Q - I'm in the process of buying a home conditional on financing and home inspection. My financing has come through but there are issues with the home inspection. My inspector found cracks in the foundation in the basement. This was not disclosed and it looks like there was an attempt to hide these cracks. I like the house but also concerned with the foundation. How can I salvage this?
A - Good for the home inspector for having found these cracks! It is always wise to have an inspection.
You have two choices:
You can rescind the contract since one of the conditions is that you 'are satisfied' with the home inspection -- and you are not.
Or, if you really want this home, have your real estate agent determine if the sellers would reduce the price by the amount it would cost to repair the foundation. If no, then you can decide if you want to bear the cost or walk away. If yes, hire a contractor to evaluate the situation and give you an estimate for repairing the foundation. Have your agent do an amendment to the contract which would deduct the cost of repairs from the price of the home.
Since you feel there might have been an attempt to deceive a buyer, be very certain that all other major and costly aspects of the home are acceptable -- electrical, plumbing, roof and so on. Be sure to also check to ensure that the title is in good order and verify with the municipality regarding zoning and any set backs. Your agent should be doing this as part of the real estate process.
Thursday, May 16, 2013
Tuesday, April 30, 2013
Downpayment on a Home
Q - I'm able to make a reasonably large downpayment on a home but I was thinking of only putting down the minimum required, 5%, and replacing my 4-year old car with a new car instead. Please advise. I live in Canada.
A - Glad you mentioned that you live in Canada. Mortgage interest on a principal residence is not tax deductible in this country.
Given that, the advice is easy. Make as large a downpayment as reasonably possible! The interest you save, over time, may well represent the value of a new car. If you can make a downpayment of at least 20%, you will also save on the mortgage loan insurance you are required to pay in Canada. This is close to 3% of the cost of the home.
As for the car issue, if you choose to put down a larger downpayment, take the interest savings and place the money in a special account. While you are driving your 4-year old car, your 'new car money' will be growing!
Go and see a mortgage broker to get the exact figures involved in a 5 % downpayment versus a larger downpayment. The numbers will speak for themselves. Good luck!
A - Glad you mentioned that you live in Canada. Mortgage interest on a principal residence is not tax deductible in this country.
Given that, the advice is easy. Make as large a downpayment as reasonably possible! The interest you save, over time, may well represent the value of a new car. If you can make a downpayment of at least 20%, you will also save on the mortgage loan insurance you are required to pay in Canada. This is close to 3% of the cost of the home.
As for the car issue, if you choose to put down a larger downpayment, take the interest savings and place the money in a special account. While you are driving your 4-year old car, your 'new car money' will be growing!
Go and see a mortgage broker to get the exact figures involved in a 5 % downpayment versus a larger downpayment. The numbers will speak for themselves. Good luck!
Friday, April 19, 2013
Irrevocable Time
Q - What does 'irrevocable time' mean in a real estate context?
A - When you make an offer on a property, you don't want the offer to be open or valid forever so, therefore, you place a time limit on the offer. Your real estate agent can make a suggestion regarding a time frame. The time can be as short as an hour or two or a day or two or even longer under special circumstances. The actual time and date are written into the offer as the irrevocable time frame. That means that the offer cannot be revoked or changed in any manner, by the one making the offer. If, during this period, the offer is not accepted, it then becomes null and void.
The receiving person of the offer can accept the offer within the irrevocable time frame or make a counter offer. Any change made to the contract will turn it into a counter offer. The person making the counter offer can also specify an irrevocable time and date. If the counter offer is not accepted or countered again within the irrevocable time frame, then it becomes null and void.
Friday, April 5, 2013
For Sale By Owner (FSBO)
Q - I want to get a larger house but need to get as much as possible out of my current home so I plan on selling it myself and saving the real estate fee. What are some of the things I should be aware of?
A - Some home owners certainly feel they have been successful at selling their own homes. It all depends on what kind of information you possess and how good you are at negotiating. The dilemma in this is that you, as the seller, want to save the real estate fee and so does the buyer. The buyer feels that, if you are not paying a real estate fee, he can offer you less and will deduct what he perceives to be the amount of the fee when he makes you the offer. So you really need to know what the market value is and be a sharp negotiator. An experienced real estate agent can sometimes net you more than doing it yourself -- without the hassle.
Here are some things to consider when selling your home yourself:
Do you know the market? Is it going up or down?
Is it a seller's market or buyer's market?
Do you know the market value of your home?
What price will you ask?
Can you write a good ad?
Can you take appointment calls at work?
Can you screen the buyers?
Can you qualify buyers?
When can you show your home? Evenings? Weekends?
What if a buyer shows up at the door without calling? Will your children answer if you're not home?
Are you familiar with the paperwork?
Have you assessed your costs for advertising, signs, feature sheets etc.
Can you negotiate for yourself?
If you feel confident in your knowledge and skills - go for it. Otherwise talk to a real estate agent who does this all the time and works in your best interest.
Sunday, March 31, 2013
Bridge Financing Option
Q - I would like to upgrade to a larger home but have to sell my current one. How would I proceed?
A - I suggest that you place your home on the market and then make an offer conditional on you selling your own home. Make sure that you list your home at market value or a bit less for a quicker sale. Also be sure that your home shows well.
Typically, when you place your offer on the larger home, your agent (or the seller's agent will counter with this condition) will include a clause - often referred to as an escape clause - that will allow the seller to continue marketing the property . If the seller receives another offer, you will be notified and would have 24-48 hours, depending on the contract, to remove your conditions. If you can't remove your conditions, the seller will be able to accept the other offer.
To avoid forfeiting the home you have selected, I recommend going to your mortgage broker or bank and arrange for bridge financing. If you have bridge financing in place, you would be able to activate the bridge financing and be ready to remove your conditions in case the seller of the other home receives an offer. This would enable you to retain the new home you selected.
When you use the bridge financing option you should be quite certain that your home is saleable and competitive with other similar homes. Bridge financing is a temporary stop gap and not something you want to carry for any great length of time. It's a great tool under the right circumstances.
A - I suggest that you place your home on the market and then make an offer conditional on you selling your own home. Make sure that you list your home at market value or a bit less for a quicker sale. Also be sure that your home shows well.
Typically, when you place your offer on the larger home, your agent (or the seller's agent will counter with this condition) will include a clause - often referred to as an escape clause - that will allow the seller to continue marketing the property . If the seller receives another offer, you will be notified and would have 24-48 hours, depending on the contract, to remove your conditions. If you can't remove your conditions, the seller will be able to accept the other offer.
To avoid forfeiting the home you have selected, I recommend going to your mortgage broker or bank and arrange for bridge financing. If you have bridge financing in place, you would be able to activate the bridge financing and be ready to remove your conditions in case the seller of the other home receives an offer. This would enable you to retain the new home you selected.
When you use the bridge financing option you should be quite certain that your home is saleable and competitive with other similar homes. Bridge financing is a temporary stop gap and not something you want to carry for any great length of time. It's a great tool under the right circumstances.
Subscribe to:
Posts (Atom)