As of Monday January 1st 2018, all borrowers will need to pass a stress test before they are allowed to take out mortgages from federally regulated institutions such as banks, regardless of how large their downpayment. People who fail the test won’t be able to buy, and estimates have put the ratio of those who will flunk as high as one-in-five.

What is a stress test?

It’s all about subjecting prospective home purchases to a “What if?” scenario. Specifically, what would be the shape of a given buyer’s finances if interest rates were to suddenly spike.

The concept is relatively new. Insured mortgages in Canada were already subjected to such tests, but they now apply to uninsured mortgages as well, explained Samantha Gale, the CEO of the Mortgage Brokers Association of B.C.

How high is the bar? 

Potential buyers will be tested against the greater of either the Bank of Canada’s five-year benchmark rate (now 4.99 per cent) or the rate offered by a lender plus another two per cent.

“For example, if they were to get a mortgage with an interest rate of three per cent, they now need to qualify to show that they can afford five per cent,” Gale explained. 

What if the bar is too high?

Those who fail the test will need to look for something cheaper on the market.

“If you were to buy a home worth $700,000 last year, this year you might only be able to afford a home worth $560,000. That’s quite a big discrepancy,” Gale said, adding that it is probably more important than ever to speak to a mortgage broker to see what the options are.

Why put buyers to a test? 

The federal government is concerned about Canadians’ debt levels, Gale said. Because it has the tools to regulate banks, it is easy for Ottawa to impose mortgage rules rather than rules on other forms of borrowing, she said.

Gale said she did not believe a housing crash like that experienced in the U.S. a decade ago is in the cards. “Generally speaking, people want to stay in their home. They find a way to pay their bills, to pay their mortgage,” she said. 

Do the new rules affect you?

Quite possibly. If you are buying and need to borrow from a bank, they will, and they will also apply to anyone looking to refinance.

While those seeking to renew mortgages under existing terms will not need to re-qualify and be stress tested, those shopping around for a better rate will. “One of the challenges might be that a certain lender might not offer a competitive rate at renewal time, knowing that buyers can’t really shop around,” Gale said.

1)       Fill pipe: This is a 2 inch galvanized steel pipe that has either a lockable flip cap or a brass cap that screws into a galvanized steel collar. These pipes may be flush with the ground or they may stick up several inches. Fill pipes are typically within twelve feet of the house foundation and go directly down into the tank. Because fill pipes commonly stick up above the ground surface, many property owners have removed or cut off these pipes below the ground surface when the tank is taken out-of-use.

2)     Vent pipe: This is a 1 to 2 inch galvanized pipe that has a mushroom shaped cap on the open end (top) of the pipe. Usually the vent pipe is plumbed away from the tank and set next to the house foundation. Vent pipes typically stick up 6 inches to a foot and a half above the ground surface. Vent pipes were not always installed on underground tanks. In rare occasions the vent pipe is constructed of PVC.

3)     An old oil furnace or parts of an oil furnace in or under the house: Glass and metal oil filter housings are commonly left usually attached to the fuel supply lines (copper)

4)     Two Copper Tubing Lines (¼ inch) in the crawl space or basement: After the tank is taken out of service, the old fuel supply lines are often left under the house even if the old oil furnace is removed.

5)     A furnace chimney: Many 1950's houses have a small (1 foot by 1 foot) furnace chimney. Occasionally, a furnace chimney is routed into a fire place chimney. If so, there will be two flues coming out of the top of the brick chimney. Examine the top of your chimney.

How Does Rental Income Help?  

If you are wondering about purchasing a rental property or a house with a suite that you will collect rental income with, you may be surprised on how lenders will calculate that.  Over the past couple years, lenders have eased up a little bit and are now allowing for more generous calculations of rental income.  Common questions that will determine the answer: 

• Purchasing a house to live in that has a rental suite as well?  If so, you can purchase with as little as 5% down payment and 1/2 the rental income will get added to your file.  If you can put 20% down or more, then you have a much more generous calculation that basically takes the rental income and deducts it from the mortgage payment, allowing people to qualify for much more. 
• If purchasing an investment property, you need minimum 20% down payment and the rental income again offsets the mortgage payments which is a much more generous calculation.  

The best thing to do is be pre-qualified by a mortgage professional to ensure you know exactly what purchase price you can go to.  

Mistake 1: Going For the Estate Agent Who Offers The Lowest Commission

Having made the decision to sell your home, you’re now planning on interviewing a number of real estate agents. There are plenty of agents out there who will undercut the competition by seriously lowering their commission, in an attempt to win the mandate to sell your home!

“As a home seller, I’m saving money, so why is that a bad thing,” you say?

Well, there are a number of ways to look at this topic:

• Less commission means less marketing resources available to help in getting your home sold. Whichever marketing tools that agent suggested he’ll be using, there’s a good chance it’ll be substantially less than what a full commission agent would be able to spend on the marketing of your home.

Reasonable point, no?

• If the listing agent goes the route of a heavily discounted commission rate in order to get your property on his books, how many buyer agents will be turned off once they find out how much their portion of commission will be? Wouldn’t it financially benefit the buyer agent to go elsewhere with his client and get paid a standard market commission for his service?

How many buyer agents will get excited to help your listing agent out?

• And, ever wonder why the agent needs to lower his commission that low in order to get the business? If he’s willing to drop his commission level at a drop of a hat (hurting his bottom line), how good do you think he’ll be when it gets negotiation time for the sale price for your home (hurting your bottom line).

As tempting as it is to sign up with the agent offering the lowest commission, having read the above, let’s hope you put his listing presentation in perspective to what the other agents are bringing to the table in the marketing of your property.

Mistake 2: Choosing The Estate Agent Who Gives You The Highest Listing Price

Once you go on the market with an overpriced property, the chances are very high that you’ll eventually end up selling your property at a price below the market price. One cannot emphasize enough the importance of correctly pricing a home when putting it on the market.

Those first 3-4 weeks of marketing are crucial and if the price is too high, potential buyers will ignore your listing. Or worse, agents will use your overpriced property to bounce educated home buyers off to more correctly priced properties. Either way, the result will be that this overpriced property will now sit on the market for a much longer period of time and eventually sell at a lower price than would have been achieved if one had properly priced it at the start!

Let’s assume there is that one buyer who decide to put in an offer: another realistic risk you run with trying to sell an overpriced property is that the banks won’t find value during their appraisal. This will limit the amount of financing for the buyer and unless there’s a bigger deposit coming in, the deal is likely to fall through.

As a home seller, you only have one chance to make a first impression. One is tempted to go with the estate agent who suggested marketing your home at a higher price, but make sure to ask for substantiation of that price level by means of a Comparable Marlet Analysis. 

Asking the agent what’s currently on the market nearby with similar features as your property, plus looking at the recent list of sales of similar homes in the area, will give you as the homeowner a more realistic expectation of the sale of your property. Plus, it will quickly set the agent straight as to where he came up with his high listing price!

Mistake 3: Looking For The Estate Agent Who Sold The Most Properties

It might be tempting to use the total number of properties sold as your sole measuring stick in choosing the estate agent who will be selling your home. Just as the agent who only managed to sell a handful of properties last year might not be your direct choice, the agent selling 60 properties per year might not necessarily be the obvious choice either.

Per Mistake 2 above, where the estate agent who gives the highest listing price does get the listings, it will become evident that the overpriced properties aren’t selling and remain on the agent’s books. Thus, the number of properties that agent will eventually sell versus the properties that he still has on the books, will be quite low. In real estate terms, they refer to it as the sales-to-listing ratio.

An agent selling 13 out of 15 listings must be doing something better than another agent who sells 20 out of 60 listings.

Don’t go looking for the estate agent who sold the most properties but take in consideration how well the agent priced the property, what was proposed as a marketing plan, how the reactions were when you tried to reduce his commission from the start (ie test the negotiation skills) or how the overall presentation and communication report was. Those skills will be pertinent when it comes down to buyer negotiations.

Is the estate agent’s overall service equivalent to the high sales numbers?

Mistake 4: Deciding To Go With The Estate Agent Because He’s Family

Selling one’s house is very serious business. Most agents will agree that every contract is different. Every client has his/her specific requirements, needs and wishes and all that needs to be properly documents by both buyer and seller. It is therefore of huge importance that, not only during negotiation but especially at the time of closing, everything is adequately legally worded.

Uncle Joseph or cousin Annie might be a great relative of yours, besides them having to be knowledgeable to be dealing with some of the intense (complex?) negotiation and subsequent paperwork, if things were to not work out with the buyer(s), it might be hard to split the personal from the business aspect of the property sale!

Will either of you be able to look past whatever may develop from a home selling process if the experience isn’t the greatest?

Perhaps the decision ought to be to not automatically choose your relative as the person to market your home, but inform them that there will be a fair interview process where multiple agents will be able to compete for the listing agent job!

Mistake 5: Only Interviewing One Estate Agent

Ideally, it is highly recommended that you will be interviewing 3 different agents. Not only will each agent have its strengths in marketing and servicing, the respective agents will have their own set of tools and traits to bring to the table when marketing your property.

None of which you would be exposed to seeing if you were to only interview one agent!

Similar as in a lot of other businesses, the 80/20 rule applies in real estate. If anything, it’s skewed even more dramatic (numbers of 90/10 in certain markets aren’t uncommon). In other words, the remaining 80-90% of agents will do whatever it takes to gain those relatively few remaining listings; even if it means exaggerating a bit when it comes to the listing price.

Mistake 6: Not Bothering Looking Into The Estate Agent’s References

It always amazes me how little research home sellers actually do prior to selecting an estate agent. To be blunt, a lot of times, people spend more time reading up on the latest testimonials and reviews prior to buying that latest, newest UHD TV, than looking into the estate agent’s history, prior to hiring him. Yet, the financial impact is easily 100x bigger and will last for the next 20-30 years!

When choosing an estate agent, besides looking at his listings, have you ever googled his name, tried to find them on LinkedIn, Facebook or Twitter? Did the activity on those social platforms match the professionalism and service you expected?

Every estate agent ought to be able to provide you as the home seller with a list of references. The trick is to bypass the ones that were hand selected and made it on that list!

Why not ask the agent which listings he’s currently working (or have it researched yourself before talking to him) and ask him whether you can call or email a few of those clients? You’ll very quickly find out how these current clients rate the estate agent’s services and professionalism throughout the house selling process.

Mistake 7: Opting To Work With A Part-Time Estate Agent

There’s a reason why there’s such a high turnover of estate agents. An outsider may look at their local estate agent and think he’s got a cushy life, driving around town with these buyers, doing a few seller presentations and signing the big sales contracts.

Selling real estate can’t be that tough, now can it?

There’s no debate about it that the question needs to be asked whether the estate agent is part-time or full-time involved in the business.

How can a part-time agent possibly be flexible in doing all the buyer viewings? When will the marketing of the property take place? After hours? Weekends only? How long before clients will get a response to their enquiries and when will they go for viewings of the property? Furthermore, where do you as the home seller fit into that schedule?

The work that’s involved in managing a listing, marketing it, giving it ample exposure, taking offers, finally selling it and hopefully bringing it to a successful close, requires a full-time involvement by the agent.

Open House Tonight 5-7 pm and Open House on Saturday and Sunday 2-4 pm

Beautifully renovated, 4 bedrooms , 3 bathrooms 2,337 sq ft on a 33x122 lot.  Landscaped grounds with a sunny south facing backyard. This house has great street appeal!  2 bedrrom legal basment suite. Stylish renovation will retaining the character charm. You must come and have a look yourself. See you at the Open house!

Last February I listed 1871 Stainsbury in the Works building. This is in the Victoria area of East Vancouver  and close to Trout Lake. This was a lovely townhouse 2 bedroom 1 bath. This sold in 4 days for $424,000.

This February 1839 Stainsbury was listed and sold in 4 days. A larger townhouse at 764 sq ft 2 bedroom 2 bath. The list price was $449,000 and it sold for $460,000. 

The market has been competitive so far this year and I don't see there being any less competition.

I am asked by buyers all the time how to win out in competing offers, well there is no way of telling what other bidders will bid, so you need to make your offer as attractive as possible.  

Some ways to be a step ahead in making an offer on a condo or townhouse:

Consider reading all the minutes before submitting your offer, if you can, do not put this subject in your offer. 

Have your financing approved before you submit your offer. Financing is the weakest subject you can have in your offer. To be competitive have your financing approved so you dont have to have this subject. 

Is it possible to do an inspection before you submit your offer? I would only recommend this if you plan to submit a subject free offer. To spend the $500 dollars and not be the successful offer is frustrating and expensive. 

What dates do the sellers want? By accommodating the sellers your offer will be more attractive. 

Karley Rice of Macdonald Realty  has just listed a Townhouse for sale at the Works. 133 1863 Stainsbury. 1238 sq ft. 3 bedroom 2 bathroom asking $675,000. There is an open house on Sunday March 8th 2-4 pm. I expect this one to sell very quickly. 

The following properties I viewed with clients this past weekend and the Buyers comments on the properties:

1336 E 17th. A nicely done character house priced at $1,699,000. Ideal for for someone who wants their kids to attend Charles Dickens School.  This house has a two bedroom basemet suite and two bedrooms on the main floor and master bedroom on the top floor. My cleints felt that they would prefer all bedrooms to be on the same floor and there was some traffic noise from Knight street.

1733 E 6th. Well priced at $699,000 but I am sure that it will sell substantially higher than the asking price. Very small but a cute cottage style house in the Commercial Drive area.

2150 Charles two brand new half duplex properties ( one already sold) priced at $899,000 and 1,738 sq ft. This was the nicest property we saw on tour. Really nice finishes with three bedrooms upstairs on a great street in the Commercial drive area. 

645 Skeena a renovated character home in the Renfrew area. Priced at $918,000. Perhaps a good starter home for a small family. 

PH1 2736 Victoria. two bedroom listed at $499,000. This Penthouse had some nice features such as vaulted ceilings and real hardwwod floors. Very spacious at 970 sq ft. The agent told me there was an offer coming in the condo. 

If you have any questions about these properties or new listings on the market, feel free to email or call me at 604 818 7422 or carol@macrealty.com

If you are fortunate enough to own a home in East Vancouver you may want to consider selling this year!

There is a shortfall of homes for sale in East Vancouver and this shortfall is adding to the simple economics of supply and demand. 

The last few sales this year in the Commercial Drive area have shown that sale prices are from $1,133,000 to $1,718,000.  

Time will tell if prices continue to escalate.... 

For property owners this is all very good news, for buyers it is frustrating to bid on houses and not have the result of a purchase. 

I wish you well in your endeavours, and as always if you need assistance in Buying or Selling on the East side of Vancouver, feel free to contact me. 

THE CRAZY WORLD OF REAL ESTATE AND THE CRAZY PEOPLE WHO OVERBID

Recently a property was listed in the Commercial Drive area at 1735 E 3rd list price was $1,588,000.

This property had 4 bedrooms upstairs and a 2 bedroom legal suite.

This house was completely re built in 2012 to enhance the character, update plumbing,

electrical and replace windows.

The property sold for $1,540,000.

Here where the Crazy part of the story begins….

1737 E 2nd was listed in the Commercial Drive area for $1,499,000. This home had

1 bedroom upstairs 1bedroom on the main floor and two bedroom basement suite.

This also was a remodelled Character home.

There were 4 offers and the sale price was $1,718,000. ( No that is not a typo)

I am not sure who the Buyers were, but I can tell you that no bank would appraise the property

at this value, which means the buyers have very deep pockets and most probably are from the

“West side”.I don’t believe this is a sign of what houses will be worth this year in the

Grandview Commercial Drive area.I do believe that it will be a competitive market and if you need

some sound real estate advice, I am happy to answer your questions.

Carol Palfrey

Associate Broker

Macdonald Realty

604 818 7422

carol@macrealty.com

www.eastvanlistings.com

Sellers need to be informed on the pitfalls of taking offers too quickly.

I was recently working with a buyer who was very interested in a new listing that came on the mls in the Commercial Drive area. I called the agent the first day the property was introduced to the market.  The agent failed to return my call and I was unable to book an appointment to view the property before the open houses.

The open houses were scheduled for Thursday,Saturday and Sunday. I checked back on the listing on Thursday and it said in the Realtor comments that the property was sold!

Had the Realtor showed the property to all interested Buyers they would have exposed the property to more potential buyers and the Seller would have benefited from this exposure of their property. The benefit would have been more money for the Seller or more favourable conditions in the offer.

Realtors who are not marketing your property to all interested Buyers are doing their Sellers a disservice. They are leaving YOUR money on the table! Sellers should make sure that it is in their schedule A of their contract that the property will have x amount of open houses and offers will be accepted on a specific date.

Hope this is helpful!

Carol Palfrey

I currently have a condo for sale at 210 3629 Deercrest. North Vancouver

This is a leasehold property, I often receive questions on what a leasehold property is about.

In a leasehold property  ownership;  the buyer does not own the land. 

The Purchaser owns the improvents and structure on the land but leases the land from the owner ( developer). This lease is called a head lease. The lease can vary in length of time, but usually is at least 50 to 99 years. The developer, in this case, leases from the First Nations Band.

The Purchaser becomes part of a corporation with shares and registers an interest as a leasehold tenant. It sounds much more complicated than it actually is... 

The benefits of leasehold property is that the cost is less expensive than a freehold property. The location of the property is usually in an area where it would be too expensive to purchase Freehold property and there is no property tranfer tax asscociated with the sale. 

If you have question, I would be happy to answer them!

Carol Palfrey

Macdonald Realty

604 818 7422

carol@macrealty.com