I receive hundreds of questions. (I give thanks, of course!) Here is a sampling, with general-interest appeal, I hope.

Q: I hear the market is turning down. Should I wait before I buy now?

A: In one form or another this is the most asked question. My answer is always the same: The peak of any real estate market is easily seen six months after it peaked, but not before. Forecasters have been announcing a “market turndown” in San Diego, for example, since 1999. In May sales were 34 per cent above the previous May. Buy the best you can for you and your family. Hire good professionals; do your own research, your own due diligence; and buy a good purchase. Do not buy “the market.”

Q: I hear that listings are rising and that this means the real estate market is about to turn down. True or not?

A: Similar question to the first, but with a twist, and driven too much by all the talk about rising listings and the relief it may signal for buyers. What they mean to say is that new listings are rising. (What they mean to imply is that this is bad for the market.) Are listings rising? Yes, but so are sales, from 20 to 30 per cent from Chilliwack to Lions Bay. If sales are increasing that much, logic dictates that new-listing inventories are rising to meet the demand. The listing numbers you should watch are the active listings, a listing of every property still for sale — regardless whether listed this month or six months ago). And that number at the end of May was only two per cent above last year, but a whopping 60 per cent below the May, 1998 number.

Q: Is it true that mutual funds outperform real estate over time?

A: “Facts are stubborn things, but statistics are more pliable,” Lawrence Peter once commented. I look at it from an average person’s point of view. No great sophisticated statistics. You just buy a house. If you had bought a house in Vancouver in 1960 for $13,105 and put $650 down, it is worth today $530,000 and your profit is $529,350. Tax free. Now what did your mutual funds do?

Q: Who offers “unique” mortgages for the “hard to finance” property?

A: Not Robert Frost, but his advise stands: “A bank is a place where they lend you an umbrella in fair weather and ask for it back when it begins to rain.” There are a hundred “unique mortgages.” That’s why you need to see a mortgage broker to explain it all. Some of the stuff out there include:

– The “no proof of income” mortgage. For the self-employed. GE Capital will insure a high-ratio mortgage that accepts income as stated by you. No T-4s. However, make sure that your statements are consistent. If your application says: Income: $200,000. Profession: Janitor from 1990 to 2003, now self employed as professor at UBC … They may not accept your application.

– The ‘bankrupt mortgage’: Xceed mortgage Co. offers a one year discharged bankrupt person with some re-established credit up to 95% financing. (Yep, at a higher rate)

– The “100-per-cent offset of rental income mortgage’: Citizen’s Bank will “offset” the rental income of your investment property by up to 100 per cent. In other words, if your mortgage, tax payments and condo fees are $1,000/month and your rent is $800/month, then you will only have to debt service $200.

The “multiple choice” mortgage. Bank of Nova Scotia’s “step program allows you to register an umbrella mortgage and underneath split it up into credit line/five-year term/open term, etc. pieces.

– The “take one-add one mortgage.” First Line offers a product that increases your line of credit every time you make a mortgage payment in the same amount.

Q: When buying an investment property, how much should I set aside for expenses?

A: Rule of thumb No. 1, for condo fees — $2 per square foot; No. 2, for maintenance, depending on the age and condition of the house – about one per cent of the purchase price annually. No. 3, expect your property not to generate income from time time, by making an allowance for vacancies. Use the vacancy rate in your area. No. 4, create a “reserve pool” of at least one per cent of the purchase price –see No. 3 — and top it up if you have to dip into it.

Q: What is usually included in the asking price?

A: Deciding what stays and what goes is always up for negotiation. Always write items into the contract, and remember almost always what you do not ask for you do not get: I once bought a house in which all the furniture and household goods (including the wine goblets) were thrown in.

Ozzie Jurock is the publisher of www.Jurock.com an independent real-estate advisory service. Telephone 604-683-1111 or e-mail: [email protected]

© The Vancouver Sun 2004