The reason this article strikes a chord with me is because I, like so many others, have been fascinated by watching the US market go through its dramatic downturn these past few years. Watching it play out and seeing who’s left at the end and why is this Realtor’s equivalent to how some biologists watch the struggle for survival during a major extinction and seeing what sorts of evolutionary traits end up making the difference before being passed on to future generations.

You wouldn’t know this from watching the news, but although we too have been affected in all of this we have fared very well compared to the US and so many other economies the world over. Our own lesser downturn in property values which was followed by a recovery and has since been waffling between getting warmer or cooler depending on which data you’re looking at, is still showing its own changes in terms of what sorts of new homes are available.

There is still a fair bit of inventory left over from the end of the boom in Nanaimo. It takes quite a long time to get the ball rolling from buying some property, getting zoning and permits and etc. in place let alone actually building it and then selling it. Then, there is this perception among the public that they will have to now pay HST on top of the purchase price. (Even though the full 12% is only applied to the balance over 425k, below that things are as they were before.) So, these perfectly fine places have been sitting there for a couple of years now, especially condos, and they keep getting cheaper. Some of them are amazing deals.

The market is far from dead though. I’ve had a pretty good year and the stats for the Nanaimo area suggest that I am not alone. For example, last year in October only 75 single family units were sold but this October 98 were sold.  People are spending a bit more too. Similar figures have been showing up on the stats since the summer. (Actually, maybe the spring, but I was simply too busy selling real estate to think about any of this at the time.)

But yes, here too I would say that the new places that are being built are a little less lavish than those from a few years ago. Cheaper locations are more popular too. The area south of Harewood, around 9th and 10th, is being populated with lots of inexpensive homes on inexpensive land.

Anyway, here is the article that inspired the above thoughts:

Wall Street Journal Article: Blueprint for a New American Home

Ryan Coffey

The following is an article I found from Canada Realty News that I thought was worth sharing.

When trying to decide whether to buy an older home or a newly constructed one, many questions come to mind. Start by educating yourself and knowing the pros and cons of each.

Real estate agents don’t like to call a house a “used” house. It makes it sound too much like a used car, doesn’t it? But when you’re buying a home you only have two choices: new or used. Real estate agents prefer to call a used home an “existing home” which sounds a lot nicer!

If you’re deciding between buying a new home and buying one that someone else has owned, you need to consider several issues.

In most cases, existing homes have a touch of character with their own charm and details. They are usually located in more established neighbourhoods with mature trees and desirable landscaping, and may be closer to city services such as schools, libraries, hospitals, shopping centres and public transportation.

Older homes may have better quality materials and workmanship that are too costly for newer homes, and may come with window coverings and appliances which are often included with the home. If you are lucky, you may still get an updated kitchen and bathrooms if the home has been renovated.

However, existing homes are generally less energy efficient and are typically more costly to heat and cool. They may need updating and require expensive repairs, and sometimes it may be difficult to find or match older building materials.

Newer homes usually have bigger rooms, more built in wardrobes and closets, and more bathrooms. If you are building a new home you can also influence the layout and the finishes within the home as part of the negotiations with the builder or developer.

Whereas with an existing home you will inherit what the previous owner built or remodelled over time. Very rarely will an existing home be built and finished exactly to your liking. Think about how much renovating you’ll need to do to an existing home. If you can buy an existing home that’s been totally renovated in a great neighbourhood within a good school district this might be a better choice than moving into a newer neighbourhood with an unestablished school district.

On the other side, buying a newly-built home tends to cost more than an existing home, unless you buy outside of the city, where land is cheaper. Of course, you will have to consider the price of gas to get to your job.

And it isn’t just about getting to your job. You’ll also want to think about how long it will take to get to a grocery store, dry cleaners, your kids’ school, your house of worship and other places you get to by car.

While new homes are more expensive, they might also increase in value faster than an existing home. That said, it may be challenging to buy a new home in your neighbourhood of choice, unless you buy a lot, hire a developer and build your own home-which can get quite costly.

However, with new homes you get warranties and guarantees on appliances that come with the new home. Dangerous building materials, such as lead and asbestos, will likely not be a problem. A new home will meet modern safety and building codes and usually use building materials that offer improved insulation, thereby reducing your heating bill.

You may be able to upgrade or customize such features as floor coverings or paint colours and sometimes the floor plan. New homes often have more closet and storage space and most importantly don’t require as much maintenance.

New homes though have their own disadvantages. Higher taxes could be required to bring water, gas or electrical services to a still under-populated area. Resale could be difficult if the entire neighbourhood is not yet complete, and you may have to cope with construction noise, dust and mud. New neighbourhoods frequently lack the relaxing appearance of mature trees, and your new subdivision may require costly landscaping.

You can make the case for and against buying either a new home or a “used” home. It’s great to live in a brand new home, but there’s nothing like the feel of an established neighbourhood. The bottom line is price: it depends on what you want to spend, where you want to live, and what kinds of amenities you’ll want to have.

Ryan Coffey

This is an important question for someone who is looking to buy a condo/townhome as an investment property. It’s also worth considering for people who are looking at buying a strata as a starter home as well if you take into account  my views on selling real estate.

The answer is most succinctly taken care of with a “Yes, but…” yet this is one of those matters which deserves at least some exploration of detail.

My reply, edited for the purpose of this blog, went like this:

The following is going to be pretty dull to read. Boring as bat…uh… guano. But it’s worth wrapping your head around if you’re thinking of investing in a strata. In particular, I’m focusing on being a landlord for a strata unit but it outlines some important concepts that any owner of a strata unit need to understand whether they’re living in it or not.

So, to answer your question: Yes, it can be changed. Condos, townhouses and the like are run by organizations which we call “strata corporations” which is an organization/corporation that you buy into when buying a unit in a given complex. Each strata corporation has a variety of bylaws which they adhere to. There is a standard list of bylaws that I will call “government issued” for the sake of brevity and which can be changed within the realm of what is legal in our area to suit the needs and tastes of the owners/members of the strata corporation.

Changes like that are the result of a decision within the strata corporation which as a unit owner you can participate in a vote on this and other policies/bylaws that may be changed. This is an example of why it’s good for a strata owner to keep up to date with what is going on in the strata so that you can see these things coming ahead of time and hopefully influence things one way or another should such a change be proposed. It is most likely that if the bylaw in the strata is changed, that there will be a limited number of rentals allowed as this is quite common and as you’re already renting it out you should be on that list. In the case that a place decides to get rid of rentals altogether they will usually “grandfather” (continue to allow the old way) the existing rentals until an owner (be it you or a new owner) lives in them. How this is handled will again, depend on how things are voted upon so depending on what the mentality of the group is overall will affect what sorts of policies are made.  In my eyes, it’s a mini democracy.

Staying up to date on strata goings on isn’t just about this sort of thing and other matters of bylaw after all. You also want to make sure that they are using their money effectively, and in particular, I mean making sure that they are saving up for future repairs that may need to be done. For example, an older building may need a new roof, or new siding and windows in the near future before they start to leak and allow (expensive) water damage to occur. This is something that is usually an educated guess in regards to exactly when it will need to be done, but you can generally see it coming. (Yes, there was also the issue of leaky condos built in the 90′s. That’s another discussion.) Generally, this is a non issue but sometimes strata owners are too interested in saving a few bucks every month on strata fees when they should be raising them to save up for upcoming repairs and maintenace. The result of bad planning like this increases chances of getting a large special assessment fee (i.e. repair bill) that is the owners all have to contribute to.  Sometimes it goes the other way and the various owners decide to get overly expensive repairs done. Usually it’s neither of these and keeping up to date with what is going on and being involved in the process is how one keeps the group from swaying too far one way or another.

Thinking about all of this might make one wonder if it’s easier to just buy an inexpensive house and not have to worry about all this bylaws, management and voting. That is, in my eyes a reasonable observation. The upside with owning your own house is that you don’t have to share decision making with others. However, it should be pointed out that with a house, you will still have to make decisions on maintenance which means always figuring out who to hire to do what when and how much it is worth to you. That’s a lot to think about too and you don’t have people managing the process for you who will give you necessary info to help you make informed decisions.

Another consideration with a house is that a wild tenant might have more freedom to live carelessly on your property before getting noticed by anyone.

So, which way is better? I’m not sure if either is better. They’re just different.

Ryan Coffey

Here is something I found in The Globe and Mail. I thought it was well written and worth sharing. It pretty much echoes much of what I have previously talked about on this blog, but it covers a wide variety of things in one article. It’s a bit longer than what I usually post here, but it’s the sort of info that has the potential to make a huge positive impact in your life. The original post is here.

Ryan Coffey

How to find a home loan on terms that work for you

By Rachel Mendleson
Special to Globe and Mail Update

In this excerpt from the MoneySense Guide to Buying and Selling Your Home [http://moneysense.ca/myhouse], a book in the “Best of MoneySense” series, writer Rachel Mendleson cuts through the jargon and explains how to find the mortgage that’s right for you.

Lauren Chender likes to shop around. So when she and her husband were trying to figure out what kind of mortgage to get on their first home, she took to the Internet and began comparing the interest rates posted on various bank websites. But as the Toronto resident did more research, she discovered that it might be possible to get even lower rates through an independent mortgage broker, or by speaking with a financial institution’s mortgage department directly. Even when she found a good rate, she discovered that the tough decisions just kept coming. Should she go with a variable or fixed rate? What about the amortization period? “It’s overwhelming,” says Chender, who wound up using a broker to secure the mortgage on her semi-detached Victorian. “There was a lot to know.”

Chender is hardly alone. Despite the fact that how you finance your home will have a significant impact on everything from what you can afford to how long you’ll be in debt, the complexity of mortgages can make it difficult to arrive at an informed decision. But by understanding what’s at stake, you can cut through the jargon and weigh the options to find a mortgage that’s right for you.

Perhaps the most important thing to consider when thinking about how to finance your home is what taking out a mortgage really means. As Rob McLister, editor of Canadian Mortgage Trends, explains, “Mortgages are definitely among the cheapest money you can borrow, simply because they are secured by quality assets.” But they are also a tremendous responsibility, and something that can greatly increase what you end up paying for your home. While an interest rate of 4 per cent on a $200,000 loan may not seem like a lot today, that changes dramatically when you consider that repayment will likely be spread over decades.

With that in mind, the first step to choosing the right mortgage is identifying the lender whose terms work best for you. While prospective home buyers often begin with their financial institution, your search shouldn’t stop there. As Sarah Daniels, a Vancouver-area realtor, points out, “The lenders are in competition for you.” She advises using a mortgage broker, who will “shop you around” to all the lenders, free of charge. (Mortgage brokers are paid a finder’s fee by the lender. There’s no charge to the home buyer for a pre-approval and no obligation.) And whether you opt for a broker or not, a second opinion never hurts. “It always helps to get one or two other quotes to keep everyone honest,” says McLister.

It’s a good idea to get pre-approved for a mortgage before you start house hunting. That way, you can get a sense of your budget, and avoid falling in love with a property you can’t afford. To give you a pre-approval, lenders factor in your income, type of job and credit history. They also take into account how much you have to put toward a down payment, and any other debts you may have. The amount you are pre-approved for is the upper limit of what the lender will allow you to borrow. Add that to your down payment, and you’ve got the total amount you have to put toward a home. If you have bad credit, are self-employed or want to borrow more than what a bank or credit union will approve, you may want to consider using an alternative lender. But while second- or third-tier lenders (examples include Equitable Trust and Aaron Acceptance Corp.) have looser requirements, the mortgages they issue come with higher interest rates (sometimes much higher), so they are not generally recommended for first-time buyers.

The specifics of the mortgage you select will depend on what makes the most financial sense, as well as your personal preference. One important decision is whether to go with a fixed rate of interest, which is locked in for the entire term of the mortgage (usually five years), or a variable rate, which can change depending on market forces. In today’s low interest rate environment, “variable rates are initially cheaper upfront,” says McLister. The risk is that they could rise far above the fixed rate later in the term, increasing your monthly payments. You’ll also have to set the amortization period, which is the theoretical length of time you have to pay off your mortgage in full, assuming you never move. Bear in mind that while a longer amortization (as of March 2011, the maximum for an insured mortgage in Canada is 30 years) may give you a bigger mortgage or lower monthly payments, it’ll also mean paying more interest in the long run. If you want the flexibility to make additional lump-sum payments outside of your scheduled monthly (or bimonthly) payments, this must be stipulated in your mortgage. And beware that if you break your mortgage before the term is up, you’ll have to pay a penalty-usually three months’ interest for variable-rate mortgages, more for fixed-rate mortgages. (This doesn’t apply for open mortgages, which are mainly for homeowners who plan to sell within a few months.) Mortgage insurance is one of the extra costs to buying a home that can be easy to overlook. But if you are putting less than 20 per cent down, your lender will require that you purchase an insurance policy to protect them in case you don’t hold up your end of the deal. Calculated on a percentage of the total mortgage, your insurance premium will depend on how well qualified a borrower you are, and can amount to thousands of dollars. As Daniels observes in her book, for a $450,000 mortgage, even the most qualified borrower who gets the lowest rate (which she sets at 1.5 per cent) would be on the hook for an additional $6,750 in insurance.

If you’re lucky, your family may offer to help with financing. But it’s important to understand how the contribution factors in. A family gift is considered a traditional source of down payment, which is ideal. It will increase the size of the mortgage you can get or allow you to pay for a greater proportion of your home up front. But if the family help is a loan, your down payment is considered to be non-traditional, which, if you’re putting down less than 20 per cent, will result in slightly higher insurance premiums.

When your mortgage is up for renewal, it may be tempting to simply sign on the dotted line, and accept whatever package your lender offers you. However, not shopping around can cost you. “The bank relies on people just to sign the renewal agreement at posted rates. As soon as you do that, you’ve lost thousands of dollars by not negotiating,” advises Vancouver mortgage broker Alma Pasic. Don’t be surprised if you need a refresher course. “It’s like you’re doing it for the first time, because everything has changed,” she says. “It’s hard to keep up-even for us.” RACHEL MENDLESON Sidebar: Cost Cutter If you can live with the uncertainty, a variable-rate mortgage has historically saved home buyers money over a term of five years or more. A 2008 study led by Moshe Milevsky, a professor at York University’s Schulich School of Business, found that variable rates would have saved Canadian borrowers money on a five-year term more than 77 per cent of the time between 1950 and 2007, and chopped a year off the amortization period. By taking on a more predictable, fixed-rate mortgage, you are offloading risk to the lender, and that comes at a price. You might sleep easier, though.

Excerpted from MoneySense Guide to Buying and Selling Your Home (Rogers Publishing Limited, $9.95). The book is available at bookstores and newsstands or online at http://moneysense.ca/myhouse

Being someone whose profession keeps them continually immersed in the world of real estate, it’s sometimes easy for me to forget that it’s a mysterious world for most people. People often feel exposed if not vulnerable when they consider entering it. This is of course why there are so many Realtors in the world. Despite what those “sell it yourself” websites and systems tell you, the fact that Realtors are still here in large numbers tells you that it’s not something that’s as easy as they claim. This post is for anyone who is thinking of buying real estate in B.C. If you’re from abroad, then there is more to this, so to start, I recommend reading this post and having a browse through my section on “Buying As a Non Canadian“.

Now, it doesn’t have to be intimidating. I’m going to outline the process for you so that you’ll have an idea of what to expect when you choose me as your Realtor. (Ok, that was a little tongue in cheek, but you can’t blame a guy for trying.) You can also get a deeper understanding of all of this by joining my mailing list by entering your email address on the right.

There are simply too many variables and possibilities for me to do this comprehensively, and too much info for me to write in a readable fashion. Keep in mind that this is intended as an outline, much like the table of contents of a book or an article in wikipedia. Plus as they say in commercials “actual experience may vary” which roughly translated comes out as “it doesn’t always go this way, but this is a typical experience”.

So here it is, the basic stages of buying a property in B.C.

1. Talk to a mortgage broker and get pre-approved.
I say this to people so much, and for good reason. It really should be the first thing you do. Going to talk to a mortgage broker and finding out how much you can borrow before looking at houses makes a lot of sense. I always explain this to my clients as “it makes sense to look in your wallet before you go shopping”. Then, you’ll want to decide how much you want budget on payments per month. A mortgage calculator is handy as a guideline for this. I do recommend going to a mortgage broker rather than a bank, as they tend to give better, more customized packages than banks and more quickly too. One of the reasons for this that mortgage brokers don’t get a regular paycheck, they only get paid for the deals they put together. And it doesn’t cost you anything to use their services, in essence they get paid by the lenders even though they’re working for you. Ask them for more info on this if you’re curious.

2. Come speak to a Realtor. (That’s me.)
Now that you have an idea of what you’re able to afford, it’s time to find out what’s out there. By the time you’ve found this blog or spoken to a mortgage broker, you’ve probably already spent hours upon hours looking at listings online at realtor.ca/mls.ca and various websites where Realtors show their goods. This isn’t a bad way to do things, but it is very inefficient and until you speak to a Realtor you’re probably not getting the best search results despite all the time you’re putting into it.

I can’t speak for other Realtors, but here’s basically how I usually do things. I’ll sit with you and listen to what your wants and needs are. Then, I’ll start to introduce you to the possibilities of what is out there and throw various ideas at you to help you explore your options. Depending on where you’re moving from, you may be be expecting more for your money or you may feel like you’ve suddenly become rich. I’ll try to find out what is most important to you and combined with various factors, I’ll help you find properties that are the best fit by using a variety of electronic resources, plus my knowledge/experience with the market, plus my connections plus my simply paying attention while I’m out there looking at properties every day.

This is the beginning of a process that requires continual communication between us. So stay in touch! This communication is important for a variety of factors that I won’t go into here, but one that I will mention is that things can and often do happen fast and I will need to be able to reach you quickly and easily. As you look at places, you will hone your expectations and tastes. I’ll need to know how these things are changing. My knowing how you feel and your listening to what I know will make this and every part of the process easier on all of us.

Once I know what you need and want I’ll give/send/show you a list of properties that you choose from that you’d like to view. This is a list which will change as some places sell and new ones come out, and prices on a couple of them change. I may also have some suggestions based on what I think you will like. Regardless, I’ll tell you not to put too much emphasis on the photos and comments in the listings. They are a form of ad after all. It’s when you go look at them that you find out what things are like.

3. Looking at properties.
We’ll have set up a time to meet and start to go out and actually look at places. We usually hop in my car, and then go look at places but we can go in separate cars too. This is the part where you find out that the properties often look quite different in person than they do in the listings, sometimes better, sometimes worse. Sometimes you find something that suits you right away and sometimes you have to look for a while. Sometimes you have to adjust your expectations and/or price range. Eventually, we should be able to find something that you enjoy.

Perhaps I should mention that I don’t double end properties as a policy. This is rare for Realtors, as it’s a method for making a lot more money, but I frown on the ethics of it. Read more about it here if interested. (It’s halfway down the page.)

4. Making an offer.
This is when people’s emotions start to rise. You’ve found a place you like and now you try to see if you can get it at a price and with terms that you find acceptable. The thing is, the seller has to find the offer acceptable too in order to progress to the next stage. Expect a couple of days of negotiating before you find out whether you have to go back to step two or three again or if you can continue to the next step.

If all goes well, the next thing is to write a cheque for the deposit which will be held in trust by my company. This will form part of the purchase price, but you’ll get it back if you have to collapse the deal legally. (The idea is that if you don’t collapse the deal legally, they keep the money. Something I’ve yet to see happen.)

5. Removing Subject Clauses
A lot of people (clients) put the bulk of their energy and focus into the negotiating part of the deal, but it’s actually not the most involved part of the process. Removing subjects is. Subject clauses are the parts of the contract where the sale of the property is “subject to” a variety of things that need to be done by a certain date before the contract can proceed to closing. The time period for this is usually less than two weeks after an offer is accepted. Depending on the type of property and the particularities of the sale, you will have different clauses to remove. But for the sake of example, let’s say you’re looking at a house and the situation is pretty basic/common, you and I will have to get the following done before the sale is finalized:

• Get the go ahead from your mortgage broker regarding financing
• Have the property inspected by a professional inspector to ensure that it is not in a condition that is substantially worse than it appears (It’s important to note that real estate in B.C. is sold “as is, where is” meaning, that there is no warranty.)
• Approve a Title Search
• Approve a Property Disclosure Statement
• Arrange fire insurance for the property

If we can satisfy all these criteria then you sign for the subject removal and then you’re done with me until you move in. The other professionals you use (i.e. Lawyer, Mortgager Broker) will  still want to talk to you though.

THEN, you move in! I’ll meet you in front of the property in question on the happy day and hand you the keys. That’s when everyone jumps with joy, hugs me and promises to name their first born after me. Ok, I’m joking, but it is a happy day for all involved.

All these and many other measures exist to protect you, so don’t feel intimidated by the process. I’m here to help.
It’s one of those things that sounds harder than it is. Many of my clients get to the end of the buying process and say “What? That’s it? I just bought a house?!”. What they don’t know is all the goings on behind the scenes that made it easy for them to get to that point. That’s not a bad thing though, it just means things have been done properly and that things went smoothly.

Ryan Coffey

I don’t even ask what amount they’ve been approved for. All I need to know is that they can get a mortgage for the sort of place we’re looking at. The rest, as far as I’m concerned, it between them, their Mortgage Broker and the Lender who is supplying the funds. Ultimately, this all boils down to affordability for that buyer.

You see, if a buyer goes out and makes an offer on a place and then it turns out they can’t afford it they have wasted a lot of time, stress and probably some money (on things like inspections or perhaps trips to the town they are moving to) before finding out it was for nothing. This is why I ask this question so early on. It saves everyone a lot of headache.

Even if you don’t qualify for a mortgage on the kind of place you had in mind, that conversation with the mortgage broker is still a positive thing. Why? Because now you have a plan. You will know what you need to save in order to get what you had in mind, or better still, you will know what you can afford now. If you’re not in a postiion to afford anything yet, at least now you know what you need to do. All positive steps.

If you come to me with a modest budget, I’ll tell you what your options are. I’m a big believer in leveraging your assests to make your financial life down the road easier. I’ll throw some ideas at you which you may not have thought of on how to do that. That said, an awful lot of people prefer places that are move in ready and cozy over the money maker. Either way, once you’ve worked out your finances, I can tell you what your options are before honing in on a section of the market to take a close look at and choose from. Using market knowledge to get the Buyer the best fit for them is a big part of what us Realtors do.

And this is in short, how you build the framework of your plan with helps from professionals. It costs you nothing to get the plan together. It only costs you money to go through with it.

Ryan Coffey

The spring market means more Buyers, but more Sellers too. Realtors have a lot more on their plate and this is the time when we usually get a good indication of what the rest of the year will be like.

As I always say though, the best time to buy has more to do with your ability to afford payments than anything else. Market wise, there are only good times to buy and better times to buy as I have explained many times in other posts. Sellers, the same basic principles apply in this market as any other and keep in mind that although yoour property will look better now than it did in the winter, so will the other listings the Buyers are looking at. The specifics of how to make your particular place stand out is part of what you hire Realtors like me for.

Enjoy the better weather!

Ryan Coffey

Regardless of what I write on this topic, it will only be a summary of general principles. You see, in some ways houses are like people. They are all unique, some more than others, and certain qualities will make an individual more popular. The more of those qualities they have, the more popular they are.

Before we get into what those qualities that create the dollar value are, let me point out something that should probably go without saying: Different strokes for different folks. Not everyone wants the same thing and sometimes I see people really happy with a place that most people really wouldn’t be happy with. Some people really don’t mind living next to a busy road or in the crazy part of town. The good news for them is that they save a ton of money on their happiness!

Those of us who have more mainstream tastes will be trying to find a balance of the following list. Think of this list as ways to add value to your home as a Seller and some food for though on how to avoid paying for more than you need if you’re a Buyer:

• Space: (Inside and out) Not a lot to say about this one as I think it’s obvious.

• Number of Beds and Baths: In a house, less than three bedrooms is going to make quite a difference in desirability/cost.  Having a  second bathroom is a bonus for many and a necessity for others. If you’re a Buyer on a budget, think about what you really need now and in the future. You may find that it makes more sense to not have that extra bedroom and settle for something more modest or you might decide to rent it out for some help with your mortgage until you get more settled financially or your family grows by one.

• View:In Nanaimo, we have lots of ocean views and mountain views. Both add value, especially the ocean view. Even so, it is in such demand that properties, particularly in hilly North Nanaimo, are crowded together on the hill in such a way that they can all share a piece of the ocean view. A home with a sweeping unobstructed ocean view (no roofs, trees or powerlinesat all) will fetch a pretty penny. On the other end of the spectrum, a house with a view of the reclusive neighbours ever expanding junk collection… well let’s just say it’s not a selling feature.

• Age: People like new. The asking price of new properties, which is plus tax, reflect that. I do tell my Buyers that all properties look good when they’re new though and that it takes a little time to see what kind of quality it really has. This is why I’ll generally steer my buyers towards something that is a couple of years old so they can have the feeling of a new home without having to pay quite as much and know that it has been “tested” first.

• Condition: This one is also common sense really and is related to the last one but it of course also applies to older properties as well.  A home that is properly maintained will hold its value better than one that isn’t.  Less work to be done is great and even if it is dated with its shag carpet and wood paneling, if it has “good bones” it’s a decent house for someone who doesn’t mind doing the updating rather than paying more for a place that already has it done. At least being “move in ready” is a big plus even if dated. Most people don’t want to do work before they move in. Only the keeners who want to save some money and understand how to do it actually do this.

• Location: Also common sense. Actually so much so that it is my opinion that most people focus on this detail more than I think they should. But yes, an important factor. Being next to the train tracks or on the wrong side of them will drop that price considerably. Being on the waterfront or in a quiet spot that is still close to amenities will have that affect in the other direction.

• Quality/Style of finishing: When people talk about finishing they generally mean things like flooring, paint, trim, counters, doors, light fixtures and so on. Newer is almost always reacted to as nicer and this applies both inside and out. Sadly, a lot of do-it-yourselfers know this and not much more. So they try to fix up their home themselves hoping to add value but botch up the job and end up having the opposite effect. To those people I say, make sure your buddy who helps you do it actually has professional experience or hire someone who does. You see, nine times out of ten when a homeowner proudly tells me “I did this myself!” I’m thinking “Yeah, I can tell…”

• Light: Lots of light feels like lots of space. This is part of why when us Realtors say to use “light neutral colours” we mean some sort of off white. It lets people imagine their own stuff and ideas in there but it also makes for a sense of space. Lots of light also makes people feel happy and for the lack of a better term, “free”. Doubly so if it’s natural lighting. Those who are into gardening or energy efficiency like natural light even more so being south facing is a bonus for them.

• A Sense of Urgency: When a property is fairly fresh on the market it will, as a rule, attract better offers than one that has been sitting there for a while. This has everything to do with pricing it right in the first place in a way that will attract Realtors and their Buyers alike. A buyer will typically look at 8-15 places in person after having looked at hundreds online in the same price range with similar criteria before making an offer. They will usually have a plan B as well. If you’re selling your property it has to be number one on that list. Not second or third. Number one. And if it really is a good deal, a Realtor who brings some Buyers through  who don’t end up buying it for whatever reason will often bring through others buyers because they see value in the property the whole time knowing that it might get snatched up by some other Buyers.

Ryan Coffey

After a great deal of reflection on the matter, I have come to the conclusion that  (in most cases) it is more of a lifestyle decision than a financial one. You see, there are many pros and cons in either decision in terms of things financial and otherwise. Sure, you could micro analyze this for each and every individual combination of Buyer and property, but we’re talking about homes here. The finances are a big factor, but there are so many others that add up to the result of how happy and satisfied you are with where you live. The rule of thumb being to buy something you can comfortably afford first and foremost. The rest is, again, down to your tastes and plans.

First off, you may be wondering what a strata fee actually is. This is one of those points where I could give a very long an technical, jargon filled answer on but I won’t. The short of it is that the monthly fee you pay when you live in a townhome or condo for example. The money is generally used for maintenance of the shared parts of the complex (called “common property”) and management. It may also include certain utilities like hot water or heat for example. What you get for that money will vary from complex to complex. I have seen places that are as low as $85/mo and as high as $350/mo.  Generally the cheaper fees mean you get less offered but the size and price of the property are also a big factor.

On a related note, are pad rental fees for mobile homes in mobile parks. Pad rental fees ( the monthly fee you pay for having your mobile in the park) which we see for mobile homes in their parks those are typically $300-350 in our area. Rent is technically different from a strata fee, but it is money you pay monthly when you own a property.

But let’s focus on strata fees.

The point of  stratas is that there are all sorts of things that are shared. It’s cheaper to build one big building with lots of units than it is to build the same number of houses with the same square footage. They are therefore, as a rule, cheaper to buy.  The roof, siding, windows, parking, landscaping , lobby,  and potentially other things are shared and need to be maintained and managed. If there were not strata fees, these things would simply get dirty, overused and then ruined.

If you buy a house, you don’t have to pay the monthly fee, but you do have to pay for the repair and/or replacement of the roof, siding, windows, parking, lanscaping etc. and unless you’re the sort of person who really plans ahead with their money, you won’t have been making monthly payments towards that expense years before it arrives.

But which is a better deal? I’ve tried to figure this one out by estmating maintenance costs of houses to the owner vs. the ongoing strata fee. I’ve really thought about this hard and I’ve decided that it is too much a case by case thing in terms of which complex,  which house as well as in terms of the Buyer’s financial habits and   to come to a firm decision on.

You see, if a condo building is properly managed, and if there are no bad surprises in regard to the craftmanship of the shared areas of the building, the regular fee will ideally cover the ongoing maintenance and repair of the common areas. This way, a big all at once special assessment fee shoudn’t happen. (But they do sometimes, which is another post in itself. Mostly it was an issue in certain stucco sided complexes built in the 90′s but it also happens when the strata owners get together and vote to have lower fees ignoring the need to save for impending major repairs like a new roof.)

If it’s your own house, you won’t have to pay a monthly fee but you will have to pay for the big expenses like a new roof, new windows, new siding or what have you all at once.  The same pitfalls exist in the single fmaily home as well. If you try to cut corners and don’t do proper maintenance or repairs or if the home was shoddily built you will be more likely have a major expense on your hands all at once. However, as the building is not shared, you can decide your own fate and not have to hope that as a group the right decisions are made. Also, it bears mentioning that you could even save for such repairs but imposing a monthly savings plan on yourself. You might even invest that money and watch it grow while it waits to be used.

I could easily talk more about things like the effect on equity based on how much you’re paying per month, whether it’s cheaper to share a roof or what have you among many people instead of just for yourself or whether the small portion that goes towards paying for management makes it not worth it. So much to consider.

In the end, I think the main thing to think about is a combination of what you’re able and willing to get mortgage wise and what lifestyle makes sense to you.  Here is a list of food for thought when trying to decide on whether to go strata or single family:

• Your average strata is smaller and cheaper than your average house.
• A strata is less for you to think about in terms of maintenance.
• Your freedom to do what you want with a strata is more limited and the decisions made by the group may not make sense for you.
• Stratas are more likely to be withhin walking distance to amenities which is a plus for convenience but may mean less quiet. New ones have better sound proofing though, but then again same goes for houses.
• They typically have no yard, and even if they do it’s probably not big or exclusively yours.  That may be a good thing or not depending on your preferences.
• Some stratas have a clubhouse which may include things like a pool table, guest rooms, an exercise room and space to hold private parties.

Ryan Coffey

As I wrote in an earlier post, the City of Nanaimo is encouraging more density and one result of that is they are allowing secondary suites in homes. This is providing certain safety guidelines are followed of course.  But it’s not limited to just have a suite in the basement. There are these detached suites (often referred to as ‘carriage houses’) that the city is permitting these days as well. In short, if your house is a corner lot, over 1,000 square metres or has a lane that accesses to the back of the property, then you can built a carriage house suite. Any one of these three criteria is enough.

Click below to open the .pdf file that is issued by the city on this matter.

SecondarySuitesAccessoryBldgsHandout

Ryan Coffey