The Saturday Weekly Review

Homeowners Price Drop May Cost Other Property Sellers Thousands : The Saturday Weekend Review #129

The Saturday Weekend Review logo- propertySELLING A HOUSE CAN BE HIT OR MISS

 

Property prices in Canada, specifically in the Greater Toronto Area (GTA) seem to be going up, not down.

That sounds great for homeowners but unless they are downsizing it’s all relative because buying a bigger home comes with a bigger price tag.

If you are in the market to buy a family home or even an investment property be ready to shell out big bucks.

We live in the GTA and property prices range anywhere from $400,000 to a million plus dollars which for most seem to be reasonable these days.

Property prices in 2014 for Toronto according to the Huffington Post and the Real Estate Board for 2014 prove to be some of the highest in Canada with Toronto condos coming in at $663,787, GTA $542,047 and single detached at a million plus unless you get lucky.

Many people who work in Toronto simply can’t afford to buy a house as the affordability level is through the roof. Some home buyers opt to buy houses in the GTA which pretty much is Toronto and commute to work like we have chosen to do.

It’s not that far  even with traffic depending on where you purchase your property. The price of homes become a bit more reasonable even with the time spent staring out the window during the commute.

If you want to find property even cheaper head out past Woodstock, Kitchener, London, Ontario and so on but be ready for a lengthy commute time if travelling by car. If you can handle it or have the option of the Go Train in your area you can really find your dream home without breaking the budget.

When potential buyers complete a property search many of them will only search for homes in their price range so price is VERY important to the buyer. If a home is overpriced it may get missed even if there are comparable homes for sale on the same street.

While talking to a couple we know who are selling their house in a sought-after area of our city we realized just how crazy buying and selling homes can be. We shall be armed and ready if the time comes when we want to sell our property.

It’s the summer now and for many realtors they will tell you it’s the hottest time of year to buy and sell homes. You can read through Realtor.ca formerly Multiple Listings Service and see that there is a property for sale in just about every neighbourhood around the city.

Our friends listed their home with a real estate agent for $534,000 last week but there are 3 other homes on the same street up for sale. They are the 4th property to go up for sale and although houses sell like hotcakes in their area it seems as if things have hit a wall.

It’s also not uncommon for pricing wars as our friend Jessica at MoMoneyMoHouses has experienced while searching for a property in Toronto.

None of the houses, many of which have been listed for a month now are moving on the street. They are getting property views and holding open houses but it seems most people coming are nosey neighbours. Those that do come say the houses are too small for their family. Don’t you read the property listing??? Time wasted for everyone when that happens.

The first property seller decided to use Property Guys listing for $534,900 only to move on to an agent in less than a month listing for $508,000. I guess she wasn’t seeing the instant results she thought she was going to get. This also happens if a house is overpriced even by a few thousand.

The problem with DIY real estate selling is that you have to be motivated to do the work yourself. It seems these homeowners were not and were hoping to save the approx $27,000 real estate fees for selling had they hired an agent.

These homeowners had already purchased another home which they were to move into the beginning of July. There’s nothing fun about owning two homes and having two mortgages when you aren’t living in one of them.

I’m guessing this was the reason for the fast turnover with Property Guys to a real estate agent. They simply have no time to waste which is a pity.

They likely could have sold and saved themselves the commission had they waited to buy their home. Alternatively they could have put a clause in the buyers agreement upon sale of their home. That did not happen from what we were told.

In the meantime 3 other homeowners on the street had decided to list their property for sale. The original price of the homes 20 years ago were under $200,000 which means huge profits for these homeowners.

I find that once one property goes up for sale depending on the property listing price you may find others who decide they want to pack up and go. The higher the property price compared to what the homeowner paid really does motivate some people to sell especially if they are downsizing or moving to a less expensive city. More bang for you buck, especially if you can commute to work.

The other properties that were listed on the street were all comparable homes to the first home listed at $534,000 then reduced to $508,000. Recently one sold for $534,000 on the street just a month earlier which is why my friends thought the first property seller decided on the $534,000 price tag to sell her home.

Apparently there have been no upgrades or changes to the first property either since it was built in the early 90’s. She was asking to list her house for the same amount as the comparable property sale on the street recently. That actually ended in a price war and the homeowner got more money for it so maybe she thought the same would happen for her property.

So, the other 3 property listings were listed around the same price $534,000, $544,000 (conservation backing) and $532,000.

Now, here’s where the problem comes in.

 

Property Price Wars

 

The first homeowner has done no upgrades or renovations apart from a new roof last year since she bought the house in the 90’s. The other homeowners have done renovations to their homes including the roof. Lot size and home size are comparable with one backing onto conservation which will yield a bit more for privacy.

I guess it doesn’t matter so much about the renovations because it seems that property prices were all comparable. To be honest that is depressing especially if you are someone like me who is planning on renovating the entire home. This is likely why they say never over-renovate your home. You may never see that money back again if you decide to sell.

Since the first homeowner bought a new house before selling her property she is now stuck for cash. She told the neighbours that she has to sell fast because there is no way she can afford 2 mortgages.

I’m always surprised when I hear this and wonder what bank would even allow this to happen. They really are risking quite a bit if they end up defaulting on mortgage payments. Maybe the bank doesn’t care because in the end they will be the winner if someone doesn’t pay up.

I’m sure she realized she could lose her home so what she decided to do was drop the property price even further. Not buy a few thousand either, try a bit over $15,000. Now the property is on the market for $492,900. The prices on the house have been all over the place and the other property sellers on the street are getting upset.

My guess is she wants potential buyers to see the low price-tag and swoop in and buy it fast so she can get out of there. Since the other homes are listed for far more any potential buyer may believe they are getting a steal of a deal with her property.

I’m not a huge fan of buying a house that was renovated because I like to make sure every job is done right and I can’t do that if the property is already updated. So, she may end up selling her home first with that low price tag and no renovations completed.

The other homeowners are NOT happy about what she did because now it makes their homes look like they are over-priced by thousands of dollars. My friends who are selling don’t know what to do other than hope their real estate agent can explain why that property price is listed so low.

Alternatively the real estate agent may have to do the best they can to showcase the beauty of the properties they are selling with the higher price-tags.

The drastic property price drop has put a dent in the plans of some of the sellers who wished she would not have done that because now they may lose out on expected $. Our friends said that maybe she doesn’t care if she loses thousands of dollars on the sale but they do care because that kind of money can go a long way.

One family is hoping to downsize and the other is buying a bigger family home in another city. A loss of $15,000 would be huge to them our friends said. You see, neighbours talk and then friends talk so I get the inside scoop about all of this. It’s great to hear but sad for everyone involved. The good news is there is a buyer for every home so hopefully there will be a light at the end of the tunnel for these property sellers.

The morale of this story is just because you think your property is worth so much money and you will list it for sale for a certain amount it doesn’t mean you will get that amount. If a comparable home is on the market for far less than your listed home you will have some explaining to do or showcasing of the home so it shows an A+ compared to other properties.

Potential property buyers don’t want to be paying a mortgage forever so if the house with the smaller price tag fits their needs you can bet that house will sell first. The rest of the properties may just end up sitting on the market until the right buyer comes along or they will be forced to lower the property selling price.

I’d be a bit peeved off too if someone did that in the midst of so many other homeowners selling their property too however that’s the price we have to pay for owning a home.

Has this ever happened to you? If you were looking to buy which of the comparable houses would you want to buy? The one with the high price tag or the other comparable house prices or the lowest house price?

-Mr. CBB

 

CBB Week At A Glance

 

This past week has been filled with weeds, weed barrier and lots of mulch. Since I finally finished the landscaping out front of our house the past week it was time to tackle the back-yard. The idea was to make the back-yard as maintenance free as possible.

I have so many house DIY projects on the go and coming up that the last thing I want to do is worry about picking weeds. All I have to do now is general maintenance like mowing the lawn, trimming trees/bushes and taking care of the deck.

In the past we used to hang about 6 large baskets with flowers overflowing in them but we simply don’t have the time to take care of them so I removed the brackets from the deck. I have 2 large brackets outside of the back of the house though where I will hang flowering baskets.

I’m also thinking about building a pergola on the deck but that will be next years project because I don’t have the time this summer to even attempt it. Our one neighbour has no trees on his side of the house so it makes our side very uninviting without the shade of some trees. The pergola with a sun shade will help combat that problem.

I still have to worry about putting in a fence. I want to put another wood fence up but without a trellis top. I can’t handle the maintenance time of that as it’s horrible to seal and stain. What we do want is a maintenance-free fence if there is such a thing that is not chicken wire fence.

What kind of fence do you have around your yard? I still have to do my homework.

We also picked up some toys for the boy from Kijiji. We got a coupe car, slide and wagon for $100 which is great. The wagon is $200 plus tax, Coupe Car $69.99 plus tax and the Little Tikes Slide is $79.99 plus tax.

That’s all for this week… how was your week?

-Mr.CBB

 

Published This Week

 

Just in case you’ve missed any of my blog posts this week I will share them all below.

If you have a question that you would like to ask Mr.CBB fill out the Contact Mr.CBB form on the Home Page and send in your questions.

If you want to share a story via a Fan Question only please ensure that there is minimum 500-1000 words and details… we love details!

Right now CBB is posting Tuesday (Grocery Game Challenge) , Thursday (Personal Finance Post), Saturday (Personal Finance and Weekly Wrap-Up and a recipe on Sunday!

 

Budget Brags

 

Submit your Deal or Brag:

Saving money while grocery shopping is essential in the CBB family and that’s why we share our grocery shops every week in The Grocery Game Challenge 2015.

What I love the most is when my fans share their amazing shops with me whether it be groceries or other deals they find at a garage sale, online or freebies!!!

If you have a brag that you want me to share email me at canadianbudgetbinder@yahoo.(ca) < remove brackets) or fill out my contact form by Friday each week to have your brag considered for the Saturday post.

olleen deals brag june 2015

Hi Mr. CBB and Fans,

A couple of weeks ago we went to a town-wide yard sale. In the first pic you can see some of the deals I found!

  • Gucci knock off handbag I got for $1
  • I found 2 small either casserole dishes or french onion soup bowls $0.50 cents in between the bowls you can read Lead Green Grilling Machine (George Foreman) full size $3.
  • In the second picture there is a Rubbermaid tote for $2.
  • Broiler pan and an almost new Black n Decker counter-top oven/toaster. I paid $5 combined for the both of them.

I thought this was some pretty sweet shopping.

-Colleen

Well done Colleen, it always pays to shop second-hand!

 

Making A Difference (MAD)

 

Note: If you are a personal finance blogger (anywhere around the world) and would like your blog to be MAD featured simply drop me an email and I’ll explain the process to you.

This is my way of giving back to the personal finance community through networking and sharing knowledge with my fans.

Today I’d like to welcome my blogger friend Stephen from My Words and Stuff!

Hello CBB Readers!

My name is Stephen and I’m the author of www.MyWordsandStuff.com . I’m a 30-year-old engineer in Canada that made the choice to move across the country for better pay and cheaper taxes to help achieve my goal of financial freedom.

After university I quickly realized how completely unprepared for the real world I actually was. So I started reading a lot, mostly books and blogs on personal finance, career management with some A Song of Ice and Fire and other fiction thrown in when I needed a break from self-improvement.

Since then I’ve learned all about the mistakes I was making with my investments, how to properly file my taxes, how to identify risks and rewards for investments and so much more.

After talking with co-workers and friends over the last few years it was obvious to me that I wasn’t the only one who was unprepared for real life.

So many people are listening to “advisors” who make a commission off the advice which leads you to buy what they’re selling in the form of insurance, mutual funds, or some other product. When in reality we’re paying these commissions and we don’t have to.

I started my blog to share my experiences dealing with the above issues and many more. You may or may not have experienced them for yourself, but someday I’m sure you will so why not learn from my experience and see if you can save even more money for yourself?

If personal finance isn’t your thing I also write about my travels. It’s the one thing I don’t like to be too frugal on because the experience of seeing new countries and learning about new cultures or history is a value to me that does not depreciate.

I love to tell the stories I learn while I’m travelling and share photos of what I’ve seen. I’ll share anything from history to funny signs so I’m sure there will be something you’ll enjoy and inspire you to start planning your next trip.

 

Top Recipe

 

cinnamon roll cakeFood  and grocery shopping is a BIG part of CBB because food is a large part of the budget which people struggle the most with.

If you are someone who would rather buy convenience meals or products consider cooking homemade meals or baking from scratch.

Not only will you save money but you will be proud of what you accomplished and you’ll see that from the smiles on those you feed.

If you don’t already know I have a second Facebook page called The Free Recipe Depot where I share recipes from other Food Bloggers from around the world.

I created this second Facebook page because I love food so much and I wanted to showcase only food 24/7 and this is where I do it.

I also share recipes on CBB once a week on Sundays either made by me or my in-house home blog cook Nicola Don!

This week our Top Recipe Pick goes to Nikki over at Chef In Training for this amazing looking Cinnamon Roll Cake. If you are in the mood for gooey deliciousness and not feeling like making cinnamon buns this cinnamon roll cake is an awesome alternative.

 

Editor’s Pick

 

Every week I will pick a blog post of the week from around the web that I found interesting and want to share with you and an Editor’s top blog post pick.

Editor’s blog post pick this week goes to My Journey to MillionsTaking a Look at My Homes Amortization Schedule“. This is a simple post BUT with enough mind-blowing financial information that every homeowner should know and read about their own mortgage. It should be enough to scare you into paying a bit more when you can on the mortgage. I know it did for us and that’s what helped get us to mortgage free in 5 years.

 

How people find CBB

 

Every week I get thousands of people visit Canadian Budget Binder because they did a search online and found my blog. Keep in mind any spelling errors below are because I share with you the exact way they typed their search engine query to land on my blog.

  • How do I find out how much my wife is spending?: Well, you could both be honest about your finances and use a budget to track your expenses.
  • Tiny house for kids– I hope that’s just a backyard playhouse you’re looking for.
  • Homemade lemonade or store-bought for lemonade stand– Well, it all depends on how much you are charging for your lemonade. If you want the best lemonade then make it yourself. If you want to sell for less buy a cheap store-bought lemonade. If you want to sell for more you could buy a cheap lemonade but you may not get return customers.
  • Best way to make money in Canada– Get a job!

Thanks for dropping by and reading!

Don’t forget to subscribe to my daily blog post by entering your email address on the home page and verifying the subscription email once it is sent to you.

-Mr.CBB

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2 Comments

  1. Just re-reading this as I have more time to think today. We have bought/sold a number of houses over the years. My first thought if I came across a house considerably cheaper than other houses in the area is “What is wrong with the house??” An experienced buyer would be asking that question. That the house hasn’t had much done to it over the years can get the label of handyman’s special. Smart people like you and me are going to look at it and be figuring in our heads how much it will cost to fix this and how much to fix that…. We know it won’t be cheap to do these things and that does figure in how much someone is willing to offer on the purchase. This person make find themselves getting low-ball offers instead of the amount they want/need.
    Banks do let people get financing for a second house when they have on the market. Yes it is a risk but they do it all the time. When we bought this house we had a two week overlap between closing dates and we had a short term loan from the bank. It’s called a bridge loan as it bridges the time frame between the two dates.
    a lot of people want to move in the summer as it usually means they get good weather for the move. Plus if they have children the kids are out of school, especially important if the kids will be changing schools with the move. This means that real estate can get pretty busy during the beginning of the year as smart people are looking to have plenty of time for looking at a new place, cleaning up and selling the old and all that packing and such. We actually looked at this house the first time in January, moved in late May. The kids were able to finish their school year by taking a different bus to the school and we changed the school in Sept.
    Love the deals Colleen got!! I need to have a good look at that recipe!!! Have a good weekend!!

    1. Hi Christine,
      I think most people would think that as well. What is wrong with the house? Yes! I think I might do some research on this bridge loan. Thanks for taking the time to read the post Christine. Real life stuff happens right here on CBB lol. 🙂 Have a great weekend…. it’s HOT!

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