Source: AOL Real Estate

Everyone knows that a home’s features can make or break a home sale, and that’s truer now than ever. But when it comes time to sell your home, not all home-improvement projects are created equal.

While some home improvements are worth the time and money that you put into them, just as many are not, and it’s important to know the difference so that you can show your home in the best light while maximizing your return on investment.

If you’re thinking about selling your house anytime soon, think twice before making any of these home improvements:

1. Extreme additions

Strategic additions that make better use of home space and lot lines can help at selling time, but home improvements that are too personalized or elaborate may have the opposite effect.

addition“A lot of times we advise our sellers not to do any major additions to a property, because you could price yourself out of the market, as well as increase property taxes for the future buyer,” says Renee Mayhall, RealEstate.com managing broker for the Carolinas. “You want to sell the home and move on to a property that’s going to better suit your needs, and let the buyer put their own personal touch on it instead, because you literally won’t get that money back.”

 2. Enclosed porches and sun rooms

While these spaces hold interest for some, most buyers will see a lost opportunity for valuable outdoor space or a drain on home energy efficiency, thanks to often-leaky glassed-in walls. I’ve also seen sunrooms on dangerously poor footings, constructed on a thin patio slab. Instead, keep porches well-maintained and out in the open. An authentic outdoor room is more flexible and appealing to buyers.

3. Way-out wall coverings

Experiments with bold paint colors and personalized patterns will translate either as far out or out-of-date. Remember, this isn’t personal, it’s real estate. Keep home interiors neutral so that potential buyers have an appealing canvas on which to draft their own stylistic vision and lifestyle.

4. Bad basement finishes

Basement finishes can lead to a host of problems for you, as well as for the future owner of your home. Address basement dampness issues before converting this valuable bonus space, and avoid the temptation to carpet your basement unless you want to start a mold farm.

5. Intricate landscaping

An overabundance of landscape plantings may initially appeal to a buyer’s eye, but then they’ll start thinking about the time and costs of maintaining a backyard paradise. So simplify your landscape plan with easy-care plantings that deliver color and impact, and highlight water-wise irrigation systems in your home’s listing and open-house tours. (Also see “Landscaping With Low-Maintenance Lawns Saves Money.”)

6. Pools and spas

“Some people love Jacuzzis and other spa-like improvements,” notes RealEstate.com Atlanta agent Katrina Walker. “But if it’s not a custom home, those may be things you put money into and don’t get money back out of when you try to sell the house.” Swimming pools also take up valuable backyard living space and add major maintenance and liability issues to a home’s real estate profile. Only add one if you plan to be in your home for a very, very long time.

7. Home office remodels

Though many buyers tend to work from home at least part of the time, a full-blown office remodel can be an obstacle to other uses of valuable square footage. Avoid custom bookcase installations and bulky built-ins that are difficult and expensive to remove or change.

8. Unnecessary improvements

Replacing a roof when it only needs a few repairs and upgrading plumbing systems are just a few examples of improvements that mean big money that you’ll never get back. Instead, stay on top of routine home-maintenance tasks, and let the next owner decide what major improvements to make. Be careful not to let contractors supersize small repair projects by talking you into full-blown replacements.

9. Anything you can’t finish

Projects-in-progress shouldn’t be among the features of open houses and walk-throughs. If you have a few final improvements in mind, you’ll either need to go with a pro or just say no when time and a home sale are of the essence.

“You want to get everything ready before you start to sell, instead of working it out in-between,” advises Harrison Tulloss, a ZipRealty agent based in Raleigh, N.C. “If you can do small changes and work with what you’ve got, it usually ends up working out better than totally re-creating or rearranging, and not getting any value out of the investment.”

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By Mark Weisleder

While any number of conditions are possible, most real estate offers are conditional on two main terms:

1) The buyer obtaining the necessary financing to complete the purchase; and

2) The buyer being satisfied with the results of a home inspection report, completed by a professional home inspection company.

Time to buy a houseThese conditions are typically for a period of three to seven days, to give the buyer the time to confirm with their mortgage broker or lender that they are approved for the necessary funds and to give their home inspection company time to complete their report. Upon receiving the approval from the lender and being satisfied with the results of the home inspection report, the buyer then waives the conditions in the offer and the agreement becomes “firm.” If the buyer is unable to obtain the financing approval, or if the buyer is not satisfied with the results of the home inspection report, they notify the seller and the agreement is terminated.

However, there are many other important legal rights and obligations that must be understood by real estate salespeople when advising buyers about any condition included in their agreement.

Let us first focus on the financing condition in more detail. What most buyers do not understand is that just because their lender provides the initial approval, there are typically other conditions that still have to be satisfied before they will actually give you the money.

The main “other” condition is that the lender must be satisfied from their own appraiser that the appraised value of the home or condominium is equal to or greater than the amount the buyer has agreed to pay for it.

For example, let’s say an agreement is signed for $300,000 for a home and the buyer is approved for financing of $225,000, which is 75 per cent of the value of the home. If the bank’s own appraiser actually values the same property at only $275,000, then the bank in most cases will not lend you the full $225,000. They may only lend 75 per cent of $275,000, or $206,250, and then expect the buyer to come up with the difference of $18,750. This can occur perhaps just before closing, making it extremely difficult for the buyer to come up with the extra funds in time.

When interviewing potential lenders, buyers must also make sure they inquire as to what the lender’s appraisal practices are and what other conditions have to be satisfied before they receive their funds. Where possible, make sure that all bank conditions, including the appraisal, have been satisfied before waiving the financing condition.

It is also important for buyers to understand that when they make a transaction conditional on financing, they have a legal obligation to act in good faith in trying to satisfy this condition. The buyer cannot simply do nothing and then say to the seller that the deal is off because they could not obtain financing. They must actually apply to a lender in good faith for the financing and then be turned down, in order to legitimately cancel the agreement. If not, the seller can take the position that the buyer has not acted in good faith in trying to satisfy the condition and the seller will then not only refuse to return the deposit, they may also sue the buyer for damages for breaching the contract.

Let’s say an agreement is conditional on the buyer obtaining a mortgage for $200,000. The buyer applies to a bank for the mortgage but is not approved. Can the seller then offer to take back a mortgage for $200,000 and try to force the buyer to waive the condition? The answer is no, unless there was an additional clause added to the agreement that gave the seller the right to provide the financing in the event the buyer was not approved by the lender.

Although the home inspection condition almost always appears in residential real estate transactions, it is surprising how many buyers and sellers do not really understand what the condition means and what their rights are once the condition is inserted. Some of the questions that are asked by buyers and sellers are:

1. Does a home inspection condition give a buyer an automatic right to cancel the agreement?

2. Is the seller entitled to a copy of the home inspection report?

3. If the report shows only minor problems, is the seller entitled to just fix the problems and force the buyer to complete the transaction?

4. What happens if the buyer does not carry out a home inspection at all and then tries to cancel the agreement?

In general, the courts have indicated that when buyers are trying to satisfy any condition, including a home inspection condition, they must act honestly, reasonably and in good faith. A decision of the Ontario Court of Appeal provides some guidance as to how we can answer each of the above questions. In the case of Marshall v. Bernard Corporation, decided in 2002, the agreement contained the following home inspection condition:

“This Agreement is conditional upon the inspection of the Property by a home inspector of the Buyer’s choice and at the Buyer’s sole expense, and receipt of a report satisfactory to him, in his sole and absolute discretion. Unless the Buyer/Cooperating Broker gives notice in writing, delivered to the Seller/Listing Broker on or before Wednesday August 19, 1998, that this condition is fulfilled, this Agreement shall be null and void and the deposit shall be returned to the Buyer without interest or deduction. This condition is included for the sole benefit of the Buyer and may be waived at his sole option by notice in writing to the Seller/Listing Broker within the time period stated herein.”

The buyer was not satisfied with the inspection report and asked for the deposit to be returned.

The seller took the position that the buyer was not acting in good faith and refused to return the deposit, because the inspection report listed only minor deficiencies to the home. The sellers felt that in accordance with any “objective standard’, the buyers should have been satisfied with the report and completed the transaction.

The court however, disagreed and held that in this case, the words “sole and absolute discretion” indicated that the parties intended this to be more of a “subjective standard” and as long as the buyer acted reasonably, they could refuse to waive the condition. In other words, as long as the buyer could prove that they were not happy with the result of the inspection report, they did not have to prove that anyone reading the inspection report would have been unhappy with the results.

As a result, many sellers try to remove the words “sole and absolute discretion”, from home inspection condition clauses or include additional language that if the amount to correct all deficiencies is less than $1,000, then the seller has the right to correct the deficiencies and the buyer has to close the transaction. If any change is made to the home inspection condition clause, salespeople need to review the changes carefully with their buyers to ensure that everything is understood.

Sellers are not entitled to a copy of the inspection report unless it says so in the clause itself.

If the buyer does not conduct the home inspection at all, or perhaps brings in an unqualified person to conduct the inspection, then I believe these might be examples of not acting reasonably and in good faith and it would thus be difficult for a buyer to try and cancel the agreement based on the condition clause. It is thus very important that buyers always use qualified home inspectors to conduct any inspection of a home.

In my view, sellers should not spend a lot of time negotiating conditions. If the buyer does not want your home, it is better to just let them cancel the agreement and find a buyer that really wants your property. However, buyers also need to understand that some sellers may not be so accommodating. That is why any home inspection condition must be drafted carefully and carried out in good faith.

Waiving conditions

Once a buyer is satisfied with the results of a condition, whether it is financing or the home inspection, immediately have the Notice of Fulfillment (NOF) signed and delivered to the seller or the seller’s salesperson. Sellers have successfully terminated agreements when the NOF were delivered late.

In the condition, we write that the NOF must be for “the sole benefit and option of the buyer” because the buyer may want to buy the house even though the condition is not satisfied.

If the NOF is not at the sole discretion of the buyer, the seller may take the position that this is a “condition precedent”, and thus cannot be waived by anyone. A condition precedent means that if the condition does not happen, the deal terminates, and no party can waive it. It is normally used when you make a transaction conditional on obtaining a severance, or dividing your property, with the approval of the local municipality. If you don’t get the approval, the deal cannot happen and thus no one can waive the condition. A seller might want to take this position because the property suddenly went up in value after the original agreement was signed.

An example occurred where a buyer made a transaction conditional on a water purification system being installed on the property prior to closing, or else the transaction would end. It did not include any waiver rights. The seller tried but could not install the system. The buyer then tried to accept the property anyway, even without the new system. The seller refused and since the condition was found to be a condition precedent, no one could waive it and the deal ended.

It is thus very important for salespeople to understand and explain to buyers and sellers all of their legal rights and obligations relating to conditions when buying or selling a home.

Note from Kim: Please be aware that until all of the conditions have been met and the NOF delivered to the Seller or Seller’s Agent, the home is NOT sold! Many seller’s have made plans prematurely (ie making an offer on a home without the proper clauses included to protect them) before the buyers for their home have met their conditions. This can leave sellers in a very difficult and expensive situation. Be sure you speak with your agent on the best approach to take in this situation!

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Smoking Decreases Property Value

By Chris Seepe

Smoking in the home may significantly affect property values, and allowing smoking in cigarette1-300x195rental units is costly to landlords.

Pfizer Canada, a leading biopharmaceutical company, recently sponsored a survey of Realtors conducted by Leger Marketing, which concluded that 87 per cent of Ontario real estate agents and brokers surveyed said smoking in the home lowers resale value. Eighty-nine per cent said smoked-in homes are more difficult to sell.

Thirty-one per cent said smoking may lower a property’s value by 20 to 29 per cent, and 21 per cent said the value could drop 30 per cent or more. That’s $120,000 on a $400,000 home!

Fifty-six per cent said most buyers are less likely to buy a home where people have smoked and 27 per cent said most buyers are actually unwilling to buy a home where people have smoked.

The number one reason given was smell; number two was health (second- and third-hand smoke).

The Council of Canadian Fire Marshals and Fire Commissioners report that smokers’ materials and open flame (cigarettes, lighters and matches) remain the No. 1 ignition source in fatal residential fires. Between 1993 and 2002 (most recent figures available) there were 9,414 fires, more than $231 million in losses, 688 injuries and 94 deaths caused by lit smokers’ materials.

Health Canada’s Annual Canadian Tobacco Use Monitoring Survey (2011) reported that 14 per cent of Canadians smoke daily, while four per cent smoke occasionally. Daily smokers consumed an average of 14.4 cigarettes per day.

So what to do if you are a smoker and trying to sell your home? First, stop smoking in the house. Go outside or to the garage. Second, give your home a thorough cleaning – including walls, curtains/blinds, furniture, carpets. It may not get rid of the smell completely, but it will certainly improve it significantly. Above all else do NOT try to cover the smell with air freshener. It doesn’t work, and sometimes make the smell more offensive (especially to someone with a scent allergy!).

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Selling a home can be an emotional process. The strain of constant showings and uncertainty about if or when offers will come in can put any homeowner under a certain amount of stress. The last thing you want is to finally get that offer – and immediately have your hopes dashed by a lowball amount. There’s certainly nothing you can do to prevent a potential buyer from making a drastically lower offer than your asking price, but there are a few things you can do to protect yourself and lessen the likelihood of such a disappointment.

Don’t overprice your property in the first place. Listen to your real estate agent! This can’t be emphasized enough. While you might think you have an idea of how much your home is worth – and certainly you want to get the most you can for it – your agent will have a better handle on the market conditions and can help you set a reasonable expectation about how your home will sell for. Plus, your agent will be more objective than you could hope to be. It’s your home. You’ve lived in it, loved it, and your feelings about it are likely to affect how much you expect it to sell for. Your agent will have the benefit of distance and will be able to see your house for all of its benefits and drawbacks. Price your home too high, and you may be asking for a lowball offer.

low_ball_offersA prime example of this is a property that I priced for a gentleman several months ago. I priced it based on my experience and knowledge of the area, and in particular the location and condition of the home. The seller obviously didn’t like my price because shortly after that it was listed with another agent for $40,000 more than I had priced it at. Driving by it the other day, I noticed that it finally had a sold sign on it (it has been listed for over 4 months at the busiest time of year!). When I got to the office I looked it up and discovered that it has had 2 price reductions since it was listed – and just sold for the price I told him it would likely sell for to begin with! That seller could have had money in his pocket  a lot sooner had he listened!

Find the right real estate agent. Make sure that your agent has a good reputation and experience. He or she should be able to provide list and sale prices for homes in your area. Armed with this information, your agent can make a good case to the buyer’s agent for the type of offer the buyer should reasonably make. Good communication between your agent and the buyer’s agent can help negotiations go smoothly and eliminate surprises – one of the many reasons you’ll want to choose your agent wisely.

Don’t appear too eager to sell. If you give a buyer any clue that you’re in a hurry to unload your home, the buyer is going to take advantage of your perceived need. Play your cards close to your chest and avoid letting too many people outside your close inner circle know the true nature of your circumstances.

If you do receive a lowball offer, don’t despair. If you feel that an offer is unfair, you’re in the position to reject it. Now it’s time to negotiate. Make a counter offer – or reject the offer up front if you don’t think the buyer will be cooperative. Moreover, don’t take a lowball offer personally. While you have memories attached to your home and a good idea of the equity involved, those factors are invisible to a buyer who just wants to get the best deal possible. Try to distance yourself from the situation and you’ll be a lot happier.

With a little luck and some upfront planning, you should put yourself in a good position to sell at the price you want. As with any home sale, a healthy bit of patience goes a long way toward making the experience pleasant for all parties.

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So you’ve decided to sell your home. Great! You have researched agents and have decided on the one you think will do the best job. Awesome! Now it’s time to get down to the details. Sure there are the big things that are really important – great photos, staging and decluttering, quality feature sheets, etc… But have you discussed some of the smaller details that sometimes never seem to come up?

For instance do you want a lockbox on your house? A lockbox is a device that holds a key to your home and has a code that opens it so that agents can easily show your home. This code is set by the listing agent and is given to the buyer’s agent at the time the showing is booked. If so, what kind of lockbox? Sounds pretty silly. Aren’t all lockboxes the same? The answer is yes, most of them are similar. However, there are a few that are a bit different, and one type offered by the Ottawa Real Estate Board is called an ibox.

supra_iboxThe ibox is an electronic lockbox that allows the seller’s agent to track who has been in the house and for how long. Each agent who chooses to, has a personalized PIN that they type into a keypad (ActiveKey) to open the lockbox. Agents can also use their smartphone to open the ibox, however, there is a fee to do this.  This type of lockbox is sometimes used within the City of Ottawa (and other cities) and in some of the outlying areas. If you choose an agent who opts to use these boxes in the rural areas, it might significantly cut down on who shows your house.

The problem with using this sort of lockbox is that they have never really caught on (at least not in my area). There are a few reasons for this. One of the biggest being that they are expensive to purchase (hundreds of dollars) and if the showing agent forgets to take the Activekey with them then they can’t open the lockbox. That makes buyer and sellers very unhappy!  In fact many of the agents in my area have gotten rid of their iboxes completely. That means that many of the agents who are the ones most likely to show and sell your house won’t  because they no longer have the PIN to open the electronic box. I know that personally I had one of these lockboxes for 6 years, but never used it on one of my listings (because I wanted to encourage other agents to show my listings – not discourage them), and only used the Activekey when I showed the occasional property in the city. If other agents are unwilling to show their clients your home simply because it has an ibox on it as opposed to a more traditional mechanical lockbox, then it really doesn’t make a lot of sense to use it. After all isn’t the goal to have as many showings as possible and sell your house?

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Source: Financial Post

If you’re self-employed and about to apply for a mortgage, be prepared for some serious form-filling. Getting financing isn’t as easy as it used to be, say mortgage brokers — and for the 15% of Canadians who earn money for themselves without a steady employer’s salary, it’s harder still.

“Back in the day, five years ago you could hold up three fingers and say ‘I promise I earn $100,000, and many lenders would take your word for it,” says Claire Drage, a senior mortgage agent with Mortgage Alliance in Greater Toronto. But things have changed, she warns. “It will take more paperwork, more documentation, more justification from the borrower on why they should be approved.”

Since 2008, the government has lowered the maximum amortization period from 40 to 25 years, and reduced the maximum gross and total debt service ratios to 39% and 44% respectively. Then, last October, the Office of the Superintendent of Financial Institutions’ B-20 rules put the underwriting practices of federally regulated financial institutions under scrutiny.

“Generally these changes have made for more rigorous review of documentation which does impact the self-employed borrower programs to a greater extent than salaried borrowers,” says Gary Siegle, Alberta-based VP of the Prairies for mortgage services firm Invis.

mortgage_240The self-employed often hinder themselves with creative accounting to lower their income. “They may have a different way of reporting all their income, reducing all their taxes as much as possible. Those are the ones that are more challenging,” says Daryl Harris, a broker at Verico One Link Mortgage & Financial in Winnipeg, and chair of the Canadian Association of Accredited Mortgage Professionals. Those not reporting cash jobs also reduce their provable income, making it harder to get a mortgage.
“Even though you’re self-employed and you benefit from amazing tax breaks, and your personal income tax return is incredibly low, you still have to prove to the lender that you can afford to pay this mortgage back,” adds Ms. Drage.

For those that find it hard to prove their income, stated income programs are an option. Designed for those with less than three years’ business operation, it requires at least a 10% downpayment, and not all lenders support it. TD Canada Trust, for example, looks instead at documented income such as T1 financials, business financials, and notices of assessments.

Changing attitudes among lenders makes it more difficult for the self-employed to deal with top-tier banks, says Don Barr, president of Verico Select Mortgage in Victoria. “It is forcing a lot of stuff out of the ‘A’ business and into the alternative business,” he says. Alternative lenders, some of which are not federally regulated, may take a less rigid approach when assessing self-employed applicants. However, the trade-off is often a higher interest rate.

There are several things to remember when applying for financing:

Loan-to-value matters. Offering a 10% downpayment will make the process far more difficult. They care more than ever about up-front equity.
Keep up with your payments. Make sure that you are up to date with the CRA before applying to a lender.
Be organized. Ensure that all your accounting and tax documentation is up to date, and that you are reporting
Pay off your credit. Get those outstanding cards and lines of credit paid down before you let your lender score you.
Be prepared to adjust your expectations. You may have to adjust your target price after talking to a lender.
See if your lender will ‘gross up’ your income. Some lenders may add a percentage when assessing your taxable and/or non-taxable income to allow for business expenses you incur.

And above all, start early in the process, preferably with a pre-approval before you look for a home, because one thing’s for sure: you’ll be doing more hoop-jumping than you think.

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April 9th, 2012 by Ruthmarie Hicks

That’s right – I’m talking about the MLS listing. Its amazing when you actually think about it – because sellers seem to blissfully unaware of how their homes are represented on the MLS. During listing presentations, most agents wax eloquent about how they are going to “market” your home. From flyers, to the unique website with its own domain name, to the post cards they are sending to all your neighbors – agents are almost jumping up and down with excitement over how hard they are going to work marketing your home. But the listing itself is all but forgotten with all the other goodies that help distinguish the agent from their competition.

Don’t get me wrong. I do all of those things too. But the fact remains that over 80% of all listings will sell through the MLS. The rest is just gravy…useful gravy, but gravy nonetheless. The truth is that the real meat and potatoes of your listing is what is posted on the MLS. Yet no one seems to make a big deal about this or discuss it at any length. Yet putting together a good listing for the MLS is probably one of THE most important things your agent will do to market your property. Although it is boiler plate – that doesn’t make it “easy”. In truth, anyone can throw a listing on the MLS, but doing it so that it grabs buyers eyeballs is another matter.

Mistakes, gaffes, and other problems:

Over the years I’ve seen mistakes that run the gamut from the merely careless to the totally absurd. From posting the wrong zip code or town, to listing copy that is obviously hopelessly out of date. Just the other day I saw a listing touting the property as a great investment opportunity since there is a paying tenant in place until August…. of 2011!! Since we haven’t invented time machines yet, I fail to see how having a tenant under a lease that ended over eight months ago is of any value to a buyer in the year 2012.

Photos, photos, photos!

Then of course there is my pet peeve….terrible photography. I think that almost any casual observer would agree that the MLS appears to be littered with some of the worst photography ever conceived by a person with a c 2003 clam-shell cell phone camera. Since photos sell homes, I have to ask the question: what are these agents thinking? Bad photos mean that you are automatically turning off over 80% of the qualified buyers who are pouring over MLS data to determine what is worth seeing and what they are going to pass on.

We all take bad pictures -but we shouldn’t actually USE them….that’s one of the secrets of Bad-Listing-Photo-300x244being a good photographer. This is one of my worst photos. It’s a picture of a window not room, the lack of light is almost secondary. Photos like this shouldn’t be used to sell a pack of bubble gum, let alone something as expensive as a six to seven-figure home. Still, these beauties might qualify as works of art compared to what I see on the MLS.

Below is a photo that I found acceptable for one of my listings. I used a wide angle lens and photoshopped the image to create more depth. Granted, I had a staged home to work with (a topic for another blog) which also presents the home in its best possible light. I am starting to use HDR (high dynamic range) although these photos were taken before I had that capacity.


Agents who can’t take good pictures, should outsource this task. In my opinion, it is too important to the listing to have bad photography. An agent who doesn’t have some wide angle capacity on their camera has no business taking photos of interiors. A wide angle lens helps buyers see the room layout and that helps YOU sell your home.

Virtual tours and slide shows:

Not optional in a world where everything is so visual and where people actually search for homes on YouTube. On our MLS a slideshow can be linked to the listing. If you have decent photos, a great slide show is a tremendous addition to the listing because search engines love video.

The Simple Formula:

It may not be different, it may not be flashy, it may not be a compelling selling point for an agent use in a listing presentation, but a good listing with great photos is vital. When you interview agents to list your home, ask to see examples of their listings on the MLS. Most people ask how many listings an agent has, but its the quality not the quantity that gets buyers through the door. Nothing gets more exposure than the listing itself because it is pick up by third party sites such as Zillow and Trulia. A compelling listing with terrific images makes buyers pick up the phone and ask their agent for a a showing.

A good listing + great pictures = more showings = more offers = the best possible price for your home.

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