How much would you pay for this home in Willowdale Toronto, Ontario??

How about close to $1.2 million?? A whopping $421,800 over asking price!! If your jaw just dropped, that seems about the likely response, but if not, then maybe you’re in the know! Land value out values the house itself by far…as you can see. While this lovely and quaint bungalow can have every buzz word attached to it, there’s no way anyone would take a seller seriously if it was priced at $1.2 to begin, so here’s how it’s done.

Toronto real estate agent and blogger, David Flemming, says there are five steps to follow to make a good profit when selling your home. First and foremost, underprice! This may seem counter intuitive but David says it’s a ‘time tested technique that has proven to ‘bring in more money’.

Here’s the rest of the list:

Timing

While the condo market is fairly steady throughout the year, you should aim to list while the competition is not out in full force. On the other hand, the housing market is very cyclical.

Planning to sell in March because spring is on its way and buyers are thinking of change? What about March break? That takes people out of town or making arrangements for children that are out of school. Think about when people will be staying put at home without any big events or holidays coming up and that is when you should be selling.

The market ‘explodes’ right after Labour Day and lasts until mid-December. Choose wisely!

Pricing

Pricing right, as previously stated, without going overboard in either direction, will tend to bring in more than the asking. David says that people love bidding wars so go ahead and slightly under-price the property. For example, $550,000 house priced at $499,000 with a set ‘offer date’ will bring a set of buyers who would have had a cap of $500,000 that would otherwise not see the house. By virtue of buyers liking bidding wars, offers will come in for up to possibly $591,000.

Staging

There lack of information out right now about staging! It could be about how to Feng Shui your house to be more inviting to potential buyers or how to de-clutter your home. It is so imperative in selling a home to have prospective buyers walk in and feel as though they can live in the space. This is difficult for many people because often times home stagers and agents will recommend removing family photos, ‘unique’ pieces of furniture and prized possessions from view, but it is crucial. Spending some money on your own for staging or investing in a professional is going to pay off in the long run without doubt.

Marketing

In today’s world there is so much technology available that has entered into virtually every aspect of the market and real estate is not excluded! From telephone apps, virtual tours, 3D renderings and listings available on the web as well as TV, the For Sale sign is no longer enough. David’s advises:

You need a professional photographer, not photos taken on your Blackberry.
You need a virtual tour with dozens of photos — not just the nine you get on MLS. You need an open house from 1 – 5 pm on Saturday and Sunday, not 2 – 4 pm on one day. The lady walking her dog on a Sunday afternoon who pops into the open house at 4:30 pm might be a buyer and she didn’t even know it!
You need a Thursday night open house with “wine and cheese.”
You need to send “Just Listed” cards to every house/condo in the neighbourhood and try to solicit the renters and people looking to upsize.
You need to call the neighbours on the street and invite them to the open house.
You also need to use Twitter and Facebook to your advantage.
Be proactive and address issues before they arise

Check out David’s interview on CTV:

With a strong Canadian dollar that has kept its value amidst the recession that hit our American neighbours, many Canadians are headed south of the border to invest in properties that have been priced well below cost and take advantage of the economic downturn in the U.S.

It seems easy enough, find a property in a warmer climate that you can turn into a vacation home and/or income property, but David Kauffman, president of Westcourt Capital Corp., is advising Canadians to do their homework before handing over their hard earned dollars.

Kaufman recommends that if the plan is to ‘buy-rent-sell’ then four important things need to be taken into consideration:

First, passive real estate investing is not an option. In purchasing a property, you should look for the right neighbourhood. If you can enlist the help of a local that can attest to the quality of the area, do communicate with them. Since the ‘buy-rent-sell’ plan requires that you rent out the property while the value of the home appreciates, acquiring professional property management services will reduce the possibility of any problems that might arise.

Second, accessing financing in the U.S. as a non-citizen may be more challenging than you might be aware of. Kauffman says that ‘if your model requires leverage, it probably won’t work.’ While mortgages are cheaper, you may not qualify when working with an American lender, which in turn would require you to make the purchase in full and that will significantly lower your long-term returns.

Kaufman’s third point is about the three letter word that no one really likes, TAX. While seasoned investors may know the ins and outs of investing down south, novices be ware! By buying and renting out an income property, there is a good likelihood that you will be hit with various U.S. taxes. Not only is filing U.S. taxes a hassle but you may encounter complications with your estate that are unforeseeable such as injury or death.

Finally, diversify! Since there are many unknowns with one piece of rental property one variable may lead to lower returns than you anticipated. Working with professionals that have studied and worked in Canadian-based investment funds may make more financial sense for you in reaching your mid to long term goals.

Not to be cliche, but you reap what you sow, such is the same in real estate investment! Doing your due diligence prior to signing a cheque will be your best defence against making an unhealthy financial decision.

With notes from The Financial Post