Information about local real estate market conditions

8 Strategies to Secure a Lower Mortgage Rate

 Thursday, September 8, 2022     Marion Goard     Financial Health House and Home Real Estate Market Buying and Selling

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Interest rates have risen rapidly this year with the latest increase announced on September 7, 2022. These increases have been triggered by the Bank of Canada’s efforts to curb inflation. And the July MNP Consumer Debt Index found that 59% of Canadians “are already feeling the effects of interest rate increases.” 

Why has the impact been so widespread? In part, due to the rising popularity of variable rate mortgages. According to the Canada Mortgage and Housing Corporation, in the latter half of last year, the majority of mortgage borrowers opted for a variable over a fixed interest rate.

Variable mortgages are typically pegged to the lender’s prime rate, which means they are immediately affected by rising interest rates. Homeowners with fixed mortgages aren’t impacted as quickly because their interest rate is locked in, but they will face higher rates, as well, when their mortgages are up for renewal. And many home-buyers are finding it increasingly difficult to afford or even qualify for a mortgage at today’s elevated rates.

Fortunately, there are steps you can take to strengthen your position if you have plans to buy a home or renew an existing mortgage. Try these eight strategies to help secure the best available rate:

1. Raise your credit score.

Borrowers with higher credit scores are viewed as “less risky” to lenders, so they are offered lower interest rates. A “good” credit score typically starts at 660 and can move up into the 800s. If you don’t know your score, you can access it online from Canada’s primary credit bureaus, Equifax, Transunion and Borrowell. 

Then, if your credit score is low, you can take steps to improve it, including:

  • Correct any errors on your credit reports, which can bring down your score. You can request free copies of your reports through the credit bureau websites. 
  • Pay down revolving debt. This includes credit card balances and home equity lines of credit.
  • Avoid closing old credit card accounts in good standing. It could lower your score by shortening your credit history and shrinking your total available credit.
  • Make all future payments on time. Payment history is a primary factor in determining your credit score, so make it a priority.
  • Limit your credit applications to avoid having your score dinged by too many inquiries. If you’re shopping around for a car loan or mortgage, minimize the impact by limiting your applications to a two-week period.

Over time, you should start to see your credit score climb — which will help you qualify for a lower mortgage rate.

2. Keep steady employment.

If you are preparing to purchase a home, it might not be the best time to make a major career change. Unfortunately, frequent job moves or gaps in your résumé could hurt your borrower eligibility. 

When you apply for a new mortgage, lenders will typically review your employment and income history and look for evidence that you've been financially stable for at least two years.6 If you’ve earned a steady paycheck, you could qualify for a better interest rate. A stable employment history gives lenders more confidence in your ability to repay the loan.

That doesn’t mean a job change will automatically disqualify you from purchasing a home. But certain moves, like switching from corporate employment to freelance or self-employment status, could force you to delay your purchase, since lenders will want to see proof of steady, long-term earnings. 

3. Lower your debt service ratios.

Even with a high credit score and a great job, lenders will be concerned if your debt payments are consuming too much of your income. That’s where your debt service ratios will come into play.

There are two types of debt service ratios:

  1. Gross debt service (GDS) — What percentage of your gross monthly income will go towards covering housing expenses (mortgage, property taxes, utilities, and 50% of condo maintenance fees)? 
  2. Total debt service (TDS) — What percentage of your gross monthly income will go towards covering ALL debt obligations (housing expenses, credit cards, student loans, and other debt)?

What’s considered a good debt service ratio? Lenders typically want to see a GDS ratio that’s no higher than 32% and a TDS ratio that’s 40% or less.7

Low debt service ratios will also help you pass a mortgage stress test, which is required by all Canadian banks and some other types of lenders. The stress test is designed to help ensure you can continue to afford your mortgage payments even if interest rates rise. You can use the government of Canada's Mortgage Qualifier Tool to calculate how much you can afford to borrow. 

If your debt service ratios are too high, or you can’t pass a mortgage stress test, you may need to consider purchasing a less expensive home, increasing your down payment, or paying down your existing debt. A bump in your monthly income will also help.

4. Increase your down payment.

Minimum down payment requirements vary by loan size and property type. But, in some cases, you can qualify for a lower mortgage rate if you make a larger down payment.

Why do lenders care about your down payment size? Because borrowers with significant equity in their homes are less likely to default on their mortgages. That’s why you will be required to purchase mortgage default insurance if you put down less than 20%. 

It’s important to note that some lenders offer discount rates for borrowers who put down less than 20% – because the required default insurance protects them from any potential loss. However, the cost of CMHC or private mortgage default insurance will typically exceed any interest savings. You'll also have to pay interest on that insurance if you add it to your mortgage. The bottom line: you’ll save money in borrowing costs if you can afford a larger down payment.

Fortunately, there are a couple of government-initiated resources designed to help eligible first-time home buyers with a down payment, including:

  • Home Buyers’ Plan (HBP) – Buyers may withdraw up to $35,000 (tax-free) from their Registered Retirement Savings Plan(RRSP). The money must be used to build or purchase a qualifying home and repaid to the RRSP within 15 years.
  • First-Time Home Buyer Incentive – Buyers can take advantage of a shared-equity mortgage with the Government of Canada. Essentially, the Government will put 5% or 10% towards your down payment, interest-free, in exchange for a limited equity share of your property. The repayment is due in 25 years or when you sell your home. 

I’d be happy to discuss these and other programs, tax rebates, and incentives that might help you increase your down payment.

5. Weigh interest rate options.

All mortgages are not created equal, and some may be a better fit than others, depending on your priorities and risk tolerance. For starters, there are several interest rate options to choose from:1

  • Fixed — You’re guaranteed to keep the same interest rate for the entire length of the loan. Many buyers prefer a fixed rate because it offers them predictability and stability. However, you’ll pay a premium for it, as these mortgages typically have a higher interest rate to start. And if rates fall, you’ll be locked into that higher rate.
  • Variable — Your interest rate will rise or fall along with your lender’s prime rate. You can choose either an adjustable or a fixed monthly payment. However, if you opt for a fixed payment, the amount that goes towards principal and interest each month will fluctuate depending on the current rate. Variable-rate mortgages typically offer lower interest rates to start but run the risk of increasing.
  • Hybrid – Can’t decide between a fixed or variable rate? Hybrid mortgages attempt to address that dilemma. A portion of the mortgage will have a fixed rate and the remainder will have a variable rate. The fixed gives you some protection if rates go up, while the variable offers some benefit if rates fall.

What’s the best choice if you’re looking for the lowest mortgage rate? The answer is…it depends. If mortgage rates don’t rise much higher, or drop back down in a couple of years, you could win by opting for a variable rate. However, if they continue to climb, you may be better off with a fixed rate.

Keep in mind that the spread between variable and fixed rates has narrowed as rates rise.  However, it's still easier to meet the stress-test requirements for a variable mortgage, since the threshold is lower. So, your choice may be limited by your ability to qualify.

6. Compare loan terms.

A mortgage term is the length of time your mortgage agreement is in effect. At the end of the term, a mortgage holder will need to either pay off their mortgage or renew for another term.

There are three major types of mortgage terms:

  • Shorter-term – These can range from 6 months to 5 years, and they are the most popular type in Canada. Borrowers can choose between a fixed or variable interest rate.
  • Longer-term – These are longer than 5 years but generally no more than 10 years in length. Longer-term mortgages are more likely to feature fixed-interest rates and hefty prepayment penalties.
  • Convertible – Offers the option to extend a shorter-term mortgage to a longer-term mortgage, typically at a different interest rate.

Which loan term offers the lowest rate? A shorter-term mortgage will typically feature a lower interest rate than a longer-term mortgage. However, the rate on a 1-year or a 3-year mortgage could be higher or lower than a 5-year mortgage depending on the current economic climate and whether it’s fixed or variable. 

Many lenders offer especially attractive rates for 5-year mortgages due to their popularity. But to find the best rate, you’ll need to compare your options at the time of purchase or renewal.

7. Get quotes from multiple lenders.

When shopping for a mortgage, be sure to solicit quotes from several different lenders and lender types to compare the interest rates and fees. Depending upon your situation, you could find that one institution offers a better deal for the type of loan and term length you want.

Ideally, you should begin this process before you start looking for a home. If you get pre-approved for a mortgage, in most cases, you can lock in the mortgage rate for 90 to 120 days. This is especially important when interest rates are rising.

Some borrowers choose to work with a mortgage broker. Like an insurance broker, they can help you gather quotes and find the best rate. They’re paid a commission by the lender, so it won’t cost you anything out of pocket to use a broker. However, make sure you find out which lenders they work with and contact more than one so you can compare their recommendations.

Don’t forget that I can be a valuable resource in finding a lender, especially if you are new to the home buying process. After a consultation, we can discuss your financing needs and connect you with loan officers or brokers best suited for your situation.

8. Ask for a discount.

When shopping for a mortgage, don’t be afraid to negotiate. In Canada, it’s commonplace for lenders to discount their advertised interest rates, which are called posted rates. And in many cases, all you have to do is ask. Of course, the strength of your application will come into play here – so don’t neglect strategies 1 through 4 above.

Keep in mind that interest rates aren’t the only thing on the table. You can negotiate other contract terms, as well, like prepayment options and rebates. And if you get a great offer from one lender, you can leverage it by asking your preferred institution to match or beat it.

Getting Started

Unfortunately, the rock-bottom mortgage rates we saw during the height of the pandemic are behind us. However, today’s 5-year fixed rates still fall beneath the historical average — and are well below the all-time peak of 20.75% in 1981.

And although higher mortgage rates have made it more expensive to finance a home purchase, they have also ushered in a more balanced market. Consequently, today’s buyers are finding more homes to choose from, a better value for their investment, and sellers who are willing to negotiate.

If you have questions or would like more information about buying or selling a home, reach out to schedule a free consultation. I’d love to help you weigh your options, navigate this shifting market, and reach your real estate goals!


Finding a New Home for Your Next Stage of Life

 Wednesday, September 7, 2022     Marion Goard     Community News and Events Financial Health House and Home Real Estate Market Buying and Selling

For most of us, our housing needs are cyclical. A newly independent adult can find freedom and flexibility in even a tiny apartment. That same space, to a growing family, would feel stifling. For empty nesters, a large home with several unused bedrooms can become impractical to heat and clean. It’s no surprise that life transitions often trigger a home purchase. 

While your home-buying journey may not look like your neighbour’s or friend’s, broad trends can help you understand what to keep in mind as you house hunt. No one wants to regret their home purchase, and taking the time now to think about exactly what you need can save a lot of heartache later.

The Newly Married or Partnered Couple

The financial and legal commitment of both traditional and common-law marriage has provided a springboard to home-ownership for centuries. And while the average age of first marriage in Canada is around 30, the average age of first home purchase has shifted even later to 36. No matter your age, there are some key factors that you should consider when you are ready to enter into your first home purchase together.

Affordability is Key

There’s no doubt about it—with home prices that just keep climbing, many first-time buyers feel that the deck is stacked against them when it comes to home-ownership. But stepping onto the property ladder can be more doable than many realize, especially in today’s relatively low mortgage rate environment. 

While many buyers are holding out for their dream home, embracing the concept of a starter home can open a lot of doors. In fact, that’s a popular approach for first-time home-buyers to take. Fifty percent of first-time Canadian buyers report that they plan to eventually upgrade to a larger home. 

Chosen carefully, a starter home can be a great investment as well as a launch-pad for your life together. If you focus on buying a home you can afford now with strong potential for appreciation, you can build equity alongside your savings, positioning you to trade up in the future if your needs change.

Taking Advantage of Low Mortgage Rates

Canadian mortgage rates hit record lows in summer 2020, and while they are now rising, it is still an ideal time to purchase your first home together.  A lower interest rate can save you a bundle over the life of your loan, which can significantly increase the quality of home you can get for your money. 

But what if both halves of a couple don’t have good credit? You still have options. First, boosting a credit score can be easier than you think—simply paying your credit cards down below 35% of your limit can go a long way. But if that’s not enough to raise your score, you might consider taking out the mortgage in only the better-scoring partner’s name. The downside is that applying for a mortgage with only one income will reduce your qualification amount. And if you take that route, make sure you understand the legal and financial implications for both parties should the relationship end.

Commute and Lifestyle Considerations

Whether you’ve lived in a rental together for years or are sharing a home for the first time, you know that living together involves some compromises. There are certain home features that can make life easier in the future if you identify them now. The number of bathrooms, availability of closet space, and even things like kitchen layout can make a big difference in your day-to-day life and relationship. 

Your home’s location will also have a significant impact on your quality of life, so consider it carefully. What will commuting look like for each of you? And if you have different interests or hobbies—say, museums vs. hiking—you’ll need to find a community that meets both your needs. Need some help identifying the ideal location that fits within your budget? I can match you with some great neighbourhoods that offer the perfect mix of amenities and affordability.

 

The Growing Family 

Having kids changes things—fast. With a couple of rowdy preteens and maybe some pets in the mix, that 1,200 square foot home that felt palatial to two adults suddenly becomes a lot more cramped. Whether you’ve just had your first child or are getting to the point where your kids can’t comfortably share a bedroom any longer, there’s plenty to consider when you’re ready to size up to a home that will fit your growing family. 

The Importance of School Districts

For many parents, the desire to give their kids the best education—especially once they are in middle and high school— surpasses even their desire for more breathing room. In fact, homebuyers report that schools are one of their top concerns. Of course, homes in the best-rated districts tend to be more expensive and harder to nab. But when push comes to shove, many buyers with kids prefer to sacrifice a bit of space to find a home in their desired location.

When you’re moving to a new community, it can be tough to figure out what the local schools are actually like—and online ratings don't tell the whole story. That’s why talking to a local real estate agent can be a game-changer. I don’t just work in this community; I know it inside and out.

Lifestyle Considerations

For many families, living space is a key priority. Once you have teenagers who want space to hang out with their friends, a finished basement or a rec room can be a huge bonus (and can help you protect some quieter living space for yourself). 

A good layout can also make family life a lot easier. For example, an open plan is invaluable if you want to cook dinner while keeping an eye on your young kids playing in the living room. And if you think that you might expand your family further in the future, be sure that the home you purchase has enough bedrooms and bathrooms to accommodate that comfortably. 

Functionality

Try to think about how each room will fit into your day-to-day routines. Are you anticipating keeping the house stocked to feed hungry teenagers? A pantry might rise to the top of the list. Dreading the loads of laundry that come with both infants and older kids (especially if they play sports)? The task can be much more bearable in a well-designed laundry room. Imagine a typical day or week of chores in the house to identify which features will have the biggest impact.

Chances are, you won’t find every nice-to-have in one home, which is why identifying the must-haves can be such a boon to the decision-making process. I can help you assess your options and give you a sense of what is realistic within your budget.

The Empty Nesters 

When we talk about empty nesters, we usually think about downsizing. With kids out of the house, extra bedrooms and living space can quickly become more trouble than they’re worth. While the average buyer with young kids is most likely to trade up to a larger home, older buyers often sell the family home and move into a smaller, less expensive home. In fact, more than half of Canadian Baby Boomers consider the area where they live too expensive for retirement.

Maintenance and Livability

What factors are driving your decision to move? Identifying those early in the process can help you narrow down your search. For example, do you want to have space for a garden, or would you prefer to avoid dealing with lawn care altogether? What about home maintenance? In many cases, a newer home will require less maintenance than an older one and a smaller one will take less time to clean. It’s not surprising that condos are among the most popular types of homes for Baby Boomers given they require less upkeep than single-family homes.

Lifestyle Considerations

Many empty nesters have retired or are nearing retirement age. This could be your chance to finally pursue hobbies and passions that were just too hard to squeeze into a 9-5. If you’re ready to move, consider how you’d like to spend your days and seek out a home that will help make that dream a reality. For some, that might mean living near a golf course or a beach. For others, being able to walk downtown for a nice dinner out is the priority. And with more time to spend as you wish, proximity to a supportive community of friends and family is priceless. 

Ability to Age in Place

Let’s face it—we can’t escape ageing. If you’re looking for a home to retire in, accessibility should be top-of-mind. This may mean a single-story home or simply having adequate spaces on the first floor to rearrange as needed. While buying a home that you plan to renovate from the start is a viable option, being forced into renovations (because of the realities of ageing) a few years down the road could seriously dig into your nest egg. Location matters, too—if your family will be providing support, are they close by? Can you easily reach necessities like grocery stores and healthcare? While it’s tempting to put it out of our minds, a few careful considerations now can make staying in your home long-term much more feasible.

Finding the Right Home for Right Now

One thing is for sure—life never stands still. And your housing needs won’t, either. In fact, the average Canadian homeowner will own 4.5 to 5.5 houses over their lifetime.8 At each milestone, a careful assessment of your housing options will ensure that you are well-positioned to embrace all the changes to come.

Whatever stage you’re embarking on next, we’re here to help. Our insight into local neighbourhoods, prices, and housing stock will help you hone in on exactly where you want to live and what kind of home is right for you. We’ve worked with home buyers in every stage of life, so we know exactly what questions you need to ask. Buying a home—whether it’s your first or your fifth—is a big decision, but we’re here to support you every step of the way.


10 Pro Tips for a Smooth Home Move

 Tuesday, August 9, 2022     Marion Goard     Community News and Events House and Home Real Estate Market Buying and Selling

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The process of buying a new home can be both exhilarating and exhausting. But the journey doesn’t stop when you close on your property. On the contrary, you still have quite a bit to do before you can begin the process of settling into your new place. 

Fortunately, you don’t have to do everything in a day. You don’t have to do it all alone, either. When you work with me to sell or purchase a home, you’ll have an ally by your side long after your transaction has closed. I’ll continue to be a resource, offering advice and referrals whenever you need them on packing, hiring movers and contractors, and acclimating to your new home and neighbourhood. 

When it comes to a life event as stressful as moving, it pays to have a professional by your side. Here are some of our favourite pro tips to share with clients as they prepare for an upcoming move. 

1. Watch out for moving scams.

Maybe you receive a flyer for a moving company in the mail. Perhaps you find a mover online. Either way, never assume that you’re getting accurate information. According to The Canadian Association of Movers, moving scams are on the rise — with seniors, in particular, being targeted.

How can you tell if a moving deal is too good to be true? Trust your instincts. If the price appears too low or you can’t pin down the mover’s physical business address, try someone else. The same goes for any moving company representative who dodges questions. Reputable movers should offer transparent pricing, conduct in-home estimates, and provide referrals and copies of their insurance documents upon request. For help finding trustworthy movers, reach out. I’d be happy to share our recommendations.  

2. Insure your belongings.

Your moving company promises to take care of your custom piano or your antique furniture. But don’t just take their word for it. Ask to see how much insurance they carry and talk about how the claims process works. That way, you’ll know what is (and isn’t) covered in case of loss or damage. If needed, consider paying extra to upgrade to full replacement value protection.

Of course, some items are priceless because they’re irreplaceable. You might want to move your more sensitive valuables (jewellery, documents, family heirlooms, etc.) in your own vehicle just to be safe. For added peace of mind, call your home insurance provider if you’re moving anything yourself. In many cases, your personal property will be covered while in transit for a limited period of time.  

3. Start packing when you start looking for a new home.

As soon as your house hunting begins in earnest, think about packing away things you won’t need for the next few months. These could include seasonal or holiday decor, clothing, and books. Tackling just one or two boxes a day will give you a head start.

If you're going to put your current home on the market, you'll want to de-clutter anyway. De-cluttering will make your home seem larger, and depersonalizing helps buyers envision their own items in the space. Consider selling, donating, or throwing out possessions you no longer need. The things you want to keep can be placed in storage until you officially start moving to a new place.

4. Pack to make unpacking easier.

Have you ever opened a packed box only to find that it’s filled with an assortment of items that don’t belong together? This isn’t efficient and will only make unpacking harder. A better way to pack is to bundle items from a single room in a labelled box. Labels can let movers know (and remind you) where to place each box, whether it’s fragile, and which side needs to be up. Some people like to assign colours to each room in their new home to make distributing colour-coded boxes a breeze. 

Feel free to unleash your inner organizer with this project. For example, you could create a spreadsheet and assign each box a number. As boxes are packed, simply fill in the spreadsheet with a list of contents. Anyone with access to the spreadsheet can log in and quickly find a desired item.

5. Think outside the box when transporting clothes.

Who wants to worry about boxing up clothes? If you plan on hiring professional movers, ask if you can leave clothing in your dressers. In many cases, they will use plastic to wrap the dresser so the drawers don’t fall out during transport. If keeping your clothes in your furniture makes it too heavy, the movers might be able to wrap and move drawers by themselves.

Another easy transport trick involves turning clean garbage bags into garment bags. Poke a hole in the bottom of a garbage bag, turn the bag upside down, slide it over five to seven garments on hangers, and lay the items flat in the back seat or trunk of your vehicle. The bags will help prevent wrinkling, and your clothes will be ready to hang up when you get to your new home.

6. Document prior to disassembling appliances and furnishings.

Few things are as confusing as looking at a plastic baggie filled with nuts, bolts, and screws from your disassembled dining room table or sorting through a box of electrical wires and cords to see which ones fit your TV. 

The best work-around to easier reassembly is to document the disassembly process. Take photos and videos or thorough notes as you go. Whether it’s your headboard or treadmill, be very precise. And just a tip: Construct your beds first when you get to your new home. After a long moving day, the very last thing you want is to be assembling beds into the wee hours of the morning. 

7. Prioritize unpacking kids’ rooms.

Children can become very stressed by a big move. To ease their transition, consider prioritizing unpacking their rooms as their “safe zones.” You aren’t obligated to unpack everything, certainly. However, set up your children’s rooms to be functional. That way, your kids can hang out in a private oasis away from the chaos while you’re running around and moving everything else.

Depending upon how old your youngsters are, you might want to give them decorating leeway, too. Even if it’s just letting them choose where furniture goes, it gives them a sense of buy-in. This can help ease the blues of leaving a former home they loved.

8. Be a thoughtful pet parent.

Many types of pets can’t handle the commotion of moving day. Knowing this, be considerate and seek ways to give your pets breaks from the action. You might ask a friend to pet-sit your pooch or keep your kitty in a quieter room, like a guest bathroom.

Be sure to check in on your pet frequently. Pets like to know that you’re around. Give them treats, food, and water throughout the day. When it’s time to transport your pet, do it calmly. At your new property, give your pet access to just a room or two at first. Pets typically prefer to acclimate themselves slowly to unfamiliar environments.

9. Plan for your move like you’re planning for an exciting vacation.

When you plan vacations, you probably look up local restaurants, shops, and recreational areas. Who says you can’t do the same thing when moving? Create a list of all the places you want to go and things you want to do around your newly purchased home. Having a to-explore list keeps everyone’s spirits high and gives you starting points to settle into the neighbourhood. 

And don’t feel that you have to cook that first night. Once the moving trucks are gone, you can always pop over to a local eatery or order SkipTheDishes for major convenience. The first meal in your new home should be a happy, welcoming treat. And if you’re relocating to my neck of the woods, I would love to introduce you to the hot spots in town and recommend local favourites.

10. Pack an “Open Me First!” box.

You won’t be able to unpack all your boxes in one day, but you shouldn’t go without your sheets, pillows, or toothbrush. Designate some boxes with “Open Me First!” labels. (Pro tip: Keep a tool kit front and centre for all that reassembling.) 

Along these lines, use luggage and duffel bags to transport everyone’s personal must-have items and enough clothing for a couple of days. That way, you won’t have to rummage through everything in the middle of your move looking for sneakers or snacks.

When packing your “Open Me First!” boxes, think about which items you’ll need in those first 24 hours. For example, toilet paper and hand soap are musts. A box cutter will make unpacking a lot easier, and paper towels and trash bags are sure to come in handy. Reach out for a complete, printable list of “Open Me First!” box essentials to keep on hand for your next move!

LET’S GET MOVING

Getting the phone call from your real estate agent that your bid was accepted is a thrilling moment. Make sure you keep the positivity flowing during the following weeks by mapping out a streamlined, efficient move. Feel free to get in touch with me today to help make your big move your best move.


7 Costly Mistakes Home Sellers Make (And How to Avoid Them)

 Sunday, July 10, 2022     Marion Goard     Financial Health House and Home Real Estate Market Buying and Selling

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No matter what’s going on in the housing market, the process of selling a home can be challenging. Some sellers have a hard time saying goodbye to a treasured family residence. Others want to skip ahead to the fun of decorating and settling in a new place. Almost all sellers want to make the most money possible. 

Whatever your circumstances, the road to the closing table can be riddled with obstacles — from issues with showings and negotiations to inspection surprises. But many of these complications are avoidable when you have a skilled and knowledgeable real estate agent by your side.

For example, here are seven common mistakes that many home sellers make. These can cause anxiety, cost you time, and shrink your financial proceeds. Fortunately, we can help you avert these missteps and set you up for a successful and low-stress selling experience instead.

MISTAKE # 1: Setting An Unrealistic Price

Many sellers believe that pricing their home high and waiting for the “right buyer” to come along will net them the most money. However, overpriced homes often sit on the market with little activity, which can be the kiss of death in real estate — and result in an inevitable price drop.

Alternatively, if you price your home at (or sometimes slightly below) market value, your home can be among the nicest that buyers have seen within their budget. This can increase your likelihood of receiving multiple offers.

To help you set a realistic price from the start, I will do a comparative market analysis, or CMA. This integral piece of research will help us determine an ideal listing price, based on the amount that similar properties have recently sold for in your area.

Without this data, you risk pricing your home too high (and getting no offers) or too low (and leaving money on the table). I can help you find that sweet spot that will draw in buyers without undercutting your profits.

MISTAKE #2: Trying To Time The Market

You’ve probably heard the old saying: “Buy low and sell high.” But when it comes to real estate, that’s easier said than done. 

Delaying your home sale until prices are at their peak may sound like a great idea. But sellers should keep these factors in mind:

  1. Predicting the market with certainty is nearly impossible.
  2. If you wait to buy your next home, its price could increase, as well. This may erode any additional proceeds from your sale.
  3. If mortgage rates are rising, your pool of potential buyers could shrink—and you will have to pay more to finance your next purchase.

Instead of trying to time the market, choose your ideal sales timeline, instead. This may be based on factors like your personal financial situation, shifting family dynamics, or the seasonal patterns in your particular neighbourhood. We can help you figure out the best time to sell given your individual circumstances.

 

MISTAKE #3: Failing To Address Needed Repairs 

Many sellers hope that buyers won’t notice their leaky faucet or broken shutters during a home showing. But minor issues like these can leave buyers worrying about more serious — and costly — problems lurking out of sight. 

Even if you do receive an offer, there’s a high likelihood that the buyer will hire a professional home inspector, who will flag any defects in their report. Neglecting to address a major issue could lead buyers to ask for costly repairs, money back, or worse yet, walk away from the purchase altogether.

To avoid these types of disruptions, it’s important to make necessary renovations before your home hits the market. I can help you decide which repairs and updates are worth your time and investment. In some cases, I may recommend a professional pre-listing inspection. 

This extra time and attention can help you avoid potential surprises down the road and identify any major structural, system, or cosmetic faults that could impact a future sale.

MISTAKE #4:  Neglecting To Stage Your Home

Staging is the act of preparing your home for potential buyers. The goal is to “set the stage” for buyers to help them envision themselves living in your home. Some sellers opt to skip this step, but that mistake can cost them time and money in the long run. A 2021 survey by the Real Estate Staging Association found that, on average, staged homes sold nine days faster and for $40,000 over list price.

Indoors, staging could include everything from redecorating, painting, or rearranging your furniture pieces to removing personal items, decluttering, and deep cleaning. Outdoors, you might focus on power washing, planting flowers, or hanging a wreath on the front door.

You may not need to do all of these tasks, but almost every home can benefit from some form of staging. Before your home hits the market, I can refer you to a professional stager or offer insights and suggestions if you prefer the do-it-yourself route.


MISTAKE #5: Evaluating Offers On Price Alone

When reviewing offers, most sellers focus on one thing: the offer price. And while dollar value is certainly important, a high-priced offer is worthless if the deal never reaches the closing table. That’s why it’s important to consider other factors in addition to the offer price, such as:

  • Financing and buyer qualifications
  • Deposit size
  • Contract contingencies
  • Closing date

Depending on your particular circumstances, some of these factors may or may not be important to you. For example, if you’re still shopping for your next home, you might place a high premium on an offer that allows for a flexible closing date.

Buyers and their agents are focused on crafting a deal that works well for them. I can help you assess your needs and goals to select an offer that works best for you. 

MISTAKE #6: Acting On Emotion Instead Of Reason 

It’s only natural to grow emotionally attached to your home. That’s why so many sellers end up feeling hurt or offended at some point during the selling process. Low offers can feel like insults. Repair requests can feel like judgments. And whatever you do — don’t listen in on showings through your security monitoring system. Chances are, some buyers won’t like your decor choices, either!

However, it’s a huge mistake to ruin a great selling opportunity because you refuse to counter a low offer or negotiate minor repairs. Instead, try to keep a cool head and be willing to adjust reasonably to make the sale. I can help you weigh your decisions and provide rational advice with your best interests in mind.


MISTAKE #7: Not Hiring An Agent

There’s a good reason 90% of homeowners choose to sell with the help of a real estate agent. Homes listed by an agent sold for 22% more than the average for-sale-by-owner home, according to a recent US-based study.

Selling a home on your own may seem like an easy way to save money. But in reality, there is a steep learning curve. And a listing agent can: 

  • Skip past time-consuming problems 
  • Use market knowledge to get the best price
  • Access contacts and networks to speed up the selling process 

If you choose to work with a listing agent, you’ll save significant time and effort while minimizing your personal risk and liability. And the increased profits realized through a more effective marketing and negotiation strategy could more than make up for the cost of your agent’s commission.

I can navigate the ins and outs of the housing market for you and make your selling process as stress-free as possible. You may even end up with an offer for your home that’s better than you expected.

BYPASS THE PITFALLS WITH A KNOWLEDGEABLE GUIDE

Your home selling journey doesn’t have to be hard. When you hire me as your listing agent, I’ll develop a customized sales plan to help you get top dollar for your home without any undue risk, stress, or aggravation. If you’re thinking of buying or selling a home, reach out today to schedule a free consultation and home value assessment.


Higher Rates and Short Supply: The State of Real Estate in 2022

 Monday, June 6, 2022     Marion Goard     Community News and Events Financial Health House and Home Real Estate Market Buying and Selling

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Canada's housing market hit a boiling point last year as homebuyers clambered for real estate in regions with significantly more demand than supply. But now that homeowners and buyers alike are feeling the pinch of rising interest rates and record inflation, the market appears to finally be simmering down.

That, in turn, could create a welcome opening for shoppers to be more selective with their searches. However, buyers hoping for a major downturn in prices may be left disappointed. Although home values in some segments are beginning to sag under the weight of higher borrowing costs, a persistent housing shortage is expected to keep prices high.

Read on for a closer look at some of the top factors impacting Canada's real estate market and how they could affect you. 

RISING MORTGAGE RATES ARE COOLING AN OVERHEATED MARKET

Over the past couple of years, home-buyers have faced record-high price appreciation and intense competition—in part due to historically low mortgage rates that were a result of the Bank of Canada’s efforts to keep the economy afloat during the COVID-19 pandemic.

According to the Canadian Real Estate Association (CREA), in 2021, both the number of sales and average home price hit at an all-time high, with demand for new homes far exceeding supply. This trend continued through early 2022, despite widespread predictions that the Bank of Canada was gearing up to increase interest rates.

But now that the central bank has officially begun pushing its key interest rate back up from emergency levels, the housing market is responding, with the pace of home sales cooling in March, April and May. The Canada Mortgage and Housing Corporation (CMHC) predicts that the housing market will continue to moderate in the coming year.

The feds plan to keep raising interest rates as necessary to fight inflation, which means target rates could rise by another 1 to 2% or more over the next year. That, in turn, will cause both fixed and variable mortgage rates to rise.

As Senior Deputy Governor Carolyn Rogers noted in May: “We need higher rates to moderate demand, including demand in the housing market. Housing price growth is unsustainably strong in Canada.”

What does it mean for you?

If you’re shopping for a new home, expect mortgage rates to keep rising into 2024. So, you’ll need to act fast if you want to get in at a lower rate. However, the cooling effect should make for a less competitive market. I can help you chart the best path.

If you’ve been thinking about selling, higher mortgage rates may shrink your pool of potential buyers, so don’t wait too long to list. And if you are up for a renewal, you should also act quickly or risk paying a higher rate. Contact me to discuss your options.

DEMAND AND PRICES ARE STARTING TO SOFTEN IN SOME SEGMENTS

Nationally, home prices soared a record 26.6% last year, an unsustainable rate of appreciation by any measure. But now that the Bank of Canada has put rock-bottom rates in the rear view window, sales have begun to slow.

Soon after the Bank of Canada began raising interest rates in early March, the real estate market responded. According to the CREA, in March, home sales fell by 5.4% on a month-over-month basis and the Aggregate Composite MLS® Home Price Index (HPI) ticked up just 1%, “a marked slowdown from the record 3.5% increase in February.” 

By April, home sales dropped by another 12.6% over the previous month as homeowners and buyers continued adjusting to higher rates.. “Following a record-breaking couple of years, housing markets in many parts of Canada have cooled off pretty sharply over the last two months, in line with a jump in interest rates and buyer fatigue,” said CREA Chair Jill Oudil. Meanwhile, prices are still rising in some markets, but are sagging in others, causing the HPI to dip in April for the first time since 2020.

As the Bank of Canada continues pushing up rates, more buyers may give up on their home-ownership dreams if they feel too squeezed by the combination of high rates and high prices. Still, many experts say a major downturn in prices is unlikely. That's in part due to the fact that there still aren't enough homes available to meet the demands of a growing population, says CREA CEO Michael Bourque. “The supply of new homes is not even close to keeping up with demographic changes and population growth.” As long as housing remains a scarce asset, prices will remain relatively elevated.

What does it mean for you?

If you’ve been waiting to buy a home, now may be the perfect time to jump in the market. There are deals to be found if you know where to look. But don’t wait too long, or higher mortgage rates will erode any cost savings. I can help you find the best opportunities in today’s market.

For homeowners, the outlook is still bright. Governmental interventions are being put in place to stabilize the market–not crash it. And demand for housing and a strong job market should help protect your investment. 

INVENTORY REMAINS TIGHT

According to the CMHC, housing starts trended higher in April after a small downturn in March. Overall, new homes are still being built at a faster clip today than in the past, but at a slower pace than we saw in 2021, noted CMHC Chief Economist Bob Dugan. Home-builders are facing a wide range of challenges, including persistent inflation, rising rates, and ongoing labour shortages.

Increased federal investment could help counteract at least some of those challenges. The federal government recently announced plans to help double the pace of housing construction over the next decade by funding significantly more new and affordable housing. It also announced additional relief measures, including a temporary ban on foreign investment, doubling first-time buyers' tax credit, and halting blind bidding wars.

In addition to fewer homes being built, new listings are also down, according to the CREA’s sales report. But a decrease in demand is offsetting the impact in some areas. “A little more than half of local markets were balanced markets…a little less than half were in seller's market territory.”

What does it mean for you?

While supply remains at historically low levels, even a modest bump in inventory can help take pressure off of buyers. If you’ve had trouble finding a home in the past, give me a call to discuss what we’re currently seeing in your target neighbourhood and price range.

If you’re a homeowner, it’s still a great time to sell and cash out those big equity gains. Contact me to find out how much your home is worth in today’s market.

I'M HERE TO GUIDE YOU

While national real estate trends can provide a “big picture” outlook, real estate is local. And as local market experts, we can guide you through the ins and outs of our market and the local issues that are likely to drive home values in your particular neighbourhood.

If you’re considering buying or selling a home, contact me now to schedule a free consultation. I can help you assess your options and make the most of this unique real estate landscape.

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