Questions, Questions
Friday, November 28, 2008
If you go to answers.yahoo.com, you get answers to questions on any and all subjects under the sun. From sports to health to consumer electronics ... all is covered there. If you want answers to real estate questions you can go to www.askanexpert.ca or of course ... ahem ... come here.
This week I have picked these questions for you:
Question: Some of the risks I perceive re condos, stratas etc. are twofold: the potential for lack of disclosure and the risk involved with potential property improvements. Reading the recent articles about deals becoming available has me thinking that the lower prices are not only functions of the general economy but also reflection of the fear of these agreements that others are feeling. Do you have an opinion on this?
Answer: Our strata ownership concept is firmly entrenched for some 35 years. Buyers are totally protected. In fact some 58 percent of all transactions in Vancouver are strata-titled properties. I assume therefore that you are referring to the pre-sale condo market ... There is no question that projects that are not completing - after buyers were waiting for up to 2 years, not getting financing etc. - have put a pall on the whole pre-sale real estate market. But lower prices are also a reflection of affordability (we had risen to 74%, the highest in North America), of oversupply (108% more condos for sale than last year at this time) and of buyer fatigue. Markets become the stories people tell/hear about them. Today's 'stories' are all negative. We expect that to continue.
Question: We purchased a home that was formerly used as a grow-op by the previous owner for many years. He was charged and convicted of these illegal activities and our realtor knew this but did not disclose it to us prior to purchase. Is he liable?
Answer: If your realtor knew this, then he may certainly be liable. You can also complain about the realtor to the Ethics and Discipline committee of your Real Estate Board as well as the Real Estate Council of BC, which governs licensing of brokers and salespeople. Unfortunately, you will need a lawyer to pursue the matter.
Question: I have used most of the equity in my principal residence to finance a rental property. I would like to purchase more investment property but fear that the banks will not lend me anymore money because of the maximum debt service ratio. Do you have any advice on what kind of deals I should be looking for, and how do I find them?
Answer: We expect prices everywhere to reverse further. While this also spells opportunity it is a time to be extremely cautious. The best way to finance without banks is to joint venture. In our Real Estate Investment Club we find many good opportunities for financing properties (exceptional-only deals!) through joint venturing. One person sweats, the other has his/her money sweat for her/him.
Published in The Vancouver Sun on November 20, 2008
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