How to buy and sell a home at the same time

You own a home now, but it’s time to make a change. If you’re moving up or downsizing, you probably have questions about how it all works. That is, the logistics of buying another home while you still own your existing property.

Here are 10 facts you need to know about navigating through the two transactions at once - to make the move as smooth as possible...

Get the facts on your existing home

What is your home worth?
Find out the value of your home by asking a Realtor to provide you with a detailed market evaluation. Alternatively, get a detailed estimate of the value by paying for an appraisal by a licensed appraiser. This will give you an idea of what residual funds you will net from the sale of your existing home which will determine how to structure a mortgage for the new home. Be conservative when working with the down payment amount so you have some wiggle room when negotiating the sale of your current home.

Three questions to ask
After you have determined what new mortgage amount you will require, you will then need to contact your current lender to ask them the following 3 questions...

1) Is the mortgage portable to a new property?

If it is and you are moving up, can the new mortgage rate be “blended” - and what will that new rate be in order to avoid paying a payout penalty?

2) If you were to pay the existing mortgage out in order to get a better rate, what would the penalty be?
Be advised that you are required to qualify for any new mortgage whether you “port” the existing mortgage to a new property or get a brand new one, as you are effectively only “porting” the terms of the mortgage

3) How are you going to sell your current home?
Options available to sell your home include for sale by owner, by a Realtor, or somewhere in between the two. I recommend using the services of a Realtor as I personally would like to leave any showings and negotiations with any potential buyers in the hands of a professional.

Ask a Mortgage Professional, Steven Porter, Mortgage Agent, Mortgage Architects

Financing your next home

Securing a pre-approval
Based on your initial findings about your current residence, I recommend obtaining a pre-approval for your next purchase as this will give you an idea of what kind of requirements you’ll need to meet in order to be approved for your next mortgage.


Quick, easy on-line mortgage pre-approval

What if your existing home hasn't sold by the time you take possession of the new home?
Your new mortgage may contain a condition to confirm your existing place has sold. This could be for either down payment or qualifying purposes, or both. See if a back-up plan is possible in case your existing home does not sell by the time you take possession of your new home. Your mortgage professional can work through a few potential scenarios with you until you’re comfortable with the options you have for all possible outcomes.

Investigate the "Home Sale Guarantee" offered by some professional Realtors

Keeping both homes, with one as a rental property
Perhaps you are looking into the possibility of keeping your current home and turning it into a rental property. Some lenders will allow this as long as you can qualify to carry both properties. Talk to your mortgage professional about the option of including potential rental income to help you qualify. Be aware that lenders tend to calculate the inclusion of rental income differently, so if you don’t qualify with your current lender, check others. If you are leaning to keeping both properties, ensure you explore all options in accessing funds for the down payment on the new home. For example, is a gift from a family member a possibility? Do you have sufficient funds in savings? Can you look at refinancing your current residence to access the equity?

What down payment requirements and proof do you need to provide?
If the down payment is coming from anywhere other than the sale of your existing home, the requirements are pretty straightforward; your lender will look for the paper trail to support the source of the funds being used. If the down payment funds are coming from the sale of a property, you’ll be asked to confirm what your equity position is via a current mortgage statement, as well as a copy of a fully-executed sale agreement for your current residence, along with all condition removals related to that contract.

The qualification process
Qualifying for your next home will be similar to getting approved the first time. Your lender will be looking at the usual application aspects - like income, credit, down payment, and the property you’re financing. If your income or credit profile has changed drastically, such as you becoming self-employed or your credit not being as good as it used to be, be sure to have a conversation with your mortgage broker about how the qualifying process could differ from the first time around.

Consider what you'll need for supporting documents
While many of our mortgage rules have changed, document requirements likely haven’t changed too much since you last qualified. What you’ll be asked to provide will be dependent on your current financial profile. Your mortgage professional, along with a mortgage pre-approval, will give you an idea of what you’ll be asked to provide in terms of supporting documents.

What to do when you need bridge financing
If the possession date for the sale property is after your purchase possession date, and you need those funds for a down payment, there is a solution known as bridge or interim financing. The lender will not only finance your mortgage, they will also give you a short-term loan to cover the down payment. This way the seller gets their money and you get possession of your new home even though your old home is still technically yours. Once your existing place has sold, your lender will recover the funds they lent to cover your down payment. It is important to note that you must have an unconditional or firm offer for your existing home in order to qualify for bridge financing. Be aware that not all lenders offer bridge or interim financing and the terms and costs for this service can vary, so double check the conditions before you commit.

Moving confidently from one home to the next
It can be stressful to sell and buy simultaneously. There are a lot of things that need to go right in order for everything to go smoothly for you. The best way to ensure a smooth move is to do your research first. Explore your options until you find one that allows you to confidently move forward into your next home while leaving the last one fondly behind.

Reprint - GoldenGirlFinance

For all your mortgage needs contact Steven Porter, Mortgage Agent/Planner, Mortgage Architects - 1-905-875-2582 or steven.porter@mtgarc.ca
 

Black Belt Negotiating for Homebuyers

How would you like to save $10,000 or more off your next house? It's really quite easy if your real estate agent has a black belt in negotiating. The challenge is that most people in general and real estate agents in specific rarely take advantage of the power of bargaining, except on rare occasions when making large purchases like cars and houses. In other countries, like Asia, people there negotiate everything everyday and save thousands.

Negotiating is like a martial arts contest where power, leverage and timing can mean the difference between winning and losing. For instance, a martial artist would never go into a contest without first spying on his opponent to find weaknesses. In the same way, you can gain bargaining power by doing your homework. When buying a house find out how long it's been on the market, why the owner is selling, if there have been previous offers and if you will be the only one making an offer at this time. Obviously, finding the answers to questions like these could save you a lot of money.

First, make sure that your agent presents your offer in-person, if possible. It's very difficult to negotiate a good deal by fax.

Before engaging in contest, a martial artist warms up by stretching. Likewise, a savvy negotiator warms up by building rapport and finding common ground with the other party, because people like to do business with people they like. In real estate, a smart agent will try to get the seller emotionally involved with you before he brings out your offer. He should have you compose a hand-written letter about why you want the home and perhaps even show a few photos of you and your family. When faced with several competing offers I know of instances when a client's contract has been accepted even when it didn't present the highest price because the seller took a likeness to the buyers.

Next, fighters will cautiously probe each other looking for weaknesses. In bargaining this is done by throwing offers onto the table to see how the other party reacts. Experienced fighters often use guile to lure their opponents into range by pretending a blow has hurt them more than it really did. Similarly, your agent could pretend to be shocked by a seller's counter to your offer to get him to come down in price. Visibly showing surprise or hurt is called flinching and it used by master bargainers to gain concessions without giving up anything.

Martial artists are taught to read the body language of their opponents so they can see a blow before it is unleashed. Experienced negotiators can literally read the other party's mind by watching body language and listening carefully. If a seller says, "Make us an offer" you know their price is flexible before you even start. Also, without saying a word their body language can also tell you if they like or dislike any offer you make so be sure your agent watches very carefully as they show the seller your purchase contract. If the pupils of the owner's eyes get larger as they read the price you are well on your way to a deal but if his pupils get smaller your agent will have to do a lot of selling.

Martial artists do not believe in win-win and neither should you. Even when sparring with their best friend they want to give their best effort. Expect and demand your agent fight for the best deal possible assuming that the seller and his agent will take care of themselves because they will.

Fighters are supremely aware of time and try to use it to their advantage by saving as much energy as possible for the last few seconds of a round when they can score points against a tired opponent. Black belt negotiators put their opponents under time pressure by setting deadlines. Be sure that your agent mentions to the seller that you are considering several other similar properties in the area and that the seller must give a prompt response to your offer.

In martial arts, as in life, there are unfair fighters who will do anything to win, so you must protect yourself at all times. Negotiators must be aware of unfair tactics such as nibbling, which is asking for concessions after an agreement has been reached. If this happens to you just remember this blocking technique, "Before you give a concession - get a concession." For example, if a seller suggests that to hold the deal together that you'll have to pay for the transfer tax or other fee, simply respond with, "If we did, what can you do for us?" When a nibbler realizes that every time they ask for something you will respond in kind they will stop nibbling.

Finally, when a contest ends, fighters will bow to each other in mutual respect.  You should congratulate the seller for having done good deal  otherwise he might change his mind and try to find a way to wiggle out of the agreement.

So, how do you find a real estate agent who is a black bet in negotiating? Just ask these hypothetical questions and see how he or she answers them:

   1. What information do we need before making an offer and how would you get it?
   2. What's your experience with negotiating?
   3. What's your philosophy of negotiating? (If the answer is "win-win" find another agent!)
   4. Do you prefer to present offers in-person or send them in?
   5. How can we make sure the seller responds to our offer right away?
   6. When you sit down with the seller what's the first thing you do? (If the answer is "I pull out the contract" keep interview agents. You want someone who knows that closing a deal begins with building a relationship.)
   7. How can you tell if the seller immediately likes or dislikes our offer?
   8. How would you react if the seller gives us a full price counter-offer?
   9. What would you do if the seller asks for something additional after the contract has been signed?
  10. If the we were five hundred dollars apart from having a ratified contract what would you do? (If the answer is, "I'd give it to you from my commission" find another agent. Anyone who cannot negotiate their own fee will have difficulty protecting your interests.)

Steven Porter ABR CNE SRES
is a Real Estate Broker of 27 years with
RE/MAX Aboutowne Realty Corp. Brokerage.
Steven is an Accredited Buyer Representative,
Certified Negotiation Expert and has been student of
Japanese Martial Arts for 46 years
Steven can be reached at 905-875-2582, email: steven@stevenporter.ca
Or www.PorterRealEstateSystem.com

Literary credit to Michael Soon Lee

As a buyer, how much detail can I get on a property before making an offer?

It’s up to the property owner as to what specifics they disclose prior to an offer. This holds especially true for information that includes private data, such finances, other offers, etc. Certain questions, both the listing broker and owner have a duty in answering honestly and to the best of their knowledge. For example questions whether a building meets code requirements, past illegal use, in a flight path, etc. should be disclosed without hesitation.

A buyer can uncover some facts by accessing publicly-available information. A visit to the local municipal office could unearth some general information related to property taxes, registered liens and potential work orders. Keep in mind this information will vary from city to city. A simple Internet search may also reveal some information about the property.

Once these avenues for information have been investigated a buyer may consider putting in a conditional offer to the seller. Conditions could include property inspections, review of any documentation and due diligence a buyer may see fit. Moving forward with a deal would only be contingent on these conditions being met to the satisfaction of the buyer.

This approach allows a buyer to move forward with complete confidence and minimal risk. The deal can also be structured that if conditions aren’t met to the satisfaction of the buyer, any deposit money would be returned in full and the agreement of purchase cancelled.

An experienced buyer representative is a trained professional, sensitive to the needs and requirements of the buyer and a definite asset to a buyer in any real estate transaction.

Before you make your next home purchase consider hiring an ABR (Accredited Buyer Representative).

Steven Porter ABR CNE SRES
Broker
RE/ MAX Aboutowne Realty Corp.,
www.PorterRealEstateSystem.com

Home Buyer Beware

It amazes me how greedy and unprofessional the residential real estate industry has become. In spite of efforts by our governing bodies and associations to enhance and better educate real estate practitioner's, there are growing numbers of sales people who just don't appear to give a damn. Many putting the almighty buck ahead of the interests of their supposed, clients.

Here's a perfect example that's happening in my own backyard. Milton has been growing exponentially the last few years and with growth in housing there always comes a boom in Realtors coming to collect their share of the resale business. The unfortunate part is we're seeing Realtors coming from as far out as Whitby, New Market, Barrie and Niagara Falls for that one sole deal. The big question here is: "How the hell do these Realtors propose to know anything about Milton and Milton real estate?" Important things like housing, market prices, areas, schools, recreation, etc., etc, etc. How about potential pitfalls like: decommissioned garbage dumps, future development, rezonings, HCA and NEC restrictions, farming practices, etc., etc. You catch my drift. Let me ask you this: Would you spend your budget, say $300,000. on a home because it was in your price range, it was what you were looking for and possibly because your Realtor told you it was a fair or good buy?? . . . Now what if you bought this home and found out later that there were two other homes two streets over just like the one you bought and for $30,000. less? What, you didn't know about them because your Realtor didn't know about them? How does that make you feel?

To this day (25 years in the real estate business) I have been building a network of trusted professional Realtors in other areas that I do not know enough about and will not service. To these trusted professionals I refer my clients because I know they will be properly taken care of. And for that I receive a referral fee from my colleges. This is taking care of the client and is good business practice.

My advice is: "BEWARE". The real estate industry is currently ballooning with sales people and with boat loads down the pipe waiting to complete there schooling. Starving sales people I might add. And many of these with an average income just shy of a MacDonald's hamburger flipper and monthly expenses in some cases double most people's mortgage payments, Do you know, I read an article from the National Association of Realtors which stated that the average Realtor only sold 4 houses in 2009. I challenge them not to put their interests before their clients'.