Author: Mayur Arora

Avoid these mistakes when you are selling your own home via the For Sale By Owner method:

Mistake #5: You didn’t de-clutter your home?!

De-cluttering your home is absolutely essential when you list your home on the market. A prospective home buyer must be able to imagine their own belongings in the space – or, if they plan on using the home as a rental unit, they need to see how it will look when it is clean and un-cluttered. If your counters are covered with appliances, you have knick-knacks on every shelf, and your table is full of stacks of papers and projects, you need to do a clean sweep! Don’t just wipe down the surfaces – clear away any furniture and floor space that can be cleared.

Mistake #4: You got too emotionally involved?!

Selling your own home can be a stressful time, particularly if you’re not familiar with all the accessible tools. You may go through a roller coaster of emotions, getting attached to particular buyers, dwelling on things that can’t be changed, or simply having trouble letting go of your home and detaching. If you’ve already taken care of mistake #5, then continue the de-cluttering process and try to remove anything that causes mess or chaos, and prepare to enjoy a new life once you’ve sold your home. It’s Vancouver, so relax!

Mistake #3: You didn’t make easy updates to your home?!

It’s okay if you didn’t invest in a major update. That’s now what this is about. You do need to take care of the smaller updates that need to be done to your home to ensure that it looks as polished as possible. If you have a hole in your wall, fix it. If a light bulb has burnt out, replace it. Clean up the scuff marks, freshen up any paint that’s peeling, and make sure your garden is tidy. If medium-effort updates could make a big difference, consider them, for instance, if you’ve got hard wood floors under your yellow shag carpeting, rip that carpeting up.

Mistake #2: You didn’t represent your home well with striking photography?!

If a real estate listing on MLS® contains either no or poor photographs, the potential buyer may click on by and never see it. You absolutely must represent your home with well-lit, professional-looking photography. In a competitive market, you need to make sure your home looks the best it can look, so make sure you feature exactly what makes your home unique to potential buyers.

And now, the number one mistake…

Mistake #1: You didn’t list on MLS®?!

Listing on MLS® is essential to advertising your home for sale. Due to recent clarifications in the Real Estate industry, amendments have been rewritten that give consumers a choice to pick and choose the level of service, and it is now possible to advertise your home on MLS® and realtor.ca without having to accept other services a REALTOR® provides. So even home sellers who use the For Sale By Owner method have access to the same tools everyone else is using.

Avoid these common FSBO mistakes by de-cluttering, de-stressing, doing small updates, taking great pictures, and listing on MLS®.

This blog post deals with two different matters.

The first deals with the failure of agents to provide the name of the property manager in the Property Disclosure Statement. Property managers charge rush fees if the request for the Form F is not made with 7 business days of the day it is needed. The Form F as you know is needed in order to transfer title. If the buyer’s lawyer has to chase down the name of the property manager from the buyer’s agent, who often says he has to speak to the seller’s agent, the 7 days might run out and a rush fee will be charged . This can range from $25 to $150. In this case who should pay for the rush fee? Neither the client nor the lawyer. It is the agents responsibility to provide the information. There is even a specific space on the PDS for it.

The second matter deals with being careful to determine where the lot lines are on a property and the importance of using a survey. In the photo below where is the lot line? You might think it is between the left edge of the driveway and the right edge of the retaining wall. But it is actually 6 feet to the left of the edge of the driveway.

My client was buying the house on the right and had they not looked at the survey they would have thought the neighbour’s lot was up to the edge of the driveway. While under the land titles system, the neighbour does not acquire title to the 6 feet, there is still a problem as my client has no use of the 6 foot wide strip. Plus who is responsible for the upkeep of the retaining wall and any damage if it fails? There were no agreements on title between the two owners. I advised my client that he has the right to demand that the encroachment be removed complexly prior to closing. Or if he didn’t want to do that he should require that the vendor and the owner to the left sign and register of title an encroachment and maintenance agreement relating to the wall and trees.

While deciphering the differences between traditional Realtors® and discount Realtors®, one must keep in mind that traditional Realtors® may or may not adjust their commission to make it seem like the home seller is getting a deal, while a discount Realtor® has no commission to begin with, offering a set price for set services, which means that the home seller gets the deal before the conversation even begins.

While a home seller is going through the process of interviewing Realtors®, the negotiations typically begin before the process has even started, whereby the home seller may negotiate with the Realtor® on the listing price, terms of listing agreement, and often, the commission of a traditional Realtor®.

Discount Realtors® charge for specific services a la carte, which means that you know exactly where your money is going, whether it be signage, photography, MLS® listings, realtor.ca listings, and more.

Because the structure of One Flat Fee allows Realtors® to close many times more sales than a traditional Realtor® while retaining the ability to offer the same desired services, home sellers now have an exciting alternative to the stale traditional commission structure and are able to experience a higher level service.

We specialize in providing Flat Fee MLS listings for homes for sale by owner in Vancouver, BC, throughout the lower mainland and the remote regions of British Columbia.

The following graphic shows that if you are selling a $500,000 home, with a traditional Realtor®, you would be in the ballpark of $17,850, while with One Flat Fee, your fee would be $9,780, for a difference of $8,070.

With over eight thousand dollars in savings, you could make updates before the sale to get even more money out of your home, you could take a trip to relax after the sale of your home, or you could just tuck it into your savings account for a rainy day. With the option to advertise in the same way that a traditional Realtor® markets their listings, One Flat Fee is able to provide the same services, a la carte, for much less than home sellers typically pay.

One Flat Fee further differentiates ourselves from other discount Realtors® by offering listings for Realtors® to see on MLXchange®, which is a critical step if you want Realtors® to show your property. Not including this vital step will eliminate 75% of potential buyers who you absolutely need to see your property to complete a successful sale.

Discount Realtors® are able to offer an attractive deal for both home buyers and home sellers without anyone having to waste tens of thousands of dollars on high commissions. This is a success story for everyone involved, including the discount or flat-fee Realtor® who builds a business on this effective system of selling real estate.

The Real Estate market is definitely changing and the tools are changing, too. Individual home sellers now have the tools to become real estate savvy, able to prepare and market their own homes using the tools available, such as MLS®, realtor.ca, and MLXchange®. Because home sellers can now professionally and successfully sell using a For Sale By Owner, flat-fee, or discount model, sellers are able to buck tradition and save money.

This blog post deals with two different matters:

The first deals with rent charges or community associations agreements that are registered on title. You often see these in subdivisions that include recreational facilities or community centres. The developer will build some sort of community centre or recreational facility such as a horse riding barn. The developer will register an agreement on title to the subdivision’s lots which sometimes impose various financial obligations on the lot owners, including future purchasers. So it is very important to read these agreements before the conditions are removed as they may be costly to a buyer. I was recently asked by an agent to review one. The agreement provided for an annual levy on each lot of 0.25% of assessed value to pay for the ongoing expenses of the original community association that the developer built. You can do the math of what that means to a buyer if the property has a high value.

The second matter is the usual clause about the vendor paying any special strata assessment that arises prior to closing. We have been consulted by someone who bought a strata unit and there was a special assessment before closing. The money to pay the assessment was held back, but after my client took ownership the special assessment was cancelled because it was improperly passed at the meeting. The money was then paid to the vendor. However as the repairs still have to be done, a new resolution will eventually be passed so now my client has to come up with the money himself.

Some strata by-laws say that any refund or return of monies paid to the strata corporation go to the registered owner at the time the refund is made. But my client’s by-laws did not say that so now he has to come up with the money.

While this problem might only occasionally come up, I think you should protect your client by adding to the standard special assessment clause the following: “In the event that the special assessment is later cancelled for any reason, including that the resolution authorizing it was declared null and void, the buyer shall be entitled to the return of the monies paid.

DAVID M. SIMON

Certificates of pending litigation

The first is certificates of pending litigation that are on title to a property. When a lawsuit is commenced against a person and that lawsuit claims an interest in a property, notice of the lawsuit can be registered against the property. The court issues a Certificate of Pending litigation which is then registered on title to the property by the person starting the lawsuit. The lawsuit is now a charge against the property and if the claimant is successful in the lawsuit it is a claim on the property. So anyone who takes title with a registered certificate of pending litigation on it takes subject to whatever rights the court grants the claimant to the property once the lawsuit is decided.

Therefore any purchaser will want the certificate of pending litigation vacated before closing. The standard wording in the agreement of purchase and sale about the buyer getting clear title puts the onus on the vendor to clear the title of the certificate. However agents for vendors and buyers should look make sure that the certificate can be vacated. This is litigation after all and the claimant has to agree to the conditions under which he will allow the certificate to be removed. This may take time to negotiate so agents should take that into account in setting the closing dates.

Taxation on disposition of properties

The second matter is taxation on disposition of properties. A couple of agents called me recently about their clients gifting their investment properties to their children. The agents and clients seemed to think that if the property was given to a child there was no capital gains tax. That is not the case. The general rule is that if a property, whether an investment one or otherwise, is transferred, whether for money, as a gift, or a deemed disposition on death or change in residency out of Canada, the property is considered to have been disposed of at fair market value. The capital gain has to be determined and any tax on that gain paid. Certain property transfers are exempt from capital gains, e.g. a disposition of a principal residence and a transfer to a spouse under certain circumstances including a transfer on death. A gift of an investment property does not benefit from any of the capital gains exemptions. Taxation is a very complicate area and you should not be answering taxation questions for your clients. Tell them to speak to a good tax accountant or lawyer.

This blog post deals with using an RRSP as a mortgage lender. With interest rates on conventional bank deposits very low, using your RRSP to lend money on a mortgage to a third party or even yourself can be a way of getting a better investment return. Your RRSP has to a self directed one, and your RRSP administrator has to be able to handle mortgages in your RRSP. As well the applicable regulations have to be followed.

You can be your own mortgage lender. If you have enough cash in your RRSP, your RRSP could lend you the money on a first mortgage and your monthly payments could then be made to your RRSP instead of the bank. In such a case the mortgage has to be insured through CMHC or another mortgage insurer. If you don’t have enough money in your RRSP for the entire mortgage you might want to approach a friend who has money in their RRSP or even your bank to do a joint first mortgage with you, i.e. they lend part of the money and your RRSP lends the rest. Many years ago my wife and I did that with our bank. Of course there has to be appropriate mortgage administration agreement between the parties which deals with the ownership of the mortgage, how the payments are divided, etc. It is important to remember that even though you are your own lender, the mortgage administrator will treat it as an arm’s length mortgage. That means you can’t default just because it is your own money. The administrator is legally obligated to enforce the mortgage.

You can also have your RRSP lend on a second mortgage. The rules are less stringent as the mortgage does not have to be insured. I have a client who has done that on a few occasions and is getting a 12- 18% return on his money. Again you have to check the permissible investments under your self-directed RRSP as well as any applicable charges from your administrator.

Many notaries’ and lawyers’ offices will be closed over the holidays so make sure that your client’s notary or lawyer will be open to handle their deal. I will be around throughout the holidays.

Mayur Arora discusses the pros and cons of having basement suites. While basement suite homes are in much demand, one has to consider the cons of having suites. Suites do provide rental income that helps you with your mortgage but it comes at a price. Are you willing to pay that price? read more here.

Mayur Arora writes about the Real Estate Market slowdown of the Metro Vancouver area and explains the repercussions of a massive slowdown that we seem to have been engulfed with. Read more here and let us know what you think….We are curious to hear your thoughts on the current Vancouver Real Estate Market.

This blog post deals with 3 different things, minors holding title, dying without a will and proper names of parties on contracts.

Recently I had some questions from real estate agents about minors buying property. The legal age of majority in B.C. is 19. That means until they reach that age, they cannot enter into contracts. The exceptions are contracts for necessaries of life such as food, clothes, etc. Buying a house would not be considered a necessary if the person is under 19. The minor could not enter into the real estate contract and it would not be enforceable against him/her if there was a problem. And if there is a mortgage the bank will require the parents be on title or guarantee it. But all the people on title have to sign the mortgage and the Bank won’t be getting an enforceable mortgage against the minor if the minor accepts it.

The second item is the “myth” I have heard many times that if you die without a will, everything goes to the government. This is not true as the relevant legislation sets out who your beneficiaries are if you die without a will. It is only if the deceased had no relatives, even distant ones that the estate goes to the government. However it is better to have a will for other reasons as it is easier to administer the estate with one, plus if there are minor beneficiaries, the Public Guardian does not have to get involved.

The third item is names. Make sure that you have the person’s full proper name on the contract and not just an initial. In the case of a company ask to see the certificate of incorporation so you can put down the correct name of the company. I have a situation now where the company name was wrong, the deal didn’t close and the vendor is suing the shareholder personally because there is no actual company under the name the contract was signed.

David Simon

Yes it is slow but it is not all doom and gloom

There has been a lot of chatter in the media about the slowdown in the Real Estate market in British Columbia. While it is true that the market has slowed down but it is not all doom and gloom. The average price is still not as low in the Greater Vancouver area as some other parts of the province.

The average residential price in Greater Vancouver declined 6.9 per cent last month from August of 2011, though last year’s figures got lift from sales of high-end homes. The survey excludes the sprawling and less expensive Vancouver suburb of Surrey.

The so called Chinese influx seems to have slowed down considerably and hence the markets that were primarily hot because of the Chinese influx have now seen a slowdown namely Vancouver and South Surrey.

The tightening of the mortgage rules is perhaps the single biggest factor that has led to the slowdown and a close second is the uncertainty of the markets and the still ever slow US housing market. Our neighbours to the south are still waiting for the market to pick up and while this wait has definitely taken longer than anticipated it seems that the Canadian market could not hold out any longer and it has followed suit as well.

Often times I get asked the question, Can I list my home on the MLS® ? and the answer is partial yes…. Through discount Real estate brokerages such as www.Oneflatfee.ca yes you can sell For Sale By Owner way. Onefaltfee gives you best of the worlds…. You can sell privately while being on the MLS® and at the same time cooperate with the Real Estate Agents. This way you can save around 50% of the commission and hence make yourself more competitive in the market place.

There is a few smart things that a seller can do in this market to alleviate some of the miseries. Firstly, the seller can choose an effective discount brokerage to sell their home. While a brokerage can be a discount Realty, it does not mean that it has to be ineffective. As long as the buyer’s agent makes a market standard commission he/she would not blacklist the property. Second, the seller can do a few simple things to make the property attractive to the buyer such as de-clutter and sometimes a simple thing such as a fresh coat of paint can add huge value to a house. Third, the seller can choose a brokerage that offers a discount or is a For Sale By Owner type of brokerage and in some instances such brokerages are just as effective and if retained for a purchase can offer cash back from the commission earned as well.

Today’s market is called a buyer’s market because of the number of properties that the buyer has available to choose from. The buyer can also dictate the prices to a large extent in today’s Real Estate Market.

The Real Estate Board recently came out its own prediction and gave the following statement:

“MLS® residential prices are expected to remain relatively stable this year and through 2013, with changes in average price statistics largely the result of a differing mix of home types sold and shifting regional demand patterns,” added Muir. Average price data for Vancouver was skewed artificially high in 2011 by a wave of detached home sales in the priciest neighbourhoods. Lower Mainland’s share of provincial home sales is expected to decline to 58 per cent this year from 62 per cent in 2011. The average MLS® residential price in BC is forecast to decline 7.8 per cent to $517,500 this year, and remain relatively unchanged at $519,000 in 2013.

Mayur Arora

Ranked number 2 Realtor (sales) in all of Greater Vancouver (2011)