Dos and don’ts for home buyers and sellers

home buyers

 

If you’re thinking of moving, now’s the time
From Saturday’s Globe and Mail
Published on Friday, Feb. 19, 2010 7:57PM EST
Last updated on Saturday, Feb. 20, 2010 3:21AM EST
Advice for sellers from Toronto real estate agent Laurin Jeffrey:
1. Get Moving
“If anyone’s thinking of selling, now’s the time,” Mr. Jeffrey said “Prices are up, interest rates are down and there are slim pickings out there.” Spring is just ahead, and that’s high season for buying and selling homes. Mr. Jeffrey believes that spring 2010 could be strong as sellers move to take advantage of high prices and buyers capitalize on low rates.
2. Under-price
Ask a little less for your home than you think you could get, Mr. Jeffrey suggested. “If you think it should be $359,000, make it $349,000.”
The benefit: more traffic and more offers. “Hopefully you wind up with people walking out the door while another set of people are waiting to come in.” Other benefits: a quick sale that saves your from weeks of people traipsing through your home, and gives you more leverage in getting the closing date you want.
3. Stage your home
Stagers, or fluffers as they’re sometimes known, are invaluable, according to Mr. Jeffrey. “They can make or break a place. Most people’s decorating skills are not as good as they think they are.” Stagers can bring in a few pictures, rent you a snappy dining room table or provide some furniture to fill out an empty house. Expect to pay something in the area of 1 per cent of the value of the house. Can you get it back through higher sales price? “Hell, yeah,” Mr. Jeffrey said.
4. Be strategic with renovations
Fixing up kitchens and bathrooms offers the best return on your investment, Mr. Jeffrey said. Uniqueness is a good thing when planning a reno, he added. “If I see another kitchen with granite countertops, stainless steel appliances and potlights … please, some originality, people.”
Advice for buyers from Robert McLister, a mortgage planner with Mortgage Architects in Vancouver and editor of the Canadian Mortgage Trends blog (canadianmortgagetrends.com):
1. Reserve your mortgage rate
Negotiate your best rate and then ask how long your lender will hold it for you. Up to 120 days is typical, but Mr. McLister said one lender he’s dealing with will go to 180 days on a five-year mortgage if you give up a little bit on the rate.
2. Use a mortgage broker
Sure, it sounds self-serving of Mr. McLister to say this. But consider the rationale: “We have three dozen core lenders we deal with that have real good interest rates and a big selection of products,” Mr. McLister said. Your bank? One line of products, and the rates are what they are. Brokers can also help with the details. If you don’t think you’ll be making any lump sum payments on your mortgage, a broker might be able to save you 0.3 percentage points on your interest rate.
3. Don’t max out
Lenders will allow payments on your mortgage plus other debts to eat up to 44 per cent of your gross annual income. “The limits do not give you enough of a buffer in case interest rates rise,” Mr. McLister said. His suggestion: go no higher than 38 per cent.
4. Think about a fixed rate
Studies show variable-rate mortgages cost you less interest over the long term, but Mr. McLister quoted a forecast calling for the prime rate (which guides variable-rate mortgages) to more than double over the next several years from its current level of 2.25 per cent. His suggestion: first-time buyers putting 5 per cent down should think about a five-year, fixed-rate mortgage, while experienced buyers should take a look at hybrid mortgages that allow you to have a fixed-rate component and a variable-rate component.

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