I’ve heard countless buyers say to me that they feel maintenance fees are a complete waste of money. While there are some condos in the city that are poorly managed and have very high maintenance fees as a result, I don’t believe maintenance fees are as bad as some people may think, especially when taking into account a longer term perspective.
Condo fees are one of the most misunderstood aspects of condo ownership. Some feel that it can turn an outright purchase into what feels like a rental, with monthly payments to budget for as long as you live there.
If you have never paid condo fees before, here is what they cover:
• The costs of keeping shared spaces, such as the elevators, outdoor gardens, parking garage, lobbies and hallways, in clean and good working order.
• The maintenance of the building amenities such as the gym, swimming pool, games room, party and theatre room - the facilities that initially attracted you to the condo.
• Snow removal, balcony, window and roof repair
* Building insurance
* Security and concierge services
How much should you pay in maintenance fees?
This is a difficult question to answer as amenities, the age of a building, location are all significant factors. In Toronto today, the average the rate per square foot is around 70 cents a square foot, or $560 a month on a 800-square foot condo.
The first step is you must consider the amenities offered at the condo and whether you will make use of them. For example, if you can cancel your gym membership and dine out less and use your condo’s rooftop patio, that can help justify a portion of the monthly cost.
When you think about the actual costs of maintaining the exterior of a single family home, including landscaping, paving, fertilizer, cutting grass, snow removal etc., most homeowners would spend more than $120 a month, on average. Also, if you factor in eventual larger maintenance items such as a roof ($8,000-$10,000) and furnace or air conditioning replacement ($5,000), and condo fees can be justified since it has the convenience of living a carefree lifestyle.
The term breaking your mortgage often has a negative meaning to it, but that’s not necessarily the case. The main reason why someone might decide to break their mortgage is to get a lower rate with their bank or another lending institution. When the Investor’s Group cut its three-year variable mortgage rate to 1.99% last month, many of my clients wondered if breaking their mortgages and switching would be a wise decision. The question is, do the long-term savings outweigh the initial interest penalties? It is possible, however let’s have a closer look at the various considerations.
The number one factor to consider before breaking your current mortgage is the interest penalty you will incur. The interest penalty depends on the type of mortgage you have (fixed or variable) and which bank or lender you’re with.
You can find mortgage penalty calculators online such as at Ratehub.ca - simply enter in your remaining mortgage balance, the type of mortgage, your mortgage rate and term and the calculator will provide you with an approximate calculation for your mortgage penalty amount. As an example if you are breaking a $200,000 mortgage with TD and have a fixed mortgage rate of 2.99 percent, you would have an interest penalty of approximately $9,800.
With a fixed rate mortgage, the interest penalty is calculated using what’s called “interest rate differential calculation.” The penalties are also different if you have a variable rate mortgage or a cash-back mortgage – check with your financial institution for details and be sure to read and understand the fine print. Some lower rate mortgages may have a provision that the mortgage cannot be broken unless you sell your home.
Once you've determined your penalty, it’s just a matter of working out if the interest savings will be greater than the penalty paid. In general, if the offered rate is greater than two per cent less than your current mortgage rate, it might be worth paying the penalty and switching.
Most people assume that working with an agent who lists a lot of houses (i.e. “to list”, is real estate lingo for the selling side of the transaction) would make for a great buyer agent. In some cases that might be true, but in my experience, agents who focus primarily on listings don’t always make for a great buyer agent.
So, why is that? In general, agents who list a lot of houses, focus just on that… listing houses. They might work with potential buyers that come from these listings, but make no mistake their focus is listings and to service their sellers. The main reason for this is that listings are a great way to promote their name and you guessed it… get more listings. Working with buyers, especially in today’s seller’s market, takes a lot more time, energy, and dedication than servicing a listing.
So where do you think this listing agent is going to be spending the majority of their time and efforts? That’s right, the sellers! To some busy listing agents, buyers often don’t get the attention they deserve. In today’s hot seller’s market, it’s now more important than ever to have an agent who’s dedicated and committed in helping you find your next home. So, when interviewing agents, ask them if they prefer working with sellers or buyers. Also, ask them what their “split” is (working with buyers to sellers). That will give you a good understanding as to what type of business they have and where their dedication lies. I don’t think you should necessarily work with a buyer-only agent, but an experienced agent who works with a healthy mix of both buyer and sellers might be your best approach.
I do believe there are some agents that are better suited to working with buyers than others. I think there are 3 main characteristics that make a great buyer agent. By evaluating these characteristics against agents you interview, it can provide some valuable insight as to what they will be like to work with.
A good buyer agent will be patient to work with and won’t try to sell you a home quickly and move on “to the next transaction”. I personally recommend looking at least 15 different properties in the same neighbourhood before even putting an offer. You really need to look at a lot of homes or condos to get a good idea of value, specific features you need in a home and the right location. Ask your agent how they work with buyers – that will give you a good indication of their patience level.
An agent needs to provide you with all the information you need to make an informed decision. In reality, a real estate agent’s opinion should not matter, rather they should give you the tools to make the decision yourself. Information such as:
sales history of the property,
why the sellers are selling,
when the sellers want to close,
how the sellers arrived at their list price,
what upgrades have been completed, and
the agent should provide recent comparable sales in the neighbourhood.
Does the agent genuinely care about your needs? This is often difficult to judge from the onset, but another question might be: do they display the qualities that are important to you in an agent? In other words, do they want to guide you through this process and make this a successful move for you? Ultimately, when you are buying a house or condo, it’s the agent’s responsibility to represent your interests and put together an offer with your terms, your conditions and your price. The agent may provide some guidance on these items, but ultimately it is your decision, not theirs.
If Buyers drive past a For Sale sign and say “Should I call the listing agent and find out what the price of the home is?” As innocent sounding as this question might be, this may not be in your best interest to do so.
Under agency law, the listing agent’s primary loyalty and duty is to the seller of the home. They have signed a contract and are hired by the seller to represent their interests and are being paid to do so.
So what does this actually mean for you as buyer who has contact with the seller’s agent with either questions or possibly even meeting them while viewing the home?
First of all you need to know what the seller’s agent can and cannot do for any buyer!
I know there may be buyers in today’s marketplace who prefer to act on their own and find the property themselves without the use of a buyer’s agent. When they do eventually find a home, these buyers may also decide to use the seller’s realtor to negotiate a transaction on their home.
One of the ways to calculate the value of a home is by doing what realtors call a comparative market analysis (CMA). Completing a CMA to find out what the home is really worth is the first step to understanding the market value. However the listing agent will prepare a CMA for the buyer only if they request it. They will not do it automatically! Furthermore… if they do prepare this CMA they cannot, by agency law, use that CMA to provide advice on what the purchaser should offer or what the property is really worth!
So why is the listing agent not allowed to do this? Well… it might give the buyer a negotiating edge and violate the listing agent’s duty to put the interest of the seller first!
As a buyer in this active real estate market you want to ensure you have a real estate agent working for you. To ensure they are advocating for your best interests and giving you all the information so you can make the most informed decision. Quite often buying a home is the single largest financial transaction most people complete and it’s imperative to have someone representing your best interests at all times.
During your home search, you’ve likely come across homes that are priced ridiculously high. I see it quite frequently, perhaps now more than ever. It continues to be a seller’s market and when my buyers come across one of these over-priced listings, they often assume that the sellers have become greedy and are trying to get a very high price for their home. I have a different theory altogether.
There are real estate agents that will tell sellers what they want to hear: their house is worth more than they think. They often do so with one purpose in mind - to put their For Sale sign on the front lawn. In real estate agent “speak” this is called “buying the listing”. A For Sale sign is great advertising for the real estate agent, and an effective way to promote their name. It also shows their clients that they are busy and active.
Ultimately having a For Sale sign on the front lawn for 3 or 4 months makes the agent look bad and brings negativity to the seller. I personally think this is a terrible way to do business. Stringing along a seller and giving them false hope is not a way to build a business in my opinion.
When I meet with prospective sellers, I always give them a range of what I think the house is worth based on current market conditions, not based on their needs or what they want to hear. While I am always sympathetic to everyone’s financial situation, I will give the sellers a realistic price for what the home will sell for, even if they don’t like what I am saying. I also find it equally important to give an honest assessment of what work needs to be completed to make the house more marketable to buyers. I might offer to show you other homes for sale that a potential buyer will look at in your price range to show you how your home should be priced.
Going back to the original question – why should you as a buyer try to avoid these sellers? Firstly, they have unrealistic expectations for the true value of their home and in fact these sellers may not truly be a seller and simply testing the market – which it makes it difficult for them accept an offer at the market value.
The real estate market in Toronto is still red hot and if you are looking to buy a home or condo I have some tips that will save you time and energy (and money!) and put you in a favourable position to buy in today’s market.
First and foremost - don’t get caught up with the newspaper headlines. You’ll still hear about the “house that got 36 offers” or on the flip side about how “the market is poised for a slowdown”. Ignore the “noise”, and with my help as your real estate agent and become a local market expert.
Here is what you can do to arm yourself in today’s market:
Be knowledgeable. Once you’ve narrowed down a neighbourhood to buy into, get to know the inventory. Study the sales history over the past several months and understand the trend in that particular neighbourhood. Keep track of the houses you view and understand their eventual sale price. The list price in today’s market can be deceiving and bidding wars are still very much prevalent. Understanding value of the product you’re buying into is key.
Be prepared. Get all of your ducks lined up and make sure you’re prepared with your mortgage financing. Meet with your mortgage broker ahead of time and understand your mortgage options. Also, make sure you have all of the documentation in place to get your mortgage approved. A good mortgage broker is vital in today’s market.
Be flexible. You may not get everything on your house hunting wish list, so make sure you’re realistic of what you can get in today’s market. After seeing the 10th home or condo, compare your wish list with the properties features you’ve seen thus far.
Be aggressive. In a seller’s market you sometimes need to use your elbows to get to the front of the line. Consider your options with me and I will evaluate the various strategies with you. Consider submitting a pre-emptive offer (before the offer review date) to beat out other offers. Also think about doing a home inspection prior to submitting an offer to understand the home’s deficiencies ahead of any offer.
Be patient. You may make several offers before securing your “perfect” house or condo but using the above strategies will help you tremendously and have you better prepared.
If you have any friends or family that are thinking of buying a home or condo in today’s market please feel free to forward them these helpful tips. I would welcome the opportunity to speak with them.
I know I’m not going to be popular with some of my real estate colleagues with this blog post, but the truth is, an open house won’t help sell your house.
Often, when I am interviewed as a candidate to list a property for sale, I often hear the “main marketing plan” of other agents is centered around the open house. I’ve even heard realtors suggest spending lots of marketing dollars on promoting the public open house through local newspapers.
However, a recent study from the National Association of Realtors found that less than 2% of buyers actually came from an open house. Not what you expected isn’t it?
So why is it that open houses are so popular if the likelihood of finding a buyer for your home is so remote?
Having an open house serves a very important purpose - for the real estate agent - it gives them a database of potential clients.
If you think about it, at an open house, you get all kinds of people walking through the home. Some people might want to get a sense of how much their home might be worth… Others walking through might just want to get a look at what's on the market. This is a great environment for a realtor to build his database of buyers and sellers.
The reality is, if you’re serious buyer – you’ll book an appointment to see the house. If you’re ready to buy and shopping around for a home, the last thing you want to do is go through an open house when there are 5 other people walking through at the exact same time. Virtually all serious buyers want to take their time to view the home and see if it is the perfect fit and they will want to do that (privately) without all of those other people there.
I won’t deny that there was a time where the open house was an important marketing tool to sell the property, but I believe the internet and the way people shop for homes today has significantly changed.
The rules of the marketing game change all the time. With the advent of the internet, email and social networking, the competition for your attention has never been greater. Marketers need to differentiate themselves from others or risk becoming irrelevant.
Think of what you’re doing to market your house, your product or your services. It needs to be different to capture the attention of others… how does your customer distinguish your product from all the others that you’re competing against? Think outside the box!
Not too long ago, I had the thought to try something different with one of my rental properties: re-rent the property using a high quality video tour.
The results were startling.
I’ve used professional videos with many of my client’s homes for sale and achieved great success… so why not use the same blueprint with my rental property?
In the end, I rented the property at a higher rental amount, my property rented significantly faster and I had to spend a lot less time marketing the property to qualified tenants.
For a property I plan to own for many years, I now have a high quality marketing video that I will be able to re-use every time I have a vacancy! Well worth the initial cost and effort in my opinion.
With my real estate brokerage, I’m also constantly looking to stay ahead of the marketing curve. One strategy I follow is to borrow marketing best practices from other industries and apply these to my real estate brokerage.
Today, I will leave you with this to think about… Have you considered borrowing marketing ideas from other industries and applying them to your business?
December is one of my favorite months of the year… Lots socializing… with many parties and get togethers, it’s just a nice time to catch up with friends and family. What I love about this time of year is that everyone is happy and in a good mood!
So how do you capture some of that good mood and translate that into your home or condo getting sold?
The homes or condos on the market right now are usually what I call the “left overs” from the Fall. It’s easy to tell the moment you walk into a “stale” listing… The sellers (and agent!) aren’t putting the same effort in selling the home as they were when the property first came on the market.
What do you do if you HAVE to sell your home in December? Why not steal a strategy from one of the best retailers on the planet… Starbucks.
What does Starbucks have to do with selling houses?
I think Starbucks does a brilliant job at marketing, especially at this time of year. They’ve got the red coffee cups, holiday themed drinks, as well, all of their coffee shops are (tastefully) decorated in the holiday spirit.
As a seller you have to do your best to create an emotional connection with the buyer. Make the buyer feel very much at home and have them envision themselves in your home. That is exactly what Starbucks does! They’ve created a very strong emotional connection with their customers and have made their stores very cozy and inviting.
I believe there is nothing more inviting than going into someone’s home who’s decorated their home tastefully for the holidays. I am amazed at how few sellers actually follow this strategy. It’s not that’s difficult! Don’t go overboard, but adding some holiday décor to your space will go a long way.
I know what most sellers are thinking right now… Why should I decorate for the holidays when I’m moving in a month or two? Well, if you don’t decorate you run the risk of not selling your home at all!
If you want to steal another page right out of the Starbucks manual, why not host a themed open house for buyers and realtors where you serve some hot chocolate and gingerbread cookies. (I mean who doesn’t LOVE gingerbread cookies, right?)
If you’re considering buying or selling this winter, there really is no need to put off a decision until after the New Year. December can be a great time – I am here this holiday season to help get your property sold!