One of the most critical decisions when putting your home up for sale is the asking price. Choosing the right price is absolutely critical. If your price is not in line with the current market you can lose out big time. Either potential buyers will not respond because the price is too high or you will lose money if the price is too low.
If you use a real estate agent, they will know how to compare your property to other properties in your town and come up with a fair price, but if you are selling your house yourself, how do you go about figuring out the best asking price?
This can take a bit of legwork, but spending the extra time on it can actually put more money in your pocket so it is well worth the time invested. First off, you need to find out what similar homes are selling for in your area. Your area is crucial ? a similar home in another area of town is not consequential to your pricing. Look in the paper and spot for sale signs on the streets in your immediate area.
Now you might think you can call up a local real estate agent and just get a free estimate, right? Not only is this not fair to expect them to do the work to provide you with the information when you don't plan to work with them, but you will not know if they are new and their pricing unrealistic or if they're giving you an inflated price to get your business. Not that all agents would do that, but it is safer to work this out yourself if you are not planning on working with an agent. After all, you wouldn't expect to do your job for free for a stranger would you?
One pitfall in trying to gauge a fair asking price is that your home has special meaning to you. It's hard to be unbiased and you may think your house is ?better? than similar houses in the area because of all the ties you have to it. Children may have grown up in the home, marriages and anniversaries have been celebrated. Your dog may be buried in the backyard. This is, unfortunately, not a selling point for buyers. Try to be objective and settle on an asking price without figuring emotion into the equation.
To get a good look see at the other homes in your area for sale, go to a few open houses in your area. Visit the homes on the market that are similar in age, size and style to yours. Only take the information that is available when you are planning to sell since markets can change drastically from season to season. Take not of how yours compares but be honest with yourself.
Some things that affect value include the size of the yard, fencing, updated kitchen, bedroom sizes, type and monthly cost of heating (especially in climates with cold whether), if it needs a paint job (inside or out), distance to schools or shopping and if the financing is being assisted. If you are selling a condominium or town house you can also consider how the view, amenities, strata fees and regulations compare to yours.
To find out if the price they are asking is fair, find out how long the house has been on the market. A home that is not moving in a strong market may be an indication that the asking price is too much. In that case, you don't want to use this home as a comparison to yours, unless you want your house to languish on the market too.
You'll want to find several homes to compare to yours. Start with their pricing and add or subtract depending on if you are missing a feature or have a feature they don't. By working with several examples you should get a feel for right price. Just make sure you don't pick a price that is too high - buyers will be scared off if they see the house has been on the market for a long time.
When picking the price, you want to use psychology to your advantage. Much like Wal-Mart prices items at $9.99 or $14.99 you want to use the same tactic. IF you want your house to sell for $300,000 you'd be better to ask $299,900. Even though we all know this is just a gimmick, it really does work!
Keep in mind that your potential buyers already have a price range in mind. It's better to be just below the $300,000 mark so you can take advantage of those looking in the $250,000 to $299,000 range rather than limiting it to those looking in the $300,000 to $350,000 range. You will still get the interest of buyers looking in the higher price range as people are always looking for a deal.
In reality, high ratio mortgages are pretty common these days. And with the price of housing, it is no wonder.
Housing Costs and Down Payments
High ratio mortgages are those that require homebuyers to borrow more than 80% of the money they need to pay for their home. This means that to avoid a high-ratio mortgage, you need a down payment of more than 20% of the purchase price.
A quick look at the current Canadian housing market will demonstrate just how difficult it is to save for that down payment, especially for first-time buyers.
If you live in a major city, you could spend anywhere between $242,000 (Montreal) and $566,000 (Vancouver) for a new home. A 20% down payment for a nice piece of Montreal real estate would set you back about $48,000. In Vancouver, you'd be looking at a down payment of just over $113,000. For that amount you could practically buy a house outright in Fredericton!
Given these costs, it's no surprise that high ratio mortgages make up nearly half of the mortgages in Canada.
Mortgage Insurance
In Canada, homebuyers are required, by law, to purchase mortgage insurance when they have a down payment of less than 20% of the property's selling price. CMHC and Genworth are the most commonly known mortgage insurers in this country.
If you are buying your home with less than 20% down, you must remember to factor in the costs of mortgage insurance. The cost calculations for mortgage insurance are pretty straightforward. The fee is a percentage of your loan, based on the size of your down payment. The bottom line? The more you borrow, the more you pay. For example, with CMHC, if you only require financing for 65% of the home's cost, you will pay .5% of the loan amount. But if you require 95% financing, you will pay 2% of the loan amount in insurance fees.
Because they are insured, high ratio mortgages are usually subject to the same terms as conventional mortgages, so you can shop around for the best rates and terms. Be sure to ask your lender or mortgage broker about prepayment options too. If you want to increase your monthly payment or make a lump sum payment, you want to be able to do so without an extra penalty being charged.
What You Can Do With High Ratio Mortgages
Insured high ratio mortgages have helped many first-time home buyers get into the real estate market. By reducing the down payment required for a new home purchase, home ownership has become a reality for people unable to save tens of thousands of dollars in advance of their purchase.
High ratio loans have also helped people looking for mortgage refinancing. Many financial institutions and lenders will fund 90% or more of the property's value, allowing homeowners to borrow against the equity in their home for renovations and major life expenses.
To learn more about high ratio mortgages, contact a mortgage professional today.
Both Lee Dobbins & Crystal Mate are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Lee Dobbins has sinced written about articles on various topics from Home Management, Diamonds and Install Flooring. Lee Dobbins writes for where you can learn more about. Lee Dobbins's top article generates over 246000 views. to your Favourites.
Crystal Mate has sinced written about articles on various topics from Finances, Buying and Selling Home and Finances. For more information on or. Crystal Mate's top article generates over 14800 views. to your Favourites.