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Welp! Crazy "bid-wars" are back in a big way. Well-priced (sometimes underpriced) homes in popular areas of Winnipeg are getting 8, 9,... 13 or more offers on offer date and selling for over $50,000 more than the list price in many cases. While great for sellers, this can be incredibly frustrating for buyers (and their agents), who go through all of the work of searching for a suitable home, finding one they love and feel confident enough to buy, writing an offer, and then finding out that they've been "out-bid" by another offer and heading back to the drawing board to do it all again. Many, many times over.
So let's talk about this a bit. You can write your offer for whatever you like. Decide on a price that is reasonable for the home and that you can afford. This may mean going all the way up to your max budget, but if you really want that house, you should be prepared to go for it. I always tell my buyers to come up with a price in their head that, if it should sell to someone else for even $1,000 more, they won't curse and say "I WOULD'VE PAID THAT!!". If it sells for a bit over what you offered, you have to be comfortable walking away happy that you gave it your absolute best shot. The thing is, in situations like what we're experiencing right now, you may need to look at homes well below your max budget, simply to allow space to negotiate. If your max is $300k, and homes in that price range are selling for $330k-$350k, your offer of $300k might not get you very far. It can be a hard pill to swallow, but finding a great home that you can make your own improvements on and that you can afford can be pretty great!
You can also put conditions on your offer, the most common being home inspections and financing conditions. There are a myriad other conditions you can speak with your agent about writing in, but I'll focus on these two. Home inspections are wonderful things. Good, reputable inspectors (that part is important...) will go through your home with a fine-toothed comb, telling you everything that they can SEE. They cannot damage a home in any way, but if they can see it, poke their head into an attic etc. they'll tell you about it. There may be things that they can't see that could be problematic in the future, but they can only do their best. They give you all of the facts and let you make the decision about whether or not to purchase this home. They will tell you things that should be fixed or looked into, and suggest how to go about getting quotes for it, if it's a big deal etc. If it's a condition of your offer, and the home inspector tells you something that is a deal breaker for you, you can walk away from that purchase and find another home. In multiple offers it can be hard to get your offer to be competitive with a home inspection condition, but you have to decide if you feel comfortable enough about this property to write without one. Two possibilities that can help in this situation are: get a home inspection after you move in. You can no longer run screaming from the home, as you've already bought it at this point, but you'll have a "to-do list" and you'll know what to expect in coming years. You can also request a second showing and home inspection PRIOR to writing your offer. If you're okay with what the inspector tells you (and you have to pay him/her whether you buy the home or not) then write an offer without an inspection condition and away you go!
Financing. SO important. So obviously, getting pre-approved with a mortgage broker should happen before you even start looking for a house. They figure out your budget based on your credit, income, monthly bills you have to pay, needs and wants etc. (Be careful to make sure that you actually ARE pre-approved). If you put a financing condition on your offer, it's giving your broker a few days to find you a lender and, if you're putting down less than 20% - a mortgage insurer, before making the deal final. Even if YOU are approved, the home you wish to purchase might not be. Say you make the best offer, you win the bid-war, and the house is yours. Hooray!!! Say that, to win, you wrote much higher than the list price (still within your budget, of course. Good for you.) Even if you are approved to spend that amount, the lender providing the loan for the mortgage, and/or the mortgage insurance company (usually Canada Mortgage and Housing Corporation or Genworth) might get an appraisal done and find that it's not actually worth what you're supposed to pay. If that happens, and you are unable to acquire financing for that home, you can walk away from that purchase because of your financing condition. If you had removed that condition (possibly in order to win the bid-war) you have now bought that home that you are stuck with, and had better FIND the money to pay for it without a mortgage, or you could risk losing your deposit and some legal fees for backing out, because it wasn't a condition set to protect you in the offer to purchase.
Basically, do what you think is right for you, and what you're comfortable with. Some folks and their agents are removing financing (or other types of conditions), and winning, and that's fine for them. If you're not cool with it - don't do it. It's really important in these situations to make your offer as "pretty" as possible: give the vendors the price they want, the possession date they want, home inspections and financing etc. depending on the home and what the situation and your comfort level is... It's up to you. If you think your offer won't have a chance because it's so close to the list price, you need a certain possession, and you have several conditions, then that's one thing. But, as I believe Wayne Gretzky (and Michael Scott -"The Office"...and my husband, Kyle) say "You miss 100% of the shots that you don't take". It never hurts to throw your hat in the ring if this is a home that you want. If you lose, you'll find something else. Be reasonable, but be true to yourself and comfortable with the choices you make. You have to be happy in your new home. Stuff WILL go wrong - it's Murphy's law. Something will break, or require attention in your new home, and you'll have a few grumbly days. It's important that you're still happy with the home that you've bought, on the terms that you chose, because you can't go back.
Okay, so you may or may not have heard the grumbly fear mongering about the new mortgage rules coming into effect over the next couple of months. There are a few changes coming, but the most important one (in my opinion) comes into effect on October 17, 2016. SOON! Let me try to clear things up a bit, as it's not all doom and gloom!
Let's say you wanted to start looking for a home, so you did the smart thing and went to a mortgage broker to get pre-qualified and to find out how much house you can afford. (Good for you! Gold Star!) You have been qualified to purchase a home with a maximum price of $350,000 and your mortgage specialist is going to get you an amazing, low interest rate of 2.34% on a 5 year fixed mortgage. Woohoo! As of October 17th, you will need to qualify at the benchmark qualifying rate (which as of today is 4.64%, but it will change regularly). You would now only qualify to buy a home with a max price of $280,000. This equates to a 20% drop in buying power. (All things being equal in terms of property taxes, income, debts, etc).
The important thing to note is that this is a "mortgage rate stress test". YOU WILL NOT BE PAYING THE BENCHMARK RATE. Your payments will still be based on that fabulous rate that your broker was able to get for you, in this example 2.34%. You just have to qualify AS IF you would be paying the 4.64%. This way, in 5 years when you have to renegotiate the terms of your mortgage, if rates have risen (and they will rise), you should still be able to afford your home. Savvy?
The powers that be are trying to ensure the affordability of Canadian life without just raising interest rates drastically and immediately. If you qualified at the benchmark rate, but get to pay lower rates for 5 years, that's still a good thing! The thing is that lots of Canadians are overextending themselves, and mortgages are (important, obviously, but also) easier to control than credit card companies, car loans etc.
So! If you still REALLY want that $350k house, you will either need to save longer, or make sure that the rest of your Total Debt Service Ratio doesn't read as scary as a Stephen King novel. Get control of your debt: credit cards, lines of credit, car loans etc. If you're wanting to buy a house, and qualify for $350k at the lower interest rates ONLY BECAUSE you're at the absolute max of what you need each month to pay your debts, then there's no wiggle room for the benchmark qualifying rate. If you can still afford to make the mortgage payments on a $350k house, even at the benchmark rate, then it's likely because there was enough room in your budget because you don't have much debt. You DIDN'T buy that shiny new $50,000 car, but hey, look, you qualify for a better home!
If you do have to be at the max of your debt repayment allowance, and you cannot wait to buy a home, then you have to be willing to look at $280,000 homes. As always when buying a home, there's nothing worse than wanting something you can't afford. It can break your heart, your wallet, and make you blind to potentially decent homes in a lower price range. For the first-time buyers out there looking at lower price points, this may affect you most of all. The best advice I can give is to keep your expectations realistic, keep your credit spending under control, and work with a good mortgage broker who can look out for you and explain things better than I can! The best people to advise you about mortgages and finances are specialists.
It's still a good and exciting thing to buy a home; there are just more hoops to jump through to ensure that it'll remain a good thing for you in the long run!
This spring I tried my hand at event planning. I then quickly realized that it’s not my forte and that it’s a TON of work. So I got my good friend at Peachy Green Eco Events on board and away we went, planning the first West End & Wolseley Home Show!
I love this area and this community. The spirit of the folks in this city always astounds me, and West Enders are no exception. They work hard, play hard, have a strong sense of family and community, and are always looking for ways to improve. The events that are constantly popping up are a testament to this.
I always tell my clients why I love this “suburb of Wolseley” as it’s sometimes called, well, at least by me… We have diversity of homes in many shapes and colours, and watching them rise in curb appeal and value is a joy. A lot of the homeowners around here are first timers, or folks with families that are thrilled to have their first home, and take such pride in it, and it makes the community even better. EVERYONE seems to have pets! The amount of neighbours I know based on their pets makes me laugh constantly. My husband will ask, as I wave to a neighbour, what their name is, and I’ll reply “Oh, that’s Spicy’s mom!” Truly, though. I can take my dog for a short walk and see several families playing, other dogs being walked, the most gorgeous canopy of trees up above, lots of mini pop-up libraries on front fences, and the restaurants! Oh, the restaurants. It’s becoming a problem for me, and my lack of willpower, to have so many incredible places to eat all over the West End area! Oh, and it’s affordable!
Wolseley is well known for it’s rich sense of culture and community, and I can go on waxing romantic about it ad nauseum as well. Wolseley’s awesome. We know this.
My litte pipe dream was to put on a community event that would build up relationships and local businesses in two areas of Winnipeg that I adore so much, and it was a total success!
We had a trade-show type feel with vendors from local businesses with anything to do with buying, selling, or renovating real estate. We had everything from a REALTOR®/Decorator (shocker… that’d be me) and mortgage specialist, to contractors/trades and renovators, to people selling eco-friendly products for cleaning and decorating your home, with much in between! We also managed to get Jonnie’s sticky buns to provide mini buns and coffee for everyone. What’s more, I managed to keep from eating all of said buns myself. Then, of course, we needed music. Cue Buffy Cowtan & Alan Wong with their guitars and beautiful voices, and we’ve got an event! It came together in just over a month! Not too shabby, if I do say so myself.
All in all, 60 people came out for our wee event. Businesses booked future clients, people had a great time, and we have lots of great suggestions and ideas for how to make this an annual event that just gets better each year! So keep your eyes peeled, folks. The West End & Wolseley Home Show will be back again!
Recently I had the opportunity to speak at New Journey Housing in Winnipeg. They work with new Canadians, helping them find housing - everything from rentals to buying their first home here. This fabulous place is a resource that I didn't even know existed, and now that I do, I'm fiercely proud of it!
It's unfortunately very common for newcomers to be targeted for scams or to be overcharged for things, especially if there's a language barrier. I wish it wasn't the case, and don't understand it. However, thinking back to my many travel experiences around the world, I've been in similar situations where, for some reason, my price was way, WAY more than the local standing next to me. It's a thing. A stupid thing, but a thing nonetheless.
Because of this, many new Canadians are under the impression that working with a buyer agent to help them find their home instead of just calling around to the listing agents on the "for sale" signs they see is a scam. The same is often believed of mortgage brokers. Here's the truth - Buyer's agents and Mortgage brokers are both FREE to the buyer! If I work with a buyer, I can help guide and educate them through the process of finding a home, narrowing it down to their desired criteria and price range, and help them through the offer and closing process, looking out for THEIR best interests at all times. I get paid for this through the sale of whatever house they buy - the vendors pay the listing agent a fee that gets split with me. Savvy?
Mortgage brokers are invaluable to everyone, but especially to newcomers! They know all the ins and outs of your finances (once you let them) and the offer process, and all of the extra hoops that will have to be jumped through to make it happen. They can also get you the best mortgage rate by shopping around to multiple lenders, as opposed to just going to the bank and seeing what they can offer. They also get paid out of the sale of the home, at no extra expense to the buyer! It's a win-win!
If language is a bit of an issue, there are resources available for REALTOR® & buyer alike. There are simple English booklets outlining the process of buying a home in Manitoba, and they are provided by the Manitoba Real Estate Association. These little books are pretty awesome, guys.
My experience at New Journey Housing was a tremendous one, and I could go on forever (and I kind of did...) but my basic advice to new Canadians looking to buy a home is this: Start by going to New Journey Housing. Next, it's REALLY important that you find an agent that you trust to guide you through the experience. If you just call the listing agents of every home you see with a sign, your search could take you all over the map and you don't necessarily have someone who's only goal is protecting you and your interests. Listen to their expertise and experience as they try to help you figure out the best home for you and your lifestyle. Also, homes here need certain maintenance that you might not be used to if you come from warmer/drier climates. Let us teach you how to find a home, and how to be a good homeowner, too! A home is an investment, and we'd love to help you start this next part of your life off right, and with the tools to make it a success!
So. Something that’s been happening more and more in our society is that kids are staying at home with their folks for longer. I totally get why this is a thing; rents are no longer cheap, school is expensive, in some cases decently paying jobs are impossible to find, especially if you’re still in school, and in order to buy a home (usually down the line) you need a decent down payment. What better way to save money than to stay at home for a few more years? If your parents are cool with it, and in some cases heavily encourage it, then awesome! Sweet deal.
Here’s the thing with that, though. When said 30-year-old kids are then ready to buy their first home, it can leave their ideas somewhat skewed as to what is going to be possible. They’ve never experienced the “crappy apartment” phase.
I moved into my first apartment when I was 18. As first apartments go, it was pretty okay. Stinking hot in summer, the water was only slightly brown, the hallways didn’t smell that awful, and hearing my neighbour play harmonica at all hours of the night actually became comforting. I also had to work 3 jobs to maintain this Taj Mahal existence of mine.
As I went back to school, took jobs that traveled, went back to school again, bought a house, moved out and started again from scratch in a SUPER sketchy basement apartment, to a better apartment… well, as you can guess, I went through my share of educational living situations from scary to pretty darn good. When it came time to buy a home again, even though my husband and I couldn’t afford anything big or fancy, we still felt like it was a step up for us. It’s clean, dry, solid, in a decent neighbourhood, and even kinda pretty! It has its issues, but such is home ownership. It’s ours. So we’re happy with it.
I often work with first time buyers, and it’s usually pretty rewarding. One of the hardest hurdles to get past is with buyers who’ve skipped the “crappy apartment” phase. If I was going straight from my folks’ house, which they worked 40-50 years for, and is pretty great, to the starter homes I could afford… it could be a bit of a hard pill to swallow. The important thing to remember is that it’s a start! Everyone has to start somewhere! If it seems straight, solid, dry, and doable, you’re winning. Paint can be changed SO EASILY. The odd repair or maintenance cost will happen, and there will have to be trade offs. Taking pride in improving your own home, and making it yours is such a great feeling, though.
My advice to these buyers is this: keep an open mind. Discern the differences between NEEDS and WANTS, and recognize as they evolve while you house-hunt. Work with an agent you trust to help educate and guide you. Get your family’s opinion. If you’ve lived at home this long, you must have a pretty fabulous family – so include them in the decision if you’re feeling overwhelmed. Just make the decision to pull the trigger on a house that feels good for you, because if you don’t, you could be looking and comparing to unrealistic dreams for years and years. Invest in yourself. You’ve earned it!
Ethos Realty Inc.
755 Osborne Street
Winnipeg, MB R3L 2C4