Welcome to this month’s installment of Dear Urbaneer, where I take on real estate questions from both clients and followers. This month I’m guiding clients approaching retirement who are contemplating purchasing a second property on one of the BC coastal islands (Vancouver Island, a Gulf Island or Bowen Island) where their intention would be to build a new residence to age-in-place.
Dear Urbaneer:
We are beginning to discuss what our life will look like when we retire. As long-time urban dwellers, we are interested in exploring rural living, and I have always dreamed of living on the West coast. We would purchase with the objective of building new or modifying an existing house. I have two questions: what should I think about if I choose to downsize to a rural property? Also, I am not familiar with the market conditions out west. What questions should I be asking my realtor out there once I find a property I am interested in to make sure I am paying a fair price, so as to protect my financial investment? I guess my question overall is what should I ask to make sure this move will work for my lifestyle and my finances?
Can you provide me some guidance?
Signed,
Heading West
Dear West:
First, it’s always wonderful speaking with past clients on charting their future! As you know, I tend to leave no stone unturned when it comes to addressing one’s wishes, wants and needs, both as it pertains to the future shelter, your future lifestyle, and, in your case, if it is the next move or intended final move.
Of course, undertaking due diligence is a must for any property purchase. Not only must you vet the future property, but also its location from both lifestyle and financial perspectives.
There is a lot to consider when weighing the merits of a rural versus a city lifestyle. Broadly speaking, determining what is best for any household has a lot to do with what stage you and your family are at in your lives, as well as being honest about your housing priorities.
For example. while guiding a young couple climbing the property ladder from a condo to a house, I wrote about pros and cons on Choosing The City Or The Suburbs?. And for some clients entering their golden years, I explored the question of whether they Age In Place, Downsize, Cohouse Or Move To A Retirement Community?
I’m going to break down my reply into two parts. First, because you are at the early stages of your search and speaking with several realtors who work in the different locations you’re considering, I’m going to start by listing the questions I would suggest you ask a realtor when a property you are interested in grabs your attention and becomes a possible contender. In the second part I’ll offer some questions to ask of yourself regarding making a move outside of the city and adapting to a new lifestyle that includes downsizing.
Six Questions To Ask An Out Of Your City Realtor
It’s not unusual for anyone to consider relocating outside of their city, province, or even country these days. In fact, our friends at Better Dwelling recently reported that “Canadians Are Leaving For Good In Record High Volumes“. Although most of us will be content to remain in Canada – and go dwell hunting on Realtor.ca – how do you know if the realtor you contact of a listing ‘over there’ that has piqued your curiousity is the right person to represent you on a property search? The reality is, you simply won’t know until you have spent some time communicating and see how they respond to your questions and concerns.
Today, in Ontario and many other provinces and territories, prospective purchasers are obliged to enter into a Buyer Representation Agreement with a realtor when they want the kind of detailed information that will determine whether the property is a contender. All BRA’s are for a set period of time and will outline the specifics of your search criteria including the geographic boundaries of the search, and the size and features of the property. The contract has many details I won’t cover here, but the questions I suggest you ask a realtor likely would only be answered once you were in a BRA contract. Again, because the contract is for a set period of time, both you and the realtor can see if the relationship is beneficial to you both.
1) How many times has the property been listed for sale on MLS?
Has this property been listed and re-listed often on MLS? Is it from the same sellers? Do buyers purchase the home and then move out quickly thereafter? Have sellers listed and re-listed at lower price points?
Activity on MLS may indicate a few things: is there a flaw with the property itself that one might only discover after moving in? Is it appropriately priced for the neighbourhood and the current market conditions? Is there something else that might not be evident that might hamper your lifestyle- i.e. a noisy roadway, raucous neighbours, or other negative influence? Are there legal issues?
Has this home been on an exclusive listing? It might be harder to find information in that case.
Don’t forget that you are a buyer now, but eventually you will be a seller of this same property. Is there something that you need to know that might impede the sale, or affect the financial value of the property, beyond finding obvious issues with a property inspection or other.
2) When did the current owners purchase the property, and for how much?
Knowing how much the current owners paid, and how long ago they paid it can help you gauge the health and speed of this local market. Has value appreciated rapidly, slowly, or declined? Are there factors at play that might influence this?
This can also help you understand if the price they are asking is based on a strategy or is speculative.
If the sellers are asking a lot more than what they purchased, is there a reason (i.e. renovations) or are they just pitching what they “think their home is worth”, which leads to the next question.
3) Is there a list of betterments available that summarizes what the current owners have done since their purchase?
What have the sellers done to the home during their tenure as homeowners? Better yet, what improvements have they done that have been properly permitted and documented? Not only does this influence the home’s value, but having property permitted work can affect insurance coverage and eligibility. You don’t want to be on the hook if someone else cut corners previously.
Ask for permits, names of professionals who conducted the work, and any receipts or warranties that go along with the work.
Different upgrades carry different values. Some may have been done to prepare the home for sale, and some are a larger value-add. I wrote about this here: Dear Urbaneer: Should I Sell My House In As-Is Condition, Upgraded, Or Elevated?
4) Has the current owner made any insurance claims during their tenure?
If any, what insurance claims have been made? This may indicate (although not always) vulnerability in a property. Is the location particularly prone to flooding, wind events or fire damage?
How were any necessary repairs made? Are they documented? Were they done by professionals?
5) What recent sales near the subject property have sold in the past 120 days?
This determines comparable value, which you may already be familiar with. Realtors, in helping to determine how you should price your home, draw on comparable sales in the area, comparing similarly sized homes with similar features, lot sizes and age. Did these comparable homes that sold in the last 120 days sell over or under asking? How long were they on the market?
Again, this can help you determine the “fairness” of the price of a home.
6) What properties have sold over the past 6 months near the subject property that are similar and would be used by an appraiser to estimate value?
Put yourself in an appraiser’s shoes, assessing the property strictly for financial and/or loan value. It will help you cast a critical, financial-first eye over the property.
Which properties have been used (or might be used) for appraisal purposes? Are they located in the same neighbourhood (i.e. same schools and amenities)? Are the homes of a similar architectural style? How far away are they from the home you are interested in? Appraisers typically try to stick as close to the property in question as possible, for the sake of accuracy.
What might have to be changed in the property that you are looking at to be similar to the homes that are used for the appraisal- finished basement, increased square footage, upgrading outdoor space and landscaping, or something else?
What is the average price per square foot for similar properties? What is the land-only value?
Determining relative value can be a bit complex, but here is a good approach that is process-driven: Understanding The Six Essential Layers Of Property
Downsizing to a Rural Property? Here are Things to Think About
Here are some important considerations that are specific to buying a rural property later in life. These questions are meant to inspire reflection and help you anticipate obstacles that you may encounter down the road.
• Are Your Priorities Compatible With Country Living? These questions apply to any property purchase, but you have indicated that you are looking specifically at rural properties. This, coupled with the fact that you are downsizing and nearing retirement, there are a few questions that you can ask of yourself- and of your realtor- to make sure that you are making the right move for you. I wrote about some of the considerations living in a rural setting in this post: So You Want To Buy A Country Home, which looks at some of the practical and necessary aspects of a rural property, from septic systems to zoning.
• What is your timeline, and ultimately, how many more moves are there in your future? Where will they be, and what will they look like? Years ago, I sold a number of historic and executive residences in Cobourg. What I learned is that a lot of people move to the country when they retire at 65, but at 75, they sell and return to the city so they can be near specialists, family, and stop driving. Is this what your future looks like? Or are you wanting to move somewhere at 65 and put down roots, build your community, and age in place there?
• How much does walkability matter to you? Do you want to be able to walk out the door and go to a cafe, a grocer and, as you age, transition to a car-free life while living in this residence full or part time? Or are you buying a place where you accept you must be auto-reliant until your situation changes?
• What is access to services like? A lot of services we take for granted in urban settings may not be readily or easily available in a rural home. At the very least, not having these services might cause inconvenience, or even affect safety, in some cases. Find out about emergency services, mail delivery, internet, cellular and phone access, snow removal on area roads (not just your driveway) and opportunity for socialization. The reality is that many homeowners, as they age, decide to return to urban settings for a number of reasons.
• Rural properties are a lot of work. Unless you are prepared to outsource, this is a consideration that might limit your tenure as a rural homeowner.
Country living means lots of space to roam free, but it also means isolation. Does that support your lifestyle needs? A lot of people require the support of a community, for mental and physical health as they age, which is more easily done in higher-density, urban settings.
Thank you for your great questions! I wish you much success!
The best way to find a home you love and that suits both lifestyle and financial goals is research, asking lots of questions, and taking a process-driven approach that requires patience and knowledge. With decades of experience in the real estate trenches, I can help guide you expertly. I’m here to help!
Further reading:
Dear Urbaneer: Should I Choose The City Or The Suburbs?
Dear Urbaneer: Do We Age In Place, Downsize, Cohouse Or Move To A Retirement Community?
Understanding The Six Essential Layers Of Property
So You Want To Buy A Country Home
Dear Urbaneer: Should I Sell My House In As-Is Condition, Upgraded, Or Elevated
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