<p>When you watch House Hunters or some other show it amazes me how they talk about extra money left over to do the repairs. Let’s say you barely have the 20% down in cash. Buyer’s budget is $400k. That means they have $80k for down payment. </p>
<p>They show them a beater for $375k and say, “you have all that extra money to fix it up”. No… They need to put $75k down and they only have $5k left to try to fix the whole house. It just doesn’t work like that!!</p>
<p>^^^Yes, that is one of my pet peeves. And a lot of those folks don’t have the 20% down. </p>
<p>What also gets me on the reno shows is that one’s house is worth X, they spend $Y to renovate and voila, new market value is Z – you’ve made a profit! The calculations seem to forget that the owners have either gone into further debt to improve the place (and now will have more mortgage to pay) or have spent lots of cash, and that the “value” of a house is what someone else will pay. The equity or value is a paper number until a willing buyer and willing seller come to agreement on a value.</p>
<p>^^^Unless they still take out the same amount in their mortgage, in which case they’ll have the extra $25K to renovate with.</p>
<p>^^^ if they can get an appraisal to support the additional mortgage amount on the beater…</p>
<p>If a buyer is paying X for the house on a Purchase Agreement and they are trying to get a conventional loan with 20% down, the bank will not loan a higher amount than the purchase price (less 20%), no matter what the appraisal comes in at. </p>
<p>However, if a buyer has 25% down and they change their mind on how much they want to put down, they can usually go back down to 20% and save 5% of their cash if they need to.</p>
<p>The secret is cash. The house hunter renovation shows are usually fairly well to do couples, and they are not putting 20% down. In Canada they have different lending laws, the biggest difference being there is no write off for mortgages on their taxes. So again, we aren’t really seeing folks that have budgets relying on maxing out their mortgage potential.</p>
<p>I agree that it is misleading to viewers, most of who probably fall into the 20% down type of buyers.</p>
<p>Sorry to differ with everyone else, but in comparison of profitability finance charges should not be included. This is universal. It does not matter if the property is in Canada or in China. In commercial real estate we compare projects by cap rate and cap rate never consider finance charges.</p>
<p>UCD, do Canadian mortgages have longer terms than US mortgages? I watch those shows and they’ll say the homeowners currently have a $XXX mortgage with a loan payment that is shockingly low to me, i.e., $1350 payment on a $450k loan. Almost looks like an interest-only loan to me, which tells me that folks were desperate to buy (and marginally qualified) in the first place.</p>
<p>coralbrook, are you venting the stove hood to the outside?</p>
<p>The stove will have an over the range microwave. We have to build a box over the upper cabinet to vent up through the cabinet and then through roof. Box will go in later (after microwave installed)</p>
<p>Here is some thing interesting to report</p>
<p>1241 Ashby Ave., Berkeley, 2000sf is on auction block as owner occupied, bank owned property. 17 hours left to close, current bid is 474k
The house behind this is sold for 550k AND 500sf smaller, another house in the same city block to this is on a short sale asking 495k AND 300sf larger.</p>
<p>In my experience, the 474K bid will be closed to 520K hammer price at close of the auction. total cost of purchase will be 520k+5% or 546K With the risk of not being able to see the inside plus the eviction risk and renovation cost after it is vacant. Even if at the end it can be sold for 620K less 5% selling cost or net to the seller $589K, the margin is too low for me to consider.</p>
<p>Ashby Ave. Is the local highway 13 and you have cars lined up every day from 7am to 9pm, I won’t even think of living there.</p>
<p>What do you renovators think about swanstone walls in a shower instead of tile? thx</p>
<p>I personally love Swanstone walls as a homeowner because they are easy to install and very easy to clean. However, for renovations to sell - for some reason buyers do not like what they think are ‘plastic’ walls in a shower. I have seen high end homes place granite slabs on shower walls, but that is expensive.</p>
<p>To sell a home buyers want to see tile with lots of fancy insets in showers. For some reason they are ‘OK’ with fiberglass or plastic bathtub surrounds. Once again, much easier to clean than tile with grout around a bathtub. I think their brains think “bathtub is for cleaning the kids and I want it to be functional and easy to clean”. “Shower is for the adults and it needs to be pretty”</p>
<p>It might be cheaper use granite instead of swanstone. I can buy two granite walls for about $2-300</p>
<p>Artlover, I guess this is a property on the Auction.com website that was already taken back by bank through foreclosure and now they cannot sell it through the MLS because of occupancy.</p>
<p>When they list these on their Occupied auction sites, do they provide the lease or any information on the occupancy??? Obviously they know what the occupancy situation is, don’t they have to provide some type of information? I could never figure out where they provided that info on the website.</p>
<p>On another note regarding the Auction.com online bidding.</p>
<p>I tried hard to bid on a large vacant property that they were selling about a year ago via their online auction. It was a property that had come up for foreclosure through regular courthouse step auction, but opening bid was way too high. It was occupied at that time.</p>
<p>Property was owned by the bank. I kept plugging in bids and immediately a phantom other bidder kept jumping the bid. I watched it for days and kept going up a bit with automatic jump. These jumps were automatically generated by their website - there was NO other bidder. At the end I caught on to the sham and just watched it close. Once again, it didn’t sell to any human… Auction.com probably was just jumping it up to try to get it to the reserve price.</p>
<p>Noone contacted me from Auction.com and tried to talk me into purchasing it for the reserve price. The property languished around forever and never sold when they tried to auction it again.</p>
<p>no lease info is provided. mostly they are owner occupied and the owners have been fighting for YEARS with the bank and the bank cannot handle it so they pass the hot potatos through the auction. Or, as I have experienced, the bank knew the occupant has mental or medical problems and they do not have money, so when you buy it, you have to HELP those occupant to get medicade and section 8 and try to relocate them, that takes YEARs if you have to go through regular routes.</p>
<p>One way or the other, those properties on Auction.com are PROBLEM properties, either the reserve is too high or they have problems. Tenant problems, zoning problems, structural problems, problems and problems. Its buyer be ware. Caveat emptor.</p>
<p>However, if you know your stuff, its high margin high risk.</p>
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<p>I don’t know about that. When I bought the duplex I am selling, I went over the reserve by a good margin and later found out the guy across the street was bidding against me. Also, in most instances, I was the high bidder way under the reserve, but the bank let it go anyway for a reason.</p>
<p>Lesson learned, a vacant home in Auction.com most likely will bring the price to the market. You are not going to get it much cheaper.</p>
<p>Just out of curiosity, why does regular eviction through court not work for these owner occupants that are mental cases? Is there some catch to the Unlawful Detainer if they are Section 8?</p>