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The real estate market in BC in the past few years has seen a steady increase in home values. Fuelled in part by the Vancouver real estate market and local market forces of less supply and steady demand.
OK, How Much is my House Worth?
You have probably heard the saying, ‘your home is worth how much someone is willing to pay for it’. That is half the story, the other half has to do with what a seller is willing to sell. True home values generally fall within a range with an ideally buyer or best case scenario at the top of the range. If a home could potentially sell for $430,000 but it is instead listed for $399,000 there is a decent chance that even if a Buyer could afford/qualify for $440k they would still offer anywhere from $385k to $430,000 for that home that is listed at $399,000, it is just human nature.
The Listing Agent
Determining a listing price range can be part science and art so it is possible to get a wide range of values from different real estate agents or real estate appraisals. When determining a list price it is helpful to have experience with a large group of buyers to get a sense of what buyers are looking for in a property and how much they are willing to pay for those features. Bank appraisals for a home can be ten’s of thousands of dollars off (high or low), and property assessments can be up to 100’s of thousands of dollars off true market value. The market value for a property always falls into a range – the ideal buyer will buy at the top of the range. Depending on a Sellers personal circumstance/preference this can actually play a role in determining how much their home is worth. A motivated seller generally will price their home at the lower end of their house’s market value range.
Price is the easiest thing someone can change about a property. A Buyer’s preference in floorpan, location, features, etc are much harder to change than its price. Your house could have an ‘excellent price’ to a certain buyer but to other buyers they would not be interested in it for basically any price. Listing your property on a multiple listing system with a good real estate agent helps ensure you give every buyer the best opportunity to buy your home and the best opportunity for you to enjoy the experience and maximize the sale price of your home.
Are you thinking of Selling your home and would like a complimentary Home evaluation? Please feel free to contact me.
Call or text: 250-320-0154
It is an exciting time to buy real estate but be aware you don’t always make money when you buy your home. The costs associated with owning real estate can quickly add up. There are transfer taxes, closing costs for a lawyer/notary, property taxes, city utility fees, replacement insurance, mortgage insurance, mortgage interest fees and finally real estate agent fees. Picking the right house can be crucial to better your financial position when owning real estate and picking an agent can help you pick the right home. In this post I will talk about the passive and active things a Buyer agent can do to help Buyers gain financial freedom through real estate.
Typically Buyers don’t pick buyer agents. The majority of the time the Buyer agent tries to “pick” a client and this happens either through an online inquiry, phone inquiry, open house or referral by a friend or colleague. When you go looking for an agent you quickly realize that there are 100’s of agents and we all say the same thing. Background information on agents are usually missing or minimal so it is normal for buyers to wind up working with an agent they don’t know much about.
The value the buyer agent brings to a Buyer, generally speaking, is as follows:
- Buyer agents make it easy for Buyers to look at multiple homes and keep their identity private rather than having to contact multiple sellers or seller agents. This means the agent needs to be available even on short notice.
- The Buyer agent makes it easy to write an offer on a property. Generally a custom legally binding contract can be created within an hour of looking at a property, any day of the week. This service is important due to the unique nature of real estate – you want to secure the property that you like sooner rather than later because another property like it might not be readily available.
- They give advice and have a fiduciary duty regarding contractual subjects and conditions on any one particular property. In this respect Buyer agents give Buyers assurance backed up with actual liability insurance usually up to $3 million dollars.
- The buyer agent can connect the Buyer with reputable sub contractors, mortgage specialists, and home inspectors to help ensure that the home buying process goes as smoothly as possible with minimal stress.
- They give advice about general market conditions as well as specific advice down to a single segment and single property, ideally speaking, helping the buyer ultimately find the right property for them so that the buyer can have the best chance of building wealth.
The first two points are probably the most important practical values a buyer agent can bring to the table and these two points also require the least amount of knowledge/experience. Just by doing these two points, a lot of Buyers appreciate the services of their agent and just these two points can mean the difference between securing a great property or getting ‘stuck’ with a not so great property or renting. These are the passive things an agent can help a Buyer with.
The last three points generally require more knowledge and experience to do well. The agent becomes more of an advisor than a passive participant. These points require more of an active approach where the agent tries to actively ask questions that can help them better understand the needs of a particular Buyer. Outside of being available, typically the biggest difference between one agent and another one has to do with these last three points.
Picking the right agent can save you a lot of time and be the difference between finding a property you want to hold on to and build wealth or buying a property that could lead to financial trouble.
Are you looking to buy a property in and around Kamloops? If you would like some help feel free to contact me when you are ready.
Call or text: 250-320-0154
You have put down roots, made great memories, have friends close by, but now you have to sell. The costs associated with selling are not small by any measure – moving costs, lawyer or notary fees, transfer taxes (on your new purchase), and real estate agent fees quickly add up.
Real estate agent fees are one of the greatest costs, but despite this, not a lot of people try to sell their property themselves. Most people decide to use a real estate agent to sell their home for the same reasons they use a mechanic to fix their automobile or a lawyer to deal with a legal matter. It is possible to sell your property yourself, but what you save in commission you could lose in sale price and it involves work in area you are not very familiar with.
As you know, real estate agents provide the following services:
- answer questions;
- prepare listing documents;
- Sell your property
- keep you at arms length from potential buyers so that you can maintain your privacy and not get emotionally involved with a potential buyer;
- offer insight on current market conditions and provide real estate advice when needed;
- help your property standout;
- limit your liability;
- Give advice on how to negotiate a good price for your property;
Based on my experience, generally speaking, this is the order of importances most people have when deciding who to use as a real estate agent or brokerage and why most people just rely on a referral from a friend or number of listings agent has to sell their property.
The real estate industry is big business. For example, in Kamloops with a population of about 95,000 on average there is about $75 million of transactions per month in our real estate market. Collectively, real estate agents are trying to make that number as big as possible. Real estate agents are like the managers of the real estate industry and for their services they charge Sellers a commission usually of no more than 4%. In return, Sellers hopefully get a good management team that consistently makes their wealth improve by more than 5% to offset this cost. I say management team because when you hire one agent you are indirectly hiring all agents. In theory, your listing agent is trying to help you achieve the highest sale price while a buyer agent is trying to help buyers achieve a lower sale price.
When choosing a real estate agent, Sellers should look for good management skills and an entrepreneurial spirit. Good managers not only have good people skills, work hard, and are honest, but they also look for ways to make things more informative and transparent. Good entrepreneurs always have the energy to try to become more efficient and effective. When you are seeking a real estate agent keep these managerial skills in mind because they should be at the heart of any good real estate agent’s business. One way to show entrepreneurial spirit is to be proactive in marketing a home with high quality pictures, and even videos that give your property a story so that there is a great first impression of the property.
Obviously selling your home doesn’t suck. But chances are you would not have read this article if I called it, “Sell your property with me for top dollar quickly!”.
Call or txt: 250-320-0154
Here is an update on the Kamloops real estate market for April 2016. In this update you can learn about which areas of Kamloops are hotter than other areas and which types of properties tend to sell the fastest.
March real estate numbers are out and here is a video detailing what is happening in the Kamloops market! Find out which areas of Kamloops are the hottest right now and what types of properties are in demand the most.
Brocklehurst or as the locals call it Brock is one of the older parts of Kamloops that was largely farm land as little as 40-60 years ago. Brock has great soil and nice flat building sites. The lots in Brock can be quite big. The Kamloops airport is located in Brock and if you travel past the airport you come across land that looks prime for further development. You can eventually get to Kamloops lake which has recently benefited from the Resort community of Tobiano and it marina facilities. If you are thinking about looking into Kamloops real estate for sale contact Andrew Thompson for the best information about Kamloops and area real estate.
Single Family Houses
During 2011 there were 140 sales of single family houses in Brock. Based on the houses that sold the average list price of these houses was $343000 and the average sale price was $334406. The average days on market for the houses that sold were 85 days. The average size of the house was 2000 square feet.
This is a picture of that average house. It is a 3 bedroom, 3 bathroom home.
There were 44 sales in Brock in 2011. The average list price of a Brock townhouse/condo that sold was for $200879 and it sold for $192622 after being on the market for an average of 56 days.
This is a picture of an average condo/townhouse that sold in 2011: This townhouse has 3 bedrooms and 2 bathrooms
There was 2 sales of lots in Brock in 2011. The average list price of the lot in Brock was $121950 and the average sale price was $118,000. The average days on market for the two sales was 6 days. The average size of the lot was 11350 square feet.
In a Buyer’s market where prices are coming down more people are thinking about buying rental properties. If you are one of those people you will be one of the elite! In fact only about 4 percent of Canadians decide to buy rental properties as part of their investment portfolio.
One of the herdles that investors have to get over to begin buying rental properties is finding down payments! Here are 7 options for you to consider to get those funds:
- 1. Liquid Assets
You can sell off some stocks, sell your car, your coin collection, or rare doll collection etc.
- 2. Real Estate equity
Properties tend to appreciate over time you can now take up to 85 percent (as of March 2011) of your equity out of one of your other properties! You usually have two options take out a mortgage for the full amount of equity (usually at lower interest rate or get a line of credit (LOC) for the amount. By getting a LOC you don’t have to borrow the full equity amount. You bank might offer a ‘re-advanceable mortgage/LOC’ combination where every time you make a principal and interest payment on your mortgage, the amount of principal that is reduced in the mortgage is automatically available to you on your LOC.
- 3. High-ratio insured Mortgages
Put less money down on a property. This is a very difficult option in the present market conditions, as described below:
Up until 2006 The Canada Mortgage and Housing Corporation (CMHC) was the only mortgage insurer who would insure rental properties. AIG United Guaranty entered this market in late 2006 and targeted the residential market coming up with 90% financing for investment properties. As well GE Financial entered the market and matched any service AIG would offer. Then in August of 2007 a rumbling from a hedge fund in France led to an avalanche called the “sub-prime crisis.” As a result GE and AIG both withdrew from the market of residential rental properties in Canada even though Canada was relatively impervious to the sub-prime crisis.
In April 2010 bowing to the concerns that the Canadian housing market had not only recovered from the recession, but was in fact getting overheated once again, the government stepped in and annouced further changes. They simply eliminated any CMHC-insured high-ratio mortgages for real estate investors with less than 20% down.
- 4. Sub-prime Mortgages
Not many people understand sub-prime mortgages. Sub-prime mortgages are lent out when the person or the property is ‘sub-prime’. In Canada the number of sub-prime mortgages represented less than 5% of the mortgage market where as in the US sub-prime mortgages represented up to 25%. Sub-prime mortgages came about to service the individuals who had a hard time proving their income (for example the self-employed).
Ever since the sub-prime crisis virtually no lendersare active in this market. The few that remain will go up to 85% but that changes every month depending on market conditions.
- 5. Private Money
When every option is exausted to get cheaper conventional money look at private money. Private money is not for everyone. Private money is best used on a short term basis. Suppose you find an ideal property but the current owner has the rent well below market value, but you have to wait a year to increase the rent. At present the CMHC will only grant you a first mortgage for up 55% of purchase price based on the current DCR calculations. If you are very confident in the market and value of the property private money might be a great short-term solution. Financing for flips might also be a good option.
Don’t confuse private with a zero-down option. Just because the money comes from a private source and not a bank doesn’t mean that the lender doesn’t worry about risk. Some private lenders worry more about security than the banks.
- 6. Vendor take-back mortgage
In the case where the market favors the buyer vendors might be willing to do a vendor take back mortgage (VTB). VTB’s are essentially a second mortgage that is arranged by the vendor. Say for example, you wanted to buy a property but didn’t have 20% to put down you could approach the seller and ask them if they would ‘take back’ or grant you a portion of the down payment say 10%. There is currently no Canadian bank that will allow the VTB to be as high as 20%. Banks typcally only allow up to 10% of the mortgage to be VTB on rental properties.
- 7. Joint Venture partners
A joint venture partnership (JV) can be structured many ways but the most popular is when one partner does all the leg work while the other provides the cash. Both parties would be on the title and therefore responsible for the mortgage. The JV can be for whatever percentage you negotiate.
I hope you have found this information informative. Finding a good rental property includes using a good Realtor. Please contact me if you are considering buying rental property in my area!
As the old saying goes…”Times change.” That is never more true than with the real estate business. Back before there was internet marketing running ads in the newspaper for your home became a vital part of the selling process. Newspaper ads were vital in getting the word out that a property was for sale. Buyers were far less sophisticated and at the mercy of the local information that was available to them and that information was limited to their individual agent or brokerage that they were dealing with at the time. Buying a home back then could be a lot harder and depended greatly on brokerages to give out information.
Since the internet age the marketing of a well known product, like a house, has been dramatically streamlined and made easier. The internet has allowed organizations to easily gather information and sort it so that it can be easily viewed and analyzed. Everyone knows that if they want information on a certain topic they can “google it” and answers to their questions will magically appear before their eyes. As real estate professionals in Canada we enter listings into a large data base following strict guidelines that keeps track for past sales, expires, and active listings. We even made it easier for Buyers looking for homes to find them, no website is required, just an email account. In fact, properties that meet a Buyer’s criteria can get emailed to them directly as soon as they hit the market or change in price.
Before the internet it was not hard to see where the value was in using a brokerage to sell your house. Today the value of real estate agents have shifted to analysis of the data that is now available and analysis of the buying processes itself. Today, just like in any established industry, the value of a good real estate agent is all about making the home buying process more efficient. There are a lot more options out there for the average buyer and a lot of potential risk they might run into. Prices of homes have dramatically gone up and there is an expectation of transparency from the public to insure that confidence remains as high as possible. It is now the real estate agents job to insure that Buyers are treated with VIP treatment and guided to make the right choice(s) when it comes their home purchase. Every buyer has their own needs that is based on their particular personality and lifestyle. As a sophisticated real estate agent I know it is in everyone’s long term interest that they find a house that best meets their needs so that financial freedom and not hardship can be had through real estate ownership.
Interested in finding more information on the Kamloops real estate market?