Far too often Sellers in Vancouver and the Fraser Valley agree to do things that they don’t end up following through with.  In a Vancouver Real Estate transaction this could result in a Buyer being responsible for thousands of dollars in repairs or future payments if a Seller does not do what they agree to do.

A Hold Back is a good way to ensure that what a Seller agrees to in an Accepted Offer actually gets done.

Here is an example of how the hold back works.
Let’s say that at the time of the negotiations the Seller agrees to replace the garage door opener prior to the buyer taking a possession of the property.
The the time of completion arrives and the Garage door open is still not replaced.  The sellers are gone and their agent has a hard time contacting them. The buyers are upset and although they have the right to sue the sellers for not fulfilling their obligations, they do not want to push it too far since the item is only worth $300. So the buyers just exhale a few nasty words and replace the opener themselves.

Here is what should have happened...
At the time of negotiating the contract when the sellers agreed to replace the non-functioning garage door opener, the buyers should have made a note in the contract to make the Sellers agree on a $300 hold back at the completion.
The money will go into their lawyers trust account and once the buyer confirms that it is done the money will be released to the sellers. If not, then the $300 will go back to the buyers to fix the opener. This is just another example of how the experienced consultant /negotiator can reduce your stress level when buying or selling Real Estate.

Tibor

Here is a case to learn from...This happened in 2005 (during a very hot market).

Mark and Sandy bought a new house in Chilliwack directly from the builder. They agreed on the contract price, terms and the completion dates. The house was about 6 weeks from being fully finished.
Due to the lack of representation many items in the contract were omitted.
Two weeks after the family moved into their new house, they found a letter from a local law firm informing them that a lean was placed on their title. The lean holder was a plumbing company that did the plumbing.
It turned out that the builder never paid the plumber for their work and apparently had no intention to do it now that the house had sold. The plumber demanded his $7,800 or else.

This is Unfair! Why should we pay for the plumbing twice!?
When we bought the house, the plumbing was included wasn’t it?  These were their words when I meet them, to see if I can advise them on a solution.

This whole issue could have been avoided if the contract was properly drafted.
When new construction homes are sold, we protect the buyer by withholding 10% of the value of improvements for 55 days from the time the occupancy permit is issued. Example: If the cost to build the house is $ 250,000 then the buyer’s lawyer would withhold $25,000 and keep it in his trust account for 55 days. If there were any unpaid debts or contract invoices the contractors have 55 days to place a lean on the property.
So in this case, if the plumber had come with a request to get his invoice paid then there would have been money to pay him.

In the end, Mark and Sandy did solve their problem but this experience left them bruised. They no longer trust a handshake agreement and they promised me that they will always get a professional opinion before committing to any contract.

Tibor

I am sure you have heard about Secured Lines of Credit. If not here is a quick explanation.

Let's assume that you own a house that has an appraised value of $300,000 but you still owe $200,000 on your first mortgage. That means that you have $100,000 in equity.
Based on this information most banks will issue you up to a $65,000 line of credit with the interest rates as low as prime+1. That would be secured by the second mortgage on the title of the property. I know this sounds really good.
I know that it would allow you to go for that dream vacation or to buy that car you always wanted...but watch out. It is really easy to spend the equity you worked so hard to create.

These secured lines of credit were originally designed for two reasons;
1. For emergencies.
2. To help us to increase the value of the property like renovations, additions and remodeling. Meaning take one dollar out and give yourself $1.25 back.
They were not created to decrease the value of your property, and that is exactly what will eventually happen if you are not careful.

Lately I have seen many families using their homes as a personal ATM’s.
For real life examples we don’t need to look very far.
In the past few years our neighbors south of the border had a number of options to extract valuable equity out of their homes (Like subprime mortgages) to buy boats, SUV's and expensive trips, and look what happened to their Real Estate values.

So be cautious with the equity of your home. It is much easier to spend then to create!

Tibor
Your Realtor For Life!

Years before he filmed the Godfather, Francis Ford Coppola met Al Pacino and they almost made a movie together.  Later, when it was time to cast his greatest film, Pacino was an obvious choice for Coppola.
Ask any successful director for a list of actors or cinematographers or screenwriters they'd like to work with and they can answer you, instantly. They're always keeping lists.

Do you have one?
If your firm has an opening for a hire or a freelancer, do you have the name ready, instantly, the one you've been waiting for a chance to work with?

If your neighbor would ask you for a trusted lawyer or notary do you have one on your list?  If you plumbing breaks down will you pick up the yellow pages to find a plumber or will you look in your cell phone directory because that is where you keep the closest  friend’s and people that help you with problems and challenges that life brings?

I’ve learned that the worst time to go looking is when you need someone badly.
I know that most of my past clients have my cell number in their cell phone directory. I know this because they call me frequently whether to discuss future needs and wants or to introduce their friends, family members and neighbours to me that may need my help.

I hope that if you don’t already have my number in your cell directory then you will take 30 seconds of your time and enter it now. It is 604 855 2521

Tibor Bogdan

Someone once told me that there is no secret to success.
He followed up with an explanation saying, “Have you ever met a successful person that didn’t want to tell you all about how he/she became successful?”

What I have learned is that they always do the opposite of what the mainstream thinking is. They buy Real Estate when everyone is selling and they are selling when everyone is buying.

It does not take smarts to do what they do. All it takes is guts. It is not easy to act when everyone else is sitting on their hands and do nothing when everyone is excited about buying something.

Simple? yes!
Easy ? No!

Tibor

Change is uncomfortable but it is good for you.
I have a lot of personal experience with change and I have learned to love it. The first job I had and thought that I would be there until I retired was really hard to quit since I had no idea what I would do next. Looking back it was the best decision I made in a long time.
The first home I bought with my wife was a big change.
We were afraid whether or not we would be able to keep it. It turned out to be one of the best financial decisions we ever made.
Going into the real estate business was scary. I did not know if I would survive. After many years, I no longer think ‘survival thoughts’. I am thinking ‘stability and prosperity’ thoughts now.
The willingness to change creates new opportunities and improves our lives. If you don’t like where you are and what you do, then change it. It is in your power.
See, what I have learned is that the opportunities are rarely presented to us as an easy thing to do. They are usually dressed up in the difficulty suit. They are hard to recognize.
But they are yours to take if you have the right attitude and are willing to change.
So my advice for you is to embrace the change!
Tibor

I do all my business with XYZ bank and now that I need a mortgage they rejected me. Why is that?

Quite often buyers believe that the bank they are dealing with for many years is the best possibility to issue them a mortgage on their home. It does make a lot of sense since the bank already knows your finances, your income situation and your credit worthiness. Through many years of working with different lenders I have often found this to be false. Why?

Banks are spending money to attract new clients but when their existing client’s needs help they turn them down. Often the client ends up doing business with a different lender. I call it, “I am too big to deal with you” syndrome.
Here is a tip for you. Before you approach your own bank, get a pre-approval from an independent mortgage broker.  Then, go back to your bank and ask them, “CAN YOU BEAT THIS?” It is quite different than asking them, “Can you see if I can get a mortgage?”

This works well!

Tibor

The Real Meaning Of Peace

There once was a King who offered a prize to the artist who would paint the best picture of Peace.  Many artists tried.  The King looked at all the pictures, but there were only two he really liked and he had to choose between them.

One picture was of a calm lake.  The lake was a perfect mirror, with peaceful, towering mountains all around it.  Overhead was a blue sky with fluffy white clouds.  All who saw this picture thought that it was a perfect picture of Peace.

The other picture had mountains, too.  But these were rugged and bare.  Above was an angry sky from which rain fell and in which lightening flashed.  Down the side of the mountain tumbled a foaming waterfall.  This did not look peaceful at all.  But when the King looked closer, he saw behind the waterfall a tiny bush growing in a crack in the rock.  In the bush a mother bird had built her nest.  There, in the midst of the rush of angry water and noise, sat the mother bird on her nest...in perfect peace.

Which picture won the prize?

The King chose the second picture.  “Because,” explained the King, “peace does not mean to be in a place where there is no noise, trouble, or hard work.  Peace means to be in the midst of all those things and still be calm in your heart.  That is the real meaning of peace.”

May you know the real meaning of peace at the holidays – and always!

Tibor Bogdan

Once in a while I am approached with a question regarding Native land leasehold properties.
Now, I don’t claim to be an expert in the Native Indian affairs. I am an expert when it comes down to the pricing and the values.
A client of mine asked me if I would recommend purchasing a home on the native land with a 99 year lease.
My view is this. If you are looking for a well priced house to bring the cost of living down then go for it (They tend to be 10-15% less then land ownership titles).
However, if you want to turn your house into an investment vehicle then think twice about it.
Why? Because leasehold properties will depreciate as time goes (just like your car). You have no ownership in the land and therefore you cannot offset or leverage the declining value of the structure. Plus, your remaining term of the lease is getting shorter and shorter and therefore less and less valuable.
Seek the help of a skilled advisor to navigate you through these sorts of decisions.

Tibor

Hey, here is an idea how you can help your friends, family members, co-workers and neighbours that are looking to buy their first home.

Sit down with them and tell them your storey about how you felt when you bought your first home.
*Tell them the truth!
*Tell them that you were afraid to commit to a mortgage.
*Tell them you were afraid that you would lose your job next week!
*Tell them about the stress you experienced while looking at 105 houses in one week! (I may be exaggerating)
*Tell them about that fact that you had to borrow money from grandma because you were short $800 for the lawyer’s fee.

And then tell them how happy you are that you did it!

Tibor