Recent statistics from the Toronto Real Estate Board indicate that current active MLS listings are way down (approximately 47% percent down) from those of a year ago. Low interest rates, combined with a 'wait-and-see' attitude of many Canadian sellers, have resulted in a situation very different from the market in many U.S. cities. Reports of bidding wars in some prime Toronto neighborhoods, and even in some suburban neighborhoods, have confounded the experts, and many buyers and their agents have felt frustration in losing out in what turns out to be an irrational bidding war with other buyers. There is nothing more frustrating to any buyer, or their agent, than finding the perfect house, and then losing it to someone else who bids a higher price.
In a market such as this a pre-planned strategy is vital, as decisive action is required in both the search and the offer process. Patience is often also required, as more time is often needed in finding that perfect home. Once the desired home is found, you will need to be ready to make an offer based on the seller's time frame parameters, so 'sleeping on it', consulting with friends or family, or viewing multiple times, may not be possible.
In this type of market, an experienced, expert professional Buyer's Agent is worth their weight in gold.
In a market where the better homes are snapped up almost immediately, there is no better contact to have than an experienced, professional, full-time Realtor, working for you. Going it alone, despite all of the information available online, will place you at a disadvantage when there is competition among buyers, and a good realtor will use all their skill and experience to get you the house that fits your needs.
When the benefits are properly explained, savvy buyers will be eager to sign a Buyer Agreement with their agent. The key principle at work here is that, if a Buyer Agency Agreement is not signed between the buyer and their agent, then by default, the agent is working for the Seller! You must remember, it is the Seller who is paying the commission, and it is only through the entering into a Buyer Agency Agreement, where the agent becomes legally bound to act in the best interests of the Buyer. While some buyers are reluctant to 'tie' themselves to a Buyer Agent, what must be remembered is that the agreement also 'ties' the agent to the buyer. Once the agent is working for you the buyer, everything they do must be in your best fiduciary interest, and there is a long list of obligations that they are obliged to make to you.
3.) Have your agent set up a Buyer Contact system, whereby the MLS system e-mails you automatically with new listings in your price range and area, as they come out.
Most big city Multiple Listing Services provide a contact system where the computer e-mails the buyer with every new listing that comes out in the geographic area specified, in the price range and type of property requested. It is like getting an RSS feed from the Real Estate Board itself, and the service is free and is easily set up by the Realtor. These updates are delivered into your inbox daily, and are automatically generated. When you see a house which interests you, simply contact your agent to view.
4.) Get Pre-Approval from your Lender, and make sure that you understand all the terms and conditions of the loan commitment.
Nothing could be more important, or simpler to action, than a pre-approval from your bank, mortgage broker, or lending institution. This service is free from almost all lenders, and will typically be good for a period of anywhere from 60 to 120 days. Once you have the pre-approval in place, then you know how much you are qualified for, and how much you can offer on any property. If you are a first time buyer, your agent can connect you with lenders who can help. If you suspect that there could be difficulties from past credit issues, get these cleared up through the pre-approval process. Often, a minor credit issue can be cleared up with a simple explanation. Credit approvals can be verbal, but it is always better to get them in writing.
Once again, in a seller's market, when inventory is low, it is imperative to act quickly when the new listings appear. If you wait for the weekend, or for a convenient time, the house may be gone. Be prepared to make time for showings as they come out.
Discuss with your agent how you will deal with competing offers. Experienced agents know strategies which will help you to come out on top when you have to compete. Have a price ceiling in mind. Your agent will know how many other offers are competing, but they will not know what the other offer prices, terms, or conditions are. How high will you go? You need to discuss this beforehand. There are plenty of ways to make your offer stand out, apart from the offer price; make sure you give the largest good faith deposit possible. When there are two nearly identical offers, and one contains a larger deposit, the seller will naturally accept the one with the larger deposit. Make sure your agent contacts the listing agent, and determines the most acceptable closing date for the seller – and then match it. Only include conditions which are absolutely necessary. Once again, your agent, if they are experienced, will check with the seller's agent to see which conditions are o.k. to include.
Most offers contain at least one or two 'conditions', which allow the buyer to buy conditionally, and which allow the buyer an out clause in case the conditions are not met. Typical conditions would be those on financing approval, on home inspection, on condominium Status Certificate (if the subject property is a condominium), and on the sale of the buyer's property (if the buyer also has a house to sell). When multiple offers are present, all these conditions create a disadvantage for the buyer. When there are identical or similar offers on the table from multiple buyers, the seller will naturally select the offer with the fewest conditions (the fewest risks for the seller). Many sellers in the Toronto area will pay for a professional house inspection themselves, and have it ready for the buyer's perusal, thereby negating the need for a home inspection condition. Here again, an expert realtor can advise which conditions can be included on a competing offer, and which should be not included. The biggest risk for any buyer is to make an offer 'firm', with no conditions, specifically with no bank finance approval condition. Unless you are paying cash for the house, you must be sure that the bank approval will be forthcoming. Remember, the offer, if it is accepted by the seller, is a Contract, which must be fulfilled. Banks will approve you, the Buyer, but they must also approve the transaction. Banks will send out a bank appraiser to appraise the property, to ensure that the money loaned is for an amount appropriate to the value of the house. If you have bid higher than the appraised value (in a bidding war), then the bank may not approve the full loan amount. So it is very important to discuss these issues with your realtor and with your lender, to know exactly how high you can go.
8.) Make sure your agent does a thorough Competitive Market Analysis prior to making the offer.
This is Real Estate 101. Make sure that your realtor shows you the prices for recent sales of comparative properties in the neighborhood – this will give you a sense for what price the home you are interested in will go for. Remember, though, that no two houses are alike, and that adjustments need to be made, and that everything from condition, to location on the street, to time of the year will impact sales prices.
9.) Understand all the closing costs, so there are no surprises later.
Once you have successfully gotten the home of your dreams, there are closing costs for things like the Ontario Land Transfer Tax, and for your lawyer's services. These amounts are due on the closing date (the day that you get the keys and take possession). Having an accurate idea of what these closing costs will be is something which your realtor can provide you with.
These are just a few of the many tips and strategies which an expert Realtor can provide you with, when you are buying in a competitive market. Using them wisely can make the difference between getting the house of your dreams, or watching it go to someone else.
The Ontario Government recently enacted legislation which will implement the much-dreaded HST Tax. This new tax will take effect on July 1, 2010.
The HST tax will effectively combine the Provincial Sales Tax of 8% percent with the Federal GST Tax of 5% percent, to create a new "harmonized" total tax of 13% percent. This new tax will be applicable to many real estate services which hitherto only had one or the other tax applied.
First, the good news….there is no HST tax payable on the sale of a resale home (residential). So the single largest dollar amount exchanged is not taxable under HST.
However, under the harmonized sales tax (HST), home buyers and sellers will have to pay extra tax on a range of services associated with the real estate transaction: services such as legal fees, moving costs, real estate commissions and home inspection fees. Currently, consumers only pay the 5% Goods and Services Tax (GST) on these services.
In a nutshell, after July 1, 2010, if you are a seller, there will be a 13% percent tax payable on the real estate commission you pay – currently there is only the 5% percent GST payable on this fee. Your lawyer's fee will also be subject to the 13% percent HST. One bit of good news – the cost of a Condominium Status Certificate will remain the same; while there will be HST at 13% instead of GST at 5%, there cannot be an increase in the legislated maximum total amount of $100.
If you are a buyer, any Home Inspection you pay for will be subject to the 13% percent HST. And so will the cost of movers hired. In addition, the cost of the CMHC premium for "high-ratio" mortgages has traditionally been taxable for PST – this amount will now be taxable for the full 13% percent HST.
So one can see that, with the introduction of the HST, whether you are buying or selling a Resale Home in Ontario, costs will be going up.
A press release from the Ontario Real Estate Association earlier this year summarized some of these changes which will take place – the example that they used was for a resale house priced at $360,000, and it was determined that the HST would add over two thousand dollars in new taxes to closing costs. Please note, these taxes are in addition to the Land Transfer Taxes which exist for both the Province and the City of Toronto. OREA calculated that, in total, the HST would add $313 million annually in new taxes to resale home transactions.
(2) Consumers currently pay the 8% PST on mortgage insurance premiums.
(3) Real estate commissions are negotiable or may be a flat fee.
Estimated range of 4% to 6% used.
(4) Ministry of Finance, Public Accounts, 2007/2008.
(5) Altus Group, "Economic Impact of MLS(R) Home Sales," June 12, 2007.
The HST Ontario Tax will add to the cost of buying and selling a resale home. Many market watchers are predicting a flurry of activity leading up to the July 1, 2010 implementation date, as buyers and sellers both try to avoid paying the tax.
We often hear in the newspaper these days how the real estate market in Canada has recovered. But there is no better evidence than the actual MLS sales figures, as reported by the Toronto Real Estate Board. Here is a chart of November 2008 sales in the Town of Oakville (W21), which we will compare with the November 2009 sales – Oakville Real Estate Then and Now.
Data is broken down into property types…today we will look at 2 – the Attached Freehold Townhouse (Att/Row/Twnhouse on the chart), and Detached Homes.
In November of 2008, you can see that there were 57 Attached Freehold Townhouses on the market in all of Oakville, and that 11 had sold that month. The median price for these sales was $332,500. (I use Median price rather than Average price as a unit of measure, as the Average price can be swayed by any large, expensive sales, whereas the Median is a better gauge of accuracy). During the entire year, 217 Attached Freehold townhouses had sold, at a median price of $321,000.
With Detached Homes, there were 346 Active (for sale), and 47 had sold that month. Median price was $496,500 for the month of November 2008. During the year, 783 Detached homes had sold in all of Oakville, at a median price of $516,000.
Now we will compare the November 2008 numbers with the most recent November 2009 numbers….
At the current time (end of November 2009), there are only 20 Attached Freehold townhouses for sale on the MLS market..there were also 20 sales during the month (Nov 2009), and the median price was $336,750. During the year, there were 243 Attached Freehold Townhouses which sold in all of Oakville, at a median price of $337,000.
As for Detached homes, in the month of November 2009 there were 206 actively for sale on the market, and 89 sold at a median price of $555,000. For the entire year, 1,017 Detached homes sold in all of Oakville, at a median price of $532,000.
The changes in the market can thus be seen….active listings are way down…for the Attached Freehold Townhouses, only 20 versus 57 a year ago. For detached, 206 versus 346 a year ago. If we look at year-to-date sales, for the Attached Freehold Townhouses, 2008 showed 217 versus 243 this year. Median price has moved from $321,000 to $337,000 – an increase of 4.9%.
Detached homes show a similar trend. There were 346 available for sale in November of 2008, versus only 206 today. During 2008, there were 783 sales at a median price of $516,000. In 2009 there have been 1,017 sales at a median price of $532,000 – an increase of 3.1%.
What is most striking is the lack of listings today…whatever the reason, this tight supply of listings indicates rising prices now and into the new year (2010). If you are thinking of selling, the news is all good. If you are planning on buying, it's probably better to act now rather than wait.
Clearview is one of three neighbourhoods in Southeast Oakville, ( Ward 3), Ontario. According to the Statistics Canada 2006 census, Clearview has a population of 7280. Over the past 20 years, Clearview's population has consistently exceeded the Town of Oakville's projected "ultimate population" of 6000.
SCHOOLS: There is a Catholic elementary school – St Lukes – located in the heart of Clearview. A long-awaited public elementary school is currently under construction next to Clearview Woods. It will offer junior kindergarten to grade 8 when it opens. French immersion is available nearby at Maple Grove School.
HOUSE PRICES: Another very attractive aspect of Clearview is its relative affordability compared to many other neighborhoods in the town of Oakville. Clearview delivers the upscale, executive Oakville lifestyle at an attractive price!