with a client in a place that has a bad situation going on with the management.”
What information can I find in a status certificate package?
A status certificate discloses information to a potential buyer about the condominium corporation’s management structure, common expenses, the current budget, any legal issues or proceedings, unit leases, insurance, upcoming repairs or maintenance and the corporation’s reserve fund; as outlined in Section 76 of Ontario’s Condominium Act.
The financial statements outline expenditures, receipts and the current year’s budget (including estimated costs and reserve fund information) which gives you—and your lawyer—a good indication of how fiscally healthy the property is.
A reserve fund study is commissioned every three years by a condominium’s Board of Directors, and it determines what major repairs need to be done, the timeline for them and whether or not the reserve fund has enough money to cover these costs.
“If it’s an older building, and if there are outstanding repairs or things that need to be done there’s a chance [the condo corporation] may increase fees,” said Savel, “so a good real estate lawyer will look for signs there may be an increase in maintenance fees [when reviewing the package].”
You’ll also find information outlining whether or not the corporation is involved in any lawsuits, the building’s insurance policy and whether any special assessments are being considered or will be taking place.
Within the declaration, you’ll find information on any restrictions, such as a “no pets” clause, and what rules you must follow when using common areas such as a swimming pool, work-out facility or party room.
How do I get a status certificate?
Anyone can order a condo corporation’s status certificate by providing a written request and paying the $100 fee, however this is typically only done when there is a prospective buyer of a resale condo unit. Whether the buyer or seller pays this fee is negotiable, and the standard varies by area. For instance, the seller typically pays for the status certificate in Toronto, but it Ottawa it’s typical for the buyer to pay.
“Even this can come down to the negotiating skill of the realtor,” said Savel. “If I’m representing a seller and have three buyers coming in, I might suggest a buyer improves their offer by offering to pay this fee.”
After submitting the request, you should receive the status certificate package within 10 days, though some condo corporations will rush the order for a fee. Once received, you and your lawyer typically have 48 to 72 hours to look over the documents and come to a decision, though this is also negotiable.
Why do I need a status certificate?
Since a condo unit is subject to additional rules and regulations—as well as managed by a Board of Directors—there’s an entirely different set of concerns for a prospective buyer than there is when purchasing a house.
You’ll want to ensure the Board of Directors is being fiscally responsible, that their budget is balanced, and that there is money in the reserve fund for any upcoming repairs. An unbalanced budget or depleted reserve fund is a red flag, and you could be on the hook for increased maintenance fees to cover repair costs.
You’ll also find out if there are any lawsuits against the corporation or unsettled legal issues. However, the presence of a legal case that has yet to be settled isn’t always sign you should back out according to Savel, especially if it’s a good deal on the unit.
“One example case I had was when the problem had been rectified, but the [legal] case just hadn’t officially closed yet,” he said, “so it wasn’t a big concern. A few months later, the prices on units in the building had gone up.”
Savel notes it’s important to get your lawyer or realtor to contact the property manager and get as much information as possible before making a decision.
Since a condo corporation makes the rules about balcony barbecues, pets, and common areas, it’s important to fully read the declaration in the status package to ensure their by-laws and regulations are a fit for you.
A status certificate outlines all this information and more for you upfront, so there are no surprises later on down the line. This is why it’s important to work with you realtor to ensure your offer is conditional upon a legal review of the status certificate package.
Source: Alyssa Furtado
It isn’t a secret that the real estate industry is not well respected. According to Forbes Magazine, real estate agents rank 23rd on the list of most admired professionals below actors, stockbrokers and politicians.
Why is this so? Research reveals that ‘home’ comes second only to ‘mother’ as the word in the English language that is closest to our hearts. Therefore, buying or selling a home is a major emotional event. Yet some real estate agents treat it as a financial transaction involving lucrative commissions and nothing more. This makes it enticing for greedy real estate agents to place their interest above yours and prey on the naive, uninformed or simply trusting. Although real estate agents have a disciplinary board through RECO, no industry can fully legislate ethics: this means the onus is on you to do your homework before choosing an agent.
I believe educating the public about the potential problems that can arise is critical in order to protect consumers from dishonest and unethical practices. The following are some of the most egregious problems I have encountered. Hopefully this awareness will provide you the knowledge to protect yourself:
The majority of real estate agents are professional, abide by the rules and provide the consumer with enormous benefit. But unfortunately the misdeeds echo louder than the good deeds which gives us all a bad name.
The bottom line is the consumer must exercise due diligence before hiring an agent because ethics cannot be legislated. But, although the industry can’t force agents to be ethical, we can make you aware of the pitfalls so you can protect yourself. The more educated you are, the less likely you will hire an unethical agent which will hopefully run some of the bad agents out of town.
It can be tricky to transition from picky buyer to happy homeowner — but it’s possible. Here’s how you can cure the four most common causes of home buyer's remorse.
1. You’re not entirely happy with your new home or neighborhood
It doesn’t take long to notice a new home’s quirks after you move in. That one neighbor who leaves their garbage bins at the curb for too long. The drafty windows that lead to high heating and cooling bills.
In my case, it was the fact that my street is on the route of a weekly late-night cyclist event that comes with crowds, loud noises, and even cop cars — with lights on.
Here are the most common reasons people regret their home choice, according to Trulia’s survey:
What to do about it:
It’s natural for new-home infatuation to fade. Remind yourself why you picked your home in the first place by pulling out your initial list of preferences and reviewing it. Chances are your new home still meets the criteria of what’s most important to you.
Also, once you’ve closed on your home, stop looking at home listings — doing so will only lead to “what-ifs” and “could-have-beens.” Instead, focus on learning to love the home you live in and make a plan to fix the features you’re most dissatisfied with.
2. You’re having problems with your mortgage
Maybe you don’t regret buying your home — but you regret how you financed it. About 1 in 5 home buyers (21%) regretted their choice of lender, according to the J.D. Power 2016 U.S. Primary Mortgage Origination Satisfaction Study.
Here are some common reasons you might regret your choice of mortgage lender:
What to do about it:
If you hate your mortgage, the good news is you don’t have to be stuck with it forever — or even for the next 30 years.
Instead, you can refinance your home into a new mortgage that better meets your needs. However, you will face new closing costs and will have to go through the whole mortgage shopping and application process again.
Still, refinancing could be your chance to get a home loan that fits your financial and homeownership goals.
3. You’re not feeling financially prepared for homeownership
With big life events such as buying a house, it can feel like you could wait forever and the timing would never be “just right.” So instead of waiting for perfect timing, you might take the plunge and figure it out as you go.
Unfortunately, a leap of faith into homeownership can turn into financial free fall. Among homeowners, 9% agreed with the statement “I wish I had been more financially secure before I decided,” according to the Trulia survey. Younger homeowners (ages 18 to 34) were nearly twice as likely to cite this regret, at 17%.
If you’re unprepared for all the expenses of buying and moving into a home, you might feel overwhelmed. Although these costs might have seemed manageable on their own, perhaps you weren’t considering the whole financial picture.
What to do about it:
When you feel like you’re drowning in housing costs, that’s a sign to focus on fixing your cash flow — in other words, your budget.
Review your expenses and look for places where you’re spending too much on low-priority costs. Look for ways to lower monthly living expenses, such as utilities, bills, or transportation costs. If you shop around or negotiate your way to a lower rate on a monthly bill, you’ll reap those savings each month.
Focusing on debt can be another smart move. For example, it’s not just your mortgage you can refinance. You could consolidate credit card balances into a loan with a lower interest rate or refinance a high car payment.
Alternatively, see if there are any low-balance debts you could quickly pay off to eliminate the monthly minimum from your budget.
4. You’re facing a sudden loss of liquid savings
Even if you’re keeping up with monthly costs, your savings account balance is probably much lower than when you were saving up for a house. A home purchase requires you to pour tens of thousands of dollars from a bank account you can access at a moment’s notice into a nonliquid asset.
Here’s what that down payment looks like in actual dollars, assuming a borrower takes out an average mortgage loan of $318,200:
And these figures don’t include closing costs or other incidental expenses that come with moving and establishing a household.
After closing on our home and paying the down payment, I felt more anxious about our money. Having a buffer of just under $30,000 suddenly gone from our bank accounts left me feeling financially insecure and wondering if buying a home was the right move.
What to do about it:
When I got caught up in moments of worry, I reminded myself that I hadn’t “lost” the money I put into a home — I’d transformed it into less liquid equity.
I also set a realistic savings goal and made sure the earmarked funds were transferred into a separate savings account along with our bills each month. It required putting off some major home purchases, such as an updated refrigerator and a new sofa. But a year later, our emergency savings fund is exactly where it should be, and my financial insecurity is nowhere in sight.
For homeowners experiencing buyer’s remorse, simply acknowledging that it’s a common experience can help you understand why you feel this way. Instead of obsessing over your regrets, give yourself credit for all the things you got right with your home purchase.
And remember: Although your regrets might be real, you likely can make some adjustments to your situation or attitude to overcome them.
So here are five things real estate has made me thankful for
Real estate investing got me out of the rat race
No I am not sitting on a beach in Panama (yet) running my business over the internet. But I was able to quit the 9 to 5 job. No more commutes, no more bosses, no more stuff like this. I now have more time for things I like to do, such as running, spending time with my wife and of course investing in real estate.
Real estate investing taught me many new skills
I can install a kitchen sink and fix minor plumbing. I can hang a door and do minor carpentry. Sure I hire many of these things out now, but it is nice to have these skills. Having these skills has provided me with a confidence (especially when deal with contractors) I did not have before.
Real estate investing has introduced me to many, many new friends and colleagues
From bankers and lawyers to wholesalers and contractors and even other investors, I have met and worked with a lot of great people that I otherwise would have likely never met, and if I had, would only have been in passing.
Real estate investing has broadened my scope of knowledge
Throughout my real estate career I have invested in and read many books and courses which opened my brain to ideas I had never thought of before. My interaction with the folks listed above has taught me about accounting and taxes, law, markets and banking, housing and construction and a host of other things. These are things I would have never had the time or inclination to learn in my 9 to 5 job.
Finally, I am thankful to real estate investing because it has, I believe, made me a better person
My perspective and life has been greatly broadened because of the four items listed above. Real estate investing forces me to get outside of my comfort zone and try things I would never have thought of trying before such as marketing, blogging and writing and just plain talking to people to see if I can help them out or work a deal.
Looking back over these five items, I guess I can say that I am just thankful I got into this business. Sure it has its ups and downs, but overall life is just better and for that I am truly thankful.
6 Tips to Protect Newbie Landlords Against Bad Tenant Situations
1. Before you rent your property, come up with a “perfect renter” profile.
To do this, first list the main selling points of your house from a renter’s point of view. What does the perfect renter do for a living? Do they have children? What would be the renter’s interests? Once you have your avatar built, then you can actively start marketing your property to the perfect client.
For example, if the main selling point of your house its school district, then you might want to let the local PTA group of the grade school, middle school, and high school know that your house is on the rental market. You might also want to put up flyers of your house on the school’s community board.
2. Perform background checks.
This might seem like a very logical thing to do, but you would be surprised at how many landlords never ask the prospective tenant for a background check. The one I use is Tenant Background Search. This service provides me with an eviction report, FICA score, and nationwide criminal background report — and the best part is that it costs around $25 per report.
3. Have a real estate attorney provide you with all legal documents.
Don’t be cheap and buy your rental agreements off the internet at one of these do it yourself websites. Many of these agreements have loopholes that allow the renter too much wiggle room. As my father always told me, “Prepare for the worst, and hope for the best.”
To prepare for the worse, you should go into the agreement with the understanding that you might have to take legal action against the renter — so wouldn’t you feel more at ease knowing that your attorney provided the legal agreement?
4. Be upfront and honest with the renters before they rent.
I have one rental property here in Orlando that has joust windows. Now, these windows give the house a lot of character, and it does give the house a lot of appeal; however, these windows are not air tight, and the electricity bill can be quite expensive, especially in the summer months. I have always been very upfront with all the renters, and I even put this warning in the contractual agreement.
What is interesting is that I have had only one person who decided not to rent the house because of this language, and not one renter in the past 8 years has tried to get out of the rental agreement early due to the high monthly upkeep. On the flip side, the house next door has the same joust windows, and that house always seems to have a “for rent” sign in the yard. As a landlord it is always the best practice to be fair and upfront when dealing with your tenants.
5. Include routine maintenance in the monthly rental amount.
I had to learn this the hard way by having to re-sod the front yard to one of my houses because the tenants never cut the grass, and the yard was overrun with weeds. There is nothing that will hurt the value of a house more than poor curb appeal.
To protect your investment, include the upkeep of the yard, spraying of weeds, trash removal service, etc. in the monthly amount. This way, you can pay to have someone other than the renter provide these services, and you can make sure they are done properly.
6. Make sure the renters provide their own insurance.
It is always a good idea to put in the agreement that the renters must provide their own renter’s insurance. This way, if something unfortunate happens, it does not back up on you. I also think it is a good idea to have the rental property or properties set up in an LLC; this way, your personal assets are protected should something happen unexpectedly at your rental property. If your accountant tells you an LLC is not advantageous for you, then I would get a million or two million dollar umbrella policy for extra protection.
Being a landlord is really not that hard — just be careful and treat people fairly. Word of mouth is the best marketing, and people want to rent from good landlords.
Many people become landlords whether they rent their basement for extra income, rent their investment condominium or rent their property because they can’t sell it for the price they want, etc. But not everyone who attempts this endeavour understands the implications of getting into bed with the Residential Tenancies Act, which provides protection for residential tenants.
This law clearly favors tenants and I want to highlight a few issues that were raised at a Landlord and Tenants seminar conducted by Harry Fine, a licensed paralegal and an expert in this field.
1. There are specific business practices permissible to landlords in selecting prospective tenants for residential accommodation. Landlords have to adhere to the Human Rights code when advertising, selecting and during the tenancy to screen tenants. Nothing in this Regulation authorizes a landlord to refuse accommodation to any person because of race, ancestry, place of origin, colour, ethnic origin, citizenship, creed, sex, sexual orientation, age, marital status, same-sex partnership status, family status, handicap or the receipt of public assistance.
Case study: A landlord received a phone call from a prospective tenant about renting one of her units asking $2,500 a month. The landlord asked the prospective tenant what her monthly income was. The prospective tenant replied $3,100. The landlord said “you cannot possibly afford this rent” so she discouraged the prospective tenant from submitting an application. The prospective tenant complained to the Human Rights Commissioner and received an award of $1,000 for “hurt feelings”.
The law stipulates that you cannot discourage anyone from making an application to rent. The landlord is obligated to consider other factors besides income such as credit references, rental history information and credit checks in order to assess the prospective tenant and only then can the landlord select or refuse the prospective tenant accordingly. Therefore, to be safe, a landlord should allow everyone to apply and choose a tenant based on all the information. When you arrive at your decision simply say to all applicants that you selected the best tenant after you did your due diligence.
2. The rules related to giving notice for rent increases are very specific. A Landlord and Tenant Board approved N1 form is mandatory, the notice must be given ninety days prior to raising the rent, an increase can only be given every twelve month period and it has to be an amount set by Provincial guidelines. Any rent increase that does not follow these rules is not legal and leaves landlords vulnerable.
Case study: A landlord increased the rent every twelve month period for four years according to the Provincial guideline and notified the tenant via a letter. At some point, the rent was in arrears and the landlord took the tenant to court. Since the law stipulates that the tenants can raise any issues they deem necessary in a rent arrears hearing without notice, the tenant did just that. The tenant raised that the landlord notified him of rent increases via a letter and not via the mandated N1 form. As a result the court awarded the tenant an abatement of all the monthly rental increases he had paid for the last four years amounting to a few thousand dollars.
3. As soon as a tenant gives you notice they are moving out you have to mitigate your damages by trying to rent it to someone else. First and foremost make sure the tenant has signed an N9 (Tenant’s Notice to Terminate a Tenancy) in case they change their mind and you have already rented the unit to someone else. If you have made every effort to rent it for the same amount and have been unsuccessful, you can go to court to get back the shortfall. Be very careful about suing the tenant for under renting it though because the tenant can turn around and raise issues that will come back to bite you. The best thing you can do as a landlord is to rent it to someone else and move on.
If your tenant stops paying rent altogether, the shortest an eviction procedure will take is about eighty days. The length of the process itself and the fact that the tenant can ask for an adjournment or raise maintenance issues during this time can easily extend the eviction process six to eight months from the time the first month’s payment is missed. The cost of the eviction process and the loss of rental income will amount to a great deal of money. Remember that tenants have one year after moving out to sue you for damages such as bad faith notice, improper notice of rent increases etc.
These are just a few due diligence procedures you can follow to try select the right tenant:
1. Speak with the prospect personally and determine if they are consistent with their story about work, debt or current address.
2. Use a professional and thorough employment application form and be on the lookout for any gaps in rental history.
3. Ask for the name and contact number of their work supervisor. Call the employer and ask them to confirm income and how long the prospect has worked there.
4. Ask to meet everyone who will be living in the rental unit. You cannot refuse the tenancy to someone on the grounds that they have children. The only defensible ground for not offering a unit to a prospective tenant is their lack of creditworthiness, previous tenancy history or a bad credit report.
5. Call their current landlord but remember to use your creativity to screen against a tenant using their friends as a surrogate landlord.
6. Remember the former landlord may just be providing a positive reference to get rid of the tenant. Certainly I have heard of this happening many times.
7. Ask the former landlord if the tenant paid rent on time, if they ever took the landlord to the Board, disturbed other tenants or ever contacted municipal inspectors with unreasonable complaints.
8. Speak to the building superintendent if there is one. Just like your hairdresser, they seem to know everything that’s really going on.
9. Always use a professional screening service.
I have touched on just a few of the myriad of things that can go wrong. Therefore it’s critical you educate yourself about the law or consult an expert in this area before undertaking the important role of becoming a landlord. Mistakes or lack of knowledge can cost you a great deal of money.
The source for this information was taken from Landlord Solutions.
We receive phone calls regularly from people who want to sell their investment property and, of course, they want to fetch market value for it. These phone calls become heightened after we disclose a record breaking sale such as our most recent one at 233 Wychwood Avenue listed at $989,000 which sold for $1,208,500. Of course every caller insists that their investment property is also worth the same or more than 233 Wychwood Avenue because the market is “very hot”.
It is true that the investment property market is very strong but unlike single family homes whose ultimate high sold price can reflect an element of emotion, investment property sold prices are influenced more by an investment return. A huge factor that will determine market value for your property will be the income it generates.
During these conversations we probe deeper and ask many questions about the condition of the property and especially about the income it generates before we voice our opinion on value. The caller usually answers “well the rent is low but I like my tenant” or “the rent is low but my tenant has been here for a long time” or “I have a really good tenant who takes care of the property so I have given him/her a reduced rent”.
So then we respond “that’s really nice that you have a good tenant, but an investor who will pay you market value for your property also expects market value rents”. They respond “well they can always ask the tenant to leave”.
In reality a new owner cannot ask the tenant to leave and being a landlord you should know this. A tenant can only be asked to vacate, if they do not have a lease, and under these circumstances:
As you can see a new buyer cannot arbitrarily “get rid of a tenant”. Then these callers keep insisting that their property generating a cap rate of 2% to 3% is worth the same as one that generates a 5% cap rate simply because the market is hot. Unfortunately that is not the case. In reality if you have two identical properties in the exact same location in similar condition with one generating an annual net income of $50,000 while the other an annual net income of $40,000, the property generating the higher net income will sell for a much higher price.
So what can you do to ensure that your investment property will increase in value according to the market?
Time and time again we list tenanted properties and of course they require tenant co-operation for viewing times and presentation of the property. Many sellers will say “oh my tenant will be very co-operative and flexible because I’ve been so good to them over the years by keeping their rent low etc” only to witness, after the landlord tells the tenant they are selling, an overly uncooperative tenant or one that insists you abide by the letter of the law. Most tenants do not appreciate the possibility of being displaced whether you have been good to them or not so treat it like a business because most tenants assuredly will. Furthermore align yourself with a trustworthy real estate agent who will advice you properly on how to go about maximizing the resale value of your investment.
Were you prepared for the responsibility of becoming a landlady?
Once I began to consider an income property, I read the Ontario Residential Tenancies Act. It’s not an exciting read, but essential for learning about landlord and tenant rights and responsibilities as well as all the notification forms. Did you know that if you have to give a tenant a notice you should slide it under their door and not stick it to their door? It turns out that little details matter in law.
Having honest conversations with acquaintances that had landlord experiences was also helpful. I even chatted with one of the property managers of the building in which I was previously renting!
One area I wish I had investigated more before purchasing was developing connections in the skilled trades. I didn’t have a plumber, electrician, or carpenter that I knew and trusted and I would have reached out for names ahead of time instead of waiting for a problem.
What skills and qualities does one have to have to be a successful landlady?
Being a landlord is not just about managing bricks and mortar. It is managing relationships and you have to be an effective problem solver when there is a repair to be made, a noise complaint or late rent.
Unless you plan to have your property managed by a professional, you need to have time. That lawn isn’t going to mow itself and you certainly can’t wait to shovel the walkway on an icy day. Your best financial position is to be able to do some things yourself and that takes time.
Do you need to be handy? Yes and no. You will save a great deal of money if you can handle small jobs such as painting and yard work. If you are not up to the bigger jobs, watch more television. Seriously. Many programs and even youtube can be informative about larger home repairs and, although you may not tackle those jobs yourself, you will be better informed and less likely to be taken advantage of when you hire trades people.
Financial literacy is important. When you are making renovation decision, it is important to know what is a “write off” again your rental income for your current year’s taxes and what are “capital gains” improvements that you can use to your advantage when you sell your property. Even if you hire an accountant, you need to keep track of all of your income and expenses and have an organized system for bills and receipts. You also need to be organized to check references and the credit of potential tenants.
Flexibility is needed when remembering that your tenants are not you. They will not do things the way you would and as long as they are respectful and paying their rent, you may need to let some things go. This is especially important if you live in the building with your tenants. The ability to stay calm is essential. You may be tempted to shed some tears when the first time you run the tub and the water pours through the ceiling of the unit below, but you need to stay composed and call a plumber. (Okay, I’ll admit to a tearful episode before calling…)
If you had to do one thing over again what would it be?
Most issues I have had revolved around noise. During the purchase process, I would have brought a friend to viewings and requested that they make noise in one unit while I was in the others. That way, I could have gauged how sound traveled in the building. I probably would have still purchased this property, but I would have included soundproofing in my initial renovations instead of having to go back and make improvements later, at a greater expense. Did I really want to pay to have carpeting put back down after refinishing lovely hardwood floors? No.
Tell us about some of the issues that came up that took skill to work through?
Patience is a virtue. Even though you are the landlord, you may need to put yourself last for a while. When I purchased the property, I only had enough savings to renovate one of the units. Although I dreamed of a beautiful kitchen and a glistening modern bathroom, I spent my limited funds on one of the units to be rented out. Living with a dodgy kitchen with 1950’s broken drawers and a pink tiled bathroom with a worn green tub was no treat. However, by doing that I now get much more rental income and I am getting very close to turning my unit into a home.
According to this experienced landlady, to be a successful landlord one needs to be prepared and educated. Although it’s a great deal of work to manage a multiple family dwelling, the financial payoff can be rewarding. It’s a great way to build equity while paying down the mortgage with the rental income with a goal toward owning that single family you have so intently set your sights on. It isn’t easy so ask yourself before you undertake this monumental task: