RelativeRealty | Toronto, Ontario

Getting a mortgage or renewing. Consider all your options.

I get it, we all tend to stick with the familiar. We take comfort from certain things or routines as it seems safe to stick with what you know. My son won’t go to sleep without a specific blanket, and my wife complains about the number of clothing articles I hold onto that have holes in them. But when it comes to getting a mortgage, it’s time to get rid of that security blanket of familiarity and have a look at what lenders are offering.

People that assume that their loyalty to their bank will pay off are usually the ones paying the highest financing rates.

Banks can often be reluctant to offer their best rates, and usually won’t do so until they are pressed by clients threatening to go to another lender. I’ve had multiple clients who work for big banks and have chosen to work with a different lender because they were able to offer a better rate and/or terms than their own employer.

In the past, I was shocked to learn the mortgage rate that my own family agreed to when a simple call to get recommendations for mortgage providers would have saved them thousands of dollars. There are different schools of thought, some people don’t look at other lenders because they prefer to have their debt consolidated. While I understand this, should a few thousands dollars in savings trump dealing with another company once every few years?

Don’t get me wrong, there are a lot of banks out there who are offering good terms and great rates, I’m just suggesting you look at all your options. People are reluctant to work with mortgage brokers because they don’t understand the process; they think they add an extra layer and will pay more because of it. Mortgage Brokers are paid a commission by the lenders and they are able to get a you a pre-approval the same way your bank would. Mortgage Brokers create competition among lenders, and by working with multiple lenders, they have a good chance of finding you the most competitive rate and terms on the market.

So when you go buy a home or renew your mortgage don’t let familiarity cost you money. Look at all your options and don’t just make the rate your sole focus, make sure you understand pay down options and all penalties associated with the mortgage.

Real Estate Commissions are Negotiable.

The commission you pay your Real Estate Broker is not set in stone. While it’s true that most Brokerages encourage their Brokers to stick to an industry standard and that many Brokers avoid advertising that they are willing to negotiate their commission, don’t be scared to talk about it. You’re not likely to walk into a car dealership and pay the sticker price (or at least I hope not!). CBC radio’s Ontario Today recently did a show on Realtor Fees and introduced its Ontario listeners to a company called Fee Duck who have Realtors compete on commission to sell your house. This concept isn’t new! Realtors compete for your business everyday; Fee Duck has simply created another platform to compete, that requires you to chooses your Broker before meeting them in person.

The Real Estate industry has changed in recent years which has given consumers more choice in how they want to sell their home and how much they want to pay to do so. How much commission you pay can vary greatly across the industry and should depend on the amount of services being offered by your Broker. When determining what option is best for you it’s important to identify how much time you want to invest in the process, your knowledge of the process, and your skill set. See this Blog Post on whether selling your home yourself could be the right move for you.

When negotiating your commission with your Broker, keep in mind that you may not be aware of all the work your Broker invests into each transaction they do and that if you are looking to pay a minimum wage fee you will attract minimum wage quality. Unfortunately, it’s true that you don’t always get what you pay for when you hire an Broker to sell your home, and there are often times where Brokers don’t deliver what they should. The amount of commission you pay to sell your property should vary on the amount of work needed to bring your property to market, the amount of work you’re willing to do yourself, and the amount of exposure you want your property to receive. Don’t be scared to have a conversation with your Broker on commission, and if you don’t like what they have to say, speak to another Agent. Today’s consumers are very enlightened to the array of choices that exist in the market and my hope is this will lead to more satisfied customers and a better reputation for the industry.

Timing Timing Timing.

Location is important in Real Estate, but if you are looking at making more money on your Real Estate investment you might want to give just as much consideration to timing. Simple economics of supply and demand can significantly impact whether you are able to buy or sell a property below, above, or at market value. Determining the best time to buy and sell in the GTA has been in the media lately because of a recent Red Pin study. The Red Pin identified January as the best month to Buy and May as the best time to Sell during the past 5 years. The analysis is interesting, but I think it’s important to note that in a Seller’s market it’s natural for the earliest point in the year to be the best time to purchase since prices rise throughout the year. It’s also important to note that the spring and fall markets attract higher quality listings than the summer and winter months. A higher percentage of listings in the summer and winter months are what I call leftovers. Leftovers are listings which failed to sell in the busy spring and fall markets and have remained on the market or have been re-listed.

Timing the market is not always possible. Often people have no choice but to sell their property within a short time frame or need to purchase something in order to avoid additional cost or inconveniences. When working with Buyers or Sellers, your Broker should closely monitor the level of supply and demand in their desired area and property type. This is can be critical to selling your home for the most money or finding a great buy, even 1-2 weeks can make a significant difference! Once a month, we highlight areas which have experienced the biggest changes in supply to show Buyers and Sellers which areas have the most favourable buying and selling conditions.