Category Archives: tips

Life Insurance versus Mortgage Insurance

Life Insurance versus Mortgage Insurance, is what some of my clients ask me when they are purchasing a house. A financial advisor I know in Ottawa shared with me a practical chart to explain the difference between life insurance and mortgage insurance:

PERSONAL LIFE INSURANCE MORTGAGE INSURANCE
  • Insures you
  • You decide who to name as your beneficiary
  • Renewable, convertible term insurance
  • Underwriting is done at the time of application
  • You determine the amount of the coverage; your coverage remains same
  • You own the policy
  • It is yours, you keep it
  • Your beneficiary decides how to use the money
    • Insures your mortgage
    • Lender is the beneficiary
    • Non-renewable, non-convertible term insurance
    • Underwriting is done at the time of the death
    • Covers the exact amount of mortgage balance; as you pay down your mortgage your coverage decreases but your premiums remain same; cost per $1000 of coverage increases
    • Lender owns the policy
    • When you change your lender you cannot transfer your insurance
    • Lender automatically pays remaining mortgage balance
    • Shared by Nilay Erisoglu, Financial Security Advisor, Freedom 55 Financial Nilay.erisoglu@f55f.com

Let me go through some more details of Life Insurance versus Mortgage Insurance

Life Insurance

Mainly life insurance is used for insuring yourself, you decide who you name as the beneficiary (your spouse, family member, etc) and they decide on how to use the money, the amount of money paid out to the beneficiary never changes.

Life insurance is also renewable, and convertible term insurance. In Life insurance you have protection for the duration of the policy. The duration usually is around 10 to 30 years or sometimes to an age like 70 or 80. It all depends on the term you purchase and the underwriting is done at the time of the application.

In life Insurance you determine the amount of the coverage; your coverage remains same during the policy. When you plan to sell or change lender for you mortgage, your life insurance remains the same and does not get affected, it stays with you.

Life insurance is usually less expensive than mortgage insurance. Although a note of caution that if you intend to get for another term, you could potentially be paying a higher premium depending on the age and your health. Typical the enrollment process for term life insurance is more complex than applying for mortgage insurance, since life insurance policies require a medical exam in order to secure coverage.

Mortgage Insurance

Mortgage Insurance insures your mortgage, and the lender is the beneficiary (not someone whom you have named). It is non-renewable, and it is non-convertible term insurance. Typically the underwriting is done at the time of the death. Mortgage insurance covers the exact amount of mortgage balance; as you pay down your mortgage, your coverage decreases but your premiums remain same…

In Mortgage Insurance the lender owns the policy and if you change your lender you cannot transfer your insurance to the new property. The lender automatically pays remaining mortgage balance in the case of death.

Some advantages of mortgage insurance are that they are very convenient, they often do not require any medical exam. You typically will purchase the insurance through your bank or the financial institute that lend the money for your mortgage. Mortgage insurance is usually added to the lender’s monthly mortgage payments.

The downside of mortgage insurance is they are usually more expensive than life insurance although more easy to attain from a bank. CBC Marketplace also did a series of mortgage insurance.

I hope this blog post helps explain the difference between Life insurance versus Mortgage insurance and last but not least I hope your winter is going well with a lot of fresh air experiences and you are getting ready for a wonderful spring coming up with high energy.,..Whether your plans to relocate, to downsize, to aim for a change or investment, give me a shout and lets get the ball rolling for your next chapter…

Cheers!

Written by Nilay Ertemur

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How to Cool Down This Summer: (Swimming in Ottawa)

Summer in Ottawa can get pretty muggy and hot, here are 11 tips of helping you cool down in the capital and then check out the map that locates all the beaches, swimming and wading pools (It doesn’t include the splash pools)

  1. Drink lots of water – Remember to balance out the dehydration with extra water
  2. Choose fruits and veggies like watermelon contain high water content
  3. Make some custom blend of ice herbal tea with lots of ice, but remember those ice-caps in Tim Hortons do contain lots of sugar=calories
  4. When outside, wear a hat, sunscreen, cotton fabric and loose clothing
  5. Pull your curtains – If you have windows facing west side of the house, keeping those curtains or blinds closed helps to block the heat coming inside
  6. Open bathroom windows when you take a shower, it helps to vent out the humidity out of the window
  7. Skip the dishwasher drying cycle, why create more heat when one can dry their dishes in the rack, and that helps to save on your energy bill.
  8. Turn off the pilot light of your fireplace during warm months, one can turn them back on in winter and it is easy!
  9. Check your doors and windows weather stripping, just like winter brings in cold air, summer brings in the warm hot air, therefore reseal any weather stripping that is wearing out.
  10. Attic insulation is not only for winter but it also works equally well in the summer. It helps to keep the hot attic air from coming into the house. Check out my previous posting on attic insulation on how to insulate your attic.
  11. Visit a friends/family/neighbour swimming pool, to cool down the heat

Last but not least one can always go to a pool or beach and cool themselves off, here is a list of public swimming pools, beaches, and wading pools provided below with a map, feel free to share the map and this post.

Note: All wading pools and beaches are free in Ottawa. There is a cost associated with the swimming pools, one can check the prices at City of Ottawa.

Blue – Are outdoor pools
Black – Are indoor pools
Green – Are Wading pools
Orange – Are beaches


Author Nilay Ertemur

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Welcome to Canada

Canada is a country, consisting of ten provinces and three territories, in the Northern part of the continent of North America. It extends from the Atlantic to the Pacific and Northward into the Arctic Ocean, covering 9.98 million square kilometres (3.85 million square miles) in total, making it the world’s second-largest country by total area and the fourth-largest country by land area.

As a new comer to Canada, you may want to look into purchasing your first property, in this blog post, I will try to cover some of the things to consider when purchasing a property in Canada. I would like to call it “Home Buying Guide for New Comers to Canada”

Mortgage / Finances

Most major banks do offer mortgages to newcomers but do have certain requirements for the loans.
Royal Bank has a document online that details their requirements. Some of the requirements for having a down payment of less than 25% consist of:

  • You must have immigrated to Canada within the past 24 months
  • You must have landed immigrant status
  • You must have a minimum of three months’ full-time employment in Canada.
  • All debts held outside of Canada must be included in determining how much you can afford, or your total debt servicing ratio
  • You’ll require a letter of reference from a recognized financial institution.

Bank and loans rules and regulations change all the time thus I would strongly suggest to speak to a mortgage specialist in a bank or mortgage brokers who will be able to assist you in obtaining a mortgage.

Canada 2014 best places to live

Listed below are Moneysense top 10 places to live in Canada:

Rank City Population Average House Hold Income Average House House Price Average Property Tax
1 St. Albert, Alta. 64,377 $128,270.17 $373,426.00 $3,286.00
2 Calgary, Alta. 1,306,471 $119,771.69 $435,825.00 $2,782.00
3 Strathcona County, Alta. 98,232 $137,509.40 $408,331.00 $3,398.00
4 Ottawa, Ont. 953,589 $103,186.09 $398,845.00 $2,283.00
5 Burlington, Ont 187,497 $110,113.81 $496,412.00 $2,855.00
6 Boucherville, Que. 41,928 $122,131.67 $352,698.00 $3,333.00
7 Oakville, Ont. 196,722 $145,694.87 $692,902.00 $3,756.00
8 Edmonton, Alta 868,392 $91,807.29 $375,308.00 $1,966.00
9 Regina, Sask. 221,999 $91,328.02 $372,335.00 $1,965.00
10 Québec, Que. 535,353 $70,627.27 $249,015.00 $1,609.00

Types of homes in Canada: Not an exhaustive list but most commonly sought after…

Single / Detached SIngle Home
Freestanding home, you own the land and the house
Semi Detached semi
Home has separate entrance and each owner owns their own property and responsible for their own side. Homes usually share a common wall or sometimes garage walls
Townhouse townhouses
Home is attached side by side to a series/row of homes, each unit has its own entrance but shares a common wall
Condos condo
Multi-unit tenant building (apartment like), you do not own the land but own just the unit itself, monthly payments to condo corporation to handle repairs and maintenance are usually attractive to first time home buyers

Things to consider when buying a house

  1. Location – The key phrase in real estate is always “location, location, location”, one cannot deny the fact that location plays an important part of your decision of purchasing a house in city, suburbs or countryside.
  2. Cost – The amount you are approved to purchase the property, things to consider: taxes, lawyers and closing costs.
  3. Size – Number of bedrooms, washrooms, and garage specs for your needs
  4. Work – How would you commute to work, public transportation vs vehicle
  5. School– What are the school ratings around you, is the school walking distance?
  6. Feature – Things that are important to you, a big backyard, fireplace, swimming pool, layout, etc
  7. Family & Friends – Would you be close to family and friends
  8. Amenities – Are you walking distance to shopping, clubs or gyms

Finding the Right Real Estate Agent

  • Look online for an agent, from the agent’s website it will tell you how tech savvy they are and have confidence about them
  • Ask colleagues, family or friends for recommendations of an agent they have used in the past or that they trust
  • Request for a meeting and tell the realtor your wants and needs for your new home purchase. Using a realtor does not cost you, a buyer does not pay the realtor for their service typically.
  • Also note you can use a realtor for new built homes. There are a lot of details of purchasing a new house and a realtor will help you with this process as well
  • I also have a separate blog post on purchasing house/condo in ottawa

Things to consider

A good real estate agent will be able to give you a hand from criteria setting to the closing, but as always having the accurate information in hand is better, so here is a list of things to consider when making the purchase.

  • Double check the paperwork for names, addresses in the forms
  • Items included and can be negotiated in the purchase, windows coverings, fridge, stove, dishwasher, laundry washer, dryer, built in vacuum
  • The closing date, possession date and when the offer becomes null and void
  • The purchase price and the deposit
  • Lawyer or notary fees, land title and taxes, I have a blog post that covers these items
  • Home inspection and mortgage approval

Summary

I hope this home buying guide will help you, I will try to make it up-to-date and if you have any questions or comments, please feel free to contact me

Cheers!

Nilay Ertemur

References

http://www.rbc.com/canada/brochures/First_Home_English.pdf
http://www.moneysense.ca/canadas-best-places-to-live-2014-full-ranking
https://www.cmhc-schl.gc.ca/en/co/buho/hostst/
http://www.cmhc-schl.gc.ca/odpub/pdf/66687.pdf

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Kanata Stittsville; The West End

The West End of Ottawa is a prime location for real estate in terms of living, investment or simply to keep an eye on! I went to a session on Kanata, Stittsville Development & Transportation news recently and the presenters Councillor Wilkinson representing Kanata North, Councillor Hubley representing Kanata South and Councillor Qadri representing Stittsville shared very exciting news about the development of the three wards. There are a lot of projects planned and underway but I will try to highlight the headlines. Accordingly:

Kanata South:

There is major construction for storm sewers; some water mains will be replaced in Glen Cairn. Some sidewalks will be added there. These projects are planned to be completed by the spring of 2016. One of the pumps will be replaced at pump station. Glen Cairn storm water management plan is another project that the community can look forward to. Widening Hopeside, Old Richmond and Hunt Club Roads were highlighted in the session for transportation news. Building seniors’ care facilities (for Alzheimer’s care), adding some outdoor gym equipment throughout some recreational spots and indoor tennis courts are some other great news. Yong’s Pond which has unique trees in it will be bettered, there will be bird houses in it and this is expected to increase property values in Katimavik where the park is neighbouring with.

Kanata North

Beaverpond, Arcadia, Richardson Ridge, Kanata Town Center, Broccolin Apartments are some of the names of the exciting projects in this part of the town. Ciena is adding 1500 new jobs, Sanmina around 500; and Kanata North will be expanding rapidly. Tanger Outlet Mall area will be developed further to accommodate 3 hotels, 6 restaurants, etc. March Retail Plaza, Taggart Plaza are some shopping center projects to be highlighted, and there will be a Cabelas, which is an outdoors store behind Canadian Tire. Transit expansion to Moodie, park and ride innovations are some of the transportation projects to name a few. Nortel Campus implications are huge; around 9000 military personnel will be added by 2017 and that will result in a great housing demand in the area. It is expected to add 3000 more houses, 4 school locations and a heavy demand in transit. A public school at Terry Fox and Second Line, and addition to South March Public, French public are some of the school news in Kanata North. The projects for seniors’ rental accommodation is also in works.

Stittsville

It is the fastest growing section in the West End. It has a population of 28000 now, and the anticipation is that 71000 people will be added to the existing population. Stittsville public high school demand is an important project being worked on. The Fernbank development is expected to be completed within 5-10 years with an estimated population growth of 35000. The Fairwinds Maple Grove development should be finished in the next two years with an estimated population increase of 3000 to 5000. The Tartan development at 33 Johnwoods is estimated at 1500 residents. The Richcraft development beside Lowes will be completed in 8 years with an estimated population for this area of 1500-2000.

Summary

Kanata, Stittsville and West End in general being a hot spot for growth, new house construction, employment, investment and population increase; there will be sure exciting real estate opportunities and I will be happy to assist you in your move either from or to the West End with a well informed and prepared perspective.

Author: Nilay Ertemur

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Forecasting 2015 Housing Market in Ottawa

As we all know predictions are not easy, especially for the future, but we can certainly go through some stats to find out how the market has been doing in the near past, to figure out how this year might turn out for Ottawa.

Mortgage and interest rate cut

Let’s look at the mortgage picture first, the average five-year mortgage rate in Canada is at a record-low 4.79%, according to central-bank data (Source: Financial Post ). Lower rates can be obtained from banks and other private lenders, such as Mortgage Brokers Ottawa, the mortgage rate on their site states 2.89 for a 5 year fixed (26 Jan 2015).
On 21 Jan 2015, Bank of Canada has lowered its interest rate to 0.75, it dropped the lending rate by a quarter of a percentage point. What that means is the cut will result in lower interest rates for variable rate mortgages, lines of credit and other loans that float with prime rates. They have called that fixed rates would be lowered also, and Royal Bank offered a five-year fixed rate of 2.84% on Jan. 24. (Source: Financial Post)

Prices of Houses and Comparisons

If we compare 2013 to 2014 market prices, we see some increases.

Month Average Home Sale Price Result
January 2014 $346,744 increase of 1.0% over January 2013
February 2014 $353,407 ncrease of 2.0% over February 2013
March 2014 $359,051 increase of 0.3% over March 2013
April 2014 $374,015 increase of 0.8% over April 2013
May 2014 $381,172 increase of 3.2% over May 2013

Ottawa is a healthy market that prices don’t go up and down like they do in some other Canadian cities, where there could be a very large influx of price ups and downs such as in Alberta… Prices of houses are still slowly going up here in Ottawa, with some minor adjustments in various neighbourhoods. 2014 was a year that average days on the market for a property increased significantly from the previous years and that was certainly not usual. Properties considered as luxurious in remote areas and the ones far from Ottawa core got hit first when it came to price reductions, however many city properties still held their value and on average saw a price increase by around 1 % in 2014.

And last but not least, this chart is key for us to understand what the economy has been doing in the near past and what the expected figures are for the coming years.

2012 2013 2014 2015 2016
Total Employment (000s) 697.6 687.4 696.5 706.0 715.5
% change 2.4 -1.5 1.3 1.4 1.3
Unemployment Rate 6.4 6.3 6.5 6.0 5.9
MLS® Res. Sales 17,184 16,539 16,472 16,750 17,400
% change 0.2 -3.8 -0.4 1.7 3.9
MLS® Res. Avg. Price 327,656 334,320 339,785 344,000 350,000
% change 2.4 2.0 1.6 1.2 1.7
Residential Permits (Units) 8,211 6,643 8,950 7,800 8,000
% change 2.7 -19.1 34.7 -12.8 2.6

Source (Ontario Chamber Commerce)

Conclusion

As we can see the prediction of 2015 would be business might proceed as usual, some adjustments are in effect but there are still increases in price for some areas in Ottawa. If you are planning for your new purchase or selling your existing house, or investment contact me and I will be able to provide you a FREE CMA (Comparative Market Analysis) report of your house value, or for the area you are looking for.

Here are some stats you can tweet:

ottawa2015

Ottawa 2015 prediction

Disclaimer: As this article has been published by the author, mortgage rates might have been changed again in the last couple of days, therefore it is recommended to talk to a mortgage broker about the latest rates and mortgage rules and regulations.

Sources:
Financial Post
CBC News

Author: Nilay Ertemur

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2014 has been a great year. There are things to be thankful for always; health, family, and the bread and butter on our tables. May our lives be filled with meaningful people, events and causes in 2015 and beyond. Today, I just wanted to share a couple of things that make any holidays, traditional or cultural events more joyful and easy.

1. Its not just about the rest, it is about fun and moving also:
Most people associate holidays with eating and certain types of foods, but having some activities and fun (snow tubing, skiing, hiking, etc.) might bring us more motivation and energy…

2. Take meaningful presents
When visiting others during holidays, give meaningful presents, things that you know people will need and use rather than the fancy new toy of the year. Don’t go empty handed anywhere that you have been invited…

3. Stay physically active
During holidays we tend to gain weight, having a schedule to do exercise or simply doing the chores at home will help shed some of the pounds away and we may even manage to lose some weight!

4. Stay stress free
Holidays bring their own stress, with in-laws visiting, cousins/neighbors involvement, their expectations, ways of doing things, etc. The key to stress free holidays is planning ahead and one way to do this is to keep things simple (prune the to-do list, call don’t send cards, cut the gift list, etc) Get in touch with people that you love the most, and do the things that make you feel peaceful!

5. Organize your life
Studies show that a minor sight of cluttering puts us on the edge, organization offers a sense of control and peace of mind, and there’s a number of ways we can improve in this regard. Having a little bit of tidy up time everyday, making a small to do list for those dreadful drawers can help us feel better, and lets remember: one task at a time…

6. Sleep early
Studies have shown that not having enough sleep can also cause weight gain. During the holidays going to bed early as much as possible and keeping a healthy sleeping and eating pattern can help with having fun and peaceful times. No one wants a sleep deprived grouchy Christmas person hosting or being a guest.

After all, like anything else, holidays is about to have and find the balance that keeps us happy!
Enjoy and be present in the moment always!
Cheers!
Nilay Ertemur
Nilay Ertemur

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Fall celebrations like Halloween and Harvest Day are fun times for children, who can dress up in costumes, enjoy parties, and eat yummy treats. These celebrations also provide a chance to give out healthy snacks, get physical activity, and focus on safety.

Check out these tips to help make the festivities fun and safe for trick-or-treaters and party guests.

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The old man winter is coming soon, and since the weather has changed in early September here in Ottawa, most people are probably thinking (although one does not want to) about ways to winterize their homes.

Here are 10 tips to get your home ready for the winter:

1. Clean your gutters
September onward would be the best time to clean up all the tree branches, leaves or toys that are stuck in the gutters. You do not want the fall rain to be draining towards your house, you want it away from your foundation, having them cleared for rain/water flow would benefit any home. If you have a tree that sheds it’s leaves late in fall, you may wish to do this later in the season.

2. Replace your furnace filter
Most of us forget about replacing our furnace filters (which causes us to reach the furnace company for a service call only for them to advise us to change our filter and the furnace works just fine again) they do get dusty over the summer even though your furnace may not be running that much (remember it still runs if you have an air conditioning unit), replace your filter and mark the date on your calendar so that you know when the filter was last changed.

3. Caulk any gaps at windows or doors
Caulking is one of the cheapest solutions to block draft air coming into your home. The process is by simply moving your hand around the edges of your door and windows and find out if there is any air coming in. Caulk around where you feel the draft, don’t forget the attic door, and your laundry dryer vent might need caulking as well.

4. Check door and garage door weatherstripping
Check the main entrance door weatherstripping, if its damaged, replace it and also the weatherstripping for the door that enters your house through the garage. There is weather stripping for your outside garage doors that one can purchase from Lowes or Home Depot. Having garage door sealers/weatherstrips adds an extra layer or blockage of wind and breeze, thus it keeps your garage and house warmer.

5. Insulate electrical outlets and switches
Most people may not realize that electrical outlets also bring in some draft air into houses, and one can purchase a simple styrofoam socket sealer from Home Depot or Lowes. Remember when working with electricity, one has to turn it off from the main electrical panel before starting to unscrew any socket.

6. Add attic insulation
Houses lose most heat through the roof/attic, I have an article of how to insulate your attic, and it does really help in warming your house when you increase your attic insulation!

7. Reverse your ceiling fan
Most people think of using their ceiling fans only in summer, but in winter if you reverse the rotation (i.e running clockwise) it will bring back the warm air from the ceiling back down to be recirculated.

8. Wrap those pipes
Turn off those outside water sprinklers or faucets so that you don’t get your pipe frozen and end up with unpleasant insurance claims and flooding problems , turn them off from the inside if you can access them, also get pre-molded pipe sleeves to wrap up any hot water pipe so that less heat is lost through them for your hot water tank.

9. Get a programmable thermostat
If you are still using a non-programmable thermostat, go and obtain one that you can program, it will save you money. Hydro Ottawa peak saver plus runs a free program to get free thermostat till the end of September 2014.

10. Seal up any ducts
The ducts that run around your house can also be sealed up with aluminum foil tape, if you find/reach any heating duct, check if there is any leakage around them, usually leakage is found around the joints. Use your hands to feel if there is any breeze, and put some extra tape to seal it up.

And remember to enjoy winter, it will not last forever…

Author: Nilay Ertemur

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Here are some back to school tips for parents preparing their little ones:

1. If you are planning to shop for children, perhaps hit the Internet and look online for deals before you head out to the brick and motar stores. Check out sites like RetailMeNot for coupons, etc. For example you can save 30% off Old Navy and also when shopping online, choose retailers that offer such deals as free shipping, promo codes and discounts. (Note: Your kids do not need 10 outfits, just buy what you need. Figure out what they’ve outgrown, then determine what they need to fill in those gaps.)

2. Look for student discount – Some stores do offer discounts exclusively to students. Get a refurbished product – Bestbuy and Futureshop both sell refurbish laptops, sometimes one could save up to $100+ dollars for refurbished electronics.

3. Organize your home, especially where children spend their time mostly, a chaotic looking house won’t give peace to anybody including your children and their learning process might get affected negatively. Involve them in organizing their rooms, closets, toys, etc.

4. Go through the supplies you have left over from last year, and if there is enough perhaps even wait till first day of school when the supply list arrives and purchase accordingly.

5. If there is an open house at school, take your kids for a tour, get your children familiarized with the school again, to see their teachers and perhaps meet some new students during open house. If this is their first time to school, get them to meet their teacher, learn where their classroom will be and have your children play at the playground.

6. If your child will be taking the school bus, show them where the stop will be, walk with them to the bus stop and teach them the basics of looking for cars before crossing the road.

7. Practice your routine – A week or two before school starts, re-establish the bedtime and mealtime routines, and get into habit of waking up early with the kids. Try to send your children to bed early, they may have gotten out of routine due to the summer holidays. Starting to re-establish the habit/routine before school starts will eliminate some of the anxiety of back to school. Talk with them about how they feel about going back to school. Address any concerns and monitor from the beginning of school year.

8. Help your kids to get their backpack ready, make it a fun activity for them, let them have input on what type of lunch bags and healthy snacks they may like to take to school and what types/colour of stationary to take to school. Telling them to organize their bags when they arrive at home or after dinner will make it habitual for the next day. Planning lunches weekly is a great idea…

9. Designate a good spot for your children to do their homework , a designated spot will help children to be encouraged to study when they come home, having them close by the kitchen would help you monitor, supervise and help them with their homework.

10. Make your lunches a night before, so that you won’t be rushing through the breakfast to make the lunches for your little ones. When one is rushed, this is the time we get lazy and just substitute unhealthy food choices for children. It is best to be organized and even have your children help you to make their lunches for school the night before. Involving children will give them a sense of responsibility and accomplishment.

Have a wonderful school year with lots of good memories and enjoy the last weeks of summer to the last drop!

Author: Nilay Ertemur

 

 

 

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Recently, a friend of mine was asking me about the process of hiring a real estate agent, and I thought it would be a great blog post!

Here are some of the questions that people tend to ask me and my colleagues about buying and selling especially in terms of commissions and remuneration.

Please note, I have already written other posts on various points that are discussed in this post.

Question: I am planning to sell my property, can you explain to me how hiring a real estate agent works?
Answer: Its not that complicated, you would first make an appointment with a real estate agent and they will most likely come to your place and take a look at your property. Usually agents bring in comparables (similar to your house-sold within 6 months to a year or a shorter time period depending on the property type and desired individual goals of the seller) to you at this meeting so that you have an idea of what the latest prices are in the market around your neighbourhood. If you agree, they will do a comparative market analysis after viewing your property, prepare a detailed report which gives a realistic price and marketing plan for your house.

Question: So how does commission works, how much do I pay?
Answer: There is usually a 5% rate for residential properties when you sell, however, this might vary depending on various brokerages and what types of services they offer. From that 5%, typically 2.5% goes to the listing agents’ brokerage (the agent who is selling your property) and the other 2.5% goes to the buyer agent’s brokerage. For example, if you are selling for 100, 000 then 2.5% goes to the brokerage who is selling your house (say it is my brokerage selling your property), and 2.5% goes to the brokerage who brings in the customer for your property. With the typical 2,5 % rate, the breakdown of the commissions within a brokerage between the sales person and the office changes from one brand/office to the other.

Question: But what if the buyer and seller agents are the same agent?
Answer: In those situations where I bring you a customer which is what we call as a multiple representation situation in the industry, you are still my client and my fiduciary duties are to you, and most of the time, serious buyers usually have their own agents, so such situations do happen, but are rare and open to discussions.

Question: As a buyer, if I want to buy a property, do I have to pay a commission to the agent?
Answer: No, as a buyer you usually* don’t pay the agent, only sellers pay a commission to their listing agent (a total commission) and the listing agent offers usually half of that amount  to the selling agent. Please note, every brokerage and sales person might choose various paths when it comes to commissions.

Question: I am currently renting and want to buy a property, how can an agent help?
Answer: Lets give an example, if Barbara and Peter are looking for a property for 300K, I would find them them a property in the area that they plan to live (close to work, school, 3 bedroom, single garage, etc) and make appointments for them for the houses that they like to see within their price range, from there, if they like one of the houses I showed or they have seen on an open house, I would represent my clients (Barbara & Peter), place an offer, negotiate the best price, closing date and conditions for them.

Question: How much closing costs should I put aside before purchasing a place?
Answer: Closing costs are anything from legal fees to moving expenses to land title fee and usually you should have 2% of the house value as the closing cost.
I have a blog post that covers this process.

Question: What is the benefit of using an agent for selling my property?
Answer: Your agent is a trained professional, they go through extensive pre-licensing courses and exams to get licensed and to practice in real estate. They go through an extensive code of ethics, and your interest is put first. Agents have access to their local MLS systems, which enable them to do market research for you and be able to price your house accordingly. They have the insight to your current market conditions, and provide you with price guidance. They will better your property for you, help you get it ready for the market, stage it, video/photograph it professionally and will expose your property to many more potential buyers using unique marketing strategies. Agents will help you to get the most value for your home. They act as a buffer for you and the buyer and negotiate on your behalf, they also help answer any questions through the entire (closing) process or even after! The service a good agent provides makes the entire process safer, easier and smarter for you.

Question: What is the benefit of using an agent for buying a property?
Answer: A real estate agent can help you research and find the exact property that you wish to purchase. They have full access to MLS systems that allow them to cater the search criteria to your needs. They can quickly tell you if a house is overpriced, underpriced, or priced right. They will be able to tackle the paperwork that it requires to purchase a property, and they will be able to represent you to negotiate the price professionally and calmly. Last but not least, using an agent to purchase a property does not cost you and they will be able to represent you as their clients, be able to hold and represent your rights as a purchaser.

There is always the next blog post to cover various more aspects and interesting dynamics of real estate…Stay tuned…

Author: Nilay Ertemur

References:
http://home.howstuffworks.com/real-estate/buying-home/10-benefits-of-using-a-real-estate-agent.htm
http://homebuying.about.com/od/realestateagent1/qt/AboutREAgents.htm
http://homebuying.about.com/od/realestateagents/tp/Whyhireagent.htm

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