From The Toronto Sun of Friday, November 16, 2012 on Page No. 42

Not all of you might like real estate agents. It’s easy for professions to get tarred with a wide brush of false perceptions. So you might buy directly from other Canadians or Sale as private as For Sale By Owner (FSBO). Don’t, there are plenty of websites and guides for FSBOs for sale by owner serving Toronto, Mississauga, Oakville Market. Certainly, they can give you an indication of what’s on the market and property values in particular areas. That’s information you can use. But the knowledge to properly pull off a deal, as a seller or buyer, is not the “one-click purchase” of the online world.

Real estate agents — the good ones, and the right one—are professionals and experts in the property world for that essential skill of using information to form knowledge to enable transactions.

For Sale By Owner: Consider these five factors

1. Real estate? Real experts.

Most people would struggle to write a proper, legally binding contract—there’s no shame in that. There’s also no shame in failing to consider every aspect and potential pitfall in buying and selling property. That’s what real estate agents are for. FSBOs are not real estate experts, and their lack of experience can be frustrating and costly. When you use the right real estate agent, they will know everything about the local market and neighbourhood. If you put their years of knowledge and experience to work, it will save you time and money.

2. Negotiating skills.

As I’ve said before, knowledge is power, especially in real estate negotiations. It isn’t just having numbers at your fingertips, but understanding them. When buyers and sellers meet, they talk too much, I find. The longer you talk, the more information you’ll have, but at some point you can have too much information, and not enough knowledge of how to get a good deal. Again, this is where a real estate agent can ensure a knowledge base that cuts through the information clutter.

3. Pricing.

FSBO properties are notoriously overpriced. Sellers are emotionally attached to their home, and thus tend to place a higher-than-market- value tag on the property. It’s understandable that they’re fond of their home, but that doesn’t help you as a buyer looking for the best deal. You might think you’re saving money by going direct to the seller. Some website will have you believe a deal is to be had because no one is paying the real estate agent commission. But this could not be further from the truth. FSBOs almost always over value their homes and this trend could actually cost you more.

4. Safety.

As a FSBO or private real estate investor, you meet with every potential buyer personally. You invite buyers — strangers — into your home without pre-qualifying them at all. This can be dangerous and in my opinion, is not worth the even small risk. Using a real estate agent places a firm buffer between you and unscrupulous buyers. Isn’t the safety of you and your family worth this caution?

5. Paperwork.

Buying and selling property doesn’t involve any less paperwork simply because you’re doing it yourself. If only anything did. The fact is, most real estate files are inches thick, filled with documents and contracts relating to the sale of the property. FSBOs are generally not familiar with the required Purchase & Sale contracts, and most never take the time to explain the contracts to potential buyers.

One mistake or omission could land you in court or cost you thousands of dollars

Suddenly, your attempt to “simplify” the process by buying or selling direct, gets a whole deal more complicated. Are there FSBO deals that work? Sure. As with anything in this world, some problems arise even with the most experienced real estate experts at your side, and conversely, complex FSBO deals can work smoothly against the odds. But my advice remains  firmly on the side of avoiding FSBOs.

There is simply too much risk, personally and financially, to try for a deal in a process most people would struggle to understand. Is your dislike for real estate agents really so strong that you would put your money in jeopardy to avoid them? We’re really not that bad, and the best of us out there will make you forget you ever considered an For Sale By Owner.

T.S. Eliot wrote: “Where is the wisdom we have lost in knowledge?
Where is the knowledge we have lost in information?”
When it comes to property, there’s plenty of information out there. But it takes knowledge to do the deals properly— efficiently and effectively. And if you choose real estate agents over being a private real FSBOs, you’ll be demonstrating that you have the wisdom needed for the property game.

If talk about a housing correction or slowdown in Greater Toronto area Real Estate are keeping you out of the investment property game in Toronto, Canada here are seven top reasons to overcome those fears. As real estate veterans points out , your time to buy an income-producing property may be now.

1. Mortage Rates

Canadian bond yields continue to sit at historic lows, as a result it is not uncommon to secure multi-unit residential financing with interest rates as low as 3 – 4%. While Canada has enjoyed a prolonged period of historically low rates, the window of opportunity is finite as interest rates have no where to go but up. (Window of opportunity – up to 18 months)

2. Investment Property Vacancy Rates

CMHC has reported that vacancy rates have been trending downward across most major urban centres across Canada with rates sitting as low as 1 to 2% in many areas. In addition, recent changes to mortgage rules in Canada have made it more difficult to qualify and thus will force many to become renters instead of buyers, thus putting even more downward pressure on vacancy rates in the coming months.                                           (Window of opportunity – up to 36 months and beyond)

3. The Spread

This is the difference between your mortgage rate and your cap rate and determines the strength of your cash flow. Even with the market cap compression taking place in the larger urban centers like Toronto and Vancouver, smaller urban centers still offer healthy cap rates in the 7-8% range (you need to do your research or have a great JV partner). Thus, with mortgage rates as low as 3-4% you can achieve a very healthy spread of 3-4%. (Window of opportunity – up to 18 months)

4. Home Equity

With the Canadian real estate market on fire, home owners have enjoyed a significant increase of the equity in their homes. Equity can be unlocked through a mortgage re-finance or HELOC (Homeowner’s Equity Line of Credit) which can be used to purchase an income property. The added bonus is that the interest costs of the re-finance or HELOC can be written off on your taxes. (Window of Opportunity – up to 18 months)

5. CMHC Insurance

Placing CMHC insurance on a multi-unit property reduces the mortgage rate by between 1/2% to 1% over the life of the mortgage and represents significant savings. CMHC is approaching its $600 billion government-imposed limit on issuing mortgage default insurance. While the government may raise the limit, this is just another reason to buy now and take advantage of CMHC mortgage insurance while it is readily available. (Window of opportunity – up to 36 and beyond)

6. Time

In real estate investing, time is your best friend as it facilitates appreciation, mortgage pay down and cash flow. The longer you own an investment property, the greater the ROI. (Window of Opportunity – becomes smaller the longer you wait)

7. Alternatives

With interest rates at historic lows, bank accounts, savings bonds and any other interest bearing investment vehicle offer little return on your capital. The stock market has shown incredible volatility with negligible returns over the past decade and shows little signs of improving any time soon. REITs offer a respectable return on your investment, but investing directly into the asset itself (income property) offers an even greater return on your investment.

— Compiled by Gyanesh Paliwal of TEAM Paliwal at Toronto, ON Canada on November 1st, 2012

Deck Building In Your Backyard

Now that summer has finally arrived, many home owners may think about deck building in a backyard by themselves. Be careful; if it is not done correctly, you may run into problems later when you try and sell your home. Here are 7 things to remember:

1. Deck Building: Do you need a building permit?

Every City has its own rules, but typically, if your deck is higher than 2 feet above the ground and is larger than 108 square feet, you will need a building permit before starting your deck building. In some cities, if the deck is attached to your home, then you always need a building permit before you build. In my opinion, by getting a proper permit in advance, it is easier to answer any questions about your deck when you sell your home later. This is because the City will do a proper inspection when your deck is completed to make sure that everything was built correctly.

2. What material should I use when I build a deck?

David Power, President of www.thedeckbuilders.com in Toronto, tells me that while the foundation of most decks is usually pressure treated wood, the veneer and railings are usually cedar. David warns that if you decide to stain your cedar deck, you should pre-stain all six sides of the wood before you install it. In addition, make sure that there is at least a one-quarter inch gap between each piece of wood.

3. Will it matter how large I build a deck or whether it is close to the boundary line?

The answer is yes. As explained to me by Toronto planner Michael Goldberg of www.goldberggroup.ca, the square footage area of a deck may count when determining whether your home complies with the zoning by-laws regarding how close any structure can be to the lot lines and how much square feet is permitted to be built inside your entire lot. For example, if the deck is at least 48 inches off the ground or the foundation is extended for construction of the deck, then it will count towards how many total square feet you can build on your land. In addition, if the deck is built too close to the lot line, it could also violate the local zooming by-laws. If you make a mistake, you could be forced to remove all or part of your deck.

4. Should you do it yourself or use an expert?

In my opinion, you should always use an expert. If the deck is not properly secured to your home, it could lead to water in the basement later. In addition, improper design and construction could lead to the deck rotting out and collapsing under the weight of people on it. If it happens, you will be liable for any injuries caused to guests who may be injured while visiting your home. Experts will make sure that your deck has the proper footings in place for the foundation so that it meets all building code requirements and that it is properly secured to your home to prevent problems later.

5. Is deck design important before you start?

It is very important. Figure out in advance where your barbecue is going to go, and any furniture you may want to include. If you are going to install a hot tub as part of your deck, make sure you leave enough space for this as well. Some owners prefer the hot tub close to their home so they can use it in the winter. Others prefer it in another area of the yard, so that they can have more room to entertain on the deck.

6. Will I need guard rails?

If the deck is higher than 24 inches off the ground, you will likely need a guard rail that is at least 36 inches high. Once the deck is higher than 6 feet off the ground, it will require a 42 inch high guard rail. In all cases, the openings in the guard rails cannot be larger than 4 inches so that no one falls through.

7. Should a deck be inspected as part of any home inspection when buying a resale home?

The answer is yes. After finishing your deck building, professional home inspectors should be able to tell you whether the deck is deficient in any way and whether it may have to be replaced as a result of poor workmanship.

When you are looking for a deck contractor, get references and look at examples of the work they have done elsewhere. Properly constructed decks should last for at least 20 years.

Credit for this article goes to Toronto Real Estate Lawyer : Mark Weisleder, http://www.markweisleder.com

1. When must real estate deposits be paid under the standard Ontario real estate contract?

In Ontario, the standard real estate contract gives the buyer two choices; you can pay the deposit immediately when you present your offer to the seller, or you can agree to pay it within twenty four hours after the seller accepts it. Most buyers prefer the second option. If you are in a bidding war, you will be encouraged to come up with the deposit immediately, to show additional good faith to the seller.

2. Can the buyer just cancel the deal by refusing to pay the deposit after the deal is accepted?

The answer is no. Once the deal is accepted, you can’t change your mind. If you do, the seller can sell the property again and if they obtain less money than you were going to pay them, the seller can sue you for the difference, plus legal fees.

3. What happens if the deposit is paid late?

If you are late with the deposit, the seller has the right to cancel the deal. This is because all time limits matter in real estate contract sand if you are late, even by a few minutes, the seller can try and cancel. I have seen this happen many times, especially when the seller knows that there is another buyer out there who will pay more money. If you need more time to come up with your deposit, say so in your offer.

4. How much should a buyer pay as a deposit so the seller will feel secure that the deal will close?

This is a tough question, and will largely depend on where your home is located. In the City of Toronto, deposits are now usually up to 5 per cent of the sale price. In Brampton, it is closer to 2 per cent. In some areas of Ontario, deposits can be as little as a few hundred dollars.

5. Why can’t the deposit be paid to the seller instead of the seller’s agent?

If the seller goes bankrupt or disappears with the deposit, the buyer is not protected. When the deposit is held by the real estate brokerage, it is in trust and is also protected by insurance so even if the brokerage goes bankrupt, the buyer can get their money back.

6. If the buyer is not satisfied with their home inspection, how can a seller refuse to release the deposit back to the buyer?

This happens more than you think. Real estate deposits cannot be released unless both the buyer and seller agree. If a seller believes that the buyer did not act in good faith in trying to satisfy their condition, whether it is a home inspection, financing or a condominium status certificate review, they can refuse to release the deposit. This means it stays in the broker’s trust account until a judge decides who gets it, which can take years. As a precaution, buyers should consider making two deposits in their offer, a small one of say one per cent when the offer is accepted, and a second larger deposit once the condition is satisfied.

Be serious and understand the rules about deposits before you sign any real estate contract. It is expensive to change your mind later.

— Credits for this article go to MARK WEISLEDER Real Estate Lawyer, Author, Speaker