The spring market in Canada is starting to heat up with record low inventory. Buyers have started to come back, as for the first time in the last few months Bank of Canada has not increased interest rates.

In fact, Royal Lepage has adjusted their national aggregate home price forecast to increase 4.5% year-over-year in Q4 2023. This is an opportune time for home sellers waiting in the sidelines, to finally start getting their home ready for sale and look into renovations.

When selling the place you’ve called home for the past five, 10 or 30 years there is always one question that comes to mind: How do I get the most money back on my home?

How can homeowners increase the ROI, or return on their investment? There are a ton of tricks and tips to increase the ROI when selling a home, but the number one piece of advice is to look into hiring a Real Estate Agent.

The right Real Estate professional can assist in setting an appropriate asking price which is influenced by the season, annual trends, neighbourhood and amenities offered in the area. They can also help with other things like organizing showings, and offering invaluable advice about possible projects that can be completed to upgrade your home and also increase sale price.

Other ways to ensure you are increasing your investment in your home upon selling is by putting some money back into the house before the sale sign is even hung.

Who is buying?

Speaking with your hired professional and by taking note of the demographics in the area can help you determine your target audience. Who will be looking at purchasing your home? A young family? An expanding family? A couple looking to retire? Investors? Perhaps it is some people who are looking to flip the property?

Learning your target demographic can ultimately save you from investing money into big projects that will do nothing to return on your investment. “There are a lot of buyers who just want to buy a home that is turn-key. Updating rooms like the kitchen, will have the greatest impact for them. However, you need to know who your buyer is so the upgrades will align with their wants and needs.” says Terry Osti, award-winning, REALTOR® at StilHavn.

Web appeal is the new curb appeal

Forbes reports that it is just as important, or more so, to have a strong web presence when selling your home as it will bring interested buyers to the door. Senior director of PR at Realtor.com, Julie Renyolds told Forbes that ads featuring walk-through tours are clicked on 150% more than ads without them.

Curb appeal still a good investment

HGTV says that curb appeal is still just as important as ever. After all, you can only make a first impression once.

Ensuring cracks in sidewalks and driveways are patched, windows and doors are caulked and door knobs, locks and hardware are upgraded are low cost ways to boost the return on investment upon selling.

Taking that extra initiative and planting flowers and perennials in the garden can also have a lasting impression and increase the value of the home. Interior designer Brittany Farinas of House of One told Forbes.com that adding some greenery can give the outdoors a whole new look.

New siding, although a little more costly, is reported to rank high on the cost vs. value report according to HGTV. According to Forbes.com, homeowners can expect to pay between $1,000 to $16,000, depending on the size of the home and the type of siding material used, but it will not go unnoticed.

Sound structure is key

Interested buyers aren’t going to be as thrilled about an upgraded kitchen if the basement is flooding due to poor plumbing or cracks in the foundation.

HGTV says that investing that facelift money into ensuring the roof is in good repair, the foundation is sturdy, the furnace is functioning properly and all electric and plumbing is up to code will ensure the asking price won’t plummet in order to compensate for the necessary repairs.

Replacing windows can cost around $15,000 for a 2,000-sq-ft home with new vinyl windows, but RE/MAX predicts a return on investment of 75%.

Focus cash on bathrooms & kitchen

The kitchen and bathrooms are where a lot of time is spent in the home and architect Steve Straughan based out of Los Angeles’ KAA Design Group says they are the areas of the home that interested buyers can tell if money has been well spent.

According to RE/MAX, kitchen renovations such as countertops are one of the top three changes that lead to a high return on investment. Countertops can be expensive, but $3,000 stones such as granite or quartz can make a huge difference. To further elevate your kitchen, spend around $5-10,000 for stainless steel kitchen appliances. Kitchen renovations typically have a return on investment of 75-100%, usually the highest ROI.

Bathrooms can often always use a facelift — and, for certain, a deep clean. Every bathroom is different, but it is one of the main focuses that buyers look for in a home. Renovations can vary, but having a vanity with marble countertops or a frameless glass shower are elements that can draw buyers. A tip recommended by RE/MAX is to analyze your bathroom and figure out the strengths and weaknesses of it. A typical bathroom renovation is between $5-$15,000 and can have a return of 62%.

Updates and remodels should focus on creating open and inviting spaces and one of HGTV’s tips is to skip that soaker tub and put in a grandiose walk-in shower — or steam shower. After all, who really has the time anymore to take lengthy soaks often enough to justify the space the tub takes up.

Creating additional space

Does the home have an attic with dimensions that would allow the creation of an additional bedroom or office space? Can you extend the deck or create an outdoor living area or sunroom? Can the basement be finished and transformed into a cozy living space? Adding more functional spaces in your home can make it look larger and eliminate any unused spaces. Forbes predicts that the average cost to finish your basement is $22,850 in 2023.

HGTV says keep other homes for sale in the area and your target audience in mind because you don’t want to renovate your home to the extent that you price yourself out of your market.

Go Green

Concentrating on making the home energy efficient with better insulation, window and door replacements can not only increase your ROI when you sell the home, but you will also notice instant savings on your energy bills. By making such upgrades, AIC says the ROI is typically between 50-75%.

Plus, as of December 1, 2020, Canada has offered a number of grants for homeowners to make energy-saving upgrades.

At the end of the day, it isn’t always the fun and sexy renovations that add the most value to the home. Sometimes it’s the dirty work that goes the extra mile when selling. But, to make sure you are getting the best return on your investment, be sure to speak with a professional Real Estate Agent who can help answer any questions you may have along the way.

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Home insurance isn’t mandated by law like car insurance. However, your home is likely the largest single purchase of your life. It’s vital to ensure you’re covered in events such as a flood or fire. Additionally, a home insurance policy is commonly mandated by mortgage lenders as a condition to your mortgage.

In this article, we explain the basics of home insurance to new homeowners. The article explains what home insurance generally covers and doesn’t cover and the types of insurance policies you can purchase.

What Can New Homeowners Expect to Home Insurance Cover?

Damage to Your Home and Others’ Homes and Property

New homeowners commonly think of home insurance in cases where there’s a flood or fire. In events where your home suffers severe damage or destruction, home insurance generally provides the cost of rebuilding your home up to the policy limit.

Further, if a fire starting from your home also causes damage to your neighbour’s house or a detached part of your home, such as a garden suite or shed, your home insurance policy may also cover these costs.

Not all forms of damage are covered, however. And it’s up to you to choose what is and isn’t part of your policy. Some events to look out for in your policy include:

• Flood: often not available for purchase in areas that commonly see flooding
• Windstorms: structural damage may be covered, but water and hail damage may not be
• Sewer backup: damage from backed-up sewers, drains, toilets, and showers
• Earthquake

Further, “predictable events” are not covered. I.e., if you don’t drain your pipes in the winter and they burst, your insurance won’t cover this. Damage that’s a result of not maintaining your house is also not covered. For example, if you don’t regularly replace your roof, and this results in water damage to your home, your insurance won’t cover repair costs.

Damage or Loss of Personal Possessions

If your home burns down, it’s not only about rebuilding your home but also replacing its contents. Home insurance policies cover damage or loss of your personal property, including incidents such as burglaries.

There’s a long list of what and when a home insurance policy won’t cover personal property. Typically, home insurance policies don’t cover:

• Loss or damage of items when they’re outside of your house or inside your vehicle
• Expensive jewelry or fine art. This commonly requires a separate insurance policy or must be added to your policy after the insurance company appraises the jewelry or fine art.
• Equipment breakdown, such as a laundry machine or HVAC system — even if it’s not unforeseen and unrelated to general wear and tear
• Equipment or stock related to a business. This requires a business insurance policy. Additionally, home insurance doesn’t generally cover any business-related damages or losses, even if you run your business from your home.

As your years of homeownership go by, you’ll accumulate more things in your home. It’s important to keep an inventory of what you own and regularly renew your insurance policy. The worst-case scenario occurs when the property inside your home is destroyed, damaged, or stolen, and you discover that your insurance doesn’t cover this loss.

Additional Living Expenses if Your Home Becomes Uninhabitable

Suppose something happens to your home. It could be a fire, weather damage, or another unpredictable event. Your house may become uninhabitable, and you and your family may need accommodations such as a hotel or short-term rental until the situation is fixed.

As a new homeowner, you can rest assured that your homeowner’s insurance covers these associated costs to the policy’s limit. Home insurance policies may also cover lost rental income if you used your property fully or partially for rental.

Damage of Injury When Someone Visits your Property

As a homeowner, you may be personally liable for injuries that happen on your property. For example, if a guest trips or slips as they reach your front door, which causes the guest an injury, they could sue you for damages. This is a common instance that home insurance is set to protect new and veteran homeowners alike.

To further draw the line between business insurance and home insurance, most home insurance policies won’t cover personal liability damages if the person visiting your home is a client. To ensure that you’re covered if your business client visits your home, you need a general liability business insurance policy.

What Types of Home Insurance Policies are Available?

Home insurance policies vary depending on what you need. Some new homeowners may need a home insurance policy with more or less coverage. Some new homeowners may want protection against earthquakes or floods, which many policies don’t cover. There are generally four types of policies you can expect when you speak with an insurance agent or broker:

• Comprehensive: A policy that provides the most coverage and protects your home from all risks unless expressly excluded by your policy.
• Standard: A policy that provides less coverage than a comprehensive policy and only covers instances and risks mentioned in the policy.
• Broad: A policy that sits between Comprehensive and Standard. Generally, it provides a Comprehensive policy (covers all risks unless excluded) for your home but a Standard policy (only covers what’s mentioned) for the contents inside your home.
• No-frills: The policy that provides the least coverage. A no-frills policy may not offer enough coverage to satisfy requirements by mortgage lenders.

Regardless of your policy, it’s important to regularly revisit your policy as your home’s contents and your home itself change. You want to notify your insurance company whenever:

• Your home is damaged, vandalized, or robbed
• You make renovations to your property — especially if you’re getting a pool
• You start a business from home
• A guest is hurt while visiting your home

Homeownership comes with many risks, but the right insurance policy can help mitigate much of these issues. It’s essential to understand your policy’s coverage to avoid surprises once you need to make a claim.

The post What New Homeowners Should Know About Home Insurance first appeared on RankMyAgent - Trusted resource about Buying, Selling and Renting.

In this article, we explain these tools and look at how they can help you buy a home. The tools include the Home Buyers’ Plan, the new First-Time Homebuyers’ Incentive, and the various tax rebates and credits available to first-time homebuyers.

Home Buyers’ Plan: Borrowing from your RRSP

The Home Buyers’ Plan lets any first-time homebuyer buying or building a home to borrow up to $35,000 from their Registered Retirement Savings Plan (RRSP). This amount used to be $25,000 until March 19, 2019, when it was raised to $35,000. If you’re purchasing your home with someone else, like a significant other, each person can use the Home Buyers’ Plan for a total of $70,000.

Although it mentions “first-time” homebuyers, if you’ve previously participated in the plan, you may be able to do it again if your borrowing balance is 0 as of January 1st of the year. Just remember that every year that the money isn’t in your RRSP is another year that it’s not growing. Without the help of this appreciation, it could impact what you have ready for retirement.

Although withdrawing this money is tax-free, it has to be repaid within 15 years to remain so. The repayment period starts the second year after the year that the money is withdrawn. So funds withdrawn in 2019 have 2021 as the first year of repayment. The tax consequences of not paying back the loan within the allotted time could result in a hefty income tax.

Unlike mortgages and other loans, there are no consequences for paying back the money early.

First-Time Homebuyer Incentive: Sharing Equity with the Government

The First-Time Homebuyer Incentive (FTHBI) started on September 2nd, 2019 as part of the government’s national housing strategy. It’s expected to help Canadians fitting into a specific criterion reduce monthly mortgage payments by $286.

The government does this through a shared-equity mortgage program, where they provide a first-time homebuyer with 10% of the purchase price of a new home, or 5% of a resale home. This capital comes interest-free because it is not a loan. The government is actually purchasing part of the equity.

When the property is sold or after 25 years, the homebuyer must pay back either 10% or 5% of the home’s current market value. Thus, if the home declined in value, the homeowner pays back less than what they got. If the home’s value appreciated, they must pay back more.

For example, a homebuyer purchases a $100,000 new home and receives $10,000 (10%) from the FTHBI. If the home appreciates to $400,000 after 25 years or when they sell, they’ll have to pay back $40,000—10% of the market value after 25 years or at the time of the sale. One big benefit is that this amount can be paid back at any time, meaning you could pay it back when the property market is weaker to maximize the benefit.

As great as it sounds, there are severe limitations to this tool. To qualify for FTHBI, homebuyers must have a combined household income of $120,000 or less. The price of the mortgage plus the incentive amount also cannot exceed more than four times the buyers’ household income. This effectively limits the maximum purchase price of a qualified home to around $500,000. This likely rules out Vancouver or Toronto purchases, as even most condos in these cities have surpassed this maximum purchase price.

Another drawback of the program is that homebuyers using the plan with less than a 20% downpayment still need mortgage default insurance. If you have 10% of the purchase price ready and hope to get another 10% from FTHBI, this won’t help you wiggle your way out of default insurance. The FTHBI is almost like a second mortgage on your home—not part of your down payment.

Tax Rebates and Credits

In addition to tools that can help you get the money you need for a down payment or to reduce monthly mortgage payments, multiple tax rebates and credits can help avoid some of the costs of purchasing your first home.

First-Time Home Buyers’ Tax Credit

The First-Time Home Buyers’ Tax Credit came into effect in 2009. It provides a $5,000 non-refundable tax credit if you and the home you’re buying fit a certain criterion. The credit works out to a maximum of $750 back in your pocket.

To qualify, you and your spouse/common-law partner need to buy a qualifying home and must also have not lived in another home owned by you or your partner in the past four years. You and your partner also get a combined total of $5,000 tax credits. This means that regardless of whether it’s a solo or joint purchase, the maximum tax credit is $5,000.

HST/GST Rebate

The HST/GST housing rebate allows a homeowner to recover the GST or federal portion of HST from the purchase of their home or from any renovations that they made to it. To qualify, this home must be your primary place of residence, among other conditions. Depending on your province, the PST or provincial portion of the HST may also be recoverable.

Land Transfer Tax Rebate

If you’re a first-time homebuyer purchasing a home in British Columbia, Ontario, or Prince Edward Island, you could also recover some or all of the land transfer tax paid on your purchase. The recoverable amount depends on the specific province. The City of Toronto also provides a rebate on the city’s land transfer tax, in addition to the provincial one. The qualifications for each rebate differ depending on the province and whether you’re purchasing in the City of Toronto.

As a first-time homebuyer, many tools can help you purchase your first home. You can borrow from your RRSP through the Home Buyers’ Plan, split the equity of your home with the government via First-Time Homebuyer Incentive, or recover some money through various tax credits and rebates. Make sure to speak to an accountant and your realtor to make the best use of these tools.

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