Excerpted from ‘Selling your home could finance your hopes and dreams’, Garry Marr, Financial Post, 26 May 2011 -
Cam Hayduk sold his house in May 2010 on Bowen Island -a 20-minute ferry ride from Vancouver -for about $580,000. “Prices had gone through the roof in the 10 years we have lived here,” says Mr. Hayduk, who now rents a home with his wife and child.
He bought the house for $380,000 in 2004, putting a 10% down payment. The return on his approximately $40,000 investment was nearly $180,000, for 450% return in six years.
“We wanted to start our business. Originally we wanted to scale down, but there were no options at the prices we wanted, so we sold,” says the 45-year-old former camera operator. “We invested the money and some of it went to a video production company we started.” He went from what he describes as “eking into debt” to a situation where he was able to buy new video gear and lights for the business to make it profitable and establish a nice nest egg that is locked away and untouchable.
“We don’t have any regrets. We are sleeping well and there is so much less pressure. Our house put us into the black in a way we never could have been before.”
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“We had one realtor dealing with a mainland Chinese client who found a property they liked. The client said they liked the house but they wanted to know if the neighbour would sell their house, too,” says Elton Ash [executive vice-president of Re/Max of Western Canada]. For the person who didn’t have their home on sale, it was a huge windfall. “In this example, the neighbour sold.”
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How do you say no? Average prices in Vancouver in April soared to $801,252, a 21% increase from a year ago. Profits in some pockets of the city are even larger. At the same time, affordability in the city has become absurd.
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“I think it’s a good time to downsize if you are moving to a less costly home because even if prices do go down, you do lock in equity,” says Clay Gillespie, managing director of Rogers Group Financial.. “Most of my clients are people near retirement, some of whom bought their [million dollar] houses for as little as $50,000.” Mr. Gillespie says he had a client who recently sold in Vancouver, bought a similar home in Victoria and pocketed a tidy $800,000 profit. “The big problem is if you want to stay here, you have to buy something else,” Mr. Gillespie says. “The fear is you will be [priced out] if you sell out now.”
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Kudos to those wise enough to cash out. – vreaa
Take the money and run! There’s a lesson in here for you Rusty.
these renters lack the commitment and dedication it requires to be a serious investory
you should learn the meditation
The welter of homes for sale along West 12th in YVR, is stunning. I just drove the corridor for the first time in a few months, and I was shocked at the skyrocketing number of for sale signs.
Cash out window is closing, or closed.
My MIL gets pestered by a former neighbour realtor every 6 months or so to sell her house. I wish she would but of course it is hard to convince her not to sell and buy but rent. The realtor calls her and chats her up, tells her how much the house down the street sold for and emails her listings for shiny new townhouses in a crappier neighborhood. He tells her she could buy and sell and pocket the $100K difference. Except them I remind her about paying his fees, the lawyers fees and the property transfer tax plus the cost of moving and that $100k starts to disappear pretty quickly. Plus in her house she can decide when to tackle the roof repair, in a strata they decide and tell you how much you’ll pay. She is holding her own for now but the realtor is a persuasive and persistent character. I guess he’s looking for a payday and thinks she is a good mark. Honestly I’d like to punch him in the nose.
terminalcitygirl, inform your MIL to request a net sheet from that agent. If he is blowing smoke, quickly analyzing the net sheet will prove it. If he has the number to back up a 100K profit, sounds like a good deal – the net sheet MUST include all fees.
He will probably push for a market evaluation in a full listing presentation. Tell him that he is the one who brought up the 100K figure and you just want proof to back up what he said.
While I agree that owning a detached home has much more freedom – don’t forget that you’ll have to fix that roof either way. By generalizing strata ownership vs. detached home without looking at the specifics you may find yourself looking merely to prove yourself right instead of looking out for your MIL’s best interest.
I had a friend that was assessed 3K last year to replace the roof on her strata. Having a condo doesn’t free you from major renovations.
[This from Rusty, calling themselves 'c-'. -ed.]
c-
Hate to break it to you but $3,000 is nothing, even on a strata. I had clients who just went through a $18K – 22K assessment on their strata (roof, balconies, rainscreening, etc.). $3K for a roof assessment sounds like a bargain relative to that, or even a detached roof repair.
Point being, home ownership, whether detached or strata, is expensive. If you are looking for an investment, you have to be extremely rational and have a shrewd, but trustworthy, agent on your side. Problem is, home ownership is generally an emotional purchase. I have had clients who just “had to” stress their purchase to the limits because of what they wanted, not because of what was financially smarter.
As a Realtor, I don’t make much more money on whether my client buys a $320,000 condo or a $400,000 condo. But I know that $80,000, once reality kicks in and mortgage rates increase, can hurt. I’m not assigning any more blame out there than is required, as the greed is omnipresent (agents, buyers, sellers, etc), but some common sense + education is required. Unfortunately this isn’t sometime taught in high school (instead, I think we learn how to take advantage of each other there).
We can’t regulate the hearts and minds of sellers and buyers. But as professionals, we need to take our legal duty to put the client’s interest above our own seriously. Mortgage Brokers need to continue to prove to consumers that they are looking out in their interest and act as trusted financial planners during the pre-approval process, because their business model, unlike the Banks, allows them to do so.
I’m not really worried about being wrong no bull. If MIL wanted to sell then we would help her do her due diligence. She doesn’t really want to sell though, the agent just tries to convince her that she should and she feels guilty because he calls all the time and she keeps saying no. Plus even if she pocketed $100K clear (which I don’t think is the case) to buy again and realize that gain she would have to buy attached in a crappier neighbourhood. Both big depreciation factors in the future I think. She now knows her neighbours, most have lived there 25 years plus and they aren’t specuvestors.
And I’m sure she would be unhappy. I am still living that scenario with my Grandmother who did sell her place 2 years ago and is renting a large new one level apartment for 1/2 the cost of owning it. She has a nice fat bank account now but complains everytime I see her about missing her old house and how she wishes she never would have sold it. Never mind that it was huge for her and expensive to maintain because for the previous 10 years she couldn’t do the cleaning or yardwork for it. At least MIL can still clean her house and hubby helps with the yard.
terminalcitygirl,
“She doesn’t really want to sell though” – that’s the crux of it all, isn’t it?
It is a difficult aspect of the business – how to gauge who is just putting up the walls as opposed to those who really don’t want to sell (and how to keep in touch with those people for when they DO want to sell).
This agent sounds like he is trying to keep in touch with his “sphere of influence” with the occasional sales pitch as opposed to targeting your MIL for any other reason. If this is the agent they would use if they were to sell, your MIL should thank him for his time, but that they have no intention of selling in the near future, but when life’s circumstances change, he will be the first that they will call.
He might not get the point – I would probably send an email or newsletter update every so often – but what is most important is that she shouldn’t feel guilty. At the very least, this is his way of making sure she doesn’t forget him. At the most, he is trying to push her into doing she doesn’t want. Either way – no guilt!
“Kudos to those wise enough to cash out. ”
and pity to those “unwise” enough to miss out or cash out early / cannot buy back?
it works both way.