Divorce, Death & Debt

Death, Divorce And Debt

by Darrin DeRoches May 23 - 29, 2013

In real estate there are the three big D’s. Death, Divorce, and Debt. Whenever these arise, you call in the real estate agent. In most cases you are looking for an Opinon of Value of your property before moving forward. The home is usually the biggest asset in one’s life so this is usually where everyone will start before making decisions. In some cases, a real estate agent is called in to value a home before the body is even buried or before the spouse even asks for a divorce. Everyone wants to know what their property is worth in today’s market and a lot of times the agent they call in is not the one who will list the property.    I deal with the three big D’s all the time and you have to watch how you evaluate a property until you have all the information. If you get a call for an evaluation and the first question is “how much does it cost?” then you know someone is just looking for a quick idea on how much their home is worth and may not ever really sell their home. A good client can call asking about their properties and without being too evasive I always ask “why?” It usually comes back to debt or divorce and it can be a touchy subject and can get pretty personal. Sometimes debt is tougher than divorce and it may even lead to divorce. Recently I had a client going through a divorce and they already had an agent come through and give them an Opinion of Value so they could decide to sell or buy each other out. His evaluation was about $30,000 over reality since he was trying to get them to sign with him. He was not aware of the pending divorce and some agents will give you a high evaluation so that you will pick them to work with. In this particular case, I was called in to give a “real” value to which I am now listing it for a price that will move it fast since they are not talking and want to get it done.     Some would think there is a deal here, since they are not talking and want to dump the house, but when you look further into it they are divorcing for a reason. This reason is usually debt and the house is just going to pay it all off and once they settle everything there is not much left. Selling the house is harder than signing the divorce papers since the money, debt, possession and memories all tie to the family home and you have to handle the situation appropriately. I deal with each side separately, very straight forward and business minded so they both will come out of the sale with the feeling that they have been dealt with fairly and had control over the final sale. You can come out ahead when selling the home due to divorce, it is all in the way you market it.

Buying Paper - Risk And Reward

by Darrin DeRoches May 16 - 22, 2013

You hear people talking about “buying paper” and that is just what it is. The investor is looking to buy a property before construction “ on paper” with the intention of selling it when the project is complete. It can be a profitable endeavor but it is still risky. It’s happening in our market with condos but also townhouses and freeholds. People always wonder why homes go up for sale when a new sub division is built or when a condo development is completed. How can they make money?     An investor will purchase a property from the plans when they are first introduced. They are able to get the best deal on a unit. It may be discounted as high as 10 per cent less than the final sale price. They buy the unit and wait for the construction which usually takes at least a year but in most cases two years. The Hamilton market has gone up about 7 per cent each year so if you take the original discount and add the natural market increase the investor can be in for a 25 per cent return. So if they bought a $200,000 unit and paid only $180,000 then it increased by 14 per cent or $28,000 they stand to make $48,000 on a unit they only owned the “paper”.     So if it is so easy why wouldn’t everyone do it? There is a risk that the market will not increase and you will have a property you never wanted to live in. The smart investor will then rent out the property and wait until the market increases and then they will realize their return. Most investors also buy multiple properties at a time and will make $150,000 for three or $200,000 for four units. One hundred grand a year is not a bad return on “buying paper”. Of course you have to have money to buy the units and depending on your bank you can buy them for just 10 per cent down and sell them before the mortgage kicks in. It can be a risky time but if you know how to invest and have the wherewithal, you can do pretty well with very little effort.     A new client from out of town contacted me about doing this in our market and there are a few good opportunities out there. He is interested in buying at least three condos before construction begins but doesn’t know which ones. You have to really know which size, location and project to buy in. If you buy the wrong ones you will have a really hard time selling them before your mortgages kick in and it can be a tough time. Every market is different and just because it worked in Vancouver or Toronto does not mean it will work in Hamilton. Picking the right broker can make or break your investment. Risk and reward! V         Darrin DeRoches is a local real estate and mortgage broker. He can be reached to answer questions, comments or stories about real estate experiences through this weekly column at sold@uniquerealty.ca.

Spring Market: Don’t Get Burned

by Darrin DeRoches May 9 - 15, 2013

Spring has sprung and the real estate market has responded. It is still a seller’s market and the listings are lower than average. It is interesting when you read the statistics since they are somewhat confusing. There is a 6.5 per cent increase in the amount of properties listed over last year and an increase of sales by 5.5 per cent so you would think there is 1 per cent of listing still on the market and that would constitute a buyer’s market. The statistics go on to say that the sales have gone up 5 per cent and the overall price increase is 1.9 per cent higher than last year in April. The most telling statistic from April is that more listing and sales were recorded than last year but the second highest in April for the last 20 years. This statement is the real tell-tale sign of the market and if you are considering selling – this is the time.     April’s weather sucked this year. It was cold and rainy and this does affect the market more than you would think. The first seven days of May have been glorious and the phones are certainly ringing. May will be much stronger than April and the spring market will be one of the best we have seen in 20 years. The statistics say listings are up from last year but at the same time there are fewer listings on the market which is confusing. The bottom line is that properties are selling and houses are not sitting on the market. The average days on the market are 38 to 40 days which in means houses are moving. 60 days is the norm for houses to sit on the market so 40 days is impressive. So what does all this mean to the buyer and seller?     Simple – the buyer better move quick and seal the deal because a quality home will be snapped up fast and may go into competitive offers if you wait around. Spring may have sprung in April but May is where you will see the sales and competition happen. So if you are buying, be prepared and work with a broker who is also prepared or you will lose out. Sellers have to also realize the market is moving fast but do not think you can ask for the sky and get it. A properly priced and presented home will get the offers not an overpriced lipstick wearing pig property. Yes it is a sellers’ market but the buyers can see a “lipstick” job a mile away and if you over price you will scare away the buyer. You also run the risk of sitting on the market where people will ask “why has it not sold?” Do not be greedy when selling – even in a sellers’ market because just as fast as spring has sprung the buyers will be buying and if you do not sell it will be a long hot summer market sitting and waiting for a buyer. Strike while the market is hot and try not to get burned. V         Darrin DeRoches is a local real estate and mortgage broker. He can be reached to answer questions, comments or stories about real estate experiences through this weekly column at sold@uniquerealty.ca.

First Time Buyers

by Darrin DeRoches May 2 - 8, 2013

I have written about first time buyers before but every time I work with a new client that has never bought before, I learn something new. First time buyers may be just as informed about real estate as other buyers but unique questions always come up and the interesting part is that the questions usually come from friends and family. The first time buyer has to stop listening to everyone else and trust their own instincts. The dumbest questions are always from the people giving them advice and never from the buyer themselves.     This is why I usually put a first time buyer with a Mortgage Broker so that they can ask all the questions and get the banks working for them. I have seen too many banks take advantage of their naivete and sign high rate mortgages with bad terms because the buyer has “blind faith” with their bank. They usually say “I have been banking with them since I was a kid” So what! This is the exact reason why they will hit you with a high rate and finally make money on you since they have given you a free account for years. Think about it! Another problem that happens with a first time buyer is moving too slowly. They listen to their friends who say you should look at “twenty to thirty homes” before making a decision. Wrong! The right home, location and price are the deciding factor not the number of homes you look at. You can miss out the best deal waiting to find the “perfect home”. Most are afraid if they move fast they will be ridiculed by their family. If your family’s last name is Trump, then maybe they can give you advice, otherwise listen to your broker.     That brings me to the most important decision – picking the right broker. First things first – you are probably buying the most expensive thing in your life and picking the right broker can make or break your financial future. Just because your cousin Johnny just got his real estate license does not mean he is the right person for the job. How do you pick the right broker? Ask yourself these questions: Has the broker been successful in buying real estate for themselves? Are they full-time  real estate brokers? Are they approachable and take time to answer questions? Lastly, have they been successful in winning against multiple offers? Anyone can write up an offer but it takes the right broker to write up the “winning offer”. Even if you are not in competition, the way you write an offer can make a deal a steal! Time after time I have clients excited about buying their home and getting it for a price they cannot believe.     Listen to your gut, move quickly when it is the right home and most importantly pick the right broker. Business is business and family is there to support you, but when buying your first home – go with an experienced professional! V         Darrin DeRoches is a local real estate and mortgage broker. He can be reached to answer questions, comments or stories about real estate experiences through this weekly column at sold@uniquerealty.ca.

How To Approach Downsizing

by Darrin DeRoches April 18 - 24, 2013

Downsizing can be a hard thing to do but if you approach it the right way it can be the right answer. People have to purchase smaller homes for a variety of reason but the main two are divorce and retirement. Divorce usually means a split in income and the ability to maintain the matrimonial home can be difficult. The two parties need to buy new homes that they can afford and keep their children in the same school and also fit all their belongings etc. The reality that the house will be smaller and lack all the bells and whistles is usually hard to come to terms with. A recent client of mine is going from a $500,000 home into a $250,000 home but wants a $300,000 dollar home. The problem is the size and location of the new property and the reality is that their income will only support a smaller home. The process can be very emotional and sometimes it is hard to come to the reality of their future. They need to be honest with themselves so they do not become house poor. My advice to them is to be brutally honest and buy an affordable property and if in time their financial standing improves, their children grow older and move out then they can reconsider a larger property in two or three years. The most important thing is to own a home and be able to afford it.     The retirement home is becoming more and more needed in today’s market. The population is aging and they require different things from their home today than they did 10 years ago. Most people require a bungalow where everything is on one floor. Laundry, bathrooms, bedrooms all need to be on the same level and their family home usually becomes too large and hard to handle. They have options and can even consider “retirement communities” but the majority of clients wants to maintain their independence and do not want to pay condo fees. I have found the best answer is one floor freehold townhouses that are mixed in communities with all different age groups. These properties are not as easy to find but they are the best option since they still have the feel of your own home but with the comforts of a community.  The grass cutting, snow removal and the ability to live independent and safely on one level is what you want and to be able to sit on your porch and watch the world go by is what you may need. This way you are able to still be involved without be separated from your community.     When downsizing, one must really look at what they need today and in the near future and figure out what works best for them emotionally and financially. Get rid of all the clutter, simplify and enjoy the next chapter of your life while staying in your community. It may be hard to find the right property but by using the right broker you can certainly improve your chances. V         Darrin DeRoches is a local real estate and mortgage broker. He can be reached to answer questions, comments or stories about real estate experiences through this weekly column at mail@uniquerealty.ca.

There's Mold & There's Mold

by Darrin DeRoches April 4 - 10, 2013

This week I showed a four bedroom house with all the must haves to my client and she loved it and wanted to make an offer. Sounds good but there was one problem – there was already another offer on the property. Most agents would just give the old “oh well, we will find you something else” but my client wanted this house and I have been showing her homes over the last three months and this was the first one she loved. I called back the agent and asked about the other offer. He explained to me it was only good until Monday and I was surprised about the quick time period and it was a holiday so banks are closed – so what was the issue?     I asked a couple of poignant questions and let the agent talk and talk until he finally revealed a possible mold issue. I asked to be kept in the loop. Monday morning at 9am I got the call that the deal had fallen apart. I got an offer written up and by the end of the day my client had her dream home. We checked the report and saw the mold and also found the cause which was that the vents were covered up once the new siding was installed. A simple fix under $100 and the mold will be no more. We secured the property for less than the other offer and we can now close on a great home for my client. The mold is being removed and the venting problem will be fixed before we take possession of the property – simple fix and moving fast got us a deal and more importantly a great home for her family.     Once a client hears about mold, they usually run from the property but 90 per cent of mold issues are minor and easily fixed. The sellers were totally freaked out over the mold since their children are living there but then they saw the results of the inspection stating that it was minor and no health problems existed. Inspectors always love to scare clients with mold but once the shock wears off and you realize how simple the fix is you can use the issue to your advantage. I had buyer ask for $2,000 off the price to fix the mold which the seller fixed with a dollar fix of bleach and a couple hundred dollars for the re–inspection to prove the mold was removed and the problem fixed.     Obviously if there is a “big mold issue” it can be a large cost and people in space suits will take over the home to correct the issue. These issues come from years of neglect, leaking roofs, pipes, windows etc. These mold issues have to be dealt with properly and with the right professionals. When you ask these same professionals about the mold they will tell you every home has some type of mold but less than 10% have a “real issue”. V     Darrin DeRoches is a local real estate and mortgage broker. He can be reached to answer questions, comments or stories about real estate experiences through this weekly column at mail@uniquerealty.ca.

Condo Investor

by Darrin DeRoches March 28 - April 3, 2013

The big move to Hamilton is constantly being talked about and is it really true? There is a property in a sketchy area of Hamilton that is promoting an entire block available to build a new apartment tower since Hamilton is a having an influx of people moving here. All the papers and magazines are writing about this huge movement and there are examples of people moving here but how many and why? Condos are going up and more are in the pipeline so a new tower geared towards rentals makes sense or does it?     There is around a 3.5 per cent rental gap in Hamilton and if you believe statistics it is considered low in comparison to other markets. We are the best place in the country to invest in real estate right now so all the indicators show we will be in need of more rentals. My only question is when exactly are the droves of new Hamiltonians supposed to show up? I personally have written about all the inquires and excitement about our city and even made fun of real estate agents who mock the new condos as “who the hell are going to live in them?” but you still must wonder – when?     I believe the new influx of condos will not only bring more people to our city it will bring in the “condo investor”. These people have bought and sold condos in Toronto, Vancouver and Montreal where they buy multiple units with the sole intentions of selling them for a profit when the project completes. It is a pretty simple way to make money over a short period of time. They buy at the lowest point before the project begins and in a couple of years when the project is actually built they make the increase in value. This increase can be a good 20 to 40 thousand dollars an a average unit. Hamilton had a 7 per cent increase in value in the last two years, with this and buying first and then selling high, money is to be made.     People always ask why there are units for sale once a project completes – it is the investor. The only problem with this is sometimes the units will not sell and the investor then puts them up for rent. A new project in the west end did just this and you can rent a condo for around $1,300 a month since they are unable to sell – right away. This influx of condos and potential rental units into our downtown market is most likely more than we will need when it comes to quality rentals. Let’s be honest there are not a lot of people who can afford to rent a $1,300 dollar condo and save enough money to eventually buy their own home. If you can afford that rent you can also afford to buy the condo itself or a great home in our city. We are still priced affordable compared to everywhere else so the investor may be careful jumping into our market! V         Darrin DeRoches is a local real estate and mortgage broker. He can be reached to answer questions, comments or stories about real estate experiences through this weekly column at mail@uniquerealty.ca.