Category Archives: home appraisals

8 HOME INSPECTION RED FLAGS

8 HOME INSPECTION RED FLAGS:

Our gallery of home inspection nightmares (below) is good for a laugh, but a home inspection is serious business. It’s the buyer’s opportunity to make sure that the house they’re about to purchase doesn’t hold any expensive surprises.

A typical home inspection includes a check of a house’s structural and mechanical condition, from the roof to the foundation, as well as tests for the presence of radon gas and the detection of wood-destroying insects. Depending on the seriousness of what the inspection uncovers, the buyer can walk away from the deal (most contracts include an inspection contingency in the event of major flaws) or negotiate with the seller for the necessary repairs.

These are the red flags that should send a buyer back to the negotiating table, according to home improvement expert Tom Kraeutler of The Money Pit.

1. Termites and other live-in pests: The home you’ve fallen in love with may also be adored by the local termite population. The sooner termites are detected, the better. The same goes for other wood-devouring pests like powder-post beetles. Keep in mind that getting rid of the intruders is just the first step. Once the problem has been addressed, have a pest control expert advise you on what needs to be done in order to prevent their return.

2. Drainage issues: Poor drainage can lead to wood rot, wet basements, perennially wet crawlspaces and major mold growth. Problems are usually caused by missing or damaged gutters and downspouts, or improper grading at ground level. Correcting grading and replacing gutters is a lot less costly than undoing damage caused by the accumulation of moisture.

3. Pervasive mold: Where moisture collects, so grows mold, a threat to human health as well as to a home’s structure. Improper ventilation can be the culprit in smaller, more contained spaces, such as bathrooms. But think twice about buying a property where mold is pervasive — that’s a sign of long-term moisture issues.

4. Faulty foundation: A cracked or crumbling foundation calls for attention and repair, with costs ranging from moderate to astronomically expensive. The topper of foundation expenses is the foundation that needs to be replaced altogether — a possibility if you insist on shopping “historic” properties. Be aware that their beautiful details and old-fashioned charms may come with epic underlying expenses.

6. Worn-out roofing: Enter any sale agreement with an awareness of your own cost tolerance for roof repair versus replacement. The age and type of roofing material will figure into your home inspector’s findings, as well as the price tag of repair or replacement. An older home still sheltered by asbestos roofing material, for example, requires costly disposal processes to prevent release of and exposure to its dangerous contents.

7. Toxic materials: Asbestos may be elsewhere in a home’s finishes, calling for your consideration of containment and replacement costs. Other expensive finish issues include lead paint and, more recently, Chinese drywall, which found its way into homes built during the boom years of 2004 and 2005. This product’s sulfur off-gassing leads to illness as well as damage to home systems, so you’ll need to have it completely removed and replaced if it’s found in the home that you’re hoping to buy.

8. Outdated wiring: Home inspectors will typically open and inspect the main electrical panel, looking for overloaded circuits, proper grounding and the presence of any trouble spots like aluminum branch circuit wiring, a serious fire hazard.

The McMillan Group/Centum Supreme Mortgages Ltd.

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Preparing for a House Appraisal

How to Get a Home Ready for an Appraisal

Whether you are selling, purchasing or refinancing a home, the lender’s appraiser has the final word on how much money the home is worth. Therefore, the appraisal can make or break the real estate transaction. Unlike a home inspection, where the inspector determines any existing mechanical or system problems in the house, the appraiser’s job is to compare your house against comparable homes that have recently sold to determine its market value. Some items on the appraisers list you can’t change, such as location, but others, such as condition and updating, depending on your budget, may be appropriate tasks to perform to prepare your house for an appraisal.

 

Cleaning and Organizing

While these may not be the most desirable tasks, cleaning, organizing and removing clutter from your house are among the best ways to prepare for an appraisal. A clean home looks well-maintained – something the appraiser will be looking for. Organizing the garage, closets and cupboards helps them appear larger, which is a great way to add value. Finally, removing excess clutter from your house, such as items on counter tops, makes a room appear both larger and cleaner.

Whether you are selling, purchasing or refinancing a home, the lender’s appraiser has the final word on how much money the home is worth. Therefore, the appraisal can make or break the real estate transaction. Unlike a home inspection, where the inspector determines any existing mechanical or system problems in the house, the appraiser’s job is to compare your house against comparable homes that have recently sold to determine its market value. Some items on the appraisers list you can’t change, such as location, but others, such as condition and updating, depending on your budget, may be appropriate tasks to perform to prepare your house for an appraisal.

Curb Appeal

Check out how your home stacks up against those that have recently sold in the area insofar as its exterior appeal, also known as curb appeal. The outside of your house makes a first impression on the appraiser, so make it is as clean and de-cluttered as the interior. Tidy up the landscaping and spread some fresh mulch in the landscape beds. Remove any toys or other clutter from the front yard. A well-maintained yard gives the impression of a well-maintained home.

Whether you are selling, purchasing or refinancing a home, the lender’s appraiser has the final word on how much money the home is worth. Therefore, the appraisal can make or break the real estate transaction. Unlike a home inspection, where the inspector determines any existing mechanical or system problems in the house, the appraiser’s job is to compare your house against comparable homes that have recently sold to determine its market value. Some items on the appraisers list you can’t change, such as location, but others, such as condition and updating, depending on your budget, may be appropriate tasks to perform to prepare your house for an appraisal.

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Make Necessary Updates

Fresh paint is an easy and inexpensive way to add value to your house. This is especially necessary if you have wild or unusual wall colors, advises Loreen Stuhr, an appraiser with Appraisers of Las Vegas. She recommends painting the walls in neutral colors and replacing vinyl flooring with wood, laminate or tile. If it’s in your budget to do so, consider replacing laminate counter tops with tile, granite or other more upscale materials.

Whether you are selling, purchasing or refinancing a home, the lender’s appraiser has the final word on how much money the home is worth. Therefore, the appraisal can make or break the real estate transaction. Unlike a home inspection, where the inspector determines any existing mechanical or system problems in the house, the appraiser’s job is to compare your house against comparable homes that have recently sold to determine its market value. Some items on the appraisers list you can’t change, such as location, but others, such as condition and updating, depending on your budget, may be appropriate tasks to perform to prepare your house for an appraisal.

Repairs

Fix any maintenance issues that the appraiser is sure to notice, such as leaking or dripping faucets, running toilets, torn screens, missing trim and missing or wobbly stairway handrails. If the home buyer is using a loan backed by the Federal Housing Administration (FHA) to purchase the house, keep in mind that FHA requires that the seller repair anything that affects the health and safety of the occupants. An FHA-approved appraiser is required to make note of such property conditions, including an assumption of the structural integrity of the property. Items that require repair before the close of escrow include providing adequate access and exit from the bedrooms to outside the home, leaky roofs, foundation damage and flaking lead paint.

Whether you are selling, purchasing or refinancing a home, the lender’s appraiser has the final word on how much money the home is worth. Therefore, the appraisal can make or break the real estate transaction. Unlike a home inspection, where the inspector determines any existing mechanical or system problems in the house, the appraiser’s job is to compare your house against comparable homes that have recently sold to determine its market value. Some items on the appraisers list you can’t change, such as location, but others, such as condition and updating, depending on your budget, may be appropriate tasks to perform to prepare your house for an appraisal.

Paperwork

Although the appraiser has numerous ways of finding information, she may have no way to know about improvements you’ve made to the home, which could have a positive impact on its value. A good way to let her know is to create a list of the home’s features and benefits, advises David Hesidenz of David Hesidenz Appraisals in Pennsylvania. Hesidenz suggests that you supply the appraiser with a page or two containing the exact street address of your home, the number of bedrooms and bathrooms and the square footage and lot size. Then make a list of any improvements you’ve made to the home and the date they were finished. Some of these improvements may include a new roof, new windows, upgraded plumbing or electrical work, and room additions.

Source: PocketSense.com – Bridget Kelly

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How housing is helping immigrant families close the wealth gap

Housing is more than just an asset class. Homeownership provides shelter and the opportunity to grow equity over time.Lars Hagberg/The Canadian Press

The recent slump in real estate sales and prices in Canada has led some to question whether housing remains a good investment. For immigrant families in Canada, the stakes may be particularly high.

That’s because new research from Statistics Canada shows that investment in housing by immigrant families has been a major factor in helping them plug the wealth gap that exists between them and their Canadian-born compatriots.

Whereas the study found wealth growth for Canadian-born families has in recent years been driven both by increases in housing and registered pension plan assets, for immigrant families, housing alone has been the primary driver of wealth growth.

René Morissette, a senior economist with Statistics Canada, in a report released this week used data from several waves of the Survey of Financial Security to compare the wealth growth of immigrant and Canadian-born families. The designation of a family being immigrant or otherwise was based on the immigration status of the major income earner.

 

The report generated synthetic cohorts in order to compare similarly structured immigrant and Canadian-born families over time. The benchmark cohort comprised recent immigrant families whose primary income earner in 1999 was 25 to 44 years old and had been in Canada for fewer than 10 years. The other cohort comprised established immigrant families whose primary income earner in 2016 was 42 to 61 years old (on average 17 years older relative to 1999) and had been in Canada for 18 to 26 years. The comparable Canadian-born cohorts were of the same relative age groups.

Interestingly, while immigrant families started at lower rates of home ownership in 1999, by 2016 the homeownership rates between comparable immigrant and Canadian-born families converged.

On average, 31 per cent of the benchmark cohort of recent immigrant families in 1999 owned a principal residence compared to 56 per cent of comparable Canadian-born families. By 2016, established immigrant families led by a primary earner of 42 to 61 years of age reported a homeownership rate of 78.7 per cent compared to 74 per cent for their Canadian-born counterparts.

A key finding of the report is how the immigrant families caught up to their Canadian-born counterparts in growing wealth over time. In 1999, the median wealth of Canadian-born families with the major income earner aged 25 to 44 years old was 3.25 times higher than that of comparable recent immigrant families. However, when the two synthetic cohorts were compared 17 years later, the difference in median wealth between the immigrant and Canadian-born families almost disappeared.

Canadian-born and immigrant families relied on different asset classes for wealth growth. The wealth composition of families in 2016 revealed that housing equity explained about one-third of the average wealth of Canadian-born families. By comparison, housing equity was responsible for a much larger share of immigrant families’ wealth, accounting for anywhere between one-half to two-thirds.

The wealth growth observed for immigrant families has a side story of high indebtedness. The report found that in 2016, immigrant families, in general, had “markedly higher debt-to-income ratios than their Canadian-born counterparts.”

Immigrant families often, but not always, are larger in size. This is partly because immigrants are more likely to live in multi-generational households or to have siblings and their respective families occupy the same dwelling.

The unit of analysis in Statistics Canada’s report is economic family, which “consists of a group of two or more people who live in the same dwelling and are related to each other by blood, marriage, common law or adoption.” An economic family may comprise of more than one census family.

The expected differences in family size and structure between immigrants and Canadian-born families could have influenced some findings in the report. For example, the family wealth held in housing by immigrant families might lose its significance when wealth growth is compared at a per capita basis.

Housing is more than just an asset class. Homeownership provides shelter and the opportunity to grow equity over time. Canadian data shows that rising home prices over the past two decades has helped immigrants bridge the wealth gap even when the gap between the average incomes of immigrants and Canadian-born has persisted.

Source; The Financial Post – Murtaza Haider is an associate professor at Ryerson University. Stephen Moranis is a real estate industry veteran. They can be reached at www.hmbulletin.com.

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InFocus: The Role of Appraisals Why accurate appraisals are more important than ever before

As certain Canadian real estate markets reach dizzying new heights, homebuyers are loading themselves with debt in order to secure their place on the housing ladder. Paying over the asking price is no longer an exception to the rule and, as a result, many Canadian homebuyers are playing a risky game with their financial futures. Brokers have an important role to play in ensuring that their clients don’t buy something they can’t afford and, in these tumultuous times of economic and real estate uncertainty, securing an accurate appraisal has never been more important.

“One of the opportunities that appraisers bring to the table when asked to give their opinion is not just understanding the dynamics of the valuation, but also understanding what that means within the current market conditions,” says Dan Brewer, President of the Appraisal Institute of Canada (AIC) and licensed mortgage and real estate broker. “There appears to be a situation where people are willfully under listing properties to create a frenzy, which is potentially misleading. It makes an appraisal all the more critical in the current market.”

Brewer has been monitoring a region in Ontario where homes are consistently selling for 15 – 30% more than list price; where paying a premium is the new norm. These premiums are being driven by current supply-demand issues, and in a situation where 20+ buyers are vying to purchase a property there really is only one winner: the seller.

Despite homes selling consistently over asking and accurate valuations becoming increasingly important, Brewer still notices a lack of broker knowledge around the appraisals process and the bodies who govern the industry. “The mortgage agent world had exploded in recent years and many people don’t have the specific training they need,” Brewer says. “The AIC has several professional development programs designed specifically for broker organizations to help them train agents and investors in the market place. It’s important that everyone, including brokers and agents, gets the education they need.”

Source: MortgageBrokerNews.ca

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Detached home prices in Toronto rising by $550 per day

cabbagetown-house

Want to earn $550 a day, literally from the comfort of your own home? All you need to do is buy a detached home in Toronto.

That’s according to Huffington Post Canada, who analyzed the latest report from the Toronto Real Estate Board (TREB) to calculate the stunning figure.

The data comes from a TREB home sales and price report released last week. The board reported that the sale price for a single-detached home hit $1,257,958 in April, up 18.9 per cent over the same time last year. Huffington Post Canada crunched the numbers to find that the price increase translates to growth of $16,820 per month. That’s $550 on a daily basis.

“Or put another way, every day you delay buying a house in Toronto will cost you another $550,” wrote Huffington Post’s Daniel Tencer.

Huffington Post also calculated the price growth for the city’s condo market, which saw the average sale price hit $436,545 in April, a 7 per cent increase over the previous year. That works out to $2,411 per month or $79.26 per day.

April was a record breaking month for Toronto home sales. The 12,085 sales in the Greater Toronto Area were the most ever recorded in the month of April, according to TREB.

In a statement, TREB’s market analysis director Jason Mercer indicated that he expects prices to continue to climb through the spring.

“As we move into the busiest time of the year, in terms of sales volume, strong competition between buyers will continue to push home prices higher,” he said.

Source: BuzzBuzzHomeNews  | MAY 9, 2016

 

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Buying a Home in the Winter

Spring and summer are the high season for home sales, but winter can be a buyer’s market. If you don’t mind a smaller pool of homes for sale or moving around the holidays, winter might be a good time for you to house shop.

Less Competition, More Leverage
Since spring and summer are the most active real estate seasons, many home sellers wait until then to list their homes. That means there are fewer homes for sale in the winter, but the sellers often have strong reasons to sell their homes soon, such as job relocation. These motivated sellers can be a boon to the home buyer.

While there are fewer homes to choose among, the smaller selection can save you a lot of time. Do you really want to traipse through 50 houses? It may be simpler to view the handful of homes for sale in the winter and choose the one that best suits your needs.

Just as there are fewer homes for sale during the winter, there are fewer buyers, too. That means less competition and sellers who are more willing to accommodate potential buyers. Use this knowledge to your advantage. Offer a relatively low (but not insultingly low) bid for the home you’ve selected, or ask for perks such as the living room furniture or the chandelier that you admire.

The low number of potential buyers also means you have more time to make your decision. In the spring, you often need to choose a home and act quickly, but in winter you may be able to take your time.

Assessing a Home’s Winter Fitness
Viewing homes in the winter lets you see how it holds up to the weather. Did you feel cold while looking through the house? Is there a functioning heating system and hot water? Are the windows letting in drafts?

Availability of Agents and Others
Another advantage of buying a home in the off-season is the greater availability of industry professionals. Real estate agents will have fewer clients and more time to focus on your home search. Lenders will be more accessible for questions and assistance. Some lenders even waive fees during the off-season to encourage borrowers to use their services. Likewise, movers tend to lower their costs during the winter months.

Gray Gardens or Winter Wonderland?
Home buyers can be turned off by the bleak look of prospective homes in winter. Bare trees and lawns covered in gray snow aren’t the most picturesque. However, you’ll be able to see how well neighbors tend driveways and sidewalks, whether the town plows or salts icy streets, and whether kids come out to play in the snow. Around the holidays, you might even see the neighborhood decorated in its winter finest.

Source: Realtor.com By Dini Harris October 3, 2013

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Closing costs more than homebuyers often expect

Some buyers may not consider the extra costs of a home beyond its purchase price.

November is national Financial Literacy Month. The goal is to protect and educate consumers about financial services and this year’s theme is Financial Literacy Across Generations. This is the third in a series of Ask Joe columns that will touch on real estate decisions buyers and sellers face at different times in their life.

 

I’m buying my first home. What are some of the costs I should plan for, besides the purchase price?

Chances are you’ll have run the numbers to determine what you can afford by way of mortgage amount and payments. But

Some first-time homebuyers may overlook the fact that the price paid for a home is just one of its many costs. That’s why it’s so important to understand the full cost of buying a property.

It’s useful to separate the additional expenses into three categories: pre-closing costs, closing costs and after-closing costs.

A home inspection is the most widely recognized pre-closing cost. It may be seen as an optional expense but it’s also a smart one is because a qualified home inspector, engineer or contractor can identify underlying problems with a home’s major systems, like heating and electrical. If you’re thinking of saving some money by skipping an inspection, ask yourself, “Can I afford to learn about major, costly problems after I take possession?” If you’re buying in a rural area, you should also have the septic system inspected and water testing conducted for the good of your health.

 

Your lender may require, as a condition of financing, that you pay for an appraisal or survey of the property to ensure the home’s value matches its sale price.

Closing costs typically make up the bulk of the additional expenses. In Ontario, a land transfer tax is up to 2 per cent of the purchase price. In Toronto, an additional tax of up to 2 per cent applies. As a first-time buyer, you should talk with your real estate agent about whether you are eligible for a refund of the land transfer tax.

Legal fees will need to be paid to handle the documents and contracts involved in the purchase of a home. Your lawyer will conduct a title search on the home to ensure the seller can actually sell the property and that there are no liens against it. They will also register the deed and mortgage for you.

 

You may also need to refund the seller for pre-paid expenses — property taxes, maintenance fees, utilities, hot water heater rental fees.

 

Three different insurance policies round out the closing expenses. You’ll need mortgage insurance if your down payment is less than 20 per cent of the sale price. You’ll need home insurance. And title insurance will protect you against title fraud, errors in surveys and encroachment issues with neighbours.

 

After-closing costs include moving expenses. Some gas, hydro and water companies charge a hook-up fee and you’ll need to pay if you want to forward your mail from your old address.

 

Then you’ll need to factor in what you want to do with the dated kitchen and broken fence. If you want to renovate or take care of some repairs identified during the home inspection, it will add to your costs. A fresh coat of paint, some window coverings, or perhaps a shiny new fridge and stove also add up. Understanding the full cost of buying a home will help to budget for these final touches. The latest edition of RECO’s consumer newsletter, RECOnnect, has a useful overview of these costs. You can find it on the consumer side of RECO’s website, reco.on.ca, under ‘Publications and Resources’.

Source:  Special to the Star, Published on Fri Nov 15 2013
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