AI & Real Estate

 I recently read an article about RBC (Royal Bank) getting into the real estate space with the purchase of an "AI-powered real estate company" & that has renewed conversations in our industry about the flaws surrounding home valuations powered by AI/Algorithms.

For many years Zillow (in the US) was the butt of the joke around their unreliable "Zestimates" & what a disservice their inaccurate information was for buyers & sellers.

And now we get to join in the fun too, lol! Well, to be fair, it's not new here either...

Power of Sales...Lately

The Bank of Canada made an announcement on July 15^th, 2020:

If you've got a mortgage, or if you're considering to make a major purchase or you're a business and you're considering making an investment, you can be confident that interest rates will be low for a long time.  -Tiff Macklem, Governor of the Bank of Canada

 

Then in August we found out that July 2020 was actually the hottest market in real estate HISTORY – for a blast from the past, watch  THIS video that I recorded at that time – but “a long time” turned out to be shorter than many borrowers wanted or needed, as interest rates jumped 3.5% in 6mo starting in April 2022. The prime rate was 2.45% in March of 2022 & now 6.70% in March of 2023.

 

And nobody was sounding the alarm in the early days, not economists, not regulators & not the lenders, that consumers should be locking in their rates so that they could weather this storm!

 

$5K Penalty? Yikes!

Do you own a rental property? Then this post is for you!

 

Think it’s not for you? Read it anyways just to be sure…remember the subject line - $5k Penalty!

Let’s dive right into it!

 

If you own a residential rental property with 3 units or less then it’s time for a chat with your accountant to discuss whether you need to file the Underused Housing Tax Return .

 

Many are under the impression that this form is only required if there are foreign investors involved, or if there have been vacancies in the property. But that’s not entirely accurate.

 

New Laws that Will NOT Help

Will not help what, you ask? Improve housing affordability as the government suggests...

Anti-Flipping Tax

If you buy a property & own it for less than 12mos before you sell, then your net profit is taxed as business income. This is not really new though, it's just been officially added to the Income Tax Act. The CRA has been operating under this premise for years! There are also lots of exemptions like for death, divorce, relocations etc.

What is the net profit? What is left after all your costs associated with buying, selling & renovating the property - that is what is taxed at your regular marginal tax rate, based on your total income. If you're buying & selling through a corporation, that can help lessen the sting because the corporate tax rate is less than for personal income tax.

What Happens When a Property is Damaged Before Closing?

 A property needs to be in the same condition on closing day as it was in when a Buyer contractually agreed to purchase it.

A simple & logical premise, right? But sometimes things get damaged before closing whether through negligence, accidents, Acts of God, you name it, it's probably happened, lol! So let's talk about it!

A few years ago my client purchased a condo, a condo that was tenanted & the tenants were moving out a couple of weeks before closing. When they moved out, they caused some damage to the flooring.

Title Insurance - Did You Know?

I listened to a presentation by Chicago Title Canada a couple of weeks ago & learned a bunch of stuff that I didn't know, so I thought I'd share some of my key takeaways here for you!

First of all, what IS title insurance?

It's an insurance policy that protects residential or commercial property owners & their lenders against losses related to the property's title or ownership. Most purchase the policy through their lawyer (typically when closing on a property) with a one-time premium in the range of $250-$500. You can read a more detailed description & what a policy may include/exclude HERE & the Ontario Government has a good general knowledge booklet HERE as well.

There are 2 types of policies available - a Lender's policy & an Owner's policy - 1 protects the lender's interest in the property & the other, the owner's. Full coverage = 2 policies!

Multiple Offers in 2023...so far

 There was a property that made a big splash last month, coming on the market at the low, low price of $549k with a hold back on offers for 6 days. And talk about starting the year off with a bang! It got a gazillion showings & 36 offers!

The property in question was 377 Laguna St, near the Oshawa/North Courtice border, just off Adelaide, in the Eastdale neighbourhood of Oshawa. Good mid-town location. See it HERE

 

A 1970's 3bed/2bath bungalow with single car garage in well-kept, but dated condition. With a non-legalized bsmt apartment. As I mentioned, the list price was $549k with a hold back on offers for 6 days. The firm selling price of $747k was posted the following day. Firm refers to no conditions. I thought it might go for less than that & some REALTORS® in our office thought it would go for more…

 

FRAUD

A surprisingly busy start to the year combined with a little writer’s block & here I am at the end of January finally hitting publish on my first blog post of the year!

FRAUD has been all over the news for the past few weeks thanks to 2 high profile cases of fraudulent real estate sales. For some reason this topic has been a tough one to wrap my head around & mostly it’s about what do I want to say about it? What is the point that I want to make? What value can I add to the conversation?

 

• Regurgitate the news articles that have already been written with some added commentary?
• Provide deeper context beyond the sensationalism of the news headlines?
• Lament the fact that fraud seems absolutely rampant in every facet of our lives (the over-dramatic hot take)?
• Ways to protect ourselves?

 

And that’s where I finally landed – how do we protect ourselves? And a bit about how rampant it is, from the little white lies to the really bad stuff…