The Best Asking Price for your Home

The Best Asking Price for your Home

In market like we're in now the most important thing when selling your house within a reasonable time frame is starting at the right price. Setting a realistic price for your home that reflects current market values will help sell your home quickly and for top dollar. When you price your home properly, you increase the chances that the offer you receive will nearly match your asking price, and that there will be competing offers (although, not very common in this market)—which may net you even more in the long run.

Your property has the best chance of selling within its first seven weeks on the market. And, studies indicate that the longer a property stays on the market, the less it will ultimately sell for. A property priced 10 % more than its market value is significantly less likely to sell within this window than a property priced close to its actual market value. About three-quarters of homes on the market today are 5-10 % overpriced. Sellers will usually over-price their homes by this margin if, either, they firmly believe the home is worth more than what the market indicates, or if they want to leave room for negotiation. Either way, if you choose to over-price your home by this amount, you run the risk of increasing the amount of time your home spends on the market, and decreasing the amount of money you’ll ultimately receive. At the other end of the selling spectrum are houses that are priced below a fair market value. Under-pricing often occurs when the owner is interested in a quick sell. You can bargain on these homes attracting multiple offers and ultimately selling quickly at—or above—the asking price.

The knowledge and skills of an experienced Realtor will be invaluable when determining an appropriate asking price. It is the job of your Realtor to know the current market and market trends inside and out, to be closely connected to the real estate market at large, and to be aware of other properties currently for sale in your particular area. Based on this range of connections and knowledge, your Realtor should counsel you on how to price your home properly in order to attract the highest price possible, in the shortest period of time. Before approaching this process, you should first do some homework yourself. You’ll need to know the workings of the current market before you even begin to think about setting an asking price. The market will always influence a property’s value, regardless of the state of a home, or its desirability.

Here are the types of market conditions and how they may affect you:

Seller’s Market: A Seller’s market is considered a “hot” market. This type of market is created when demand is greater than supply—that is, when the number of Buyers exceeds the number of homes on the market. As a result, these homes usually sell very quickly, and there are often multiple offers. Many homes will sell above the asking price.

Buyer’s Market: A Buyer’s market is a slower market. This type of market occurs when supply is greater than demand, the number of homes exceeding the number of Buyers. Properties are more likely to stay on the market for a longer period of time. Fewer offers will come in, and with less frequency. Prices may even decline during this period. Buyers will have more selection and flexibility in terms of negotiating toward a lower price. Even if your initial offered price is too low, Sellers will be more likely to come back with a counter-offer.

Balanced Market: In a balanced market, supply equals demand, the number of homes on the market roughly equal to the number of Buyers. When a market is balanced there aren’t any concrete rules guiding whether a Buyer should make an offer at the higher end of his/her range, or the lower end. Prices will be stable, and homes will sell within a reasonable period of time. Buyers will have a decent number of homes to choose from, so Sellers may encounter some competition for offers on their home, or none at all. Remember, a Realtor is trained to provide clients with this information about the market, helping you make the most informed decision possible.

The right Realtor will guide you through the ups and downs of the market and keep you up-to-date with the types of changes you might expect. Evaluate your house in the other main areas that affect market value:

Location: The proximity of your home to amenities, such as schools, parks, public transportation, and stores will affect its status on the market. Also, the quality of neighbourhood planning, and future plans for development and zoning will influence a home’s current market value, as well as the ways in which this value might change.

Property: The age, size, layout, style, and quality of construction of your house will all affect the property’s market value, as well as the size, shape, seclusion and landscaping of the yard. Condition of the Home: This includes the general condition of your home’s main systems, such as the furnace, central air, electrical system, etc., as well as the appearance and condition of the fixtures, the floor plan of the house, and its first appearances.

Comparable Properties: Ask your Realtor to prepare you a general market analysis of your neighbourhood, so you can determine a range of value for your property. A market analysis will provide you with a market overview and give you a glimpse at what other similar properties have been selling for in the area.

Market Conditions/ Economy: The market value of your home is additionally affected by the number of homes currently on the market, the number of people looking to buy property, current mortgage rates, and the condition of the national and local economy.


We are Mortgage Brokers located in Vancouver British Columbia and are happy to answer any questions you may have regarding the home buying and selling process.

Is 100% Financing Still Available?

In an article dated November 11, 2008 in the Vancouver Sun they point out 3 ways that you can avoid having to meet the Federal Governments minimum requirement of a 5% down payment on a property purchase.

The 3 basic ways in the Vancouver Sun article in which you can avoid the 5% down payment are in the are as follows;

• Wells Fargo still offers 100% financing because they self insure their mortgages. Wells Fargo 100% financing mortgages are available through mortgage brokers such as myself.

• Borrow the 5% from credit cards or lines of credits. There is more to it than simply borrowing from a line of credit or existing credit card. You need to make sure you get proper advice before simply borrowing for the down payment and are aware of the specific rules set out by mortgage insurers before considering this mortgage option.

• Borrow the 5% from a friend or family member and then take a cashback mortgage and pay them back. There are significant costs to a cashback mortgage that you should be fully aware of before being tempted by this type of mortgage arrangement. Although despite the cost it can make sense in certain scenarios.

Below is the link to the Vancouver Sun article:

Want a mortgage at 0%?All you need to do is skirt a few rules

I think it's important to point out that all 3 options carry a cost to the borrower with the second option most likely being the cheapest.

I also feel it's important to note that any time your skirting around rules you could open yourself up to potential problems unless you are fully aware of all of the issues.

Don't hesitate to contact me if you have any questions on the Vancouver Sun mortgage article.

You can also visit my website for tips on mortgages in Vancouver at MyMortgageBC.com.

Why the Canadian Housing Market is Not Set to Melt Down

This article provides a much different perspective on the Canadian housing market. All I've been hearing is gloom and doom so this is somewhat refreshing. Please feel free to leave your comments.

Why the Canadian Housing Market is not set to Melt Down.

While the "best days" for Canada's real estate markets may be over, comparing the Canadian outlook to the U.S. housing meltdown is off base, two Bank of Nova Scotia economists say in a new report.

Earlier this week, Merrill Lynch Canada economists warned Canada's housing market could be vulnerable to a U.S.-style crash, drawing a response from Prime Minister Stephen Harper rejecting that.

Derek Holt, vice-president of Scotiabank's economics department, and his colleague Karen Cordes, cite several reasons why the Canadian mortgage market is healthier than that of the United States. They do not mention the Merrill study.

"We do believe that the best days for Canadian housing markets are behind us, and that lower volumes of new home construction and resales lie ahead alongside further fairly modest erosion of house prices," they write. "Calgary and Edmonton are the most exposed in this regard. But, arguing that consequences to the overall Canadian economy and to debt markets particularly in terms of mortgage-backed securities are as severe as they are in the U.S. is way off base."

Here are the findings of Scotiabank's Mr. Holt and Ms. Cordes, as printed in their report:

Debt growth over the full cycle

Much is being made of the fact that Canadian debt growth relative to incomes over recent years has been on par with the U.S. experience.

Ergo, one is led to conclude, Canada must face similar stresses to its own housing and mortgage markets.

Nonsense. One must look at the full cycle and use the right measures. Recent Canadian debt growth reflects the unleashing of pent-up demand from the 1990s. Canada's recession in the early 1990s was more severe, and the effects were longer lasting by way of how long it took housing markets and the consumer sector to get back on their feet. The U.S. recession of the early 1990s was comparatively mild, and the economy rebounded faster such that U.S. debt growth over the long-haul has exceeded debt growth in Canada.

Leverage - night and day comparisons

Canada's ratio of household debt-to-income is much lower than the U.S. Despite its popularity, however, this is the worst way to look at leverage since it compares total debt amortized over decades to a single year's after-tax income, which is a stock-to-flow comparison that most economists avoid. One doesn't take out a mortgage on Jan. 1 with the expectation of having to pay it all back out of the current year's income by Dec. 31, so why make the comparison?

The best way to judge the full cycle's influences upon debt growth in Canada versus the U.S. is to look at where the two countries stand today on leverage on the household balance sheet (i.e., debt as a share of assets). This must be done by making adjustments to ensure comparability of Canadian and U.S. household sector balance sheet data. In Canada, total debt as a percentage of total assets sat at 20 per cent as at the end of 2007. The U.S. ratio is about 26 per cent. By corollary, Americans have used nearly 30 per cent more debt to purchase assets than Canadians. Clearly, Americans and Canadians have different debt tolerances.

Canadian mortgage markets are fundamentally healthier than the U.S.

• Canada's subprime market is small (5-6 per cent of outstanding mortgages) whereas the U.S. share peaked at about three times that. As a share of originations, 20-25 per cent of new mortgages in the U.S. were subprime over the 2004-06 period. So Canada isn't anywhere near as exposed to the products that caused most of the damage in U.S. housing markets.

• Not only is Canada's subprime market much smaller, but it isn't even really subprime per se. Canada's subprime market is more like the U.S. near-prime market, whereas the U.S. subprime market often lent to borrowers with extremely impaired quality.

• Adjustable rate mortgage (ARMs) resets also caused many of the problems stateside, but those resets occur much more suddenly in the U.S. By contrast, the closest Canadian product parallel is the variable rate mortgage, but they get constantly repriced so that people aren't caught offguard years later. Furthermore, in Canada, some variable rate products adjust the principal, not the payment. On balance, the shock effect from payment resets in Canada is nowhere close to what has caused much of the problem in the U.S.

• Canada's mortgage equity withdrawal market isn't like the U.S. We've seen secured home equity lines of credit (Helocs) grow in Canada as a way of withdrawing equity, but nothing like the U.S. withdrawals picture. U.S. homeowners' equity has been in free-fall with mortgage debt growth outpacing housing assets since the early 1990s. Canada, by contrast, retains much higher homeowner equity, and while it may have reached a plateau, the figure has risen in recent years while the U.S. position has deteriorated.

• Mortgage interest is deductible against taxes in the U.S. It generally is not in Canada. That creates vastly different incentives to leverage oneself in the two markets.

• The nature of the products has been very different in Canada versus the U.S. Examples of Canadian innovation like long amortization mortgage products are absolutely nothing like "Ninja" mortgages. Mortgage innovation was needed in Canada, but has been relatively more conservative.

• Further to this latter point, long-amortization mortgage products actually extend the Canadian credit quality cycle. Long amortization periods of over 25 years have been dominant as a share of new mortgage originations since the 40-year mortgage was introduced almost two years ago. However, there is still an overwhelming majority of Canadians who face the option of extending from the previously standard 25-year product into longer amortization products in a manner that lowers their payments in the face of shocks. Even though insured 40-year mortgages are now banned in principle, 35-year mortgages still provide this flexibility.

• Investor mortgages were among the first products to default in the U.S. ,where they account for about 9 per cent of all outstanding mortgages, similar to the U.K. (9.5 per cent) and Australia (10 per cent). In Canada, however, they are about 2-3 per cent of all outstanding mortgages. There are problems in the investor segment the world over, but the magnitude of the exposure in Canada is far less significant.

• If there is an imminent problem brewing, then it's not showing up in terms of industry-wide mortgage delinquency patterns. Mortgages 90+ days in arrears in Canada remain at 27 basis points, which is the range around which they've been floating since mid-2004. By contrast, even when the country had double digit variable mortgage rates and double digit unemployment rates in the early 1990s, the peak rate of delinquency was about 65 basis points. We're of the opinion that delinquencies will deteriorate going forward, but will be nowhere close to the U.S. experience.

• The extent of runaway house price inflation was much more muted in Canada than in many other countries. Canada's priciest market is Vancouver, and prices have gone up by about 80 per cent since the mid-1990s start of the global housing cycle. London, England, by contrast, went up by about 270 per cent over this time period. Canada's house price appreciation was, on average, significantly below the U.S. experience since then, and much below the experience of many European countries.

Canadian mortgages are funded, underwritten, and enforced in a totally different manner

• Canada's funding model is completely different from the U.S. The majority of mortgages are held on balance sheet in Canada, with only 24 per cent having been securitized. Thus, much more of Canada's mortgage book is funded by on-book retail deposits than is the case in the U.S. That also makes the banks more conservative about the products they are originating since they are mostly stuck on balance sheet.

• Further, the majority of the securitized totals have been done through the CMHC - a Crown corporation with explicit government backing - thus avoiding the problems in the U.S. caused by the ambiguity of GSE liabilities. Other insured securitizations have been done through private insurers that also receive explicit government backing for the underlying assets through the Canada Mortgage Bond program.

• Furthermore, Canadian financial institutions are not as reliant upon short-term lines extended by other financial institutions. The degree of reliance upon such funding in the U.S. is what caused excessive exposure to short-term swings in market sentiments, not to mention adverse incentive effects.

• Mortgage-Backed Securities (MBSs) were not placed in off-balance-sheet SIV and CDO structures as in the U.S. So, Canada MBS investors do not face the same heavily leveraged investor risks. This is perhaps the most important point, since origination mistakes in the U.S. were bad enough, but what really caused the problems were dollops of leveraging that occurred after the mortgages were originated.

• Unlike many U.S. banks, Canadian banks continue to apply prudent underwriting standards. In other words, they have always checked, and continue to check, incomes, verify job status, ask for sales contracts, etc., such that all those questions your banker asks in Canada have a purpose that somehow got lost on many American bankers. The no-income-no-job-no-asset ("Ninja") style, here-are-the-keys-to-your-brand-new-home lending just didn't take hold in Canada.

• Appraisal standards are generally higher in Canada, where appraisals are more likely to low-ball estimates of property value before making the final decision on how much to lend.

• Finally, enforcement of Canadian mortgages is not as tilted in the borrowers' favour as it is in the United States. In the U.S., lenders have little recourse - they can take the keys and settle relatively quickly, or sue and go through great expense for a potentially lengthy period. Alberta is similar to the U.S. treatment in this regard. But the rest of Canada provides greater recourse to lenders than in the U.S.

Globe & Mail

I'm a mortgage broker in British Columbia.

Vancouver Home & Interior Design Show

For those Homeowners in the Vancouver Lower Mainland area you may be interested in the upcoming Vancouver Home and Interior Design Show. This is THE event for anyone just looking for a few ideas and the basics or for someone that wants re-do their entire home. They'll have many exhibits and demonstrations throughout the event. Event runs from Oct 16th to the 19th at BC Place.

Show Dates & Hours

Thursday, October 16 4 pm - 10:00 pm
Friday, October 17 Noon - 10:00 pm
Saturday, October 18 10:00 am - 10:00 pm
Sunday, October 19 10:00 am - 6:00 pm

What does it cost?

Adult (online):	$12.00
Adult (at door):	$14.00
Seniors (55+):	$10.00
Children 7 - 17:	$5.00
Childre ages 6 & under:	FREE

Tickets available at the door – cash only.

Visit here learn more about the Vancouver Home and Interior Design show.

Although I'm not an interior designer I can help finance that big renovation or home update as a Mortgage Broker located in the Vancouver area. I'm always available to answer any questions you might have. Enjoy the show.

Canadian Mortgages and the US Crisis

Canadian Mortgages and the US Crisis

Some of you may be wondering the impact the current US Financial crisis may have on the Canadian economy and the impact on Canadians seeking mortgages.

In Canada our lenders were much more conservative and didn't offer the aggressive mortgage products that the US lenders did. The exposure that Canadian mortgage lenders have is much different than that of the US. The aggressive US mortgage products were big contributors to the current US financial problems. The conservative Canadian mortgage lending practices have allowed us to remain separated from the US credit crisis.

In Canada, we are experiencing an economic slowdown, but nothing like what the US is experiencing. We are also yet to see rising inflation numbers despite the increase in the price of fuel. If we find ouselves in an inflationary environment we will see the impact with higher mortgage rates.

Bank of Canada has stated that they will continue to provide liquidity as required in order to support the stability of the Canadian financial system and the functioning of the financial markets.

The Canadian government is expected to keep interest rates low to stimulate the markets. The Canadian government has taken preventive measures to avoid the housing crisis in the US. As of October 15, 2008 Canadian Banks and mortgage lenders will no longer be able to offer 40 year ammortizations, 100% mortgage financing and minimum credit score requirements.

This will impact the have to become more strict therefor making it more difficult to obtain a mortgage from the big lenders in Canada. I've seen lenders become more and more stringent over the last year. =This approach started with mortgage lenders last year and has accelerated as the US continues to struggle. With that said, all lenders are still happy to provide mortgages to people that can prove income, have a down payment and good credit.

I'm a mortgage broker in Vancouver, BC and offer mortgages throughout BC at the best mortgage rates possible. Visit me at www.MyMortgageBC.com

Don't hesitate to leave your comments and thanks for visiting.

Bank of Canada Holds the Prime Rate Steady

Bank of Canada To Keep Interest Rates Unchanged

Vancouver — My Mortgage BC.com - 03 Sept - The Bank of Canada stuck to its guns on interest rates Wednesday, holding the overnight rate at three per cent despite acknowledging that both inflation and the economy are weaker than previously projected.

The central bank's decision to stay on the sidelines for the third consecutive announcement date had been widely predicted.

"There is absolutely no signal here whatsoever they are preparing to cut rates (in the future)."
Scotia Capital economist Derek Holt, who had urged the bank to lower its key interest rate to spur borrowing and boost the economy, was even more blunt, calling Carney's language on the economy as bordering on the "Pollyannish."

With a federal election call expected later this week, the bank may not have wanted to send a strong signal about downside risks to growth, he said.

The market's reaction, boosting the Canadian dollar almost a cent to 94.54 cent U.S. in early trading, was an indication many expected a clearer signal from Carney on future interest rate cuts.

Inflation currently stands at 3.4 per cent.

The bank said the economy remains vulnerable to U.S. weakness and tight credit conditions that could further drag down demand for Canadian exports.
"Given these developments, the bank judges that the current level of the target for the overnight rate remains appropriately accommodative," it said.
Porter said the bank may feel that having chopped 1.5 percentage points from the overnight rate since December, it has cut interest rates deep enough.

The Bank of Canada's next interest rate decision will be Oct. 21.

MyMortgageBC.com is a mortgage broker located in Vancouver BC.

Bank of Canada Unlikely to Raise Interest Rates

Interesting article in the Vancouver Sun today predicting that the Band of Canada is unlikely to raise rates. This is great news for those in variable rate mortgage products.

BoC unlikely to raise rates, despite inflation jump

Vancouver Sun

Published: Thursday, August 21, 2008

Inflation in Canada clocked in at 3.4 per cent in July, the highest level in more than five years. Yet with the economy still weak, economists agree that the Bank of Canada is unlikely to attempt to rein in inflation by raising its bank rate in September.

The biggest contributor to July's inflation was gas prices, which were 28.6 per cent higher across the country last month compared to a year earlier, Statistics Canada reported Thursday.

Food prices and mortgage interest costs were also up, the report said.

On the other side of the balance sheet were drops in the prices of vehicles and computer equipment, Statistics Canada said.

In British Columbia, the inflation rate was slightly below average at 3.3 per cent despite an above-average increase in the cost of gas, which rose 31.5 per cent in the province.

The gas-price increase may reflect the provincial government's new carbon tax, which was implemented on July 1 and added 2.4 cents a litre to the price of gas, said Bernie Magnan, chief economist with the Vancouver Board of Trade.

The province's lower-than average inflation rate may be due to B.C. residents having to spend such a large portion of their income on housing that businesses have a hard time raising prices for other goods, Magnan said.

With the price of gas expected to drop in August, inflation is likely to ease too, he said.

But Derek Holt, vice-president of Scotia Capital Economics, said inflation is likely to stay high because it is measured year over year. So even as gas prices fall, they remain higher than they were a year ago.

Holt counselled not paying too much attention to the year-over-year numbers and focus instead on month-to-month comparisons.

While inflation was 3.1 per cent in June compared to a year earlier, prices were up 0.8 per cent from May. But price rose only 0.3 per cent from June to July, an indication that inflation is actually cooling, Holt said.

Taking the volatile elements out of the equation, such as fuel and fruits and vegetables, inflation was only "a remarkably well-behaved" 1.5 per cent, Holt said.

"So that suggests that even though commodities were elevated there really wasn't any pass-through of those higher commodity prices by businesses into the broader spectrum of consumer pricers," Holt said.

However, B.C. may start experiencing higher than average inflation in the coming months because of the buildup to the Olympics, he added.

Cities hosting Olympics usually have higher inflation rates leading up to and after the Olympics because of the work involved getting ready and the people and business the games attract, he said.

So far B.C. has remained "surprisingly well-anchored," Holt said.

That could be due in part to the dampening effect a weak U.S. economy has on the province, especially its forest sector, he said.

Both Holt and Magnan believe that despite July's high inflation rate - the highest since March 2003 - the Bank of Canada is unlikely to change its overnight target bank rate in September.

While the central bank's focus is a target inflation rate of around two per cent it also has to ensure any rate changes don't hurt the economy, they said.

Holt added that while the bank will hold rates steady in September, it will communicate its intention to focus on the economy, thus paving the way for rate cuts, despite the high inflation numbers, as soon as October.

I'm a mortgage broker located in Vancouver BC. Please don't hesitate to contact me if you have any questions regarding mortgages.