The Toronto Real Estate Market Blog

How Much Home Insurance Do You Need in Toronto?

noreply@blogger.com (Toronto Real Estate) — Tue, 27 Apr 2010 03:07:00 +0000

Even though home insurance adds an extra expense to buying a home in Toronto that you have to pay on your own, it is essential that you have a policy in place. The final mortgage documents cannot be signed without proof of such a policy. Some Toronto homes owners try to cut down on this expense by having the minimum amount of insurance, but this is not a very good idea. The point of having such insurance is that if your Toronto home is completely destroyed, you will receive enough money from the insurance to pay off the balance of your mortgage. This is the least amount of coverage required by the lender, but in most cases, you will need to have coverage that exceeds this amount.

A home owner’s insurance policy covers the cost of replacing the basic structure of the home. The contents of the home, such as your furniture and belongings, are automatically covered under the policy, but for a percentage, usually 50%, of the amount of coverage you have on the structure. There are many different factors you need to take into consideration when you are determining how much insurance you need.

The amount of your mortgage may be less than the actual value of your home. To be sure you have enough coverage in this regard, you should contact a builder in your area to inquire about the approximate cost of rebuilding your home. This will give you a good idea of how much insurance you need to have on the structure.

Make a list of your belongings, which include your clothing, furniture, electronics and jewellery, and the price that you paid for each one. Total this amount to see whether half the amount of coverage on your home would be enough to replace all these items if they are lost. This amount may tell you that you need to increase the overall amount of coverage.

When taking out a home insurance policy, you should also look for replacement cost as part of the policy. This is important in that if your Toronto home is destroyed you will get the amount of money you need to purchase the articles again. Without this in place, you will only get a percentage of the value because of depreciation in value of your belongings.

You need to make sure that there is a provision in your home insurance policy that will cover your living expenses if your Toronto home is completely destroyed or if you are unable to live in the home while repairs are being carried out. This provision will cover accommodation and meals during this period of time. Without this provision, you will have these added expenses in addition to still making your mortgage payment.

There is liability coverage built into a standard homeowner’s policy, as well. If someone gets injured while on your property, this insurance will pay the medical expenses of the injured person and if you are sued for damages, it will pay the court costs. You should not scrimp on this aspect because the average lawsuit for such damages today is over $1 million.

Look at potential risks that exist in your area. You may want to take out flood insurance, which is an extra insurance policy, if you live in an area where floods are common. Having enough home insurance is essential to protect you and your family if disaster should happen to strike. It gives you peace of mind, letting home owners enjoy their Toronto homes..

An Explanation of Closing Costs and Points When Buying a Toronto Home

noreply@blogger.com (Toronto Real Estate) — Sat, 17 Apr 2010 16:49:00 +0000

If you have little or no experience in buying a home in Toronto, you may find the aspect of closing costs and points very confusing. Even those who have bought and sold Toronto Homes in the past have a very limited understanding of this part of the process. Some are not even sure of the actual extent of the costs involved.

The term “closing costs” refers to the fees that a lender requires you to pay before the mortgage documents can be finalized giving you ownership of the Toronto home. They amount to a percentage of the amount of money that you borrow – usually between 3% and 5%. This cannot be confused with the amount of down payment you make – it is an additional cost that you must factor into your finances. There are various components of this aspect of buying, which include:

1. The Application Fee. This is a fee charged by the lender in order to cover the administration costs of processing your loan application. Lenders have to pay a charge when they request your credit report and they may or may not pass this cost on to you in the fees. Another aspect of the application fee is called the loan origination fee, which many lenders refer to as points. Each point represents 1% of the total amount of your mortgage.

You do have options with regard to the points, such as purchasing without points. However, taking this option will mean that you will have to pay a higher rate of interest on the loan. Depending on the lender you choose, you may also have the option of paying additional points in order to obtain a lower interest rate than the one quoted to you.

2. Title Insurance. The Toronto lender will require you to take out title insurance as a protection for both you and the lender. This will protect you in the event that it is discovered that the seller did not legally have the right to sell the property. In the title search, it is possible that some owners of the property may not turn up in the search or a creditor may have a lien placed on the property due to unpaid debts of the seller. Any of these would prevent the sale of the property from going through. Without such insurance, you would still be liable for repayment of the mortgage.

3. Toronto Home Appraisal. In order to determine that the home in Toronto that you want to buy is actually worth the selling price, lenders require you to have a home appraisal carried out. Many lenders in Toronto have their own appraisers for this reason and will include the cost in the amount of your mortgage. You can also undertake the task of hiring your own appraiser and paying the cost on your own.

4. Toronto Home Inspection. While lenders do not require a Toronto home inspection report, it is good advice for you to request one. Through such an inspection, the inspector will determine whether or not there are any problems with the home, such as structural damage, problems with the electrical or problems with the roof that would cost you money after you take possession of the home. You can, however, have the costs of this appraisal included with your closing costs.

5. Toronto Home Insurance. You will not be able to sign the final mortgage documents without providing proof that you have a homeowner’s insurance in place. Depending on the requirements of the lender, you may have to pay the premiums for the first year of the policy in full. This is a cost that you do have to pay for on your own and is rarely included in the amount of money that you can borrow.

6. Private Mortgage Insurance. The usual amount of down payment required by lenders is about 15% to 20% of the purchase price of the Toronto home. This is money that you must come up with on your own. Some lenders do have policies in place to make it easier for first-time home buyers by requiring only 5% of the price as a down payment. In this case you will have to take out private mortgage insurance, which the lender will arrange for you. This is insurance on the amount of the down payment so that the lender has protection just in case you default on the loan.

7. Taxes. One aspect of owning a home is the taxes that you must pay to the municipal authority. You can have the lender pay the property taxes for you on an annual basis and this will require you to pay an extra amount of money in each payment.

8. Legal Fees. Since a mortgage agreement is a legal document, you must acquire the services of a lawyer to represent you. The fees paid to the lawyer are included in the closing costs of a mortgage.

9. Interest. Once you sign the final mortgage documents, interest starts to accrue on the loan. Depending on the length of time between this date and the date of your first payment, you may have to pay the additional interest charges.

All the expenses associated with taking out a mortgage are considered to be closing costs. The points are charged by the lender and have an effect on the interest rate you pay on the money you borrow. When you have an understanding of this essential part of the Toronto homes buying process, you will be better prepared to meet the extra costs involved.

Renters in Toronto to Feel the Effects of the Housing Crisis

noreply@blogger.com (Toronto Real Estate) — Fri, 09 Apr 2010 20:37:00 +0000

The Toronto real estate market will have a devastating effect on homeowners and real estate investors and now this will start to trickle down to those who are renting in Toronto as well. Renters thought they were immune to the Toronto real estate crash because they had not committed to a mortgage and only had to worry about having the money for their rent each month. They figured that they were safe and had time to wait until the real estate market started to rebound before they could think about purchasing a home.

The problem that renters are facing is that while they do not have a mortgage payment to worry about their landlords do. A landlord with an adjustable rate mortgage now has higher monthly payments due to increased interest rates on the loan and in order to survive, he has no other choice but to raise the rent in order to meet the payment deadlines.

Some Toronto real estate has gone into foreclosure as a result of the landlords not being able to keep up with the mortgage payments or the rising property taxes. The result is that while renters may feel that they are safe in this economic climate, they could be evicted if this happens to the property they are renting. The eviction notice will give them 30 days to leave the property and this is not enough time to find other, suitable rental properties for them to live in. Thus, many Toronto renters who have been renting the same property for years and have come to regard it as home are finding themselves out on the street.

The rapidly rising rental rates have also had a serious impact on renters. These rates have risen all over the country but none so much as in San Francisco and New York. Seattle, which has so far evaded the worst of the effects of the housing market crash is also starting to see rental rates increase as have San Jose, Cleveland, San Bernardino and San Diego.

In areas where developers have not been able to construct apartment dwellings, such as in Seattle because of the Growth Management Plan the state has in place, there is a lack of rental properties available. Thus landlords can basically name their price for the apartments. In other areas, the demand for rental properties is more than the supply because homeowners who have had their homes repossessed through foreclosure are also looking for places to rent at reasonable prices.
The vacancy rate of rental properties has decreased more than 10% throughout the country. This indicates that there are more renters in the housing market now than there has been at any time in the past. According to the Census Bureau, the cost of renting has also risen about 14%.

The increase in the cost of renting is due to several factors. Many renters do want to eventually become real estate owners but are waiting out the recession in the hope that house prices will take a further drop allowing them to purchase Toronto real estate at prices below market value. Then when the Toronto real estate market does rebound, they will be well placed to make a profit on the sale because of the equity they have built up in the home. Many think that the real estate market has not yet hit rock bottom and when it does they will pounce of properties that are ripe for the picking.

Renters who would be buying real estate for the first time are also faced with tighter lending restrictions. Even though interest rates are down, lenders are requiring higher down payments, such as 20% of the purchase price. This amount of money is beyond the capability of many first time Toronto real estate buyers and they have to wait until their savings grow in order to meet these criteria. In the past, lenders were willing to approve mortgages for those with bad credit, but this option is no longer available. Now lenders scrutinize credit reports and want to deal with only those who have an excellent credit rating.

With Toronto real estate in the state that is in, there are fewer apartment buildings under construction. Builders, too, do not have access to the funding sources of the past few years and the few who do have the money to build are fearful of the Toronto real estate market as a whole.

Will Toronto Real Estate Buyers End Up in a Negative Mortgage Situation?

noreply@blogger.com (Toronto Real Estate) — Mon, 05 Apr 2010 20:58:00 +0000

When you go to buy a car in Toronto without having the loan on your current vehicle repaid in full, the lending institution will add the amount owing to the purchase price of the new car. This means that you actually owe more than the value of the car on the loan so that you are essentially paying off two vehicles rather than just one. This is what is called negative equity – you owe more than you would get if you were to see this new car as soon as you buy it and you would still owe money.

Many Toronto real estate buyers are now finding themselves in a similar situation but not because of the same circumstances. They did not buy new Toronto real estate and have the outstanding balance added to the new mortgage. It has occurred because the value of their real estate has fallen so that they now owe more for their real estate than they would get for it if they were to sell it at current Toronto real estate prices. The crash in the real estate market has created a drastic decline in the values of homes so that prices are way below what they were a few years ago.

This situation has also dramatically impacted the housing market in California and Florida. The majority of real estate owners in these states are finding themselves basically upside down on their mortgages and are in a negative situation. Most of them purchased real estate when prices were at their highest and interest rates on the mortgage loans were also high. In 2005-2006 real estate prices doubled and even tripled in some areas of these states, just as they did all across the country. As interest rates on adjustable rate mortgages started to rise when they were adjusted many homeowners were faced with impossible odds when they received their renewed statements and were unable to come up with the unusually high payment amounts.

There are homeowners in Toronto who are not encountering difficulty in making their payments on their mortgages even though the value of their real estate has decreased. Many of those locked into fixed rate mortgages that they could manage in their household budget and are still able to make their payments. These homeowners who are employed in areas of the economy not hit by the recession can feel safe in feeling that they can ride out this economic storm and enjoy higher equity in their Toronto real estate when the market starts to rebound. They are in a great place to make a profit on their real estate at this point in the future.

Others are not in this same secure situation, though. For those who have lost their source of income due to layoffs and job cuts, they have no choice but to try to sell their real estate and relocate to other areas where they can get employment. They are finding it increasingly difficult to sell their homes at current market prices because they will not even realize enough money from the sale to pay off their mortgage.

For homeowners faced with rising mortgage payments due to the increase in the APR, they are often left with no choice but to declare bankruptcy and allow the lender to proceed with a foreclosure of their real estate. Many of them have very little equity built up in their Toronto real estate due to the fact that relaxed lending practices allowed them to make little or no down payment on the purchase. Thus they have very little of the mortgage balance repaid and so are in a negative equity situation.

The decline in Toronto real estate prices also affects homeowner’s ability to take out home equity loans to help tide them through these difficult economic times. Because the real estate prices are lower, the amount of equity is also decreased which doesn’t give them a lot of leverage when looking for a loan. Lenders are also wary of the risks involved because it is possible that homeowners who are having difficulty keeping up with their payments may default on the mortgage and the home equity loan and so leave them at risk of losing even more money. The default rate has also risen on the number of people not repaying home equity loans, just as it has on the defaults on mortgages.

Lenders are also restricting the number of mortgages they approve and now require higher down payments. The typical amount is 20% of the purchase price of the home, which has closed the door on buying for many who would like to take advantage of lower prices.

How Can Real Estate Investors Protect Themselves in the Coming Toronto Real Estate Crash?

noreply@blogger.com (Toronto Real Estate) — Fri, 02 Apr 2010 05:21:00 +0000

Even though there was a real estate boom in Toronto 2005 - 2008, the beginnings of the current crash of the Toronto real estate market were starting to make themselves known given the amount of new condo supply coming online. The market started to crash in 2008 resulting in total devastation of most of the North American market in 2008 and bankruptcies of companies and individuals at a rate not seen since the Great Depression. Thousands of brokers, mortgage companies and real estate agencies have gone under as a result. As 2008 drew to a close, it was clear that the market was not going to rebound in the near future and foreclosures and loan defaults continue in 2009. The Toronto real estate industry, while slowing considerably for some time, made it through relatively unscathed.

While the news is full of doom and gloom about the housing market on a daily basis, and with Toronto real estate still doing well, there are still ways in which Toronto real estate buyers can protect themselves in the coming crumbling of Toronto real estate.

Take a close look at your mortgage to determine what type it is. Adjustable rate mortgages, which were once very attractive to buyers, are no longer the correct option to take. You may enjoy lower payments with the low interest rates right now but as the rate adjusts higher the monthly payments will also increase dramatically. The interest rates in Toronto at the present time are the lowest they have been in quite some time, so now is the best time to lock in the mortgage at a fixed rate. In this way you will know that no matter what changes occur in the interest rates on the market, your mortgage payments on your Toronto real estate will not increase.

Homeowners in Toronto who presently have their homes on the real estate market and are experiencing difficulty with the sale can make concessions in order to attract interested buyers. This includes lowering the price and offering to pay for a home inspection. There is a glut of homes on the market and the buyers are not so easy to convince as they once were. If everything is not to their satisfaction, they walk away from the real estate sale without a second thought.

You may also consider throwing in a few extras along with the house in order to make a sale. The draperies usually are part of the sale, but if you have rugs on the floor or artwork on the wall that the buyer really likes, you can include these articles in the sale of the home. Another option you have in helping you wait out the recession in the real estate market is to consider renting the home for the same price as you are paying for the mortgage.

However, buyers of Toronto real estate are at a disadvantage in the current state of the real estate market. Many who would have qualified for a mortgage in 2007 are now finding that they do not meet the lending criteria for such a loan. Lenders are wary of risking any more money in the Toronto housing market because they already have scores of loans in default and foreclosed properties that they are trying to sell. A first time homebuyer with an outstanding credit rating and a steady income may not even be able to take out a mortgage because the down payment requirements have changed. Lenders require a larger percentage of the purchase price as a down payment – the days of little or no money down in Toronto real estate are no more.

Toronto Fairing Well in the Real Estate Market Crash

noreply@blogger.com (Toronto Real Estate) — Tue, 30 Mar 2010 17:38:00 +0000

There has virtually been no area of North America left untouched by the real estate market crash which occurred in 2008. However, some areas are worse off than others depending on the number of new homes that were under construction and the prices at which these homes were selling for. On the other hand, Toronto real estate is making new highs. The housing market crash trickled down into other areas of the economy and affected numerous types of businesses. As a result many companies were forced to close laying off thousands of employees – the majority of which had mortgages that they now had no way of repaying without an income.

Whereas real estate in Toronto is still booming, Cleveland and Detroit are two of the hardest hit areas of the US because of the dependence of the residents on the jobs in the automotive sector. However, they are not alone and many cities all across the country are reporting huge increases in the number of foreclosed homes on the market, contrary to the red hot Toronto real estate market. Job loss and the inability to make mortgage payments are not the only reasons for these foreclosures, though. Rising property values in 2005 and 2006 meant that the property taxes on the homes also rose to never before seen amounts, which also occurred with Toronto real estate. Many homeowners were not able to pay the taxes and therefore the counties placed liens on the homes forcing them into foreclosure for back taxes. Thankfully this didn't happen in Toronto, but it could if the Toronto condo market implodes.

During the heyday of the housing market, home prices doubled and tripled in some areas. While Toronto real estate prices appreciated quite rapidly as well, the incrase in Toronto real estate prices was more moderate. Buyers were able to take advantage of relaxed lending restrictions and purchase a home with little or no down payment and take the mortgage out for lengthy terms, such as 35 and 40 years. As a result they had low mortgage payments and many took out adjustable rate mortgages to take advantage of lower interest rates.

Buying a home was available under the same lending regulations to those with bad credit as for those with good credit. Most of the mortgages approved during this boom were in the subprime and adjustable rate mortgage sector. When the markets began to fall, interest rates began to rise in an attempt to prop up a sagging market. When the renewal time came due on adjustable rate mortgages, homeowners who had this type of mortgage received statements for payments that had tripled in the amount owing each month. They were no longer able to make their payments and thus the homes were foreclosed on by the lenders.

As the high rate of defaults on loans and foreclosures started to rise, lenders found it difficult to secure funding in the real estate market and were unable to extend credit to companies. As a result, there were many bankruptcies and the layoffs compounded the disaster that was taking place in the real estate market. Those who could manage to keep up with their mortgage payments found that without a job they could no longer continue to do so.

The ten areas of the country that have been most affected by the crisis in the housing market are Sacramento, New Orleans, Detroit, Riverside-San Bernardino, Las Vegas, Tampa, Miami, Cleveland, Phoenix and Jacksonville, Florida. The price of real estate in Sacramento has fallen at a rate well above the national average so that homes have lost a tremendous amount of value on the market in this city. Even with this amazing drop in house prices, the real estate in Sacramento still remain well above that of most other cities in the country or even in the state of California. Most of these homes are foreclosures, which does not bode well for the housing market in the future.

Detroit is the city named as having been affected the most in the real estate crash. The prices of homes have dropped 7% in the last year due to the huge numbers of foreclosures with people losing their jobs in the automotive sector of the economy. This city played a significant role in this industry and when it, too, started to suffer from the slumping market, it was the first to feel the real effects of it. In Cleveland, another important auto-making city, conditions are not much better.

The housing market is not expected to bounce back to its former glory any time soon, but there is a glimmer of hope. If the Toronto market has rebounded so quickly, could Toronto be the real estate market that leads North American real estate prices higher after the worst real estate crash in history?

Use Your Imagination When Selling in the Coming Toronto Real Estate Bust

noreply@blogger.com (Toronto Real Estate) — Thu, 25 Mar 2010 17:04:00 +0000

The Toronto real estate market was booming in 2005 and 2006, but it wasn’t long before cracks started to appear showing that this Toronto real estate bubble was about to burst. Toronto home prices have always gone through cycles with prices being up and down during different times. The real estate crash that occurred in this market in late 2007 and into 2008 was unprecedented in recent times and took the majority of people in the Toronto real estate industry by surprise. There have been crashes in Toronto housing prices before, but nothing like we are experiencing right now and many people are very concerned.

Real estate sales are down in spite of the lower prices and interest rates. Those who would like to take advantage of the situation are either waiting to see whether prices will decline even further or are having difficulty obtaining the financing they need due to lenders being more cautious about whom they approve mortgages for. This means that sellers who do want to sell their Toronto home within a reasonable time frame have to very creative in coming up with ways to make their properties more attractive than others.

This is a buyers’ market and they are looking for concessions. With so many homes on the Toronto real estate market, they have plenty of homes to choose from and can take their time. In the Toronto real estate market crash that occurred in the early 1990’s, many sellers offered to pay the closing costs of the transaction. This saved the buyer money in that the seller took care of the legal and administrative costs that the buyer would have had to pay on his own or have added to the mortgage. In some areas, sellers are desperate to sell and are offering all kinds of concessions, which has forced lenders to put restrictions on what they can provide for the buyer.

In the cases mentioned above, you may not be able to offer to pay the closing costs for the buyer. Therefore, you have to come up with other creative ways of attracting buyers for Toronto real estate. In any sale, buyers always offer less than the asking price with the idea that all homes are priced in order to negotiate a lower price. At one time it was standard practice to raise the price at first and then have room to come down, but this practice is not feasible in this current market. You can use it though if you do want to offer concessions to the buyer in the form of paying the closing costs.

By asking a higher price and paying the closing costs for the buyer, you give money back to the buyer when the transaction is complete. Buyers like this option because they actually get cash in their hands with which they can buy new furniture or even have some money to put away to help with paying the mortgage. The way in which this works is that you add on the cost of closing to the price of the home, which usually amounts to 3% of the purchase price. Instead of asking $175,000 for your home, the purchase price would be $180, 250 to allow for the $5250 in closing costs. When the deal is complete, you give the buyer $5250 in cash.

There is a disadvantage to using this creative tactic to help sell real estate in Toronto. Lenders will only approve a mortgage to those who do qualify if the home is appraised and valued at or above the asking price. In order to include the closing costs into the purchase price, you do need to make sure your home is valued for that amount on the Toronto real estate market. The buyer must also understand that having this additional cost in their mortgage will mean that their mortgage payments will be higher.

In the current recession in Toronto real estate, very few sellers are willing to make concessions to buyers because the prices at which they can sell their homes are lower than they would like. They want to sell their homes for the most money possible in order to repay their mortgage and still make even the smallest profit. At the same time, a home that is just sitting on the market in Toronto month after month is costing you money in that you still have to make the mortgage payments and taxes on the home. It may be a better idea to sell at a lower price than you would like than to take the chance of losing the home through foreclosure. But, it's best to always check with a qualified Toronto real estate agent before making any decisions.

Falling Real Estate Prices – Rising Property Taxes

noreply@blogger.com (Toronto Real Estate) — Tue, 23 Mar 2010 14:39:00 +0000

With the coming crash of the Toronto real estate market in 2011, Toronto homeowners will realize decreasing values in their homes in spite of the amount of money they owed on their mortgages. Many in Toronto assumed that this drop in real estate values would be accompanied by a drop in property taxes. To their dismay this did not follow so that although the value of the home was less on the market, the amount of property taxes either stayed the same or increased.

Homeowners traditionally thought that the amount of property taxes they had to pay on an annual basis was closely tied to the market value of their home. So when they received their bills, they were shocked to find that this was not the case. Many of them found that the taxes had actually risen a lot higher than they expected and of course, they had many questions about how this could happen.

Due to the crash of the Toronto real estate industry and layoffs in all sectors of the economy, the number of loan defaults and foreclosures rose sharply in 2011. As a result, counties all over the country found themselves in a deficit situation due to unpaid property taxes. The Greater Toronto area, for example, is one of these hard hit regions of the country where the housing prices have declined to an all-time low. Jobs are at a premium and there are massive numbers of people who have lost their jobs due to the downturn in the economy, particularly the automotive sector. This is one of the main reasons for the crash of the real estate industry in Toronto, as in others.

Foreclosures do not always result from Toronto real estate owners not being able to make their monthly mortgage payments. Municipal governments can foreclose on real estate for unpaid taxes when a homeowner has not paid the property tax bill for three consecutive years. The county has the right to foreclose on the real estate and sell it at auction for the amount of back taxes owing on the property. There are millions of dollars owed in back taxes in the Greater Toronto area, and this had a significant effect on the number of real estate foreclosures on the market and on auction.

There are steps a Toronto homeowner can take once he/she realizes that there are serious arrears in property taxes. Instead of making the payment in one annual lump sum, you can make regular payments on this account, just as you can with a loan or a credit card. The problem arises when homeowners do not realize that if they contact the county to make payment arrangements, they are not considered in default. As a result, they choose to ignore the statements and pay nothing at all.

If you cannot pay all of your real estate taxes when you receive your annual statement, you do have the option of making a partial payment. This is better than ignoring the situation, which will only get worse as time goes on. If you are in arrears, taking steps to pay off the oldest tax accounts will enable you to keep your home and avoid foreclosure by the county.

You may be eligible for an extension on unpaid property taxes, but you do have to contact the city of Toronto in order to find this information. For example, if you can demonstrate that you are experiencing extreme financial hardship, you may be exempt from the taxes. Instead of waiting until it is too late, it is best to contact the city as soon as possible to apply for extensions and exemptions because there are deadlines for the applications.

It is also possible that your bank or mortgage company offers a program to help you with paying your property taxes on time. Some Toronto real estate owners have this included as part of the mortgage payment and the lending institution receives the bill and takes charge of paying it in full. You don’t even realize that you are paying your taxes and any overpayment remains in the account for next year’s property taxes.

Toronto banks do not want the city to foreclose on homes that they have mortgaged in order to collect back taxes. Therefore, the lender will likely be able to work with you to find a solution to the problem, such as giving you a loan to repay the taxes. Either way, whether you pay the taxes through monthly payments or take out a loan for the payment, you will be incurring additional debt.

Protection for Investors in the Current Toronto Real Estate Crisis

noreply@blogger.com (Toronto Real Estate) — Tue, 16 Mar 2010 14:29:00 +0000

The real estate crash of 2011 will hit everyone hard – homeowners as well as Toronto real estate investors. Anyone who has spent time researching the Toronto real estate industry over time will see that this industry has gone through cyclical patterns in the past where real estate prices rose, fell and rose again. Although the news may seem depressing, there is still room for optimism for anyone interested in getting involved with investing in Toronto real estate. It is important, though, that you do proceed with caution in order to avoid losing, rather than making, money on your investment.

The first step in becoming a Toronto real estate investor is to have an investment strategy that is based on the current real estate market and the prices. You also need to be able to adapt your strategy as market conditions change, which could be quite often. You do have to realize that the market is in a slump at the present time, but the idea behind investing right now is to make a profit when the market starts to rebound. Wise investment is the keyword that you have to keep in mind.

Experts advise that the best strategy for investing in Toronto real estate is to focus on the best areas in Toronto in which you want to buy houses. These are the areas that will be the first to rebound when prices start to rise because they are in prime locations and will attract the most buyers. You choose a property in this area and when the prices start to rise you can choose to put it on the market, sell it and use the money you realize from the sale to buy another property. If you are wary about purchasing property right now if you are not interested in renting it during the interim, then you should wait until just before property prices start to peak again before you buy.

One of the things you have to keep in mind is the type of property you buy. There is no doubt that you can make money by purchasing real estate that needs improvements, you do have to set a budget for this expense. Calculate the cost of buying the home and the cost of improvements and renovations to help you make an informed decision about whether it would be feasible to invest at the present time. During the current economic downturn it probably does not make good financial sense to invest in property that needs substantial renovations.

Take a look at real estate trends of the past to gain information about its cyclical nature. This will help you decide when would be the right time for you to start or restart investing. You also have to be aware of supply and demand. This can also determine your investment because if there are homes for sale at cheap prices but not a lot of buyers because the majority of people are first time home buyers and probably don’t meet the lending requirements, you could think of buying the property and renting it for the amount of your mortgage payment. In this way you have your payments covered and when the time is right you will realize an even greater profit.
Balancing your Toronto real estate investments is also important. This means that you should not have all of your money tied up in real estate and that you do have areas of your portfolio that are making money. Gains in one area will make up for losses in another.

One of the major mistakes beginning Toronto real estate investors make is that when they don’t have the capital needed to buy property, they mortgage their own home in order to proceed with the purchase. You should never put your primary residence at risk in order to invest in more real estate. If you do this, you will be putting your own family at risk if you find that you cannot sell or rent this second house.

Tips for Investors During the Current Toronto Real Estate Crisis

noreply@blogger.com (Toronto Real Estate) — Fri, 12 Mar 2010 20:54:00 +0000

During the Toronto real estate boom of 2004-2010 and the relaxed lending practices of mortgage lenders, many people started investing in real estate as a way of making a quick dollar. Now many of these investors, especially those new to this type of investment, are very frightened with the Toronto real estate crash that has occurred and is still continuing today. A sliding market is very stressful, but when it crashes, it can be devastating. Novice investors, as well as veterans in this field, are looking to experts for advice as to how they can weather the storm and be still in the market when Toronto real estate prices start to rebound.

Investors in Toronto real estate should be prepared for the result that some of them will not survive this market crash and there are very few who will survive it unscathed. The first thing that many investors did when the market started on its downward slide was to sell off their properties at a loss or for very little profit in order to avoid being totally ruined. If you want to be successful in Toronto real estate investing, you have to be prepared to wait it out and stick with the real estate in the bad times because it is not going to be good all the time.

The commonly asked questions by new investors at this time concern how to deal with a downturn in the market and how to manage to wait out the housing recession. The first advice experts will give you is not to put your property on the market at this time. This is because property values in Toronto have fallen at a dramatic rate and it is unlikely you will get what you paid for it. Potential real estate buyers in Toronto will not even entertain the thought of buying a house that is priced over its value on the market. The best thing for investors to do right now is to hold on to the properties and wait until the market starts to rebound and prices rise.

Research of the Toronto real estate market shows that there have always been cyclical trends. The market has been high and then sinks to a low, only to rise again a few years later. The length of time it takes the market to rebound have varied in the past and no one can predict with any accuracy when this one will start to show signs of rebounding. Experts do predict that it will be in 2013 or 2014.

Many investors in Toronto real estate try to unload their properties on the market when prices start to decline. They have fears that the prices will go even lower leaving them with an albatross around their neck. This is quite possible because the market has to hit rock bottom before it starts to climb again. The Toronto real estate market is not showing any signs of rebounding just yet and house prices are still decreasing. This is probably because the market is glutted with homeowners selling to repay their mortgages and the foreclosures on the market. There are also fewer buyers than there were a few years ago.

The decision to put a home for sale is often made in haste and is not well thought out. Some investors have had to scrimp and save to pay the closing costs of the deal when they sold a property just to get rid of it not even realizing enough profit from the sale to cover this cost. You do have to factor in all possible costs when you decide you want to sell and get out of Toronto real estate investing.

Many investors in Toronto who do want to sell the properties they already have must now do so at a loss. For some it is very troubling that they cannot even get enough money to cover the outstanding balance of the mortgage they took out to purchase the property. Selling a property at a loss is not a wise financial decision, but you do what you must in order to avoid foreclosure. Such a move will wipe out any profits you have made in the past.

The alternative to selling at a loss or to break even is to hold on to the property and try to wait out the Toronto real estate crash. Renting out the property is a possibility, especially with so many former Toronto homeowners looking for housing and potential first time home buyers who have been locked out of the market by the stringent lending conditions for mortgages that are now in place. Everyone needs a home and if you can collect rent that is close to or equal to the amount of your mortgage payment you should be able to bide your time.

You do need to still have access to cash and this may be difficult to do when you are facing a massive loss on your Toronto real estate investment. One thing you can do if you decide to rent is to ask a higher price than the mortgage payment and put this aside for a rainy day – such as a time when you do not have any renters to make the payment. This extra money can help to cushion the blow of house prices in Toronto falling even further and allow you to come out on the other side when the Toronto real estate market rebounds.

How to Sell Your Home During the Toronto Real Estate Crash

noreply@blogger.com (Toronto Real Estate) — Tue, 09 Mar 2010 19:21:00 +0000

With the downturn in the Toronto real estate market there is a glut of homes on the market in Toronto that are not selling even though the prices are really down compared to what they were a few years ago. While some regions of Toronto are faring better than others, experts are recommending that if you are planning on selling real estate, it is best to try to wait out the recession before placing your home or condo on the market. In most parts of the Toronto, the real estate market is glutted with foreclosed homes and prices have not yet started to stabilize.

It is expected that the Toronto real estate crash will continue to be felt well into 2012 and the prices of real estate will go even lower before they start to rise. No one knows when this stabilization will occur and it would make sense to sell now when prices may start to rise at any time. However, some sellers are not in a position to wait and need to sell their homes now. So many are facing real estate foreclosure as a result of not being able to make their mortgage payments due to the increases in the amount of the payment and job loss which means they must relocate to find work, that they have no choice but to try to sell their homes at the peak of the Toronto real estate crash.

Despite the bad news surrounding Toronto real estate, there are homes that are selling. Therefore it is vital that you do all that you can to make your property as attractive as possible to draw in interested real estate buyers. This does not mean you should shell out a lot of money in doing renovations on your home because this will only cost you money that you may not be able to recoup in the sale.

Today’s buyers in Toronto are attracted to the low home prices, which combined with the low interest rates will give them a great real estate investment property at an amazing price. When they inspect your home they want to see a clean home and one that is decluttered. Before you open your home to buyers, you should take extra care in cleaning the floors, walls and draperies. The exterior of the home should be clean and presentable as well.

If you feel that you do need to make improvements to your home in order to sell it, your best bet is to look at the most cost-effective improvements. In some cases it is quite inexpensive to replace old carpeting with laminate flooring. Search the sales of home improvement stores in Toronto to find the best deals on the materials that you need. A professional in Toronto will be able to give you valuable advice as to the type of upgrades that you can do and not cost you a lot of money in the process. If you can do the upgrades yourself, you will also save yourself money in the process. A simple coat of paint can do wonders to a room that looks like it has seen better days.

When staging your home for a sale, it is important to look at the curb appeal. The exterior of the home is the first view of it that Toronto buyers have and if this is not up to standard they may not even walk through the doors. Making sure that the lawn in mowed, the leaves raked and the flower beds tended will make the property attractive. Fix any defects in windows, doors and siding and make the entrance to your home as inviting as possible.

Kitchens are one of the areas of a home that receive the most attention from real estate buyers. It costs very little to enhance this room with new stain or varnish on the cabinetry and making the room seem as large as possible. It is not advisable to invest in new appliances because this is a costly venture.

Since most buyers in Toronto want a home inspection of the home in order to determine that it is a good buy, you might want to consider having one of these done on your own so that it is available for the buyer. This is a sort of concession for the buyer in that he/she doesn’t have to pay to have one carried out. Usually home inspections were not carried out until an offer was made on the real estate property, but having an inspection in place will go a long ways toward selling your home in Toronto.

Better to Rent Than Buy Real Estate in Toronto Right Now

noreply@blogger.com (Toronto Real Estate) — Sun, 07 Mar 2010 06:46:00 +0000

How quickly times change! Just a few years ago Toronto financial experts were advising renters to start looking into the Toronto real estate market to buy their own home so that they could invest what they were paying in rent into equity of their own. Today, it is truly a renter’s market and real estate experts are advising that it is better to rent than buy during the current economic climate and radical downturn in the Toronto real estate market.

Consumers in Toronto are realizing this fact as well and that financially they are better off renting rather than taking out a large loan. This is especially true of those working in areas of Toronto where the future of jobs may be uncertain. At least with renting if you do lose your job, you don’t have a high mortgage payment hanging over your head and you can always look around for cheaper accommodations. There are still many areas in which rent is much cheaper than that of a mortgage payment – often as much as 40% or 50% less.

The reasons for cheap rent in Toronto and many areas of the country is that buyers who did purchase homes when real estate prices were at their highest are now realizing that in order to avoid foreclosure or encountering difficulties with trying to sell the real estate at a lower price, they are able to find renters for the properties. In many cases they are able to get the amount of the mortgage in the rent they collect each month.

In most cases, in order to come out on top when selling Toronto real estate, the homeowner has to realize the same amount as the purchase price and consumers are not willing to invest large amounts of money into a crumbling market. Those who are renting are unwilling, and rightly so, to buy Toronto real estate that is priced far above the value of the home on the real estate market.

Many renters in Toronto are finding it increasingly difficult to meet the criteria of lenders in order to obtain approval for a mortgage today. Even if they are able to obtain a mortgage, most are realizing that it is more beneficial to rent even if they are paying the homeowner’s mortgage. This is because by renting you are not responsible for paying the property taxes associated with the home nor are you responsible for paying for any problems that arise, such as leaks or replacing windows.

Some who are currently renting and aspire to owning their own home some day are holding off because they feel that Toronto Real Estate prices have not reached their lowest level just yet. There is a fear in the real estate market that buying a home at the prices of today may not be the best option if house prices continue to decline. This would leave them with negative equity in that they would owe more on the mortgage than the house is actually worth on the market. They are being cautious and taking a wait and see attitude before taking the plunge with a mortgage.

There are areas of Toronto and the country where there are not enough rental units available, but at the same time there are areas where there is an abundance of units. These are not just apartment buildings because those who invested heavily into Toronto real estate in recent year see the wisdom of renting out the large homes in an effort to see some income from their real estate investments. They know that to sell at the present time will bring them a loss and so they rent out the homes. However, the mortgage payment on the properties is sometimes higher than what the average renter is willing to pay or can afford to pay. This means that some investors and homeowners do have to take a loss on the rent in order to keep the property solvent until the market starts to stabilize and Toronto real estate prices start to rise.

New Divorce Trends as a Result of the Real Estate Market

noreply@blogger.com (Toronto Real Estate) — Mon, 01 Mar 2010 00:44:00 +0000

The crisis in the mortgage and Toronto real estate industry makes headlines every day in the newspapers and the news on TV and radio. Some areas of Toronto have not been touched by the real estate crisis, while others have been devastated. Even those areas yet untouched have been affected by falling real estate prices and a higher than normal rate of foreclosures. Few homeowners in Toronto have not felt the credit crunch of the recession in some form. Families are having to face the fact that they will lose their homes and have to move out and this causes tension in the household. As a result the number of divorces in Toronto is up as a result of the crash.

When couples divorce in Toronto they usually sell the real estate and divide the proceeds between them. The real estate crash is having an effect on this because the houses that once sold rather quickly are now not selling at all. The cash they had looked forward to using to help them get on with their lives is not forthcoming and this puts a strain on both partners as they try to lead separate lives. It does dictate where and how they are able to live once the divorce is finalized. It also plays a major role in the amount of child support one spouse is able to pay in spite of the agreed upon amount.

The crash in the Toronto real estate market has led to a new trend for couples who have recently divorced. This is called post-marital cohabitation and it means that the couple continue to live in the same house after the divorce. This was unheard of until recently, but the real estate market and finances have forced couples to look at this option until the home is sold. Many of them have no choice but to continue to live in the family home until such time a buyer in Toronto comes along with an acceptable bid. They simply cannot afford to let the house it empty while they rent and they certainly can’t afford to let the lender foreclose on the home because then they won’t get any money from the sale.

Many newly divorced couples are now finding that in order to survive after divorce they do have to live together for at least several months or longer afterwards. Whether they have young children or are an older couple there is no doubt that this is a stressful situation for all involved. For divorced families with children, it is likely that any rental properties that are within their financial reach are too small for the size of the families or are in areas not conducive to children. If the situation becomes too unbearable, many former spouses have resorted to moving in with friends or family members.

The Toronto real estate crash has limited the options once open to divorced couples. In many cases the value of the home has fallen significantly and they will not realize enough money from the sale to be able to go one with their lives. This leaves them no other option but to remain living in the home until the real estate market starts to turn around. They can also decide to cut their losses and sell the home for the amount owing on the mortgage just to be able to separate fully.

In some areas in Toronto, this situation has led to court action and the judge is the one to make the final decision on what the divorced couple should do next. This has occurred in some situations where one partner wishes to remain in the home until such time as it is sold at a reasonable price and the other wants to sell immediately no matter what the loss may be. Judges are hesitant to order the home sold and the partner to move out because it is possible that Toronto real estate prices may rebound and the house will sell at a very good price.

What Caused the Toronto Real Estate Crash of 2008?

noreply@blogger.com (Toronto Real Estate) — Wed, 24 Feb 2010 09:57:00 +0000

When the Toronto real estate prices came crashing down in 2008 there were many people who were astounded that this kind of thing could happen in this day and age. However, there were many others who were not surprised by the events and had, indeed, been predicting that this very think would eventually happen.

The loss of the subprime market has been held as one of the leading causes of the real estate market crash. Sub-prime mortgages were approved at an amazing rate by all mortgage lenders. Such loans involved using lending practices that put the lenders in a higher risk category, such as lending more money to borrowers to buy real estate than they really could afford, offering deals on the amounts of down payment required and offering loans at lower than standard interest rates. As a result, many of the major lending institutions found themselves in a credit crunch with many of the borrowers unable to meet their payment obligations. Companies were forced to declare bankruptcy putting millions of people out of work and forcing the lenders to foreclose on the mortgaged real estate.

The crash of the sub-prime mortgage industry has been the focus of news reports for the past year in Toronto and elsewhere. While millions of Toronto homeowners have been affected, no one is quite certain as to the initial cause of this real estate downturn.

The Toronto real estate industry was a gold mine for investors in the past number of years. One could purchase a property, make a few renovations and resell it for a sizable profit. Even those with poor credit ratings could afford to purchase a home or condo in Toronto. This is because the restrictions on lending were more relaxed in an effort to entice more buyers into the real estate market. Lenders were able to make a killing by approving mortgages for those with bad credit by charging high rates of interest on the loan. The lenders believed that they would make a profit while the borrower was making the payments and if the time came when they had to foreclose, they would make an even larger profit on the resale with real estate prices continually rising.

The source of the funding used by lenders in order to offer these mortgages was varied. Due to low interest rates offered between banks, lenders were able to secure funding at a low rate of interest and then charge a higher rate when they approved mortgages for their customers. The real estate market remained stable and there was a boom in new real estate construction all over Toronto. Instead of the normal 20 or 25 year mortgages, consumers were taking out mortgages for 35 and 40 years in order to have manageable payments each month.

Toronto homeowners were taking on massive amounts of debt in order to own their own home and get out of the cycle of renting. The real estate market was healthy and everyone expected that it would continue to be a very profitable sector of the economy. It appears now that in hindsight such expectations were very unrealistic.
2005 and 2006 were boom years for the real estate sector. Lenders approved mortgages for virtually anyone that applied making it very lucrative for them financially. However, the start of problems occurred when the previously low interest rates offered to lenders started to rise and this had a negative effect in that their profits started to decrease dramatically in a short period of time. Low interest rates spur spending whereas high interest rates deter spending on real estate.

Up until the middle of 2006, there was an unprecedented demand for new housing and real estate construction. Builders could not keep up with the orders, often having a wait list of customers waiting for homes to be built. Some real estate was sold before construction even started. The second half of 2006 saw this demand for real estate gradually starting to decrease and it was about the same time that the first increase in loan defaults became apparent in the Toronto real estate industry.

In 2007, lenders started to encounter difficulty obtaining funding for the mortgages they wanted to approve for customers. Since there was less money available, those who wished to become homeowners were finding that the doors were starting to close on easy financing. Wary investors developed stricter guidelines for mortgage lenders which led to the lenders tightening their own lending guidelines.

With rising interest rates on the market, Toronto homeowners who had taken out adjustable rate mortgages were faced with impossible monthly payments when the adjustment occurred on their mortgages. They found that they were unable to meet the unusually high payments required to keep their accounts in good standing and because of the new regulations, they were unable to refinance for fixed rate mortgages. More and more homeowners were left with no choice but to default on the loans and the number of foreclosures reached massive proportions.

Harder to Find Toronto Home Renovation and Home Equity Loans

noreply@blogger.com (Toronto Real Estate) — Wed, 17 Feb 2010 22:12:00 +0000

As a result of the crash in the Toronto housing market last year, fewer homeowners in Toronto are engaging in home renovations. You may think that this is a contradiction in that the more renovations done to a home, the easier it will be to sell. The problem is not that the homeowners don’t want to do renovations. It is that they do not have the money needed for these renovations.

Just a few years ago when house prices were on a tear in Toronto, a few simple renovations to a home would fetch a high price when the home went on the market. Due to the high prices many homeowners had a lot of equity built up in their homes, even without making a large down payment on the mortgage. They could easily obtain a home equity loan for up to 100% of the equity to carry out renovations. However, with the Toronto real estate market almost grinding to a halt last year, all these sources of funding for home renovations no longer exist. The falling values of homes means that many homeowners now find themselves in a negative equity situation, which means they owe more on the home than it is worth on the market.

During the housing boom of 2005 and 2006, millions of homes in Toronto went through upgrades and renovations, especially to the kitchen and bathroom areas of the home. New cupboards were installed with granite countertops, whirlpool tubs and home spas were installed and the flooring in both rooms was upgraded to laminate, hardwood or ceramic tile. High-end appliances, such as stainless steel stoves, fridges and dishwashers were all the rage. What was once a mediocre home became a luxury home on the market.

In most cases, when homeowners completed the renovations and sold the property, they were able to recoup the cost of the renovations in the price for which the home was sold. For many this was a great way to realize a profit at a low cost.

Today, the cost of renovations has skyrocketed and the materials needed to make upgrades are beyond the reach of many. With so much excess houses on the market, why would anyone want to invest time and money into renovations for a home that might not sell. If the homeowner is able to secure a home equity loan or a second mortgage, this will seriously cut into the finances in the extra monthly payment required. Those who have done renovations with an eye to making a profit are realizing that they are only recouping about 70% of the cost of renovations in the sale.

Homeowners in Toronto who are considering making upgrades to their homes hoping that this will give them a better deal in the price should take a second look at the state of the Toronto real estate market. It does not mean that you shouldn’t renovate, but it does mean that you should look at the cost of the materials and perhaps scale down the renovations. You shouldn’t go all out with the most expensive of everything, especially if you are planning on selling within the next three years. If so, you will incur a loss because you won’t get the price you need for the home in order to make a profit as a result of the upgrades.

Getting a home equity loan is not as easy as it was a few years back. Lenders now look closely at the credit rating of applicants and take the debt to income ratio more seriously than they did when lending restrictions were more relaxed. They are more wary of making risky approvals for fear of the homeowner defaulting on the loan or that the lender may have to foreclose on the property. Default rates and foreclosure rates as a result of home equity loans have doubled in the past year alone.

Consumers Benefit from a Renter’s Market in Toronto

noreply@blogger.com (Toronto Real Estate) — Sat, 13 Feb 2010 00:16:00 +0000

More and more consumers are recognizing that at least for right now they are better of financially renting than buying in Toronto. This is certainly a departure from the past when most consumers realized that the best financial option would be to buy rather than rent so that their money would go toward creating equity in a home.

Today that is no longer the case; however. While rents have continued to rise in many locations in Toronto, consumers are still finding they are often able to rent for less money than what they would pay for a monthly mortgage payment on a comparable property. In some cases, renters are able to save between 40% and 50% by renting instead of buying.

One of the reasons for this is that in some locations in Toronto, property values rose quite steeply. Today, buyers who snatched up those homes without blinking have discovered they must now sell. The problem? They need to sell the homes at the prices at which they purchased them two years ago to recoup the balance they owe on the mortgage. Renters just are not willing to pay more money than a home is worth.

Even renters who are able to qualify for mortgages just do not feel as though they are getting enough home for their money, especially when they can often rent a comparable or even larger home for less money.

As a result of the shifting market, many experts are quick to point out that today the Toronto real estate market is no longer a seller’s market and it is not really a buyer’s market either. Instead, it has become more of a renter’s market.

Other renters are holding off on the idea of buying because they are concerned that prices in Toronto real estate have not yet hit the lowest point. They are primarily concerned that if they purchase a home today it may not be worth the same amount just six months from now. They feel it is far more prudent to wait and see exactly where the housing market will land before they consider buying a home. Other renters are concerned about the upcoming hurricane season. Few have forgotten the hurricane season of just two years ago that devastated many areas. Homeowners in those areas, especially those without insurance, have yet to recover.

While some areas in Toronto are experiencing a deficit in supply of rental properties, in other areas homeowners have recognized the wisdom of holding off on selling their homes. They, too, are reluctant to sell their homes now when it seems more prudent to wait and see when the market will stabilize. To help make ends meet, many of these homeowners are willing to rent out their homes to the scores of renters lining up to take advantage of the opportunity. Even homes that are on the market for sale are also available for rent. While renters must accept the reality that the home in which they are living must be available for showings, they still feel the trade-off is quite worth it.

Would-be investors who attempted to get in on the quick profit potential of flipping homes have also discovered that it makes more sense to rent out their properties right now instead of trying to selling them. In some cases, investors are discovering they simply do not have any other options when they must meet mortgage payments every month and are unable to sell their properties. In some cases, this means renting the properties at a loss, creating a negative cash flow.

In fact, this situation has become so much of a problem that landlords in certain niche markets are finding they must cut rents in order to create even a small amount of cash flow. These investors have quickly discovered that it is far better to rent right away at a loss than wait several months to try and attain the amount of rent they really need. Although landlords are often upside down on most of these properties, renting them out has proven to be the safest method; at least for now.

Sell Your Home Faster in Toronto By Offering Concessions to Buyers

noreply@blogger.com (Toronto Real Estate) — Wed, 03 Feb 2010 15:39:00 +0000

Toronto homes are definitely not selling at the same rate they were a few years ago and in some areas, the Toronto real estate market has reached a stalemate. The market is crowded with excess inventory and many homes that would have been snapped up overnight are now languishing on the market for months on end. Depending on the home and its location, interested buyers bid against one another with the result that the purchase price was higher than the asking price.

Numerous investors became involved in Toronto real estate at this time due to the ease with which one could obtain a mortgage and the low rate of interest charged on the loans. Signs that the market was in difficulty did start to become evident in late 2007, but the bubble did burst entirely in 2008. Experts recommend that the situation will continue to get a lot worse. Many homeowners are getting very concerned about the situation and are wondering if there is anything they can do to protect themselves in the current market.

If you are one of the many homeowners faced with financial difficulties and have no option but to try to sell your home now, you will have to come up with very creative ways in order to do so. The market is full at the present time with an excess of homes for sale due to foreclosures, impending foreclosures and investors who are trying to recoup some of the money they have invested.

It is important that you recognize the fact that there is a glut of homes on the market. A few years ago it was a seller’s market with few properties for sale and an excess of buyers. Today the situation is reversed with more homes for sale than there are buyers in Toronto. Prices are lower and buyers can take their time in looking at properties and deciding which one they want to buy. This makes the market very competitive for sellers who do have to offer buyers something that will entice them inside and peak their interest.

Providing concessions for buyers is a new idea for sellers at the present time. During the 1980’s many sellers offered to pay the closing costs for the buyer, but in some cases the amount of the costs they can pay is limited depending on the lender the buyer is using for the mortgage. Some of the options you can consider in deciding to offer concessions is to include an allowance for the buyer for the purpose of upgrading the flooring or making a contribution towards the closing costs of the transaction.

Concessions were not a typical part of a selling transaction where both parties negotiated over the purchase price of the home. However, there is little negotiating taking place in the Toronto real estate market today because sellers are already selling their homes at the lowest possible price. You do need to offer the best possible price in order to entice buyers.

One method of offering concessions to buyers could include offering to include the draperies in the home if the buyer expresses interest in them. This can also include rugs and accessories in certain rooms of the home, such as an electric or gas fireplace, especially if you are moving to a smaller home and know that you will not have room for it. In the case of a seller who is moving to an apartment, throwing in the lawn mower is a concession that most buyers will jump at.

Another option would be to pay the buyer’s points, which is a win-win situation for both parties. One way in which you could do this is to deduct a percentage of the purchase price and use this money to purchase points for the buyer. In this way, the buyer can obtain a lower rate of interest on the mortgage and you manage to sell your home. The buyer wins with a lower monthly payment and you have enough money to pay off your mortgage.

5 Toronto Real Estate Flipping Don'ts

noreply@blogger.com (Toronto Real Estate) — Wed, 27 Jan 2010 23:06:00 +0000

Making money as a professional real estate flipper in Toronto is not easy but it can be done. If you plan to enter this risky business you will find many do’s as well as don’ts when it comes to this very specific niche within the Toronto real estate industry. Let’s look at some of the things you don’t want to do when it comes to flipping Toronto real estate as a successful business venture. You will find that this information can be useful to you whether or not you are a first time Toronto real estate flipper or have been doing this for quite some time.

1.Don’t buy in a neighborhood in Toronto that you haven’t checked out first – it is important to figure out whether or not the property you want to buy will fit nicely into the neighborhood once you are done with your real estate flip. Surveying the neighborhood will also help you figure out what repairs or changes will work best for what buyers seems to want in that area. Having a plan that considers the neighborhood and your target market in Toronto will help you sell your home faster at the end of the project.

2. Don’t blow your budget (if it can be avoided) – the budget you have put together is the one document that can make or break the real estate project if not strictly adhered to. Carefully monitoring your expenditures through the use of a budget in necessary if you plan on making any kind of profit. Keep in mind that the amount of money that you spend over what your budget called for is money that directly eats into revenue on the backend. Don’t forget that the goal is to spend the least amount and get the greatest return all while producing a quality finished product

3. Don’t overlook the importance of setting daily goals – Having a plan that you can work from is no good to you unless you break it down to determine what needs to occur day by day in order to finish on time and budget. Each day that you are unable to get the tasks done allotted for that day is another day you will have to sit on the property and incur those profit eating carrying costs. Religiously watch your plan and set daily goals of what works needs to be completed in order to finish on schedule. Doing this will save you from those delays that eat up profits.

4. Don’t forget about curb appeal – The exterior of the home is the first thing people in Toronto will see when they come up to your property as a prospective buyer. It would not be a good idea to spend all of your financial resources on the inside of the home while neglecting the exterior. A Toronto real estate buyer may never get to see the wonderful job you’ve done in bringing the inside of home back to life if the outside looks like a disaster.

5. Don’t spend unnecessary money – I’m sure you’d love to have granite counter tops in your own home, and they are lovely, but is this a necessary expense in a working class Toronto neighborhood where most buyers are okay with having quartz? You should never put money into a real estate flip that can’t be recouped at the time of sale. If you can update things instead of replacing them, do it. Paint cabinets instead of replacing them and re-glaze the bathtub instead of getting a new one; this is not a remodel, it is a flip.

Toronto real estate is an unpredictable market to begin with. Do what you can to do the right things while avoiding the wrong ones. The ideas listed here can help you avoid some of the common traps uninformed flippers in Toronto are known to make.

An Overview of Toronto Home Loans

noreply@blogger.com (Toronto Real Estate) — Wed, 20 Jan 2010 08:44:00 +0000

There are very few people in Toronto who have the monies available to be able to purchase a home without financing from a lender. Real estate loans are widely available from lenders to make the home buying process an easy one. These loans provide potential Toronto real estate buyers with a wide variety of opportunities in the types of homes and locations they can consider. However, when you decide that the time is right for you to purchase a new home in Toronto you can benefit greatly from becoming educated about the process of obtaining a home loan so that you will understand the paperwork, your discussions with the real estate agent and lender and be able to ask the right questions.

The main factor to consider when taking out a home loan is the interest rate charged by the lender. This will have an impact on the amount of your monthly payments and on the length of time it will take to repay the loan in full. Rates change according to the market and there are differences among lenders so it pays to shop around. The rates can also change without notice, which in turn could bring about an increase or a decrease in the amount of your payments.

The terms of the loan and the length of time it will take you to repay it are also important factors to consider. There is a variety of plans you can choose from no matter what lender you choose. The longer the term you choose, the lower your payments will be, but this will also mean that you pay more interest over the course of the repayment. Interest rates could also drop if you choose a longer term, which could work to your advantage if interest rates are high at the time you take out the loan.

Most Toronto mortgage lenders have a free mortgage calculator on their sites for you to use in order to calculate various terms and repayment options to find one that best suits your financial circumstances. By taking advantage of this tool, you will have a good idea of how much of a loan you can afford based on the monthly payments.

Lenders look at your ability to repay the money you borrow in a home loan when considering your application. You should take notice of restrictions the lender may have in place with regard to repaying the loan before the final due date. Some lenders will allow you to repay the loan in full at any time and others have a set amount you can overpay in any one year.

If you repay the loan before the term is up, you may have to pay a fee based on a percentage of your outstanding balance. This could be a substantial amount if you decide to sell your Toronto home in the early years of the term, which will cut into the amount of profit you realize from the sale.

One way of saving money and cutting down on the term of a real estate loan is to choose bi-weekly payments rather than monthly payments. The interest charged each month is based on your outstanding balance. By making payments every two weeks, you can shave years off the term of the loan and save money in the amount of interest you pay.

Make sure you understand the terms of the loan agreement so that there won’t be any misunderstandings in the future. In addition to scrutinizing the fine print of the loan documents, if you deal with a lender other than one of the major banks, you should research the company to make sure it is financially stable. Being prepared for a home loan is one of the best ways you can protect yourself and get the best possible rate and terms for the loan.