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Rapid Rise of Homebuyer’s Remorse

Posted by GuruDan on April 30, 2014

1 in 4 homeowners regrets buying a house

By Mandi Woodruff | Yahoo Finance – April 29, 2014

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When Jennifer Berry, 41,  purchased a home in Grand Rapids, Mich. with her husband in 2001, they had a simple plan: live there for 10 years or so, cash in on the equity and upgrade. Thanks to the financial crisis, things didn’t quite go as planned. Her husband’s business failed, they separated and she was forced to sell the home at a loss.

“Instead of gaining equity, [our home] actually lost equity and I ended up literally paying someone to buy it just so I could get out from under it and save my credit score,” says Berry, who now rents her home. “I’m looking at retirement in 20 years and thinking about having to take out a 30-year mortgage now and worry about [the upkeep] drives me crazy.”

Berry isn’t the only one suffering from homebuyer’s remorse. One out of four homeowners admit they wouldn’t buy their home again if they had the chance, according to a recent survey by real estate brokerage Redfin.

The biggest factor contributing to homebuyers’ remorse appeared to be affordability. Nearly one-third of homeowners who reported a household income of less than $100,000 said they were unhappy with their decision. In contrast, just 14% of homeowners who earned more than $100,000 said they were unhappy, according to the survey.

Younger homeowners were also more likely to have regrets. About 28% of homeowners under 65 said they regretted buying their home, compared to 14% of senior homeowners. And one in five homeowners with kids still living at home said they regretted their home purchase as well.

Redfin’s findings come around the same time as new home sales have begun to lag in the U.S. Sales of single-family homes fell by 14.5% to an eight-month low in March, with just 384,000 units sold. Experts have blamed slow sales on bad weather, low home inventory, rising mortgage rates, and a rise in vacant homes (homes that are under repair or being rented).  Whatever the case, one thing is certain  — buyers today are at a distinct disadvantage when it comes to finding a home that meets every point on their checklist.

[Click here to check home loan rates in your area.]

“One of the biggest regrets homeowners have is feeling pressured [to buy],” says Marshall Park, a Redfin agent based in Washington, D.C. “There aren’t enough homes on sale now, they’re sort of under the gun to buy their home.

Half of homeowners admitted to having regrets about their home purchase in a similar study by Trulia released last August. The majority of people with buyer’s remorse said they regretted choosing a home that wasn’t large enough for them. One in five homeowners said they wish they’d inspected the home more carefully before moving in — a trend that doesn’t surprise Park.

In order to compete with other bidders, he’s seen many homeowners signing contracts and moving in without getting a professional home inspection.

“In competitive markets like D.C., it’s not rare to just forego a home inspection or say you won’t ask for any repairs,” he says. “People are doing that and purchasing properties they could possibly have to dump tens of thousands of dollars into later.”

This is the kind of mistake that Trulia real estate expert Michael Corbett says is a “disaster waiting to happen.”

“I would never waive an inspection,” he says. “I would pass on the house before I’d waive on an inspection, mainly because I may get to a house and realize [too late] that there are issues.”

In other cases, owners said they loved their home but were unhappy with their chosen neighborhood. Neighborhood-related complaints made up four of the top 20 homeowner regrets in Trulia’s report. Fourteen percent of homeowners said they wish they’d vetted their neighborhood more, and 15% wished they had picked one closer to work.

“Very often our clients fail to do basic research and end up living in the right house but the wrong town,” says Ali Bernstein of Suburban Jungle Realty Group, which specializes in helping New York City renters transition into suburbia. “Agents are there to sell you the house, but the way the real estate market is set up, they don’t tell you about the towns. You’ve got to find a town that fits your personality.”

So how can you make sure you get through the whole home buying process without disappointment? Here are a few tips.

Don’t bite off more than you can chew. Your housing costs should typically take up less than one-third of your total household budget (or 40% for those who live in high-cost areas like New York or San Francisco) — property taxes and homeowner’s insurance included. Free mortgage calculators are plentiful online and can give you a pretty good estimate of what you can afford in your area.

Think beyond the inspection. In addition to a home inspection, don’t kid yourself into thinking maintenance costs end there. “People forget about the ongoing homeownership costs,” says Corbett.  “Not just the closing costs, but the ongoing homeownership costs and keeping a slush fund for ‘invisible systems’ like electric and plumbing that will eventually break down.”  Keep an emergency savings account flush with at least $1,000 to handle any unexpected maintenance issues.

Hire a good real estate agent. In Redfin’s survey, more than 30% of homeowners said they felt like their real estate agent wasn’t very helpful, and another 8% said their agent was the worst part of the homebuying process. Always vet your real estate agent. Ask trusted friends and family for recommendations and come up with a list of your top picks. It’s wise to arrange to meet in person at their office. Not only will you get a sense of their personality, but you can take a look around their workspace to see how seriously they take their job.

Get to know your neighborhood. With such low inventory out there, buying a home can feel like a dog-eat-dog competition. Take the time to vet your choice of neighborhood before rushing a bid on a home there. That means driving by at several times throughout the day — morning, noon and night — to get a feel for the environment. You might discover a nearby highway makes too much noise at night, or morning school bus traffic that could make your commute a disaster. 

Test your homeowner smarts — take this quiz to find out if you’re smart enough to own a home.

Have a real estate horror story or question? Let us know.

Posted in Financial Planning, Real Estate | Tagged: , , , | Leave a Comment »

Hidden camera investigation uncovers ‘atrocious’ investment advice

Posted by GuruDan on April 29, 2014

CBC
CBC – Fri, 28 Feb, 2014 9:58 AM EST

People walk in Toronto's financial district in Toronto, on Oct. 29, 2012. THE CANADIAN PRESS/Nathan Denette

As RRSP season closes and many Canadians prepare for tax time, a CBC Marketplace investigation reveals that financial advisers at some of Canada’s top banks and firms are giving consumers inaccurate, misleading and inappropriate advice.

Meanwhile, consumers face a complicated patchwork of regulatory bodies if they want to complain about bad investment advice, as some investor rights groups call for more robust consumer protection rules.

Since a third of Canadians rely on advisers to help them make financial decisions, Marketplace sent a person wearing hidden cameras to visit the five big banks and five popular investment firms in Ontario. The full investigation, Show Me The Money, reveals how individual banks and firms performed. The show, including practical tips on how to hire a financial adviser, airs Friday at 8:00 p.m. (8:30 p.m. NL) on CBC Television.

“That’s one of the worst pieces of advice I’ve ever heard in my life,” financial analyst and former adviser Preet Banerjee told Marketplace co-host Erica Johnson when shown hidden camera footage of one of the tests. “That was atrocious. That’s the only word to describe that advice.”

The tests revealed a wide range in the quality of advisers. Some performed well, giving clear answers and asking appropriate questions about the tester’s financial situation and risk tolerance. Other interactions, however, Banerjee found troubling.

In some cases, information was incorrect or misleading – even in response to direct questions, such as how fees are calculated. Some gave unrealistic promises about returns, including one adviser who said that a $50,000 investment should increase by $10,000, $15,000 or $20,000 in one year.

Others failed to adequately assess the customer’s risk profile, which advisers are supposed to use to ascertain the suitability of investment products they recommend to a person.

In an unusual twist, one firm tried to recruit the Marketplace tester to become an adviser herself. While some designations and certifications do require training, and individuals have to be licensed to sell specific products, “financial adviser” is not a protected term. There are currently about 100,000 advisers in Canada.

Several advisers in the Marketplace test neglected to include any conversation of paying down debt in their financial advice, which Banerjee says reveals a conflict of interest that most consumers don’t consider as they’re weighing the recommendations of an adviser.

“If you invest there’s a commission involved with that, or a percentage of assets,” he said. “But if you pay down debt, there’s no financial incentive for the adviser to do that. So that’s one of those conflicts of interests that people should know about.”

As a result of the Marketplace investigation, one firm suspended the employee and reported the behaviour to the regulatory body, the Investment Industry Regulatory Organization of Canada (IIROC).

The Marketplace test was similar to a broader mystery-shopper test in the UK by the Financial Services Authority. That test included 231 mystery shopping tests of investment advice at six major firms. The results of that test, made public last year, found that more than 25 per cent of investment advice was of poor quality because it was unsuitable or because the adviser did not collect enough information to be able to make the recommendations.

Ontario firms could face a test this year, as the Ontario Securities Commission (OSC) conducts a mystery shop to determine the quality of investment advice. While the OSC declined to provide specific details about its test to Marketplace, the results are expected to become public later this year.

However, investor rights advocates are critical of slow-moving efforts to provide better consumer protection. In a letter to the OSC, the Investor Advisory Panel pressed for reform, including how fees are structured and how complaints are investigated. “We have debated, discussed and studied the issues and their solutions for many years. It is time for decisions that will lead to a more robust investor protection regime in Canada.”

Among the most pressing issues: Financial advisers are not in fact required to act in the client’s best interest.

“There’s a big debate raging about that very issue right now,” says Banerjee. “So, it seems in a couple of years they will be bound to do what’s in the client’s best interest. But right now that’s not actually regulation.”

That runs contrary to the very reason many Canadians turn to advisers in the first place.

"If you walk into a financial institution, I think the average person on the street assumes they’re going to have someone who’s going to take care of all their financial issues,” says Banerjee. “But on the other side of the desk, there’s a wide range of people that you could see. Some of them are just order-takers or salespeople and others are true financial planning professionals."

For consumers struggling with the consequences of bad investment advice, a confusing patchwork of organizations oversee complaints, including IIROC, the Mutual Fund Dealers Association (MFDA) and provincial securities associations. Each body oversees different types of complaints, depending on the nature of the complaint or the type of product the adviser is licensed to sell.

The Ombudsman for Banking Services and Investments (OBSI) also investigates complaints, but only for participating banks and firms. And OBSI has limited enforcement powers, offering only non-binding recommendations, so it’s entirely up to the bank or firm to decide whether or not to comply.

OBSI’s 2013 report, released this week, reveals a sharp increase in the number of banks and firms refusing to compensate investors for mistakes.

According to the report, banks and investment firms refused to pay back investors even when OBSI found wrongdoing in 10 cases last year. In total, investors were denied more than $1.3 million in restitution. The OBSI report called this trend “disappointing.”

Marketplace notified all of the banks and firms about the test and approached some for interviews, but all declined. Some viewed the test as an isolated incident; others vowed to investigate and take appropriate measures.

Posted in Investment, Mortgages, Non-insurance, Retirement Planning, Tax Planning | Tagged: , , , , | Leave a Comment »

These 10 secrets will help you get top dollar for your home

Posted by GuruDan on April 16, 2014

10 Best-Kept Secrets for Selling Your Home

By HGTV Family of Sites | At HomeMon, 14 Apr, 2014 11:22 AM EDT

These tricks of the trade from HGTV.com will help you get top dollar when selling your home…

Selling Secret #10: Pricing it right
Find out what your home is worth, then shave 15 to 20 percent off the price. You’ll be stampeded by buyers with multiple bids — even in the worst markets — and they’ll bid up the price over what it’s worth. It takes real courage and most sellers just don’t want to risk it, but it’s the single best strategy to sell a home in today’s market

Selling Secret #9: Half-empty closets
Storage is something every buyer is looking for and can never have enough of. Take half the stuff out of your closets then neatly organize what’s left in there. Buyers will snoop, so be sure to keep all your closets and cabinets clean and tidy.

Selling Secret #8: Light it up
Maximize the light in your home. After location, good light is the one thing that every buyer cites that they want in a home. Take down the drapes, clean the windows, change the lampshades, increase the wattage of your light bulbs and cut the bushes outside to let in sunshine. Do what you have to do make your house bright and cheery — it will make it more sellable.

Selling Secret #7: Play the agent field
A secret sale killer is hiring the wrong broker. Make sure you have a broker who is totally informed. They must constantly monitor the multiple listing service (MLS), know what properties are going on the market and know the comps in your neighbourhood. Find a broker who embraces technology — a tech-savvy one has many tools to get your house sold.

Selling Secret #6: Conceal the critters
You might think a cuddly dog would warm the hearts of potential buyers, but you’d be wrong. Not everybody is a dog- or cat-lover. Buyers don’t want to walk in your home and see a bowl full of dog food, smell the kitty litter box or have tufts of pet hair stuck to their clothes. It will give buyers the impression that your house is not clean. If you’re planning an open house, send the critters to a pet hotel for the day.

Selling Secret #5: Don’t over-upgrade
Quick fixes before selling always pay off. Mammoth makeovers, not so much. You probably won’t get your money back if you do a huge improvement project before you put your house on the market.
Instead, do updates that will pay off and get you top dollar. Get a new fresh coat of paint on the walls. Clean the curtains or go buy some inexpensive new ones. Replace door handles, cabinet hardware, make sure closet doors are on track, fix leaky faucets and clean the grout.

Selling Secret #4: Take the home out of your house
One of the most important things to do when selling your house is to de-personalize it. The more personal stuff in your house, the less potential buyers can imagine themselves living there. Get rid of a third of your stuff — put it in storage. This includes family photos, memorabilia collections and personal keepsakes. Consider hiring a home stager to maximize the full potential of your home. Staging simply means arranging your furniture to best showcase the floor plan and maximize the use of space.

Selling Secret #3: The kitchen comes first
You’re not actually selling your house, you’re selling your kitchen — that’s how important it is. The benefits of remodelling your kitchen are endless, and the best part of it is that you’ll probably get 85% of your money back. It may be a few thousand dollars to replace countertops where a buyer may knock $10,000 off the asking price if your kitchen looks dated. The fastest, most inexpensive kitchen updates include painting and new cabinet hardware. Use a neutral-color paint so you can present buyers with a blank canvas where they can start envisioning their own style. If you have a little money to spend, buy one fancy stainless steel appliance. Why one? Because when people see one high-end appliance they think all the rest are expensive too and it updates the kitchen.

Selling Secret #2: Always be ready to show
Your house needs to be "show-ready" at all times — you never know when your buyer is going to walk through the door. You have to be available whenever they want to come see the place and it has to be in tip-top shape. Don’t leave dishes in the sink, keep the dishwasher cleaned out, the bathrooms sparkling and make sure there are no dust bunnies in the corners. It’s a little inconvenient, but it will get your house sold.

Selling Secret #1: The first impression is the only impression
No matter how good the interior of your home looks, buyers have already judged your home before they walk through the door. You never have a second chance to make a first impression. It’s important to make people feel warm, welcome and safe as they approach the house.
Spruce up your home’s exterior with inexpensive shrubs and brightly coloured flowers. You can typically get a 100-percent return on the money you put into your home’s curb appeal. Entryways are also important. You use it as a utility space for your coat and keys. But, when you’re selling, make it welcoming by putting in a small bench, a vase of fresh-cut flowers or even some cookies.

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Posted in Real Estate | Tagged: , | 1 Comment »

Benefits of Segregated Funds

Posted by GuruDan on March 27, 2013

Written by Independent Financial Concepts Group for Financial Advisors.

 

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When it comes to selling insurance, many advisors are heavily focused on the standard insurance products that they are comfortable with and that they are versed at selling. Sure, when a client calls you, the chances are they are usually looking to invest in some form of insurance – for a variety of reasons – but if you are only providing one product or a limited range of products, your ability to provide the service that best meets their needs may be limited.

If you work with a managing general agent, you already know the importance of maintaining your independence, and hopefully how to garner the benefits that should come from this type of partnership. But has your managing general agent discussed the benefits of selling segregated funds? If not, here are some things that you should know!

There are many benefits for your clients when they invest in segregated funds. Since segregated funds can only be sold by insurance advisors, it makes sense to diversify as much as possible and to add these important investment tools to your arsenal.

One of the major benefits of segregated funds is the low risk. For those clients who may be a bit hesitant when it comes to investing, either because they shy away from the risk or because they have no investment experience, segregated funds offer an important opportunity. Since they are low risk, and managed effectively by an outside source, segregated funds may leave clients much more open-minded since their capital is protected.

Another benefit of segregated funds is that they have maturity dates. Clients are often unsure of how to approach investing and being able to provide them with a product that offers a timeline for their returns is useful. Being able to tell them that they are guaranteed a return if they hold a segregated fund until it reaches maturity will help those conservative investors realize that investing doesn’t necessarily need to be stressful. Also important, segregated funds guarantee a return on principle, and clients can lock in the market value every 3 years for the death benefit.

Your clients will also be happy to learn that segregated funds are guaranteed at death, so if they pass away, their beneficiary is able to claim benefits from their investment. This can be an important product for those clients looking to provide for their loved ones in the event of their death.

If you work with a managing general agent and only sell insurance, you are limiting yourself. There are major benefits to your clients to selling segregated funds, and since being able to provide the best, most diverse service to your clients is what will set you apart, offering segregated funds will only increase your credibility and reputation.

 

Posted in Insurance, Retirement Planning | Tagged: , , , , | Leave a Comment »

Don’t fall for your bank’s ‘sucker rate’

Posted by GuruDan on December 7, 2012

Mortgage negotiation: Why every basis point counts

This article originally ran in Yahoo Canada! Finance

By Dale Jackson | InsightThu, 6 Dec, 2012 10:37 AM EST

 

When your mortgage comes up for renewal, you’ve got to go into negotiations armed with all possible info. » Basis points matter

I just renewed our mortgage for the last time – ever.

We locked into a five year term and the house will be paid off well before it ends. Any move from here would be a downsize so it’s pretty safe to say the mortgage renewal ritual is over for me.

After 25 years of home ownership, there’s a lesson for younger homeowners that can get their homes paid off quicker and save tens of thousands of dollars: basis points really matter.

For those who don’t know, one hundred basis points equals 1 per cent. Banks talk to us about the cost of debt in percentages, but banks talks to other banks about debt in basis points.

That’s because our mortgages transcend our neighbourhood banks and enter the multi-trillion dollar global debt market where they are morphed with other mortgages and debt instruments. A difference of a few measly basis points between what lenders charge and what it costs them to borrow can translate into billions of dollars in profit.

That’s what the banker across the desk is thinking at mortgage renewal time, and that’s what you – the consumer — should be thinking too.

Negotiation basics

The ritual often begins weeks ahead of the renewal date with a phone call from the bank offering a mortgage rate below the sucker rate – more commonly known as the posted rate on the bank’s website. It sometimes comes with a threat that the offer could expire if you don’t act now. After some haggling the offer to me was 3.99 per cent, or 399 basis points for a five-year closed mortgage. The sucker rate was 5.24 per cent, or 524 basis points.

I took a pass and was contacted by another representative two weeks before the renewal date who, after I threatened to take my business to a mortgage broker, offered 3.09 per cent.

At the time, the best rate for a five-year closed mortgage on broker websites was 2.84 per cent. Mortgage brokers are great. Posting the best rates on their websites gives the borrower leverage. If you choose to go with them, most are compensated by the lender — not you. Brokers like RateHub.ca also provide calculators to let you do your own number crunching and see the cost in dollars.

After mentioning mortgage brokers I usually get a slight whiff of condescension at the pettiness of bickering over a few basis points, and ungratefulness at not appreciating a rate so far below the sucker rate.

In this case, I was also informed that the penalty to be imposed by the bank for taking my mortgage elsewhere would outweigh any gains from a few basis points — not true, but a good point. Touché.

In the end I went to a broker at Mortgage Intelligence who came up with the bright idea of negotiating my mortgage with his contact at the same institution. I signed off at 2.85 per cent.

I saved a few hundred dollars this time around but for an illustration of how a few basis points have, and can, make a big difference over several years let’s plug in the same rates for a mortgage of $300,000 and biweekly payments of $1,000.

  • Total interest on the "sucker" rate of 5.24 per cent would be $156,366.
  • Interest on the "special" rate of 3.99 per cent is $100,383.
  • The "final" offer of 3.09 per cent generates $70,203 in interest.
  • And the 2.85 per cent settlement rate would generate total interest of $63,152.

In the end, the homeowner with a 2.85 per cent mortgage saves over $90,000 from the sucker rate and pays the house off nearly three years early.

Petty? I don’t think so. No wonder the banks fight so hard for a few basis points.

Posted in Insurance related, Mortgages, Real Estate | Tagged: , , , , | 3 Comments »

The cost of taking CPP early

Posted by GuruDan on August 27, 2012

By Bruce Sellery | Online only, 17/08/12

Tags: CPP, Power of Advice, retirement

Does it make sense to take a lower Canada Pension Plan payment now to get more later? Bruce Sellery weighs into the debate.

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Question

Does it make sense to take out CPP at age 60 and invest the amount into TFSA’s or to wait until one needs the money? I have been retired for a couple of years and will be soon approaching 60, but with the new changes in CPP I’m not sure what to do.

Answer

As the saying goes, patience is a virtue. But in your case, patience may mean a profit. By waiting until age 65 to take CPP you could see more money in your bank account, even if you invest the early withdrawals in a TFSA. To walk you through the rationale in detail I turned to Matthew Ardrey, a CFP at fee-based financial firm T.E. Wealth.

The critical assumptions

To answer this question Ardrey has to make a number of assumptions. The first one, of course, is that you can afford to wait. This is implied by your comment that you would save the money in a TFSA versus needing the money to pay a heating bill that’s six-months overdue.

Ardrey also has to consider how the CPP changes will work. “The changes to the CPP are going to see the early retirement reduction gradually move from 0.5% per month up to 0.6% per month over the period of 2012 to 2016,” he says. Ardrey assumes you will be able to receive CPP in the middle of this transition and have a reduction factor of 0.55%. Under this scenario you would see a 33% reduction in your CPP at age 60, he says. Ardrey also assumes you will receive the average benefit for CPP, currently listed as $528.92 per month at age 65 and that you are in a 30% marginal tax bracket.

As for inflation beyond the next two years, Ardrey uses a long-term average of 3% and rate of return in the TFSA is assumed to be at 6%. And finally, with regards to your TFSA, he assumes you have $5,000 in contribution room a year between ages 60 to 70, increasing to $7,000 by the time you’re in your 80s.

The cost of taking CPP early

Waiting to take CPP at age 65 instead of age 60 is more profitable. But by how much? Ardrey figures the difference by age 73 would be in the range of $1,500, and the amount will grow over time.

Adjusting for inflation of 2% per year for two years and a reduction factor of 33%, at age 60 your CPP payment would be $368.69 per month gross and $258.09 after tax, he says. If you wait until age 65, your CPP payment adjusted for inflation of 2% for two years and 3% for five years would be $637.94 per month gross and $446.55 after tax.

Saving in TFSA to offset differential

Provided you did what you said and put the money you received into a TFSA (and not into vacations and fine wine) you would offset some of that differential. But will it be enough? Nope, says Ardrey.

“By age 80, the combination of excess CPP payments and TFSA savings is greater under these assumptions by taking the pension at age 65 than at age 60. Though I agree with the principle that contributing excess funds to save in a TFSA is a worthy venture, the loss in future CPP income does not seem to warrant it, especially with today’s population living longer in most cases,” he explains. He says it’s worth noting that if you wait until you need the money after age 65, the rate of payment increases by 8.4% per year or 42% by age 70. The new CPP rules start to come into effect by 2013.

Of course, these calculations are based on some general assumptions. There may be other factors to consider, like longevity, how long you’ve been out of the workforce, or whether you’re receiving any other government support. You have an important decision to make. It would be worth consulting a professional for some extra assurances.

But in the meantime, here are a few additional resources to help you prepare for that conversation:

Posted in Retirement Planning | Tagged: , , , | Leave a Comment »

Vancouver home sales drop sharply in June, hit 10-year low, local board says

Posted by GuruDan on July 6, 2012

By The Canadian Press | The Canadian Press – Wed, 4 Jul, 2012 5:40 PM EDT

 

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Canada’s hottest real estate market takes nosedive

Sales in one of the most popular cities to purchase plummet to a 10-year low, ahead of mortgage rule changes.

 

 

 

 

VANCOUVER – Vancouver home sales hit their lowest level in more than a decade in June, falling 17.2 per cent from May, and tilting the market in favour of buyers, the city’s real estate board said Wednesday.

However, despite a drop in the number of sales, prices in what was once the country’s hottest real estate market have remained firm, the board said.

The Real Estate Board of Greater Vancouver reported 2,362 sales in June, which is a decline from 2,853 in May and also off 27.6 per cent from a year earlier when there were 3,262 sales.

However, despite the lower sales numbers, the housing price index for residential properties in Vancouver was still up 1.7 per cent from a year ago.

"Overall conditions have trended in favour of buyers in our marketplace in recent months," board president Eugen Klein said.

"This means buyers are facing less competition and have more selection to choose from compared to earlier in the year."

The board said June sales were the lowest total for the month in the region since 2000.

June sales of detached properties in Vancouver totalled 921, down from 1,471 in June 2011, while the price for detached properties increased 3.3 per cent from a year ago to $961,600.

Sales of apartments slipped 19 per cent to 1,026 in June from 1,266 a year ago. The benchmark price of an apartment increased 0.3 per cent from June 2011 to $376,200.

Meanwhile, there were 415 attached property sales in June, down from 525 a year ago, while the benchmark price decreased 0.1 per cent from a year ago to $468,400.

Vancouver has been one of the country’s hottest housing markets, but has shown signs of cooling in recent months.

New listings for detached, attached and apartment properties in the Greater Vancouver region totalled 5,617 in June, down from 6,927 new listings in May and from 5,793 new properties a year ago.

The total number of residential property listings on the board’s MLS service was 18,493, up 3.27 per cent from May and up 22 per cent from this time last year.

The slow down in sales in Vancouver comes ahead of changes by Ottawa to tighten mortgage lending in Canada.

Finance Minister Jim Flaherty moved last month to cool the red hot condo markets in Toronto and Vancouver by tightening the rules for borrowers including cutting the maximum amortization period for government insured mortgages cut to 25 years from 30.

As well, the federal regulator of financial institutions has told lenders they can only issue home equity loans up to a maximum of 65 per cent of the property’s value, down from the previous 80 per cent.

Posted in Insurance related, Real Estate | Tagged: , , , , | Leave a Comment »

DIY home selling: Wise or a fools’ folly?

Posted by GuruDan on June 18, 2012

By Liam Lahey | InsightTue, 12 Jun, 2012 2:11 PM EDT

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When selling one’s home, the desire to hire a real estate agent is waning in Canada, according to a new survey commissioned by PropertyGuys.com.

Canadians say real estate commissions are too high, agents don’t have their best interests in mind and bidding wars are engineered by the industry, say respondents in the survey conducted on the Angus Reid Forum.

The survey found:

  • 82 per cent of homeowners agree that the average five per cent commission real estate agents charge is too much.
  • Fifty per cent say that agents don’t have their best interests in mind when selling their home.
  • Another 60 per cent believe that property bidding wars are engineered by real estate agents.

"There’s an overwhelming sentiment that the status quo, and the commission rate that seems to sustain in Canada at around five per cent; folks don’t like that and they find it too much," says Walter Melanson, director of partnerships at PropertyGuys.com in Moncton, N.B.

"We know there’s a sentiment among Canadians to try something new and different … so many are disgruntled towards the amounts they paid in the past (to real estate agents) and they’re likely to consider alternatives."

Melanson says there’s a genuine consumer desire for change in the Canadian real estate industry.

"If we look at the traditional real estate industry, there hasn’t been any great deal of reform and the little box they built about 100 years ago operates quite the same as it did then.

"You’ve got an industry today that doesn’t want change and … those that suffer the most are the folks that choose traditional agents and are waiting for something big to happen within that space that helps them start to save money."

Want to go it alone? Here’s what you need to know

While it’s true you could sell your own home without a real estate agent, there are a number of factors to consider before doing so.

For starters, understand that real estate agents generally charge a five per cent fee for their services that include having forms and contracts approved by lawyers to execute a sale contract.

Real estate agents also advertise that your property is up for grabs beyond sticking a sign on your front lawn and they’re front and centre whenever a potential buyer shows up to take a tour of your house or property to highlight the unique features and/or renovations you’ve done to the building. And agents also handle the negotiations with a potential buyer.

"Buying or selling a home is the single largest investment a purchaser or seller will make in his or her lifetime. As such, the services of a full-time real estate professional are required to ensure the best possible outcome," says Christine Matysiewicz, director, RE/MAX Ontario-Atlantic Canada Inc. "Surprises can arise at any given time during the home buying/selling process. From legal issues such as easements, encroachments and grandfather clauses to the negotiation table, the process is not without pitfalls."

If you’re selling, your realtor will set a price based on comparable sales in the area. He or she will likely get a higher price for your property than if you tried to sell it yourself.

"Your home will also sell faster because of the exposure it will receive. Your realtor is also connected to your neighbourhood — he or she will continually assess market conditions and how they impact your property," she continues. "Your realtor is also a skilled negotiator and has been educated on the complex laws and regulations in real estate and is trained to put together a legally binding contract … and if you’re buying, your realtor can open doors to thousands of properties through the MLS system."

If considering alternatives, one should weigh their own needs and goals, as well as their own abilities, Matysiewicz advises. "They should know what level of personal involvement they are interested and available in having in the transaction process. Most of us have very busy lives," she points out.

Some questions consumers might want to ask themselves may include:

  • Do you have the time, energy, know-how and motivation to sell/buy on your own?
  • Will you be able to effectively market your home?
  • Do you feel comfortable showing you home to strangers and can you make your home available to potential purchasers when needed, given your hours of work and other commitments?
  • Will you be able to deal with a parade of potential bargain hunters and tire kickers?
  • Can you overcome the emotional attachment you have to the property? Would you be able to negotiate effectively and accept criticism of your home?

Are you able to manage technical issues related to contracts and negotiations?

If you’re selling and mulling over which realtor to turn to, Matysiewicz recommends touring your own neighbourhood to see who has a strong presence. It’s ideal to engage someone who is very active in the local marketplace.

"Doing so assures they’ll have the right mix of knowledge and experience to meet the challenges and identify the opportunities within that specific area. It’s also more likely that they have established links to potential buyers in the area as well," she adds. "Family, friends and colleagues can also be a great source for a referral. Visit the local real estate offices that services your area. Don’t be afraid to ask questions. You can also ask for and check references for your own peace of mind."

Meanwhile, the PropertyGuys’ survey findings also shows 67 per cent of respondents agree traditional real estate agents, and their commission fees, are one of the factors contributing to home price inflation. In Ontario, this number was higher at 70 per cent.

This survey also finds:

  • 66 per cent of homeowners polled say alternatives to traditional real estate agents will benefit home sellers.
  • Only 19 per cent of homeowners think their real estate agent was definitely worth the commission paid.
  • 87 per cent believe that how much money they have at the end of the day is most important when selling a home.
  • 50 per cent of Canadians disagree that real estate agents have your best interest in mind when selling a home.

While those in the traditional agent/broker segment may want buyers and sellers to believe that it is dangerous not to use an agent, the truth is that the real estate market has changed and savvy consumers, with the right tools, technology and know how, can sell their home without the use of an agent, Melanson adds.

"The folks that connect best with our concept are those that are comfortable with showing their house themselves and in engaging with others," he says. "These are confident sellers. They lean more on process and systems than they do on people."

The Canadian Real Estate Association politely declined to be interviewed for this article. However, for undecided consumers, the CREA’s How Realtors Help website provides information about realtors and the services they provide.

 

Posted in Insurance related, Non-insurance, Real Estate | Tagged: , , , | Leave a Comment »

Down-to-earth tips for retiring

Posted by GuruDan on October 5, 2011

5 Tips From Early Retirees

usnews

Susan Johnston, On Tuesday September 27, 2011, 10:36 am EDT

How couple was able to retire by 43 retiring01

At 31, Robert Charlton had grown disillusioned with his job as a technical writer. "The idea of doing a desk job for another 30 years seemed painful to me, so I came up with this idea of trying to retire before 45," he says. He shared the idea with his wife Robin, who was then 31 and working as a travel agent.

Robert read up on personal finance instead of hiring an adviser and looked at taxable accounts they could draw from before turning 60. During that period, Robin completed an accelerated nursing program to become a registered nurse. By age 43, they’d gone from $16.88 in their checkbook at age 28 to saving up enough money to leave both their jobs and live off the interest.

Now, years later, they travel the world, skydiving in New Zealand, hiking through India, sailing through the Chilean fjords, and documenting their adventures on their website, wherewebe.com. Although many people struggle to retire in their 50s or 60s, Robert believes it’s possible for others to retire early as he and his wife did. "Really, we’re very average people," he says, admitting that it’s harder, though not impossible, for those with kids. "We never had power jobs. We just both took intelligent steps." Here are some of those steps.

1. Cut housings costs. The Charltons spent a year carefully tracking their spending to see where they could cut back. But as Robert says, "the truth of the matter is, we really didn’t have that much fat to cut out." Still, they agreed to rent out half of the bi-level starter home they owned in Boulder, Colo., so they could pay off the mortgage and pad their savings. Switching from a 30-year to a 15-year mortgage also helped the couple reach their goal. "You save so much on interest that it does result in a higher monthly payment, but not as high you would think," says Robert. They later sold their house and put the equity into a bond fund.

2. Agree on your priorities. Instead of buying new cars, the couple kept their old ones, and Robin stuck to grocery shopping lists instead of buying whatever caught her eye. "That’s how he shopped [without sticking to the list] so he was cut off from shopping," she says. Keeping their shared goal in mind kept their eyes on the prize. "We were both on the same page," adds Robin. "We both knew we wanted to put the money towards experiences." However, because they value travel so much, the Charltons didn’t completely deprive themselves while saving up for retirement. As Robert says, it’s important to "balance living for tomorrow with living for today." If saving feels like too much of a chore, it’s easy to fall of the bandwagon.

3. Live below your means. Now that they’ve left the workforce, the Charltons live modestly by staying in hostels and focusing on less expensive travel destinations. They estimated needing between $30,000 and $40,000 annually, and they’ve managed to stay in that range, though they’re averaging closer to $40,000. Earlier this year, they splurged on a trip to Italy and Switzerland for their 25th wedding anniversary. However, Robert says, "we typically have tried to travel places where the dollars goes further, like Argentina and Chile, where the exchange rate was in our favor." Destinations like India and Nepal have higher airfare but low day-to-day expenses so they stay for several months at a time to balance out the airfare costs.

4. Stay in the game. Although the Charltons’ portfolio has had its ups and downs, they’ve resisted the urge to try to time the stock market or get out altogether. "We did some of our best investing during the bear market of 2000 to 2003," says Robert. "We bought stocks ‘on sale’ and reaped the rewards afterwards." Although he says they could have gotten a higher return on investment if the timing had been different, they also underestimated future earnings, so that helped them reach their target more quickly than planned.

5. Don’t rule out temporary work. Dips in the market have made it more challenging for the Charltons to live off their interest. So when Robert was offered a six-month consulting project in 2009, he jumped at the opportunity to rebuild their capital. Although he’d once dreaded going to work, he actually liked the temporary arrangement. "I genuinely enjoyed working hard during that window because I knew it wasn’t endless, which was the thing I found challenging early on when I first came up with this plan," he says.

Robin adds that they’re open to making adjustments as they go or returning to work if needed. However, she values the change to travel and be active while they’re young and healthy. "Working as a nurse, I realize so many people save so much and a lot of people don’t get all the years they thought they’d get," she says.

 

Posted in Insurance related, Retirement Planning | 1 Comment »

Ontario boasts highest Auto Insurance premiums in Canada

Posted by GuruDan on October 5, 2011

Ontarians pay highest auto insurance premiums in Canada, Quebec drivers pay the least: study

By Jordan Chittley | Daily BrewMon, 3 Oct, 2011

Canadians looking to save money on auto insurance should head to Quebec. auto_insurance01

A new study finds that residents of la Belle Province pay the lowest premiums in the country, at an average of only $642 a year. While Ontarians, right on the other side of the Ottawa River, pay the highest premiums at $1,282 a year.

Co-author and Fraser Institute director Neil Mohindra says this is because of rampant fraud in Ontario.

"(It) comes as a result of higher claims costs per vehicle stemming from high levels of insurance fraud, and relatively severe regulations in rate-setting as well as mandatory minimum liability and accident benefit laws," he says in a statement.

The study conducted by the Fraser Institute, a right-leaning think tank, goes on to say that fraud investigators consider Toronto to be the centre of organized crime rings. Ontario announced reforms in November of 2009, but the study uses the most recent price information, also from 2009. The province’s reforms are expected to lower premiums.

The study explains that Quebec consistently has the lowest premiums because it has a government-run provider that has a monopoly over selling basic coverage. They also have a no-fault system that prevents injured people from suing drivers at fault for pain and suffering.

However, the public provider in Quebec ran a deficit in 2009 of $2.6 billion and in some provinces taxpayers, including those who don’t drive, subsidize government auto insurers to keep premiums lower.

Government intervention is not always the answer, however, as seen by high premiums in B.C., Saskatchewan and Manitoba, according to the report. These three provinces rank second through fourth on the list.

"These results are consistent with previous reports that suggest government-run auto insurance monopolies are less efficient than auto insurance provided by a regulated, competitive market," says Mohindra in a statement. "Drivers in B.C., Saskatchewan, and Manitoba should be asking why their governments have eliminated consumer choice and are forcing them to purchase auto insurance at rates higher than necessary."

Average auto insurance premiums by province
Ontario                                        $1,281
British Columbia                           $1,113
Saskatchewan                              $1,049
Manitoba                                      $1,027
Alberta                                        $1,004
Newfoundland and Labrador             $749
Nova Scotia                                    $736
New Brunswick                               $728
Prince Edward Island                       $695
Quebec                                          $642

(Getty Images)

Posted in Insurance | 1 Comment »

 
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