BUYING A FORECLOSURE Part 1: How Do I Find a Foreclosure?

fore·clo·sure/fôrˈklōZHər/ Noun: The process of taking possession of a mortgaged property as a result of someone’s failure to keep up mortgage payments.

Recently I’ve noticed a lot more Nanaimo real estate going into foreclosure.  There are a lot of different reasons why someone goes into foreclosure and we aren’t going to discuss that in this article.  We ARE going to discuss how you go about buying a foreclosure and more importantly the benefits and problems with purchasing one.

FINDING A FORECLOSURE:

Homes that are offered via court ordered sale are typically marketed just like any other home for sale.  Lenders will almost always hire a Nanaimo Realtor to list and market the home and they are all placed on the Multiple Listing Service (MLS).  If you’ve been looking on REALTOR.ca for properties you’ve probably come across a court ordered sale/foreclosure even though you weren’t specifically looking for one.  It’s important to note that there is NO master list of foreclosures.  Almost every time one is offered it’s simply a ploy to get your contact information or generate buyer inquiries for agents.  I don’t recommend to any of my clients that they specifically look for a foreclosure as there are very few available relative to the total listing inventory and there are some issues with purchasing via court ordered sale that we’ll discuss later.  That being said, if during our process of looking for a suitable home we find a foreclosure that works for their needs, I certainly wouldn’t tell the to shy away from offering on a court ordered sale.

BUYING A FORECLOSURE:

The early stages of purchasing a foreclosure home are very similar to buying a regular home.  You view the property, write an offer with subjects, get an accepted offer and then work towards removing those subjects.  The only differences are that your offer will be subject to court approval and your offer will contain a “Schedule A” which makes changes to the typically MLS contract of purchase and sale that are determined by the lender.  These can include, but are not limited to:

  • The property is sold “As is. Where is”
  • The seller (lender) cannot guarantee that the property will be in the same condition as when you last viewed it
  • No Property Disclosure Statement will be offered
  • The offer can be terminated at any time if the owner redeems all the money he owes

These clauses are VERY important and should not be taken lightly.  You should thoroughly read through the Schedule A and make sure you understand all of the changes it sets out.

Once you’ve done your due diligence and removed all of your conditions the offer that you have will still be subject to court approval and this is where the process changes dramatically.  We’ll discuss just how the process is changed next week in Part 2: The Court Process.

If you have any questions about Foreclosures or would like to add anything, please leave a comment below and share this with your friends.

See you in Part 2.

Matt Scheibel, REALTOR

www.mattanddoug.com

matt@mattanddoug.com

2012
04/19
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The 3 Reasons You Won’t Sell Your Home!

Contrary to popular belief there are only THREE reasons that your home won’t sell.  Everything that every tells you can be summarized into three categories.  When you’re thinking about selling your Nanaimo real estate, if you do not address these three issues you will not be able to find success in today’s competitive market.  It’s interesting to note that doing one of these things well may make the others slightly less important but they all need to be addressed to some affect.

1. PRICE:  This is the obvious one.  Like any service or product, most sales are dependent on accurate pricing.  You wouldn’t pay $10 for a loaf of bread.  You wouldn’t pay your accountant 10% of your annual income to do your taxes.  You wouldn’t pay $6 for a litre of gas (even though you may have to someday soon).  Real estate in Nanaimo is no different.  Pricing your home based on what similar homes in your neighborhood have sold for is the only sure fire way of making sure that you’ll hit your mark and get your home sold.  Over pricing is the single most common reason that over 50% of the homes listed in Nanaimo ARE NOT selling.

2. CONDITION:  Having your home show well is of paramount importance when trying to sell.  It’s important that your property feels like home to a prospective buyer so they can visualize themselves living in it.  The old saying “You never get a second chance to make a first impression” holds true when selling your home; therefore, your property should have curb appeal, feel warm and inviting, smell great and have the whole space defined so buyers can experience what it would be like to live there himself.  How would you react if you walked into a home and it was dirty, smelled like cigarettes or had icicles on the inside of the windows?  Other buyers don’t respond well to that either.

3. EXPOSURE: Often overlooked, exposure is critical when trying to sell your home.  Your home could be priced well below market value and be in immaculate condition but if nobody knows that it’s for sale, none of this matters.  Exposure will help potential buyers see how well your home is priced and through marketing efforts from your Realtor they’ll see the features of your home that will make them want to come see it.  People often look for homes in a variety of media: newspaper, internet, open houses, real estate agent recommendation, etc. so it’s important to make sure that your home is marketed in the most effective areas to get the best bang for your marketing buck.

There are countless strategies for addressing the three reasons your home won’t sell.  We address all of them to great lengths in our “Thinking of Selling?” information package.  If you’re considering making a move in the Nanaimo real estate market, then get your copy by emailing me today info@mattanddoug.com.

Thanks for your time!
Matt.

2012
04/13
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Buying Using a Real Estate Agent Costs You NOTHING!

One of the biggest misnomers regarding real estate agents is about the cost of using their services.  Not how much they get paid (which is also very over perceived) but actually what using an agent costs someone and mainly who ends up paying these costs.

Now it’s written in black and white that in Nanaimo a real estate agent can charge whatever fee he wants.  Not doing so would be anti competitive and illegal but some people are unclear of who actually pays these fees.  In our market the seller is responsible for paying both agents – the buyers’ and sellers’ agents – out of their proceeds of the sale.  As a buyer, there is absolutely no cost to using a REALTOR to purchase your next home.

There are plenty of arguments regarding using a real estate agent to sell your home including: who to use, what to pay them and whether you even need one.  We’re not looking to get into that today.  I’m simply making a point that, if a licensed Nanaimo real estate agent costs you nothing when you buy to use his market  knowledge, his training and heck even his car or gas, why would you as a buyer choose NOT to use one?

My dad and I personally will show any house for sale that we know of to a potential buyer.  We’ve sold “For Sale By Owner” homes, expired listings, discount brokerages’ listings and anything else you can imagine to buyers that we’ve worked with.  We’ve canvased neighborhoods, knocked on doors, mailed to entire regions trying to find a house for buyers of ours.  All costing our clients NOTHING!  There’s no sense in you pouring through Craigslist, Kijiji, newspapers and other antiquated real estate listings because we already have!  It’s our full time job to know what’s available and if a house is a “Great Deal!” then we’ve already told our clients about it and maybe even sold it.  We can do this All Night Long!

The good news is we can do it for you too.  Let us put our Buyer’s System to work for you today.  We do things that 99% of other agents don’t do to help you find the next “Screaming Deal” in Nanaimo real estate.  Find out why it works.  Email me today at info@mattanddoug.com.

Take Care,

Matt.

2012
04/02
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What Happens If You “Under Price” Your Home?

I was working with a Buyer a couple of weeks ago looking for a Home in Nanaimo and he’s in a very competitive lower price range.  Homes in his price range tend to sell very quickly when they are priced correctly simply because a lot of people can afford them and it’s rare to find a nice home in this price bracket.

Being the proactive and dedicated Nanaimo real estate agent that I am (shameless self promotion) I managed to find a home for him to view that had been listed by another agent but wasn’t going to be hitting the market for a day or so.  We managed to get in to look at the home right when the listing came on our MLS (literally the first hour).  I immediately told the buyer that I believe that they’ve “under-listed” the home and, therefore, it was probably worth more than they were asking.  The home was listed for $220,000 and i felt it was worth around $240,000.  There were comparable sales that supported what I thought and I urged him to make an offer ASAP which we did.

We were able to present the offer about 6 hours later (the home had been on the market 7 hours) and were informed that there were two other offers on the home from other buyers.  This is a whole different story but the gist of it is that all buyers make their highest possible offer and the best offer via sealed offers wins.  There are no counter offers; the seller just takes the best one.

Our offer was for $231,000.  That’s $11,000 more than the sellers were asking in the first place!  Why the heck would we do that, you ask?  Like I said before, I thought the house was worth around $240,000.  If you could get a $240,000 house fore $231,000 that’s a win in my books regardless of how you get it.  After a little deliberation the sellers actually accepted a DIFFERENT offer.  The sad conclusion is that the home sold for $235,500 in 8 hours on the market.

The moral of this story, actually, isn’t for buyers of Nanaimo real estate.  It’s for sellers.  Often sellers are concerned that they may be listing their homes for less than they think it’s worth.  Often times this is simply because most people place extra value on things they own and think they’re worth than the market actually dictates they are.  The important thing to learn from this is that it is the MARKET that determines what your home is worth not the listing price.  If you list your home too high, you won’t need to “leave some wiggle room” because you won’t get any showings, let alone any offers.  And even more importantly, if you list your house below market value, the market with bring you a plethora of buyers and the home just might sell for $15,500 or more over the asking price in a very very small amount of time.  That’s a lot less time cleaning, having strangers trudge through your home and having your neighbors ask why your house isn’t selling.

If you’d like to know what your home is worth in today’s market you can call us anytime 1 (800) 779-4966 or get a no hassle, no obligation FREE market evaluation of your home at www.FREENanaimoHomeValues.com.

Take Care,

Matt.

2011
11/09
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New Construction: When is the Listing Price Not the Listing Price?

 

I’ve recently spent a lot of time working on homes that are brand new construction both from the Buyers and Sellers end.  This poses two unique propositions that I’d like to discuss.

As some of you may have heard, new construction has been struggling in recent months due a lot to the unpredictability of the HST imposed July 1, 2010.  In marketing of brand new Nanaimo real estate this poses an issue.  There really is no standard for listing new homes for sale and the requisite pricing of these homes.  Some homes are being marketed including this tax.  But it’s important to know that there are rebates that operate on sliding scales and are very difficult to calculate.  These prices can
This makes it very difficult for a buyer looking for a home on REALTOR.ca or some other avenue to accurately compare prices of certain homes in new areas.  Is the home brand new?  Is HST applicable?  How big is my rebate?  Who is going to pay the rebate amount?  And we’re not talking about peanuts here.  On a $300,000 home the gross HST is 12% which is $36,000.  Your regular home buyer is going to get over half of that rebated back.  So some buyers think the home is $300,000 and some think it’s $336,000 when, in fact, both are probably incorrect.  still not include some HST if a buyer doesn’t qualify for rebates for various reasons.

The other major factors affecting pricing on new construction in Nanaimo are the extras or inclusions.  These can include:

  • Landscaping
  • Window Coverings
  • Appliances
  • Fencing
  • Finishing the Basement
  • Bathroom Mirrors
  • Closet Organizers
  • Garage Doors
The list is long and obscure.  I’ve seen all of the above be issues (even though you’re saying to yourself  ”Bathroom mirrors? Really?” … “REALLY!”)  A lot of times these aren’t addressed anywhere in the listing information.  Often times they can be negotiated in and sometimes they are already included.
With all of these variables, it’s critical to have an agent represent you who has experience on both ends when looking to purchase or sell new construction.  When buying, this will help you make an informed decision and save you money in the long run.  When selling, your listing is going to be clearly articulated and give potentially confused buyers all the right information to consider purchasing your home.
Our team has ample experience to help guide you through the buying or selling process of new construction with many sales of new condos, homes and lots in Nanaimo.  If you’d like the REAL price on a home you saw on MLS.ca then feel free to give us an email info@mattanddoug.com or post a comment below with the house you’re referring to.
Until next time, happy house hunting!
Matt.
2011
11/02
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Why buying before you sell could cost you tens of thousands of $$$!

The vast majority of people who are looking to buy Nanaimo real estate inevitably have a home that they’ll need to sell when they buy.  This leads to two major phobias by these home owners: buying a home and then not being able to sell your home, thus being stuck with two homes and, the converse, selling your home and not being able to find a new home, ending up essentially homeless.

The real estate industry for years has been sympathetic to this situation and has created a form called a “Time Clause”.  This allows buyers to make an offer on a home that is conditional to the sale of their home.  While this alleviated a lot of fear for buyers it has created a new, hidden issue that many people using the Time Clause are unaware of.

Essentially, when a buyer now makes an offer of a new home using a time clause it severely weakens their offer.  Because, typically, an offer is not for full price the buyer will be asking for some amount of a discount off the listing price.  Not only are they asking for this discount, they are also asking the seller to take a risk that the buyers’ home will even sell at all.  A seller will often view this type of offer as more of a “hypothetical” offer because it is only a true offer IF the buyer is able to sell his home.  Traditionally they will take a risk on this but only if the buyer offers a very strong price and in my experience a buyer and seller will settle on a much higher price than they would if the offer was not subject to the sale of a home.

You’re probably saying “Ok Matt. But I’d be a shrewd negotiator and make them take my lower offer!”  This may be the case and you could potentially agree to a favorable price but there is NO WAY ON EARTH that putting subject to the sale of your house doesn’t cost you some amount of money.  As immeasurable as it is, it costs you!  And it’s not even the biggest cost!

So now a buyer gets their next dream under contract and then they have to SELL their home.  An average home in Nanaimo takes around 60 days to sell in today’s market.  It would, therefore, close in between 90 and 120 days, again, on average.  Is John Q. Seller going to wait 120 days for you to sell your home?  The answer? NO!  He needs to get his home sold fast.  Like, 30 days fast.  And, if any of you are in retail, you know that the only sure fire way to get something sold fast is … to discount it.  The buyer needs to price his home at or even slightly below market value to ensure that it sells fast enough to satisfy your time clause offer.  In my experience, this means 3-7% lower than we would usually list and probably costs them around 5% of the sale price to get it sold fast.  On a $300,000 home, that’s %15,000!

So if we add up the money the buyer leaves on the table from their purchase and the certain loss of money from their sale it could, by very conservative estimates cost him $20,000.

Is there a way to avoid losing this money?  Of course there is!  We always recommend to our clients that they list their home before they do anything.  It’s usually important for them to know what they’ll net from the sale of their home before they know what they can afford to spend on their new home.  We can look at other homes during the course of the sale to make sure they don’t miss anything and we almost always make the timing work out perfectly.

If you’d like to more information on selling your Nananimo home, feel free to comment below or email me at matt@mattanddoug.com.

Take Care,

Matt.

 

2011
10/17
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Can I still buy a second home with 5% down?

Down Payment OptionsAfter the great feedback we got from our last blog post on Purchase Plus improvement Mortgages, I thought we should discuss another great program that CMHC told us about when it was at our sales meeting last week.  One of the other major drastic changes that the federal government has made to protect the real estate industry was to eliminate financing of investment properties with little or no money down.  The new requirements for an investment property are that it must be purchased with a 20% down payment.  This helped to limit the amount of speculation in the market and prevented false demand.

Home owners are, however, allowed to purchase a second PRINCIPLE residence with 5% down.  It is important to know the difference between a principle residence and an investment property.  This home cannot be rented for money (this would be considered an investment property).

This mortgage program is especially useful for people looking to buy Nanaimo real estate for retirement or recreational property or for their children attending Vancouver Island University.  They will still need to qualify for the financing as usual to show that they can service the debt but this program will allow them to keep a larger portion of their capital or the equity from their first home.

In an effort to be your first choice when looking a Nanaimo Realtor, we try our best to stay on top of unique options for both home buyer and sellers in the Nanaimo real estate market.  If you have any questions or comments, please feel free to post them below.

Matt Scheibel.

2011
09/06
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Want Your Bank to Pay For Your Renovations?

At our weekly sales meeting this week we had a lady from the Canadian Mortgage and Housing Corporation (CMHC) come in to discuss the various changes to the products that they offer.  If you’re unfamiliar with CMHC, they insure most of the mortgages in Canada that are considered “high ratio”, which simply means the buyer purchases with less than 20% down payment (a “conventional” mortgage).  They allow buyers to borrow up to 95% of the purchase price meaning that the typical consumer is required to come up with as little as a 5% down payment.

Now that’s all well and good but what about buyers that are purchasing Nanaimo real estate that needs to be fixed up?  Perhaps you’re a first time buyer and cannot afford a beautiful brand new home but rather something is a little rough around the edges?  It’s tough enough coming up with the ten or twenty thousand dollars for the down payment let alone having anything left over to do the repairs or improvements that  you’d probably like to do.  CMHC and lenders have now teamed up to come up with a solution.

The solution is often referred to as a “Cost Plus Improvements” mortgage.  In this case the buyer purchases the home and prior to completion (when the money and keys change hands) they submit to their lender a quote from a recognized builder to do improvements to the home.  The buyer is able to qualify to borrow 95% of the increased value of the home.  The buyer has to put the renovations on a line of credit, credit card, have the builder carry the costs and then the lender pays the bill for the buyer and this money is added to the mortgage.

It’s important to know that the extra money you borrow from the bank is actually only 95% of the ADDED VALUE of the home so you need to be careful to make sure that you add value to the home (ie. no swimming pools!).   At today’s historically low rates if you borrowed an extra $30,000 you’d probably be looking at approximately an extra $150 per month on your mortgage.  For a lot of people that’s great value and one of the few ways they could afford to do a major renovation.

For more detailed info on Cost Plus Improvements visit this link from CMHC:

http://www.schl.ca/en/hoficlincl/moloin/hopr/upload/CMHC-Improvement.pdf

Also, if you’d like to discuss some other great ways to make a little money using Nanaimo real estate we’ve got a few other creative ideas floating around.  Give us an email to info@mattanddoug.com or visit our website www.mattanddoug.com.

Ciao for now,

Matt Scheibel

2011
08/31
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MLS.ca is NOT up to date

Nanaimo real estate

Have You Seen This Site Before?

If you’re reading this article it’s a near certainty that you’re interested in Nanaimo real estate.  It’s a safe assumption that you’ve also looked at property on www.mls.ca or www.realtor.ca.  These are the industry standards for marketing real estate online in Canada.  These two sites get millions of visitors monthly and are so important that government agencies have even gone so far as to make them available to the public even though they were created by and for REALTORS (this is a completely different article).

I’m sure there are many buyers and sellers out there who check this site hourly to see if any new properties are listed that meet there needs and they may be shocked to know that MLS.CA IS NOT UP TO DATE.  It can take as long as a week for a property to hit mls.ca.  If you’re a buyer who’s out there looking for a “good deal” this may come as a surprise and you may be asking “why?”.  It’s a simple product of administrative back logs.  That’s just how long it can take for an agent to finish the paper work, submit the listing, get it approved by his brokerage, and that brokerage to add it to mls.ca.

Now this may come as a surprise as well but I have a solution to this lag time.  Obviously, use me to handle your next purchase.  Well, not just me but any agent for that matter.  We have our finger on the pulse of the Nanaimo real estate market and there have been numerous times that I’ve found a “sleevie” (a listing that was coming up but not quite ready to hit the open market) that my buyer was able to purchase without the home even being marketed yet.  This is great as there’s no competing buyers or any showings for that matter.

Now aside from the unlikelyhood of a “sleevie” we have a product that will get the information to you as soon as it is available on the Multiple Listing Service (MLS) and up to three days before it hits mls.ca giving you a distinct competitive advantage against other buyers.  We call it our Preferred Client Service (PCS) and we offer it to all our clients.  It’s an automated system that is updated numerous times over the course of a day.  We’ve used it with great success for years and we offer it to you for the cost of some of your information.  Simply, fill in the form here and we’ll get you going.

If you have any questions or comments about Nanaimo real estate, leave them in the comments below and we’ll get back to you soon.

Matt.

2011
07/26
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When Shouldn’t You Renovate?

Just left a client’s condo and we had a conversation that he found very suprising.  He’s in the process of renovating his Nanaimo home before we list it and sell it.  We were discussing what his plans were and he he was going to make his place look as good as possible.  The surprise came when I told him not to replace the flooring in his main living area.  The flooring wasn’t in the best condition but it was more than acceptable and I thought he wouldn’t be adding any value to the unit by changing out the floors.

A lot of sellers understand that your home should look as good as possible when it comes time to market it.  An important thing to keep in mind when doing repairs/renovations is that saving money is a heck of a lot easier than increasing the value of Nanaimo real estate.  While renovating CAN increase value, there are times when it simply makes a property more saleable.  This is, of course, really important but for $10,000 worth of flooring?  You can see my point.

Of the renovations that do increase value, there are very few that on their own actually have a positive ROI.  Here’s a list of the average ROI of various home improvement projects according to the National Association of the Remodeling Industry:

Renovation Average Cost Resale Recovery
Paint $700 200% plus
Add a Bathroom $10,000 96%
Add a Fireplace $4,000 94%
Kitchen Renovation (minor) $8,500 79%
Kitchen Renovation (major) $24,000 70%
Bathroom Renovation $7,500 69%
Add a Skylight $4,000 68%
New Siding $7,500 67%
Add Insulation $1,750 65%
Addition $35,000 62%
New Roof $4,600 61%
Deck $6,000 60%
Greenhouse Addition $17,000 56%
Replace Windows /Doors $12,000 55%
Add a Swimming Pool $24,000 39%

Now, this chart doesn’t exactly mean that if you’re looking to sell your Nanaimo real estate that you should just throw a coat of paint on the walls but simply that you should really make smart decisions and try to stay on budget (this may actually be nearly impossible to accomplish) and not “over-renovate”.

Or better yet, give us a call and we can give you some pointers.

Matt Scheibel

2011
07/21
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