The Pros & Cons of Renting Versus Buying a Home

Is it better to rent or buy a home? This is a question that everyone has to process through at some point in time. It’s not always best to buy and it’s certainly not always best to rent. A person’s lifestyle, financial situation, relational situation, and employment are all factors that can sway the answer to one side to the other.

The PROS of RENTING

Easy To Move On When Renting

Renting Allows You Freedom To Easily Move On. When you rent a home, you are free to move on as soon as your lease is expired. There’s no house to sell. This is one of the most common reasons for renting a home, rather than buying. If you are unsure of how long you will be living in an area, renting is usually your best option. Selling a home is a lot of work and expense, so it makes sense to buy a home when you are sure that you want to stay in the home for a few years. This allows you to build up equity and make money when you sell, which you cannot do when you rent.

No Property Tax When Renting

For many homeowners, property taxes are the 2nd highest cost of owning a home, next to their mortgage payment. Home owners insurance is a close 3rd for expenses, which is another fee that you do not have to pay when you rent a home…. or do you? I have heard the argument that the cost of property insurance and home owners taxes are enough to make people rent, rather than buy. But think about this, the landlord of the property that you rent is also paying property taxes and insurance. So, who is really paying the property tax and insurance? It just makes sense that the cost of the tax and insurance are being passed on to the tenant. This means that tenants are inadvertently paying the taxes and insurance for their landlord, just not directly. There are also tax advantages to owning a home as well.

No Maintenance

Every home needs maintenance and repairs over time. When you rent a home, the repairs are passed on to the landlord or property management company. This is a very popular reason to rent. Of course, there are down sides to this as well. Some landlords and property management companies are not very prompt or easy to work with. Just do a quick Google search for reviews on property management companies in your area. You may find a long list of tenants who have complained that it took days or weeks to fix issues in their rental properties that should have been fixed immediately, as well as smaller issues that never got fixed at all. However, if you have a good landlord, your maintenance worries are minimal.

The PROS of BUYING

You Can Make It Yours When You Buy A Home

Buying a Home Allows You Freedom To Make It Yours. When you buy a home, you are free to paint, change fixtures, tear down walls, or put up new walls. It’s your home and you can do whatever you want with it. When you rent a home, you are not allowed to change paint colors, fixtures, or remodel. Having the freedom to do what you want with your home is one of the greatest benefits of homeownership. My wife and I have rented a home after moving to a new area and it was very hard for us to leave the house alone. Many people are like us and want to own a home for the freedom to make it the way we want it. A home is a place that captures many of our memories, which is why we want it to reflect us and our design choices.

No Payment Hikes When You Rent

When you agree to the terms of your mortgage, chances are very high that you will have a fixed rate. This means that your mortgage payment will not increase over the life of the loan. The security of knowing your payment amount will never change is very comforting. It’s common for rental properties to have payment increases every time that the lease is resigned. Especially in areas like the lower mainland where rents have increased dramatically over the past few years.

Build Equity When You Buy A Home

When you buy a home, a portion of your payment goes straight to paying off your mortgage. Every time you make a payment, you earn equity in your home. As the price of your house appreciates, your mortgage goes down and your equity steadily rises. If you buy a home in an area that appreciates well and you pay down your mortgage over 5+ years, you will have a nice chunk of equity to use however you like. You can use your equity to move into a larger home, refinance and take out some cash, or leave it alone and let it grow!

The CONS of RENTING

Increasing Rental Prices

Rent Prices Continue to Increase. Rents nationwide seem to be rising fast right now. In British Columbia, rents have been steadily rising for years. This makes it hard to plan your future finances when you don’t know what your rent payments are going to be after your lease expires. Once a lease is expired, a landlord can raise the rent as high as they want. If you disagree to the new terms, you’ll need to find a new place to live, which is also an expense and very exhausting. The unknown future of rents can make tenants feel insecure and unsettled.

Lease Deadlines

When you sign a lease, it will most likely have a deadline. Many leases are structured for a year. Once the lease is up, there is no certainty that you will be able to renew. Sometimes landlords will sell the rental property after a lease is expired, or have family and/or friends move in. The future is always uncertain when you rent a home, which makes long term life plans more difficult and uncertain.

No Equity When Renting a Home

Every rent payment made goes straight to the land lord. You do not have any ownership or equity in the property. This is the hardest part of renting for most people. Knowing that every dollar of your rent is gone for good is discouraging and causes tenants to look into owning their own home. Rent always costs much more in the long run. Imagine renting for 10 years, as opposed to paying down a mortgage over 10 years. The person who pays down their mortgage is going to have a nice chunk of equity when they sell, as opposed to the person who rents and has no equity after 10 years.

The CONS of BUYING

Need Money for Down Payment

When you buy a home, it’s common for the mortgage company to require you to put a certain amount of money into the deal as a down payment. This is usually between 3% to 5% of the cost of the home. There are down payment assistant programs and other mortgage options for certain people, so this is not always a con to owning a home. There are misconceptions that home buyers need as much as 20% down, but this is usually not the case. The best way to find out is to talk to a mortgage lender and know your options.

The Cost of Selling A House

Selling a home can be costly. Realtor fees can run from 4% to 6% of the sales price of your home. If your home needs some work before selling, you’ll also have to come up with the money to make those necessary updates or repairs. Selling a home is much more stress than buying a home. It usually requires months of planning and preparation to really do it right and make the most amount of money when you sell your home.

Home Owner Responsibilities

When you own a home, it is your responsibility to maintain the property. You’ll need to work on the landscaping, have the heater & air conditioner serviced, and repair any damages to the property. Your home owners insurance will typically help you with many of the most costly issues, like roof repairs and major damages. The rest is up to you. I personally prefer this because I can fix problems, like a broken garbage disposal or ceiling fan, and replace old items with new high-end items to make my house run smoother. My dishwasher and garbage disposal are virtually silent since I replaced them recently; and I prefer to do these things myself.

THE VERDICT

Both renting and buying have their advantages and disadvantages. It really comes down to the stability of your living situation. If you have a career that is moving forward and you feel like you are going to be in your current city for a while, buying a home makes much more sense. If your life is up in the air and you don’t know what next year is going to be like, renting a home makes a lot more sense. Buying a home costs less in the long run and builds your financial situation. Renting a home is expensive and always leaves you without any true ownership or equity.

Taking the time to truly look at all the aspects of each option can help you plan your life to move in the direction that benefits you the most. If you plan on buying a home, there is a ton of information online to help you. Start with this article that explains how to buy your first house. It will give you a quick overview of the home buying process and help you identify where to start. Good luck and happy house hunting!

Community Overview – Moving to Abbotsford

If you’re considering a move to Abbotsford, here are some great resources to help you get started, whether you are buying a home, or not quite ready to get into the real estate market, these resources can familiarize you with the city and its services.

Community Services

Abbotsford is already a diverse community, with residents from 58 countries. The city makes efforts to serve residents in their first language wherever possible. It has also launched many initiatives to ensure newcomers are treated fairly and equitably.

Abbotsford Community Services offers many settlement and community services.

Language Training

These organizations offer English language training

Abbotsford Community Services
Offers morning and evening classes for all adults, plus special programs for Punjabi-speaking mothers and grandmothers.

Abbotsford School Board

University of the Fraser Valley
Offers an advanced ESL program for career and professional integration.

Settlement Help

These organizations provide all kinds of support to immigrants:

Abbotsford Community Services
Language and translation, settlement services, legal advice and advocacy, job search assistance and education services.

Newcomers Guide (published the by British Columbia government)

Citizen and Immigration Canada
Provides information on coming to Canada to immigrate, study, work and live. On this website you will find forms, policies and regulations, research, services, publications and visa offices.

Housing Information

Most Abbotsford residents own their own homes. However, the area also offers a mix of townhomes, condominiums and apartments — with prices much lower than nearby Vancouver.

Average rents
The average monthly rent for a one bedroom apartment in April 2013 was $669 and a two bedroom apartment was $823. The average monthly rent for a three bedroom apartment was $920.

Vacancy rate and availability
In Abbotsford – Mission, the vacancy rate for one bedroom rental apartments was 5.5 per cent and for two bedroom apartments was 4.1 per cent. The vacancy rate of three bedroom rental apartments was 3.2 per cent. This was the proportion of rental apartments that are vacant and ready for move-in in April 2013.

The proportion, in April 2013, of apartments that are vacant or for which the present occupant has given notice to move-out was 5.9 per cent for one bedroom apartments, 4.5 per cent for two bedroom apartments, and 3.2 per cent for three bedroom apartments.

Home purchase prices
In Abbotsford – Mission, the average house price, in 2012, was $483,730.

For more up-to-date information, see CMHC’s Housing Market Information website, and the Canadian Housing Observer.

Housing Help

Canada Mortgage & Housing Corporation — Housing information for Newcomers

These agencies can help you find housing:

Ministry of Social Development
www.gov.bc.ca/hsd/

BC Housing
604-433-2218 (1-800-257-7756 toll free)
www.bchousing.org/
For government-subsidized housing

Abbotsford Community Services
2420 Montrose Street
Abbotsford, BC V2S 3S9
604-859-7681
www.abbotsfordcommunityservices.com/

The Salvation Army — A Centre of Hope
34081 Gladys Avenue
Abbotsford, BC V2S 2E8
604-852-9305
www.careandshare.ca/

Mennonite Central Committee of BC
31414 Marshall Road
Abbotsford, BC V2T 6L9
604-580-6639 (604-857-0011 toll free from Vancouver; 1-888-622-6337 from outside the Lower Mainland)
http://bc.mcc.org/

If you’re ready to buy a house, please contact Dave Combs for more information on listings, getting your first, or next, mortgage, and touring the beautiful city of Abbotsford.

What Does a Realtor Do to Earn Their Commission?

REALTORS® are known for helping people buy and sell real estate, but much of what a REALTOR® actually does to earn their commission happens behind the scenes. A good REALTOR® will make your real estate transaction flow smoothly through each step of the process, leaving the impression that their job is fairly simple. The fact is – that couldn’t be further from the truth. Anyone who has ever lived with a REALTOR® knows how difficult their job is. If you’ve never spent much one-on-one time with a REALTOR®, you may not understand how different their job is from the average everyday job. For this reason, I created a simple infographic covering a few of the day-to-day items that REALTORS® are responsible for. A day in the life of a good REALTOR® is extremely complicated.

Being a REALTOR® is Exhausting!

As you read through some of the tasks on the infographic above, it may seem overwhelming. That’s because it is. Full-time REALTORS® who excel in their careers are high-energy, time-efficient professionals who know how to handle stress and responsibility well. There are definitely REALTORS® out there who cut corners and do not take care of their responsibilities as well, but they should not define our industry. The real estate industry is loaded with very impressive professionals with whom I am proud to work with.

Common REALTOR® Responsibilities:

Being a REALTOR® is Expensive!

On top of the large list of responsibilities that REALTORS® carry, they also have many expenses to account for. When people see a REALTORS® commission check, they may feel like we are getting rich quick. In reality, the average REALTOR® makes around $50,000, after all expenses and taxes. Much of the money from our commission check goes to maintaining our business and licensing fees. Less than half of it usually goes into our bank account. Here is a list of some common REALTOR® fees:

Some Common REALTOR® Expenses:

Being a REALTOR® Can Drive You Crazy!

Working in Real Estate Can Drive You Crazy. Many people try to start a career in real estate under the assumption that there is easy money to be made here. In reality, it is a brutal business with loads of competition. The paychecks are not large enough to keep people in the business, a fact that is reflected in the 20% success rate for new REALTORS® . Those who do survive usually do so because they have a passion for the business, and helping people make their real estate dreams a reality. It’s a great business to be in, but it’s NOT EASY!

So, the next time you work with a REALTOR®, remember that they are human just like you, and they carry a lot of burden and responsibility in their job. We work long hours for months on end for clients with no guarantee of a paycheck. When you understand these things about REALTORS® and let them know that you get it, you can be sure it will put a smile on their face.

10 Critical Steps to Take Before Listing Your House for Sale

Selling a house is much more work than buying a house. Just ask anyone who has done it. If you’ve never sold a home before, you may be surprised at how complex it can be. From determining the correct listing price, to navigating contractual agreements; it’s an exhausting process. The best place to start is by choosing a good Realtor who you trust and enjoy working with. Ask their advice through each step of the process and leverage their experience. A good Realtor will keep you focused on the things that will help you sell your home fast and for top dollar. Below is a list of 10 items that most Realtors will advise you to work on before listing your home for sale.

1. Remove Personal Decorations 

   There will be many different types of people looking at your home when it is listed for sale. To encourage the most positive feedback, it’s best to create a neutral environment. The best way to do this is to remove any objects that reflect your personal choices and lifestyle. If a buyer can walk through your house and determine your religious preference, family size, profession, and/or favorite alcoholic beverage, you may have a problem. Some buyers have a hard time emotionally attaching to a home when a sellers lifestyle choices are front and center. This is particularly true when those choices conflict with theirs. Take out all evidence that you even live there and you will be on the right track. It will also help you to emotionally detach from your home and to start thinking of it as someone else’s. When a buyer has to ask if someone lives in your home, you have done your job.

2. Hire A Home Inspector 

   Once you have an executed a sales contract with a buyer, the first thing the buyer is going to do is hire a home inspector to inspect your house. Why not beat them to it? An inspection usually costs around $300 in Abbotsford. That’s pennies in the grand scheme of things. Tackle all of the repairs upfront and you will not be surprised by buyers who supply a list of problems to take care of. Inspections are the #1 deal killer in this industry. You can eliminate the whole problem by dealing with the issue right up front. Sure, it may cost you some money out of pocket, but that is money that you will most likely be spending anyway. Buyers will second guess a house if the inspection report is loaded with issues. In my experience, when buyers know that there has been a previous inspection and all repairs have been made, they are more willing to pay top dollar.

3. Clean Everything Thoroughly 

   Everyone has a different definition of “clean”. When you’re listing your house for sale, you need to get Martha Stewart clean! Pretend that you’re selling your house to a germaphobe. If you can afford it, hire a professional cleaning crew to spend a whole day doing a deep clean. It’s well worth the money! When a house is unkempt, it can be hard for buyers to emotionally attach to it, even if they are not clean people themselves. It’s an interesting irony that many home buyers expect the house they buy to be cleaner than the one they currently live in. This is a reality that must be accounted for. A clean house gives the impression that the property has been well maintained and is easy to move into.

4. Remove Evidence of Pets &/or Kids 

   To sell your home quickly and for the most money, you want to appeal to every possible buyer. Not everyone is a fan of kids and/or pets. Your house may be the perfect layout, price, and design but if it smells like animals or has toys stuffed in every corner, you may have just lost your buyer. I have worked with clients that are so sensitive to pet dander that when I show them homes, they won’t even finish walking through the entire house if there is evidence of animals. Sometimes they will rule out a house simply based on seeing litter boxes in the property photos. And don’t forget the fact that you can never experience your home as a buyer would, because you live there and are used to its unique smell.Abbotsford is the most pet friendly city that I have ever lived in. Residents here bring pets when they go to breakfast, get their hair cut, or even shopping. Sometimes it seems as if everyone in this town loves animals, but it’s just not the case. There are many people with pet allergies; one of them might be your perfect buyer. Take the time to make your house appeal to them and it could pay off big time.

   Statistically, pet odors are one of the most common reasons for a home to stay on the market for a long time. A home that has been ravaged by children can be equally unappealing though. Be sure that any evidence of your kid’s presence in your home is kept to a minimum.

5. Replace Outdated Fixtures 

   This is an easy fix that can have a huge impact. If you have brass door handles and brass chandeliers, you should replace them. It makes your home look dated. You can buy a contractor pack of brushed nickel door handles for $5 a piece at home improvement stores. If you are appealing to higher end buyers, spend some money for designer door handles. If you have old outdated light switch covers, replace them all. You’ll be surprised by how much of a difference it will make. Walk through your house and try to identify every fixture that reveals the date of the home. Replace as many of them as possible.

6. Shampoo and/or Replace Carpets 

   Carpets show more damage than almost any part of your home. If you have carpet in your house, it’s probably going to be a problem. If the carpets are not stained and are newer, you can get away with simply getting a deep clean from a professional carpet cleaning company. If cleaning will not restore them, you’ll need to replace them.Most any Realtor will tell you that a home with worn out dirty carpets is hard to sell. If the property is a foreclosure, or priced under market value, it’s not as big of an issue. However, if you want to compete for top dollar, you’ll need to tackle this objection right away. Carpets hold a lot of dirt and odor. It’s important that they look and smell clean for your showings.

7. Touch Up and/or Re-Paint 

   If it’s been more than a year since the interior of your house has been painted, then it’s time for some touching up. If you have paint left over from the last time you painted, use this to touch up areas when there are nail holes, scrapes, hand prints, etc. Touching up existing paint is very easy and makes your home look new again. If you do not have any touch up paint, you can try to peel off existing paint, or cut a small section of sheetrock (which you can repair later). Just do in an area where it’s not very noticeable, like in a closet or behind a door. Take the sample to a local paint store and have them color match it. You may need to do this 2 or 3 times to get the color right. Once you have a close match, use it to make your walls look new again.If you have any strong colors in your house (purple, burgundy, lime green, etc.), it would be wise to paint over them with a neutral color. I tell clients that they should not have more than 3 neutral colors in their home. The more colors, the more chance you have for objections. You can’t take it personally if someone else does not share your affection for orange. Remember, there are many different types of people and you’re trying to appeal to as many as possible. Neutral colors are the only way to appeal to the greatest amount of buyers. Even those who like strong colors are not always going to like your choices. Then you have to consider that their furnishings and drapes have to match as well. When you look at it this way it’s easy to see that the probability of your strong color choices working for most buyers is quite slim. For this reason, most good Realtors will recommend painting with neutral colors. People will rarely object to buying a home with neutral colors, but will often object to a home with strong colors.

   If you have exterior paint that is in need of restoration, take the time to work on it as well. This includes mailbox posts, fences, storage sheds, house siding, and trim work. The exterior of your home needs to look well maintained to encourage a good offer from a buyer.

   Bonus Tip: Paint makes a home smell new. People love new! If you have door trim with oil based paint, find a match to that paint and keep it handy. Before a showing, dab a little bit of paint on top of the door trim where no one would place their hands during a showing. The smell from the paint makes the home smell new. Oil based paint has a strong lasting odor so only use a little bit and do it every 15 feet, or so.

8. Get a Storage Unit 

   If you actually live in your house like most people do, then your closets are full and your garage is packed from floor to ceiling. This is normal. The problem is that some of the homes you will be competing with are either vacant, or almost vacant. These homes show much better and buyers can visualize themselves moving in much easier.To stay competitive, it is wise to rent a storage unit and start loading it with everything that you are not going to need while your house is on the market. Start with all of your memorabilia and pack the unit with the items that you are least likely to need in the back. The more you put in storage, the better. If you have to question, “Should I store this?”, the answer is: “Yes!”. Start packing as though your house is sold and you only have a month left in it. The more you put in storage, the less you will need, because your home will sell much faster! Buyer’s love homes that look move in ready!

9. Freshen Up Landscaping 

   Statistically, landscaping is the biggest bang for your buck when listing your house for sale. We’ve all heard about the importance of “curb appeal”, and know that first impressions are HUGE in real estate. The fastest way to freshen up your landscaping is new mulch. Spread a layer of it all throughout your landscaped areas. This is inexpensive and requires very little time commitment.If you’d like to make an even better first impression, plant some colorful flowers which will make your new mulch stand out even more. Trim any over grown plants and bushes and clean up your outdoor spaces to look new again. In a city with weather as beautiful as ours we spend a lot of time outside, so it’s likely to have a big impact on your buyer’s decision to purchase your home.

10. Get Specific Advice From a Realtor 

    Every property is different and will have unique and specific areas to address. Experienced Realtors look at dozens of homes with home buyers every week. When we walk through your house at a listing appointment, we have buyer’s voices in our heads calling out objections. We know what buyers want because they tell us every day. Every market is different and there are different tactics for each area. A good experienced Realtor will point out all of the objections that you can expect to hear from your potential buyers. There will always be Sellers that don’t want to hear it, but this is extremely valuable information, so be sure to take advantage of it early on in the listing process.

Final Thoughts

As you read through the list above, don’t be intimidated by the scope of work. Make a list of things that you feel are important for your home sale and then plan them out accordingly. Tackle one item at a time and before you know it, your list is done. Once your house is ready to put on the market it will most likely get an offer before your competition does. Many sellers will try to avoid some of the steps mentioned above. If you take the time and expense to tackle these issues, your house should outshine the others and sell for the highest sales price possible. When it comes to selling your home, the adage “you get out what you put in” rings exceptionally true. Your efforts will be well rewarded!

How the Wrong Pricing Strategy Can Cost You Thousands!

As you’re probably aware, the list price you set for your property has an impact on how quickly it sells — and how much you earn on the sale. What you may not realize is just how significant an impact it has. Consider the following examples.

Example 1: You price your property well above its current market value. As a result, many buyers don’t bother to see it because it’s outside of their price range. Those who do see it are confused by the high price tag, (and may even be suspicious.) They may wonder, “What’s going on?” In this scenario, the home will likely languish on the market for weeks or even months. You might even have to lower the price dramatically to reignite interest.

Example 2: You price your property just a couple of percentage points lower than what is necessary to gain the interest of qualified buyers. That might not seem like much of a problem. How much can a couple of percentage points matter? Those points matter a lot. On a $400,000 property, pricing your home just 2% lower than necessary could cost you $8,000 on the sale. That’s a serious amount of money! So, as you can see, pricing your home right is serious business.

Fortunately, a good REALTOR® knows how to set the right price.

Looking for a good REALTOR®? Call today.