INSIDER WAYNE COCHRANES REAL ESTATE

March 2012

Your Neighbourhood Real Estate Professional

Wayne Cochrane...www.mooving.ca

Inside this Issue:

Make Your Home Appealing To Buyers

The Selling Power of Closets

Staggering Amount of Mortgage Fraud in Canada Last Year

Taxing Misconceptions

Canadians Develop A Better Way To Track House Price Trends

Canadas Most and Least Affordable Housing Market

As you start to gather up your belongings and pack them away for your move, many sellers question which items they should leave out for buyer appeal.

Often the wrong items are left on display; things like family photos, personal keepsakes, and treasured belongings. All of these items should be safely packed away which very often creates open space (a plus for buyers) on shelves, refrigerator doors, and desktops.

Buyers often make a decision within just seconds of seeing your home about whether or not they want to buy it. So picture your home through the eyes of your potential buyers. What do you see in about 10 seconds?

When you walk up do you see children's toys scattered across the front lawn? Do you see overgrown shrubs and weeds? Do you see chipped paint on the front door, a screen that's torn? Do you spot oil spills on the driveway?

Even answering yes to just one or two of those questions can be damaging, and that's before your potential buyer has entered your home. Sometimes, those seconds are all the buyers need to decide to simply do a "drive by" and not even stop to go inside.

Of course, the goal is to get the buyers inside. To get them to spend time, feel like your home could be their home. But even though that goal is so widespread

and common among sellers, somehow the decisions some sellers make are almost completely polar to the goals.

Let's look at five tips that can make your home appealing to buyers.

Check all the screens and molding around your windows and doors. This isn't at the top of a seller's list but it ought to be. Even slightly torn screens send a careless message to buyers. It gives an unconscious uneasiness that there's been, at the very least, lack of care for this home.

Something simple like fixing a screen is often overlooked by a seller because it is so simple, yet, just seconds of seeing the ripped screen can cause a negative impact for buyers.

Add artwork to long hall ways. You don't have to buy artwork that costs thousands of dollars but, if your home has long hall ways, it's nice to break up the monotony with some tasteful artwork. Use contrasting shades and hues to coordinate with the flooring. When you're shopping for the artwork or borrowing it from a friend or your real estate agent or homestager, bring swatches of the carpet or flooring and wall paint to match the artwork colors.

Make the kitchen a focal point. Whether they cook or not, the kitchen is of primary interest to many buyers. Winning over buyers with an appealing kitchen can often convince them that

Make Your Home Appealing To Buyers Written by Phoebe Chongchua

Page 2

Condominiums and Townhouses

on the Halifax Common

www.ArmourySquare.com or Call Wayne

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and working. Return on investment in the kitchen is usually high and worth every penny, and more, you put into it.

Put the "ah" in the bedroom. The bedroom needs to look like a bed-room. Sounds funny, but many peo-ple use their bedroom for other things such as an office or storage. Boxes or newspapers are scattered or stacked in a corner. There's no "ah" or sense of relaxation with that kind of room. So even if that's how you've been living, understand that's not how you should show a home.

If there isn't much space, clear the clutter out. Remove excess furniture. It doesn't matter if you use it. You can walk to another room to get what you need if it means you sell the home faster because it now looks more inviting and spacious.

Making your home more appealing is about seeing your home through the eyes of your potential buyers. When it comes time to go over the offers, you'll be glad you did.

At first glance your closets may seem like insignif icant or unassuming rooms in your home. The truth is, however, that closets can be real selling features. Homes must have storage. From clothes to food to cleaning supplies, closets are the heart of every clean house.

The first order of business in revamping your closets is to get rid of the clutter! We all are a little guilty of holding onto clothes and other "valuables" that we no longer need. These superfluous items can make closets burst at the seems and can turn a ready and willing buyer off.

Downsize these items by holding a yard sale, giving them to charity, or gifting them to family and friends. Chances are youll never miss the items you give away, but your closets will breathe a sigh of relief!

With all that extra clutter out of the way its now time to get organized. Even cheap fixes can make a real difference.

First, organize your closet by color blocking your clothes, grouping like items, and sorting smaller items into storage totes or even labeled shoe boxes. You can also store away winter/summer items in the garage in the off season.

Tame your shoes with shoe racks. You should always be able to see the floor of your closet!

Are you needing to organize your pantry? Use the same principles as with your bedroom closets. Remove unnecessary items, get storage totes for small and miscellaneous items, and then group like items together.

Every closet needs shelving and racks. Depending on your budget and your housing market theres a wide range of choices. Simple and inexpensive Rubbermaid shelving can be configured in a myriad of patterns and can be installed with nothing more than a drill or screwdriver.

If your budget allows, however, custom built-in units can wow your potential buyers and put your home at the top of their list. Taking it one step further if you have a walk-in closet. Walk-ins are super selling points in a home, so its time to maximize the potential of this space.

The main key with closets is to allow buyers to see the true size and functionality of the space. You dont want them to be overwhelmed by your junk the minute they open a door and yes, they will open the closets! Instead, let them be inspired by your organization!

Top Selling Power of Closets Written by Carla Hill

Page 3

Give me a call...

Wayne Cochrane EXIT Realty Metro

wayne@mooving.ca (902) 830-4761

WAYNE COCHRANES REAL ESTATE INSIDER

Mortgage Rates

Fixed rates:

1 yr: 2.89%

2 yr: 2.99%

3 yr: 2.79%

4 yr: 2.99%

5 yr: 3.19%

Rates provided by Invis Mortgage

as of March 14, 2012

Subject to change without notice

Every day last year, about $1.7 million worth of fraudulent activity was detected in Canada by Equifax Canada. "The greatest dollar value of detected fraud activity is within mortgage applications, at over $400 million," says John Russo, vice-president at the company. "This staggering dollar figure illustrates the need for continued vigilance by financial institutions to reduce this threat to both consumers and lenders."

Criminal Intel l igence Service Canada (CISC) says there are three general categories of mortgage fraud: fraud to further other criminal activities, fraud for profit and fraud for shelter. The last category represents the most frauds. These crimes are by individuals who falsify the i r pe rsonal o r f inanc ia l information so they can get a larger mortgage than their income can support, which makes them more vulnerable if there are any changes to their financial situation.

Sometimes mortgage fraud is used to facil i tate mari juana grow operations, illegal drug laboratories or money laundering. The criminals obtain properties by using fraudulent personal or financial information, and later may make superficial renovations to the properties to cover up damage to the property. Or, they may simply default on the loan.

For money laundering, CISC says a fraud called "value tampering" happens when a property owner sells the property on paper for a price below its actual value and then takes the difference in cash. Later the criminal is able to sell the property for its actual value.

There are several scams that fall under the "fraud for profit" category. An appraisal may be performed on a property that overvalues it, so the lender is willing to provide a larger mortgage than the property is worth. Then the criminals walk away with the money, leaving the lender with a property that is worth much less than they thought it was.

A property flipping scheme involves having a number of people repeatedly buy and sell the same property over a short time period, with the price increasing for each transaction. The last person in the chain is a "straw buyer" someone who uses false or stolen identification who gets a mortgage based on the inflated price and then disappears with the funds.

Title fraud is the scariest kind of mor tgage f r aud f o r hones t homeowners. The criminal steals a homeowners' identity and discharges the existing mortgage, transfers the title and then gets a larger mortgage under a new name. The poor property owner doesn't know anything is amiss until someone shows up to say they have purchased the house, or the lender starts asking about missed mortgage payments.

Perhaps the most vulnerable homeowner is one who has no mortgage on the home and/or rents it out. If a criminal can steal the homeowner's identity, they'll be able to sell or refinance the property based on the existing owner's credit rating. Again, the owner doesn't know there's a problem until it's too late.

"Financial crimes like mortgage fraud are facilitated in large measure by technological advances, specifically in underwriting systems and property-valuation models as well as communication technologies," says CISC in a 2007 report. "Criminal groups undertaking mortgage fraud exploit online transfers of funds and electronic communications that reduce the need for individuals to meet in person."

Although steps have been taken by government and financial institutions to curb the practice, Equifax's most recent report shows that there's a lot more work to be done. As the 2007 CISC report predicted, "Mortgage fraud for profit will remain a significant criminal threat as there are always ways to illicitly manipulate the age, size and value of a property

Staggering Amount of Mortgage Fraud in Canada Last Year Written by Jim Adair

Page 4

MARCH ISSUE

and to commit fraudH.Criminal groups will continue to exploit professionals within the financial and real estate industries who will knowingly or unknowingly assist them in their fraudulent activities."

A blog by the Real Estate Council of Alberta for real estate and mortgage brokers says, "It is your responsibility as a licensed industry professional to ensure you do not become a participant willing or otherwise in any scheme to obtain mortgage funds through deceitHif you suspect fraudulent and/or other illegal behaviour, take it one step further and contact your local police."

Mortgage fraud often starts with identity theft. To protect yourself from having someone assume your identity, protect your personal information. Don't give out your social insurance number and don't carry your SIN card in your wallet, says Equifax. Generally when you go out you should only need your credit and ATM card, your driver's license and your health card. Lock up your birth certificate and SIN card somewhere safe at home or put it in a safety deposit box.

Don't leave your mail out in the mailbox for long periods someone could steal it. Shred any old invoices, bank statements, preapproved credit applications, insurance forms and other financial documents that you are discarding.

If you are selling your home and there are showings or open houses, make sure all your personal information is put away where it won't be a temptation for thieves. The same goes if you are having some work done in the home by strangers.

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Brain Teasers

Word Scramble:

smiontpusa

WAYNE COCHRANES REAL ESTATE INSIDER

Taxing Misconceptions Written by JP Wade

Page 5

We're stuck in an annual "money rut" that is not doing anyone any good.

The emphasis on investing for future security and minimizing income tax is crammed into the first third of the year. During the remaining two-thirds of the year, consumers are encouraged to spend, especially during December. Is there any wonder that debt tops savings for most consumers?

From January to April, finance is king in the media, but is the right message getting through? The media, online and off, offer tax-bites that arouse curiosity, but rarely is there a "mental meal" that leaves the reader or listener full of actionable knowledge.

Accountants and other financial

professionals are forced to compress a year's worth of financial advising into the weeks before the February 29 RRSP deadline and the April 30 income tax deadline.

Consumers are deluged with "buy me"

financial messages embedded with multimedia marketing finesse that makes comparison shopping for products and services exhausting.

The phone lines at the Canada Revenue

Agency (CRA is responsible for Registered Retirement Savings Plans (RRSP) and income tax) are so busy that even getting through to wait on-hold is an accomplishment.

The federal Task Force on Financial

Literacy declared November Financial Literacy Month, but has that changed the way you think about saving or tackling income tax forms?

What keeps the "money rut" approach to finance going for you? Do you think there is little you can do because you don't have millions to invest? Are you overwhelmed by what you don't know about finances? Do the stresses of life and career leave little room for clarity about what exactly you can do that will make a financial difference?

How many of the following five key misconceptions about RRSPs and income taxall of which contribute to undermining year-round commitment to keeping more of

1. RRSPs are the ultimate retirement savings vehicle.

That may have been true in the last century when retirement was a handful of quiet, low-income years before death, but lifestyles have changed. The 21st-Century version covers decades of extended living during which income may increase, or at least stay the same as during traditional working years. RRSPs were designed to defer payment of income tax on saved income until retirement when incomes were usually 40 per cent or more lower than in working years. If you expect to continue earning over your extended-living years, RRSPs may eat up savings. Losses suffered in an RRSP do not count as a capital gains loss, so you're out on two levels. Enter the Tax-Free Savings Account (TFSA), which entitles individuals to deposit up to C$5,000 each year in a savings-style or investment-portfolio style account where profit is not taxed. To learn the TFSA advantages, start with the basic introduction provided by CRA. You can deposit up to $20,000 if you start this year. Then spend your time growing this principal and re-investing tax-free profit. Withdrawals are not taxed or held-back like RRSP withdrawals.

2. You can make tax-free withdrawals from your self-directed RRSP.

CRA calls this a myth and makes the following clarification: "If you use your registered retirement savings plan (RRSP) as security for a loan, the value of the RRSP will be added to your taxable income. Similarly, if you use your RRSP to purchase shares of a private corporation, and the shares are not a qualified investment under the rules, then the value of the shares will be added to your taxable income. Some promoters of financing schemes may promise you that they can make tax-free withdrawals from your RRSPs. Typically, the arrangement involves using your self-directed RRSP to purchase shares of a private company. The funds used to purchase the shares are then loaned back to you at low or no interest... If you respond to these kinds of arrangements, you risk losing your retirement savings and the tax benefits of the RRSP." This is one of many examples:of consumers looking for fast-track

making their money vulnerable to scams and fraud in the process.

3. If you claim expenses for your homebased business when you file your income tax, you'll lose the tax-free principal residence status of your home.

Although claiming loss of value for your real estate, or depreciation, can jeopardize this status, the solution is simple, don't claim depreciation on the building unless you are positive there won't be any increase in value over the years ahead. There are e n o u g h d e d u c t i o n s , i n c l u d i n g apportionments of mortgage interest, property insurance, heating/cooling, and maintenance costs, to reduce income tax paid, so depreciation should not be missed. Depreciation on equipment and vehicles is another allowable expense. There are many other benefits and some other cautions, so search out CRA CRA events and seminars, or contact your financial advisor for details.

4. simple enough to leave to the last minute. Knowing where your money goes each week, month, and year is vitally important for spending wisely each day. This bookkeeping system also makes preparing your income tax faster and easier. Cheaper, too, if you're hiring an accountant or tax service. Organizing your accounts reduces stress and leaves you free to investigate annual changes to The Income Tax Act. For instance, are you one of up to 85,000 volunteer fire fighters who stand to benefit from the C$3,000 non-refundable tax credit?

5. There are people who are exempt from paying GST/HST or income tax.

CRA lists this and variations on this theme of legitimate non-payment as myths and provides explanations of why everyone, except lottery or sweepstake winners, must pay tax on income. The CRA prosecuted 1,124 individuals for failing to file a tax return and successfully prosecuted 323 cases involving income tax evasion or fraud in the 2008-2009 fiscal year. If you hesitate to file because you cannot pay what you owe, contact CRA to arrange payment, but file by midnight April 30 or face late filing charges. Self-employed individuals have until June 15, but, if money is owed, those funds should be paid by April 30 to avoid interest charges.

What breed of cow produces the

most milk?

Word Scramble: Bdldeen atenmyp

Go to www.mooving.ca - About Wayne and click on Monthly Newsletter Trivia for the answers.

Brain TeasersBrain TeasersBrain TeasersBrain Teasers

The Canadian real estate industry says it has developed "the best and purest way of determining house price trends in the housing market."

The new MLS Home Price Index (HPI) will be used to replace the current method of providing average or median prices. The more accurate numbers will allow consumers and real estate professionals to identify price trends sooner, and allow for an "apples to apples" comparison of prices across the country. The measure will be a valuable tool for homeowners, real estate investors and those in the real estate industry.

The Canadian Real Estate Association (CREA), which took the lead in developing the HPI, says average house prices are often misinterpreted. They are affected by changes in the mix of homes sold and can swing dramatically from month-to-month, based on the types and prices of properties that sold in a given month, CREA says.

The new measure is calculated "using a sophisticated statistical model that is a hybrid of both the repeat sales and hedonic price approaches," says a news release from the Toronto Real Estate Board.

For those of us who have no idea what that means, heres how it works. The HPI each month will provide two measurements. First is a price index. The HPI uses price values as of January 2005 as its base (reference) point. This level is set at 100 and works in a similar way to the Consumer Price Index. For example, in January 2012, Torontos composite HPI was 143.6. That means the composite price index rose by 43.6 per cent between January 2005 and January 2012. It was up by 0.28 per cent compared to December 2011 and up by 7.6 per cent compared to January 2011. Consumers can use the number to track price trends without worry of it being skewed, for example, by increased sales of higher-priced homes in a particular month.

The HPI also sets a series of benchmark home prices for different housing types: single-family, one-storey, two-storey, townhouse and condominium apartments. The benchmarks take a set of attributes typical of that type of home in the area where

it is located, and remain constant over time.

Among the attributes that go into calculating the HPI are:

number of rooms above basement level

n u m b e r o f b a t h r o o m s a n d

half-bathrooms

square footage for main and living areas

whether it has a fireplace or finished

basement

lot size

age of the property

parking

how the home is heated

foundation, flooring, siding and roofing

types

waterfront or panoramic view if any

whether its new or resale

proximity to shopping, neighbourhood

amenities, public transit In 2008, the Teranet-National Bank House Price Index was introduced to address the problems presented by average and median prices. The new HPI is better than the Teranet Index, says CREAs chief economist Gregory Klump, for two reasons. The Teranet index uses the repeat sale methodology, which compares the values of properties that have been sold at least twice. The two prices are used to measure the increase or decrease in property value between the two periods of measurement.

The problem with that, says Klump, is that it does not take into account renovations or improvements that may have been made to the property between the two sales. "And we know how much Canadians love to renovate," says Klump. The other issue is that the Teranet index data is "considered to be five months out of date" by the time it is issued, says Klump. The new HPI data will available almost immediately at the end of every month.

The HPI was developed by CREA with five major real estate boards in Montreal, Toronto, Calgary, Fraser Valley, B.C. and Vancouver. It was created by the Altus Group. They consulted with Statistics Canada

Canadians Develop A Better Way To Track House Price Trends Written by Jim Adair

Page 6

MARCH ISSUE

Initially only the five boards are taking part in the new index, which Klump says represents more than 60 per cent of the Canadian real estate market. There are plans for eight more real estate boards to be added this year, and another eight boards next year. Klump says there is no accurate measurement of how many private and new home sales are not conducted through the MLS, but he estimates that 70 to 90 per cent of all Canadian home sales are tracked on the service.

"This new approach will provide clarity for the consumer and prove to be a major improvement over any other method to measure home prices and home price change available in the marketplace today," says Toronto Real Estate Board president Richard Silver.

For the median price of a property in Vancouver, you could buy four homes at the median price in Windsor, Ont. and still have lots of money left for renovation work.

Vancouver has the most unaffordable housing market in Canada, and a new survey says the B.C. city has passed Sydney, Australia to become the second least affordable city out of 325 metropolitan markets in Canada, the U.S., Australia, New Zealand, Ireland, Hong Kong and the United Kingdom. Only Hong Kong is worse for affordability than Vancouver.

The annual survey is conducted by Demographia which calls itself "an international public policy firm" based in Belleville, Ill. It says the survey is "produced to contrast the deterioration in housing affordability in some metropol i tan markets wi th the preservation of affordability in other metropolitan areas. It is dedicated to younger generations who have the right to expect they will live as well or better than their parents, but may not, in large part due to the higher cost of housing."

It uses median house price divided by gross (before tax) annual median household income to determine affordability levels. A rating of 3 and under is considered affordable, while 5.1 and over is considered "severely unaffordable".

Canada's overall rank is 3.5 "indicating s l i gh t l y de te r i o ra t i ng hous ing performance from last year's 3.4," says the survey. At 10.6, Vancouver is well into the red zone. The four least affordable markets in Canada are all in B.C., with Abbotsford, Victoria and Kelowna coming after Vancouver. The fifth least affordable is Toronto, followed by Montreal, Hamilton, Sherbrooke, Que., Saskatoon and Calgary.

On the positive side, Windsor's median price of $149,900 places it as the most affordable market in Canada, and 16th on the world-wide list. Second most affordable is Fredericton, followed by

Moncton and Saint John, N.B. and Thunder Bay, Ont. The most affordable major market in the survey (more than one million population) is Edmonton.

The United States has the world's most affordable markets, with Saginaw, Mich. (not far from Windsor) ranking No. 1 and Detroit coming in second. Ireland is the second most affordable country and Canada is third. The report says the United Kingdom, Australia and New Zealand "continue t o e x p e r i e n c e p e r v a s i v e unaffordability."

"The causes of massively deteriorating housing affordability are not a mystery," say Demographia authors Wendell Cox and Hugh Pavletich of Performance Urban Planning. "They inevitably result from more restrictive land use regulations adopted by governments with insufficient attention to economic fundamentalsH.Where land is rationed (by more restrictive land use regulation), house prices will rise. Thus, where house prices have increased substantially, they have been preceded by more restrictive land use regulation."

The authors say, "Vancouver, which like Sydney has largely prohibited housing development on the urban fringe for decades, experienced a s i g n i f i c a n t d e t e r i o r a t i o n " i n affordability. "Toronto was also severely unaffordable at 5.5, a deterioration of 40 per cent in housing affordability since 2004, as that metropolitan area's 'smart growth' program has taken effect. Montreal has been one of the worse performers

Canadas Most and Least Affordable Housing Markets Written by Jim Adair

Page 7

in housing affordability over the yearsH.up nearly 60 per cent from 2004, at the same time as the land for development has been severely limited by an inflexible approach to agricultural zoning," says the survey.

The authors say that when they started the survey eight years ago, "Canada was generally the most affordable nation," but now it ranks behind the U.S. and Ireland. Among all Canadian markets, as house price have gone up, now nine markets are considered affordable, 17 are unaffordable, three are seriously unaffordable and six are classed as severely unaffordable.

The authors say that too much emphasis is placed on housing as an investment rather than a place to live.

"As housing affordability has deteriorated, there has been a tendency on the part of housing industry and financial market analysts to 'cheer on' abnormally high house price increases as if housing were a commodity market, like gold. Housing is much different. It is a basic necessity and adequate, comfortable housing is necessary for a decent standard of living," write Cox and Pavletich.

"The performance of the housing market is thus not genuinely measured based on price increases relatively to other investments. The genuine measure of a housing markets performance is the extent to which it remains affordable in a well functioning metropolitan economy."

WAYNE COCHRANES REAL ESTATE INSIDER

WAYNE COCHRANES REAL ESTATE INSIDER

Note: This is not intended to solicit clients currently under contract.

The trademarks MLS, Multiple Listing Service and the associated logos are owned by The Canadian Real Estate Association (CREA) and identify the quality of services provided by real estate professionals who are members of CREA.

Page 8

Wayne Cochrane Real Estate Professional

902-830-4761 wayne@mooving.ca

More homes listed and sold by Wayne - view these homes at:

www.moov i n g . c a

unless noted otherwise

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