Great time to Buy!!!

Although the British Columbia Real Estate Association forecasts that average MLS prices will slightly decline in 2009 and 2010, I still believe now is a great time to buy. Why? Because, amongst others, the interest rates are historically low. People tend to forget that over the course of an amortization period the total of interest paid is close to or sometimes even more than the principal paid. In the table below you will see the effect of a change in interest rates for a $250,000 mortgage with a 30 year amortization.

Interest rate: 4% - Monthly payment: $ 1,188 - Total of interest paid: $ 178,000
Interest rate: 5% - Monthly payment: $ 1,334 - Total of interest paid: $ 230,000
Interest rate: 6% - Monthly payment: $ 1,487 - Total of interest paid: $ 285,000

I’m almost positive that interest rates will go up long before home values will increase again. So if you wait a while to benefit from a decline in selling prices, the advantage most likely will be taken away by an increase in interest rates. Not even to mention that your monthly cost will increase as well. Have you ever considered that with a lower interest rate, you may qualify for a loan you wouldn’t have been able to qualify for half a year ago?

But there are more reasons to buy right now. For one, inventory is high which allows for choice, negotiations advantage and no time pressure. Also, buyers tend to partially renovate or at least makes some changes to the house they buy and the Federal Budget announced a new Home Renovation Tax Credit of up to $1,350 for homeowners who renovate within the next 2 years. For First Time Home Buyers there are even more reasons to purchase now. The same Federal Budget announced a FTHB Tax Credit of up to $750 to help with closing costs such as land transfer taxes and legal fees. Furthermore, the FTHB withdrawal limit from RSSP’s to buy a home is increased from $20,000 to $25,000 a person, which is $50,000 per couple.

And don’t forget about this one. The Province of BC’s Property Tax Deferment Program is now open for everyone who can prove financial hardship. So if you’re eligible, you can have your property taxes deferred for 2 years, which in a lot of situation allows for an additional net spending amount of $200 to $400 a month.

As always, IMHO. Please feel free to comment or give me a call.

More myths about “Discount” companies

Why are sellers still listing their properties with “traditional” real estate offices if there are companies that do the same for way less money? It just doesn’t make sense! Financially it is a no-brainer!! So there must be something why sellers make the wrong decision. Let’s shed some light on the reasons why.

Over the last year our clients have informed us about what motives they have heard not to list with us.

1. “Assist-2-Sell consists of only 2 realtors, the bigger offices market your home to a team of 20 (and more) realtors.” Totally nonsense. Regardless what you are told, 99% of the listings are posted on MLS. This means that 99% of the listings are exposed to every realtor and every brokerage in the area, not only to the in-office realtors. And yes, they will have an office tour going through your property. Not because they have the buyer, but to underline this marketing tool to get the listing. Been there, done that!

2. “At a bigger office they work as a team to sell your home.” Nonsense again! Realtors within a company are each other’s competitors! It’s nice if they sell each other’s listings, but that being the sole purpose is not ethical. A Buyer’s agent should work in the best interest of the Buyer and find the property that suits the Buyer’s need, not the needs of his/her colleague. Further this would a very arrogant statement, because today’s buyers are very well informed about the market. Through the Internet they are very well capable of researching the market themselves.

3. “In a bigger office they have more real estate experience.” Often realtors mistakenly believe that their years in the business are equal to experience. However, experience is build up by doing transactions! Assist-2-Sell’s business model is based on volume. Because of the low listing fee we handle more transactions per realtor per year than average.

4. “Low fee real estate business models are not here to stay.” Over the years the general public gained more and more access to real estate up-to-date information. With the younger generations who grew up with the Internet becoming key players in the real estate market and an increasing use of the Internet to access both listing and recent sales information, an important role of the “traditional” realtor diminishes. There is no doubt in my mind that low flee business models will survive in the future.

As always, IMHO. Please feel free to comment!

Market Update

I would like to take a couple of your minutes to inform you a little bit about the real estate market. Although I presume that you already know that the real estate market is really slow right now, you probably are more interested in where the market is headed.

The British Columbia Real Estate Association recently released a news letter. It shows what we already know: sales numbers came down dramatically. In our region, the Okanagan-Mainline area, residential sales in 2008 dropped with a stunning 37% compared to 2007, slightly more than BC’s average of 33%. The average MLS selling price declined with 5%.

More importantly however is the BCREA’s housing forecast. Based on the most recent economic numbers, the BCREA’s forecast for 2009 shows another 9% decrease in residential sales within the Okanagan-Mainline region and a decline of 14% in average MLS price. For 2010 the forecast shows that residential sales numbers will increase again with 7% compared to 2009 (still below the number of sales in 2008). However, the average forecasted MLS price will decline with another 2% compared to 2009.

In summary this forecast shows that residential sales prices will continue to decline over the next few years. If you are still considering selling, you might as well do it sooner rather than later!
If you have any question or concern regarding the marketing of your home or the real estate market in general, please don’t hesitate to give us a call (250-832-0111), stop by the office or to send us an email (janvanlindert@assist2sell.com).

Myths about "discount" companies

Out in the street you can hear a lot of myths about “discount” real estate offices, like “you get what you pay for”, because there are always sceptic people or people afraid of change. I want to pass on to you the results of a survey conducted by Consumer Report, a Yonker, NY based magazine. Down below I posted some parts out of the September 2008 issue.

“Forty-six percent of sellers CR surveyed attempted to negotiate (with a traditional broker) a lower commission rate. Roughly 71 percent [of them] succeeded. The survey also found that sellers who paid commission rates 3 percent or lower were just as satisfied with their brokers’ performance as those who paid 6 percent or more, suggesting that haggling can’t hurt.”“Respondents who paid extra, in fact, were more likely to say they had regrets about the selling process. Nearly one-third said they should have been more assertive in negotiating their agent’s fee.”
“Paying less won’t hurt the quality of service. While some of the survey respondents who paid lower commissions got fewer services from their agents, the gap wasn’t significant. For example, 81 percent who paid 3 percent or less said the agent provided a competitive market analysis of their home, compared with 87 percent of people who paid 6 percent or more.”

My conclusion: Interview a couple of realtors and all other things being equal, why don’t you sell your home for a much lower fee and keep more of your equity in your own pocket?

Moderation in the Local Market Predicted

Following down below parts of a news release from the Okanagan Mainline Real Estate Board:

Sorrento, October 9, 2008:

The Shuswap Zone of the Okanagan Mainline Real Estate Board (OMREB) reported total sales dollars of all property types sold on the MLS® in September decreased by 46% compared to September 2007. Units sold were also down 34% over last year (82 units compared to 125 last September). The number of units listed on the Multiple Listing Service also declined by 14%
from last September (212 listings this month compared to 248 in September 2007). “Given all the recent global economic uncertainty, the latest sales and price figures in our local market are actually encouraging when compared to the troubling economic news we hear so much about.” said Bob Cliffe, OMREB Vice-President and REALTOR® in the Shuswap Zone. “This slow down has more to do with the cyclical nature of real estate. The moderation we are experiencing was predicted well over a year ago. Adding cautious buyers to the mix has added an extra variable which is putting some downward pressure on prices.”

Cliffe continued: “Today’s real estate market has a more normal stable environment where sellers can still realize a good return on their investment despite the more cautious and careful approach by buyers. Although the days of double digit price increases may have passed for now, whether you consider your home an investment asset or your valued possession; when you consider the current economic climate, real estate is proving a sound investment.”
The Shuswap Zone of OMREB includes the areas of Salmon Arm, Sicamous, Sorrento, North Shuswap and east along Hwy 1 to Revelstoke.

Right time to buy?

Is this the right time to buy? In my opinion it is! Some buyers argue that when early Spring comes, there will be more homes up for sale. More homes means more choice. Although that's true, I believe that since inventory is still high right now, there are many listings to choose from. And often, Sellers that keep their homes on the market during Winter are motivated sellers. Hence 2 good reasons to buy now!