9 myths on buying or selling a property

Real estate myths are often passed around among buyers and sellers. Some of them have some truth; others are outright false; and still others depend on a variety of factors that are best discussed in depth. Be prepared to help educate your buyers and sellers, so they make the smartest choices, rather than just accept what they hear.

Myth #1: Always change bold paint colors to neutrals before selling.

Reality check: False

Bold doesn’t automatically mean bad, says Kim Grant, broker with John Greene Realty in Oswego, Ill. Sometimes, a room calls for a grand color in order to play up an architectural feature, divide a room in two visually, or add cheer when there’s little natural light. But even if a room sports a bold shade of paint, home owners don’t always have to grab a brush to change it up before listing. Sellers can tone down a strong color with a neutral counterpart, such as a calming rug or tranquil array of fresh greenery. If the room needs a change, Grant suggests sharing the name of a painter, getting a bid on the cost of repainting, and offering a handful of paint chips that demonstrate alternative color options that are more universally appealing. “It’s up to the salesperson to explain that another color can transform the space without much effort,” Grant says.

Myth #2: Never buy the biggest house on a street.

Reality check: Usually true

The largest house on a block or in a neighborhood often is the most expensive, which may affect its appraisal and make its price much higher than other homes in the same neighborhood on comparative analyses, says Michelle Shurtleff, salesperson with the Miami Real Estate Team in Key Biscayne, Fla. Most buyers today are concerned about value when making an investment in a home, so they’ll appreciate a caveat about limiting their pool of future buyers by pricing themselves out of or above the local market, she says.

Myth #3: Always avoid first-floor condos because of noise and safety concerns.

Reality check: False

A first-floor unit can be a terrific bargain and a wonderful place to live, says salesperson L.J. Ganser of Fenwick Keats Real Estate in New York, who has sold many in Manhattan. He has found they offer numerous advantages, and sometimes they just need a few tweaks to dampen possible sounds and make owners feel safer. Among the advantages: “You don’t have to wait for an elevator [or] climb stairs, and you can enjoy the changes in scenery from the ground level up,” he says. Suggest ways to soundproof the unit with a good-fitting door and sound-dampening acoustical panels on the interior side. Also, suggest window treatments that block noise and views such as “top down, bottom up blinds” that can be raised from the windowsill to a height that prevents pesky pedestrians from ogling the buyer’s home but still allow in light. For safety, suggest wrought iron bars, if the unit doesn’t have them, or an alarm system.

Myth #4: Sellers should expect to earn back everything they invested in remodeling projects at resale time.

Reality check: False, but…

A quick check of the annual “Cost vs. Value” survey will demonstrate to sellers that it’s nearly impossible to get 100 percent of the money they put into a redo back when they sell. A siding replacement of fiber-cement brought the highest return in the most recent survey in the upscale project category, and that percentage was 84.3 percent. Still, Roman Bruno, a salesperson with Coldwell Banker in Los Angeles,has found that remodeled kitchens and bathrooms continue to be huge selling points to prospective buyers. “They make a home more attractive to potential buyers—and help them avoid doing the work,” he says. Paul Rosso, ABR, GRI, a salesperson with RE/MAX Properties Ltd. in Newtown, Penn., agrees that it pays to keep a house updated and in line with similarly priced homes in the community. The two times he cautions against upgrades are when a home owner plans to sell soon after making changes and when the market is flat or heading downward.

Myth #5: To sell quickly in this market, you must have the most popular features buyers are seeking.

Reality check: False, but…

It’s true that items such as master bedroom walk-in closets and first-floor master suites are all the rage now. But most homes in Los Angeles don’t have these features because they were built before these residential trends became widespread, says Bruno. “There is always a market for these homes, and someone with a vision may buy it just to update it,” he says. “Right now, we have little inventory and a lot of buyers — including absentee owners and investors — so we don’t see the need for redos as a problem.” Rosso agrees, but warns that the selling price usually reflects the absence of the feature: “Every home will sell, but at the right price. Price is the great equalizer.”

Myth #6: If buyers don’t like an exterior, they’ll never go inside.

Reality check: Often true

Without some curb appeal, most think, “Why waste the time,” says Grant. She suggests buyer’s agents prepare clients for the exterior ahead of time by asking buyers in advance what styles of houses they like and dislike, and even showing them images before checking out a place in person. If a house works otherwise—its layout, number of bedrooms and bathrooms, and maybe a backyard—she says listing agents can find ways to remove or downplay features that may not appeal. Exterior changes may be as simple as adding landscaping that dresses up part of the offending façade, painting shutters and a door to focus attention, or upgrading a walkway with a nicer material.  

Myth #7: Homes with swimming pools are always tougher to sell.

Reality check: False

While they bring with them high maintenance and utility costs, a lot of buyers look specifically for homes with pools, especially in warmer climates. Usually it’s just the seasoned investors and older home owners who shy away from homes with pools, says Bruno. To appeal to buyers not looking for a pool, he suggests sturdy canopies that can slide over the top to make a safe, walkable patio. But he never advises clients to remove a pool. “You don’t cater to a market that doesn’t want something. Instead, you use it as a tool to attract those who do,” he says.

Myth: #8: Green features automatically mean a higher listing price.

Reality check: Not always

Bruno says many buyers find added value in smart, environmentally friendly homes. “LEED certification has become a huge marketing feature, and it’s not just something for home owners living on either coast,” he says. Still, Rosso says many buyers shy away from these houses if they’re priced much higher than comparable non-green homes. “In my area, I haven’t seen buyers willing to pay a green premium. I view them as added value that can help with marketing a home,” he says.

Myth #9: Always remove holiday decorations before listing a home.

Reality check: False

If the decorations are tasteful, they’re fine, says Ganser.  If it's Christmas, go green and minimal with a tree, some fresh boughs on the mantle, and a pretty wreath on the door. “There will be some Grinches who come and object to Christmas décor on principle. Perhaps Jacob Marley will pay them a visit that evening and convince them to lighten up,” he says. “But most people like the holidays, and if sellers can warm their spirits with a light, welcoming touch, I say do it. But don’t make potential buyers wonder what's going on with a corner that’s blocked by a 9-foot-high tree.” Follow the same rules for other holidays, he advises. At Halloween, fill a dish with candy corn; for Easter, bring on the jelly beans.

So what’s always true?

Real estate professionals should always advise buyers and sellers to avoid accepting widely held truisms as fact. Help clients put these and other myths in the context of overall economic trends, local and neighborhood factors, and the special features that distinguish individual properties on the market.

Cost-Effective Ways To Add Value To Your Home

Written by: Jessica Kane  Published by: Kevin Sha

For many people, their homes are their largest investment and asset. With that being said, it is important if that is the case that a person know how to add value to their home. There are two types of appreciation, appreciation over time and forced appreciated. Forced appreciation is when a person completes an upgrade on the home in order to increase the cost of the home. Below are five cost effective ways to add value to your home.

Hardwood Floors

One of the most simple upgrades to a home is replacing carpet with hardwood floors. There are many advantages of hardwood over carpet, and the cost for this upgrade has gone down considerably over the past few years. Many families prefer to have hardwood floors over normal carpet floors if they have kids. If someone spills their drink on the hardwood floor it is much easier to clean up than if that happens on carpet. In addition, hardwood floors last much longer than carpet and viewing this upgrade from that perspective it can be argued that hardwood floors actually save money over time.

Ceiling Fans

Perhaps the least expensive way to upgrade a home is to change out all of the ceiling fans. Often times for homes that are ten years old or older, the ceiling fans are probably out of date and may have been in style at the time. Ceiling fans can generally be purchased for about $100 each, and for less than $1,000 a person can transform the look of each room in their home with a new and updated ceiling fan. Although the installation of ceiling fans is not simple, it is worth it to upgrade the look of a room. The proper ceiling fans can make a room look both larger and newer.

Granite Counter Tops

In a kitchen, one of the best upgrades available is to put in granite counter tops. For anyone that loves to cook in the kitchen, there are fewer things that can help out the cooking experience like granite counter tops. Not only do the counter tops look great, but they also serve practical purposes in that they can withstand heat more easily. When hosting a large party, it is very convenient to just put a hot plate on the granite rather than having to worry about hurting the counter top.

When adding value to a home, the kitchen is the best place to go first. Granite counter tops with proper lighting in the kitchen will transform the experience of anyone who is looking to purchase a home. Although granite counter tops are not the cheapest upgrade, the have a huge wow factor that any home buyer will love.

Stone Floors in Bathrooms

In addition to kitchens, bathrooms are also a big selling point to any potential buyer. One newer upgrade that many people are looking at is stone floors for their bathrooms. There are many advantages to having stone floors over other kinds, especially when looking at the impact that water has on typical floors. There are even certain stone floors that can be heated. These are a great selling point for anyone who lives in an area that is cold for most of the year. Stone floors are the perfect match of having both a practical use in a home and looking great as well.

Fenced in Front & Back Yard

Finally, one of the best ways to add value to a home is to add in a fence in the front & back yard. For anyone with children or pets, having a fenced in front & backyard can be a huge selling point. Many parents do not want to worry about their children or pets playing outside, and a fenced in yard can add a unique peace of mind that few other upgrades can. Many smaller yards can be fenced in for under $5,000 and this upgrade will be a huge advantage over other homes that do not have a fenced in front & back yard.

Jessica Kane is a professional writer who has an interest in interior design and home decor. She currently writes for Canopy Concepts, a leading installer of custom patio covers and patio enclosures.

Kevin Sha is a professional real estate associate with Royal Lepage, serving the cities in Alberta, Canada. See more information about Kevin.

Thinking about buying your first house in the next year? You must read this!

Buying vs. Renting

Buying a house gives you ownership, pride, and status. It is also a long term investment that can give you great returns. In accounting terms, the owned property is considered an equity that has tangible value. It increases your net worth. Rent is an expense. It simply transfers your wealth to others. If you are convinced that buying is the way to go, then you should keep reading. 

Check below to see what you likely be able to afford based on the rent amount.

Rent* $1,250 - $1,300

Home value* $163,000 - $193,500              

Monthly mortgage payment* $981 - $1,165

Rent* $1,500 - $1,800              

Home value* $153,000 - $212,000              

$921 - $1,276

Rent* $2,100                            

Home value* $250,000                                 

Monthly mortgage payment* $1,505

(As you can see, your monthly cash out flow isn't that much different. You might even be able to save a little and have some extra beer fund for pub night!)

*The information presented above is for illustration only. Rent and Home prices are based on the Survey of Canadian Prices (Royal LePage, Second Quarter 2005, Issue No.32). Monthly mortgage payment is based on a $150,000-$250,000 mortgage, with 5% down payment at an interest rate of 5.90% per year (rate as of October 5, 2005), on a 5-year closed term and a 25-year amortization. Mortgage payment amount does not include property taxes, insurance premiums, utilities and common expenses.

Have a good credit history?

A credit rating is really just a measure of how dependable you are when it comes to repaying your debts. Credit bureaus create detailed reports containing information about your payment history (and a bunch of personal information that they really should not have). It gives them knowledge of your credit worthiness when you need another loan.

How do you get your credit rating?

You have the right to see the information in your credit bureau file, which includes your credit rating. You CAN receive a copy of your credit report by mail, FREE of charge. For a fee, you can also view your credit report online. (But if you just want that free copy, don't let them talk you into getting that paid version, because they will try VERY hard to sell you the paid version! They may even say, they don't have a free version! That's a lie. I have personally experienced it. I don't know if their offshore-outsourced accented agent didn't understand me or what.)

When you get your report, check your report carefully - if there are errors in the payment information on your credit report, you should send a letter to the credit-reporting agency requesting rectification of your records.

There are 2 major credit bureaus in Canada to contact:

TransUnion Canada: 1-866-525-0262

Equifax Canada: 1-800-465-7166

How do I establish a good credit rating?

ALWAYS pay your bills on time. Credit card, loans, or a line of credit are the main channels to build your credit with the bureaus. If you use your credit cards, at least make your minimum payments, you can develop a history of good credit.

How long does it take to build a mortgage worthy credit rating?

It really varies. It can take many years. (So you better get on it. But don't worry, if your credit is average, you can usually get approved by having a larger down payment or a credit worthy co-signer.) To learn more about how this works, you can contact us.

The information is for general use only; it is not intended for investment, financial, accounting, legal or tax advice.

Start saving for down payment.

Here's a few way to save up:

• Set aside money each month. As much as you are comfortable with. (The catch is, the less you put away, the longer it will take to reach the goal. You may have the intent to buy, but you may not have the cash! Your piggy bank is not filling up quick enough? Here's a few tricks.)
• Invest your mortgage fund only in a cash investment, such as a GIC that guarantees you a small interest. (So your principle is safe and pretty much no risk at all.) Right now the interest rate is great. You can get 1.75-2% sometimes on a savings account! I know a few institutions that offers that. If you would like to find out more, contact us here.
• Contribute to an Registered Retirement Savings Plan (RRSP) account. It's tax deferred. It allows you to get a lump sum tax return back each year and you can put that into your downpayment fund mentioned above.
• Cash gift from a parent or relative. Try to put most or all of it into your downpayment fund. (These are always pleasant surprises. So thank them very much and show your love! These don't come that often.)
• If you have a Employee Stock Purchase Plan, contribute to it! It usually guarantees a 25-50% return! When it matures, take it out and but it into your mortgage fund mentioned above..

RRSPs for buying a home

You may be eligible for the government's Home Buyers' Plan (HBP). If qualified, you and your spouse or partner can withdraw up to $25,000 each from your RRSPs to pay the down payment and related costs. (This is free cash flow sitting in your retirement piggy bank, that your normally can't touch until you are 65, but you can borrow it for free only now! Take advantage of this!)

There's no income tax on the funds, if you repay the total amount to your RRSP within 15 years. The repayment period starts the second year following the year you made your withdrawals. If the full $25,000 is withdrawn, the minimum annual repayment would be $1,666. This can be paid as a lump sum as well using your tax refund generated from your RRSP contribution each year. 

For more information on the Home Buyers' Plan, please visit the Canada Revenue Agency website.

The information is for general use only; it is not intended for investment, financial, accounting, legal or tax advice.

How much downpayment do you need?

Two options for down payment relative to property value.

• 20% or more down payment - This require a conventional mortgage
• Less than 20% down payment - This require an insured, high-ratio mortgage

High ratio mortgages must be insured by a third party such as the Canada Mortgage and Housing Corporation (CMHC), Genworth Financial Canada or Canada Guaranty and require you to pay an insurance premium. (Unless you are really desperate to buy a house or a business property, I would not recommend going for a high-ratio mortgage. Here's why.)

The insurance premium:

• Will depend on the amount you are borrowing and the percentage of your down payment (Usually, mortgage default insurance premiums range between 0.6% and 3.15% of your total mortgage amount)
• Can be added to the principal balance and paid off as part of your mortgage, or paid off in a lump sum at the time of purchase. It may be subject to provincial sales tax which cannot be added to mortgage amount.

(The mortgage insurance is there to protect the financial institution of potential costs in case you default, and it doesn't protect you in any way.)

The information is for general use only; it is not intended for investment, financial, accounting, legal or tax advice..

How much mortgage can you afford?

Things to consider.

• What's your annual household income? This is one factor financial institution will use to evaluate how much mortgage they can lend you.

• How much down payment are you prepared to pay? The less downpayment, the more negative cash flow. How much negative cash flow are you able to afford to stay liquid in case there's an interruption in your income stream? If you don't know the answer, you'd better talk to us.

• What's your debt-to-income ratio? Financial institution uses this ratio to evaluate your ability to pay the mortgage and how much mortgage they think you can manage. (So the lower the better.)

• Amortization period. In general, you want to take the longest amortization period available. (Years back, when I was a financial planning strategist, we used to learn about various mortgage pay-off strategies, and here is the best one). If you'd like to pay the mortgage off quicker, you can take advantage of the monthly and annual lump sum extra payment options. Most loans have this feature. It does have a maximum you can contribute without penalty, but 100% of the payment goes towards the principle, (The goal is to have as little money going towards the interest as possible.)

• Know your closing costs. There are many closing costs. It can add up to 1-5% of the total mortgage. You need to have it in consideration. 

• Property taxes,  home insurance, title insurance, condo fee, utilities, gas, etc.. These expenses can be significant. Financial institutions usually don't factor these expenses into their calculations, so they may over qualify you for what you can actually afford to pay comfortably each month.

To speak to an mortgage advisor, please contact us.

The information is for general use only; it is not intended for investment, financial, accounting, legal or tax advice.

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Written by:

Kevin Sha, Real Estate Professional | Royal Lepage Preferred Real Estate