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Stepping out of the taxi into a bustling downtown financial district, George was ready to take on the world. Two days from starting his new career in this new city, he just had one thought in mind: ”Where do I hang my hat, and start my new life with my new pregnant wife?” Read rest of article…
After selling her home in just 3 days, Anna decided to sit on her front porch and sip what may be her last ice tea at this old house. As she settled into her Adirondack chair, she watched the Realtor selling the neighbor’s house across the street orchestrate stagers, cleaners and videographer.
As Anna took her first sip, “seller’s remorse” started creeping in. “My realtor didn’t fuss that much”, she thought, “and still we sold quickly. But what if my Realtor had done some of the neat stuff the neighbor’s agent is doing? Could I have gotten more for my home? Did I sell too quickly?”
Anna, don’t stress. Even great preparation may not always yield the greatest results. Each property and agent, as well as seller combination, has its own unique blend that results in a very specific outcome.
But since most of us would rather make sure no stone was left unturned when dealing with our high-priced asset, here are 7 things as a seller you must know about your listing agent, so you can inspire them to sell your property quickly, and at the highest price possible.
1. Busy agent: A good agent should be busy, but they also cannot physically handle, at times, the steps you deserve … from preparing you property, to marketing and selling it. Some Realtors have been known to cut their listing commission to attract more seller business. But that has its pros and cons. Realtors flock to larger paychecks, like bees to honey. Want the busy agent to pay more attention to your listing than one of their others’? An agent is likely to pay greater attention to your deal, if they are offered a full commission, where a higher selling price for your property can more significantly impact their paycheck. They are also more likely to invest into marketing your property if their payoff is greater in the end.
2. Hold your realtor to their word. When signing a listing agreement, prepare a schedule of tasks that your realtor commits to and will be held accountable for at each stage, so that once the deal is done, you can feel confident that both of you have done all you planned, and thought was necessary to get you the best deal.
3. Teams. Is your agent working by themselves or as part of a team? Remember that your Listing agreement is not with the agent, but their Real Estate office. Will your agent be willing to tap into the great resources of personnel and advice of their brokerage, especially when your busy agent gets too busy?
4. Online or Get off the deal: It is no longer a myth, but a proven fact that a growing number of buyers and their agents find properties they want to buy online. An even growing number of buyers research in greater depth a property they found on MLS via search engines or websites of the listing agents. MLS is just one destination for most buyers. But even that information is limited to a few sentences and 9 photographs. Want to help potential buyers bond with your property and neighborhood? Make sure your agent is willing to make it easier for them to find all they need to make their decision. Today additional detailed photos, video and audio online tours and even live one-on-one video walk through are becoming more fashionable with travelling or out of town buyers.
5. Drive traffic: Traffic is not only about Open Houses anymore. It is not enough to put up a sign and an MLS listing and expect to find a buyer in this very competitive busy market. To reach the highest price, you must “Chum the waters…” Let all the big buyer fish and their agents know that your property will be coming on the market imminently and offer some key morsels of information to build interest before the property hits the market. Like a Hollywood Blockbuster, your property deserves a great trailer. In fact, a photo or video presentation is one of the proven ways to attract the real buyer. And finally, you must have a great opening weekend. Like a Hollywood Hit, the first and second weekend must be huge, or the property stands the risk of ending up in discount theatres, great, but doing poorly on the bottom line.
6. Negotiate. If your agent is motivated to do the first 5 things in this list correctly, there is a much greater chance that you will have more than one interested party to buy your property in the right price range. Already, the risk of you having “Seller’s Remorse”, is just a faint memory. Other agents and neighbors are starting to take notes from your experience. Motivate your agent to tread carefully not to chase the big fish away. Make sure that price is not the only motivating factor, or risk turning away a great buyer over petty issues.
7. Close well. The ink isn’t dry yet, and your agent isn’t around anymore to make sure all the waivers have been promptly completed, that your moving plans go without a hitch and that there are no delays at the lawyer’s office. Keep contact with your agent throughout this process and make sure to point out the milestones you both marked down in your schedules, post-conditions, so that this great full-fee you agreed to pay them, is well deserved.
Anna, hope you had the best of experiences, even if your agent didn’t have to do all the things your neighbor is asking their agent to do. But for your friends and family, who may someday go through the experience of selling their home, keep these 7 motivational factors handy.
Read other Blog posts or Articles by Yan as seen in “Resale Home and Condo Guide” HERE!
Trump is doing it! So is the Ritz, the Four Seasons and your neighbor. They are selling their Million Plus+ Luxury condos just like you, and often in your tower.
Fall of 2012 may be the cusp of “The Stall” if not “The Fall” of High-End condo market in Canada.
How will you sell your Sky High Retreat in this unforgiving Air War?
Developers, high flying marketing plans, buyer incentives, killer pricing strategies, well-pressed Real Estate Agents. They won’t stop until all their many units have been sold. They compete with each other, and you: the same client that bought from these people. Welcome to survival of the financially fittest.
Mortal Combat? Or an Extreme Sport?
Outspend them? Not realistic. But while they must focus on marketing an entire tower, you only need to sell one unit. So on a per unit cost basis, you can probably outspend your competition. Your team consists of a Great Realtor and his team, family and friends. No one gets paid unless the property sells. Your marketing and online costs are minimal compared to the big shots. You operate like a mosquito, and nail just one buyer. They need to pay a swarm of specialists, even before they start selling.
Out-web them! Create unique and exclusive content that can be regularly updated, repositioned, continuously e-mailed out, and duplicated. Make personal connections with your readers and humanize your property with unique benefits you discovered by living there. Your friends and family have vested interest in your success. They help making your message viral. Your competition does not have true advocates for their success, like you do.
Out- Like them – the love affair with some of the developers may have waned as they look to fire sale some of the units, upset the neighbors and you in the process. Likeability and price can go hand in hand. If your property is priced to market and you are a more personable, accessible, and willing to negotiate than the cold builder rep, you will have an edge.
Out-last them – you can use sales, pricing, and marketing strategies your competition may not. Take your property off the market, just to re-position it with a new price, new paint, new staging, new energy. Time off the market can be a month, or a week. Up to you. But when you do come back on the market, don’t just change the price… (and if price does change, make it a dramatic one) … but make more adjustments all at once. “Wow” the person who has seen your listing before. Attract new prospects, who may not have seen this property yet.
“HOLD ON TIGHTLY/LET GO LIGHTLY” Love your condo, but accept that it is a commodity. Let go of the thing and of the emotion toward what was once a home. Your willingness to part with it will not only encourage a buyer, but empower you to make a deal out of good business sense, and without ego or reservation. Try thinking of what you may do in a month if your sale strategy does not work. Knowing your potential next move alleviates anxiety and desperation. It is a game.
Out-Incentivise them – offer better incentives to buyers – higher end finishes, furniture, appliances, electronics, window shades. You may need to include some aspect of the property you were thinking of taking with you, just to make the price worth paying. Offer to pick up and drop off potential qualified investors at their home, or airport.
Out-Qualify your Buyer – Make sure that the person considering your high end property is actually a strong potential candidate for buying your property. There is an art to it.
I believe that Selling High End Condos is an extreme sport. Try a few things you have not done before, and surprise yourself.
Every time a new client tells me they were approved for a fantastic 1-year term mortgage rate, I get a little more “Yosemidi Sam”. Damn banks in Canada have gone freakin’ mad, I say! All you read is how Financial Institutions are so afraid that same issues that plagued the US Mortgage Industry would creep into Canada. But the no good bankers have currently fallen in love with offering new clients door crashing short term rate mortgages. 1-year term for 2%. Variables at Prime Minus 1%. Anything just to get them to sign with them. MADNESS!!!!
Here is their thinking … Get them into our door for the lowest rate we can afford – even at a loss, then when it is time to renew – say 12 months, we can earn all our losses back, and then some… like converting the cheap 1-year rate into a posted or near posted 5-year rate – which by the way they expect about 80% of you asking for in 18-24 months because their economists predict that rising rates will force the clients to consider longer term fixed rate positions.
Net effect? More than doubling your cost to carry your mortgage within a few short months. Does that sound familiar? Does anyone remember the teaser rates in the US for the first 9-12 months, where the actual rate would be converted to a much higher, impossible to afford, longer term rate?
And no, you won’t go shopping to other banks if that happens. Statistics tell your bankers that 80-90% of their clients don’t switch banks on renewal. You are either too lazy, too late to shop, have too much debt to qualify elsewhere, or had a financial crisis or job loss to get approved elsewhere. So you will sign what they want you to sign, and like most Canadians you will not complain about it.
And what is the client supposed to do in Canada if they are not able to carry the higher rate? Well, you can sell your house, break your mortgage and refinance with another institution… Either way, you are about to pay through the nose for the mistake of taking the door crasher rate 12 months earlier.
At least in the U.S. many mortgages were fully open with no penalties, so you could refinance ten times, as long as you qualified. In Canada, try calculating your Interest Rate Differential penalty. Don’t want to? Don’t bother. It is highway robbery. Back to Yosemidi Sam style, guns a blazing!!!
So news reporters, start asking the hard questions of the same Economists who are telling us what we should be afraid of, while they are serving the same irresponsible strategists at the FI’s who pay them huge salaries, mostly trying to make the banks appear more caring, humane and responsible. Yeehaah!!
Back in 2007 and 2008 I sat in on at least 3 major presentations by a senior economist from one of the major Canadian banks. He is now chief Economist at that same bank. He waxed poetic about the impending Sub-Prime Collapse in the U.S. and how things were about to implode due to how clients were approved in the U.S. How there was no real security behind these mortgages. All the while, his own bank was the leading investor in these same Sub-Prime Mortgages, buying billions and later writing off billions.
How is it that no one at that FI was listening to this clearly superior observer? Could it be because they could not care less, as long as at the time they were buying this crap, they were using our money? Making huge bank for the individual executive, trader and CEO? Well I asked this Economist this same question.
Call me at 647 209 4004 or e-mail me at Yan@EastwoodFin.com if you want to know what he said. I can assure you, you can guess his answer.
I’m going back to Private Lending, this Loony Tunes Stuff is for major, Major Cowboys.
Yan runs his own boutique mortgage brokerage in Richmond Hill Ontario Eastwood Financial Ltd. www.EastwoodFinancial.com
Okay, so you heard all kinds of nightmare stories about investing. From Bernie M., and the Wall Street Brothers to Zeus and the Leprechauns pitching a tent in the bread lines. You told the trusty Canadian financial institution where you banked for forty years to “please hold onto my money” while hell thaws. Your Financial Advisor convinced you to park your life savings in a Tax-Free “Savings” account (Time Out! If you have net losses for parking your cash there, due to inflation being higher than the interest you receive, could that really be called a savings account?)
Some of you may have purchased a long term GIC or a near cash product that is as safe as can be, and you felt good realizing net losses on your “safe” investments. That’s okay. I am not making fun of you. I wish I was there to open your eyes two years ago. Banks spend a lot of money convincing us that we should listen to their advice.
So here comes your neighbor. He went against his father’s advice for the last two years. He invested in a neat little fund idea called “the Mortgage Investment Company (MIC)”. Oh, it hurt your feelings when he showed you his statement: a consistent 7-10% net return for his RRSP eligible investment. What? Oh yeah! That much. But why? How? Is he crazy? The risk of the investment must be huge if he is getting such a tax sheltered return at a time when most of the banks are awash with deposits for which they don’t feel compelled to give you more than a 2% return on term deposits.
Let me be blunt. Although banks can only tell you about products they have access to, and since they control most of the marketing money out there to pitch you these conservative products, their offerings paled in comparison to a MIC.
Let me set the landscape in a few words. Aside for a minor glitch in the value of Canadian Real Estate marker in late 2008 and early 2009, the residential and commercial real estate values have remained reasonably steady in Canada. When banks started to tighten their mortgage lending criteria, it created a void in the mortgage market. This void was quickly filled by private lenders who are willing to take that additional risk that banks have shied away from, in exchange for higher interest rates and fees. With stabilized values, that risk was well worth the returns. Thus arose the greater need for Mortgage Investment Companies (MIC).
Instead of one individual lending money to one home owner, a MIC pools funds from dozens of investors into one fund and distributes the proceeds of the fund proportionately to the amount of the individual investment. The MIC uses the pool of funds to make hundereds of smaller loans, thus diversifying every investor’s risk. This is similar to a Mutual Fund that spreads your risk amongst many products and sells it to you as one basket of goods.
So, if some of the MIC’s mortgages go into default, in theory there would be enough income from the other loans, as well as funds in reserve, to mitigate the shock of the income shortfall. If a property did go into a Power of Sale or Foerclosure, typically there would be enough remaining equity in the property to sell it within a reasonable time on the market and recoup most - if not all of the principal - and in most cases also the interest due to the MIC. There is always a risk that the losses might be significant. There are no guarantees of a certain return and your principal is not guaranteed or insured.
The MIC fund is managed by an administrator. So the investor is not involved in the lending process at all, other than being entitled to the profits. The manager typically takes a salary, collects fees from the borrower for each funded deal, and makes sure all the bills of the fund are paid and the profits are distribured according to its charter. The Administrator does not share in the profits of the fund.
The investments in many MICs are RRSP eligible – in other words you could move the RRSPs you have in the market to a MIC fund. In some cases, you could roll over your profits back into the sheltered fund.
In the next few articles I will dissect how some MICs operate. How they source money, find relatively safe mortgage investments, analyze deals, decide on how much to lend and to whom – in other words assess risk – and finally how they manage to pay such healthy returns, while offering you relatively good security.
If you have specific questions about MICs or any Private Mortgage related questions, Yan can be reached at Yan@EastwoodFin.com
My goal is to help you, the investor, start asking the right questions about MICs and why I feel that a good portion of your RRSPs should be invested in a MIC. My goal is to inform, educate and guide you, so that you “know” where your money is and “like” what your money does.
Yan Gurevich is an advocate of Private Lending in Ontario. A past Director of the Independent Mortgage Brokers Association, Yan is pushing for Canada’s first Alternative Lending Symposium. “Anything to dilute the Monopoly and misinformation dished out to us by the big Financial Institutions in Canada”
You are ready to make more money on your RRSPs and the mortgage Investment Company sounds like a good investment vehicle. You know what a mortgage is, or at least you are interested to understand how one works, and you started reading about MICs. Good. You have the intention and that means you are not just wasting your time.
How do you decide which MIC suits your risk profile and your income requirements?
Start by asking the following questions of the Administrator of the fund:
1 What experience do they have in the mortgage business?
2 Are they known as an authority in the Mortgage industry in the area where they offer loans?
3 Do they analyze all the deals themselves or do they let others review the deals?
4 What sizes of loans will the MIC do?
5 What if the investment is very attractive, but exceeds the loan limit of the MIC? Will the MIC pass on the deal? Syndicate with other lenders? Make an exception and fund the deal any way?
6 What rates does the MIC charge the borrower?
7 What fees are charged to the borrower on 1st, second 3rd mortgages?
8 Which types of properties is the MIC interested in funding? Residential? Commercial? Construction? Multiple Units? Land? Developments?
9 How much money or what percentage of the fund is held in reserve to handle cash short fall due to defaults, power of sale, or foreclosure requirements?
10 What is the target ROI on your investment?
11 Does the MIC have a track record? And are the profits a result of balanced earnings or because a few deals really paid off?
12 How often do you get the Dividends payments, are the direct deposit or a check?
13 How do you liquidate your investment? Is there charge for early redemption?
I will stop at lucky 13. Hopefully there will be some serious questions from you, the reader based on these notes.
I will continue discussing MIC investment Strategies next: exploring arguments for residential vs. commercial and construction funding.
Yan Gurevich started his career in the mortgage business in 2005 in Kitchener, Ontario, and later moved to Toronto. Primary Focus is on close relationships with Private lenders who care about helping the borrower, and offering the borrower a satisfactory exit strategy. Yan owns his own Mortgage Brokerage in Richmond Hill Ontario Eastwood Financial Ltd. http://www.EastwoodFinancial.com
Eastwood is an advocate for an organized lending platform for Private investors and Borrowers, and supports an open, transparent interaction for the growth of private lending in Canada. Yan Blogs about private lending at www.yangurevich.com, and regularly surveys Mortgage professionals across Ontario on how to provide a coherent lending service across Canada.
Yan manages a network group on www.Linkedin.com called: “Private Mortgage Lenders – Ontario”, and hopes to see more lenders and Real Estate investors participate in those discussions. E-Mail Yan: Yan@EastwoodFin.com
I spoke to a well known Mortgage industry expert about what it took to set up her MIC. She explained that despite her broad knowledge of Real Estate lawyers, Lenders and Mortgage Brokers in the industry, few really knew how to set up a MIC, or had an exact idea how to operate it. A handful offered some advice, and could only speak from experience while offering little in terms of reference material.
It was more of a “feel your way through it”, approach. Set some key guidelines that are easy to follow, which make sense to the investor, and try not to break any laws. For me, 3 of the most important qualifies about a MIC manager are: do they have enough experience to assess the risk in a mortgage deal, are they following the rule of law and the corporate charter of the MIC without making unauthorized choices, and are they corrupt?
If you ever had a mortgage, or even lent significant amount of money to a brother-in-law, you probably have enough common sense to know how someone can afford the payments or if you will see your money back. All you want to do when choosing a MIC, is to see if the MIC’s Administrator has the same type of common sense approach. That covers 2 of 3 of my concerns. The Corrupt part can only be tested over time.
Here I want to address the 2 aspects of the MIC we should really understand before investing.
Experience: I would expect a MIC manager to have more than just “bank lending” experience to lend money thorough a MIC. A MIC will rarely see a bank-type deal. Perfect credit, perfect property with lots of remaining equity, and plenty of income to support the loan. So the Manager better have a past as a Mortgage Broker who specialized in alternative lending, or who worked in a managerial position for an Alternative Lender. I also want my Manager to know a thing or two about property valuation and limit themselves to lending areas where they have some knowledge of the market. I would not want a MIC out of Toronto to lend in Thunder Bay, unless the manager has, at least, been to Thunder Bay, placed deals there regularly in his past or present job, or comes from Thunder Bay, thus, still has a few friends there who can drive out to the property and even know the owners. Yes, appraisals are important guidelines for lenders and we will discuss that some other time, but nothing replaces having personal knowlege of the area.
Philosophy: If I am familiar with Residential properties, owned a few in the past, or helped build some homes, or if I always fantasized and considered owning some Mixed use properties like a store and apartment, or a 6plex, then I would feel more comfortable with MIC that places most of its funds in properties as I just described. If I am a builder, or past commercial property owner, or worked in industrial buildings for part of my life, or a farmer who really knows land and what true value of a Marina may be, then I would tolerate a MIC that lent against those types of properties from time to time. There are builders who pool their own funds, once in a while, and lend to other, smaller developers. These lenders feel far more comfortable in that position than you or I might be, as the lenders (builders) have the know-how to complete the project without a pause, and make sure the project returns their original investment, should the borrower fail.
Choose a fund that shares your concerns about lending, addresses your fears about the market and puts your money where you would feel most comfortable, just as if you were lending directly against those properties.
I am not saying that a MIC should not lend on properties that you – the investor – know nothing about. you do have to have some trust in the Administrator of the fund to make the call on a deal they feel strongly about. I do believe that the overall approach should mostly mirror the investor’s own tastes. After all, there are other MICs that can cater to a more adventurous investor.
I will conclude by saying that, just like with any investment, you should not put all your investments into one MIC. Just like you should not stay in one mutual fund, GIC or Commodity market. Hedge. Diversify. Try 2 or 3 MICs. But always, ALWAYS, Know Where Your Money Is. And like what your money does.
Next, we will dissect lending on single Family Residential properties.
That is what has been happening in the Mortgage Brokering marketplace in my opinion. Mortgage brokers talk like bankers, sell bank products, insurance products, but we are neither bankers nor insurance brokers. We are sales people who should really own some of our own products. photo © 2005 Zach Klein | more info (via: Wylio)
To stay relevant, Canadian Brokers must embrace all alternative (Non-bank) lending devices. In fact, we have to become a separate entity (or species) – other than the niche where the major banks shoved us and prefer to keep us.
I love private lending in all its forms. MICs, Syndicates, Trusts, Funds, Individual loans. More please. These are products I can call my own, or feel some ownership over as a broker, because I understand them. Me, or someone like me created them. And I feel a kinship with them.
It allows the broker to be a more intimate participant in the transaction, take ownership and be more accountable when deals go sour, and to maintain personal value to private lenders and clients. The broker must convert him or herself into a known, respectable and public entity that operates “over the counter” not under the table. YOUR OWN SPECIES. YOUR OWN EGG AND BIRD.
photo © 2008 Jelene Morris | more info (via: Wylio)
REALTORS, LAWYERS, APPRAISERS! You are part of this. In these transactions you are dealing with real lenders with actual faces and names. You are an intimate participant, because it is a person’s name that goes on that appraisal, mortgage registration, or deed. (Ok, so MICs, Trusts, etc. have names of companies not people on the lending instruments, but you will be dealing with the manager who knows every single investor personally.)
In the last few months engaging the Alternative lending industry into a one coherent movement seemed an ominous task to me. Social networking and actual regional events engaged poorly if at all the entire spectrum of participants in an alternative transaction. I am talking about Lawyers, Brokers, Realtors, Appraisers, Insurers, (Title and Life), associations like IMBA and CAAMP, as well as regulatory bodies like FSCO and Law Society. Aren’t we all part of that transaction? Don’t we all take part of society that is looking for greater transparency, liquidity, disclosure – heck – a larger market place so we can all eat? Oh…should the media not be reporting on what we do just as much as what the banks do? After all, don’t alternative transactions serve a greater sociological, emotional and societal purpose than so many bank transactions? Don’t rule out economic impact! Any idea of the size of the alternative lending industry in Canada today? Would it surprise you if it neared or exceeded $6 Billion?
SO HERE IT IS:
Before we launch events, luncheons and symposiums, we need to create a willing community that is engaged in discussion, debate and exchange of highly valuable information that should bring more business to the alternative market, close more alternative deals for every participant and literally make all participants able to put more money in their pockets. We need to promise ourselves a growth of the alternative business in Canada, outside of control of the major banks where all participants incrementally benefit. Our own industry segment. A system we can improve. A market we can nurture. A reputation we can enhance in the consumer’s eyes. Mainstream, as best as we can make it. Not hidden, secretive, paranoid. As one major Mortgage Broker said to me not long ago (I am paraphrasing) “God forbid we reveal how we arrange a private loan so that others could copy us and take our business away. I think the opposite occurred in Egypt. They all talked, interacted, shared, came together, and became a new species. And we all feel better about the result, no?
So how to do that?
I HAVE THE FIRST MAJOR STEP FIGURED OUT.
TWO WEEKS. JUST GIVE ME TWO MORE WEEKS.
MY CLOSEST FRIEND WAS RECENTLY GRILLING ME ON MY OPINION OF BUYING OR NOT BUYING A CONDO IN THE NEXT 30 DAYS IN TORONTO IN THE 400,000 RANGE.
“QUICK ANSWER: IF OBAMA AND BERNANKE LOOK STUNNED, CONFUZED, PUZZLED, CLUELESS, FRUSTRATED, AND WITHOUT ANSWERS FOR AN ENTIRE COUNTRY, THEN YOU SHOULD WAIT.
IF THE MOST POWERFUL COMPANIES ARE SITTING ON THEIR CASH BEFORE CHOSING WHERE TO INVEST THEIR SAVINGS OVER THE LAST 3 TO 4 YEARS, SHOULDN’T YOU DO THE SAME?
IF INDIVIDUALS WITH EXCESS CASH ON HAND ARE LOOKING FOR ONLY SHORT-TERM INVESTMENTS WITH MAX YIELDS – LIKE PRIVATE MORTGAGES ON GOOD REAL ESTATE – SHOULD YOU BE BETTING YOUR LIFE’S SAVINGS ON JUST ONE PROPERTY WHEN THE SMART MONEY IS DOING THE OPPOSITE?
HERE ARE THE DO’S IN TODAY’S MARKET:
Instead of analyzing the recent economic reports from TD Bank and other reporting centers, let me just share with my clients and collegues what should be their next move in real estate.
If you already own the property and have a great longer than 3-year interest rate and plan to live there for many years, do nothing. If anything, get the largest secured Line of Credit (HELOC) you can get from your bank today, and wait out the ups and downs of the upcoming real estate market.
If you don’t own a property, don’t get one now, unless the property you are planning to buy will serve one of 2 purposes:
1. You will set up a home – based business that will generate significant cash flow for you and your family – enough to more than cover any cost associated with owning the property. Consider it a live/work environment, so that even if values tank, you would still generate enough income to cover home and office, and have the capabilities to ride out the upcoming market noise or:
2. You are buying a rental property with enough units that you could consider occupying as well, and the rents will nearly or completely cover the cost of the purchase.
If you are a home owner and your family has outgrown the size of the property you are in and you are forced to get a larger more expensive property, consider doing the following:
1. Get a larger property in an area where the purchase price of the new property is near what your old property is selling for.
2. Sell your current property, get all the money you can out of the sale, and sit on the cash, until the values in your area readjusted to lower levels – as predicted – before re-entering the market. Lease. You can lease for same or lower amount a brand new property – town home or house – without risking value drops, or higher interest rates on an overpriced property you are considering moving to today.
If you are overleveraged on your existing property (mortgaged up to or near the value of the property) and you are having problems carrying the cost, sell immediately. Your property may not see same value in the coming 5 years or more, which means that if you are forced to sell in the near future, you may not get enough from the sale to cover all your outstanding mortgages and debts. After the sale, you may still owe money to creditors.
Sell, pay off your bills, lease, re-evaluate the market when it stabilizes. Save your credit history for a more soft market and a more comfortable entry point.
Hold onto an overleveraged property, and risk missing payments, ruining your credit, selling for less than you prefer, and be left with a bad credit history without equity in your home to count on to pay out your creditors. This will delay your reentry into the market.
Best of luck.
Every day I get asked if my private Mortgage sources will fund land deals…
Land prices in GTA and surrounding areas are baffling even the most experienced real estate professionals. Today’s market feels like we are nearing Armageddon and anyone with savings is grabbing all they can at any price, even double what any reasonable estimator may expect.
Crazy… considering world economic landscape.
Please, before you ask anyone about mortgaging land, have answers for at least the following questions:
Who is asking for the money and are they a strong client?
If a purchase, how much down payment can clients bring to the table? And Is there a Vendor Take-Back Mortgage?
Any additional cross-collateral available?
Size, Zoning and current use?
Is there any building on it?
Date and amount of most recent appraised value?
What stage of development and estimated time for development stages?
Current mortgage amounts outstanding?
Are we paying out any of the mortgages?
If we increase the loan amount, for what reason?
Rate and fee tolerance?
MORE DEALS PLEASE!