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For all of your Toronto real estate needs, contact Laurin. I am dedicated to helping you find that perfect and unique new home to call your own.

 

Five questions to ask before selling your house

Kather­ine Scar­row – Globe and Mail

In June, 2010, when my boyfriend and I bought our first house together – a 1940s bun­ga­low in Mim­ico just steps away from Lake Ontario – we were thrilled. Home own­er­ship sig­naled our sta­tus as adults. Like many young and eager home­own­ers, we spent count­less hours hunt­ing the aisles of IKEA and Home Depot, as well as paint­ing and assem­bling fur­ni­ture. (It’s likely I still have flakes of paint in my hair and Allen key cal­luses on my hands).

But as enthu­si­as­tic as we were about our place, the desire to live down­town – while we’re still sans enfants – never left me. Over rides on the GO train in the morn­ing or on the ram­bling Long Branch street­car in the evening, I’d imag­ine what life would be like if I could walk to work, or to improv class at Sec­ond City or to my flag foot­ball games at Lam­port Sta­dium in Lib­erty Village.

Now sell­ing, mov­ing and buy­ing a home (and all its asso­ci­ated headache-inducing minu­tiae) involves incred­i­ble amounts of time, energy and money – espe­cially in a mar­ket as hot as Toronto’s. It’s not a deci­sion to be taken lightly, espe­cially con­sid­er­ing the dras­tic finan­cial reper­cus­sions an ill-advised or poorly-timed move can have.

After months of dis­cussing our future, research­ing down­town neigh­bour­hoods, weigh­ing the pros and cons of mov­ing and fig­ur­ing out how we could afford it, we have decided that we will list our house on the mar­ket in the spring. To make sure that we’ve cov­ered our bases, I spoke with real estate investor Don R. Camp­bell to find out the ques­tions every­one should ask before they decide to sell their house.

1. Do I need to move or do I want to?

This may seem like an obvi­ous one, but it’s remark­able how many peo­ple con­fuse their wants with needs, says Mr. Campbell.

If you have to move, can you clearly define why? Is your one bed­room 600-square-foot condo in the down­town too small with a baby on the way? Is your 6,000-square foot palace in Vaughn far too big for your empty nest? Or per­haps some­body in the fam­ily has been trans­ferred, forc­ing you to relo­cate. If you need to move, explains Mr. Camp­bell, the mov­ing process is accel­er­ated and you can­not be as picky as you may like to be.

If mov­ing is sim­ply a dream – whether for more space, to be closer to work, to have a bet­ter view, for exam­ple – the seller/buyer can be much more selec­tive. “Under the ‘want’ win­dow you have a lot more flex­i­bil­ity,” he says.

2. What will my ‘real net’ be when I sell?

There are a num­ber of costs asso­ci­ated with mov­ing that we often for­get when ana­lyz­ing our bud­gets, which can some­times lead to com­ing up short at clos­ing time, says Mr. Camp­bell. “The key is to know your real net.”

Many assume that if they sell a home they bought two years ago for $200,000 for $350,000, they’ll have $150,000 to buy the next prop­erty. But after tak­ing into account the laun­dry list of costs asso­ci­ated with mov­ing – includ­ing real­tor fees and clos­ing costs, to name a few – the seller is look­ing to have closer to $100,000 to play with.

Com­ment: Not really… Com­mis­sions would max out at 5%, likely less – bud­get for $20,000 (includ­ing HST) and it will def­i­nitely be less than that. Legal fees are about $1,500. I would esti­mate a max of $20,000 total to sell a $350,000 prop­erty. If you get com­mis­sion down to 4% (which is totally com­mon) then you are look­ing at $17,000 or a touch over. So you would have $13x,000 to play with, NOT $100,000.

Mr. Camp­bell empha­sizes the need for sellers/buyers to do the math early, rather than be sur­prised and dis­ap­pointed when they real­ize that they can­not afford what they ini­tially thought they could.

3. Do I know where I want to move?

Do we want to live in Markham or Lit­tle Italy? High Park or Scar­bor­ough? The ques­tion of where to move is so self-evident, it seems strange to ask. But fig­ur­ing out where you want to move – and nar­row­ing your options down to a few areas – is a crit­i­cal ques­tion. We live in the Greater Toronto Area but it applies to mar­kets across the country.

Tak­ing the time to research the mar­ket and to be real­is­tic is key. In Toronto, for exam­ple, cer­tain mar­kets are extremely hot. Did you know that a three-bedroom bun­ga­low in North York just sold for $421,800 over ask­ing? That might be one area to cross off your list.

4. Can I really afford what I want/need?

When cal­cu­lat­ing how much house you can afford, esti­mate mort­gage pay­ments based on inter­est rates that are two or three per­cent­age points higher than cur­rent rates, and if you can­not afford that, get a smaller mort­gage and buy a less expen­sive house.

But “even if you can afford it, pay that equiv­a­lent no mat­ter how good a rate you can get,” Mr. Camp­bell says. “If you can pay the equiv­a­lent of 4.99%, why not just pay it because that extra pay­ment every month will dra­mat­i­cally shorten your amor­ti­za­tion and help you pay down the prin­ci­pal faster? And then when rates creep back up, the jump won’t hurt you because you’re already there.”

5. How can I afford to move to an area I like?

In order to move down­town, my boyfriend and I have decided that we will need to pur­chase a house with an income prop­erty. If this is some­thing you have con­sid­ered, the ques­tions you should ask your­self are:

* Can I legally have a renter in the area in which I’m tar­get­ing? Mr. Camp­bell says he has had clients who have bought prop­er­ties or put in suites only to have them shut down.
* Is there a high demand for rental prop­er­ties in the area?
* Have I thought about the reper­cus­sions of a ten­ant, and the idea of hav­ing direct con­tact with him or her every day?
* Have I weighed the finan­cial reward ver­sus the incon­ve­nience of hav­ing a ten­ant in my house?

Now you’ve done the ini­tial home­work and con­firmed the value of your prop­erty, as well as fig­ured out what you can real­is­ti­cally afford. You have made the big deci­sion to sell your house.

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Con­tact Lau­rin Jef­frey for more infor­ma­tion – 416−388−1960

Lau­rin Jef­frey is a Toronto Real­tor with Cen­tury 21 Regal Realty. He did not
write these arti­cles, he just repro­duces them here for peo­ple who are
inter­ested in Toronto real estate. He does not work for any builders.

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