Posted by Ryan Coffey under: Real Estate Terminology 101; Uncategorized.
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.
Posted by Ryan Coffey under: Buying; Nanaimo Real Estate Market; Selling; Uncategorized; When to Buy and Sell.
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.
Know and understand the myths of real estate, and the basics of buying real estate and while you’re at it you might as well take the time to figure out what creates value in a home.
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.
Posted by Ryan Coffey under: Buying; Uncategorized.
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.
Posted by Ryan Coffey under: Just For Fun; Nanaimo Real Estate Market; Uncategorized.
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….
Posted by Ryan Coffey under: Buying; Nanaimo Profile and Events; Uncategorized.
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.
Posted by Ryan Coffey under: Buying; Financial; Nanaimo Real Estate Market; Uncategorized.
I jokingly call some of the things Mortgage Brokers do “financial voodoo” because they have some really intelligent methods of making financing work that can seem a bit mysterious to those of us who are… well… not a Mortgage Broker. One of my favourite bits of financial voodoo is called “Purchase Plus Improvements”. It’s nothing new but I don’t see Buyers thinking about it often. Essentially, the idea is that if you buy a home, you can tag the cost of renovations onto the mortgage.
‘So what?’ you say? Well, let me tell you…
So, when you walk into that house that you really like overall but hate one or two details this makes for an easy and affordable fix. Maybe you love the house but hate the flooring, maybe you want to add a suite to make the home more affordable in the long run, maybe you want to (or have to) redo the kitchen/bathroom but don’t have the cash, or maybe the windows are old and starting to get a regular mould around the edges, this will remedy that. You don’t have to put it on your credit card or try to figure out how you are going to pay that big bill when you just put your life savings into the down payment.
Yes, you are still footing the bill long term because like I said, it is going on your mortgage but considering how insanely low mortgage interest rates are these days especially when compared to unsecured debts like credit cards and lines of credit this is really quite attractive.
But financing details aside, here’s why I, as a Realtor, think it’s such a good thing to keep in mind when buying:
Not that long ago, I wrote this post where I talked about how a great way to get a good property for cheap is to look at the bones and ignore the decor, flooring, paint and so on. To be able to visualize change. (Go on, read it. This is the kind of stuff that will help you save/make money and not that fluff that shows up in the newspaper every day.) The pattern I see so often is that houses that are shiny and new looking sell for more than houses that aren’t. This won’t surprise anyone but the interesting part is the price difference between two similar properties where one has had some contemporary finishing done versus the one that hasn’t. I frequently see people paying more for a cheaply renovated home that will probably cost them money in a few years when the cheap materials and results of quick labour start to wear out. I hate seeing people waste their money like that. This pattern goes to the point where the price difference is usually more than it costs to have the work done so providing that the ugly duckling has good bones and adequate potential, you’re farther ahead getting that one in a financial sense. Providing you make intelligent choices about what work needs to be done and what doesn’t.
Another important thing to keep in mind is that you’ll get to choose the style, colours, type and quality of the work done to the home. That’s a big thing because your tastes and ideas of what changes should be made are likely to differ from anyone else who puts the finishing touches on a property. Plus, if the previous owner only did that work in hopes of selling the property it’s almost a given that the quality won’t be as good as when an owner who intends to stay has the work done so they can enjoy it for years to come.
CMHC Mortgage Loan Insurance can help you to obtain financing for up to 95% of the appraised value after renovations with only 5% down payment for both the purchase of your home and the renovations.
- Available for conventional and insured mortgages.
- Work must normally be completed within 90 days or the funds will be recalled and applied back to the mortgage.
- A detailed list of improvements, including a copy of contracts outlining the scope of the work and cost estimates, is required.
- An appraisal with two separate values will be required: current value of the property “as is” and the estimated value of the property once the improvements are completed.
- Lender will lend based on the improved value as confirmed by the appraiser.
- The entire committed amount of the mortgage will be advanced to the solicitor and the solicitor will be instructed to hold back the cost of the improvements.
- Once an inspection from an appraiser confirms ALL work is complete and a copy of the building permit (if applicable) has been received, the balance will be released.
Purchase price: $300,000
Total lending value: $320,000
Total approved mortgage: $304K (95% of lending value)
Initial advance on closing date is – $285K (not taking into account insurance premium)
Advance upon completion of renovation – $19K
Thank you to Brad Rembold of Universal Mortgage Architects for sharing this info with me and for proofreading my ramblings. You can reach him at 250-758-5524 ext 4 or firstname.lastname@example.org
Posted by Ryan Coffey under: Just For Fun.
Every so often a new technology comes along that drastically changes society. One that can be used for such a wide variety of purposes that nearly every corner of society is changed either directly or indirectly. We’ve seen this recently with computers, the internet and wireless technology and not so long ago with television, radio, records, cars, planes and telephones. It’s starting to look like 3D printers are going to be the next big thing.
I’ve been fascinated with them since I first heard about them about four or five years ago but for some reason it was only recently that I first heard about 3D printed houses. A bit of time on the search engines will show you various methods that are in the works. All of them still in a crude and not market ready stage but the concept is so full of potential that I would be surprised if it hasn’t refined itself and started to catch on in 20 years. Time will tell.
For those of you who haven’t seen it yet, here are some videos on the topic.
Posted by Ryan Coffey under: Nanaimo Profile and Events; Nanaimo's Neighbourhoods; Uncategorized.
For an intro to this series, please see the first post of the series, here.
On the very southern end of what the Nanaimo MLS map refers to as the “Departure Bay” area, is an ocean side neighbourhood known to locals as ‘Cilaire’. Word among longtime Realtors is that when Cilaire was developed in the sixties, it was the fanciest part of town. This area has some of the finest examples of west coast contemporary homes in Nanaimo as well as a variety of other well built homes of that era. Of course, there is lots of ocean view as these properties are all on a gently sloping hill over the water. I do think though, that the elementary school has views that rival any fancy home in Nanaimo.
The shape of the streets in this subdivision make it fairly easy to distinguish the contours of the neighbourhood. Cilaire Drive is a loop that goes around the most central parts and there are a few roads that jut off it mostly along the waterfront or to wards Departure Bay Rd. As traffic going through those streets isn’t really on the way to or from anywhere that isn’t a property in the neighbourhood, the streets are pretty quiet and the traffic doesn’t fly by like they do on a straight road full of commuters.
This doesn’t mean that Cilaire is isolated. In fact it’s a easy walk to a nearby mall known as Brooks Landing. You can walk down Departure Bay Road in either direction and find access to beaches and walking trails. You could even walk or bike to the ferry terminal if youwanted to and go to the mainland as a foot passenger which everyone out here knows is much cheaper thank taking a car.
Nearby parks include Beach Estates park, which is pretty much a Nanaimo secret. It’s a path that goes down a gulley behind Cilaire Elementary and makes its way down to a spot of beach next to the ferry dock. The whole time walking down there you can’t believe you are in the middle of town. Old growth trees and very few buildings can be glimpsed all the way down and then suddenly your at a beach and there’s those giant boats that are so familiar to anyone from Vancouver Island. Walking the other way, North along Departure Bay Road, is what most would refer to as Departure Bay beach. Lots of space for taking yourself, your dog or your kids for a run. However, if you live in Cilaire you don’t necessarily need to bother with going all the way up Departure Bay Road they way the other Nanaimoites do. There are two access points to the beach from withing Cilaire itself. Regardless of which way you get down to Departure Bay beach, there are quite a few parks there to choose from as well.
Posted by Ryan Coffey under: Uncategorized.
I’m excited about this upcoming “Home Owner Fair” my company is holding on April 26th. It’s one of those events where there is something for everybody. I know that sounds like a recycled sales line, but it’s true. Read on and find out why.
This is more than an open house, or a viewing of a property. More than a chat with a Mortgage Broker. More than advice from a renovation company, a Landscaper or an Interior Designer. It’s a whole that is greater than the sum of its parts. You can pick the brain of each of the professionals and find out useful info that will make ownership, maintenance, improvement and market value of your home more affordable and easy. Every professional involved, myself included, will have a variety of tips and tricks to share and you can speak with them in person so that you can make sure that the info is a custom fit for your wants and needs.
Those who RSVP will be given directions and we’ll put out directional signs to help them find the house on the day of the event. I am making efforts to contact past clients about this because I am hoping to add value to my services even after the time of working with them has passed but I am also of course always looking to meet new people. Please contact me at email@example.com to be added to the list.
Come learn about something you didn’t know that you didn’t know.