Buyer's Advantage

"Immediate Delivery" New Homes

Little Known Buyer Advantage Your Builder WON'T Tell You

Some builders offer newly-constructed homes available for immediate delivery. These homes are usually ready to move into within 30 days. That means some builders are eager to sell - but don't expect them to say so.

Immediate delivery homes often are available for various reasons:

• The community is nearly complete so the builder went ahead and had the on-site contractors build "spec" homes on the last lots, or the model home is for sale.
• The contract on the home fell through.
• Builders purposely build homes for immediate delivery for buyers who are relocating or who have sold their old home and need to move in quickly.

An immediate delivery home may be specially priced, although builders sometimes add financing incentives or free options rather than dropping the price. Recent buyers understandably don't want the last homes on the street to sell for less than they paid for their home.

If you need to move in quickly, or prefer seeing and walking through what you're buying before you sign a contract, an immediate delivery home could be the right choice for you.

Buying a Home Builds Wealth

How to Buy a Home in Today's Market

Some buyers today have had their desire to buy dampened because they think they can't. In fact, today's market offers a unique opportunity to save by buying now. First of all, properties are available now below the average market price, with selections through all price ranges for starter homes, buy-up houses, executive properties and luxury estates. Today is a good time to start on the path to your dream home.

Also, lenders are offering attractive rates and innovative financing, such as buy-downs and various adjustable loans. That means your same income can qualify for more home today.

Buyers who act now not only can take advantage of today's market, they also can begin to benefit from the Big Four wealth builders of homeownership.

Four Wealth Builders

1. Leverage Leverage means using borrowed money (OPM - "Other People's Money") to control a property and receive its benefits. Here's how leverage works. Say you've acquired a $100,000 house with only a 10% down payment ($10,000). Suppose the property appreciates 10% in the first year and the house is worth $110,000. You've "earned" $10,000 on your investment of $10,000 - a profit of 100% in a year. (Financing costs would, of course, lower the net yield) That's leverage - a big return by using borrowed money.
   
   If home prices rise only 3% a year in the next decade, the home your bought this year for $100,000 would be worth $134,392 in ten years. With $10,000 down, you'd realize a 344% profit. If prices rise 5% a year, you'd profit 629%; at 8% a year, you'd profit 1,159% due to your leveraged purchase.
2. Tax Breaks The capital gain you realize when you sell your home is tax free. This gain may be very substantial and could be used to move up to your dream home or provide a fine nest egg as you move towards your retirement years.
   
   You may also be able to structure your affairs to make your mortgage tax deductible. If you have an investment portfolio equal to or larger than the mortgage you presently have or will have on your home, you may be able to structure or restructure your portfolio and mortgage such that your mortgage interest is tax deductible.
   
   If you and your spouse have not owned a home in Canada which you occupied as your principal residence in the last five years and have RRSP's you could buy that first home or your dream home with a tax free down payment using Revenue Canada's Home Buyer's Plan (HBP).
   
   If you and your spouse have not owned property in British Columbia you may qualify for a reduction in the property transfer tax.
3. Savings Mortgage principal payments go into your own pocket, not someone else's (like your landlords). You're saving and building equity as you pay for a home that's appreciating in value. (The amount of appreciation depends on inflation, the local economy and whatever home improvements you make.) But there are fewer appreciation windfalls in today's market. You must buy wisely. Not all properties in all locations will give you the top-dollar investment return you want. Using a mortgage professional and a real estate professional from the beginning will put you way ahead of other hopeful home buyers.
4. Owner Pride The fourth pillar of home owning involves, of course, many things besides keeping a roof over your head. You acquire, along with a structure, the responsibility for maintenance and repair. Most homeowners find the benefits of owning far outweigh the upkeep efforts - and many homeowners enjoy the work, after all you're working on your property. You also put down roots and become more involved in the community. In short, you own an investment that builds intangible riches while you lock in your housing costs and avoid unpredictable rent hikes.

How You Can Buy

Here are six ways buyers can take advantage of today's real estate market.

1. Be Realistic Set your sights realistically; don't expect to move directly into your dream home in the most expensive part of town. Get a toe in the homeownership door by buying a modest place, modestly priced - in a good location. Improve your home as you can afford to; and/or let your equity build to help you buy the dream house in the dream location later.
2. Closing Cost Help If you haven't been able to save for a down payment and closing costs, consider:
   • Negotiating a gift, loan or shared-equity arrangement with parents or other people looking for a good investment.
   • Selling something of value - with the realization that you'll be able to replace it later.
   • Financing the closing costs, if your lender agrees, or getting help from the seller.
   • Using a tax refund.
   • Borrowing on your life insurance or securities.
   • If your parents own their own home and are over the age of 62, they may consider doing a Reverse Mortgage programme which allows them to unlock a percentage of the capital they have accumulated in their home (without having to make any payments while they continue to own the home) to assist with your down payment. The Canadian Home Income Plan (CHIP) is a programme supported by the two major Canadian Banks and is available to homeowners in British Columbia, Ontario and Alberta.
   
    
3. Pre-Qualify "Pre-Qualify" yourself as a borrower by calculating what price home you can afford. Generally (depending on lender and type of financing) lenders consider your total basic monthly affordable housing cost - including mortgage, principal and interest payments, real estate taxes and insurance payment. Your affordability is based on 30% to 32% of your gross monthly income. Or, with additional long-term debts included, the ratio is up to 40%. Remember: Some lenders extend these limits, based on their assessment of your financial situation and the loan plan you select. As a pre-qualified buyer, you'll have an advantage over other buyers who aren't when sellers consider your purchase offer.
4. Innovative Financing Get acquainted with the various kinds of loans available: fixed rate, adjustable rate, government backed mortgage insurance (CMHC), assumptions, buydowns, blended loans, seller takebacks and more. (Terms and interest rates vary considerably - among loans and among lenders; these factors, along with your income and length-of-ownership expectations, must be weighed - and we're here to help you do that).
   
   Canadian Mortgage and Housing Corporation (CMHC), for example, now makes available to home purchasers who meet certain qualifications access to mortgage insurance which allows them to obtain a mortgage and purchase a home with a down payment of as little as 5% of a property's value.
5. Choose The Right Lender For You Your mortgage options are numerous, thanks to recent innovations in mortgage plans. We can help you save money by structuring your mortgage to your best advantage. Look to us for:
   • Loan programs explained plainly and simply
   • Full financial assessment and explanation of your best options
   • Loans processed quickly
   • Dependability
6. Consult A Professional There are more details involved in buying a home than are outlined here. If these basics seem appealing, let us help you understand the homebuying process. Please call for more information.

Some Different Reasons to Own Your Own Home

You've probably seen lots of financial arguments about why you should own your own home rather than rent. This includes budgeting (no rent increases) and the tax savings you'll most likely have. Now I'm going to give you some reasons you probably haven't heard.

Freedom to pursue other goals in life once the major goal of home ownership is achieved Strange as it sounds, many of my first-time buyers have told me that once they bought the house, other things in their life started to fall into place. It's as if not owning took so much of their mental energy that other goals were not worked on until that big goal was reached. So buy a home and get on with your life!

A greater sense of belonging to the community

Once you own a home, you feel more attached to the city in which you live. You're more interested in what happens in town, to the roads, schools, and shopping areas. Some people even become involved in local politics, which you seldom see a renter do.

A commitment to something, a sense of stability

Home ownership is an anchor, something that cannot be pulled out from under you. You'll never get a notice that you have to move. You're kids will never have to change schools. It gives you freedom to plan years ahead.

You can change things, a feeling of being in control

It's your home. You can add to it, remodel it, change the landscaping, do whatever projects you want. You have a feeling of being in control of something in your life. At work we don't always have control of what happens, but your home is your castle that you have dominion over. You can see what you're building take shape before your eyes.

More control over the children than in an apartment complex

In a neighborhood, kids usually play in the yards or go to friend's houses a few doors away. My clients have told me that in an apartment complex they never knew where the kids were. They could be in any of hundreds of apartments, doing who knows what. In a home you get to know the neighbors and watch out for each other's kids.

Children do better in school and feel more secure

This one surprised me, but buyers have reported to me that their kids calmed down in school after they bought a house. I don't know why, but it seems to work that way. I remember a single mom watching her son play in the yard, making steps in the slope and building things. She didn't have to tell him to leave everything alone, like she did at the apartment complex. I guess kids feel the same need for control we adults do.

Time and money saved by not going to the Laundromat

A small point, but if you have kids, you know the value of this one. You gain a whole evening a week when you buy a house! The wash gets done in between other things, or while you're at work. What would you do with the extra evening you'll have? How about going out for dessert with your spouse with all those quarters?

We've been in a home of our own for so long; we take these benefits for granted. We forgot what it's like to be renters! If you have anything you can add to the list, please let me know via email. I'd love to hear from you!

An Agent's Roll

Straight Answers About an Agent's Role

"Seller's Agent? Buyer's Agent? ~ What Does All This Mean To Me As A Homebuyer Or Seller?"

As a homebuyer or seller, you and the real estate agent working with you share a common goal - to buy or sell a home. Real estate agents are professionally trained to accomplish that goal. Simply put, agents are matchmakers bringing buyers and sellers together.

You should understand right from the start what type of relationship exists between you and the agents you deal with. Real estate agents - brokers and sales associates - in most provinces are required by law to let consumers know whether they are representing the buyer or the seller.

Traditionally, real estate agents represented the seller. That was true whether the agent helped the homeowner market the home or the homebuyer find the right home. Agents were legally bound to represent the seller. Typically the seller paid both the listing agent and the agent who brought the buyer.

Today's real estate market has introduced new ways for real estate agents to work with buyers and sellers. Now consumers have choices. If you want to sell a home, you can engage a real estate agent who is a "seller's agent". If you want to buy a home, you can work with a "seller's agent", a subagent of the seller's agent, or in many areas you can engage a real estate agent as a "buyer's agent."

To help you understand your choices and their implications, this brief brochure answers many basic questions. For indepth answers to your specific situation, talk with a knowledgeable real estate professional and ask about local practices. Provincial laws vary and are constantly changing. Be sure you understand and are comfortable with the options involved when you engage the services of an agent.

Remember the goal of all real estate agents is the same - to help bring about the sale or purchase of a home. Expect to be treated with honesty regardless of agency relationship. Together buyer, seller, and agents get the job done.

Straight Answers About A Real Estate Agent's Role

Know The Players

To understand agency, it helps to first know the names of the players. A "broker" is a person who has passed a special exam to earn the designation and is licensed by the province. Typically a principal broker forms a real estate company and recruits real estate licensees (salespersons and associate brokers) to the company as associates (often called "agents"). Agency agreements are legally made between the client and the company, personified by the principal broker. The associates, or agents, represent the principal broker by working personally with the firm's clients and get some or all of the resulting brokerage commission.

Agent and Principal

Legally speaking, an agent is the person who represents and acts on behalf of another person, called the principal. The agent owes certain duties to the principal. These duties generally include care, confidentiality, full disclosure and accurate accounting, although some specifics may vary from province to province.

Seller's Agent

A real estate agent who is employed by and represents only the seller in a transaction is a "seller's agent". This agent is also known as a "listing agent", because the agent lists the home for sale and generally markets it through a Multiple Listing Service. The listing agreement serves as a contract between the seller and the agent, and spells out how the seller's agent will be paid. Responsibilities of a seller's agent include getting the highest purchase price and best terms possible for the seller.

A seller's agent can offer buyers a variety of services, including a diligent search to find the right home, an explanation of available financing, calculation of monthly payments and estimated settlement costs, etc. The seller's agent is expected to act honestly and in good faith and may also be required by provincial law to disclose to the buyer certain kinds of information about the property.

However, a seller's agent cannot divulge confidential information to the buyer that is not in the best interest of the seller, such as what price the seller will accept, or offer an opinion of the home's value.

In many instances, a subagent of a seller's agent produces a buyer for the home. Although the subagent is often first contacted by a potential buyer and works hard to help the buyer find the right home to purchase, the subagent - like the seller's agent - represents the seller throughout the transaction and is responsible for getting the best terms possible for the seller.

Buyer's Agent

A real estate agent who is employed by and represents only the buyer is a "buyer's agent". The agreement between the buyer and the buyer's agent serves as a contract between them and typically spells out the agent's duties and how the agent will be paid. The buyer's agent may be paid by the seller through a commission split with the listing agent or paid a sales commission by the buyer or by some other mutually agreed - upon formula. Some buyer's agents may also (or instead) charge the buyer a retainer or hourly fee for services. In addition to helping the buyer with the house-hunting process, the responsibilities of a buyer's agent - unlike those of the seller's agent or subagent - include representing the buyer's interests throughout, and working to negotiate the best price and terms for the buyer.

In-Company Situation

An "in-company situation" occurs when the potential buyer is working with an associate from the same real estate company that listed the home for sale. The solution to this situation goes by different names in different parts of the country - for instance, "designated representative", "transaction broker", "facilitator" or "disclosed dual agent".

Provincial statutes and common law determine how an "in-company situation" is handled. Your real estate professional can explain the alternatives to you. Keep in mind, however, a broker and associates must maintain the confidentiality of their clients. They cannot, for instance, without permission reveal to a buyer what lower price their seller would accept nor to a seller how much more their buyer is willing to pay.

In an "in-company situation", as in other agency relationships, the basic goals haven't changed: the seller wants to sell, the buyer wants to buy, and the agents want to help close the transaction.

Commonly - Asked Questions, Straight Answers For Buyers

How can a seller's agent or subagent help me and what can't they do?

A seller's agent or subagent can provide you, the buyer, with many important services. Here are a few: help you determine what price home you can afford and explain how different loans can stretch your buying power; search all homes in the Multiple Listing Service and show you those that you select as best meeting your needs; provide general information about homes, recent area sales if asked, neighbourhoods, and local lending institutions; prepare your sales contract and present it to the sellers; walk you through the homebuying process and keep in contact with lenders, inspectors, and sellers through settlement.

Since the seller's agent is required to share with the seller information you provide, you may want to keep certain financial and other confidential matters to yourself. Common sense should be your guide. For instance, you may not want to say you're willing to pay more than the price you're offering, or that you'd agree to pay more points or closing costs, or that you're especially motivated to buy.

Remember, the seller's agent can't offer an opinion of the property's condition, the value of improvements, any urgency the seller may be under to sell, and if the seller will accept a price below the asking price. The seller's agent assisting you also must respond to such questions as "What do you think I should offer?" and "What do you think the home is worth?" with the answer, "I can only quote the listed price." When it comes to price and terms at the negotiating table, you must be your own representative. The seller's agent will present your offer and bring back to you the signed contract, a rejection, or a counteroffer. You are free to respond as you see fit.

Should I be represented by a buyer's agent?

There is no simple answer. Some buyers want the help of an agent in whom they can confide. A buyer's agent can discuss relative advantages and disadvantages of a particular home, advise on how much to offer, evaluate improvements, and actively participate in negotiating favorable price and terms for the buyer.

Other buyers who are comfortable negotiating for themselves feel a seller's agent or subagent will give them all the assistance they need to find a home and close the transaction smoothly and successfully.

I know the seller's agent is paid by the seller, but who pays the buyer's agent? Compensation arrangements for buyer's agents vary. Surveys have shown buyer's agents generally receive a share of the commission paid from the sale proceeds. Many listing agreements between seller and seller's agent note whether the commission will be split between the seller's agent and buyer's agent or must be negotiated.

There are, however, other ways buyer's agents may be paid. Some buyer's agents collect a retainer fee from the buyer at the beginning, some charge by the hour, and some charge a flat fee or a combination. Often these fees are applied against any subsequent commission received by the buyer's agent. Your agreement with the buyer's agent should specify the details of compensation.

If the buyer's agent I use will split a commission based on the sales price, doesn't the buyer's agent have a conflict of interest when it comes to negotiating the lowest price for me? While theoretically this could be true, in practice buyer's agents would benefit only slightly by failing to help you negotiate the best price. For instance, for every $1,000 paid above the bottom price a seller would have accepted, the buyer's agent only receives a few dollars extra in commission. Most buyer's agents prefer to negotiate the lowest possible price and ultimately receive much more valuable referral business from satisfied buyers.

Some buyers and buyer's agents agree on a payment formula not tied to the sales price, such as a commission based on original asking price or a flat fee.

Can a buyer's agent show me all the homes for sale in the area?

In areas with a Multiple Listing Service, a buyer's agent generally can show buyers almost all available homes, including homes not in the Multiple Listing Service and homes for sale by owner. The listing agreement made between sellers and the seller's agent often specifies whether buyer's agents may show the home. Most sellers want their home made available to the largest possible audience of potential buyers. It is rare, but possible, that a seller may refuse to work with a buyer's agent.

A special in-company situation occurs when you want to see a home that your buyer's agent has listed for sale as a seller's agent, or one that is listed by another agent at the company of your buyer's agent. Provincial laws, individual company policies and local practices vary. Ask the agent whether and in what ways the company or agent might then modify the agency agreement with you if you wish to purchase a company listing.

Can a seller's agent show me all available homes?

In most provinces, the agent can show you any home available through the multiple Listing Service. That includes homes listed personally by the agent, homes listed by another agent in the same company, and homes listed by agents in other companies.

In areas without a Multiple Listing Service or where each real estate company shows only its own listings, both buyer's agents and seller's agents may be restricted to showing their own company listings.

Straight Answers For Sellers

I'm selling my home. Should I agree to let buyer's agents show my home?

Although only you can decide whether you want to permit buyer's agents to show your home, remember the greater exposure your home gets to qualified buyers, the more likely you are to sell it quickly and at the highest possible price. The majority of sellers and seller's agents let any agent help sell the home. Sellers typically don't care who brings a buyer or how the broker splits the commission as long as the house sells.

If a buyer is using a buyer's agent, do I have to pay the buyer's agent a commission? Practices vary by area. Check with your agent to learn about your choices. As the seller, generally you can indicate on the listing agreement whether the selling agent must split the commission you pay with the buyer's agent. Most sellers choose to work with a broker who splits the commission with a buyer's agent even though that agent does not represent the seller's interests. This, of course, maximizes the number of potential buyers for your home. Because the listing broker already is prepared to share the commission with a subagent who produces a buyer, most sellers don't mind when their broker instead shares the commission with a buyer's agent.

Can the seller's agent represent me in the sale of my home and then continue to represent me as a buyer's agent when I purchase my next home? If the seller's agent also works as a buyer's agent, the agent can go on to represent you as a buyer's agent - under a separate agreement - as you purchase another home provided both you and the agent agree to the representation.

How and when will I find out who an agent is working for?

Most provinces require real estate agents to disclose to buyers and sellers their agency relationship. The Canadian Real Estate Association supports disclosure laws requiring real estate agents "to provide timely, meaningful, written disclosure to consumers of all possible agency relationships available under provincial law and the most significant implications of choosing one type over another".

This "disclosure" should take place early, certainly before either a seller signs a listing agreement, a buyer is shown any properties, or the real estate agent is told any confidential information. The consumer usually signs a form acknowledging the agency disclosure.