Posted by Ryan Coffey under: Real Estate Online.
For the second year running, this blog has made it to the top 100 real estate blogs on the web. This year it is #74.
Posted by Ryan Coffey under: Real Estate Online.
For the second year running, this blog has made it to the top 100 real estate blogs on the web. This year it is #74.
The first step of buying is, as I so often say, finding out what you can afford. If you are planning on buying or even just wondering if you are ready to buy going to see a Mortgage Broker is a crucial first step.
Since my early days in real estate I have been steering Buyers towards Mortgage Brokers rather than banks. The short of it, which is somewhat elaborated in the video below, is because a Mortgage Broker has access to a wider variety of lending options. I think it is also worth pointing out that in my experience Mortgage Brokers, who (like me) only get paid when they put a deal together, are more motivated to give faster and better service than their counterparts at banks who collect a wage/salary whether your mortgage goes through or not.
Very early on in my real estate career I developed a certain fondness for some of the homes in what the MLS map calls “Old City”. This area, just up the hill from downtown, is Nanaimo’s original settlement area which means that it is where the oldest houses in town are found. This means character and it means charm.
As you head from the southern part of the area (Old Victoria Rd) around the often mentioned hub towards the north end of it (Bowen Rd.), the houses gradually become, bigger, fancier finishing and in many cases better maintained over the years. Back in the day, the houses in the northern part of the old city were lived in by Mayors, Doctors and other well to do people of the era. Some of the nicer homes have fabulous wainscoting, oak floors with a darker inlay and great old fashioned fireplaces that give you those warm fuzzy feelings most of us only experience around Christmas time. Being older homes that are built pre-war, they are not nearly as large as what we consider a fancy home to be nowadays but the charm and quality of craftsmanship is undeniable. When someone says “character home” these are what I consider to be the standard in Nanaimo.
Not everyone wants to be walking distance from the downtown core. It certainly means more pedestrians going by at all kinds of hours but the flip side is having oodles of convenience is your lifestyle. You can walk to all the restaurants and shopping if you so choose, not to mention the parks and nightlife if you are so inclined. Bowen park and the giant walkway with its associated parks at the waterfront are there inviting you at all times. Your home will probably have some lovely mature trees in the yard which often means lots of fresh fruit. Due to the era of construction, your home will have a unique style of its own that would be expensive and difficult and in some details, impossible to replicate in our own era.
You can have a look at the sorts of properties I am describing on the Nanaimo MLS system or you can get the general idea by doing a google image search like the one I show below.
Not all dirty words are four letters long. “Special assessment” is a term that is a red flag for anyone initiated into the world of real estate. That’s not to say that if there is a special assessment going on that you shouldn’t buy a given property, but it is to say that there is a matter going on that you really need to pay attention to the details of in order to make an intelligent and informed decision regarding your finances.
Stratas have an annual budget and some savings called a contingency reserve fund (CRF) where they try to balance the income from strata fees with the costs of maintaining the strata complex. Like any building, big or small, many things need to be maintained on an ongoing basis in order to keep small bills and medium bills from becoming giant bills or for keeping the place from falling into terrible disrepair like this one. (Ok, that’s an extreme example but it just blows my mind even months later.)
Sometimes a fairly large item needs to be taken care of. Sometimes it happens as a surprise like we were seeing in the 90’s with the leaky condos and sometimes it was foreseeable but the CRF doesn’t have enough money to cover it. Maybe the strata council and the owners have decided that they would prefer to not dip into the CRF as that is their big financial safety net and decide it makes more sense to ask for funds from the strata unit owners instead. There are many possible reasons and situations for a special assessment but the bigger pattern I have seen is that there is a reasonably expensive maintenance item that needs to be addressed and as a strata is a communally own thing, the costs are shared according proportionately.
When a Buyer puts an offer on a strata property, there is typically a clause that gives them the right to review and approve a long list of strata docs before going ahead with the sale. There are many many pages to review but the biggest thing we are looking for is signs of special assessments (i.e. big sudden bills) either immediately or down the road. Alas, there is no perfect system or absolute guarantee for anything in life but proper review of strata documents has kept many Realtors and many clients out of sticky situations over the years. Worth noting is that it is standard practice for Realtors with such properties listed to tell you or your Realtor that there is a special assessment on the books before you start negotiating. No one wins by doing all the work required to bring an accepted offer together only to take it apart again. Plus a Realtor who is in the habit of not being up front with things like this in a timely manner will at very least have fewer of their cohorts showing their listing to Buyers and therefore take a hit business/reputation wise. In more extreme cases there is disciplinary action.
A special assessment can be an opportunity as well. Most Buyers shy away from anything that isn’t 100% done and towards the top end of their budget with the asking price and don’t have room for any extra costs. The result is that there is lower demand for a listing that has a special assessment on the books and thus a lower price. So if you have a little bit of flexibility with your finances and if you are willing to do your homework there is a reasonably good possibility of coming out ahead. This is a more esoteric path.
Do you ever wish you could talk to the younger version of yourself and tell them something that would change their (your) life to make it better? Maybe I’ve been watching too much science fiction but the thought has occurred to me a few times. I decided that in addition to telling myself which people to not waste your time and feelings on, which lottery ticket to buy, which horse to bet on and which stock to invest in I would also want to tell them some of the most important things I have learned about real estate I have learned over the years.
Of course, time travel not being a reality as proven by Stephen Hawking’s party for time travellers which wasn’t exactly well attended, I suppose I have to find some other way of making use of what I’ve learned. The next best thing is for me to do is try to pass such info on to other people in my own time so that they can benefit even if it less exciting than meeting up with past me and discussing things over a pint.
These points will echo much of what I’ve already written on this blog because info like this is really what this blog is all about and also because most of the lessons are not that time specific but rather fundamental real estate stratgies. The broader changes in real estate markets move something like the seasons. They cycle. They do it slower and the time frame is pretty nebulous but the pattern is there and good strategies take this into account.
Buy real estate as soon and as young as you can afford to.
No sooner, no later. You will need to start saving as soon as you can. Don’t worry about all the people on TV, in the newspapers or in your family who are convinced that the whole thing is going to go down the tubes in a couple of months. There are always people saying that at any given time regardless of what the real estate market is doing. Always. The reverse is true too, don’t get overly excited about the idea of it shooting up super fast and being able to sell the thing for a huge profit. That may happen but no one definitely knows when it will, how much it will go up or how long it will take. All we really know is that it will go up in value over time faster than inflation, but it takes years. This is where someone chimes in with “Oh, but the bubble in 2007 and 2008….” Well, although there was some ripple effect that went around the world, the dramatic stuff mostly happened in the US and a few other places but not so much here because we had more conservative regulations in place in regard to borrowing/lending. We had a slowdown, sure but calling it a ‘bubble’ would be going too far in my opinion. Ultimately you are way better off in the long run buying something modest and staying in it than renting. That is, if you can afford the place and don’t take shortcuts on maintenance.
In my case, I nearly bought a house with a suite near the university in 2003. I knew enough about real estate at the time to deem it a good idea but it wasn’t until I became a Realtor shortly thereafter that I realized that I had missed out on a life changing opportunity. I’d probably be about $200,000 richer by now had I gone through with it… and that’s a conservative estimate. Oops.
Learn how to DIY certain things but if you have any doubt about whether you’re doing it right hire a pro.
I have attended many home inspections over the years and of course I’ve been in many many homes. It is really common for people to bite off more than they can chew with the DIY and they often make long term maintenance more difficult and expensive because they were trying to cut costs on labour and materials in the short term. Like everything else, home maintenance is a matter of balancing various factors and considering how much money is on the line with your home’s condition it pays to be attentive to it. This may seems like an obvious statement and so it should, but wow do I often see people costing themselves thousands and thousands of dollars as a result of trying to cut corners to save a few hundred. Really, I think it just comes down to not knowing the difference.
The most extreme case I’ve seen was probably a house where the same person had been doing improper DIY for about 30 years. Every door knob was on backwards or didn’t line up with the door frame quite right somehow, every bit of trim didn’t quite fit, the paint in every section was unevenly brushed on and was overlapping onto adjoining areas that are intended to be a different colour (like where the wall meet the ceiling) cabinets in the kitchen were crooked… and there was more but I don’t remember all the details because after initial fascination with the myriad of deficiencies and how they might have been created I evnetually felt it made more sense to just leave. After all, I’m not going to knowingly bring a Buyer into a place like that. There are other more sane houses to take my Buyers to. When I first arrived I was shocked at how low the price was, probably about $75,000 than I would have expected for size, type and location but when I left I wondered if it was low enough. I wasn’t sure if it was worth tearing down to the studs and doing a complete reno or if it would be easier to tear it down and start from scratch. I tell this anectdote like it was the only time I’ve had such thoughts while looking at a property. Not at all. This one was just the most elaborate and amazing I can remember.
Understand your finances.
At very least, talk to a Mortgage Broker before you start dreaming about what kind of property you want. Beyond that, it is worth understanding the nature of interest rates and how they affect what your long terms bills will be and how much principle vs. interest is being paid. Keep in mind that your property value goes up in the long term too, though it may fluctuate short term. If you’re smart and ambitious you’ll plan to rent out your first home rather than sell. It makes growth slower at first but in the long term you’re better off financially. You just have to deal with tenants. Some are fine and some are diptwits.
I don’t really have any wild anecdotes for things I’ve seen up close for this one because I prep my clients early on. The first thing I ask of every Buyer is whether they are pre approved for a mortgage before we even have a serious talk about buying. If I didn’t I would be not only wasting my time but also that of my clients, other Realtors, their clients, staff at my office… the list goes on. Having a general plan that is comfortable for you to pull off is well… rather important. That’s an obvious statement. That said, knowing what is and isn’t feasible is not so obvious and a matter of planning. The hardest part to plan for is your income as that sometimes changes but talking to a Mortgage Broker and a Financial Planner is only going to open your eyes to what the realistic possibilities are.
These are the fundamentals of knowing which homes are worthwhile and how to get one. Maybe this seems like too much reading and research. Think of how hard you have worked in the past to pass an exam or just finish a work day. This is less work and will affect your life far more financially than any of that.
This is a common question that I get from Buyers. It’s an understandable one. Knowing the answer does have some bearing on how one would best approach negotiations but generally speaking I think it is less important than most Buyers make it out to be or perhaps it is better to say that it tells us different things than many would be Buyers are hoping to find out when they ask this question.
Why? Well this is one of those conclusions I have come to after being asked it countless times and having experienced the playing out of decisions made based upon it. The hard and fast rule (and pattern that people on bothes sides of the Buyer/Seller dynamic naturally fall into) is that a more recently listed property will command higher offers and places that have sat around for a time will command lower price offers. This is true even if there have been price reductions to make the property competitively priced. Once it has gotten to such a point, there is less of a sense of urgency and a sense of urgency is one of the big things that make people act.
It would be reductionist to only consider these factors though and that is why I am writing this post. There are many other factors that can reduce the importance of how long a property has been on market. Exploring this properly would require chapter length illustration but a couple of quick examples are estate sales where the property has been on the market while the probate process is being done (which is very hard to predict the timeline of and it sometimes takes a year or two) and development properties and others.
This is one of those finer points of real estate where you rely on the professional guidance of the Realtor (that’s me) to help you figure out the various ins and outs of a property that has caught your serious attention. We all want to make sure that your decisions are informed decisions and having all the pertinent info, not just some of it, is key.
Finally, a use for that mountain of pennies you don’t know what to do with anymore. There are so many amazing ideas that are shared via the internet and one that you may or may not have seen in recent years is a method of turning those piles of pennies so many of us have into flooring as a substitute for something like tiles. The trick of course is sticking them to the floor, filling the gaps and making sure they are even and coated with a lasting protection.
Nanaimoites, Patrick and Anja Rhomberg created their own variation of this kind of flooring by covering the walls in their kitchen. They had seen the floor online and had planned on doing the same, but ultimately went with a different floor when renovating their kitchen. They modified the plan to cover the walls instead. They glued the pennies onto copper colored sheet metal. Patrick, who is a sheet metal worker framed everything in, like a picture frame, then they used industrial clear drying glue to affix them pennies and then sprayed clear lacqeur on top.
So yeah… a bit more work than just slapping some paint and a few tiles for a backsplash but the effect is rather interesting and attractive. In the near future these pennies will be an item of nostalgia. I can imagine people having future get togethers in this kitchen where they tell their kids about these basically worthless things we carried around for so long but now we have a nice use for them.
What I’m wondering though is just how many pennies it took….
A fairly common question I get from Buyers is about which school catchment area a given property is in. People often assume that the closest school is the one but it’s not quite that simple. This is why School District 68 has this nifty school locator which you can access via the link.
Just enter the address in question and the website will do the rest.
As for advice on which school is best for your children to go to, I have to say that although I do have certain views on the matter, they are my personal views and not professional ones so I won’t be putting them on my blog.
Posted by Ryan Coffey under: Uncategorized.
If you’ve driven through Port Alberni recently you may have noticed that there is some lady who is copying my name and my industry. That’s not just some lady, that’s my mom.
After 34 years working at CIBC in financial planning, mortgage and other lending, Eleanor Coffey retired. Sort of.
She retired from banking but a few months later she started to fulfill her longtime dream of becoming a Realtor in her (our) hometown of Port Alberni.
She too is working at Coast Realty, but in the Port Alberni office, and we have teamed up.
If you are from Port Alberni, my bet is that you probably know her and even if you don’t your best friend/sister/neighbour certainly does. I can tell you from personal experience it’s impossible to join her for a brief outing in public without her finding fifteen friends she has known for decades. If you’re in Port Alberni you will be seeing her name on signs for real estate that is for sale or already sold very soon. If you want either of those kinds of signs on a property you own or would like to own you will get the benefit of both her knowledge, connections, and experience as well as mine if you contact us.
You can find her by clicking here and me by clicking on my name below.
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