5 Tips for Home Buyers – Winnipeg Tourism 5 ‘Hidden Gems’ of Winnipeg for tourists and locals – Financial tips and advice from a financial planner for home buyers – Buyers Question and Answer – Winnipeg Real Estate Market Update – Last Word: Bidding Wars in real estate.
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REAL ESTATE ROUND TABLE JUNE 2017[00:00:01] If you have 20 minutes a month we can get you up to date on everything involved in buying or selling a home. This is the real estate roundtable. Are a monthly update on the real estate market. From a Winnipeg perspective. Now here’s your host Ryan Peterson and real estate expert Bo Kaufmann.
Ryan Peterson: [00:00:18] Welcome to the real estate Roundtable. I’m your host Ryan Petersen and with me as always is Bo Kauffmann our residential real estate expert. Bo how are you doing today.
Bo Kauffmann: [00:00:26] Great. Happy to be here. Ryan this month’s show we’re going to be talking a lot about tips and information for home buyers and sellers will find out about some lesser known Winnipeg attractions that you can enjoy this summer. And our featured guest today on Ask the Expert is financial adviser Thomas Johnson. He’ll share some financial tips for homebuyers.
Ryan Peterson: [00:00:44] But before we get to that Bo is going to share the five steps you need to take before you start looking for a home.
Bo Kauffmann: [00:00:49] You know many buyers think pre-approval is the first step and I’m going to surprise you by saying that actually preapproval is about halfway down the list it’s about the third step.
Bo Kauffmann: [00:00:58] Buyers phone banks to get the best rates without even knowing whether they qualify. So my first step is in about six months to a year before you’re actually going to buy a house is to check your credit score and improve it if possible. And there’s a couple of places you can check. In Canada it would be Equifax or Trans Union. Those are the two big ones used by the banks. So you can check your report for inaccuracy and fix what’s incorrect. Sometimes you’ve got an old phone bill that hasn’t been paid or maybe a Visa bill that was late. I think it’s Equifax it actually adds unpaid parking tickets in there. So make sure that all any glitches on your credit are paid for and taken care off.
Bo Kauffmann: [00:01:42] Another tip to clean up your credit rating is to not have too many credit cards. And on the other side of the scale if you don’t have any credit cards, get one and make sure you always pay it off because it just shows that your credit worthiness and your ability to pay.
Bo Kauffmann: [00:01:59] Second step is pick an agent. You’re going to spend a lot of time with this person and a good age and that’s like a quarterback of a football team or a good agent can help you navigate through the process but also put you in contact with all the other people that are involved.
Bo Kauffmann: [00:02:13] Whether it’s a financial adviser like we’re about to hear from from Thomas Johnson or a mortgage broker or a mover, a home inspector a home insurance company all that kind of stuff.
Bo Kauffmann: [00:02:26] The third step then is to get pre-approved getting pre-approved is important but getting pre-approved by the right lender is even more important. I had a customer call me the other day and he’d called his bank and they told him over the phone what do you make a year and he says to $60,000 and they said oh we just take four times that. And you should be good for a house up to about a quarter million dollars. Well that’s worse than useless because it really doesn’t tell them anything for sure. So the best way to do it is to sit down with a mortgage specialist at whatever bank credit union or a mortgage broker that you’re dealing with and ask them for a rate hold. Now this is how it works.
Bo Kauffmann: [00:03:05] If they put a rate hold on or for up to 120 days that means if the rates go up between now and four months from now you actually get the lower rate that you’re pre-qualified for. That could save you a lot of money down the road. On the other side of the coin if the rates actually go down between now and when you move in, you get the lower rates so it’s a win-win situation.
Bo Kauffmann: [00:03:35] I had a lot of buyers phone three different banks and what’s your best rate but they have no idea whether their situation would lend themselves to being the best and best qualified buyer.
Bo Kauffmann: [00:03:46] Now step number four is make a list of wants vs needs unless you have a million dollars house buying is actually an exercise in compromise. There are certain items that will be needs. So if you have three kids and you want to have at least three bedrooms on the main floor that would be a need. But some others will be once. So for example a lot of people will want a garage. Yes we have harsh winters but if I can find you a house for about 15 or $20000 under your top limit you might be able to add a garage right into the mortgage and I have ways of doing that as well. So make sure we separate the ones from the needs. And don’t sacrifice location to get something that you don’t really need.
Ryan Peterson: [00:04:29] And I guess the trick there too is also to make sure that your needs and wants are the same as your spouse’s fate.
Bo Kauffmann: [00:04:35] I’ve had that before and after looking about for houses I said to the couple “I think we should be looking for two separate houses” one wanted a two story that one wanted a bungalow.
Bo Kauffmann: [00:04:43] And the final step is make a decision with resale in mind the average Canadian moves every five to six years and you may think that you’re going to be in this house forever. But reality as things change your you’re going to improve your job hopefully you’re going to get some advancements in your job. Maybe instead of one child of a sudden you have a pair of twins. And so you want to keep resale in mind of course location location that is important. But there are other factors such as a number of bedrooms the location of the bedrooms. One example would be is that one and a half story homes where there’s two bedrooms upstairs and no bathroom. So you want to keep that in mind if you suddenly have two kids. And one of them has to be on the main floor. That’s not ideal. So an agent should be able to advise you on this. So those are my my five steps to getting you started on your search for a home.
Ryan Peterson: [00:05:44] Thanks Bo. Now that we know how to start the search. Let’s take a closer look at the current market.
Bo Kauffmann: [00:05:49] Time now for the market report with Bo Kauffmann of Remax performance realty. Winnipeg REALTORS who are the organization that represent all real estate agents in the southeast corner of Manitoba. They’ve been around for a hundred and fourteen years and like they do every month they look at the past month’s worth of sales and May 2017 ended up being the best month ever. We sold just shy of 1700 homes with a dollar value of just shy of half a billion dollars. So that’s $500 million worth of homes so that’s like buying 25 houses in Vancouver.
Bo Kauffmann: [00:06:22] Because the year started off slow May sales actually brought us 4 percent ahead of where we were last year. The other thing that stood out in this report is that houses in the 300 to five hundred thousand dollar range actually increased by 21 percent. Winnipeg realtors feel that the new growth impact fee that the mayor has put in against a lot of people’s advice may be having that kind of an effect that people say hey I don’t want to pay that growth fee. They buy a resale house where you don’t have to pay that. Now as fun as these reports are they’re really not all that helpful because even in a place like Winnipeg we’re made up of dozens of different markets so when somebody ask me “Bo what’s the real estate market like?” my question is “Well which part of the market are you looking at?”.
Bo Kauffmann: [00:07:07] Because a house in Transcona is going to sell different than the house in St. James, a high rise condo in the $500000 range is a completely different market than a townhouse condo in $180000 for this to be useful to you to look at what the price ranges are that you’re looking for. If you’re looking for a more luxurious home let’s save between four hundred and eight hundred thousand dollars. Linden Woods has just eight of those and two of those were listed in the last couple of days so that’s a really limited market. Whyte Ridge is even more limited that there’s only three houses in White Ridge for sale.
Bo Kauffmann: [00:07:45] However if you look at Sage Creek there’s 21 houses between 400 and $800000. If you’re looking for entry level let’s say 250 to 300,000 in Windsor Park there are seven of those, East Kildonan has seven of those as well. But Garden City and Maples combined has 27. So if you’re looking to buy or sell call your real estate agent and discuss it with him because knowing that the overall market is hot or cool doesn’t really help you because if you’re looking for a certain kind of house in a certain kind of area you need to know more specifics in that. Call me any time. I’d love to discuss this with you. And that’s the market report for me the Garden City and the maples also has a new jalebi and a save on foods. There you go.
Ryan Peterson: [00:08:31] Coming up after the break we’ll talk financial advice with this month’s ASC-P expert Thomas Johnson from Cascade Financial Group.[00:09:42] Buying or selling a home require specialists from multiple related fields you’re everything you need to know direct from the source is the real estate roundtable presents as an expert and we’re very pleased today to welcome Thomas Johnson from Cascade financial group. [00:09:58] Thomas thanks for joining us today. Thanks for having me.
Bo Kauffmann: [00:10:00] Tom a lot of home buyers might not realize how a financial adviser can help them. Fill us in on when and why they should talk to you.
Thomas Johnson: [00:10:09] Truly I think a financial adviser should be your first stop when you’re thinking about even buying a home. You should come talk to an adviser one two or even three years out from when you think you’d be willing to purchase something because I’m there to help every step along the way. What we do is we look at your budget currently figure out how much money you have available to save for your downpayment. We also figure out what’s the most efficient way to save for that down payment whether you should be doing the RRSP homebuyers program tax free savings account if you should be investing in mutual fund savings account kind of what’s the best program for you and making sure you stick to it. So we help guide you towards that down payment amount. We also work on budgeting on the back end and that’s a little bit different than what you’d get if you just went straight to to your lender or your banker what they typically do is they look at your your income your debt levels forecast of what your what your hydro might be or your property taxes and they put those together to come up with their debt servicing ratios. And that term is how much they’re willing to lend you and that’s a lot different than what people can afford. My favorite example is if you had two people who make the exact same amount of money have the exact same debt levels exact same credit score. They’re going to be offered the exact same amount of mortgage from the bank.
Thomas Johnson: [00:11:20] But what if one of them was single and what if one of them had three kids an independent spouse. That’s a big difference in what your actual cash flow is to pay that mortgage and coming to see me helps avoid getting your house poor on the back end. And then I also have a number of great professionals to give advice on every step of the way. I know one of the best realtors in the city beau Kaufman. I know a great mortgage broker who will help get a great rate. I can help with the legal expertise on the back end or with with finding a great property insurer to make sure that your your home is properly insured on the back end so I can walk you through the whole process and that’s why people should come talk to an adviser.
Ryan Peterson: [00:11:56] Now Thomas I heard you mention the home buyers plan. How does it work and who should really be using it.
Thomas Johnson: [00:12:02] It’s a really great program from the government what it does it allows you to take up to $25000 out of your RRSP. When you buy your home as a first time home buyer first time home buyer means in this context as it has to have been at least four years since you last owned a home or you’ve never owned a home before taking it out tax free in the with the only caveat being that you have to pay it back at some point.[00:12:26] There’s a two year grace period and then you’ve got to pay it back over 15 years in 150 increments. If you miss a payment they’re going to add that to your income for the year and you pay taxes on it. But what it does is it essentially allows you to borrow from your SPEEs to help pay for a house and the kind of people it’s good for anyone who’s who’s got that income level today to benefit from the tax deduction for saving in an RRSP. [00:12:47] You need to have the cash flow down the road in the proper budget to pay it back. And it’s also great for people who need to accelerate their savings for a down payment so it helps get you there faster so you can buy a home sooner. [00:12:57] And there’s a discussion here about life insurance and mortgage insurance. I hear a lot of people talking about that. [00:13:03] How does that work is it mandatory person fight a common misconception. What’s mandatory is that your lender has to offer you life insurance. The government recognizes the importance of having life insurance when it comes to a mortgage because that home that you put all the effort into finding into upgrading and making your own. If you don’t have life insurance and something happened to you Well it’s property of your lenders as long as there’s a mortgage balance on it. So it’s important that somebody has life insurance. It’s important that they offer to you but it’s not mandatory that you take it and I don’t encourage people to take the the mortgage insurance through the bank for a couple of different reasons personal insurance typically ends up being more cost effective. The bank life insurance has a decreasing death benefit more often than not. And what that means is every time you knock a dollar off your mortgage you actually decrease the amount of the insurance benefit by a dollar. Doesn’t make your premiums any cheaper but it actually doesn’t do anything to leave extra for the people you care about your personal insurance is level so if you pay that dollar off your mortgage even with the value of your state by a dollar as well the coverage with a personal insurance policy it sticks with you. So if you get sick of your lender and you want to go somewhere new. You are free to do so without losing your insurance coverage where if you take it from the lender it’s basically theirs. So if you’re sick of the bank and you go elsewhere.
Thomas Johnson: [00:14:21] Now you’re reapplying maybe you don’t qualify anymore. So there’s some risk with that lack of portability when you own it yourself you get to design it yourself. So if you want a little bit extra to pay for funeral to look after kids pay off other debts look after your favorite charity. You can do that with personal insurance which you can’t do with the lender insurance. And one of the biggest things is that the rating with personal insurance it’s always done upfront. You do an application and underwriter reviews your file and once they give you an approved contract and you pay for it either they are bound by that coverage and they owe you a payout. If you do it with through the bank it’s often underwritten at the time a claim at time a claim you’ve passed away so you can’t really defend yourself. And so it’s it’s often a bigger fight on the back end to get the insurance payout. So that’s kind of some of the few few reasons why personal insurance is just a much better approach than than mortgage insurance for most lenders.
Ryan Peterson: [00:15:13] Excellent. Thomas Johnson is with Cascade financial group Thomas thank you so much for joining us today. Before we go how can people get ahold of you.
Thomas Johnson: [00:15:19] You can reach me in the office anytime at 2 0 4 8 3 7 1960 or putt by my office at 1730 court enameling. Excellent thank you so much.
Ryan Peterson: [00:15:28] Thank you. Who knows the answers to your real estate questions below knows. Good thing it’s time for Bo Knows real estate.
Ryan Peterson: [00:15:36] And today’s Bo Knows question is from Mark in West Broadway. Mark what’s your question for Bo.[00:15:41] Hi. So I had a question about putting an offer on a house for a first time. So do we get to know if there are other offers, . And if so do you get the amount of those offers.
Bo Kauffmann: [00:15:52] Thanks Mark. That’s a great question. I get that quite a bit in Winnipeg we have what’s called a sealed bid system so we won’t see how much the other offers are for. But we will definitely know how many offers there are in fact there’s a couple of protective measures in place that have been put in place over the years. So if you’re working with me as your agent and we’re going to put an offer in on a house I’m going to for the listing agent first to see how many offers he’s got and he has to be both accurate and truthful in his response. So he can’t just say well yeah maybe or yes or no. He has to actually tell me if there are offers and how many. And my next question is going to be who are these other agents so that I can actually verify the answer of these rules were all put in place to protect buyers. A couple of years ago a lady called me and she wanted to work with me as a buyer and I got into the discussion of buying a private sale and she held her hand up and said No Bill I don’t even want to bother with that and I said why not. She’d put an offer on a private sale somebody that wasn’t represented by a real estate agent and she put in a full price offer the house was perfect for her great neighbourhood and all that night nice young couple selling it and they said they looked at the offer and they said well we need three days to think about it.[00:17:04] That’s a warning sign right there if you’re looking to sell your house and you’re getting a full price offer what do you need three days to think about it. So after three days she called them and they said no we need a couple more days and a couple more days and that stretch to two weeks and then her last call to the couple was answered by. Well I’m sorry we sold it to somebody else. So she wasted two weeks and this lady she needed a house she was out of her apartment pretty soon. So she wasted a couple of weeks waiting for somebody who didn’t even tell her that there was other offers. So these are just some of the protective measures of why you should be working with an agent in buying a house. It’s my job to look after your interests and to make sure that you’re not taken for a ride. So great question. Thanks Mark.
Ryan Peterson: [00:17:53] Coming up after the break on the community call out we’re going to talk to Dane aspiring president and CEO of economic development with a pig and we’ll find out about the Winnipeg’s lesser known tourist attractions. So stick around.
Ryan Peterson: [00:19:09] What’s going on this month in and around with a big find out with the community call out.[00:19:14] Joining me now on the community call out is Dana Spiring, president and CEO of economic development with a pig. Dana our listeners are familiar with the main attractions of Winnipeg like the zoo the Canadian Museum for human rights and the forks and all are professional sports teams. But what would you consider to be the five lesser known gems that when the pickers and visitors can check out the summer.
Dana Spiring: [00:19:35] Well Ryan you hit on some of the highlights and those are for sure some of them the ones I’d add to that would be the Winnipeg art gallery the Children’s Museum. Some of the other activities before we have some lesser known attractions that not everybody know about or it’s not on everyone’s radar screen. Some of the ones that I would flag for Winnipeggers is the royal aviation museum the royal aviation museum is the second largest aviation museum in Canada.
Dana Spiring: [00:20:01] It was given royal designation in 2014 and has an incredible display of the history of aviation in Canada and security in Manitoba. It’s a great collection and people can walk right up and touch the planes and really experience the aviation industry which I think is pretty spectacular. Another one that I think people forget sometimes is the Royal Canadian Mint. The Royal Canadian Mint produces billions of coins each year. Fifty five billion and counting for more than 75 countries around the world. So some people may know that Canadian currency is made of cement but we. We do it for a lot of countries around the world. Here’s a great manufacturing made great advancements in how they’re producing the coins and it’s really something that they need to see. Another one is that Manitoba electrical museum and education center.
Dana Spiring: [00:20:52] It’s a unique museum that guides visitors through the safe use of electricity and how electrical energy works. So medics of a hydro is always a big proponent of the electricity industry in Manitoba but their retired workers work at that museum to really give people a sense of where their electricity comes from how it works and how we’re able to produce it safely. Another place for people to take a look at this summer is Fort Gibraltar and it’s one of those things that if you look on Trip Advisor it is a 4.5 rating. It’s just close by to Forks between the red and a boring river. And it was a fur trading posts many many many years ago. But specifically it was a pelican warehouse of the Northwest Company. So if you go to all three you can see how the boys are lived you can see some of the greats all that they have there how they make various tools and entertainment and you can throw axes and have some some find like the voyageurs did outside a festival the boys you’re I always forget about forgie brother.
Dana Spiring: [00:21:55] And finally one last place for Winnipeggers to go visit this summer is a Winnipeg Railway Museum. It’s nearby for the Via Rail Station. It’s the only museum in Winnipeg dedicated to the preservation of Manitoba’s rail heritage. It’s got a great old steam engine in there so you can see a variety of vintage railcars and cabooses in that museum. So another great thing for Winnipegger is Manitobans to check out this summer.
Ryan Peterson: [00:22:20] Well Dina I’ve got two kids that are going to be off school for eight weeks and I’ve got I’ve got cousins that are visiting from out of province. So I’m so glad you’ve added to my list of great things to do this summer. How can we as Winnipeggers get the word out about these great places.
Dana Spiring: [00:22:35] Well you know I’ve talked a lot in the last year about the importance of Winnipeggers being an ambassador for Winnipeg and you know the way that we’re going to change the momentum in and keep the momentum going is we all need to be ambassadors and you know we’ve got to stop talking about mosquitoes and the cold weather we’ve got to start talking about the world the traction that we have here. And for those who don’t know what’s going on in Winnipegger some of the neat developments we’ve created a cheat sheet at economic development and tourism Winnipeg. If you go to my Winnipeg dot ca it is the cool notes of all the things that are happening in the city what to see what to do where to eat. And it gives everybody the opportunity to be a great ambassador for our city.
Ryan Peterson: [00:23:14] Excellent. Thanks Dana. Well before we close out the show here’s the last word with Bo Kaufmann.
Bo Kauffmann: [00:23:20] Well I’ve noticed a trend over the last couple of years and that is buyers are getting tired of competing and who can blame them. Years ago they used to be stories of 20 30 offers on a house and it’s really frustrating. So there’s a saying that goes and you know tell me, correct me if I’m wrong. It goes something like “when everybody else is buying, sell. And when everybody else is selling buy.
Ryan Peterson: [00:23:42] I think that was Warren Buffet.
Bo Kauffmann: [00:23:43] OK. So my take on that is and the way I want to adjust that is if people are afraid of competing compete. So I’m telling my buyers not to be afraid to compete. I had a property for sale a couple of weeks ago. They got four offers on it and in the old days four offers would have meant ten or fifteen thousand dollars above asking when we opened those offers. Two of them were actually below asking price the third one had so many poorly written conditions on it it would never have been accepted anyway. So then the winner of this was somebody who wrote a relatively clean but just a full price offer. So what I’m saying here is don’t be silly. If the House has asked me three hundred thousand dollars and this three offers on it writing to 80 at that point is is probably going to be a waste of time. But at the same time don’t be scared to write an offer because you just never know what those other offers are going to be. So if you can write a relatively clean offer at full price sometimes that’s enough.
Bo Kauffmann: [00:24:43] And I think Wayne Gretzky says you’re going to miss 100 percent of the shots you don’t take. And just so it is in real estate you’re going to miss 100 percent of the offers that you don’t make. And that’s the last word.
Ryan Peterson: [00:24:56] Great advice Bo. If people want to receive notification about next month’s show what can they do.
Bo Kauffmann: [00:25:01] Well it’s a couple of ways to find me if you’re on Facebook. Just simply search out WinnipegHomeFinder Bo Kauffmann. I’ll come up there. And if you can Google a really good way to Google is Winnipeg’s real estate podcast Bo Kauffmann. I’ll come up there.
Ryan Peterson: [00:25:17] Thanks Bo. I’m Ryan Peterson. And on behalf of Bo Kaufmann. Thanks for listening today and I hope you’ll join us for next month’s real estate roundtable.[00:25:25] You’ve been listening to the real estate roundtable. [00:25:28] Your monthly update on the real estate market from a Winnipeg perspective Google Winnipeg real estate podcast to hear the latest episode or search Winnipeg home finder on Facebook