Archive | March, 2012

5 Tips to Beautify Your Garden

March 30, 2012

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Due to some technical difficulties last week, this post never made it to its final stages. My apologies, and hopefully it was worth the wait!

We all know how important curb appeal is when selling a house. Sure, you can hire landscapers, or get your mom to come over! If you’re not a green thumb (probably because you never tried) like me, here are some great tips I got from our friends and neighbours at Bradford Greenhouses. Your garden doesn’t have to be complicated. Just enjoy it!

We have been incredibly lucky with record-breaking warm weather this month (except this past week…brrr). You may be getting the gardening bug, so keep reading to help you start your journey!

  1. Plant native plants. If you’re new at the gardening game, using plants that are native to our geographical area will help ensure a successful garden. Native plants are anything that you might find naturally, say if you went for a walk in the forest. Luckily, Bradford Greenhouses are local experts and they can guide you toward plants like honeysuckle which grows wonderfully here.
  2. Plant bulbs. Bulbs are very attractive to me…drop them in a hole in the ground, water, and wait. Not a lot of room for me to mess up! My favourite flowers are lilies, and they’re so easy to grow. Every bulb has different planting instructions, but maintenance is easy; keep the soil moist and add some fertilizer.
  3. Plant perennials. Some of us can never remember the difference between perennials and annuals. But the important thing to remember is that, because perennials come back year after year, the long-term maintenance is manageable. Plus they often bloom from April to October, so you get the biggest bang for your buck!
  4. Plan your design. It may seem unnecessary, however taking an hour or so to properly plan where everything will go will make all the difference in the world. The shape, the soil type, the sun or shade factor – these all play a part in the success of your garden. Plus, you want all the colours and plant height and size to make sense. And if you need help with this, the lovely people at Bradford Greenhouses can help you with a consultation.
  5. Maintain your lawn. With all this garden talk, you don’t want to ignore your grass. Especially if you’re considering selling your house (even next year!) this is an important factor to curb appeal. A potential buyer who sees a dead or weedy lawn will think a lot of work has to be done. Keep it watered and fertilized, and you will notice the difference.

Following these tips is a great way to start your Spring garden. Keep in mind our local weather and various soil types, and when you visit your local garden centre you should be in good shape.

Our friends at Bradford Greenhouses gave me some fun extras to share with you. Enjoy!

  • To prevent accumulating dirt under your fingernails while you work in the garden, draw your fingernails across a bar of soap and you’ll effectively seal the undersides of your nails so dirt can’t collect beneath them. Then, after you’ve finished in the garden, use a nailbrush to remove the soap and your nails will be sparkling clean.
  • Turn a long-handled tool into a measuring stick! Lay a long-handled garden tool on the ground, and next to it place a tape measure. Using a permanent marker, write inch and foot marks on the handle. When you need to space plants a certain distance apart (from just an inch to several feet) you’ll already have a measuring device in your hand.
  • To create perfectly natural markers, write the names of plants (using a permanent marker) on the flat faces of stones of various sizes and place them at or near the base of your plants.
  • The next time you boil or steam vegetables, don’t pour the water down the drain, use it to water potted patio plants, and you’ll be amazed at how the plants respond to the “vegetable soup.”
  • Always misplacing garden seeds, gloves, and your hand fork?  Try placing an old mailbox in your garden. With a new coat of paint, you have the perfect spot to place all those little things!

Laura

Laura Keller of Century 21 B.J. Roth Realty is a real estate agent with a business philosophy of nurturing relationships with her clients. She will walk you through the process of buying, selling, or investing step-by-step so there are no surprises at the end of your transaction.

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When does a denial of warranty become a guarantee?

March 28, 2012

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A SPIS is a form that some sellers will fill out, which details information about the property, everything from zoning issues to structural issues to environmental concerns. The form specifically states on it that it is not a warranty, and that the purchaser cannot rely on the statements contained on it. However, there have been numerous cases in Ontario where a purchaser was able to break through a SPIS, and also cases where the purchaser was made aware of an issue through a SPIS, bought anyway, and successfully sued the vendor for the problem with the property.

If you are thinking about completing a SPIS, the most important piece of information to take away is to complete it with either your realtor or your lawyer, ensure that you understand everything you answer, and understand the consequences of providing the information to a prospective purchaser.

Cesia

Cesia is a real estate lawyer at Wall-Armstrong and Green, a boutique law firm in Barrie focusing on real estate and estates. When she's not online, she can usually be found in her garden.

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Risk? What Risk? Mortgage Investment From the “Buy Side”

March 26, 2012

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Starting last week and for the next couple of weeks, our regularly-scheduled Mortgage Monday blog posts are featuring a 4-part series courtesy of MCAP on how and why mortgages are priced the way they are (starting with Part 1 last week: The Bond Market and Fixed Income Yields – How Does it Really Work?).  If you have some basic financial knowledge, it shouldn’t be overly complex (that being said, these next couple of posts aren’t for beginners, either).  Either way, if you have any questions, ask them in the comments below and I’ll do my best to answer them.

 

Part 2 – Risk? What Risk? Mortgage Investment From the “Buy Side”

Residential mortgages in Canada, compared to various other possible investments, are not usually considered to be particularly risky. And, they’re not. But they do carry more risk than government bonds do and they are therefore priced at a spread above government bonds. What risk is there – particularly with insured mortgages? In terms of credit risk (the risk that some portion of the principal advanced or interest owing may be lost due to borrower default) there is very little. For conventional loans with an LTV of 80%, credit losses would arise only in the event of a “perfect storm” scenario which would include a mortgage default, a steep drop in home values, property tax arrears and delay. This rare scenario could easily erode a lender’s 20% security cushion but investors also consider two other types of risk always associated with mortgages: Reinvestment Risk and Liquidity Risk.

Credit Risk is the risk that that some portion of the principal advanced or interest owing may be lost due to borrower default.

Remember Mary and her government bond (from our post last week)? When Mary sold her 10% government bond (and earned an impressive capital gain because rates had decreased from the time she first invested), she decided to consider taking on a little more risk and she looked at investing in a fund of fixed rate residential mortgages. The fund manager explained to her that the fund’s yield would not be constant because amounts of principal are repaid to the fund every day – either through regular amortized borrower payments or full payouts. The fund would then reinvest the repaid principal in new mortgages which could have lower rates than the older repaid mortgages. Mary now understood the concept of Reinvestment Risk. Her bond had paid a constant rate of return until maturity. An investment in mortgages was going to provide a less certain return, but she invested in the fund anyway because she was comfortable that she was being compensated for this risk by the yield she would earn,which includes a spread above the yield of government bonds.

Reinvestment Risk is the risk that the mortgage principal may be repaid prior to maturity (without the appropriate interest penalty) and reinvested at a lower rate.

A couple of years after she invested in the mortgage fund, Mary decided to sell all of her investments and open her own business. Over that two year period, her mortgage fund had performed well but there had been widely reported problems in the American mortgage and housing market which were threatening to spill over into Canada. Mary was not the only investor in the fund wanting to sell and the fund manager was having great difficulty finding new investors as investments which contained the word “mortgage” had fallen out of favour in the market. Mary had come face to face with Liquidity Risk and, although she was able to sell her investment in the mortgage fund and open her own business, it took longer than she had expected – especially compared to how easy and fast it had been to sell her government bond two years earlier.

Liquidity Risk is the risk that, in the event that an investor needs to sell some or all of its mortgage portfolio, it could take some time to find a buyer and to go through the review process and close the transaction.

Mortgages are priced at a spread over government bonds to compensate investors for Credit Risk, Reinvestment Risk and Liquidity Risk. But how big does the spread need to be? Look for the answer in the next Mortgage Monday blog post.

Tim

Tim is a mortgage agent in Barrie who specializes in helping first-time home buyers. He works with a variety of lenders and can help customize a mortgage with the best rates & options that fit the needs of each customer.

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Let the seller beware?

March 21, 2012

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The Ontario Court of Appeal released a decision last spring that could have far-reaching effects for home sellers and realtors in Ontario. The decision, Krawchuk v. Scherbak,involved a first-time buyer who purchased a home in Sudbury. The sellers filled out an SPIS form, on which they stated that the foundation issues had been resolved years earlier. Unknown to the buyer, there were serious foundation problems, and the sewers regularly backed up. The agent did not know that the sellers were misstating information, but did not inquire as to whether the information was accurate.

The Court ultimately decided that both the vendors and the agent were liable for the purchaser’s costs. As I blogged about last week, the vendors would not have had an obligation to disclose defects in the house. However, a vendor cannot make a false statement about a condition of the house. When the vendors decided to fill out the SPIS form, it was their obligation to ensure that it was fully accurate.

Cesia

Cesia is a real estate lawyer at Wall-Armstrong and Green, a boutique law firm in Barrie focusing on real estate and estates. When she's not online, she can usually be found in her garden.

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The Bond Market and Fixed Income Yields – How Does it Really Work?

March 19, 2012

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This week and for the next several weeks, our regularly-scheduled Mortgage Monday blog posts will feature a 4-part series courtesy of MCAP on how and why mortgages are priced the way they are.  If you have some basic financial knowledge, it shouldn’t be overly complex (that being said, these next couple of posts aren’t for beginners, either).  Either way, if you have any questions, ask them in the comments below and I’ll do my best to answer them.

 

Part 1: The Bond Market and Fixed Income Yields – How Does it Really Work?

The first thing we need to understand about the bond market is the concept of “yield”. The yield of a bond is the income, the earning, the profit – the reason why an investor would invest. With a bond, yield is a function of two things: the interest the bond pays and the price the investor pays for the bond.

Think of this example:

A few years ago, Mary bought a new bond with a face value or principal amount of $100 which pays annual interest of $10. Mary’s yield is 10%. Interest rates in the economy have decreased since Mary bought her bond and, today, a similar new $100 bond only pays annual interest of $5 (a 5% yield). Mary must be happy to have a bond with a yield of 10% when the current yield is now only 5%, right? If Mary decides to sell her bond, she will ask for $200 for it since she knows that investors today are only earning a yield of 5%. Her bond still pays annual interest of $10 to whoever owns it, so the new investor who pays $200 for her bond, will earn a yield of 5%.

Bonds pay a fixed rate of interest until they mature. Bond prices, and therefore bond yields, change all the time.

Have you ever noticed that reporters, when trying to explain the reason why the bond market influences mortgage rates, will often say “because mortgages are financed through the bond market“? Financed through the bond market? While that statement is not entirely true, it can help us understand the relationship between mortgages rates and the bond market.

The bond market (and we are referring to Government of Canada bonds) operates on the simple basis of supply and demand. We have all heard, especially recently, about the government’s operating deficits and overall debt. When the government takes in less than it spends, it finances the shortfall mostly by issuing bonds (and other short term instruments such as Treasury Bills). Investors buy these bonds when they are first issued but there is also a vast secondary market which allows investors to buy and sell existing government bonds before they mature. As with anything in the economy, increased demand results in higher prices. Higher bond prices result in lower bond yields since the interest rate of each bond is fixed when it is issued (like Mary’s example above). Demand for government bonds tends to increase during times of uncertainty and when investors see increased risk in the stock market – like they probably do now. When the economy recovers and the outlook for corporate earnings brightens, investors tend to return to the stock market. Demand for bonds falls off, bond prices are pushed down and bond yields are pushed up.

Government bond yields are widely followed and are used as a reference point or a benchmark for other fixed rate investments. Government bonds are considered to be the safest and the most liquid (easy and fast to sell if necessary) fixed income investments available in Canada. They therefore provide the lowest returns. Other fixed rate investments are evaluated in comparison to government bonds and, since government bonds return the lowest yields, yields on other investments are always higher. The difference is often referred to as the “spread”. Using government bonds as a benchmark therefore provides a base frame of reference for valuation of other fixed rate investments – like mortgages.

Tim

Tim is a mortgage agent in Barrie who specializes in helping first-time home buyers. He works with a variety of lenders and can help customize a mortgage with the best rates & options that fit the needs of each customer.

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