Wednesday, July 01, 2015
Canadians Chip Away At Their Mortgages
During the last couple of years, the average Canadian home buyer made a down payment of 119,000, about one-third of the value of their homes. Most have fixed-rate mortgages with five-year terms and an average interest rate of three per cent, according to a recent report by the Canadian Association of Accredited Mortgage Professionals CAAMP.
Author Will Dunning says in the report, "Very low levels of interest rates mean that Canadians are paying less interest and have more money available that they can use to repay their mortgage principals. CAAMPs surveys have found that Canadians are making significant efforts to repay their mortgages more rapidly than they have to."
A Manulife Bank of Canada survey found that four in 10 homeowners made extra mortgage payments or increased the amount of their payment during the last year. It found that homeowners with mortgage debt paid down an average of 6,300 in the past year. The number of homeowners who reduced their debt is up from last years survey.
"These results are encouraging," says Rick Lunny, president and CEO of Manulife Bank of Canada. "Effective debt-management is absolutely central to long-term financial health and clearly many Canadians are taking advantage of the low-rate environment to reduce their debt."
High household debt remains a concern for everyone from the Bank of Canada to foreign observers of the countrys housing market. While home prices have levelled off in most parts of the country, soaring prices in Vancouver and Toronto have prompted calls for the government to take action to make homes more affordable.
For years there has been concern that once the rock-bottom mortgage interest rate begins to rise, many people who bought homes wont be able to afford their payments.
"Our research finds that Canadians are well aware that interest rates can and will increase at some point and they have allowed themselves considerable room to absorb future rises in mortgage costs," says Dunning. "Meanwhile, they continue to take advantage of low rates to pay off their mortgages as quickly as they can."
The Manulife survey found more than a third of homeowners would have financial difficulty if their payments increased by 10 per cent, while another 15 per cent said they would not be able to afford any increase in their payment.
However, 80 per cent of homeowners indicated a willingness to cut back on their discretionary spending if it meant they could shrink their mortgages. Among the items they are willing to sacrifice are dining out, daily coffee/snacks, movies, concerts and sporting events. But only 20 per cent said they would be willing to cut back on their phone, Internet or cable TV services.
Both surveys say the biggest threat to homeowners is job loss.
The Manulife Bank of Canada survey says that if the primary income-earning homeowner lost their job, one in six would have problems making their regular mortgage payment in just one month, and 27 per cent would have difficulty after three months.
Dunnings CAAMP report says, "It is possible that job losses could lead to more arrears and defaults. The greatest risks would be in the regions that produce oil and natural gas. In the remaining provinces, where economic outlooks are more favourable, mortgage difficulties are much less likely."
During the last year, the Canadian Bankers Association says the rate of mortgage arrears has been stable at a rate of just under 0.3 per cent.
The June 2015 House Trends and Affordability report from RBC Economics says that excluding Vancouver and Toronto, "Generally speaking, housing affordability remains fairly neutral in Canada with limited signs of undue stress being exerted on home buyers. Both at the national level and in the majority of local markets, RBCs affordability measures are still quite close to their long-term averages, thereby suggesting that current conditions are within historical norms."
RBC and other forecasters believe that the Bank of Canada will start raising interest rates in the second quarter of 2016. "The effect on affordability of a rise in interest rates would be most visible in high-priced markets," says RBC.
CAAMP says that by the end of 2015, total outstanding residential mortgage credit in Canada will be about 1.34 trillion, "and by the end of 2016, the figure may be very close to 1.4 trillion."
Mortgage brokers want the government to resist the temptation to clamp down on lending. Dunning says they are concerned that if theres an economic slowdown, leading to less housing activity and higher mortgage defaults, the government might tighten mortgage lending rules.
"Any reduction in the availability of mortgage credit would further dampen housing activity and aggravate the default issues," he says. "Moreover, because housing has such an important role in the economy, this would add to the negative economic risks in Canada."
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Special Rules Apply When Tenant-Occupied Property Is For Sale
Agents who have for-sale listings of tenant-occupied properties need to comply with the rules governing showings and notice of entry. California has some special -- and somewhat surprising -- rules in this regard, and it behooves California agents to become familiar with them. Recently, the legal department of CAR California Association of REALTORS provided a memo on this topic. We note some of the highlights here.
While the California Civil Code 1954 generally requires that a tenant be given written notice of an intent to enter, there is a special provision 1954d2 covering property that is for sale. For a 120-day period after the tenant has been notified that the owner is selling the property, it is sufficient that the tenant be provided oral notice of the intent to enter. The oral notice may be given personally or by phone. Twenty-four hours is presumed to be reasonable notice. The showing should take place during normal business hours.
The original notice of the landlords intent to sell can be provided on CAR form NSE Notice of Sale and Entry.
The question of open houses frequently arises when a tenant-occupied property is for sale. Fortunately, some answers were provided in the 2013 case of Dromy v. Lukovsky Second Appellate District, August 30, 2013.
In that case, the tenant Lukovsky would not permit weekend open houses. The landlord filed a motion in Superior Court, based on Civil Code 1954.
The Superior Court ruled in favor of the landlord; but it did not grant an unrestricted right to hold open houses. Indicating a desire to fashion an order that was fair and reasonable to both sides, it came up with the following:
The tenant appealed.
The Appellate Court noted that the phrase normal business hours, though not defined in the statute, was meant to strike a balance between two competing policies: 1 the tenants right of quiet enjoyment of the property, and 2 the landlords right and ability to sell his property. The Court noted that, at the time the legislation was enacted, the current edition of Blacks Law Dictionary defined "business hours" as meaning: "In general those hours during which persons in the community generally keep their places open for the transaction of business." The Court then went on to say, "For our purposes, the >
Thus, the Appellate Court held that the judgment of the Superior Court was "reasonable under the facts and circumstances and that it complies with the requirements of section 1954, subdivision b."
California real estate agents will no doubt wonder how this decision applies to their business. The legal department of the California Association of REALTORS CAR had this to say in its realegal publication. "landlords and their listing agents who want to arrange weekend open houses should obtain the tenants consent or comply with the reasonableness standard required by the Dromy court." To help insure that what they schedule is reasonable, landlords and agents "are strongly encouraged to, depending on the circumstances, pattern your weekend open house arrangements in a similar fashion to what the trial court ordered in Dromy" See the 4-point requirement that was stated above.
Bob Hunt is a director of the California Association of Realtors. He is the author of Real Estate the Ethical Way.
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Become The Real Estate Agent of Choice For Prospective Homebuyers
Being a convenient and efficient real estate agent is a critical part of staying competitive in the industry. There are a lot of agents out there your clients could use instead of you in fact, The National Associaiton of REALTORS reports there are currently more than one million member realtors across 1,341 local associations. If you want to win clients over, you need to make their experience easy and pleasant. The following tips will help you become the most convenient and >
Pick up the Phone
Return client calls as quickly as possible. People who are in the market for a new home are going through a stressful time, and if they cant get a hold of you, they will abandon you for someone they can reach. Make contact with your clients a priority.
Staying in contact is about more than just answering the phone, though; you must be just as quick with email, text and any other means of communication your client chooses to use. If they want to use Skype, get Skype in fact, those dealing with clients from out of state or country should be using Skype to keep that face-to-face interaction going over a great distance.
Not all your clients are going to be able to drive from location to location looking at homes, and you should be able to drive them. In the long run, having a larger vehicle like an SUV is handy for you as an agent, because you can easily and comfortably shuttle prospective home buyers from location to location. Those in the market for this form of convenience should visit DriveTime and look for a deal on a used SUV in good condition that can serve as the work car. Having a car large enough for your clients to share a back seat comfortably also gives them a sense of privacy, which many first time home owners desperately need when discussing their future, their dreams and their misgivings about a property.
One final advantage of playing the role of chauffeur to your clients is that it is easier to keep them there, engaged in the prospect of buying a house with you after all, youre the one with the car
Know the Neighborhood
Neighborhoods should be one of your most important collections of knowledge. From where you are standing on a property, you should always be able to point to where the nearest cultural and educational sites are, as well as the best restaurants and social spots. In many cases, your clients are going to be totally unfamiliar with a neighborhood and your job is to make them feel at home without them having to do any work at all. If they have to ask around and cruise the neighborhood to see if there is a grocery store within a couple blocks, than you have failed to provide them with the convenience that another agent su>
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Ask the HOA Expert: Without Living Here, Can Individuals Remain On The Board?
Question: I am an owner in a rather small condominium complex. The board is made up of five individuals. We have now learned that two of the officers of the board, the president and vice-president, are planning to rent their units and live elsewhere, one of them to another state. My question is, without living here, can these individuals remain on the board?
Answer: There are two issues. The board is composed of directors, some who are officers. As directors, they are entitled to remain on the board although doing so may not be practical or fair to those members that voted them in. Not living at or in close proximity to the HOA clearly compromises a directors ability to attend meetings and be directly informed of the physical condition of the property.
A director that also serves as an officer has even a higher responsibility to those that elected them since the officers direct the day to day business of the HOA. Having a local president, in particular, is extremely important. However, officers are selected by the board itself so this can be changed when circumstances dictate. If the two top officers are no longer local, I recommend that other directors assume these duties.
It makes sense that the non-local directors tender their resignations if they are no longer able to attend the board meetings. That said, the board has no authority to remove directors, even for just cause. They were elected by the members and can only be removed from the board by the members.
Question: Our new board is preparing our Annual Calendar. How many board meetings a year should we hold?
Answer: The answer is directly >
If the HOA is self-managed, the board usually meets at least every two months or even monthly if the common elements are extensive.
Keep in mind that board meetings are for the benefit of the general membership as well who have the right to attend and petition the board. Board meetings should be scheduled a year in advance in a location that is guest friendly. Scheduling months in advance ensures that there will be no scheduling conflicts.
Question: Our board has been advised to steer clear of Neighborhood Watch type programs due to potential liability. Your opinion?
Answer: While an HOA needs to be careful not to boast of being "secure", the board needs to take reasonable precautions to make sure the common area is not attractive to criminals. This includes making sure there is adequate night light, landscaping and trees are trimmed to allow light to disperse and not conceal criminal activity. If there is entry access control gates, doors, they should be maintained in good repair.
Participating in a criminal watch program not only makes sense, every HOA should encourage it. It does not mean iron clad security, only improved self-help vigilance by the HOA members. Participation in such programs should be broadcast to members and criminals alike by notices and signs. Each year, a special meeting should be held to reacquaint the members with the program and renew heightened awareness.
Question: Our current board is considering enforcing long standing architectural restrictions that previous boards failed to enforce. Should we grandfather existing violations or enforce the restrictions retroactively?
Answer: There is no "one answer fits all". There is never any automatic "grandfathering". The board needs to weigh each violation and its importance. The big ones may be worth fighting for while minor ones are not. The board can compromise when its in the best interest of the HOA and too expensive to litigate.
Question: When our HOA was developed years ago, the board allowed unit owners to customize the landscaping around their units even though the land was common area.. Some have done it well while others not so well or at all. Our current board is debating whether to return all landscape maintenance to the landscape contractor. What are the challenges?
Answer: Having professional landscape maintenance of landscaping installed by owners simply wont work. For the contractor to maintain the new area would require replacing the custom landscaping with a standardized maintenance plan.
One fundamental principle that will help guide your board in the future: The board has no authority to grant exclusive use of the general common area to any owner for any reason. This always must be approved by an appropriate vote of the members which could be 100 depending on how your governing documents read.
For more innovative homeowner association management strategies, subscribe to www.Regenesis.net
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When Is A Real Estate Commission Earned?
Question: I have a problem, which may turn into a lawsuit. A month ago, I listed my home for sale with a real estate broker. He agreed to charge four percent of the selling price if he was the only broker involved, or six percent if he had to cooperate with another company or agent. A couple of weeks after the listing, the broker presented me with a full price offer, but the buyer wanted 8,000 in "sellers costs." I counter-offered, and the final contract requires that I give a 5,000 credit to the purchaser. Settlement is scheduled for mid-May. The broker has advised me that all is going well, but reminded me that I will owe a real estate commission of four percent based on the full selling price.
I do not think this is fair, since I will not get the full selling price. I believe that the commission should be based on the selling price minus the 5,000 which I will be giving to the purchasers at settlement. Am I correct? Furthermore, what happens if the buyers do not go to settlement? Am I still liable for the commission?
Answer: The simple answers are "no, you are not correct" and "yes, you will probably still be liable to pay the commission."
Lets step back a bit and review some basics. When a homeowner decides to sell his/her house, there are several options. The most common approaches are to try to sell it by yourself,
without using a real estate agent or a broker, or to engage the services of a real estate company.
If you opt for the latter approach, you should make sure that you are satisfied with the person who will be your specific agent. Just because you may have selected a large brokerage firm does not mean that the entire company will be working for you. Inquire of that person as to his/her experience, and knowledge about the area where your house is located.
Once you have selected a real estate agent to help you sell your house, you must sign a "listing agreement" with that person or company. There are different kinds of listing contracts:
1. Open listing -- this means that you agree to pay a real estate commission only to the broker or agent who finds a buyer for you. If you personally sell your house by yourself -- or through some other agent -- the holder of the open listing is not entitled to any commission.
2. Exclusive listing -- this means that you have given the exclusive right to an agent or broker to sell your house. Regardless of who sells the property, the person holding the exclusive listing is entitled to a commission.
While brokers periodically do enter into open listings, the exclusive listing is most commonly used. Brokers and agents do not want to spend a lot of time -- and money -- marketing your house, only to learn that no commission will be earned because you or someone else has sold it.
A signed listing contract is a binding, legal document. You should read it carefully before it is signed. Most standard form listing agreements provide that the commission is earned when the broker presents a ready, willing and able purchaser to the seller and a real estate contract is entered into. Accordingly, whether or not the buyer actually goes to settlement, the real estate agent is entitled to his/her commission.
As a practical matter, it is my experience that many agents will waive their right to a commission should settlement not take place. However, this is not universal. Accordingly, it is recommended that you add the following language into the basic listing agreement: The commission will not be earned until and unless settlement actually takes place.
Without this language, since the agent found you a person who signed a real estate contract with you, that agent could legally claim a commission, even though you have not sold your house.
Turning to your other question about the amount of the commission you will owe, the standard listing agreement obligates the seller to pay the commission on the full selling price. This is not mandatory, however. You have every right to negotiate different terms -- and different commission arrangements -- with the broker, but only if you do so before you sign the listing contract.
Make sure that all >
However, since you signed the listing agreement without making any changes, you are legally obligated to pay a commission on the full selling price -- regardless of the amount of seller concessions you have given your buyer.
While I appreciate your concerns, the amount in question is -- after all -- only 200 4 percent of 5,000. Perhaps you should raise your concerns with the broker, who may be willing to reduce the commission by this amount -- or at least split the difference with you. Good will is a very important element of any business, and they want your business -- or referrals from you -- in the future.
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Millennial Homebuyers: From Limp to Standing at Attention
Limp. Flat. Flaccid. Thats how millennial homebuying has been described over the last few years. But a new wave of young buyers has pumped some testosterone into a real estate market that needed it.
"Despite the economic and financial challenges young adults have braved since the recession, the millennial generation represented the largest share of recent buyers, according to a report from the National Association of REALTORS NAR.
Surging forward after many years of just lying there, millennial homebuyers have now become the hottest segment of the buyer market for a number of reasons:
An improved job outlook - "The job market was particularly unkind to young adults during the recession. Between 2007 and 2010, the unemployment rate within this group soared to 14 percent from 7.8 percent, compared with 9.6 percent for the population as a whole, said the NY Times, quoting corporate economist Alan MacEachin. This year, "the millennial unemployment rate was down to 9.3 percent."
Rising rents - "Americans in their 20s and early 30s are getting a nudge toward homeownership a decade after sales peaked during the housing bubble," said Bloomberg Business. "Its not their nagging parents. Its rents. Theyve risen so much that buying is making more sense."
In fact, rents in many areas now exceed the recommended monthly expenditure for housing. "Nationally, half of all renters are now spending more than 30 percent of their income on housing, according to a comprehensive Harvard study, up from 38 percent of renters in 2000," said the New York Times. In December, Housing Secretary Shaun Donovan declared the worst rental affordability crisis that this country has ever known."
World Property Journal
Being stressed out about constantly increasing financial obligations is not sexy. Especially when those financial obligations are tied to something that isnt even yours.
Mortgage rates - Near-historic low mortgage rates are the ripped abs of homeownership, seducing buyers with the promise of affordability, especially when compared to those out-of-control rents.
Down payments - Also helping to get buyers over the hump are lower down payment requirements. "Saving enough for a down payment is often the biggest challenge for first-time homebuyers," said the NY Times. "Fannie Mae and Freddie Mac have lowered that bar, however, with new conforming loan programs requiring as little as 3 percent down. Loans backed by the Federal Housing Administration are also more affordable, thanks to recent reductions in mortgage insurance premiums. The easing is reflected in Januarys 1.8 percent increase in the mortgage credit availability index published by the Mortgage Bankers Association."
Indeed, the feds insurance premium adjustment, while somewhat financially unsubstantial since it represents a small percentage of the overall monthly payment, may just have been the last push millennials needed to get their groove back.
Making homeownership sexy again
First Option Mortgage
CNN Money said last year that "The great American Dream is dying. Even though many Americans still desire to own a home, they are losing faith in homeownership as a key to prosperity."
But that proclamation may have been premature. Pride of ownership is alive and well, and may just be most fervent among the group that once rejected the idea. Especially those who are looking to get a little on the sidea little added sexiness borne out of the financial benefits of homeownership, that is.
"It sounds crazy but owning your own home is not only financially beneficial but it may improve your sex life as well," said Lifehacker Australia. "Who else is more >
Among their musings on "How Being A Home Owner Improves Your Sex Life," Lifehacker suggests, "You can install a pole or a swing." And you can say goodbye to sex in the backset of your car.
Those Aussies make a lot of sense.
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The Top Three Reasons Buyers Choose The Homes They Buy
You may think buyers will love your home because of your extraordinary taste in home furnishings or the incredible job you did with your home addition. Nope, its not the dcor or the vast add-on that gets them to commit, although they may help. There are three top reasons a buyer chooses to buy a home -- price, condition, and location.
Lets start with Price. To choose the right asking price for your home, you need to know if your neighborhood is in a buyers market or sellers market. A buyers market is characterized by large inventories of six months supply or higher, few buyers making offers, low offers, and many other concessions asked of sellers. A sellers market is characterized by low supply of six months on hand or less, heavy buyer traffic, multiple offers, and close to full price or full price offers.
Bankers, buyers agents and buyers all have access to the same market information that your agent has given you. If you overprice for the current market, your potential buyers wont get to see your home, and even if they do, they wont get their loans approved.
Allow your real estate agent to help you market your home by putting it in the best condition possible. Buyers pet peeves may be easy items to fix, but you dont want your house to go to the bottom of their list because you failed to paint, mow, replace the carpet, etc. Sometimes you have to invest a little money to make money.
Remember, todays buyers are more skeptical about buying a home, so creaky steps, dripping faucets, and outdated wallpaper just give buyers a reason to skip your home.
You cant do much about your homes location, but you can make your home more attractive with lovely landscaping, fences to block out ugly views and sounds, a lower price and immaculate condition.
If you do have a great location, dont overprice. People expect to pay more for a great location next to schools, transportation, shopping and restaurants, but if you overprice, they will scrutinize the price and the condition.
Its hard not to be sentimental about the home youve lived in for years, but to buyers, your home is a commodity. Like you, they simply want to make a good deal on a home they love.
Youll quickly find out what real estate agents and their buyers think of your home. If you get a quick offer, you know you priced it right for the location, condition, and the current market.
If you dont get an offer within a couple of weeks, or whatever period is normal for your area, theres something wrong. Look at your price and condition and see if you can make your home a little more desirable.
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Great Ideas For The Dog That Rules The Roost
You often wake up in the morning on a tiny corner of the bed, while your Goldendoodle Frankie lays caddy corner, legs splayed, taking up all the valuable bed real estate.
You bought your last house specifically because there was a great place in the corner of the kitchen for the food bowls and it already had a doggie door in the living room.
Face it. Your dog rules the roost.
And its the way it should be, really. After all, dogs make us happier, calm us down, make us laugh, make us smile, and help us live longer and more fulfilled lives.
Its all proven. You can look it up.
If youre getting ready to move, or even considering it, you might be worried about how to make your dog comfortable in your new home.
Or perhaps youd just like to make your place a little friendlier for your pooch. Either way, these products will help you become the best dog owner ever.
For those who want their dog nearby but arent super keen on the idea of using a metal crate as a side table, heres a chic solution.
For the pet and pet owner that likes to chow down together. Wonder if they make this for 60-pound dogs.
Put that pooch to bed in >
When you cant be there to throw the ball for your buddy, the iFetch fills in for you. A former Kickstarter project, the iFetch has won numerous awards since launching in 2013, and made thousands of dogs happy.
Doghouse not doing it for you? Commission your own doggie old town.
Or, you could build the doghouse of all doghouses, like this one
"This place really has gone to the dogs. Currently being built for two Great Danes in Gloucestershire, England, it will feature sheepskin-lined, temperature-controlled beds, a 250,000 sound system, and a 52-inch plasma TV," said This Old House. "Automatic dispensers ensure the dogs, who each have their own bedroom, will always have chilled, filtered water and dry food available. Dog-vision webcams allow their owner, who has chosen to stay anonymous, to keep tabs on the pups as they frolic in the house or in their own private playground outside. To keep out the riff-ruff, a retina scanner ensures only the two dogs can enter the front door, and an 18-inch spa bath with a saline treatment will help their coats stay shiny. Designed by architect Andy Ramus, this little shack will only cost about 417,000."
This Old House
If youre doing some work on your new house, this idea to incorporate the dogs bowls into your kitchen island is one that will increase convenience and make cleaning up after them a breeze.
As long as youve got the power tools out, why not create a cozy spot for your kitty too?
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8 Cool New Things You Need For Your Home
Always on the lookout for cool new stuff? So are we. And when it comes to our home, we are always excited to showcase the latest and greatest, and share what we find.
Check out these 8 new products youll be rushing to put in your home.
1. Nest Cam
Were already big fans of the Nest Thermostat, and their new Nest Cam might be even better.
Its got 1080p HD video streaming, Night Vision, activity alerts, a 130 wide-angle view, a zoom feature, and can be used as a pet cam or baby monitor. Plus, "sign up for Nest Aware, and you can go back and see what you missed," said Nest. All this for just 199.
2. Peel and stick wallpaper
Its not necessarily a super new product, but the variety of >
Whether you go fancy with a glam pattern or urban industrial with an old brick pattern, youll love the fact that it requires no glue and can be repositioned over and oververy helpful in the application trust us.
3. June Intelligent Oven
Perfect for the lazy chef at home ahem, guilty, the June Intelligent Oven is "a computer-based oven that thinks like a chef," is compact enough to sit on a countertopand can fit food as large as a 12" pizza pie," said Huffington Post. "The June Intelligent Oven comes with a built-in camera that allows it to recognize the food youre cooking. From there, the oven will recommend an estimated temperature and cooking time for your dish. Its quite the over-achiever."
4. Kaffeeform recycled coffee cups
Looks like hardwood, smells like coffee, and makes you feel good about using a recycled product. Kaffeeform, coffee cups use "an innovative recycled material made from used coffee grounds and renewable raw materials."
If youre looking to update your walls beyond paint and want more texture than wallpaper, Stikwood could be your answer. This cool new product is also peel and stick, but instead of wallpaper, its made of solid wood planking.
"Stikwood comes in a variety of looks from contemporary to rustic. An innovative interior design solution, Stikwood is economical, environmentally responsible, and offers you endless creative design solutions," they said.
6. LG Twin Wash
One of the coolest products to bow at this years Consumer Electronics Show CES, the LG Twin Wash is "essentially a washing machine within a washing machine," said PC Magazine. "Theres space for a full-size load on top, and a smaller, pull-out drawer on the bottom allows you to wash a second load simultaneously, so that you can get through the dreaded laundry day in half the amount of time."
7. Lenova Bamboo Sink
Weve seen one trillion farmhouse sinksand thats just from one night of watching HGTVbut weve never seen one like this Lenovas single bowl apron front bamboo sink comes in double bowl too is sleek, stylish, unique, and made from a renewal material.
8. Here Active Listening
This Kickstarter project features "two truly wi>
In a nutshell, Here allows you to hear what you want, amplifying or reducing certain sounds. Some of you may think it would be cool to use these to spy on conversations you know who you are, but were loving them for other reasons. The ability to drown out Spongebob from the other room comes to mind.
Clearly people like the idea. Here has reached more than double its 250,000 goal.
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