subscribe to the RSS Feed

Thursday, July 24, 2014

How to convert your home into a rental

Posted by admin on May 25, 2013

If your local real estate market is on the upswing, you might be thinking about becoming a landlord. You might even consider doubling down by renting out your current residence and buying another place to live in. If you convert your residence into a rental, you can probably shelter most or all of the rental income with tax deductions, including depreciation write-offs. With any luck, you can eventually sell the property for a good price. Meanwhile, you must navigate confusing tax rules that apply when a personal residence is converted into a rental. Here’s the scoop.

Depreciation Deductions and Loss on Sale May Depend on Special Basis Rule

Depreciation: You can depreciate the tax basis of the building part of a residential rental property (not the land part) over 27.5 years. Depreciation is nice because it allows you to shelter some of your rental income with noncash deductions. However a “special basis rule” applies to a rental property that was formerly your personal residence.

Under the special rule, the initial tax basis of the building portion of the property for purposes of calculating depreciation write-offs equals the lower of: (1) the building’s fair market value (FMV) on the conversion date or (2) the building’s “regular basis” on the conversion date. Regular basis usually equals original cost plus the cost of any improvements (not counting normal repairs and maintenance).

Key Point: If on the conversion date the building’s FMV is lower than the regular basis figure (this is possible if the local market is still in the early recovery phase), you must use the lower FMV number as the basis for calculating depreciation deductions. While this will result in lower depreciation deductions during the rental period, it isn’t a big issue.

Loss on Sale: The same special basis rule also applies for purposes of determining if you have a deductible loss on sale after converting the property into a rental. So if the property’s FMV is lower than the regular basis amount on the conversion date, you must use the lower FMV figure as the initial basis amount to see if you have a deductible loss when the property is sold. Also, you must reduce the initial basis by depreciation deductions taken during the rental period. The special basis rule and the depreciation deductions greatly reduce the odds of having a deductible loss. Just a year or so ago, being able to claim a deductible loss on sale was a big issue because property values were still bumping along the bottom in many places. Now, with many markets improving dramatically, you’re probably more likely to have a taxable gain when you sell than a deductible loss.

Gain on Sale Depends on Regular Basis Rule

When you eventually sell the converted property, the basis for purposes of calculating whether you have a taxable gain on sale is the property’s regular basis on the sale date. Regular basis generally equals the original cost of the land and building plus the cost of any improvements minus depreciation deductions claimed during the rental period.

Different Basis Rules Can Produce Weird Tax Results When Property Is Sold

When you sell the converted property, the tax results might be surprising. That is because you must use the special basis rule to determine if you have a deductible loss on sale, but you must use the regular basis rule to determine if you have a taxable gain. Following two different basis rules can sometimes put you in no man’s land where you have neither a taxable gain nor a deductible loss. In fact, that is exactly what will happen whenever the sale price falls between the two basis numbers. I know this is confusing, so here are some examples.

Example 1: No Tax Gain and No Tax Loss on Sale

Your converted property is in a market that has bounced off the bottom but not all the way back to its earlier peak by the time you sell. Assume the following numbers for the property.

  1. Regular basis on conversion date: $300,000
  1. FMV on conversion date: 235,000
  1. Post-conversion depreciation deductions: 13,000
  1. Special basis for tax loss (line 2 – line 3): 222,000
  1. Regular basis for tax gain (line 1 – line 3): 287,000
  1. Net sale price: 275,000
  1. Tax loss (excess of line 4 over line 6): none

 By: Bill Bischoff

Keeping cool in a heat wave

Posted by admin on July 5, 2012

If anyone needs to stay cool right now, it’s Shane and Jennifer Schick. The Scarborough parents of toddlers aged 2 and 4 are expecting their third child in about two weeks.

The couple also recently moved to an apartment in a fourplex after renting in the Mount Pleasant Rd. and Eglinton Ave. E. area for several years. That means they are making many adjustments to living in their new home as they unpacked during the recent heat wave. When you have two kids and one on the way and no air conditioning, finding relief in 30C and high humidity can be difficult.

To top it off, the Schicks learned after moving into their new apartment that the owner of the building did not want them to install a window air conditioner because he had just replaced all the windows.

“We’re using table fans right now and it doesn’t really do the job,” says Shane. “We used to live in a main-floor apartment and we’re finding that the heat seems to travel upstairs to the second floor. It’s been really challenging. I’ve even slept in the basement on a few nights.”

The alternatives aren’t that appealing, either.

“The floor model air conditioners take up a lot of space (and can be expensive) and look like a small washer or dryer,” he says. “This is probably the last year we will rent so I’m not sure we want to make an investment in something like that.”

There’s also the cost consideration of running air conditioning units if you pay your own hydro.

According to a recent survey conducted by Direct Energy, 77 per cent of Ontarians use air conditioning to escape the summer heat and 69 per cent are concerned about what the cost will be to keep a steady temperature.

Any AC units 12 to 15 years old may not be energy efficient. Most units older than 12 years operate at around 10 SEER (Seasonal Energy Efficiency Rating), which means they are a lot less efficient than newer models.

“The age of the equipment can impact not just the cost, but the overall effect and comfort level of the equipment as well,” says Dave Walton, director of home ideas with Direct Energy.

So if you rent and your landlord doesn’t offer central air or window air conditioners, what are your options?

If the home you’re renting has a programmable thermostat use it, or ask your landlord to install one. By raising the temperature by 5C at night and when no one is home, you can save as much as 10 per cent on an energy bill.

“Set it to keep the home just a little bit warmer during the day and have it start to cool down around 4:30 or 5 p.m. as you’re heading home,” says Walton.

Other tips include closing all the blinds and curtains on a hot day before leaving the house. “You can leave a few windows open, but especially on the south and west facing windows, keeping window coverings closed is quite an effective way of keeping the house cool,” says Walton.

When the sun goes down, open the windows. Opening selective windows so that cooler night air is blowing in throughout the evening can make a big difference, especially when combined with a good fan. Leaving all the interior doors open can help as well. Be sure to get up and close the windows and blinds as soon as the sunlight hits.

Avoid using heat sources in your living spaces, such as the stove, if you can avoid it. Eat cold meals, or use the microwave. Some light bulbs can also create heat, so switch to compact fluorescents. Turn off your lamps and computer when you’re not using them. The TV can give off a lot of heat, as well as some plug-in power adapters.

If you can use a window air conditioner in your unit, know that they have their limitations. “They typically can only cool so much of the room or home, can be noisy and not as energy efficient as a central air conditioning unit is, and they can also pose a few headaches like dripping water and rattling window frames,” says Walton.

Window units also need to be taken out in the fall and put back in the spring.

Like any new technology, efficiencies are improving and new units operate better than ones that are 10 years old. “A new window air conditioner does work a lot better than an old one,” he says.

If you’re in the market for a new window unit, Hydro One is having a saveONenergy exchange event Saturday and Sunday at participating Canadian Tire stores.

Take your old window unit and/or portable dehumidifier (in working condition and a minimum age of 10 years old) to the store and receive a $50 coupon towards a new model. Go to hydroone.com for more information.

By replacing your old, inefficient appliances with an Energy Star model, you’ll save energy and help the environment.

According to Hydro One, the savings amount to about $50 a year when you replace an older dehumidifier with an Energy Star model and about $14 a year when you exchange an older room A/C with an Energy Star model.

For now, the Schicks say they plan to investigate some of the newer, more expensive fans offering better air circulation, such as the Dyson air multiplier — and perhaps there will be more sleepovers in the basement.

By: Jennifer Brown

New Internet real estate grab begins with fierce competition

Posted by admin on June 18, 2012

An unprecedented land grab for new Web addresses began in earnest on Wednesday with fierce competition for new internet real estate including .app, .blog and .web from applicants hoping to break the near-monopoly of the .com top-level domain.

The ambitious plan to liberalise internet addresses attracted 1,930 applications, almost half of them from north America, with Web giants Amazon and Google applying for dozens of domains including .cloud, .buy and .book.

The liberalisation of top-level domains beyond the fewer than two dozen in existence – dominated by .com, .org and .net – is intended to stimulate competition and innovation by giving organisations more control over their Web presence.

Critics say the new suffixes are unlikely to catch on, and some trademark owners have complained that the move is causing them unnecessary expense – at $185,000 per application plus running costs – to defend their online turf.

Previous small-scale experiments in liberalising domains led to low take-up of suffixes such as .museum, .jobs and .travel.

“At the highest level, this is all about creating competition to .com,” said Jonathan Robinson, non-executive director of internet registry services company Afilias, which has applied for more than 100 new domains on behalf of clients.

“That’s where short, memorable, distinctive three-letter type terms become very interesting,” said Robinson, whose organisation already provides key infrastructure for .org, .info and .mobi.

Competing applications were received for 231 domain names. The most popular were .app with 13 bids, .home with 11, and .inc with 12. High bids are also reportedly expected for domains such as .pets, .porn and .pizza, according to reports.

Technology giant Apple’s claim to .apple was uncontested by the Apple music label or anyone else.

“The big names of the Internet have either invested massively or not at all,” said Stuart Durham, European sales director for Melbourne IT, which has handled 150 applications on behalf of clients.

“There appear to be no applications from Facebook or Twitter. There are different strategies in play here and some big gambles.”

Just 17 applications were received from Africa, and 116 for names in non-Latin alphabets. Expanding the Internet beyond the Latin alphabet was one of the original reasons behind the liberalisation drive, which began seven years ago.

ICANN will now spend the rest of the year assessing the applications, with contested domains going to auction where more than one party has a legitimate claim. The first new domains are likely to come online in the first half of 2013.

Some critics, including senior figures at Google, have warned that the liberalisation risks effectively privatising the Internet by giving already powerful Web players more scope to control portions of it.

“Our concern is that this could lead to more Facebook-style walled gardens as big brands seek to keep you in their own areas of the Internet,” said Stephen Ewart, marketing manager for Names.co.uk, a British domain-name registrar.

“Make no mistake, this change to the domain name world will lead to more competition and consumer choice, but it could also be viewed as a silent privatisation of the Web – for better or worse,” he said.

The project is a key test for U.S. non-profit organisation the Internet Corporation for Assigned Names and Numbers (ICANN), whose authority to administer the Web’s naming systems is being challenged by emerging nations who say it is too U.S.-centric.

“The plan we have delivered is solid and fair,” ICANN Chief Executive Rod Beckstrom told journalists at a news conference in London. “It is our fundamental obligation to increase innovation and consumer choice.”

Nations including China, Russia and Brazil are pushing for ICANN’s functions to be transferred to a body such as the United Nations, in which governments would have more control.

ICANN is set to net some $350 million from the liberalisation project – about five times its annual budget.

Beckstrom said the organisation had priced the applications to cover its costs and that the use of any surplus would be decided by its community – which includes Internet companies, governments and ordinary citizens.

By: Georgina Prodhan

 

Landlord establishes online rent payment policy

Posted by admin on May 25, 2012

Q: Our landlord has instituted a policy of online rent payments only, using a bill-paying service on the Internet. We object to this, as we don’t have a computer at home and would rather use a check. Can we refuse to go along with the new policy?

A: If you refuse to pay rent online, and the landlord rejects your check, you may get hit with an eviction lawsuit for nonpayment of rent. But if you are renting with a fixed-term lease, your landlord’s unilateral change in an important term (how rent is paid) would probably be ruled illegal by a judge. The essence of a lease is its terms remain in place until it expires or both parties agree to make a change.

On the other hand, if you’re renting month to month, the landlord can announce a change of terms with proper notice (30 days in most states). After that, you’d be obligated to pay online.

Or would you? Perhaps it’s worth asking why the landlord is instituting this change. Maybe it’s to cut down on administrative costs and paper, but maybe a more sinister motivation is at hand.

Recently, just such a policy was instituted at apartment complexes in Los Angeles. Tenants objected, claiming that the landlord was targeting older, low-income tenants who had two things in common: Many were protected by rent control, and many did not own a computer. They argued that apart from the notice issue, the landlord was targeting a particular class of tenants — older ones — with the intent of inducing them to move out or, if tenants refused to pay, creating a reason to evict them. This would create vacancies that could rent at market rates, presumably to younger people who were not averse to paying rent online.

But the policy sparked a rebellion. Tenants demonstrated, filed a lawsuit handled by venerable legal aid group Bet Tzedek and inspired a bill in the state legislature that would forbid online-only rent payment clauses.

Q: In our apartment complex, there are two ways to the garage: around the side of the building or out the back. The walkway around the side is quicker but has never been lighted, and the landlord has signs saying, “To access garage at night, use back entrance.”

I used the side path one night and tripped on a raised part of the walkway, which I didn’t see. I think there should have been lights, and that the landlord should cover the cost of treating my injured knee. What do you think?

A: You may have a hard time pinning the cause of your fall on the landlord. Here’s the problem: In spite of being told to use the back entrance, you chose a path that you knew was not lighted.

Lawyers might say that the risk of walking on a pathway in the dark was a risk that you willingly assumed, and that the consequences (not being able to see variations in the pavement height) were also something you knowingly took on. In legal jargon, you may have “assumed the risk” of a fall, which will defeat, if not lessen, any responsibility of the landlord for your injuries.

As with most personal injury situations, there’s room for argument, depending on the facts of the situation. Sometimes, no matter how many warnings a property owner may make, he cannot shield himself from liability. This is particularly true if the danger involved is a serious safety problem or a significant code violation, and certainly if tenants have little choice but to ignore the warnings.

Imagine, for example, that the garage could be accessed only from the side path, and that the “variation” in sidewalk level actually involved chunks of broken concrete. It’s unreasonable to expect tenants to avoid the garage except during the day, and the condition of the sidewalk is dangerous even during daylight. A tenant who used the pathway and tripped over a protruding chunk would have a better shot at recovering damages from the landlord than one who chose a risky, alternative route whose imperfections were slight.

By: Chicago Tribune

Solid advice for self-builders

Posted by admin on May 1, 2012

Who hasn’t dreamt of building their own house? Of finding that perfect little plot of land, coming up with a design and then seeing it through to completion.

It’s a powerful idea, and it might be part of the solution to Britain’s housing shortfall, which some estimates suggest will reach 750,000 homes by 2025.

Perhaps the answer is for house-hunters to take control of the situation themselves. A report by the National Self Build Association predicts a 141 per cent increase in the number of mortgages available for those building their own homes. Now the Government has backed a package of measures to help would-be home builders to get their grand designs off the ground.

“It’s an idea whose time has come,” says the Housing Minister, Grant Shapps. “At any moment, two million people in Britain are investigating the idea of building their own houses. But too many of these projects are halted before they can get started.”

The product of a joint initiative between the Government and the self-build housing industry, a new interactive website, selfbuildportal.org.uk, contains information on everything from finance to double-glazing. A postcode calculator allows you to work out how much, on average, a self-build will cost in your area.

Pricing is a key point. Television property programmes often feature multi-million-pound fantasy homes, but Shapps is keen to stress that building your own place needn’t be for the wealthy few. “The average cost of a ready-made home is now more than £232,000, but a budget of £150,000 is usually adequate to build a three to four-bedroom house. Fourteen thousand self-build homes were constructed in the UK last year, just one in 10 new homes, a figure which lags behind the rest of Europe.”

Shapps’s aim is to double the size of the UK self-build sector. He has enlisted the support of some of the biggest names in British property, including the “Restoration Man”, George Clarke, the BBC architectural historian Dan Cruickshank and Kevin McCloud.

McCloud knows better than most about Britain’s self-build frustrations. As presenter of Channel 4’s Grand Designs, he has spent more than 13 years helping people to realise their dreams, and to deal with the myriad frustrations they encounter.

“Often people think of self-build as long, difficult and self-sacrificing,” he says. “But with the right planning, help and support it can be an enjoyable process.”

As well as individual self-builders, the portal aims to encourage community projects, where a group takes charge of a local scheme. This means that self-builders can buy a “base unit”, a plot where the foundations are laid and utilities connected.

“What we’ve seen from Grand Designs is that 90 per cent of the hard work is breaking the surface: laying foundations, connecting to utilities, that sort of thing,” McCloud explains. “One solution might be for people to buy a base unit and then put their own designs on top of that. It’s good news for home builders, and also good for the landscape because people will have more architectural input.

“Self-build homes are often more ecologically sound, so it could also be beneficial for the environment.”

One of the controversies around the Government’s new legislation to free up planning laws has been the fear that the countryside will become swamped with low-quality homes.

Restoring ownership, by having a greater number building their own properties, could help ensure that new properties are both attractive and precisely suited to people’s needs.

“It would be great if we could become a nation of self-builders,” adds McCloud. “Like the Dutch, the French, the Germans, the Italians, the Swedish – the list goes on – we have lagged behind so far, but there’s no reason why we can’t catch up.

“Self-build is a dream that can stay with you through your whole life.”

By: Ed Cumming

Portable buildings

Posted by admin on April 24, 2012

Issue: Energy and mining companies often create homes and infrastructure in previously uninhabited areas only to leave them abandoned once operations cease

Shift: New processes let companies quickly set up, tear down and move buildings whenever they need to, creating a more sustainable and cost-effective approach to infrastructure

If you build it, they might come. But what happens when they leave? That’s the dilemma facing many thriving oil and gas, energy and mining operations that have set their sights on development in remote communities throughout northern Canada.

With the rebound in the resource industries, the sectors are surging ahead with projects that will instantly grow existing communities or instantly create new ones. But past booms and busts have shown that building a community infrastructure isn’t that simple — especially when the production life cycle will peter out within 20 to 25 years.

The questions being asked around the planning table are different from days gone by: How do we get it up and running as quickly as possible? How can we do it in an environmentally sustainable way? And what do we do with it all once the boom is over?

There is a lot of overseas mining activity in the Yukon, for example, that will demand infrastructure building in what were once virgin territories, notes John Berg, architect and senior associate for engineering firm Stantec in Whitehorse, Yukon. “The biggest obstacle for these people coming in is dealing with the environmental impact and delivering an infrastructure that they have to have up and running in a matter of months.

“That includes electrical, mechanical, structural and architectural planning.”

Infrastructure and life cycle planners need only look at the fallout of aggressive post-war development to know what not to do. When the market faltered, many communities were virtually abandoned after operations closed.

But as Scott Weston, mining sector leader for Hemmera in Vancouver, which specializes in environmental management and infrastructure design, notes, today’s planning exercises are far more future-focused.

“You need to build in a way that the smallest footprint of land is disturbed. You have to design taking into account the potential impact on human health, socio-economic and socio-community factors. And you have to consider the entire life cycle of a community and plan for closure in 10 or 20 years’ time. What’s the cost of clean-up when you’re done?”

Governments have become increasingly leery about being left on the hook for project clean-ups, he adds.

“People are now planning projects for closure so they minimize footprint and environmental impact while supporting economic development. I’m also seeing progressive reclamation, in which they remove liabilities as they go rather than waiting 19 years to start.”

As part of that, organizations are increasingly considering modular and portable infrastructure solutions from communications, energy and water-treatment systems to housing and community buildings. The reasons are simple: Modular translates into cheaper to build, faster to deploy, and, more importantly, easier to dismantle, move or recycle.

On the economic front, Mr. Weston notes that the scale of today’s operations is much bigger and the amplitude of these booms and busts are getting larger. Translation: companies need to get operational as quickly as possible to justify the investment.

The outcomes of modular thinking also deliver positive benefits on the environmental front, Mr. Weston says. “Having something that is temporary and can be moved is good from an environmental perspective. And you can scale up or down throughout the life cycle of the project. That’s a much more sustainable approach. And every mining company is thinking that way right now. It’s a new standard for how you do business.”

BioteQ Environmental Technologies Inc. in Vancouver has worked with resource industries on sustainable water treatment technologies. According to company CEO Jonathan Wilkinson, it recently engaged in a project that involved the development of a portable water treatment system for a mine site in northern Canada.

“Everyone is looking for opportunities to shrink their footprint and make things more portable,” Mr. Wilkinson says. “A lot of operations are looking at significant expansion, and need to sustain themselves through that  growth. Permanent facilities are expensive and inflexible. Transportable solutions are much more desirable in many cases because they reduce both economic and environmental risk.”

Another aspect that ties into the modular movement is skilled labour shortages and high turnover. Not only do modular solutions reduce the need for skilled
construction hands, they also provide higher-grade living conditions and supporting facilities, such as arenas and schools, that are appealing enough to keep employees and their families comfortable and happy in their environs. The old trailers and metal shelters aren’t nearly enough to ensure employee retention.

That’s a big selling proposition for companies like Sprung Structures in Calgary. The family-owned company produces tension-membrane modular facilities that range in size from barracks, churches and schools to large-scale community recreation-size facilities such as gymnasiums and hockey rinks. Construction can be done by a team of 10 unskilled labourers at a rate of 2,000 sq. ft. per day by 10 workers.

Phil Sprung, president, tells the story of a team of oil company engineers walking through the two-storey modular facility serving as the company’s head office. “They told me they had just finished constructing a new office complex that took two years to build, was 30% over budget, and they had already outgrown it.  Then they saw we could have had something finished and operational within 90 days at 70% less cost. All they said was ‘that changes everything for us’. It was one of the greatest meetings we ever had.”

Mr. Sprung touts the buildings as “99% reusable” because, with the exception of the bolts, they don’t corrode. Some of the buildings have had three or four lives — a more sustainable alternative to “bulldozing a site and taking thousands of tonnes of debris to a scrap yard.” Materials are also light enough to be helicoptered in if need be since materials are one-tenth the shipping size.

Out-of-the-box residential housing options have also improved considerably, notes Andrew Libera, president and CEO of RedLeaf Homes Ltd. in Victoria. RedLeaf recently signed on with ICI (Innovative Composites International) to distribute its permanent and portable homes and shelters in Canada. He reports that a 1,000 sq. ft. structure can be erected and ready for plumbing and electrical in about two days at a cost in the $60- to $100-per-square-oot range — a significant savings from more conventional builds that can run $120 to $200 a square foot or higher.

“We’re seeing a lot of interest from the mining community,” he says. “The price point and portability is such that it’s right in their wheelhouse. The best part is they can be dismantled and reused. You don’t need cranes – just some basic hand tools you’d find in any garage.”

9 ways to avoid home-buying pitfalls

Posted by admin on April 2, 2012

So it’s officially a buyers’ market, and you’re all geared up to find a home that makes your heart sing.

But, despite advantages in the buyers’ favor, at least for now – prices that still seem to be falling, low interest rates and lots of houses to choose from – smart house-hunters need to be wary of the pitfalls of buying.

And take care.

We spoke to experts – real estate agents, mortgage brokers, bankers and attorneys – for their advice to buyers.

1. Make a list

If you don’t figure out just what you want, you might just buy the wrong house.

“I always say this to all the young buyers: They have to decide where they want to live and what they’re looking for in a home,” says Michelle Cohen, associate broker and executive vice president for Century 21 Laffey Associates in Greenvale.

“Does it have the proximity to your job? Especially now, with the cost of transportation so high, it might make more sense to look for a house close to your place of business.”

You also have to look at the cost of owning a home – again, with fuel costs high, how much will heating it run you? If it has a large piece of property, keeping it up costs either time (if you do it) or money (if others do), she says. How is the school district? Can you afford the taxes? (They will only go up.)

“You should sit down and write a list of what you’re looking for in a home, and really do your homework,” Cohen says. Even a house that seems like a bargain may not be one if it doesn’t meet your needs.

2. Check it out

Avoid a nasty financial surprise that could ruin a deal.

“I think education is extremely important right now,” says Jeff Barker, Bank of America’s regional executive for consumer banking. “The buyer should fully understand what will be asked of him or her when they are ready to apply for the mortgage.”

It’s important to check your credit reports to see if you can fix any mistakes, he says. And be sure to figure out how much house you can afford – most lenders, including Bank of America, have online tables that will help you figure it out.

You’ll need to get your financial records in order – proof of income, tax records, a solid source for a down payment and the like, he says. Then, get prequalified so you can show a seller you’re a serious buyer who’s ready to go.

Barker says that, even though lenders may be taking more care than in the past, “it’s not a difficult process for people who can afford a mortgage.”

3. First, hire a lawyer

Fools act as their own attorneys in real estate, too – you could get burned. Badly.

You might think you can wait until the closing to hire an attorney – but things can go wrong, so it’s a good idea “from the get-go” to find a good lawyer, says Elysia Prinz, manager of Coach Realtors’ Northport office.

And they’re surprisingly affordable – most attorneys charge a flat fee for the entire real estate transaction, and you’ll probably pay somewhere between $1,000 and $1,500 locally, experts say.

It’s a good idea to have your lawyer look over any legal document before you sign it – no matter how boilerplate it might look, including an agreement with a broker, says David Sappé, a Huntington attorney with a practice concentrating in real estate law. “As soon as they’re out in the market and serious about buying or selling, they should have an attorney – from that first binder handshake,” he says. “There’s no premium that you have to pay for lining up an attorney before or after.” If you don’t have recommendations, he says, you can check with the state or local bar association.

Look at it this way, he says: When else would you get involved in “a half-million-dollar transaction” without protecting yourself legally?

4. Working for you

Not all real estate brokers are alike – and remember, most of them are representing the homeowner. Not you.

Ask friends, neighbors and relatives for recommendations, and find an experienced person who makes you feel comfortable.

Especially if you’re a first-time buyer, you might want to consider hiring a buyers’ broker to represent your interests. (It won’t cost you any more – their fees are split with the seller’s agent, as in any real estate transaction.)

Even brokers who take you around are working for the seller (which is their legal obligation), not for you, unless they’re specifically a buyers’ broker – a concept more common elsewhere in the country, but catching on here.

A buyers’ broker “might be able to do a little better job negotiating,” says Prinz of Coach Realtors. Plus, she adds, a broker representing a seller is not required to reveal things or find things out about the property or neighborhood that might be negative – for example, if a local planning committee is considering an action that would mean “that lovely piece of land that you’ve been looking at, that greenbelt, is going to be an industrial park,” she says.

A buyers’ broker, on the other hand, should do that kind of research for you.

5. Have a cushion

Don’t use a fly-by-night broker (or bank) to finance your mortgage, or you could blow the deal.

No one who’s followed the news in recent months about failing mortgage companies – and even banks – should take the prospect of financing a house lightly.

Make sure you deal with a reputable mortgage broker or a bank, says Robert Bram, senior loan officer for Preferred Empire Mortgage Co. of Melville, an affiliate of Prudential Douglas Elliman Real Estate. And, he says, it’s important that you have a bit of a cushion when you apply for a mortgage in case the situation changes. “The market is changing,” Bram says. “There could be some fluctuations in the interest rate.” You shouldn’t be “down to your last dime.”

If the interest rate suddenly goes up half a point, you shouldn’t be so tight that you can no longer afford the mortgage – not to mention having a fund for repairs and emergencies.

6. Get good advice

Listen to the experts, not your Aunt Bertha – it’s likely she doesn’t know what she’s talking about.

You could drive yourself crazy trying to sort through all the doom and gloom in the news as well as “advice” from people who may have your best interests at heart but don’t know what they’re talking about.

Talking to relatives who don’t own houses but feel free to give advice is “a sure deal killer,” says Michael Daly, principal broker for Beach Properties of the Hamptons in North Haven and author of The Hamptons Real Estate Blog (thehamp tons.wordpress.com).

And “telling your cousin you’re about to buy a house and having him scream, ‘You’re crazy!’” doesn’t help either, he says.

You’ve put together a team of professionals – a broker, a financial adviser, a real estate attorney – so listen to them. That’s what you’re paying for.

7. Don’t skip the report

Don’t buy a lemon (but sometimes, a lemon-in-waiting can help you make lemonade).

When we’re talking about professionals, by no means skip that all-important engineering report.

The seller should handle serious issues, such as removing an underground oil tank or fixing any serious problems with plumbing or electrical systems – and these can be negotiating points. If the house has serious issues and the seller doesn’t want to address them, the best bet might be to walk away, experts say.

But something that comes up on the report could help you bargain for a lower price – that is, if it’s not something vitally important that makes buying the house questionable.

On the other hand, you’re not buying perfection. On a used house, Sappé says, “wear and tear” – say, some outside boards that have rotted, or painting that needs to be done, or the like – are not the seller’s responsibility to fix.

An engineering report can sometimes kill a deal, says Joan Silverman, a Northport attorney whose practice concentrates on real estate.

“Buyers kind of want it perfect, and sellers feel like they don’t want to give it away,” she says – adding that both buyers and sellers need to be reasonable and compromise.

8. It’s not a fire sale

Don’t insult the sellers – if you do, you might never have another chance at their house.

A lowball offer might work – but it might bring only hostility. Let your agent guide you about a negotiating price.

Rick Hoffman, senior regional vice president of the East End for The Corcoran Group, says, “Don’t go out there and think that there’s a fire sale going on, especially on the East End. There are bargains to be had, but it’s not a fire sale, and if a buyer comes in and makes an unreasonably low offer, you’re going to lose because you’ll insult the seller, and they won’t negotiate with you.

“Everyone thinks that their house is special,” Hoffman says. “People are emotionally attached to their homes, they have memories, and they’ve raised their family there. And sometimes, that’s not evident to a buyer. People need to remember that. Just be sensitive to it.”

It’s important to justify your offer, he says. “You can say, ‘I’ve looked at the properties around, I love your home, but it needs this, this and this.’ If you can maintain an amiable relationship between the parties, that helps facilitate the transaction, and that’s what a good broker does.”

9. The short and long

Don’t try to buy a short sale – unless you don’t care about the time.

Short sales, in which a lender will agree to accept less than what the homeowner owes and thus avoid foreclosure, are becoming more common on Long Island, says Philip Tesoriero of Gelip Inc. Consulting of Amity Harbor, a broker and consultant who teaches seminars about short sales for Realtors around the country.

But they can take much longer than the typical real estate transaction. “In this current market, you have to be prepared to be patient,” Tesoriero says. Whereas, a regular house sale could close within 30 days, a short sale could easily take eight to 12 weeks, he says.

Are they worth waiting for?

“I think they could be excellent deals for a person who could be a do-it-yourselfer or a contractor,” he says. But since these houses were owned by homeowners in financial trouble, he says, don’t underestimate necessary repairs – which could make what seems like a good deal a poor deal. Short sales, he says, “could run into a lot of money for people.”

By: Peggy Brown

Gen Y will drive rents higher, seek smaller homes

Posted by admin on October 30, 2011

Generation Y will change housing demand, and the strained finances of many Americans will lead to more multi-generational households, according to a new report from the Urban Land Institute, released at its annual fall meeting this week.

The report, “What’s Next? Real Estate in the New Economy,” finds that many real-estate trends will be driven by the values and preferences of Generation Y, a group now in their teens through early thirties.

It’s a group that will be comfortable in smaller homes, preferring an easier commute and better lifestyle to bigger living space, according to the report. They’ll also increase the demand for rentals, a trend that will cause rents to rise.

Meanwhile, researchers expect a continuation of the trend that has people sharing housing, at times creating multi-generational households. They expect much of the fast-growing senior population to age in place or move in with relatives in order to save money.

Generation Y is the largest generation in American history, according to the ULI. It’s only logical that the preferences of this group will have a large influence in shaping the places where people live and work in the years ahead.

By: Amy Hoak

America’s Best and Worst Housing Markets, 2011

Posted by admin on October 25, 2011

Want to know how bad the real estate market is? Just drive down almost any street in the U.S. and you’re likely to see “for sale” signs lining the road. Come back a month later, it’s a good bet the same signs are still there—and quite possibly a few new ones, too. But while there’s a lot of housing pain, there’s also some good news. That’s because in some markets across the country not only have home values improved, a few have even seen double-digit growth.

So where is this miracle occurring? Believe it or not, the city that has seen the biggest increase in home value is in Florida. That’s right—the state that has seen home values plummet 52.3 percent from 2006 peak levels. Nearly 96,000 loans were modified in Florida through August 2011 under President Obama’s Making Home Affordable program. Joblessness, foreclosures, and high inventory hamper recovery in nearly every corner of the state, with rare exceptions. In this case, the rare exception is Weston, a high-income city of more than 65,000 people near Fort Lauderdale where the median home value has risen 15.1 percent to $280,000 from February 2009 to August 2011.

A survey of the 1,000 largest cities nationwide by online real estate marketplace Zillow for Businessweek.com identified the markets with the biggest gains and losses in home value, ranking Weston the best-performing city since Obama took office. In contrast, the U.S. median home value fell by 9.9 percent over the same period.

What’s behind Weston’s success? Ines Garcia, an agent for EWM Realtors in Weston, describes the city as “Broward County’s cul-de-sac.” “It’s like driving into a gated community: the landscaping, the manicuring all around the city,” she says. “We were very lucky. Weston was one of the last communities to fall and one of the first to recover.”

Other winners: Arlington, Mass., where the median home value increased by 14.8 percent since February 2009; Brookline, Mass., at 13.6 percent; and the D.C. suburbs of Burke, Va., at 13.5 percent, and Vienna, Va., at 12.8 percent, Zillow data indicate.

Of course, the winners are far outnumbered by the losers. The city with the worst-performing market in the survey is only 50 miles from Weston in Homestead, Fla., where the median home value dropped by 48.8 percent since February 2009. Rounding out the bottom worst-performing markets: former manufacturing city Pontiac, Mich., with a 47.4 percent decrease, and New Jersey capital Trenton, at 46 percent.

While those in depressed housing markets hope for solutions from the White House, “I don’t see how any President is responsible for the housing market in a particular area,” says Steven Blitz, director and senior economist at ITG Investment Research in New York. The federal government and national housing policies have a limited impact on a local level.

According to  Senior Economist Svenja Gudell, under current conditions the median U.S. home value will likely fall another 3 percent to 5 percent and not reach trough until 2012 at the earliest. The Obama years have been bad ones for housing, yet government was not alone in breaking the housing market—and it cannot be alone to fix it.

By: Venessa Wong

Be careful when renting newer condo or home

Posted by admin on July 30, 2011

Nov. 1, 1991, is a very important date for rental properties in Ontario.

If your home, condo or apartment was built after that date, rent review does not apply. So, instead of the maximum increase of 0.7 per cent permitted in 2011 for most rental units, there is no limit on how much a landlord can increase the rent after the first 12 months of your tenancy.

Let’s say you rent an apartment in a building constructed before Nov. 1, 1991, and your rent is $1,000. The maximum your landlord can raise the rent this year is $7, to $1,007.

However, if your unit was built after that date, your landlord can raise the rent as much as he or she wants — to $1,500 for example.

In all cases, the landlord has to use the proper forms under the Residential Tenancies Act and must give the tenant at least 90 days’ notice of any increase. If the required notice is not given, the entire rent increase will be declared void later.

There are now thousands of condominium units in Ontario built after Nov. 1, 1991, that are being rented to tenants. If you are thinking of renting one, consider a clause in your lease that puts a maximum on how much the landlord can hike your rent each year.

For landlords, this right to increase arbitrarily should not be abused. It should be limited to what the fair market rent for a similar type of unit would be. For example, let’s say you rent a two-bedroom unit in Toronto for $2,000. After one year, similar two-bedroom units in the area rent for $2,200. You are having problems with the tenant. Can you raise the rent to $3,000 in order to effectively terminate the tenancy?

In my opinion, if the landlord tries to just get rid of a problem tenant by unreasonably increasing the rent well above fair market value, they may have difficulty terminating this tenancy for non-payment of rent later. A judge may look at the entire process as acting in bad faith.

I am fairly certain this Nov. 1, 1991, exception to rent review will become an issue in the October provincial election. I wouldn’t be surprised if rent review is extended to cover these units as well.

We have a real problem in Ontario in that few new apartment buildings are being constructed. Builders make more money building condominiums. There needs to be creative thinking by our politicians to encourage and provide incentives to building more rental units in Ontario. This will benefit both landlords and tenants in the long term.

Until this happens, tenants must be careful to protect themselves when renting units built after Nov. 1, 1991. Landlords must always make sure to use the proper forms and give 90 days’ notice before any rent increase.

By Mark Weisleder