The Pros & Cons of Renting Versus Buying a Home
Is it better to rent or buy a home? This is a question that everyone has to process through at some point in time. It’s not always best to buy and it’s certainly not always best to rent. A person’s lifestyle, financial situation, relational situation, and employment are all factors that can sway the answer to one side to the other.
The PROS of RENTING
Easy To Move On When Renting
Renting Allows You Freedom To Easily Move On. When you rent a home, you are free to move on as soon as your lease is expired. There’s no house to sell. This is one of the most common reasons for renting a home, rather than buying. If you are unsure of how long you will be living in an area, renting is usually your best option. Selling a home is a lot of work and expense, so it makes sense to buy a home when you are sure that you want to stay in the home for a few years. This allows you to build up equity and make money when you sell, which you cannot do when you rent.
No Property Tax When Renting
For many homeowners, property taxes are the 2nd highest cost of owning a home, next to their mortgage payment. Home owners insurance is a close 3rd for expenses, which is another fee that you do not have to pay when you rent a home…. or do you? I have heard the argument that the cost of property insurance and home owners taxes are enough to make people rent, rather than buy. But think about this, the landlord of the property that you rent is also paying property taxes and insurance. So, who is really paying the property tax and insurance? It just makes sense that the cost of the tax and insurance are being passed on to the tenant. This means that tenants are inadvertently paying the taxes and insurance for their landlord, just not directly. There are also tax advantages to owning a home as well.
Every home needs maintenance and repairs over time. When you rent a home, the repairs are passed on to the landlord or property management company. This is a very popular reason to rent. Of course, there are down sides to this as well. Some landlords and property management companies are not very prompt or easy to work with. Just do a quick Google search for reviews on property management companies in your area. You may find a long list of tenants who have complained that it took days or weeks to fix issues in their rental properties that should have been fixed immediately, as well as smaller issues that never got fixed at all. However, if you have a good landlord, your maintenance worries are minimal.
The PROS of BUYING
You Can Make It Yours When You Buy A Home
Buying a Home Allows You Freedom To Make It Yours. When you buy a home, you are free to paint, change fixtures, tear down walls, or put up new walls. It’s your home and you can do whatever you want with it. When you rent a home, you are not allowed to change paint colors, fixtures, or remodel. Having the freedom to do what you want with your home is one of the greatest benefits of homeownership. My wife and I have rented a home after moving to a new area and it was very hard for us to leave the house alone. Many people are like us and want to own a home for the freedom to make it the way we want it. A home is a place that captures many of our memories, which is why we want it to reflect us and our design choices.
No Payment Hikes When You Rent
When you agree to the terms of your mortgage, chances are very high that you will have a fixed rate. This means that your mortgage payment will not increase over the life of the loan. The security of knowing your payment amount will never change is very comforting. It’s common for rental properties to have payment increases every time that the lease is resigned. Especially in areas like the lower mainland where rents have increased dramatically over the past few years.
Build Equity When You Buy A Home
When you buy a home, a portion of your payment goes straight to paying off your mortgage. Every time you make a payment, you earn equity in your home. As the price of your house appreciates, your mortgage goes down and your equity steadily rises. If you buy a home in an area that appreciates well and you pay down your mortgage over 5+ years, you will have a nice chunk of equity to use however you like. You can use your equity to move into a larger home, refinance and take out some cash, or leave it alone and let it grow!
The CONS of RENTING
Increasing Rental Prices
Rent Prices Continue to Increase. Rents nationwide seem to be rising fast right now. In British Columbia, rents have been steadily rising for years. This makes it hard to plan your future finances when you don’t know what your rent payments are going to be after your lease expires. Once a lease is expired, a landlord can raise the rent as high as they want. If you disagree to the new terms, you’ll need to find a new place to live, which is also an expense and very exhausting. The unknown future of rents can make tenants feel insecure and unsettled.
When you sign a lease, it will most likely have a deadline. Many leases are structured for a year. Once the lease is up, there is no certainty that you will be able to renew. Sometimes landlords will sell the rental property after a lease is expired, or have family and/or friends move in. The future is always uncertain when you rent a home, which makes long term life plans more difficult and uncertain.
No Equity When Renting a Home
Every rent payment made goes straight to the land lord. You do not have any ownership or equity in the property. This is the hardest part of renting for most people. Knowing that every dollar of your rent is gone for good is discouraging and causes tenants to look into owning their own home. Rent always costs much more in the long run. Imagine renting for 10 years, as opposed to paying down a mortgage over 10 years. The person who pays down their mortgage is going to have a nice chunk of equity when they sell, as opposed to the person who rents and has no equity after 10 years.
The CONS of BUYING
Need Money for Down Payment
When you buy a home, it’s common for the mortgage company to require you to put a certain amount of money into the deal as a down payment. This is usually between 3% to 5% of the cost of the home. There are down payment assistant programs and other mortgage options for certain people, so this is not always a con to owning a home. There are misconceptions that home buyers need as much as 20% down, but this is usually not the case. The best way to find out is to talk to a mortgage lender and know your options.
The Cost of Selling A House
Selling a home can be costly. Realtor fees can run from 4% to 6% of the sales price of your home. If your home needs some work before selling, you’ll also have to come up with the money to make those necessary updates or repairs. Selling a home is much more stress than buying a home. It usually requires months of planning and preparation to really do it right and make the most amount of money when you sell your home.
Home Owner Responsibilities
When you own a home, it is your responsibility to maintain the property. You’ll need to work on the landscaping, have the heater & air conditioner serviced, and repair any damages to the property. Your home owners insurance will typically help you with many of the most costly issues, like roof repairs and major damages. The rest is up to you. I personally prefer this because I can fix problems, like a broken garbage disposal or ceiling fan, and replace old items with new high-end items to make my house run smoother. My dishwasher and garbage disposal are virtually silent since I replaced them recently; and I prefer to do these things myself.
Both renting and buying have their advantages and disadvantages. It really comes down to the stability of your living situation. If you have a career that is moving forward and you feel like you are going to be in your current city for a while, buying a home makes much more sense. If your life is up in the air and you don’t know what next year is going to be like, renting a home makes a lot more sense. Buying a home costs less in the long run and builds your financial situation. Renting a home is expensive and always leaves you without any true ownership or equity.
Taking the time to truly look at all the aspects of each option can help you plan your life to move in the direction that benefits you the most. If you plan on buying a home, there is a ton of information online to help you. Start with this article that explains how to buy your first house. It will give you a quick overview of the home buying process and help you identify where to start. Good luck and happy house hunting!
Community Overview – Moving to Abbotsford
If you’re considering a move to Abbotsford, here are some great resources to help you get started, whether you are buying a home, or not quite ready to get into the real estate market, these resources can familiarize you with the city and its services.
Abbotsford is already a diverse community, with residents from 58 countries. The city makes efforts to serve residents in their first language wherever possible. It has also launched many initiatives to ensure newcomers are treated fairly and equitably.
Abbotsford Community Services offers many settlement and community services.
These organizations offer English language training
Abbotsford Community Services
Offers morning and evening classes for all adults, plus special programs for Punjabi-speaking mothers and grandmothers.
University of the Fraser Valley
Offers an advanced ESL program for career and professional integration.
These organizations provide all kinds of support to immigrants:
Abbotsford Community Services
Language and translation, settlement services, legal advice and advocacy, job search assistance and education services.
Newcomers Guide (published the by British Columbia government)
Citizen and Immigration Canada
Provides information on coming to Canada to immigrate, study, work and live. On this website you will find forms, policies and regulations, research, services, publications and visa offices.
Most Abbotsford residents own their own homes. However, the area also offers a mix of townhomes, condominiums and apartments — with prices much lower than nearby Vancouver.
The average monthly rent for a one bedroom apartment in April 2013 was $669 and a two bedroom apartment was $823. The average monthly rent for a three bedroom apartment was $920.
Vacancy rate and availability
In Abbotsford – Mission, the vacancy rate for one bedroom rental apartments was 5.5 per cent and for two bedroom apartments was 4.1 per cent. The vacancy rate of three bedroom rental apartments was 3.2 per cent. This was the proportion of rental apartments that are vacant and ready for move-in in April 2013.
The proportion, in April 2013, of apartments that are vacant or for which the present occupant has given notice to move-out was 5.9 per cent for one bedroom apartments, 4.5 per cent for two bedroom apartments, and 3.2 per cent for three bedroom apartments.
Home purchase prices
In Abbotsford – Mission, the average house price, in 2012, was $483,730.
These agencies can help you find housing:
Ministry of Social Development
604-433-2218 (1-800-257-7756 toll free)
For government-subsidized housing
Abbotsford Community Services
2420 Montrose Street
Abbotsford, BC V2S 3S9
The Salvation Army — A Centre of Hope
34081 Gladys Avenue
Abbotsford, BC V2S 2E8
Mennonite Central Committee of BC
31414 Marshall Road
Abbotsford, BC V2T 6L9
604-580-6639 (604-857-0011 toll free from Vancouver; 1-888-622-6337 from outside the Lower Mainland)
If you’re ready to buy a house, please contact Dave Combs for more information on listings, getting your first, or next, mortgage, and touring the beautiful city of Abbotsford.
What Does a Realtor Do to Earn Their Commission?
REALTORS® are known for helping people buy and sell real estate, but much of what a REALTOR® actually does to earn their commission happens behind the scenes. A good REALTOR® will make your real estate transaction flow smoothly through each step of the process, leaving the impression that their job is fairly simple. The fact is - that couldn't be further from the truth. Anyone who has ever lived with a REALTOR® knows how difficult their job is. If you've never spent much one-on-one time with a REALTOR®, you may not understand how different their job is from the average everyday job. For this reason, I created a simple infographic covering a few of the day-to-day items that REALTORS® are responsible for. A day in the life of a good REALTOR® is extremely complicated.
Being a REALTOR® is Exhausting!
As you read through some of the tasks on the infographic above, it may seem overwhelming. That's because it is. Full-time REALTORS® who excel in their careers are high-energy, time-efficient professionals who know how to handle stress and responsibility well. There are definitely REALTORS® out there who cut corners and do not take care of their responsibilities as well, but they should not define our industry. The real estate industry is loaded with very impressive professionals with whom I am proud to work with.
Common REALTOR® Responsibilities:
Schedule Listing Appointments
Maintain Required Continuing Education
Deliver Earnest Money On Time
Coordinate Property Inspections
Keep Up With Mortgage Company Progress
Verify Buyer’s New Homeowner’s Insurance
Coordinate Home Warranty Company
Get All Disclosures Delivered & Signed
Keep The Transaction On Track
Provide Educational Materials to Consumers
Keep Your Blog Active
Maintain Active Social Media Profiles
Answer the Phone ALL DAY & NIGHT
Return Missed Phone Calls
Return Emails ASAP
Follow Up With Website Inquiries
Keep Up With Changing Laws
Run Comparables for Buyers & Sellers
Determine Accurate Pricing
Help Stage & Present Properties
Meet the Appraiser at Property
Meet the Inspector(s) at Property
Show Hundreds-Thousands of Homes Each Year
Get Signed Contract to Title Company
Keep Clients Updated With Each Step
Provide Comps for the Appraiser
Make Sure There is a Clear Title
Explain the Contract to Clients
Provide Advice on Offer Price
Explain The Current Real Estate Market
Explain Pros & Cons of Each Neighborhood
Verify Completion of Repairs
Make Sure The Loan Funds
Schedule & Attend the Walkthrough
Dispute Low Appraisals
Verify Delivery of Title Commitment
Remind Clients to Schedule Utilities
Manage Your Online Reputation
Compete with 1,000’s of Realtors for Business
Deal With Vendors
Keep MLS Listing Data Current
Attend Real Estate Conferences
Network with Local Home Builders
Coordinate Open Houses
Check Up On Past Clients
Still Have a Life After You're Done!
Being a REALTOR® is Expensive!
On top of the large list of responsibilities that REALTORS® carry, they also have many expenses to account for. When people see a REALTORS® commission check, they may feel like we are getting rich quick. In reality, the average REALTOR® makes around $50,000, after all expenses and taxes. Much of the money from our commission check goes to maintaining our business and licensing fees. Less than half of it usually goes into our bank account. Here is a list of some common REALTOR® fees:
Some Common REALTOR® Expenses:
E&O Business Insurance
Extended Auto Insurance
Board Licensing Fees
Showing Service Fees
Continued RE Education
Being a REALTOR® Can Drive You Crazy!
Working in Real Estate Can Drive You Crazy. Many people try to start a career in real estate under the assumption that there is easy money to be made here. In reality, it is a brutal business with loads of competition. The paychecks are not large enough to keep people in the business, a fact that is reflected in the 20% success rate for new REALTORS® . Those who do survive usually do so because they have a passion for the business, and helping people make their real estate dreams a reality. It's a great business to be in, but it's NOT EASY!
So, the next time you work with a REALTOR®, remember that they are human just like you, and they carry a lot of burden and responsibility in their job. We work long hours for months on end for clients with no guarantee of a paycheck. When you understand these things about REALTORS® and let them know that you get it, you can be sure it will put a smile on their face. :)
10 Critical Steps to Take Before Listing Your House for Sale
Selling a house is much more work than buying a house. Just ask anyone who has done it. If you’ve never sold a home before, you may be surprised at how complex it can be. From determining the correct listing price, to navigating contractual agreements; it’s an exhausting process. The best place to start is by choosing a good Realtor who you trust and enjoy working with. Ask their advice through each step of the process and leverage their experience. A good Realtor will keep you focused on the things that will help you sell your home fast and for top dollar. Below is a list of 10 items that most Realtors will advise you to work on before listing your home for sale.
As you read through the list above, don’t be intimidated by the scope of work. Make a list of things that you feel are important for your home sale and then plan them out accordingly. Tackle one item at a time and before you know it, your list is done. Once your house is ready to put on the market it will most likely get an offer before your competition does. Many sellers will try to avoid some of the steps mentioned above. If you take the time and expense to tackle these issues, your house should outshine the others and sell for the highest sales price possible. When it comes to selling your home, the adage “you get out what you put in” rings exceptionally true. Your efforts will be well rewarded!