tag:blogger.com,1999:blog-26797914784689884802024-03-19T01:48:26.150-07:00At Home in DurhamKelly Baynehttp://www.blogger.com/profile/10346740244333549143noreply@blogger.comBlogger90125tag:blogger.com,1999:blog-2679791478468988480.post-2829117704588351962023-09-18T17:12:00.004-07:002023-09-18T20:54:42.720-07:00The Investor Dilemma<p>I was
recently asked by a “small” investor/landlord what the likelihood would be that an “above
guideline” rent increase would get approved by the Landlord & Tenant Board
(LTB) given the fact that his expenses are about to increase astronomically
when his mortgage renewal goes through.</p><p><br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj7KcegiIG4U8ViLjp4yb7A1GsZZZefyK4nSrguzeULZFR5HF8zO2-3gGxnZiCPr2Qr7pCDZsxFWxWoupA_okFdZGR_ZvzjImOPM0jAxWF8lfkd-Jkp7MCDy07iODZiUFfSt3FnfF_QWqaGqFpOLWNM9YnLlkGWy3Q5INAfHwdqOncCIVDsa-gV8F1uhvU/s687/Dilemma.webp" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="431" data-original-width="687" height="251" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj7KcegiIG4U8ViLjp4yb7A1GsZZZefyK4nSrguzeULZFR5HF8zO2-3gGxnZiCPr2Qr7pCDZsxFWxWoupA_okFdZGR_ZvzjImOPM0jAxWF8lfkd-Jkp7MCDy07iODZiUFfSt3FnfF_QWqaGqFpOLWNM9YnLlkGWy3Q5INAfHwdqOncCIVDsa-gV8F1uhvU/w400-h251/Dilemma.webp" width="400" /></a><span style="text-align: left;"> </span></div>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><br /></span></p><p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">The short
answer is there is no chance whatsoever that that would get approved….<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">The longer
answer is that there are a lot of complexities to this issue because what is
good for a landlord is not necessarily good for a tenant, & vice versa.<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">For
properties that fall under rent-control rules, the approved rent increase for
2023 was 2.5%. The approved rent increase for 2024 is 2.5%. Meanwhile, landlords’
expenses have sky-rocketed with insurance up 25-30% & mortgage costs up by
more than 30%.<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">Every
investment comes with a certain amount of risk. And to be fair, it’s not the
tenant’s responsibility to help a landlord cover their expenses. It’s the
landlord’s responsibility to provide a livable space to a tenant for an agreed
upon price, at agreed upon terms.<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">BUT…<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">The reality
of rents not covering expenses means that landlords have a shortfall that needs
to be covered somehow every month. And let’s face it, the goal of investing is
to make money.<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">Rentals.ca
released some research earlier this year that said that the average advertised rental
price in April was up 20% from pandemic lows in April 2021. And that the
average rents across Canada were up 9.6% compared with April 2022. Read more in
this article <a href="https://www.cbc.ca/news/canada/toronto/gta-condo-investors-losing-money-on-properties-1.6858342">HERE</a><o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">So that’s
the kind of spread we’re talking about….<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">Or to make
it even clearer with a real-life example, a small investor bought a sweet
little property in 2021, rents were great, life was good. His variable rate mortgage
is now $1,900/mo on his $1,100/mo rent & due to his particular financial
situation, he has no choice but to bail out. $27.50/mo (2.5% rental increase) doesn’t
do much to help his $800/mo shortfall…<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p> </o:p></span></p>
<p class="MsoNormal"><b><span lang="EN-US" style="mso-ansi-language: EN-US;">But here’s
where it gets really tricky:<o:p></o:p></span></b></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">Who is
willing to buy an investment property that costs them money each month rather
than pays them money each month (or at the very least is cashflow neutral)? So now
we’re talking loss of value to the property itself, because it’s not an
investment that makes sense to a prospective purchaser unless they’re getting a
deep, deep discount on it! Capital gains just pile on to this already painful
scenario that some landlords & would-be sellers are caught in.<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">Taking
rental properties/units off the market also means less rental opportunities in our
already critical housing supply shortage environment.<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">Less rental
supply means higher rents & more competition for the existing supply. <o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"></span></p><blockquote><o:p> I know, I know, it feels like I'm always the voice of doom & gloom as I try to educate & provide context to what's currently going on in the market! Sorry!</o:p></blockquote><p></p>
<p class="MsoNormal"> </p>
<p class="MsoNormal"><b><span lang="EN-US" style="mso-ansi-language: EN-US;">So here
is the dilemma….<o:p></o:p></span></b></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">Should
existing investors hang on? Extending amortizations to lower monthly costs
until rates start to come down again?<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">A CIBC <i>Landlord
Poll</i> found that 74% of homeowners
believe that even with a negative cash flow, the tax deductions available to
them can help make an income property a worthy investment. Read more about that
<a href="https://www.cibc.com/content/dam/personal_banking/advice_centre/tax-savings/landlords-en.pdf">HERE</a>
<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">Or should
existing investors sell their Ontario rentals & buy in other provinces, overseas,
or in the US, basically anywhere the laws governing tenancies are more fair to
landlords & the price-points are likely to be lower as well.<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p> </o:p></span></p>
<p class="MsoNormal"><b><span lang="EN-US" style="mso-ansi-language: EN-US;">And what
about those who want to get into investing in real estate now? Or really, just
get into the market, period.<o:p></o:p></span></b></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">Warren Buffett
famously said “<i>be fearful when others are greedy & be greedy when others
are fearful</i>”. Market and/or economic downturns are the best time to find the opportunities that will help you get ahead!<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">New investors
can focus on units that are not covered by rent control, however they do need
to stay in-line with “market” rents regardless of what their expenses are.<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">First-time
homebuyers may find that this is their moment as well…writing about capitalizing
on others’ misfortunes has a lot of “ick” to it, but that’s how our system is
set up 🤷<o:p></o:p></span></p><p class="MsoNormal"><br /></p><p class="MsoNormal">Want to chat more about your real estate options? Call or text me at 647-697-4071 or email Kelly@HomeInDurham.ca</p><p class="MsoNormal"><br /></p><p class="MsoNormal"><b>Additional Reading:</b></p><p class="MsoNormal"><i>Analyzing An Investment Property</i> <a href="http://www.athomeindurhamblog.com/2022/12/analyzing-investment-property.html" target="_blank">HERE</a></p><p class="MsoNormal"><i>Do The Math!</i> - this was an email out to those who get my <i>Mid-Month Note</i> but I'd be happy to send it to you as well, just ask!</p><p class="MsoNormal"><br /></p><p class="MsoNormal">Until next time,</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh_SGrSoKrUeDv4fLXxrO-pTeveqN23eXLVGwZakFLLIyQYe0f44KWZ1Wh8lw-oN9PO2BDzFZK7zMVbqy7Mvq2qRx_yOFIVLhdCvk64j5N2x6OqbUP_YIjr7zbgg3vQ2E3qRl-hJWjodSyzc8VAb5bk1UvDSMALGvppmErUk1OQAGp6f8qKFFgOmxIIKrE/s406/Kelly.png" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="251" data-original-width="406" height="104" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh_SGrSoKrUeDv4fLXxrO-pTeveqN23eXLVGwZakFLLIyQYe0f44KWZ1Wh8lw-oN9PO2BDzFZK7zMVbqy7Mvq2qRx_yOFIVLhdCvk64j5N2x6OqbUP_YIjr7zbgg3vQ2E3qRl-hJWjodSyzc8VAb5bk1UvDSMALGvppmErUk1OQAGp6f8qKFFgOmxIIKrE/w168-h104/Kelly.png" width="168" /></a></div><br /><p class="MsoNormal"><br /></p>Kelly Baynehttp://www.blogger.com/profile/10346740244333549143noreply@blogger.com0tag:blogger.com,1999:blog-2679791478468988480.post-34550564807345721802023-08-15T13:30:00.001-07:002023-08-15T13:30:30.341-07:00Golden Handcuffs<p class="MsoNormal"><span lang="EN-US">We used to use
this expression when it came to employment & compensation packages, but now
it’s just as applicable to the circumstances many would-be seller-buyers find
themselves in today. Not to be confused with the Golden Parachute, which is a much more pleasant set of circumstances, lol!</span></p><p class="MsoNormal"><span lang="EN-US"><br /></span></p><p class="MsoNormal"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjPTI2YJSMMCa6w9OO4hES7l9iCU-dOFDzqC0CXV2CSooC0yQTtdXDmSzDX1XwF_Z6awio5_sa1p2OTQrz57To4EvSN3LCVeZklTlqqdL74aDCgpFMJJ7tb-zWiuh0WFMujas14tFREdXNdjxVW7OYI-IpoUhmernh8U5RbSrDGaSxu40Ti4TB7E_VBjcg/s2880/Golden%20Handcuffs.webp" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="2157" data-original-width="2880" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjPTI2YJSMMCa6w9OO4hES7l9iCU-dOFDzqC0CXV2CSooC0yQTtdXDmSzDX1XwF_Z6awio5_sa1p2OTQrz57To4EvSN3LCVeZklTlqqdL74aDCgpFMJJ7tb-zWiuh0WFMujas14tFREdXNdjxVW7OYI-IpoUhmernh8U5RbSrDGaSxu40Ti4TB7E_VBjcg/s320/Golden%20Handcuffs.webp" width="320" /></a></div>If a seller
has a fixed mortgage at a rate that is MUCH better than today’s rates & they
want to sell their home and buy something else, it may not make sense
financially, even if it makes sense in every other way, because their current
rate is so good they can’t justify the increased payments on a new home at a higher
rate. That was quite the run-on sentence, but that in a nutshell is the
quintessential <i>Golden Handcuffs</i> situation.<p></p><p class="MsoNormal"><br /></p><p class="MsoNormal">An option
to address this could be to port the existing mortgage to a new home & not everyone
is aware of that. Port, blend the old rate with the new rate & extend the
term of the mortgage. Unfortunately not all mortgages are portable though. Throughout
the ultra-low rate environment of the past 10’ish years we’ve seen many cases
of “stripped down” mortgages, those that traded super low rates for “privileges”
like pre-payments & porting, causing home owners difficulties due to their
lack of flexibility when something unforeseen arises. Another road block for
some is <i>Collateral Charge</i> mortgages - those can’t be ported either
because they’re secured differently than a traditional mortgage.</p>
<p class="MsoNormal"><span lang="EN-US"> </span></p>
<p class="MsoNormal"><span lang="EN-US">A colleague
recently shared a story about a client with
the Bank of Nova Scotia who was spending more on a new purchase & was looking
to port & blend and & the bank wouldn’t let them. They told them to pay
the 20k penalty & THEN they would give them a new mortgage. Every mortgage
is different, know your terms!<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US"> </span></p>
<p class="MsoNormal">Another
option could be an <i>Assumable Mortgage</i>. The buyer essentially takes over
the existing mortgage with no changes to the terms & payments & pays
you the balance of the purchase price in “cash”. The ability to assume a
mortgage at a favourable rate can be a very attractive selling feature! That
being said, they’re not that common here in Canada, but in theory most
fixed-rate mortgages can be assumed. In reality, lenders don’t like them &
don’t want to deal with them. A talented mortgage professional is a must when
it comes to any sort of “outside of the box” financing ideas!</p>
<p class="MsoNormal"><span lang="EN-US"> </span></p>
<p class="MsoNormal"><span lang="EN-US">And yet
another option could be a <i>Rate Buydown</i>. More common with mortgage
brokers & new home builders, this is a scenario where the seller pays the
lender a lump sum to lower the interest rate for a fixed term to benefit the
buyer. More information on that <a href="https://mortgagewisefinancial.com/mortgage-information/mortgage-options">HERE</a>.
Just like the <i>Assumable Mortgage</i> option above, this would be viewed as a
selling feature if offered by the seller, or a negotiable term if asked for by
the buyer in an offer. This is another “outside of the box” financing strategy
where you want a knowledgeable & experienced professional at the wheel! <o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US"> </span></p>
<p class="MsoNormal"><span lang="EN-US">Another
dilemma that’s holding seller-buyers back is the question of buying first or
selling first. A good rule of thumb is that in an increasing market you want to
buy first & in a balanced or decreasing one, sell first. If you’re buying
& selling in the “same” market, then the state of the market is almost
irrelevant. It can even be to your benefit if you’re a “move up” buyer. I wrote
about the potential advantages last July in an email that went out to those who get my <i>Mid-Month Note</i> called “Moving Up in a
Down Market” (I can't link an email but would be happy to forward it to you if you send me a message!)</span></p><p class="MsoNormal"> </p>
<p class="MsoNormal"><span lang="EN-US">There are a
lot of facets to the buy first/sell first dilemma & one of them is the needing
to know how much you can sell for, like the actual number, before you fully
commit to purchasing. Enter the SPP (Sale of Purchaser’s Property) condition,
which I wrote a blog post about last fall (see it <a href="http://www.athomeindurhamblog.com/2022/11/what-is-spp.html">HERE</a>). It makes a lot of sense & was common
practice when I first got in the business back in 2011, but is very rare to get
accepted these days, at least in our local markets!<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US"> </span></p>
<p class="MsoNormal"><span lang="EN-US">If you’re
only willing to move for the “right” property & you can’t/don’t want to commit
unless you have a firm selling price on your existing home & you can’t get
an SPP condition accepted on that “right” property…how do you ever move
forward?<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US"> </span></p>
<p class="MsoNormal"><span lang="EN-US">Both of
these very common scenarios essentially “handcuff” those who want (or need) to
make a move. The “Golden” part is the fact that they’re already IN the market. But those handcuffs also keep inventory out of the market for those who are trying
to break into it for the first time. It’s a big contributing factor as to why the
entry level market stays very competitive regardless of what the overall market
is doing. Less inventory at the entry level keeps prices elevated in this
segment & competition fierce!<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US"> </span></p>
<p class="MsoNormal">And finally,
if you want to have a look at the full breakdown of market activity in July,
click <a href="https://www.facebook.com/HomeInDurham/posts/pfbid02TgvmRyH5ayYibXBCGiMfLouoP9LbFTUGNAoh2DUDJDDCP2xfDU9HCRpWmU7hLhYfl" target="_blank">HERE </a><i>Spoiler Alert:</i> all the leading
indicators are down in July vs June BUT they’re up by a healthy margin when
compared to July 2022.</p>
<p class="MsoNormal"><span lang="EN-US"> </span></p>
<p class="MsoNormal"><span lang="EN-US">Until next
time,<o:p></o:p></span></p>
<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEheXEsSeA2_qwms3XBvEgL3YZg9VxHystEMrI6JOzRI0Ud1GprHecvEoPMyC4x5P9taRvkv0oGGfg34c1sc3iJq2b3LMDE4dsoL8kGgeoBGdsBJAdrV5KfOrRP5MWPKNF2E0L6oZwMFAHUM87th4fZ2c5_etoaskKPiPsryubmi7Pf-puZOgrAeJLQDE0c/s406/Kelly.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="251" data-original-width="406" height="108" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEheXEsSeA2_qwms3XBvEgL3YZg9VxHystEMrI6JOzRI0Ud1GprHecvEoPMyC4x5P9taRvkv0oGGfg34c1sc3iJq2b3LMDE4dsoL8kGgeoBGdsBJAdrV5KfOrRP5MWPKNF2E0L6oZwMFAHUM87th4fZ2c5_etoaskKPiPsryubmi7Pf-puZOgrAeJLQDE0c/w175-h108/Kelly.png" width="175" /></a></div><br /><p><br /></p>Kelly Baynehttp://www.blogger.com/profile/10346740244333549143noreply@blogger.com0tag:blogger.com,1999:blog-2679791478468988480.post-56041735060874706972023-04-03T16:44:00.016-07:002023-04-03T17:47:53.812-07:00Tax Free Money 🎉 the NEW FHSA<p>Ch...Ch...Changes 🎶 The month of April is bringing you more than just spring showers that will turn into May flowers, but also an increase in the carbon price & higher alcohol taxes. In the good news column for April is an increase to the federal minimum wage & the introduction of the Tax-Free <i>First Home Savings Account</i> program.</p><p><br /></p><p class="MsoNormal"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhuFboHacpkP2oRbVsIrbr49QGOZpol2TcmePq7b0Km7DBRZ4MzWJ06xj6pKnE_sriib1F4_0R3j6uHEXFC_uVssPh-o1_iucmAv3leNEuKW5dIuFD559pFEgl8XuLhbKuba_6f-Ls6nQt8YOhq5a5VjkR4Ysu30Fk4eAaqSAOWaONGDFTAsOjIkHdG/s518/tax%20free.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="289" data-original-width="518" height="224" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhuFboHacpkP2oRbVsIrbr49QGOZpol2TcmePq7b0Km7DBRZ4MzWJ06xj6pKnE_sriib1F4_0R3j6uHEXFC_uVssPh-o1_iucmAv3leNEuKW5dIuFD559pFEgl8XuLhbKuba_6f-Ls6nQt8YOhq5a5VjkR4Ysu30Fk4eAaqSAOWaONGDFTAsOjIkHdG/w400-h224/tax%20free.png" width="400" /></a></div><br /><p></p><p class="MsoNormal"><o:p>I am automatically skeptical when there are any new government initiatives announced that relate to real estate (or housing in general) because it always seems to be all flash & no substance. The "appearance" of doing something rather than the real life practicality or consequences of it. <a href="https://www.cmhc-schl.gc.ca/en/consumers/home-buying/first-time-home-buyer-incentive" target="_blank">First-Time Home Buyer Incentive</a>, I'm looking at you! (The FTHBI was <a href="https://nationalpost.com/news/failing-first-time-home-buyer-incentive-has-helped-just-16000-canadians-of-the-expected-100000" target="_blank">not well received</a> & has had very low participation among eligible Canadians).</o:p></p><p class="MsoNormal"><o:p><br /></o:p></p><p class="MsoNormal"><o:p>So let's talk about this new savings vehicle for <i>First Time Home Buyers</i>, shall we?</o:p></p><p class="MsoNormal"><o:p><br /></o:p></p><p class="MsoNormal"></p><blockquote><o:p>It's a good policy. It's easy to understand and work. And the tax policy part of it is the same as an RRSP on the way in and the same as the TFSA on the way out, which makes it a very strong tax savings program. -James Laird, co-CEO & co-founder of RateHub.ca</o:p></blockquote><p></p><p class="MsoNormal"><o:p><br /></o:p></p>
<p class="MsoNormal">How it works is that it allows you to save up to $40,000
(lifetime limit) tax free to purchase your first home. The yearly maximum
contribution is $8,000 – and that part is important, more on that below. It’s a
registered plan like an RRSP, and like an RRSP, the contributions are tax
deductible. And here’s where it gets good, unlike an RRSP, the withdrawals are also non-taxable.
Tax-free in; tax-free out.</p><p class="MsoNormal"><o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p><p class="MsoNormal"><o:p>Who is eligible? A resident of Canada, at least 18 years of age who qualifies as a "first-time home buyer". A first-time homebuyer is defined (in this case) as someone who has not owned a qualifying home that they lived in as a <b><i>principal place of residence</i></b> at any time in the year the account is opened or the preceding four calendar years.</o:p></p><p class="MsoNormal"><o:p><br /></o:p></p><p class="MsoNormal">You can combine your withdrawals from the FHSA with your <a href="https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4466/tax-free-savings-account-tfsa-guide-individuals.html" target="_blank">TFSA </a>& the <a href="https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/what-home-buyers-plan.html" target="_blank">HBP </a>(via your <a href="https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/registered-retirement-savings-plan-rrsp.html" target="_blank">RRSP</a>) when it comes time to purchase your first home to maximize your total downpayment.</p><p class="MsoNormal"> </p>
<p class="MsoNormal">My biggest take-aways from this program are:<o:p></o:p></p><p class="MsoNormal"><br /></p><ul style="margin-top: 0cm;" type="disc">
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l1 level1 lfo2;">You
need to have a good handle on the timing of your purchase & your
ability to save since your contribution room only carries over from the
previous year, so no “catching up” beyond that<o:p></o:p></li>
</ul><p class="MsoListParagraph"><o:p> </o:p></p><ul style="margin-top: 0cm;" type="disc">
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level1 lfo1;">You
can only contribute for 5yrs from the time you open the account & then
hold the account for a maximum of 15yrs before any unused balance must be transferred to an RRSP, RRIF or withdrawn on a taxable basis<o:p></o:p></li>
</ul><p class="MsoListParagraph"><o:p> </o:p></p><ul style="margin-top: 0cm;" type="disc">
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level1 lfo1;">If
you have money in an RRSP, you can transfer funds tax free to the FHSA
& then withdraw them tax free with no obligation to pay the funds
back, unlike a withdrawal under the HBP where the funds have to be repaid
within 15yrs<o:p></o:p></li>
</ul><p class="MsoNormal"><o:p> </o:p></p><ul style="margin-top: 0cm;" type="disc">
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level1 lfo1;">FHSA
funds can be withdrawn immediately after contribution whereas RRSP funds
have to be in the account for at least 3mos<o:p></o:p></li>
</ul><p class="MsoNormal"><o:p> </o:p></p><ul style="margin-top: 0cm;" type="disc">
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level1 lfo1;">The
home you purchase has to be used as your principal residence<o:p></o:p></li>
</ul><p class="MsoNormal"><o:p> </o:p></p><ul style="margin-top: 0cm;" type="disc">
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level1 lfo1;">If
you’re purchasing in the short (or shorter term) then it could still make
sense to open & contribute to the account simply for the tax deduction
on the contribution – you do NOT need to (nor should you) invest the money
in the account<o:p></o:p></li>
</ul><p class="MsoNormal"><o:p> </o:p></p><ul style="margin-top: 0cm;" type="disc">
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level1 lfo1;">The
total benefit of using the FHSA is the combination of the tax deduction
from your contribution + any gains you make by investing the funds while they’re
in the account (should you choose to do so)<o:p></o:p></li>
</ul><p class="MsoNormal"><o:p> </o:p></p><p class="MsoNormal">
</p><ul style="margin-top: 0cm;" type="disc">
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level1 lfo1;">The
Big Banks may not have their sh&t together for many months to come, for
example TD is saying available in November, lol 🤦 but I have heard that
Questrade is ready & willing to open accounts right now!<o:p></o:p></li>
</ul>
<p class="MsoNormal"> </p>
<p class="MsoNormal">As always, this post is intended to bring something to your
attention so that you can look into it further. Follow the links below to get a
more in-depth understanding of the FHSA & how to best use it to achieve
your real estate goals:<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><b><i>Recommended Reading:</i></b><o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">Real Estate Tax Guru Cherry Chan’s breakdown of the FHSA - <a href="https://realestatetaxtips.ca/tax-free-first-home-saving-accounts/">HERE</a><o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">CPA Canada (Industry association for Chartered Accountants)
also has an excellent breakdown that covers some issues that Cherry Chan didn’t - <span style="mso-spacerun: yes;"> </span><a href="https://www.cpacanada.ca/en/business-and-accounting-resources/taxation/blog/2022/november/faqs-tax-free-first-home-savings-account">HERE</a><o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">The Government of Canada as a number of home-buying resources all linked up in the same place - <a href="https://www.canada.ca/en/financial-consumer-agency/services/buying-home.html#toc0">HERE</a><o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">Until next time,</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgToGWM2qT8d--wM3aH5stRtTBgUP4_8iy8BpBnZBJLKayIMdLGxmF3BnKjWQJzSGIVYiymqR4zRVprfrhWMcW_UcZZtuyOBUY9EnkE_qKYxQw3saiVYGsXA_wnnsexVKtD5VNZESn5ZKcyQxvT6r09QQVGD6Vlt360SN2UTDrDNPo6cscJ6HQMLfLQ/s406/Kelly.png" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="251" data-original-width="406" height="130" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgToGWM2qT8d--wM3aH5stRtTBgUP4_8iy8BpBnZBJLKayIMdLGxmF3BnKjWQJzSGIVYiymqR4zRVprfrhWMcW_UcZZtuyOBUY9EnkE_qKYxQw3saiVYGsXA_wnnsexVKtD5VNZESn5ZKcyQxvT6r09QQVGD6Vlt360SN2UTDrDNPo6cscJ6HQMLfLQ/w210-h130/Kelly.png" width="210" /></a></div><br /><p class="MsoNormal"><br /></p>Kelly Baynehttp://www.blogger.com/profile/10346740244333549143noreply@blogger.com0tag:blogger.com,1999:blog-2679791478468988480.post-5691033259149956662023-03-27T16:02:00.006-07:002023-03-28T12:09:50.740-07:00AI & Real Estate<p> I recently read an article about RBC (Royal Bank) getting into the real estate space with the <a href="https://www.retailbankerinternational.com/news/rbc-buys-ojo-canada/" target="_blank">purchase </a>of an "AI-powered real estate company" & that has renewed conversations in our industry about the flaws surrounding home valuations powered by AI/Algorithms.</p><p><br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjeQtVKEPN8JA5MBxgOaA6GYzmKewlRu_ZR_hEyagHwHF36NEjWyiySoRDcKtSUzpArwaakk78NEBqK2BKLKfJBQKGeXv8Cpszx9MVVynDbwKoh3oNAPuUieA5E_715PE5jepZCq2lVFp47U8kVIWD5H0IL_2U1CRSI4KlsLTqj4KdcUy4GdXxXLZE5/s766/not%20my%20circus.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="766" data-original-width="648" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjeQtVKEPN8JA5MBxgOaA6GYzmKewlRu_ZR_hEyagHwHF36NEjWyiySoRDcKtSUzpArwaakk78NEBqK2BKLKfJBQKGeXv8Cpszx9MVVynDbwKoh3oNAPuUieA5E_715PE5jepZCq2lVFp47U8kVIWD5H0IL_2U1CRSI4KlsLTqj4KdcUy4GdXxXLZE5/w339-h400/not%20my%20circus.jpg" width="339" /></a></div><p><br /></p><p>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.</p><p><br /></p><p>And now we get to join in the fun too, lol! Well, to be fair, it's not new here either...</p><span><a name='more'></a></span><p><br /></p><p>HouseSigma, Zolo, Listings.ca & others have been offering a similar "Automated Valuation Tool" for a while so it's not like RBC is offering something new or innovative, they're just the new kid in town...</p><p><br /></p><p>But here's the problem with these AI/Algorithm valuations - just like Zillow & their Zestimates, they're not necessarily accurate & it can create a lot of confusion because consumers can get "stuck" on these numbers which can be off by hundreds of thousands of dollars!</p><p><br /></p><p>There is a screenshot making the rounds at my office right now, that came from a thread on <a href="https://www.reddit.com/r/canadahousing/comments/11eiol2/condo_townhouse_in_south_oshawa_for_900k/" target="_blank">Reddit</a>, about a condo townhouse in South Oshawa that shows a HouseSigma value of $923k & a list price of $899k (on the market for 48 days so far). The highest selling price to-date for a 3bed/2bath condo townhouse in any of the complexes down in that area is $750k from back in March of 2022. The most recent sale in that particular complex was in December - a nicely updated unit without being too over the top - and it sold for $545k.</p><p><br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhNxRlfcXh6TbzhdMePEozRwt9xDUyaF4R2Qkv_qROE0qP0V8GneUWYAZkxRMcrTvrLoKykbGNtGdQSkainob5ewHzYSZWQK0uGbuZw_QC7B5WX4tDrOHOGHf3eyCdJcDGXCbAAwCujuSvfiLYcf06RqhJbD1Llg5l3i_7BrR4ZUbXXetAlNPlsOkOc/s960/reddit.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="960" data-original-width="444" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhNxRlfcXh6TbzhdMePEozRwt9xDUyaF4R2Qkv_qROE0qP0V8GneUWYAZkxRMcrTvrLoKykbGNtGdQSkainob5ewHzYSZWQK0uGbuZw_QC7B5WX4tDrOHOGHf3eyCdJcDGXCbAAwCujuSvfiLYcf06RqhJbD1Llg5l3i_7BrR4ZUbXXetAlNPlsOkOc/w296-h640/reddit.jpg" width="296" /></a></div><p><br /></p><p>The townhouse in question has been completely renovated, but so were so many others that sold for far less! The $899k number makes zero sense...not at the height of the market & certainly not now! This should have been chalked up as some kind of glitch in the system BUT somebody on the selling side has chosen to ignore the actual data & waste time, money & resources at a price that would never be achievable? It just makes no sense!</p><p><br /></p><p>And this is a flip too, so they must be hemorrhaging money...🤦</p><p><br /></p><p>And there are lots of stories like this - maybe not quite as dramatic, but still lots of face-palm worthy fodder for around the water cooler (or in online chat groups)!</p><p><br /></p><p>There are so many variables when it comes to valuing property & nuances to be considered when comparing homes to each other. How could it ever be possible for AI to be anything more than just another data point to be added to the mix when using a proper <a href="https://professional.sauder.ubc.ca/re_creditprogram/course_resources/courses/content/330/11_AIC - All Three Appraisal Methods to be Used.pdf" target="_blank">sales comparison approach</a> to valuation? I just don't know. And in the case of the over-inflated HouseSigma price on the townhouse that I mentioned above, I think it would be considered such an outlier, that it would probably be disregarded anyway, lol!!</p><p><br /></p><p>But if I had a dollar for every time someone said to me, "but Kelly, HouseSigma says XX..." 💰💰</p><p><br /></p><p>Here are some theories I've heard as to how these numbers are being generated:</p><p><br /></p><blockquote><p>The RBC tool takes what the seller paid for the house X years ago and applies the market increase/decrease, then spits out a number. If this is their method the only comparable they are using is the subject property. If the client over/underpaid for their property, it will affect the outcome severely.</p></blockquote><p><br /></p><blockquote><p>They are using the price that TREEB uses for 2022. It's the average of all of the monthly prices for the entire year. The correct number should have been the December number. Just compare this to the stock market. By using the number they did, they ignored half the interest rate increases. </p></blockquote><p><br /></p><blockquote><p>They use statistical regression analysis. Practically useless in rural areas where there is not enough data for those calculations.</p></blockquote><p><br /></p><p> Algorithms tend to be proprietary so it's likely we'll never know the exact formula they're using - and it's also likely that it varies from site to site as well. I'm sure it's something that gets tweaked regularly as well!</p><p><br /></p><p>It's not that I'm against AI, I think there are lots of useful applications for it to help us save time, but I think it's a first step - NOT the only step in whatever it is that we're trying to do.</p><p><br /></p><p>I'll leave you with this final screenshot that illustrates that just like everything you find on the internet, you've got to take it with a grain of salt & when you're dealing with an asset (or a potential one) worth hundreds of thousands of dollars, you want to seek real live, experienced, professional help!</p><p><br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgEvn8PIXVcGR6w5fcjq1rt8EYhVQi0rpughddfacmNohSsKcYt_6RR5nTZabhcRrvxKeTrRUb7zfxbb-8rmHzLTU-CTAq5SJuLxLaV8mxj_8zS4PinpTEYBRc7jnqdRygKCqShWwCsXq45Riqw6MExEzgfBM_Fk0yoWzejWljcD9w2Ims-0SfWAyIQ/s960/housesigma.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="960" data-original-width="645" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgEvn8PIXVcGR6w5fcjq1rt8EYhVQi0rpughddfacmNohSsKcYt_6RR5nTZabhcRrvxKeTrRUb7zfxbb-8rmHzLTU-CTAq5SJuLxLaV8mxj_8zS4PinpTEYBRc7jnqdRygKCqShWwCsXq45Riqw6MExEzgfBM_Fk0yoWzejWljcD9w2Ims-0SfWAyIQ/w269-h400/housesigma.JPG" width="269" /></a></div><p><br /></p><p>Until next time,</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEizkzVYbFh6_I0CDMB97Dlw3N5fDKyoJv3L1QHWkqFkZMh4W1FYU604dnF-pE1je2p1Cc49OIoS9Tn4UrwZKnsrD6o7sdAE7xZzN2J0HTFSSEcZ1ZJV7Wllb-SYsQ7igxytiLwSMqJ78MD3zsWtSKbH6JHdFl5YoA0od4ltsarhzFiLBsrs-QQrsGdS/s406/Kelly.png" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="251" data-original-width="406" height="105" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEizkzVYbFh6_I0CDMB97Dlw3N5fDKyoJv3L1QHWkqFkZMh4W1FYU604dnF-pE1je2p1Cc49OIoS9Tn4UrwZKnsrD6o7sdAE7xZzN2J0HTFSSEcZ1ZJV7Wllb-SYsQ7igxytiLwSMqJ78MD3zsWtSKbH6JHdFl5YoA0od4ltsarhzFiLBsrs-QQrsGdS/w170-h105/Kelly.png" width="170" /></a></div><br /><p><br /></p>Kelly Baynehttp://www.blogger.com/profile/10346740244333549143noreply@blogger.com0tag:blogger.com,1999:blog-2679791478468988480.post-2679922139534020842023-03-20T13:10:00.006-07:002023-03-28T11:55:10.982-07:00Power of Sales...Lately<p>The <i>Bank of Canada</i> made an announcement on July 15<sup>th</sup>,
2020:</p><p><br /></p><blockquote><p>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. <b>-Tiff Macklem, Governor of the Bank of Canada</b></p></blockquote><p class="MsoNormal"><o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">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 <a href="https://www.facebook.com/HomeInDurham/posts/pfbid0Dm23tSJnzVYYt2L9a79TNnYoa3gdLuLvV5s6MStivm1S5tQBYhAuozkCChxe84Dgl" target="_blank">THIS</a> 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.</p><p class="MsoNormal"> </p>
<p class="MsoNormal">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!<o:p></o:p></p><p class="MsoNormal"><br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgtLDITUtLHR0PDh1krjuieB5Cqm0wM4PQ8bC5yExeR-GagFsdRp_f2w9dzi35f28JZ4f41F95IRQoMmH59_XrFcr7B7B32oYbU7CS7cNeKoROsIzG-ht-dXp-2hZLAp_yjSG5hSihRamyJtLCWHWyqC0J7IVCB5UH3--RR_VAZ7cuujtYE1O7GDcjW/s498/sound-alarm%20(1).png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="177" data-original-width="498" height="143" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgtLDITUtLHR0PDh1krjuieB5Cqm0wM4PQ8bC5yExeR-GagFsdRp_f2w9dzi35f28JZ4f41F95IRQoMmH59_XrFcr7B7B32oYbU7CS7cNeKoROsIzG-ht-dXp-2hZLAp_yjSG5hSihRamyJtLCWHWyqC0J7IVCB5UH3--RR_VAZ7cuujtYE1O7GDcjW/w400-h143/sound-alarm%20(1).png" width="400" /></a></div><p class="MsoNormal"> <span></span></p><a name='more'></a><p></p>
<p class="MsoNormal">And so here we are in March of 2023 & we’ve been seeing
more & more <i>Power of Sale</i> properties hit the market. But not from the “<i>Big Banks</i>”
as apparently they’re working with their customers to keep them in their homes…it’s
the <i>B & C</i> lenders who are calling in their notes.<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">As interest rates rose, it pushed more mortgage-seeking customers
into the <i>B & C</i> channels as they no longer qualified for traditional financing.
And there’s some ugly stuff going on in the <i>B & C</i> lending environment
because they don’t say NO. Huge up-front fees, even higher rates, crazy terms
like being added to insurance policies as beneficiaries & when times get tough
for their mortgagors, eating up any available equity through penalties &
fees!<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">Of course we’re not privy to what’s going on behind the
scenes in a sale unless we’re directly involved in the sale, but when we see
properties that were purchased between 2020 & 2022 selling for less than
they were purchased for, we know that something’s going on. When we see that it’s
a corporation name, a lawyer’s name or some name other than the name(s) listed
on title as the “Seller(s)”, then we know something’s going on. There’s always
the usual suspects of death & divorce, which can force the sale of a home
at an inopportune time, but it’s fairly easy to connect the dots when we see a
property sell at a loss that also has any of the above parameters to it as
well, as to what the cause might be.<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">And it’s so very sad to make those connections. Behind the
listings we scroll through every day are real people, some of whom have run out
of options & will be left with enormous financial burdens that may take
years to get out from under.<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><i>B & C</i> lenders are supposed to be short term solutions
with the eventual goal of qualifying for <i>A </i>lending at the end of the term. With
rates where they are, many are still not able to qualify for the jump to A
lending & so they get stuck where they are. If a <i>B or C</i> lender is not
willing to renew a mortgage for a new term & they can’t qualify for any
other financing, then they have to sell their house – whether the market is
good or not in order to get ahead of the <i>Power of Sale</i> process. If they don’t
get ahead of it, they will still lose the house to the lender, but then they
also incur all kinds of additional fees that go along with the process.<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">Flip the script on this & this is where opportunities
for buyers can be found. Lenders are required by law to take reasonable steps
to get market value for the property – market value essentially translates into
what a buyer is willing to pay for the property. If that means less than what
the original homeowner paid for it, then that’s just the way it is….<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">I’ll leave you with one last wrinkle in all of this &
that’s when the lender becomes the landlord in a <i>Power of Sale</i>. If the property
in question is tenanted in any way, then guess who’s responsible for them &
now bound by the <i>Residential Tenancies Act</i> - the new landlord! Because the
tenants have security of tenure. And that could be why the “<i>Big Banks</i>” are doing
their best to work with homeowners so that they can avoid this scenario as much
as possible. The backlog at the <i>Landlord Tenant Tribunal</i> is still far too long –
8 mos just to get a hearing! And if the tenants aren’t cooperative it just
complicates everything even further & piles on additional costs on the
mortgagor.<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">No take-aways or action steps for you today, just some
observations & what may be behind some of the numbers we’re seeing. And to
be fair, I’ve only identified 9 ACTUAL <i>Power of Sales</i> (out of 1,274 sales
to-date) in Durham since January 1<sup>st</sup>, none from the “<i>Big Banks</i>”, but
we also have no way of knowing how many people have sold to get ahead of the
process in that time either.<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">Until next time,</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEicTOBvybmQyJet6jTYz6_OA3pqdkb8GoRIS9Vg_3zCgCSpciKoOTHff2ypASi7X4JXMJoXnkRZAowyfzQA6rFSKW64Ts63PJA9whFATFzD7dBOnIy0XnKYlBrV2P_bTtC_0MQzo_eLEDnxNP-abWYcRU7EjCPmOVu2MoPeWnBhVALgIjzdzyDpKcjD/s406/Kelly.png" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="251" data-original-width="406" height="118" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEicTOBvybmQyJet6jTYz6_OA3pqdkb8GoRIS9Vg_3zCgCSpciKoOTHff2ypASi7X4JXMJoXnkRZAowyfzQA6rFSKW64Ts63PJA9whFATFzD7dBOnIy0XnKYlBrV2P_bTtC_0MQzo_eLEDnxNP-abWYcRU7EjCPmOVu2MoPeWnBhVALgIjzdzyDpKcjD/w190-h118/Kelly.png" width="190" /></a></div><br /><div><br /></div><div><br /></div><div><br /></div><div><br /></div><div><br /></div><div><br /></div><div><br /></div><div><br /></div><div><b>Additional reading/viewing:</b></div><div><br /></div><div>Video on Power of Sales & other distressed properties <a href="https://www.facebook.com/HomeInDurham/posts/pfbid06c2AfXxK2XDGKMpZ3KVBkMwkDxHMX3vnhiQEPnpkGpFvqxPFX36RLfW35iYy8G5Bl" target="_blank">HERE</a></div><div><br /></div><div>PDF outlining the Power of Sale process <a href="https://powerofsalesontario.ca/wp-content/uploads/2017/04/The-Power-of-Sale-Process-in-Ontario_for-distribution.pdf" target="_blank">HERE</a></div>Kelly Baynehttp://www.blogger.com/profile/10346740244333549143noreply@blogger.com0tag:blogger.com,1999:blog-2679791478468988480.post-88216659150854443732023-03-13T07:30:00.010-07:002023-03-28T11:55:43.759-07:00$5K Penalty? Yikes!<p>Do you own a rental property? Then this post is for you!</p>
<p> </p>
<p>Think it’s not for you? Read it anyways just to be sure…remember the subject line - $5k Penalty!</p><p><br /></p><p><br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjXCvHgr17PuiLA7rmqaZwiv3AaFEXv9BIAXIP3gn1NPUHDpyVQkc_nunPm_9IfsxJ6LixviTNkM4k10ykIz98DIc28XWjGkqSCnl6luT1njtSPg5b7LTwywq68Q0zIulnumN-lefByChmBoO5jIPDrIoha7T6ErK1JKgejnhfXQ-9P9L1k1OD0SNre/s1600/Underused%20Housing%20Tax%20-%20Insight%20Header.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="567" data-original-width="1600" height="226" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjXCvHgr17PuiLA7rmqaZwiv3AaFEXv9BIAXIP3gn1NPUHDpyVQkc_nunPm_9IfsxJ6LixviTNkM4k10ykIz98DIc28XWjGkqSCnl6luT1njtSPg5b7LTwywq68Q0zIulnumN-lefByChmBoO5jIPDrIoha7T6ErK1JKgejnhfXQ-9P9L1k1OD0SNre/w640-h226/Underused%20Housing%20Tax%20-%20Insight%20Header.jpg" width="640" /></a></div><br /><p><br /></p>
<p>Let’s dive right into it!</p>
<p> </p>
<p>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 <em><a href="https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/uht-2900.html">Underused Housing Tax Return</a> </em>.</p>
<p> </p>
<p>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.</p>
<p> <span></span></p><a name='more'></a><p></p>
<p>Although most rental property owners will likely be exempt from this tax, it doesn’t necessarily mean that you are exempt from filing the form. Beware that the penalty for failing to file before the end of April (April 30<sup>th</sup>, to be exact) is a whopping $5k – PER property! So, if you are on title for ANY properties other than your primary residence, then it’s crucial to consult your accountant on this issue!</p>
<p> </p>
<p>Now, who are the ones that are likely required to file?</p>
<p> </p>
<ul style="margin-top: 0cm;">
<li style="margin-left: 0cm;">If the property is owned by a Canadian corporation, or if a Canadian corporation has any interest in it (this would include a Bare Trust situation where title is under your personal name but income is claimed under the corporation)</li>
</ul>
<br />
<ul style="margin-top: 0cm;">
<li style="margin-left: 0cm;">If the ownership is a partnership (not necessarily a joint venture though, check with your accountant!)</li>
</ul>
<p> </p>
<ul style="margin-top: 0cm;">
<li style="margin-left: 0cm;">Any scenario where there is a trustee involved (for instance, if you are on your parent’s property title even though it’s not a rental – or your kid’s, for that matter (think financing) you may still be considered a trustee and may be required to file. Or, if you have a property where your spouse is the only one on the title, but you claim the income 50/50, then your spouse is a trustee in that scenario)</li>
</ul>
<p> </p>
<p><i><b>So what’s the big deal about filing this form?</b></i></p>
<p> </p>
<p>Well there’s the fine…that $5k per property…plus the fact that if you are not exempt from this tax & you don’t file, then not only are you required to pay 1% of the fair market value of the property every year, but you’ll also rack up interest & penalties as well….so a fairly big deal, in my opinion!</p>
<p> </p>
<p>This post is just the broad strokes, intended to alert you to an issue that you should look into for more information. It’s new, the form is very in-depth, & of course it’s not perfectly clear who needs to file it & who doesn’t…are we surprised that a new government initiative is confusing? No. Or that it’s up to “us” to figure it out or face steep penalties? Also No. But it is, so I urge you to have a conversation with your accountant, who hopefully specializes in investment real estate, to make sure that you’re compliant!</p>
<p> </p>
<p>Sharing is caring so be sure to pass this along!</p>
<p> </p>
<p>Until next time,</p>
<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEijh8jffNOXTFDlwcew4r6imMC-zAF8v2zPE6y6u-bcBHWpYyju23ahdb0nhuBJAlLNo78kizYdD601bkEs5im-Annhippz3BoBrRH7Yr94JQJttcBlqDG7wSD_0ZN9i9Gf2-TzCYkcvSIHvAyyrTHFY1EkG5LdI2Av47B_CDmISh-PVf0gou_GQqqb/s406/Kelly.png" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="251" data-original-width="406" height="105" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEijh8jffNOXTFDlwcew4r6imMC-zAF8v2zPE6y6u-bcBHWpYyju23ahdb0nhuBJAlLNo78kizYdD601bkEs5im-Annhippz3BoBrRH7Yr94JQJttcBlqDG7wSD_0ZN9i9Gf2-TzCYkcvSIHvAyyrTHFY1EkG5LdI2Av47B_CDmISh-PVf0gou_GQqqb/w170-h105/Kelly.png" width="170" /></a></div><br /><p><br /></p>
<p> </p><p><br /></p>
<p> </p>
<p><br /></p><p>Additional Reading Here:</p>
<p><br />Research for <a href="http://www.athomeindurhamblog.com/2023/03/new-laws-that-will-not-help.html" rel="noopener" target="_blank">THIS</a> blog post alerted me to the upcoming UHT deadline - give it a read to see what other new government measures that will also NOT help with housing affordability<br /><br /></p>
<p><a href="https://www.canada.ca/en/services/taxes/excise-taxes-duties-and-levies/underused-housing-tax.html#7">https://www.canada.ca/en/services/taxes/excise-taxes-duties-and-levies/underused-housing-tax.html#7</a></p>
<p> </p>
<p><a href="https://www.cpacanada.ca/en/news/canada/underused-housing-tax">https://www.cpacanada.ca/en/news/canada/underused-housing-tax</a></p>
<p> </p>
<p><a href="https://www.pwc.com/ca/en/services/tax/publications/tax-insights/underused-housing-tax-compliance-2023.html">https://www.pwc.com/ca/en/services/tax/publications/tax-insights/underused-housing-tax-compliance-2023.html</a></p>
<p> </p>Kelly Baynehttp://www.blogger.com/profile/10346740244333549143noreply@blogger.com0tag:blogger.com,1999:blog-2679791478468988480.post-65088439722479520122023-03-06T13:06:00.004-08:002023-03-28T11:56:26.658-07:00New Laws that Will NOT Help<p>Will not help what, you ask? Improve housing affordability as the government suggests...</p><p><br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgBNW9OZssgbY7Tm_l2EChS0LV547fDVdy9Zo6NFCvHNi2fzCEvqzFhRrK-d697p6DM9OrhSi-M-RAdusZk8lU9dLI3PrCP6kGGoTkdcPSyvBJLY7GwtFbY3NQkDSJ2kCoS83AGkOVL9qp5Jf48TsC78Af2NdatGmqtWYnssugz7rxn0U2POP9vQ_Hq/s6720/pexels-karolina-grabowska-6958584.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="6720" data-original-width="4480" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgBNW9OZssgbY7Tm_l2EChS0LV547fDVdy9Zo6NFCvHNi2fzCEvqzFhRrK-d697p6DM9OrhSi-M-RAdusZk8lU9dLI3PrCP6kGGoTkdcPSyvBJLY7GwtFbY3NQkDSJ2kCoS83AGkOVL9qp5Jf48TsC78Af2NdatGmqtWYnssugz7rxn0U2POP9vQ_Hq/w266-h400/pexels-karolina-grabowska-6958584.jpg" width="266" /></a></div><p><br /></p><p><b>Anti-Flipping Tax</b></p><p>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.</p><p><br /></p><p>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.</p><span><a name='more'></a></span><p><br /></p><p>What's interesting though, is if you sell at a loss, which is definitely happening in some cases since the meteoric rise of interest rates in the past year, is that you CANNOT write off the loss against your income...You lost money doing something we (the government) don't want you to do? Too bad, so sad! How does that make sense?</p><p><br /></p><blockquote><p>The Foreign Buyers' Ban is really just a fine...so you could go ahead and buy the place, wait 18mos, and they've chased you, and then you sell it, and you pay the $10,000 fine. That's kind of the perfect money laundering timing scenario. - Ron Butler, Butler Mortgage</p></blockquote><p><br /></p><p><b>Foreign Buyers Ban</b></p><p>This is a 2 year ban on purchasing property anywhere in Canada unless you are a Canadian citizen, Permanent resident or a person registered under the Indian Act with lots of exemptions like long-term international students, people with temporary work permits, refugee claimants & many others.</p><p><br /></p><p>Foreign ownership was reported as 3.3% in the GTA back in 2019, which is the last time a number was made available by <a href="https://www.cmhc-schl.gc.ca/en/media-newsroom/news-releases/2019/new-insights-non-resident-ownership-and-participation-bc-on-ns-housing-markets" target="_blank">CMHC</a>. A pretty small amount to create such a heavy handed policy around. Not to mention all the confusion & fear created for professionals who will be hit with <a href="https://news.westernu.ca/2023/01/expert-insight-canadas-ban-on-foreign-homebuyers-is-unlikely-to-affect-housing-affordability/" target="_blank">big fines</a> if they inadvertently (or otherwise) get caught up in a transaction with a foreign buyer. We're all scrambling to try to figure out new best practices to assist buyers, while still protecting ourselves from this newest liability. It has been suggested that getting a "legal opinion" on a client's residency status would be the most prudent course of action! Layers upon layers of bureaucracy...</p><p><br /></p><p>And there is already talk of "unintended" consequences & perhaps the need to revisit some of the language in this law which has caused it to be at direct odds with the stated purpose of the law in the first place. And this has to do with the foreign ownership limits of corporations. This article <a href="https://financialpost.com/executive/executive-summary/foreign-homebuyer-ban-upheaval-real-estate" target="_blank">HERE </a>explains it way better than I ever could & includes several quotes from top economist Benjamin Tal.</p><p><br /></p><p>At the end of the day I really don't see how either of these measures will have any positive impact on housing affordability. It's just the usual sense of deja vu where the government does something to make it seem like they're "doing something" about a hot button issue & as a bonus, also comes up with a new revenue stream via the fines.</p><p><br /></p><p>Things that make you go hmmmmm...</p><p><br /></p><p>Until next time,</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiicSC3BBtFIs1h5ZUa3E_hYdTvRq7s-eYTQS0HqZTKZR8nE5XHZkrRj3He1Iwd94h17-NkulpTPXxSRGmovexqfNONVWEhfCrRJqnkPbUK1Q1sjeUIIj171-mklvCRbWAoZwHMq92VLsYQcC4dC_IgzJ2vKL1sKs_2ZJfuC6uoIc30tUbU8ai6bhZr/s406/Kelly.png" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="251" data-original-width="406" height="123" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiicSC3BBtFIs1h5ZUa3E_hYdTvRq7s-eYTQS0HqZTKZR8nE5XHZkrRj3He1Iwd94h17-NkulpTPXxSRGmovexqfNONVWEhfCrRJqnkPbUK1Q1sjeUIIj171-mklvCRbWAoZwHMq92VLsYQcC4dC_IgzJ2vKL1sKs_2ZJfuC6uoIc30tUbU8ai6bhZr/w199-h123/Kelly.png" width="199" /></a></div><br /><p><br /></p><p><br /></p><p><br /></p>Kelly Baynehttp://www.blogger.com/profile/10346740244333549143noreply@blogger.com0tag:blogger.com,1999:blog-2679791478468988480.post-51127375214507897922023-02-27T13:15:00.003-08:002023-03-28T11:56:56.495-07:00What Happens When a Property is Damaged Before Closing?<p> A property needs to be in the same condition on closing day as it was in when a Buyer contractually agreed to purchase it.</p><p><br /></p><p>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!</p><p><br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhuGIZGVj7sLmYmFo-L-ITfgL1bpV2FyFaBbDA7EeH3YqxY0A6_49UwNT1HZKH7bmOox5I_by2P1wmoM2IGlINC1x2Z9tMTVsA_BXCaRj-nxkUpN50UOMTE_ZAMMtYYOyJFLQsr0CuGZGZImBkIQBvO73ZBeEOEX0EX0ilXjaR0bwsR3d9u_5uLZ_v3/s1360/Plot%20twist.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1360" data-original-width="907" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhuGIZGVj7sLmYmFo-L-ITfgL1bpV2FyFaBbDA7EeH3YqxY0A6_49UwNT1HZKH7bmOox5I_by2P1wmoM2IGlINC1x2Z9tMTVsA_BXCaRj-nxkUpN50UOMTE_ZAMMtYYOyJFLQsr0CuGZGZImBkIQBvO73ZBeEOEX0EX0ilXjaR0bwsR3d9u_5uLZ_v3/w266-h400/Plot%20twist.jpg" width="266" /></a></div><br /><p><br /></p><p>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.</p><span><a name='more'></a></span><p><br /></p><p>Luckily for my client, each time we did a walk-thru at the condo he was taking videos to send to his fiancee who was out of the country. If he hadn't been doing that it would have been difficult to prove that the huge gouges in the laminate & ripped up carpet at the doorway transition leading to that laminate, weren't there when he offered to purchase the condo!</p><p><br /></p><p>There was a big black dresser in the bedroom at previous visits & the gouges had black paint transfer in them & there was a very clear visual path of the journey that dresser made from getting stuck in the doorway transition & ripping the carpet to then gouging the floor a few feet past the doorway...</p><p><br /></p><p>We were able to negotiate repairs to be completed prior to closing & they lived there happily (with brand new floors, as it turned out) until it was time to move up to their next home a couple of years ago!</p><p><br /></p><p>Ever since then I've kept a clear record of the condition of a home, especially when it's tenanted, from one walk-thru to another!</p><p><br /></p><p>Another way this could have been dealt with is by way of an "<i>Abatement</i>" where the seller gives an agreed-upon amount of money to the Buyer at closing, to deal with an issue themselves. Sometimes this is viewed as the preferred way to go, especially if there's a concern about the quality of materials used or workmanship, or both. This Abatement is added as an Amendment to the original Agreement of Purchase & Sale for full transparency, so as not to be perceived as some kind of mortgage fraud!</p><p><br /></p><p>There could also be a "<i>Holdback</i>" on funds based on an estimate of what something will cost - especially if it can't be addressed before closing. An example of this that I've run into before, is a window getting replaced, where installation is scheduled after the closing date. Or a driveway getting paved is another common example. Once the work is completed to the buyer's satisfaction, the holdback of funds is released to the Seller. Sometimes this ends up as an Amendment, sometimes it's handled outside the Agreement, between the lawyers directly.</p><p><br /></p><p>But what if something bigger happens? Like a burst pipe or a fire - something where an insurance claim is involved?</p><p><br /></p><p>This issue is addressed in clause 14 of the Agreement of Purchase & Sale (or clause 18 of the Condo APS)</p><p><br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhURApChad-y0a5UD3JyBoPxvIFvPb1AfI07YCEILGrXQgDZKvy4e9A_NfCe4Zic8YHeqSOcJdnS15E7rWl6uWirh9GHVyP5kWhgA6hAggGShkAn2ju_-4LHchFPQ40dvOq1Qq87yr1j-o28dTVh2A30oxH8hWny09JQRrrQn5O3rUCyQ8e8VH4d6TN/s782/Clause%2014.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="296" data-original-width="782" height="151" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhURApChad-y0a5UD3JyBoPxvIFvPb1AfI07YCEILGrXQgDZKvy4e9A_NfCe4Zic8YHeqSOcJdnS15E7rWl6uWirh9GHVyP5kWhgA6hAggGShkAn2ju_-4LHchFPQ40dvOq1Qq87yr1j-o28dTVh2A30oxH8hWny09JQRrrQn5O3rUCyQ8e8VH4d6TN/w400-h151/Clause%2014.png" width="400" /></a></div><br /><p>So in the case of larger issues, the Buyer has the choice as to whether they want to proceed with the Agreement or walk away. With the pace at which Insurance companies work, it could leave both the Buyer & Seller in limbo for longer than they'd like, potentially creating a domino effect of other issues...</p><p><br /></p><p>Everything I've written so far falls under the <i>Doctrine of Equitable Conversion</i>. And the above clause is included in our OREA forms specifically because of this doctrine - otherwise the Buyer would be responsible for insurance prior to closing!</p><p><br /></p><p>The following is an excerpt from a post that lawyer Mark Morris posted in our legal forum & which I must confess, I did not know, lol! I mean I understood the basic premise that I started this post with, that a property needs to be in the same condition at closing as at the time of offer, who needs to be responsible for insurance etc....but this part is new!</p><p><br /></p><blockquote><p>The <i>Doctrine of Equitable Conversion</i> is the concept that, as soon as the APS is signed by a Seller & a Buyer, the Buyer becomes the owner of the property in "equity" and the Seller becomes nothing more than a legal trustee of legal title for that same Buyer. The closing date is simply the time when we record the interest on the land registry and the consideration transfer takes place. <span> </span><span> </span><span> </span>- Mark Morris, Real Estate Lawyer, <a href="http://www.legalclosing.ca">www.legalclosing.ca</a></p></blockquote><p> </p><p>Essentially, once the Agreement becomes firm, the Seller is holding the property in trust for the Buyer & closing day is the date on which it has been agreed that payment will be made & title will be transferred.</p><p><br /></p><p>Equitable Conversion is the rule of law in the province & applies to every agreement in Ontario.</p><p><br /></p><p>So there you go! We both learned something new today, lol!</p><p><br /></p><p>And finally, much better to have something happen & deal with it BEFORE closing than to discover it afterwards - like when you show up at your new home! Your options become much more limited & you've lost your leverage....another good topic to explore, but for another day!</p><p><br /></p><p>Until next time,</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi6j77zlW5pGbz0WOkff2eNgZaGzXfWVz8uy97uDkrlQnTSLN6-T8-1MKPHYaMg8TFQTRuz32slP0oTZvzJFzMk_Dq_lDBKtejasrfZPIJf8vaz5E0p0rsQSM9tM5lKszMZLcRqPktIaQWj_15lMRBPxOCoIxiyprfjM_BAblb81Oi_mYOed3jtIVpJ/s406/Kelly.png" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="251" data-original-width="406" height="121" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi6j77zlW5pGbz0WOkff2eNgZaGzXfWVz8uy97uDkrlQnTSLN6-T8-1MKPHYaMg8TFQTRuz32slP0oTZvzJFzMk_Dq_lDBKtejasrfZPIJf8vaz5E0p0rsQSM9tM5lKszMZLcRqPktIaQWj_15lMRBPxOCoIxiyprfjM_BAblb81Oi_mYOed3jtIVpJ/w196-h121/Kelly.png" width="196" /></a></div><br /><p><br /></p>Kelly Baynehttp://www.blogger.com/profile/10346740244333549143noreply@blogger.com0tag:blogger.com,1999:blog-2679791478468988480.post-75545584239088345672023-02-22T11:15:00.002-08:002023-03-28T11:57:38.453-07:00Title Insurance - Did You Know?<p>I listened to a presentation by <a href="https://chicagotitle.ca/meet-ctic/" target="_blank">Chicago Title Canada</a> 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!</p><p><br /></p><p><br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiinZINrAPaIVts3qvwpeWq6yVPqLH-zAe9RXFDndev-qm5N1qRcJB8SL6lOJUCyo9xqYG7utbAK-lwNdo2LV-O-Rp3LXPPVaVelP3qAd6Mjif7h4ot_yvcrSDoiP6uxGvEQlMSq24fklQRD7vcm4pgEDMW4roGTfZtZzWIFjacSfp-rafdf8Ki_PSj/s940/title%20insurance5.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="788" data-original-width="940" height="268" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiinZINrAPaIVts3qvwpeWq6yVPqLH-zAe9RXFDndev-qm5N1qRcJB8SL6lOJUCyo9xqYG7utbAK-lwNdo2LV-O-Rp3LXPPVaVelP3qAd6Mjif7h4ot_yvcrSDoiP6uxGvEQlMSq24fklQRD7vcm4pgEDMW4roGTfZtZzWIFjacSfp-rafdf8Ki_PSj/s320/title%20insurance5.png" width="320" /></a></div><br /><div class="separator" style="clear: both; text-align: center;"><br /></div><p>First of all, what IS title insurance?</p><p><br /></p><p>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 <a href="https://chicagotitle.ca/documents/what-is-title-insurance/" target="_blank">HERE </a>& the Ontario Government has a good general knowledge booklet <a href="https://www.fsco.gov.on.ca/en/insurance/brochures/documents/undstitins.pdf" target="_blank">HERE </a>as well.</p><p><br /></p><p>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!</p><span><a name='more'></a></span><p><br /></p><p>Title insurance is NOT mandatory in Canada but a Lender may require you to purchase a Lender's policy in order to get a mortgage from them.</p><p><br /></p><p>Chicago Title put on this presentation for our legal forum in light of recent highly publicized vendor fraud cases. They are the policy issuers for the first case that came to light - reminders of the story details <a href="https://globalnews.ca/news/9389172/police-allege-toronto-house-sold-without-owner-consent/?fbclid=IwAR3VQEqqPsJsxCssd2NWkkA2gZdzgLgUGlI4ciYlvY0j8kt9t1OqBIaRg-M" target="_blank">HERE </a>& the blog post I wrote about fraud <a href="http://www.athomeindurhamblog.com/2023/01/fraud.html" target="_blank">HERE</a></p><p><br /></p><p>Chicago Title has been in the business for 70yrs & is one of the top 4 insurers in North America with aprox 20% of the market share. When they looked through their records between the 1960's & 2019 they could only find evidence of 2 frauds having taken place (impacting their clients) during that timeframe. From 2019 to present day there are almost 100! That is just their company!</p><p><br /></p><p>They are actively lobbying stakeholders like the Land Registry, the Mortgage Industry, the Attorney General, and all the various regulatory bodies involved in real estate & mortgage transactions to improve ID authentication.</p><p><br /></p><blockquote><p></p><p class="MsoNormal">ID is garbage. My phone won’t let me in unless it
recognizes my face…and that’s just to use my phone. So why then can I buy a
house with 2 pieces of plastic that are easily faked? With the amount of technology
that is available in 2023, that that is what we are relying on is crazy &
we can’t rely on it anymore. -John Rider, SVP, Chicago Title<o:p></o:p></p><br /><p></p></blockquote><p><br /></p><p>The title industry is covering all the losses - in the billions of dollars, & it's just not sustainable when they're selling policies at $500 a pop!</p><p><br /></p><p>Some insurers have stopped doing private lender deals over $500k - it's not that they're bad - the stress test has pushed many buyers from conventional to private lending out of necessity - it's just that their underwriting standards are significantly different & as a result it can often be easier to perpetrate a fraud with private lending than with a conventional lender.</p><p><br /></p><p>Everyone's afraid right now. And with good reason!</p><p><br /></p><p></p><p class="MsoNormal">I mentioned email hacking in my <a href="http://www.athomeindurhamblog.com/2023/01/fraud.html" target="_blank">FRAUD </a>blog post, but apparently in the
US there was recently a case of voice hacking in the course of a real estate transaction – voice hacking is where they make it sound like
it’s your voice & give fraudulent information/instructions. They can get your voice from your voice mail greeting or a video you post on social media & then use <a href="https://www.theverge.com/2020/7/27/21339898/deepfake-audio-voice-clone-scam-attempt-nisos" target="_blank">Deep Fake Voice Cloning</a> to make it seem like a fraudulent message is from a trusted contact or professional – ponder that for a moment! Like is this seriously real life??????<o:p></o:p></p><p class="MsoNormal"><br /></p><p class="MsoNormal">I typically like to include links when I'm writing, to give you, the reader, another credible source for the information that I'm sharing. But on this subject, until recently, no one was talking about it - not consumers who were getting duped & not the Title industry that was covering the losses. But when an industry insider says these things are happening, to a group of industry professionals, I'm going to take their word for it & help get the message out!</p><br /><p></p><div>Back to the infamous vendor fraud case where Chicago Title is the policy issuer for my next takeaway:</div><div><br /></div><div>The original owners purchased the home for $600k with a title insurance policy that included a 200% inflationary component to it. With this, $600k becomes $1.2M & caps out there.</div><div><br /></div><div>The fraudsters sold their home out from under them for $1.7M.</div><div><br /></div><div>That leaves a $500k shortfall.</div><div><br /></div><div>If the original owners were not able to get their home back, which they will in this particular case, but there are scenarios where they would not (I'm not going to get into that in this post) then that shortfall would be a pretty big problem.</div><div><br /></div><div>So how can we protect ourselves from that kind of shortfall?</div><div><br /></div><div>With something called an <i>Increased Policy Amount Endorsement</i>. You can't buy it after you've experienced a fraud, but you can buy it now to remove that inflationary cap from the policy if you too would have shortfall in the event of a full policy claim</div><div><br /></div><div>With the way real estate values have gone up exponentially over the last 10-15yrs, there's a very good chance that you would not be fully protected by your title insurance in the case of a similar fraud.</div><div> </div><div>This is a newer offering that may not have been available
when you purchased your home originally – if you don’t currently have title
insurance or you don’t have it for the proper value, you can purchase a policy
now to protect yourself</div><div><br /></div><div>Think of it like full replacement value on your car, but for
your home.</div><div><br /></div><div>If I’m understanding correctly, you don’t necessarily need
to get the IPA from the same company that you purchased your original policy
with. A good starting point would be to call the lawyer who closed your property purchase or contact the title company that holds your current policy. Or you could try calling a new title company & explain what you want & they will be able to direct you from there.</div><div><br /></div><div>A quick mention about the Buyers of this fraudulently sold property. They're innocent parties. They bought in good faith, renovated the home & have a contractual obligation for the mortgage on this home. Their own title insurance policy will make them whole. But I bring it up because it's more than just the purchase price. It's all the money they've spent purchasing & renovating & all the expenses they'll incur as a result of no longer legally owning the home, which they will need to be reimbursed for. And if they hadn't purchased title insurance, they would get nothing - but still be on the hook for that mortgage!</div><div><br /></div><div>But of course it's not just vendor fraud that we need to worry about - most title fraud is actually mortgage fraud. Fraudsters putting mortgages on homes & walking away with the money, leaving homeowners holding the bag. There's big money in these frauds & that's why organized crime has gone all in on it. </div><div><br /></div><div>John Rider from <a href="https://chicagotitle.ca/" target="_blank">Chicago Title</a> thinks that if ID authentication requirements are beefed up across the board that it would stop it in it's tracks. And they've put their money where their mouth is & developed an ID Verification Service. They're not the only ones out there with this type of service of course, but the goal for all of them is the same. Stop the Fraud. </div><div><p class="MsoNormal"><o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p><p class="MsoNormal"><o:p>To Re-Cap:</o:p></p><p class="MsoNormal"><o:p>- Protect your identity</o:p></p><p class="MsoNormal"><o:p>- Keep a close eye on your financial affairs - check online statements/summaries regularly</o:p></p><p class="MsoNormal"><o:p>- If you don't already have it, get title insurance</o:p></p><p class="MsoNormal"><o:p>- Check to see if you need an <i>Increased Policy Amount Endorsement</i> on an older policy</o:p></p><p class="MsoNormal"><o:p>- You need BOTH a Lender & Owner policy to be fully protected</o:p></p><p class="MsoNormal"><o:p>- Always confirm information/instructions received via a voice mail or email by contacting the person back at a main number (not the number they've provided in the communication) to ensure that it's valid</o:p></p><p class="MsoNormal"><o:p><br /></o:p></p><p class="MsoNormal"><o:p>Until next time,</o:p></p><p class="MsoNormal"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg85F3c6DUloWFd9y3TDGyM4wdU4Uo-JH7FxaKLU2_FYVbngUvPZvdYKQ97Kc224mDtICMYD9RR1VumU-39LuQmKrYwMgYy1-oZnoE60Qp2Ain2396AfCsJ_mWd0g7n-YVdEwROSNapQcWVjcOnkQ-c9LsziK_iG0CBwrHKUO8090PUq4CDn0b692L_/s406/Kelly.png" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="251" data-original-width="406" height="115" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg85F3c6DUloWFd9y3TDGyM4wdU4Uo-JH7FxaKLU2_FYVbngUvPZvdYKQ97Kc224mDtICMYD9RR1VumU-39LuQmKrYwMgYy1-oZnoE60Qp2Ain2396AfCsJ_mWd0g7n-YVdEwROSNapQcWVjcOnkQ-c9LsziK_iG0CBwrHKUO8090PUq4CDn0b692L_/w186-h115/Kelly.png" width="186" /></a></div><br /><o:p><br /></o:p><p></p></div>Kelly Baynehttp://www.blogger.com/profile/10346740244333549143noreply@blogger.com0tag:blogger.com,1999:blog-2679791478468988480.post-68136142170439857692023-02-16T09:17:00.001-08:002023-03-28T11:58:05.269-07:00Multiple Offers in 2023...so far<p> 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!</p><p><br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh95Ok-PdlD2Z84Nh-7xwxv9xBrYySKZ3zziaaRVEYFbH8yS6F8A0xIw6I5goG2bLvomE-x4PlI_V9066UDxHjNbfIQ5oOjxKXT5RyVeEjLPuSXoVnXzX5LI6JetZ3W7kvTAa_tZKYIV7bCTjSWkMEFhU1acQZbAVPlpiWIUW8VPa94KtAmDh1fTTXf/s2121/iStock-1227327057.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1414" data-original-width="2121" height="266" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh95Ok-PdlD2Z84Nh-7xwxv9xBrYySKZ3zziaaRVEYFbH8yS6F8A0xIw6I5goG2bLvomE-x4PlI_V9066UDxHjNbfIQ5oOjxKXT5RyVeEjLPuSXoVnXzX5LI6JetZ3W7kvTAa_tZKYIV7bCTjSWkMEFhU1acQZbAVPlpiWIUW8VPa94KtAmDh1fTTXf/w400-h266/iStock-1227327057.jpg" width="400" /></a></div><br /><p>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 <a href="http://email.em.realmmlp.ca/c/eJwdjsFuwyAQRL8GHxHsAoGDD4nSXNpDVfUHAC-1FTCW7UT135dUGulJc3gz1EtzMlqgBNsNPSaLWndTDwJQgNSA0irLlUgqJgsmInqbiClBha_kcyl54dF3Y2-GCJggqSYTQ5AYnEyuKbSx1gjT5X7c94XhmcGt5Yl8r2ud91ryxmfaW_cxPanh0__Q9uIj5Cn-9_Od-235ZXh7p4PhVYMUOpEN-uQVObLCKgcuuTAYH2VgYM5LG7t-f71durU_6mMda3k9v1POR_DHTDzW8gc1LkvJ">HERE</a></p><p> </p><p>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…</p><p> <span></span></p><a name='more'></a><p></p><p>Other 3bed/2bath/single garage bungalows (in various conditions) in the immediate area sold in the range of $575k to $750k since Sept 1<sup>st</sup>. In fact, something far more updated, with the same specs, just sold in the area last week for $725k!</p><p> </p><p>They listed at $749k & got $725k & Laguna listed at $549k & got $747k with a ton of cosmetic work that still needs to be done!</p><p> </p><p>Which strategy would you say worked better for the seller?</p><p> </p><p>So that’s the story of Laguna. But there are many other stories out there right across the Greater Golden Horseshoe Area. Some listed close to market value & getting less (or sometimes slightly more through multiple offers), & some grossly under-priced & achieving the same thing or way more. Confusing? Yes it is, lol!</p><p> </p><p>Perhaps adding to the confusion is the fact that the average price in Durham was also up slightly in January along with many of our other key metrics – see the full breakdown <a href="https://www.facebook.com/HomeInDurham/posts/pfbid028TMVudKKCZTK4EaAdFDiQ5syELF398LXBS6ip58KvCwGHr6n9XG5dBnmJyioLGMml">HERE</a></p><p><br /></p><blockquote><p>The reason why a home won't sell is that it is either priced incorrectly or poorly presented<span> </span><span> </span><span> </span> <span> <span> </span> <span> <span> </span> </span></span>-Quote from a real estate book written in the '70s (nothing's changed since)</p></blockquote><p><br /></p><p>Other interesting facts are:</p><p> </p><p>Of the 38 detached homes listed in Oshawa, Clarington & Whitby in the past 2 days, 17 are holding offers. Half of the remaining are asking for a minimum of 24-48hrs irrevocable (time to respond to the offer, in hopes that more offers will come in to compete). And we've seen double digit offer counts on many homes so far this week as well.</p><p> </p><p>In Oshawa there have been 7 freehold homes listed under $600k that have sold so far this month, & the list-to-sold ratio (percentage of the list price that a home sells for) was between 100% & 147%.</p><p> </p><p>The one that sold for 147% was purchased in 2019 for $286k, then fully renovated & sold for $735k via a bully offer last week (originally listed at $499k). Would they have achieved the same results if they’d chosen a different listing strategy? We’ll never know…Interesting to note that even though they did a beautiful renovation, & it had all the same specs, they still didn’t get as much as Laguna did, lol! In all fairness, they did do well for the central Oshawa location!</p><p> </p><p>The one that sold for 100% (actually 100%+$2K) was purchased in 2021 for $550k & sold for $521k yesterday after being on the market since May…another central Oshawa location, but they did NOT do well & they tried every strategy they could think of in almost 9mos on the market!</p><p> </p><p>Sooooooo…all that being said, CONTEXT is what is needed to navigate this market & any market, really! Whether it’s a seller’s, buyer’s or a balanced one, looking beyond the surface is what will serve you best. And the news headlines & social media posts that you’re reading probably aren’t doing that! Multiple offers & a high percentage over the list price sounds great (or scary depending on which side of the table you’re on) but dig a little deeper & it’s possibly a much different story.</p><p> </p><p>I’ve often found recently that the selling price is at or below what the sellers purchased it for (if they purchased in the last couple of years), & that certainly changes things! Like the one I wrote about above, & there’s another one in Courtice that comes to mind, which sold at the end of January. The home was purchased in August of 2022 & then money was spent on renovations. I ballpark their losses at more than $60k once you factor in selling costs, renovation costs & a selling price that was less than what they purchased for! Painful!</p><p> </p><p>We’re living in confusing times, that’s for sure! One thing is for certain though, when a seller gets multiple offers, it gives them peace of mind that they have achieved the highest price that their largest asset will command (at a given moment in time) & if they’re in a situation where every dollar counts, that peace of mind is priceless!</p><p> </p><p>And for those who say it’s an unethical practice, it’s important to remember that the listing agent works for the seller. Owes fiduciary duties to the seller. Their job is to get the seller the highest price that the market will bear. This listing strategy has proven time & again, over many years, to be the most effective at achieving that. And even when it doesn’t “work” it IS actually working! Because of the message that delivers… <span face="'Segoe UI Emoji',sans-serif">😉</span></p><p><br /></p><p> </p><p class="MsoNormal">
</p><p>Until next time,<br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjXzXWkEXLisDRZ2zlaSBx--_3tG6HvcqLOookbi9bVzaPBEnttT_1FKPNjZXONRrrILVZdHL4vS5PtC301yagRKr06HfP1u7CcdimnnA5TS9KQPqpLAApj5_XjHPfR4lezVDlZl5NR6cmxKN1ojb-GHBqtWBu412SwydWPkCMA3RG-UWt5LQPnQo2w/s406/Kelly.png" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="251" data-original-width="406" height="96" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjXzXWkEXLisDRZ2zlaSBx--_3tG6HvcqLOookbi9bVzaPBEnttT_1FKPNjZXONRrrILVZdHL4vS5PtC301yagRKr06HfP1u7CcdimnnA5TS9KQPqpLAApj5_XjHPfR4lezVDlZl5NR6cmxKN1ojb-GHBqtWBu412SwydWPkCMA3RG-UWt5LQPnQo2w/w155-h96/Kelly.png" width="155" /></a></div><br />Kelly Baynehttp://www.blogger.com/profile/10346740244333549143noreply@blogger.com0tag:blogger.com,1999:blog-2679791478468988480.post-63818547329651849262023-01-31T17:33:00.007-08:002023-03-28T11:58:34.795-07:00FRAUD<p>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!</p><p><br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjm2052GuQ92Vp7CBfM4c9Aqh6HebmH2kuvTz_dXGGQjWUtNtgHBP_QH4RDTVLAMxy9R9MFFjw5G6FU8ZRSABERxnddGVPhLCUXQKStN4mMHfZuk8aj1f2H2Yeo93Mg7T9dDH8d4ih0yeSwvo3sbcwYD0N7W4OJ8_xNfcmFyMTkFjG1bcYwgzgHpKM7/s6016/pexels-leeloo-thefirst-7247414.jpg" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="6016" data-original-width="4016" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjm2052GuQ92Vp7CBfM4c9Aqh6HebmH2kuvTz_dXGGQjWUtNtgHBP_QH4RDTVLAMxy9R9MFFjw5G6FU8ZRSABERxnddGVPhLCUXQKStN4mMHfZuk8aj1f2H2Yeo93Mg7T9dDH8d4ih0yeSwvo3sbcwYD0N7W4OJ8_xNfcmFyMTkFjG1bcYwgzgHpKM7/s320/pexels-leeloo-thefirst-7247414.jpg" width="214" /></a></div><p>FRAUD has been all over the
news for the past few weeks thanks to 2 high profile cases of fraudulent real estate sales<i><b>.</b></i> 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?</p><p class="MsoNormal"><o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<ul style="margin-top: 0cm;" type="disc">
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level1 lfo1;">Regurgitate
the news articles that have already been written with some added commentary?<o:p></o:p></li>
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level1 lfo1;">Provide deeper context beyond the sensationalism of the news headlines?<o:p></o:p></li>
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level1 lfo1;">Lament
the fact that fraud seems absolutely rampant in every facet of our lives (the
over-dramatic hot take)?<o:p></o:p></li>
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level1 lfo1;">Ways
to protect ourselves?<o:p></o:p></li>
</ul>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">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…<o:p></o:p></p>
<p class="MsoNormal"><o:p> <span></span></o:p></p><a name='more'></a><p></p>
<p class="MsoNormal">A day in the life of a REALTOR can run the gamut from simple
deception to outright fraud, and I’m talking about experiencing it <b>NOT </b>perpetrating
it, lol! So we can be a little jaded sometimes…from one end of the spectrum to the
other, here are some examples:<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<ul style="margin-top: 0cm;" type="disc">
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level1 lfo1;">Signing
up on my website with fake credentials costs me money (Google PayPerClick
money) with no hope of recovering it by potentially signing a new client<o:p></o:p></li>
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level1 lfo1;">Signing
my open house sheet with fake credentials creates liability for me &
no recourse for my clients if there is theft at their home during the open
house. The anger & intimidation we're often faced with when we ask for ID is
crazy too!<o:p></o:p></li>
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level1 lfo1;">Lying
about whether you’ve already entered into a representation agreement with another
realtor when you want something from me…costs me time, sometimes
money & worsens my trust issues (lol)<o:p></o:p></li>
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level1 lfo1;">Sending
me fraudulent documents creates liability for me, costs me credibility
with my colleagues if they get past me & wastes my time…and others’
time as well.<o:p></o:p></li>
</ul>
<p class="MsoNormal"><o:p> </o:p></p><p class="MsoNormal"><o:p>Not real estate related, but I ran a softball league for adults for many years & from what they would lie about to how they would behave when they didn't get what they want...talk about a study in human nature, lol!</o:p></p><p class="MsoNormal"><o:p><br /></o:p></p><p class="MsoNormal"><o:p><br /></o:p></p><p class="MsoNormal"><o:p> </o:p><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgqfICrE8ItYHg8ZkCIjx9wtg7sepLKVtqMr0lGVqxstEAjgSAUqOafVc0ctyr9POTBle78rabtCnoiptaUPyDQbISkea2WUALC40pqd9jmPEnqOSmV2lf9caAovMwY4rqD4kPwuDYzcYe_tXzA34WkAIKkspMRo5DxMtAyNb90DEmASgOBKhZMY-Jj/s1024/fraud%20screenshot.JPG" style="margin-left: 1em; margin-right: 1em; text-align: center;"><img border="0" data-original-height="1024" data-original-width="750" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgqfICrE8ItYHg8ZkCIjx9wtg7sepLKVtqMr0lGVqxstEAjgSAUqOafVc0ctyr9POTBle78rabtCnoiptaUPyDQbISkea2WUALC40pqd9jmPEnqOSmV2lf9caAovMwY4rqD4kPwuDYzcYe_tXzA34WkAIKkspMRo5DxMtAyNb90DEmASgOBKhZMY-Jj/w469-h640/fraud%20screenshot.JPG" width="469" /></a></p><br /><p></p>
<p class="MsoNormal"><br /></p>
<p class="MsoNormal">But then we get into the next level crap (which I’m thankful
that I’ve never gotten caught up in)!<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<ul style="margin-top: 0cm;" type="disc">
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level1 lfo1;">Mortgage
Fraud - lots of shady sh#t in this CBC Marketplace investigation - Watch it <a href="https://www.cbc.ca/news/business/marketplace-mortgage-fraud-1.6614132?fbclid=IwAR3zAH1M1E8QoJRgWpdGoJUWHpaBzAOu7UIHUG0KohN_44XpVI95fcD2b5A" target="_blank">HERE </a></li></ul>
<ul style="margin-top: 0cm;" type="disc">
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level1 lfo1;">Hacking
of lawyer and/or mortgage broker email addresses in order to divert
funds/information<o:p></o:p></li>
</ul>
<p class="MsoNormal"><o:p> </o:p></p><p class="MsoNormal"></p><blockquote><o:p>DRAR Members...As many of you know there have been numerous reports of fraudulent activity within the real estate market recently. This is a reminder to please remain very diligent during the transaction. There have been reports of email addresses from lawyers or mortgage brokers being hacked and changed resulting in individuals unknowingly transferring money or information to an incorrect email address. Small changes in an email address are easy to miss and a sneaky way to commit these fraudulent activities. Please encourage your clients to always contact the original source and to contact you as the salesperson if they have concerns during the process <b>- Durham Region Association of REALTORS, January 28, 2023</b></o:p><b> </b></blockquote><p></p>
<p class="MsoNormal"> </p>
<p class="MsoNormal">And then we’ve got the <b>“Big Baddy”</b> which is the <b>FRAUDULENT SALES</b>
that were all over the news earlier this month!<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p>See the stories <a href="https://globalnews.ca/news/9389172/police-allege-toronto-house-sold-without-owner-consent/?fbclid=IwAR3VQEqqPsJsxCssd2NWkkA2gZdzgLgUGlI4ciYlvY0j8kt9t1OqBIaRg-M">HERE</a>
& <span style="mso-spacerun: yes;"> </span><a href="https://www.cbc.ca/news/canada/toronto/fraudulent-home-sale-1.6710868?fbclid=IwAR1oDuQ-frFaaI-ObmMbFkrHurH0gF3m4VFCqWgEyTbDF_YHsbZr7_5JW7g">HERE</a><o:p></o:p></p>
<p class="MsoNormal"><br /></p><p class="MsoNormal">The (short version) of the likely outcome, according to a lawyer,
is as follows:<o:p></o:p></p>
<p><br /></p><p>In this instance, two innocent parties, the original owner and the new
buyers both have a claim to title. So...who ends up with the home? Based on the
Legal Concept of the <em><span face=""Calibri",sans-serif">Indefeasibility
of Title</span></em> it "should" resolve as follows:<span face=""Segoe UI Historic",sans-serif" style="background: white; color: #050505; font-size: 11.5pt;"> </span><o:p></o:p></p><p><span face=""Segoe UI Historic",sans-serif" style="background: white; color: #050505; font-size: 11.5pt;"><br /></span></p>
<ul type="disc">
<li class="MsoNormal" style="color: #050505; mso-list: l1 level1 lfo2; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; tab-stops: list 36.0pt;"><span face=""Segoe UI Historic",sans-serif" style="background: white; font-size: 11.5pt;">The original owners, with the law on their side, go to
court and seek a vesting order that will likely be granted and reclaim
their property. </span><o:p></o:p></li>
</ul>
<ul type="disc">
<li class="MsoNormal" style="mso-list: l2 level1 lfo3; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; tab-stops: list 36.0pt;"><span face=""Segoe UI Historic",sans-serif" style="background: white; color: #050505; font-size: 11.5pt;">The buyers will be made whole financially through their
title insurance which covers these events.</span><o:p></o:p></li>
</ul>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><b>So with all that build up, how do we protect ourselves?</b><o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">As Professionals, we need to KNOW OUR CLIENTS! Because if we’re
not checking out our clients thoroughly & they commit fraud, then it could
be assumed that we were aiding & abetting them. It’s literally our job! Not
to mention the fact that otherwise we could be wasting our time, the other
agent’s time, the seller’s/buyer’s time, risking our reputations, lawsuits etc!
<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">Some best practices would include:<o:p></o:p></p>
<ul style="margin-top: 0cm;" type="disc">
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level1 lfo1;">Pull
parcel registers<o:p></o:p></li>
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level1 lfo1;">Have
a lawyer as part of your team to investigate liens & anything else of
concern on title<o:p></o:p></li>
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level1 lfo1;">Ask
to see original purchase documents<o:p></o:p></li>
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level1 lfo1;">Compare
photo IDs to available pictures elsewhere, such as on social media<o:p></o:p></li>
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level1 lfo1;">Compare
original purchase date to current age of the sellers; ie, a home purchased
in the 1970’s would not be sold by a 30yo without other factors at play than can/should be verified<o:p></o:p></li>
</ul>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">Clients, aka Buyers & Sellers, need to realize &
come to terms with how invasive a process it is to ensure that all parties are
protected. I don’t particularly want to read your separation or custody
agreement (just as an example), but I might need to in order to further your interests or protect the
integrity of the transaction or limit liability. And it should go without saying, but be honest! Behind in your
property taxes or income taxes? The professionals who are assisting you need to
know ALL the facts to best know how to help you!<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">Best practices for you would include:<o:p></o:p></p>
<ul style="margin-top: 0cm;" type="disc">
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level1 lfo1;">Register
a lien on title such as a <a href="https://www.canada.ca/en/financial-consumer-agency/services/mortgages/home-equity-line-credit.html">HELOC</a><o:p></o:p></li>
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level1 lfo1;"><a href="https://www.fsco.gov.on.ca/en/insurance/brochures/Pages/understanding-title-insurance.aspx">Title
Insurance</a> is a MUST<o:p></o:p></li>
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level1 lfo1;">Safeguard
your ID<o:p></o:p></li>
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level1 lfo1;">Know
what your Home Insurance requirements are about leaving your home
unattended<o:p></o:p></li>
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level1 lfo1;">Keep
in touch with your neighbours as they can be an early warning signal that
something is amiss<o:p></o:p></li>
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level1 lfo1;">Follow
other common <a href="https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc284/protect-yourself-against-identity-theft.html">Identity
Fraud Safety Tips</a><o:p></o:p></li>
</ul>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">The conveniences of our digital world also come with downsides & mistakes do happen, & that’s why professionals carry <i>Errors
& Omissions</i> insurance. But if everyone, including YOU is working
together, doing the due diligence that’s needed to safeguard what’s
likely your biggest asset, then you’re certainly lessening the chance that YOUR story is the next sensational news headline…<o:p></o:p></p><p class="MsoNormal"><br /></p><p class="MsoNormal"><b>UPDATE:</b> I wrote a follow up post (of sorts) that dives deeper into Title Insurance with key takeaways on ensuring that you have adequate coverage for existing policies as well as the latest scam to be aware of - read it <a href="http://www.athomeindurhamblog.com/2023/02/title-insurance-did-you-know.html" target="_blank">HERE</a></p>
<p class="MsoNormal"><o:p> </o:p></p><p class="MsoNormal"><o:p><br /></o:p></p>
<p class="MsoNormal">Until next time,<o:p></o:p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiclaBeBak5HfV6WpNy2o7ngOeL79456FYdfEbC5RhFhLjccwMK3skMO0JE3BhAcbJVEpb4skoK2QzmoTvK_UIGn92OVO9CNMPdVijqB-Tk7x_WlR3fOq7LqrV6jtlbTNh3yT1saUpjo-RfbV9zeG7lOWolki1cwiogaYpb72hwpAGhE6iEMkzVgTaF/s406/Kelly.png" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="251" data-original-width="406" height="130" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiclaBeBak5HfV6WpNy2o7ngOeL79456FYdfEbC5RhFhLjccwMK3skMO0JE3BhAcbJVEpb4skoK2QzmoTvK_UIGn92OVO9CNMPdVijqB-Tk7x_WlR3fOq7LqrV6jtlbTNh3yT1saUpjo-RfbV9zeG7lOWolki1cwiogaYpb72hwpAGhE6iEMkzVgTaF/w210-h130/Kelly.png" width="210" /></a></div><br /><p class="MsoNormal"><br /></p>Kelly Baynehttp://www.blogger.com/profile/10346740244333549143noreply@blogger.com0tag:blogger.com,1999:blog-2679791478468988480.post-55828307113055884542022-12-18T10:55:00.002-08:002023-03-28T12:01:42.494-07:00How the MLS® Works<p>The latest Realtor.ca Insights Report was just released & inspired the topic for today's post.</p><p><br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhk_Nd1p4Jn2htxVftl_Fv42HF1Vw_Iea6bDy_ifG-P3nkJqgic9LQqHXR5V0Gd_0rrHaQSBTtzEfPf5Zr3VWF5eMuLkfJYEp-W2MueQvrhe5-VHFpZucBbGU71Wr3F-faCIee1g3u0BGNLJbkPN7kCpy6VTsiT2YCeZeh5ifcX4Gv7op82fZFUopJo/s289/MLS.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="174" data-original-width="289" height="241" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhk_Nd1p4Jn2htxVftl_Fv42HF1Vw_Iea6bDy_ifG-P3nkJqgic9LQqHXR5V0Gd_0rrHaQSBTtzEfPf5Zr3VWF5eMuLkfJYEp-W2MueQvrhe5-VHFpZucBbGU71Wr3F-faCIee1g3u0BGNLJbkPN7kCpy6VTsiT2YCeZeh5ifcX4Gv7op82fZFUopJo/w400-h241/MLS.png" width="400" /></a></div><p>First, let’s start with some messages I’ve received recently:<br /><br /></p>
<blockquote><p>Thought you'd send cheaper places, I see all these on <a href="http://realtor.ca">realtor.ca</a></p></blockquote><p><br /></p>
<blockquote><p>Where is the rest of the information about this house</p></blockquote><p><br /></p>
<blockquote><p>Where are the photos?</p></blockquote>
<p><br />Maybe you’ve had similar thoughts & questions, so let’s talk about how the MLS® works:<span></span></p><a name='more'></a><p></p>
<div><br /></div>
<ul>
<li>When a seller signs listing paperwork they can choose to be “exclusive” or on the MLS® - exclusive listings are NOT on the MLS®</li>
</ul>
<br />
<ul>
<li>MLS® listings are then uploaded to a data system operated by a real estate board – different boards use different data systems</li>
</ul>
<br />
<ul>
<li style="margin-left: 0cm;">Each real estate board then sends the listings to CREA (The Canadian Real Estate Association)</li>
</ul>
<br />
<ul>
<li style="margin-left: 0cm;">CREA owns the MLS® trademark logo & also administers & owns the mls.ca & realtor.ca websites for the public</li>
</ul>
<br />
<ul>
<li style="margin-left: 0cm;">Through data sharing agreements (DDFs), listings are then distributed by CREA to websites like mine, other 3<sup>rd</sup> party sites like Zolo & HouseSigma & of course, Realtor.ca</li>
</ul>
<br />
<ul>
<li style="margin-left: 0cm;">Bottom line is that if it’s an MLS® listing, then that listing is going to be on thousands of sites – YOU choose what site you’re going to look at it on</li>
</ul>
<br />
<ul>
<li style="margin-left: 0cm;">And the information is only as good as what was input into the data system in the first place – which means that if the listing agent didn’t include pictures in their submission, then there aren’t any available. Very rarely it means that there’s a glitch with the data transfer at the board level or at CREA & once that’s fixed, the pictures will be visible.</li>
</ul>
<br />
<ul>
<li style="margin-left: 0cm;">Why would an agent not include pictures? The most common reasons are that the property is tenanted & they haven’t allowed it, or it doesn’t “look” good in some way. No picture of the kitchen or bathrooms? They’re probably not renovated…</li>
</ul>
<br />
<ul>
<li style="margin-left: 0cm;">A few honourable mentions when it comes to “the information is only as good as what was input”:</li>
</ul>
<br />
<ul>
<ul style="margin-top: 0cm;">
<li style="margin-left: 0cm;">We are limited to a list of specific key words when it comes to features & finishes of a property – for example, “granite” is a key word that’s available for countertops, but “quartz” isn’t. These key words are what allow a listing to be captured in a search</li>
</ul>
</ul>
<br />
<ul>
<ul style="margin-top: 0cm;">
<li style="margin-left: 0cm;">Not every field in the data submission form is mandatory – square footage & age of the property, to name a couple – which will make search results incomplete if you try searching by that criteria</li>
</ul>
</ul>
<br />
<ul>
<ul style="margin-top: 0cm;">
<li style="margin-left: 0cm;">In the “remarks” & “extras” sections of a listing we have free reign to write whatever we want</li>
</ul>
</ul>
<br />
<ul>
<ul style="margin-top: 0cm;">
<li style="margin-left: 0cm;">There are 2 “remarks” sections, 1 that the public can see & another that is only for agents</li>
</ul>
</ul>
<br />
<ul>
<ul style="margin-top: 0cm;">
<li style="margin-left: 0cm;">The data system software automatically capitalizes the first letter of each word – that’s not us, lol!</li>
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<li style="margin-left: 0cm;">A human is inputting the listing data into the system, so mistakes do happen</li>
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<p> </p>
<p>So there you have it, a peek behind the curtain of how the MLS® works - from listing paperwork being signed, to the listing ending up in your inbox or on your screen each day! </p><p><br /></p><p>Until next time,</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhgxc83Xpuzo4aZqIYodxIPJGTv2kC2_huABIk860s4diQttmZ6Ne79SQGAO8OAPOegMw1N6PMJDQmoEEvl7mW14_lkaM-noG_U4YpOLH4EJKU23Ef4s-M-iw8wF1POZL1OUL8E_gnIUhqj6A_iTl7JGtkTxe-zdSgVx8OC5NdONzAjkbzXEhVc3dZw/s406/Kelly.png" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="251" data-original-width="406" height="106" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhgxc83Xpuzo4aZqIYodxIPJGTv2kC2_huABIk860s4diQttmZ6Ne79SQGAO8OAPOegMw1N6PMJDQmoEEvl7mW14_lkaM-noG_U4YpOLH4EJKU23Ef4s-M-iw8wF1POZL1OUL8E_gnIUhqj6A_iTl7JGtkTxe-zdSgVx8OC5NdONzAjkbzXEhVc3dZw/w171-h106/Kelly.png" width="171" /></a></div><br /><p><br /></p>
<p><br /><br /></p><p><br /></p><p><br /></p><p>If you’re up for some additional reading, check out these links:<br /><br /></p>
<p>Breaking the month of November down in my <em>Durham Housing Report</em> – <a href="https://www.facebook.com/HomeInDurham/posts/pfbid02tqqgCyYX6cQfZyJAYGkWVfRJ5hXs2oWELD16YR41nT5ii8fPbCQY3zktxKG7yvZBl" rel="noopener" target="_blank">HERE</a></p><p><br /></p>
<p>REALTOR.ca Insights Report – <a href="https://insights.realtor.ca/" rel="noopener" target="_blank">HERE</a></p>
<p> </p><span><!--more--></span><span><!--more--></span><span><!--more--></span><span><!--more--></span>Kelly Baynehttp://www.blogger.com/profile/10346740244333549143noreply@blogger.com0tag:blogger.com,1999:blog-2679791478468988480.post-81973477433535833752022-12-13T14:58:00.001-08:002023-03-28T12:02:21.694-07:00Tales from the Trenches : Theft<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi59ech5yl1E2J_hq9JlFfxivg3VtADPlq7MBDP0f7DVEIozaRCz0cTWxSGv6uTc4e4aaihsQNZWvQaIjFiJwaW9GE5DwGPiJ7eYbACB9uuWqpIL9aZB_qePPVaORDnbGbz_8w7qj0OlW8XZtmyViC7kGwrY1-yV3XqD511rk9tiN7zWxgvSr3Ctxwz/s250/WhatWillTheyThinkofNext-maintitle.PNG.webp" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="192" data-original-width="250" height="307" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi59ech5yl1E2J_hq9JlFfxivg3VtADPlq7MBDP0f7DVEIozaRCz0cTWxSGv6uTc4e4aaihsQNZWvQaIjFiJwaW9GE5DwGPiJ7eYbACB9uuWqpIL9aZB_qePPVaORDnbGbz_8w7qj0OlW8XZtmyViC7kGwrY1-yV3XqD511rk9tiN7zWxgvSr3Ctxwz/w400-h307/WhatWillTheyThinkofNext-maintitle.PNG.webp" width="400" /></a></div><br /><b><span style="font-size: medium;"><br /></span></b><p></p><p><b><span style="font-size: medium;">Seriously!</span></b></p><p><br /></p><p>A colleague recently posted in our realtor group about something that happened to their client who just purchased their home this summer...</p><p><br /></p><p>Someone stole their central air conditioning unit! Cut the wires & hauled it away from the side of their house!</p><p><br /></p><p>And they don't know exactly when it happened, because who's checking the air conditioning unit outside once it's turned off for the season?! Not me, that's for sure!</p><p><br /></p><blockquote><p>The more you know, the more you can protect yourself - share what you know & help protect others too!</p></blockquote><p> </p><p>Here's what I learned from the 55 responses in that thread that made me think that this was a good PSA to share:<span></span></p><a name='more'></a><p></p><p><br /></p><p>Their insurance company is asking for proof that there was an air conditioning unit in the first place - specifically service records & the purchase receipt. They've only lived there since the summer so they don't have those things & the sellers/previous owners probably don't either, because why would you keep them when you don't own the property any more?! The MLS® listing & Home Inspection report both refer to there being a central air conditioning unit, but that doesn't seem to be enough "proof" for the insurance company in this particular case.</p><p><br /></p><p>Apparently this is a fairly common occurrence in the US - they even make cages to put over the units that are then bolted to the cement slab. And we've all heard the stories about thefts at construction sites all over the province, but now they are becoming more prevalent in our developed residential neighbourhoods as well. In the course of this online thread there were incidences reported in a Hamilton neighbourhood this summer & in a "small Ontario town" this past winter. The original incident that prompted this post was in the Warden & St Clair area of Toronto, last week!</p><p><br /></p><p>Building materials, copper wire, mechanical systems...everything is fair game these days! I even heard recently about all the (installed) plumbing being cut out of a vacant house, how crazy is that????</p><p><br /></p><p>So what can we take away from this situation & others like it?</p><p><br /></p><p>Check your property on a regular basis, take pictures of all your stuff, write down serial numbers, keep records of repairs & purchases, if you have the means, install cameras or monitoring systems.</p><p><br /></p><p>If you're purchasing a home, it's a good practice to have pictures & serial numbers of big ticket items that are supposed to be included in the sale, in case the sellers decide to swap them out for something else - yes this does happen!</p><p><br /></p><p>Put away your valuables for showings & open houses because yup, that can be a problem too! :(</p><p><br /></p><p>If it feels like there's a new scam to worry about every day, you're not alone! And it can feel very heavy at times, as we add new things to the already long list of things we have to watch out for...All we can do is the best we can, with the information we've got, & try to stay focused on the good stuff!</p><p><br /></p><p>Stay aware, stay safe & enjoy the ride my friends!</p><p><br /></p><p>Until next time,</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgHincvlqQmXU4xmyiUTdcyZ9M2sdwmyLzrxbyuans8yuTaLxu189pbeJnQ1WjMU3M54I29UCNJ5rqSzBrV7y52V6aCXXJJIzPdquU_EP3jskrE4Mn-ped9N3Ro6Nv-M0CUsWtra3fPcatsXVfktQ5mJH92hWHsUX-J_gA9JrmR4c7ieF9kmjtoMOEg/s406/Kelly.png" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="251" data-original-width="406" height="113" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgHincvlqQmXU4xmyiUTdcyZ9M2sdwmyLzrxbyuans8yuTaLxu189pbeJnQ1WjMU3M54I29UCNJ5rqSzBrV7y52V6aCXXJJIzPdquU_EP3jskrE4Mn-ped9N3Ro6Nv-M0CUsWtra3fPcatsXVfktQ5mJH92hWHsUX-J_gA9JrmR4c7ieF9kmjtoMOEg/w183-h113/Kelly.png" width="183" /></a></div><br /><p><br /></p><p><br /></p>Kelly Baynehttp://www.blogger.com/profile/10346740244333549143noreply@blogger.com0tag:blogger.com,1999:blog-2679791478468988480.post-72199967211798511542022-12-05T21:48:00.001-08:002023-03-28T12:02:53.130-07:00Analyzing an Investment Property<p>I'm keeping today's post short & sweet, but it couldn't be a more important message! </p><p><br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjUsqXBqnH5GIYGrYUWPF3a5romZ9oSxAhzeh2onVE0Y0PBcUuMb6k6hwf6zbBIHQoUrQslxh32PI5dUqfvMknpk-EYZ5zdd0PfSFJzV5ucRneJC1MAY-7Jn5DWE_aD89iYmo21zglnW5b34b_RvhdI_ttYDHNM5xHZd8FP4b6eYy8cMZVQ1F9DxSTV/s300/4-Key-Metrics-Every-Rental-Property-Owner-Should-be-Measuring-300x186.jpg" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="186" data-original-width="300" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjUsqXBqnH5GIYGrYUWPF3a5romZ9oSxAhzeh2onVE0Y0PBcUuMb6k6hwf6zbBIHQoUrQslxh32PI5dUqfvMknpk-EYZ5zdd0PfSFJzV5ucRneJC1MAY-7Jn5DWE_aD89iYmo21zglnW5b34b_RvhdI_ttYDHNM5xHZd8FP4b6eYy8cMZVQ1F9DxSTV/s16000/4-Key-Metrics-Every-Rental-Property-Owner-Should-be-Measuring-300x186.jpg" /></a></div><p>Prices have come down since we hit the peak of the market earlier this year & when you're investing you want to take your advantages when & where you can get them. A "down" market is certainly one of those times. And on the face of it, some of the lower prices look very attractive, BUT now more than ever it's important to know your numbers!</p><p><br /></p><p>This summer for example, a client of mine was looking for an investment property with very specific parameters & after each showing we stood at my car, with my laptop on the hood of it, & plugged the numbers into a spreadsheet I designed for him, to see if the numbers made sense - FOR HIM & what he was trying to accomplish. In the end, none of them did. And that was an important exercise because there was more than 1 occasion where he was ready to move forward on a property until we really broke down the numbers.</p><p><br /></p><p>Analyzing an investment property is more than just the purchase price & interest rate.<span></span></p><a name='more'></a><p></p><p><br /></p><p>The purchase itself would be the:</p><p><br /></p><p>- <b>Negotiated Price</b></p><p><br /></p><p>- <b>Deposit </b>- essentially the downpayment on your downpayment, which is due when an agreement is accepted</p><p><br /></p><p>- <b>Downpayment </b>- balance of the downpayment due at closing - a minimum on a rental would be 20%, but some lenders require more</p><p><br /></p><p>- <b>Closing Costs</b> - aprox 2% of the purchase price which should cover Land Transfer & legal fees</p><p><br /></p><p>- <b>Mortgage</b> - your terms & interest rate</p><p><br /></p><p>Pretty standard, right? But here are some line items that are often overlooked or under estimated when doing an analysis, & should be considered before ever getting to the point of an Agreement of Purchase & Sale:</p><p><br /></p><p><b>Insurance </b>- insurance on a rental property will cost a little more than a regular residential policy & will have stipulations as to the kind of insurance your tenants are required to have, including liability coverage.</p><p><br /></p><p><b>Repairs & Maintenance</b> - a good rule of thumb is to account for 0.25% of the value of the property each year to address any repairs or maintenance that is required PLUS an allotment for capital costs that you would spread out over a period of time, depending on what they are. Need a new roof? You spread that cost out over the lifespan of that roof...</p><p><br /></p><p><b>Vacancy Allowance</b> - another good rule of thumb is to account for a 5% vacancy or credit loss in case you run into difficulty renting the property or a tenant not paying the rent.</p><p><br /></p><p>Other Expenses could include: property management, snow removal, grass cutting, condo fees (if applicable), utilities if you're including them in the rent, water heater rental, property taxes etc...</p><p><br /></p><p><b>What's the total income (actual or potential)? Rent, laundry, parking?</b></p><p><br /></p><p><b>Important Consideration</b> - Are you inheriting a tenant & the rent they are currently paying? Or are you able to set current market rent for a new tenant?</p><p><br /></p><p><b>Quick & dirty calculations:</b></p><p><br /></p><p>Revenue minus Vacancy Allowance = Net Revenue</p><p><br /></p><p>Net Revenue minus Total Expenses = Net Income (NOI)</p><p><br /></p><p><b>Now how does that Net Income (divided by 12) compare to your potential monthly mortgage payment?</b></p><p><br /></p><p>You need to be brutally honest with yourself on every aspect of an investment like this because once you are a landlord, many aspects of your investment are out of your control.</p><p><br /></p><p>I don't say this to scare you off, but to empower you to make the best decisions possible...and I'm not reinventing the wheel here either, google <i>analyzing an investment property</i> & there are 32M hits & many spreadsheets & calculators to choose from. But they're only as good as the information that you put in them...</p><p><br /></p><p>Until next time,</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjD48yKoymk3st0-hrEyKOTEFQiCf6ZnXWEQgcso8JW-lXcdLBB_ObIgmHOgScPEbPC-uor3MaTtJmvJdVQC8pJ1eInqG4JoVCXHs23sfKnP-x5Fq7ZZjzFpmP48JnydDffCh1I0twDWnu2ycCWp27YW3IMAmfSHdROGJxecO5jwFi55suXubxkLOqK/s406/Kelly.png" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="251" data-original-width="406" height="108" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjD48yKoymk3st0-hrEyKOTEFQiCf6ZnXWEQgcso8JW-lXcdLBB_ObIgmHOgScPEbPC-uor3MaTtJmvJdVQC8pJ1eInqG4JoVCXHs23sfKnP-x5Fq7ZZjzFpmP48JnydDffCh1I0twDWnu2ycCWp27YW3IMAmfSHdROGJxecO5jwFi55suXubxkLOqK/w175-h108/Kelly.png" width="175" /></a></div><br /><p><br /></p>Kelly Baynehttp://www.blogger.com/profile/10346740244333549143noreply@blogger.com0tag:blogger.com,1999:blog-2679791478468988480.post-11043558317285448812022-11-28T17:45:00.002-08:002023-03-28T12:03:17.309-07:00Part 3 - What Happens When A House Doesn't Close?<p>This is the 3rd installment in my series on <i>What Happens When A House Doesn't Close</i> - <a href="http://www.athomeindurhamblog.com/2022/10/what-happens-when-house-doesnt-close.html" target="_blank">Part 1</a> detailed what happens when a Buyer breaches their contract & doesn't close & <a href="http://www.athomeindurhamblog.com/2022/10/part-2-what-happens-when-house-doesnt.html" target="_blank">Part 2</a> is about how my Buyer clients benefitted from another Buyer's breached contract. Click through to catch up if you missed them! </p><p><br /></p><p>As I was researching & writing those first 2 posts in the series, I discovered that as the market was accelerating rapidly in 2020, 2021 & early 2022, some sellers were balking at closing because prices had risen so dramatically between the time that they sold their homes & when they were due to close...and they wanted in on that action - in other words, more money! None of my clients encountered that so it wasn't really on my radar screen...apparently it was happening back in 2017 as well, but again, not on my radar!</p><p><br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEictTyPLXKlUHkfyMbDzzmuB4jDojdl-YyJMxjH477W4wwJsiK3GOZrHLuvzyVD59FRr2MCDsxfVw_loikTQ1rkdcJuOlSjR5gIIP9vW2DFdaj-d8fHZ0o9g0zs1BnryqHqbbLKUiUyE0os4DNx9GjI2yZTcvqyGqfXTujf_i1cgEVe93J_1NX1Tc1Z/s600/estate-litigation-lawyers-origin-law-surrey-600x400.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="400" data-original-width="600" height="266" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEictTyPLXKlUHkfyMbDzzmuB4jDojdl-YyJMxjH477W4wwJsiK3GOZrHLuvzyVD59FRr2MCDsxfVw_loikTQ1rkdcJuOlSjR5gIIP9vW2DFdaj-d8fHZ0o9g0zs1BnryqHqbbLKUiUyE0os4DNx9GjI2yZTcvqyGqfXTujf_i1cgEVe93J_1NX1Tc1Z/w400-h266/estate-litigation-lawyers-origin-law-surrey-600x400.jpg" width="400" /></a></div><p><br /></p><p>So what happens when a seller won't close?<span></span></p><a name='more'></a><p></p><p><br /></p><p>It's a breach of contract, just like when a Buyer can't or won't close. And it's the Buyer's damages that are at issue now, the Buyer who needs to be made "whole".</p><p><br /></p><p>First of all, the Buyer needs to be "ready, willing & able" to complete the transaction on the day of closing with their mortgage funds ready to go.</p><p><br /></p><p>Secondly, and this is a tough one because it keeps the Buyer's deposit tied up, the Buyer must NOT sign a <i>mutual release</i>. A <i>mutual release</i> will release the Seller from liability & the Buyer won't be able to collect on their losses/damages from the Seller. (I go more in depth on deposits & mutual releases in <a href="http://www.athomeindurhamblog.com/2022/10/what-happens-when-house-doesnt-close.html" target="_blank">Part 1</a> in case you need a refresher)</p><p><br /></p><p><span style="background-color: white; color: #050505; font-family: inherit; font-size: 11.5pt;">It should go without saying that the paperwork & processes/procedures followed should be perfect in every transaction, but especially in a situation like this, you better pray it is, because Sellers & their lawyer will be looking for loopholes to get out of the deal as unscathed as possible!</span></p><p><span style="background-color: white; color: #050505; font-family: inherit; font-size: 11.5pt;"><br /></span></p><p><span style="background-color: white; color: #050505; font-family: inherit; font-size: 11.5pt;">The real estate lawyer that the Buyer has engaged to close the sale may try a "demand to close" letter but if that doesn't work then it's time to bring in the big guns!</span></p><p><span style="background-color: white; color: #050505; font-family: inherit; font-size: 11.5pt;"><br /></span></p><p><span style="background-color: white; color: #050505; font-family: inherit; font-size: 11.5pt;">A Litigation Lawyer!</span></p><p><span style="background-color: white; color: #050505; font-family: inherit; font-size: 11.5pt;"><br /></span></p><p><span style="background-color: white; color: #050505; font-family: inherit; font-size: 11.5pt;">A litigation lawyer may also start out with a letter that spells out in great detail exactly what is going to happen and what it can cost the sellers. It can scare them into closing whereas a "demand to close" letter from a real estate lawyer might not have enough teeth.</span></p><p><span style="background-color: white; color: #050505; font-family: inherit; font-size: 11.5pt;"><br /></span></p><p><span style="background-color: white; color: #050505; font-family: inherit; font-size: 11.5pt;">If this doesn't work & assuming that the Buyer elects to proceed past this point...</span></p><p><span style="background-color: white; color: #050505; font-family: inherit; font-size: 11.5pt;"><br /></span></p><p><span style="background-color: white; color: #050505; font-family: inherit; font-size: 11.5pt;">The litigation lawyer can assess the situation & determine whether suing for "specific performance" is an appropriate course of action & then apply for a Certificate of Pending Litigation (CPL) & file that against the title to the property, in order to tie up the property so that it cannot be re-sold.</span></p><p><span style="background-color: white; color: #050505; font-family: inherit; font-size: 11.5pt;"><br /></span></p><p></p><blockquote><span style="background-color: white; color: #050505; font-family: inherit; font-size: 11.5pt;">Specific Performance is an equitable remedy in the law of contract, whereby a court issues an order requiring a party to perform a specific act, such as to complete performance of the contract. Essentially the courts force the sale of the property.</span></blockquote><p><br /></p><p>The issue of "specific performance" will depend on the "uniqueness" of the property. This remedy may not be available for an ordinary subdivision home. There needs to be something unique about the property that can't be replicated.</p><p><br /></p><p>If "specific performance" is off the table then it will be about covering the Buyer's losses & damages monetarily.</p><p><br /></p><p>Some examples of this would be:</p><p></p><ul style="text-align: left;"><li>If the Buyer buys another house but had to pay more for it, then the Seller has to make up the difference & any additional costs involved in the purchase</li><li>If the Buyer already gave notice to their Landlord or already sold their existing home, the Seller will have to pay the costs associated with that too</li><li>Legal fees, moving, rent, storage of their belongings, really any & all (reasonable) costs incurred by the Buyers would be on the table when it comes to losses/damages</li></ul><p></p><p></p><p></p><p><br /></p><p>Now let's go back a few steps to the "demand to close" letter. And the letter didn't work. What if the Buyers don't have the time or resources for a fight & just want to move on with their lives & their deposit? Another option could be asking the Sellers to "buy out" the contract in exchange for releasing them from liability.</p><p><br /></p><p>Here are some anecdotal stories from an online Legal Discussion Forum that I belong to:</p><p><br /></p><blockquote><p>Go to court you'll get the deposit back & much more. If the Seller wants to stay out of court make sure he pays back the deposit plus, oh I don't know, let's say $50k and then you'll sigh the mutual release</p></blockquote><p><br /></p><blockquote><p> Seller didn't want to close after deal went firm. Seller ended up paying the Buyer $$$ to get out of the deal.</p></blockquote><p><br /></p><p>And some additional stories from the same Forum where this tactic resulted in the Seller changing their mind & closing:</p><p><br /></p><blockquote><p>Had this once. Buyer's lawyer gave a buy out price + commissions to be paid by Seller in order to get out of the deal. Seller chose to sell</p></blockquote><p><br /></p><blockquote><p>I had this happen to my Buyers a few years ago. The listing brokerage hand delivered an invoice for all of the commissions to the Seller since they had fulfilled their end of the contract. When the Seller saw that he was on the hook for the commission he finally agreed to close.</p></blockquote><p><br /></p><blockquote><p>Most problems can be solved if enough money is thrown at it. They have a firm commitment to sell, they now have to decide if they can buy their way out of it. Commissions to both agents and the Buyer will need to be paid off. My guess is they will rethink once they realize what it will cost.</p></blockquote><p><br /></p><p>Before I wrap this up, I thought I'd share the case law that got me so interested in doing this last installment in the series:</p><p><br /></p><p>Ahmad v Ashask - Specific Performance - Property sold for $865,000 on June 27, 2020...At the start of the lawsuite, in July 2021, the property was valued at $1,170,000</p><p><a href="https://www.canlii.org/en/on/onsc/doc/2022/2022onsc1348/2022onsc1348.html" style="font-family: inherit;">https://www.canlii.org/en/on/onsc/doc/2022/2022onsc1348/2022onsc1348.html</a></p><p><br /></p><p>Dhatt v Beer - Specific Performance - Property sold for $800,000 in 2016 & was valued at more than $1.5M in 2021 when the sale was court ordered.</p><p><a href="https://www.canlii.org/en/on/onsc/doc/2020/2020onsc2729/2020onsc2729.html" style="background-color: white; font-family: inherit; font-size: 11.5pt;">https://www.canlii.org/en/on/onsc/doc/2020/2020onsc2729/2020onsc2729.html</a></p><p><br /></p><p>Cannon v Gerrits - Application for Certificate of Pending Litigation - Sellers trying to get out of the deal over a personal cheque vs certified cheque for the deposit.</p><p><a href="https://www.canlii.org/en/on/onsc/doc/2022/2022onsc851/2022onsc851.html">https://www.canlii.org/en/on/onsc/doc/2022/2022onsc851/2022onsc851.html</a></p><p><br /></p><p>I think it's important to note that scenarios like these usually happen in a rising market, not a falling or stagnant market...but as another colleague recently said "Sellers be crazy these days, prices are falling & it's causing irrational decision making".</p><p><br /></p><p>This post came about because I was finding so many juicy stories & actual case law about nefarious doings by sellers when I was researching & writing the first 2 installments in the series...greed & deceit & large dollar judgements...Oh My! But sometimes bad things happen in life through no fault of anyone involved - think back to the situation in <a href="http://www.athomeindurhamblog.com/2022/10/part-2-what-happens-when-house-doesnt.html" target="_blank">Part 2</a> where my clients were able to take advantage of a Buyer backing out of a purchase due to a medical diagnosis. It was a stroke of luck for my clients & they were so thrilled - not so much for that original Buyer who not only got a life altering medical diagnosis, but then got tangled up in a stressful legal situation & ultimately lost a big chunk of money too!</p><p><br /></p><p>It also brought to mind something that happened years ago, when a co-worker of my husband's tragically passed away in a freak accident a week before he & his family were due to relocate to a new city for work. I remember hearing that the sale of his current home & the purchase of his new home in the new city were both "unwound" & the family stayed put. Such a simple word for what I'm sure was a complicated mess...because despite it being a very sad situation, it was still a breach of contract x 2 & there would have been significant financial consequences for his family at an already difficult time!</p><p><br /></p><p>So there you have it, same topic from 3 different perspectives, all boiling down to the fact that contract law is serious business & trying to get out of a real estate transaction is messy, time consuming & expensive! Tread carefully & in good faith!</p><p><br /></p><p>Until next time,</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgarIhZsBIh-yFPkZG_qgQJ7A9SiUtxeTivdgMSZ7aiWPBpVU5gNi1L_Tl35JUVhj8wLK2YZczfH3ajm2pxxXdFdvzdl5IPzLPmlyDEkh_MBu0xjyFJRaEYu3OMuLTf4O481G2enwBh7sq_ltg6WHM7aRYcL_qdEgLKZzdRjTqIMB3sQL9hWeM2EYGg/s406/Kelly.png" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="251" data-original-width="406" height="136" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgarIhZsBIh-yFPkZG_qgQJ7A9SiUtxeTivdgMSZ7aiWPBpVU5gNi1L_Tl35JUVhj8wLK2YZczfH3ajm2pxxXdFdvzdl5IPzLPmlyDEkh_MBu0xjyFJRaEYu3OMuLTf4O481G2enwBh7sq_ltg6WHM7aRYcL_qdEgLKZzdRjTqIMB3sQL9hWeM2EYGg/w219-h136/Kelly.png" width="219" /></a></div><br /><p><br /></p><p><br /></p><p><br /></p><p><br /></p><p><br /></p><p><br /></p><p>For some additional light reading on the topic (LOL!), check out these articles:</p><p><br /></p><p><a href="https://www.gillmulholland.ca/blog/sellers-breach-of-the-purchase-and-sale-agreement-can-the-innocent-buyer-force-the-sale?fbclid=IwAR0fBajghbjW7vlmV87kG4854zJzPJ4fghlKgpQOlUc8MxuVwUdbo-Z1QLs" style="background-color: #fefefe; font-family: inherit; font-size: 10pt;">https://www.gillmulholland.ca/blog/sellers-breach-of-the-purchase-and-sale-agreement-can-the-innocent-buyer-force-the-sale?fbclid=IwAR0fBajghbjW7vlmV87kG4854zJzPJ4fghlKgpQOlUc8MxuVwUdbo-Z1QLs</a></p><p></p>
<p class="MsoNormal"><span style="background: rgb(254, 254, 254); color: #666666; font-size: 10pt;"><o:p><span style="font-family: inherit;"> </span></o:p></span></p>
<span style="background: rgb(254, 254, 254); color: #666666; font-size: 10pt;"><a href="https://www.tcwalkerlawyers.com/understanding-the-rights-of-a-buyer-in-residential-transactions/?fbclid=IwAR2UZWzaDGEFiXhsSw-3hfgox0iyC8k1x_pb5k5lmZk8Zyiz4oYkWwn9ZWk"><span style="font-family: inherit;">https://www.tcwalkerlawyers.com/understanding-the-rights-of-a-buyer-in-residential-transactions/?fbclid=IwAR2UZWzaDGEFiXhsSw-3hfgox0iyC8k1x_pb5k5lmZk8Zyiz4oYkWwn9ZWk</span></a></span>Kelly Baynehttp://www.blogger.com/profile/10346740244333549143noreply@blogger.com0tag:blogger.com,1999:blog-2679791478468988480.post-59365319407187766862022-11-21T14:15:00.002-08:002023-03-28T12:03:41.475-07:00What is an SPP?<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgtSapia4o-ytLWNg17EdJmP8iK5yHEOtaWcPHUh3_U2lRyPN2pfLyqAoQKJAePm4pxBv4VtI9iBjZCvKBQfv9MUq9YGzDQi-HAYPH5ugO_JpEc2gJZtHX1dJ3Bix4RPlRs4OdWsdrpPtgFDk-fhirCHKF3Y0alju_FO7mipcE7wBrll11fWgDrd6a0/s9000/iStock-1201654087.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="4000" data-original-width="9000" height="178" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgtSapia4o-ytLWNg17EdJmP8iK5yHEOtaWcPHUh3_U2lRyPN2pfLyqAoQKJAePm4pxBv4VtI9iBjZCvKBQfv9MUq9YGzDQi-HAYPH5ugO_JpEc2gJZtHX1dJ3Bix4RPlRs4OdWsdrpPtgFDk-fhirCHKF3Y0alju_FO7mipcE7wBrll11fWgDrd6a0/w400-h178/iStock-1201654087.jpg" width="400" /></a></div><br /><p>In real
estate speak this refers to a “condition” in an offer that makes the offer
conditional on the <i>Sale of the Purchaser’s Property</i> (SPP) or <i>Sale of Buyer's Property</i> (SBP) which is the same thing. </p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><br /></span></p><p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">In a balanced
or Buyers’ market this is a completely normal condition to include if you
already own a home that you will need to sell before closing on a new property.
Normal but not necessarily easy…<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">In a
Sellers’ market, this kind of condition – or really including any kind of
condition, can mean the kiss of death for your offer if you’re competing
against an offer that doesn’t include that or other conditions…<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">When you’re
including conditions in your offer, you’re writing them to YOUR benefit. The
Seller is looking for an offer that benefits THEM. And that’s what <span style="mso-spacerun: yes;"> </span>negotiations are for, to find terms that
everyone can agree to…<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">So let’s
break it down!<span></span></span></p><a name='more'></a><span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p></o:p></span><p></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><b>Advantages
to including an SPP condition in your offer:</b><o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p> </o:p></span></p>
<ul style="margin-top: 0cm;" type="disc">
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level1 lfo1;"><span lang="EN-US" style="mso-ansi-language: EN-US;">Takes the risk out of the
equation for a Buyer who needs to sell their existing home in order to
close on a new home<o:p></o:p></span></li>
<ul style="margin-top: 0cm;" type="circle">
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level2 lfo1;"><span lang="EN-US" style="mso-ansi-language: EN-US;">Depending on the language of
the condition, gives the Buyer an out if they don’t sell their home for
the amount of money they need in order to purchase the home they’re
offering on<o:p></o:p></span></li>
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level2 lfo1;"><span lang="EN-US" style="mso-ansi-language: EN-US;">The Buyers’ deposit is
returned if the condition is not fulfilled or waived<o:p></o:p></span></li>
</ul>
</ul>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><b>Disadvantages
to including an SPP condition in your offer:</b><o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p> </o:p></span></p>
<ul style="margin-top: 0cm; text-align: left;" type="disc">
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level1 lfo1;"><span lang="EN-US" style="mso-ansi-language: EN-US;">Can limit your negotiating
power <o:p></o:p></span></li>
<ul style="margin-top: 0cm;" type="circle">
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level2 lfo1;"><span lang="EN-US" style="mso-ansi-language: EN-US;">When you need the Seller to
agree to something that’s not necessarily in their best interest, you can’t
be quite as cut-throat in negotiations as you may want to be</span></li></ul><ul style="margin-top: 0cm;" type="circle"><li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level2 lfo1;">The seller will want to be
compensated for the perceived risk & aggravation of accepting this
condition & that translates into $$$</li></ul><li>The home you have an accepted
offer on continues to be marketed & shown to other buyers with the
hope that another offer will come in</li>
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level1 lfo1;"><span lang="EN-US" style="mso-ansi-language: EN-US;">Your accepted offer could get “bumped”
by another offer & you will have a pre-determined amount of time to
either “fulfill” the condition, “waive” it, or walk away with your deposit<o:p></o:p></span></li>
<ul style="margin-top: 0cm;" type="circle">
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level2 lfo1;"><span lang="EN-US" style="mso-ansi-language: EN-US;">Typically an “escape clause”
goes hand in hand with an SPP condition & will stipulate how much
time you have to respond after receiving notice that another offer has
come in. And by respond, I mean, <i>Fulfill, Waive or Walk</i>. Anywhere from 24
to 36hrs is the norm.<o:p></o:p></span></li>
</ul>
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level1 lfo1;"><span lang="EN-US" style="mso-ansi-language: EN-US;">You will need to be prepared to
shift into high gear if your existing home is not already on the market
& your offer is accepted<o:p></o:p></span></li>
<ul style="margin-top: 0cm;" type="circle">
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level2 lfo1;"><span lang="EN-US" style="mso-ansi-language: EN-US;">Depending on the language in
the offer you will need to have your home listed on the MLS by a certain
date & you will have a specific amount of time to sell it<o:p></o:p></span></li>
</ul>
</ul>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">That last
point is an important one & there are a number of aspects to this part of
it!<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">A savvy
Buyers’ Agent is going to first “sell” your home to the Listing Agent & the
Sellers, in order to get the SPP condition accepted. Your house is the best
thing since sliced bread & it’s going to sell in a hot minute! And here’s
why….<o:p></o:p></span></p>
<ul style="margin-top: 0cm;" type="disc">
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level1 lfo1;"><span lang="EN-US" style="mso-ansi-language: EN-US;">Detailing a competitive pricing
strategy<o:p></o:p></span></li>
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level1 lfo1;"><span lang="EN-US" style="mso-ansi-language: EN-US;">Detailing a solid marketing
plan<o:p></o:p></span></li>
<li class="MsoListParagraph" style="margin-left: 0cm; mso-list: l0 level1 lfo1;"><span lang="EN-US" style="mso-ansi-language: EN-US;">Detailing an attractive
timeline<o:p></o:p></span></li>
</ul>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">A savvy
Listing Agent is going to carefully assess the property themselves to determine
how confident they are that the property will be sold within the agreed
timeline. If the Buyers’ Agent hasn’t provided all the details, they should be
asking for them – if they don’t agree with the details provided, then they would
be advising the Sellers that the risk/reward just isn’t there for them to
accept the condition.<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">So what
this means is that a Buyer needs to have all their ducks in a row prior to
making an offer if they know that they will want to make it conditional on
selling their existing home. This is not the time to start prepping the house
for sale or “trying out” a higher list price than what their Agent has suggested…those
things need to have already been done & a specific agreed-upon plan in
place that’s just waiting to get executed! <o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">At the best
of times real estate is a high stakes, sophisticated business & adding an
SPP condition into the mix takes it up yet another notch…but if everyone is on
the same page, well prepared & working with a high degree of professionalism,
this is a scenario that can be navigated successfully for everyone involved! We'll just gloss over the nail biting, teeth gnashing & possible day drinking that the agents behind the scenes are doing trying to make it all come together seamlessly, lol! ;)<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">All that being
said, if you don’t like the idea of the Seller having you by the “short &
curlies” in a balanced market, then the answer to that is to sell your home
first! You will know how much money you have to work with, you will already have
a closing date to work towards (or arrange bridge financing for) & you will
be on your own timeline & terms! The only fly in this ointment is that it’s
a bit of a leap of faith that the right house will be available, at the right
time, so that you don’t end up homeless or settling for a house that’s not “the
one”. And this is what makes this scenario not right for everyone…<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">There are
only 2 choices & you have to decide which one you feel most comfortable
with…pick your poison!<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p> </o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">Until next
time,</span></p><p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p></o:p></span></p><div class="separator" style="clear: both; text-align: left;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhhSxT5fV0vzHHeNq4AHzT2pZrIDUxlvqwuJ8Edg50viAjgwafS5cmgqfb8qb9CrdbSBe6bHMXZ6vuXEOTP80keOJ170peEo-8OH5s8c7C7Fl3S751yYsc-KVvku1_9-0VkAJOOOROX9J_sZVEP25hIqPK__UzTEbN-_sKuOF_CyPl4E-PBDwjy6vTI/s406/Kelly.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="251" data-original-width="406" height="108" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhhSxT5fV0vzHHeNq4AHzT2pZrIDUxlvqwuJ8Edg50viAjgwafS5cmgqfb8qb9CrdbSBe6bHMXZ6vuXEOTP80keOJ170peEo-8OH5s8c7C7Fl3S751yYsc-KVvku1_9-0VkAJOOOROX9J_sZVEP25hIqPK__UzTEbN-_sKuOF_CyPl4E-PBDwjy6vTI/w175-h108/Kelly.png" width="175" /></a></div><br /><p></p>Kelly Baynehttp://www.blogger.com/profile/10346740244333549143noreply@blogger.com0tag:blogger.com,1999:blog-2679791478468988480.post-8511383807053419452022-11-14T08:33:00.001-08:002023-03-28T12:04:17.432-07:00Insurance Issues You Should Care About!<p> <strong>Is your HOME under-insured?</strong></p>
<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi4Ku29MMjyq1wX7AN8YoPdce8SvgR0XtEnMi3jrrkxC6z2XNwpgKRqfP1nLlLe7VRBuV9aalEm-0efHOurd6sd-JXB2PCJadwV2ACx2MyX4me4hhaPBKVBuVzih1gAmtFBMm_bRboIUstW_KpQ_7a-fbncOGaGyQi27MsUVkFMf6VwMrLd_RWXZxw2/s2830/pexels-mikhail-nilov-7735629.jpg" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="2830" data-original-width="2442" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi4Ku29MMjyq1wX7AN8YoPdce8SvgR0XtEnMi3jrrkxC6z2XNwpgKRqfP1nLlLe7VRBuV9aalEm-0efHOurd6sd-JXB2PCJadwV2ACx2MyX4me4hhaPBKVBuVzih1gAmtFBMm_bRboIUstW_KpQ_7a-fbncOGaGyQi27MsUVkFMf6VwMrLd_RWXZxw2/s320/pexels-mikhail-nilov-7735629.jpg" width="276" /></a></div><p><br /></p><p>The price per square foot of a new build has increased dramatically over the past couple of years & often our insurance policies are not keeping up!</p>
<p><br /></p><p>Regardless of where you are in the real estate space, this is an important topic to understand & take action on if needed.</p>
<p><strong><br /></strong></p><p><strong>First-Time Home Buyers</strong> – as you are arranging insurance coverage for your new purchase, ensure that you understand & ask how “replacement cost” is determined, “adequate limits” & “co-insurance penalties”</p>
<p><strong><br /></strong></p><p><strong>Homeowners Who Have Renovated</strong> – if you have “forced” appreciation on your home due to renovations then your replacement costs may have changed, depending on how your policy is written</p>
<p><strong><br /></strong></p><p><strong>Homeowners Who Have Re-financed to Pull Equity Out</strong> – make sure you don’t owe more than you are insured for</p>
<p><strong><br /></strong></p><p><strong>Homeowners/Investors Who Have Owned Their Home for a Long Time</strong> – has your “replacement cost” kept in step with market appreciation of your home</p>
<span><a name='more'></a></span><p><br /></p><p>Your insurance broker/agent should be reviewing the replacement cost on your dwelling with you at every renewal. It can be a bit of a lengthy process but SO worth it! And yes it will most likely mean your premiums will go up. BUT if you have a loss & the insurance company deems you under-insured then you will have to come up with part of the rebuild funds.</p>
<p><br /></p><p>An example I’ve recently heard is that if rebuild costs $400k and you’re insured for $300k & you have a fire with repair costs of $100k, the insurance company will say you are 25% under-insured and you need to contribute 25% of the repairs…so insurance would only pay $75k of the $100k in repairs.</p>
<p><br /></p><p>Policies that are “100%” replacement value are usually UP TO a certain amount of money so it’s important to ensure that that amount of money will rebuild your home or address your loss to the same condition it was in when you suffered the loss – for example if you renovated your kitchen you want it rebuilt to the same quality & finishes – not builder grade basic.</p>
<p><br /></p><p>Insurance companies often use automated software to determine replacement costs/premiums, if you find that the numbers they are giving you are not adequate, then escalate things until you do get something that makes sense – advocate for yourself because no one else is looking out for you!</p>
<p><strong><br /></strong></p><p><strong>Remember… “replacement cost”, “adequate limits” & “co-insurance penalties”</strong></p><p><strong><br /></strong></p><p>Until next time,</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhgT8z0kr1k6dORukhItqepv87JcX6eoZGOGKkVjgyjcYtSfPSZb_j14U3AvqcJBquB_LQE_U00aZrygfipl7WAPykyuJ_GWnnhrOFyocp9ss1YWwxtOiM8dzKEAL9RQVBijWWl2gfgex5mt2b0ARkmaIlYpf8J7-hEsArpgEYyVU0-kvcbbTt2RcsQ/s406/Kelly.png" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="251" data-original-width="406" height="116" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhgT8z0kr1k6dORukhItqepv87JcX6eoZGOGKkVjgyjcYtSfPSZb_j14U3AvqcJBquB_LQE_U00aZrygfipl7WAPykyuJ_GWnnhrOFyocp9ss1YWwxtOiM8dzKEAL9RQVBijWWl2gfgex5mt2b0ARkmaIlYpf8J7-hEsArpgEYyVU0-kvcbbTt2RcsQ/w188-h116/Kelly.png" width="188" /></a></div><br /><p><br /></p><p><br /></p><p><br /></p><p><br /></p><p><br /></p><p>Check out other posts I've written related to insurance matters:</p><p><br /></p><p><a href="http://www.athomeindurhamblog.com/2020/01/insurance-conditions-making-comeback-in.html" target="_blank">Are Insurance Conditions Making A Come-Back?</a></p><p><br /></p><p><a href="http://www.athomeindurhamblog.com/2015/01/the-true-costs-of-home-ownership-series.html" target="_blank">The True Costs Of Home Ownership Series - Insurance</a></p><p><br /></p>Kelly Baynehttp://www.blogger.com/profile/10346740244333549143noreply@blogger.com0tag:blogger.com,1999:blog-2679791478468988480.post-3652639912665241842022-11-07T11:07:00.056-08:002023-03-28T12:04:49.479-07:00Property Values are Hyper-Local<p> </p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjcIvBjj8MCKcd2-eppzQQHkhhkvd2jItNQh2dLTRcRMG0s3ldhOlN5hL_psuJWc6Ah9ZshTOCJk7eRjxKaexQeoBlZr-bezxNUOWlpuKKYfN7ZrqNQF9wSatMlVpCUvV-Ybl3bQX6LIpsBapL8NC-SlmsQ9hPh-I9D0NKhow6tZNUZ5OPl-NtiVoDk/s3240/hyper-local-data.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="2160" data-original-width="3240" height="266" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjcIvBjj8MCKcd2-eppzQQHkhhkvd2jItNQh2dLTRcRMG0s3ldhOlN5hL_psuJWc6Ah9ZshTOCJk7eRjxKaexQeoBlZr-bezxNUOWlpuKKYfN7ZrqNQF9wSatMlVpCUvV-Ybl3bQX6LIpsBapL8NC-SlmsQ9hPh-I9D0NKhow6tZNUZ5OPl-NtiVoDk/w400-h266/hyper-local-data.jpg" width="400" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">-Local Matters-</td></tr></tbody></table><p></p><ul style="margin-top: 0cm;" type="disc">
</ul><div>I love getting questions & comments! And in the past month I've gotten a number of questions that follow the same theme...and that is, how does the selling price for a home in one area impact the value of a home in another area? Some of the homes in question are more than a hundred kilometers away from each other!</div><div><br /></div><div>And the answer is that most likely it doesn't! It's not a relevant comparison because each area has it's own little eco-system when it comes to things like supply & demand, property values & more!</div><div><br /></div><div>I'm sharing 1 comment & 1 question in today's post, one is more from the seller perspective & the other from the buyer's - & it's cut & paste directly from my email for the win!</div><div><br /></div><div>The first one, a comment, came after updating someone on the selling price for a home in Wilmot Creek in Newcastle. I had noted how long it had taken to sell & the fact that the selling price was 86% of what they were hoping to get (given their original asking price). The response to this was:</div><div><br /></div><blockquote>Wow! I guess that will be impacting our sale too!</blockquote><p><br /></p><p>And my answer was as follows: <span></span></p><a name='more'></a><p></p><p style="background-color: #fefefe; box-sizing: border-box; color: #666666; font-family: Lato, sans-serif; font-size: 13px; margin: 0px 0px 10px;"><br /></p><p style="background-color: #fefefe; box-sizing: border-box; color: #666666; font-family: Lato, sans-serif; font-size: 13px; margin: 0px 0px 10px;">As for the impacts of the Birch Tree Lane sale, very important to remember that real estate is hyper-local & you have to look at it on an individualized basis. What’s happening in Wilmot Creek will be completely different from where you currently live because 1. The location is different & 2. Unless you’re currently living in a land lease community (like Wilmot Creek), your home’s value will be completely different because it’s a different segment of the market.</p><div><br /></div><div>So how DO you figure out what impacts you & what doesn't? What's relevant to your current situation & what isn't? Besides asking me, of course, lol...I went on to write the following:</div><div><br /></div><div><span face="Lato, sans-serif" style="background-color: #fefefe; color: #666666; font-size: 13px;">What could be helpful for you is to log onto my site & set up a new search for SOLD properties that are like yours, in your area. That will give you a sense of what your current home would sell for in the current market. You can set that up to get a daily or weekly email with all the sold properties in your area that are like your current home so that you can compare. Go to any of my emails with listings in them & click the log in button to get started! If you have any trouble getting that set up, just send me the info & I’d be happy to do it for you!</span></div><div><br /></div><div>In example #2 I was once again updating someone on a selling price - this time for a townhouse in the new waterfront development in Bowmanville. As in the first example, I had noted how long it had taken to sell & the fact that the selling price was 90% of what they were hoping to get - $799k to $720k. The response to this was:</div><div><br /></div><blockquote><div>I wonder if other towns would sell for 720 if they were originally listed at 799</div></blockquote><p> </p><p>I responded with a list of selling prices since the beginning of the year for a 3bed/3bath townhouse in that development showing the downward trajectory from $915k in January (height of the market) to $720k in October & concluded by saying:</p><p><br /></p><p><span face="Lato, sans-serif" style="background-color: #fefefe; color: #666666; font-size: 13px;">Each sale sets a new price standard, so other 3bed/3bath townhouses in the development that are comparable (same finishes, same view etc) are going to be impacted.</span></p><p><span face="Lato, sans-serif" style="background-color: #fefefe; color: #666666; font-size: 13px;"><br /></span></p><p>The follow up question asked was:</p><p><br /></p><blockquote><p>Would it be the same in Brooklin?</p></blockquote><p><br /></p><p>And I responded with:</p><p style="background-color: #fefefe; box-sizing: border-box; color: #666666; font-family: Lato, sans-serif; font-size: 13px; margin: 0px 0px 10px;"><br /></p><p style="background-color: #fefefe; box-sizing: border-box; color: #666666; font-family: Lato, sans-serif; font-size: 13px; margin: 0px 0px 10px;">You can’t really compare Bowmanville to Brooklin. Historically Whitby & Brooklin real estate has commanded a “premium” & homes cost more in those areas.</p><p style="background-color: #fefefe; box-sizing: border-box; color: #666666; font-family: Lato, sans-serif; font-size: 13px; margin: 0px 0px 10px;">Also, the sales I listed in my last email were related to 1 particular development in Bowmanville, so we’re looking at the ACTUAL selling prices for 5 sales since the beginning of the year.</p><p style="background-color: #fefefe; box-sizing: border-box; color: #666666; font-family: Lato, sans-serif; font-size: 13px; margin: 0px 0px 10px;">There are many developments in Brooklin, so we would be looking at the MEDIAN selling price of the 22 sales that have occurred since the beginning of the year…</p><p style="background-color: #fefefe; box-sizing: border-box; color: #666666; font-family: Lato, sans-serif; font-size: 13px; margin: 0px 0px 10px;">Here’s an example using the median selling price of a 3bed/3bath/single car garage townhouse in Brooklin so far this year:</p><p style="background-color: #fefefe; box-sizing: border-box; color: #666666; font-family: Lato, sans-serif; font-size: 13px; margin: 0px 0px 10px;">January - $1.030M (1 sale – actual price)</p><p style="background-color: #fefefe; box-sizing: border-box; color: #666666; font-family: Lato, sans-serif; font-size: 13px; margin: 0px 0px 10px;">February - $1.010M (4 sales - median price)</p><p style="background-color: #fefefe; box-sizing: border-box; color: #666666; font-family: Lato, sans-serif; font-size: 13px; margin: 0px 0px 10px;">March - $999,999 (5 sales - median price)</p><p style="background-color: #fefefe; box-sizing: border-box; color: #666666; font-family: Lato, sans-serif; font-size: 13px; margin: 0px 0px 10px;">April - $920,000 (1 sale – actual price)</p><p style="background-color: #fefefe; box-sizing: border-box; color: #666666; font-family: Lato, sans-serif; font-size: 13px; margin: 0px 0px 10px;">May - $851,450 (6 sales – median price)</p><p style="background-color: #fefefe; box-sizing: border-box; color: #666666; font-family: Lato, sans-serif; font-size: 13px; margin: 0px 0px 10px;">June – No Sales</p><p style="background-color: #fefefe; box-sizing: border-box; color: #666666; font-family: Lato, sans-serif; font-size: 13px; margin: 0px 0px 10px;">July - $850,000 (3 sales – median price)</p><p style="background-color: #fefefe; box-sizing: border-box; color: #666666; font-family: Lato, sans-serif; font-size: 13px; margin: 0px 0px 10px;">August – No Sales</p><p style="background-color: #fefefe; box-sizing: border-box; color: #666666; font-family: Lato, sans-serif; font-size: 13px; margin: 0px 0px 10px;">September – No Sales</p><p style="background-color: #fefefe; box-sizing: border-box; color: #666666; font-family: Lato, sans-serif; font-size: 13px; margin: 0px 0px 10px;">October - $822,500 (2 sales – median price)</p><p style="background-color: #fefefe; box-sizing: border-box; color: #666666; font-family: Lato, sans-serif; font-size: 13px; margin: 0px 0px 10px;">November (to-date) – No Sales</p><p style="background-color: #fefefe; box-sizing: border-box; color: #666666; font-family: Lato, sans-serif; font-size: 13px; margin: 0px 0px 10px;">So the median price from January compared to October in Brooklin is down 20.15% & in that specific development in Bowmanville it’s down 21.31% - which is a very similar decrease in value…BUT a 3bed/3bath townhouse in Brooklin was still $100k more expensive than in that specific Bowmanville development in the month of October.</p><p style="background-color: #fefefe; box-sizing: border-box; color: #666666; font-family: Lato, sans-serif; font-size: 13px; margin: 0px 0px 10px;"><span style="color: black; font-family: "Times New Roman"; font-size: medium;">Interesting to note, when looking at 3bed/3bath townhomes with a single car garage in ALL of Bowmanville, the median price in January was $986k & in October it was $760k - which outperformed the waterfront development values - but it also shows a greater drop in the MEDIAN value - down 22.92% vs 21.31% & vs 20.15% in Brooklin. Still outperforming I guess, lol...</span></p><p style="background-color: #fefefe; box-sizing: border-box; color: #666666; font-family: Lato, sans-serif; font-size: 13px; margin: 0px 0px 10px;"><span style="color: black; font-family: "Times New Roman"; font-size: medium;">The bottom line is you need to compare "like" with "like" because different locations command different prices & different types of homes also command different prices. Digging further for context to go along with the raw numbers, is what gives a more complete picture, & hopefully a better understanding of f what the market is doing specific </span><span style="color: black; font-family: "Times New Roman"; font-size: medium;">responded </span></p><p style="background-color: #fefefe; box-sizing: border-box; color: #666666; font-family: Lato, sans-serif; font-size: 13px; margin: 0px 0px 10px;"><span style="color: black; font-family: "Times New Roman"; font-size: medium;"><br /></span></p><p style="background-color: #fefefe; box-sizing: border-box; color: #666666; font-family: Lato, sans-serif; font-size: 13px; margin: 0px 0px 10px;"><span style="color: black; font-family: "Times New Roman"; font-size: medium;">If you're ready for more context, there are several resources you can take advantage of:</span></p><p style="background-color: #fefefe; box-sizing: border-box; color: #666666; font-family: Lato, sans-serif; font-size: 13px; margin: 0px 0px 10px;"><span style="color: black; font-family: "Times New Roman"; font-size: medium;"><a href="https://search.athomeindurham.ca/StreetMatch" target="_blank">StreetMatch</a> - keep up with real estate directly in your neighbourhood - or any neighbourhood</span></p><p style="background-color: #fefefe; box-sizing: border-box; color: #666666; font-family: Lato, sans-serif; font-size: 13px; margin: 0px 0px 10px;"><span style="color: black; font-family: "Times New Roman"; font-size: medium;"><a href="https://search.athomeindurham.ca/Search/Search?FilterItems=%5B{%22FilterName%22:%22ActualListingStatus%22,%22FilterOperator%22:%22=%22,%22FilterValues%22:%22Sold%22}%5D&page=1&viewType=0&orderBy=0&solds=true" target="_blank">Sold Listings</a> - set up the criteria for what type of sold listings you're interested in & how often you'd like to receive them</span></p><p style="background-color: #fefefe; box-sizing: border-box; color: #666666; font-family: Lato, sans-serif; font-size: 13px; margin: 0px 0px 10px;"><span style="color: black; font-family: "Times New Roman"; font-size: medium;"><a href="https://www.canva.com/design/DAFRUn7d40s/D--Zrl5vMvpJ8h9LqvsX-w/view?utm_content=DAFRUn7d40s&utm_campaign=designshare&utm_medium=link&utm_source=publishsharelink" target="_blank">Monthly Housing Report</a> - this is a personalized report created to your specifications that compares your real estate wish list across different cities/towns/communities in Durham & the surrounding areas - super helpful to see where you'll get the biggest bang for your buck! Example is linked. Get that set up <a href="http://housingreports.wehelp.ca/" target="_blank">HERE</a></span></p><p style="background-color: #fefefe; box-sizing: border-box; color: #666666; font-family: Lato, sans-serif; font-size: 13px; margin: 0px 0px 10px;"><span style="color: black; font-family: "Times New Roman"; font-size: large;"><a href="https://calendly.com/kelly-bayne/30min-call" target="_blank">Book a Discovery Call with Kelly</a> - Sometimes a call is just easier...</span></p><p style="background-color: #fefefe; box-sizing: border-box; color: #666666; font-family: Lato, sans-serif; font-size: 13px; margin: 0px 0px 10px;"><br /></p><p style="background-color: #fefefe; box-sizing: border-box; color: #666666; font-family: Lato, sans-serif; font-size: 13px; margin: 0px 0px 10px;"><span style="color: black; font-family: "Times New Roman"; font-size: medium;">Until next time...keep those questions & comments coming!</span></p><p style="background-color: #fefefe; box-sizing: border-box; color: #666666; font-family: Lato, sans-serif; font-size: 13px; margin: 0px 0px 10px;"></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhA3OJnBw3CryYzJ810ScW3WSm9oYCp3Cw8Vt2fkj0FWFxUTzqEq4A5PFBl4w9tQzDSvE3vZkOFC2kBkH8NKzI1mlh2V6Mf6lVaKg2qjUXFM52ps_jRGzqz5cPCGx4SB9tQix4GCyIPWoguVK5mHEt_LL1DFRG8pJCTq7lAR0Wl9TeYFKuZMskRocfS/s160/Kellys.png" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="107" data-original-width="160" height="107" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhA3OJnBw3CryYzJ810ScW3WSm9oYCp3Cw8Vt2fkj0FWFxUTzqEq4A5PFBl4w9tQzDSvE3vZkOFC2kBkH8NKzI1mlh2V6Mf6lVaKg2qjUXFM52ps_jRGzqz5cPCGx4SB9tQix4GCyIPWoguVK5mHEt_LL1DFRG8pJCTq7lAR0Wl9TeYFKuZMskRocfS/s1600/Kellys.png" width="160" /></a></div><br /><span style="color: black; font-family: "Times New Roman"; font-size: medium;"><br /></span><p></p>Kelly Baynehttp://www.blogger.com/profile/10346740244333549143noreply@blogger.com0tag:blogger.com,1999:blog-2679791478468988480.post-85658796334330826882022-10-31T12:14:00.007-07:002022-11-29T12:19:31.471-08:00Part 2 - What Happens When A House Doesn't Close?<p>This post was inspired by a home in Oshawa that sold firm in May of this year & was due to close in August - but didn't. In September it sold for $85,000 less than it had sold for in May.</p><p><br /></p><p>In <i>Part 1</i> I wrote about what happened when a client of mine breached his<i> Agreement of Purchase & Sale</i> back in 2017 as well as a rundown of all the things that COULD happen when a contract is breached - in case you missed it, go back & read <i>Part 1</i> <a href="http://www.athomeindurhamblog.com/2022/10/what-happens-when-house-doesnt-close.html" target="_blank">HERE</a></p><p><br /></p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiWrdLLALjAPOz2eh2k4AiA9wKRYN4nISg4BpFcJXIR2MbjJ_7_77fH9zTDfP9y22Ic3u9daCaWBM2-KuP5WQwyfFU9HtXITvcvucBAlZNQpTiuISGRym-PFevZe5Jn1-u0hlZc68P_-wBIAiwOVotmwstFsx0rqwYTXWxjWah-GXgs2m6OsHgBSGhm/s365/Theatre%20Masks.png" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="186" data-original-width="365" height="204" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiWrdLLALjAPOz2eh2k4AiA9wKRYN4nISg4BpFcJXIR2MbjJ_7_77fH9zTDfP9y22Ic3u9daCaWBM2-KuP5WQwyfFU9HtXITvcvucBAlZNQpTiuISGRym-PFevZe5Jn1-u0hlZc68P_-wBIAiwOVotmwstFsx0rqwYTXWxjWah-GXgs2m6OsHgBSGhm/w400-h204/Theatre%20Masks.png" width="400" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;"><span style="font-family: inherit;"><span style="text-align: start;"><span style="color: #1f2025;"><span style="background-color: white; font-size: 18px;">Thalia & Melpomene </span></span></span>Comedy & Tragedy/Happy & Sad</span><span style="text-align: start;"><div style="background-color: white; color: #1f2025; font-family: Lora; font-size: 18px; text-align: start;"><span style="background-color: transparent; text-align: center;">(Sums up the 2 different client experiences I've written about in 1 handy dandy picture!)</span></div></span></td></tr></tbody></table><p><br /></p><p>I also mentioned how I had another client who benefitted from a breached contract, so we're going to use that as an example to show how a bad situation can turn into a good one for both a seller & a new buyer when that happens!</p><span><a name='more'></a></span><p><br /></p><p>Sometimes it pays to be 2nd....or 3rd or...whatever number after 1st, who ends up getting the deal done! Side note, I've often seen this hold true when negotiating with an unrealistic seller with an over-priced listing - first offer gets rejected & the buyers move on. But then subsequent offers are similar (or less). IF the seller has been paying attention to what the market (aka buyers) is telling them about the value of their home, then it's one of those subsequent buyers who reaps the benefit of what those previous buyers/offers were trying to accomplish!</p><p><br /></p><p>But I digress...so here's how my client benefitted from another buyer's breach of contract:</p><p><br /></p><p>Back in early 2016 my clients fell in love with a home that had been on the market for some time already - unfortunately they weren't ready to move forward at that particular moment & it was over budget as well, so we had to let it go. A couple of months later, the home sold & then it was really over...</p><p><br /></p><p>Or so we thought! A month after it sold, the listing agent reached out to me because there was going to be an "a<i>nticipatory</i>" breach & they were looking for a new buyer. While my clients still loved the house, they still weren't quite there timing-wise & price was still an issue too, so it was still a no-go for them!</p><p><br /></p><p>Before I go any further, let's talk about the "a<i>nticipatory</i>" breach. It was 2 1/2 months before the scheduled closing date when the buyer received a medical diagnoses that had them deciding that it wasn't a good idea to proceed with purchasing the house. Because it was well before closing, the breach was "anticipated" to happen in the future, rather than being something that was happening "now".</p><p><br /></p><p>You may recall in <i><a href="http://www.athomeindurhamblog.com/2022/10/what-happens-when-house-doesnt-close.html" target="_blank">Part 1</a></i> where I mentioned that it is the seller's responsibility in a situation like this to "<i>mitigate their losses</i>" - meaning minimize - which means getting the house back on the market as soon as possible & at a price that can be defended in court - often this is done by listing it at or close to the price that it originally sold for.</p><p><br /></p><p>Back to the story once again..Fast forward 3 weeks & my clients' ducks were finally in a row & miracle of miracles, the house which had become the bench mark for them with every other house we looked at, was still available! So we took the plunge & submitted an offer!</p><p><br /></p><p>And this is where things got a little different, because we weren't just negotiating with the sellers through the listing agent, but also with the lawyers! And it almost like seemed like the lawyers had the final say! I remember a few times being told "the lawyer's never going to go for that..." And the reason for this goes back to "<i>mitigating the losses</i>" . The sellers weren't free to accept just any offer & then go after the defaulting buyer for the difference. It had to be defensible as the best offer they could get!</p><p><br /></p><blockquote><p><span face="Montserrat, sans-serif" style="background-color: white; color: #262626; font-size: 16px;">Making the seller “</span><i style="color: #262626; font-family: Montserrat, sans-serif; font-size: 16px;">whole</i><span face="Montserrat, sans-serif" style="background-color: white; color: #262626; font-size: 16px;">” means that the seller is entitled to be put in the same position as the seller would have been had the buyer completed the transaction as scheduled.</span></p></blockquote><p> </p><p>In the end we were able to negotiate a $15,000 reduction off of the original selling price! It brought the price more in line with what they wanted to spend & the timing worked perfectly for them as well - it was such a win for them! Everything felt very much "meant to be" for them with this house!</p><p><br /></p><p>Now it's important to note that at that time in 2016 we were not in a declining market, in fact, we were just a couple of months away from the infamous run up in prices we had between the summer of 2016 & spring of 2017! So it's not like the house was worth less than what it sold the first time! It was the fact that the house had been on the market for so long with no other prospects waiting in the wings & the defaulted buyer's deposit was available to bridge the gap between the original selling price & the new lower selling price that enabled this deal to come together for my clients.</p><p><br /></p><p>Individual circumstances play such a big role in real estate & they can't always be duplicated. In this case, length of time on the market + an offer on the table negotiated as much as it could be + a forfeited deposit that would make the sellers "whole" if they accepted the offer = a defensible offer to accept. If any of those circumstances were different, then perhaps there would have been a different outcome...</p><p><br /></p><p>The sellers' damages in this case were the $15,000 difference in selling price + 1 month of carrying costs for the property - because our closing date was 1 month later than the original + additional legal fees to deal with the breach. The defaulted buyer's deposit was $25,000 & the lawyers were very strict about keeping the losses under that amount.</p><p><br /></p><p>When all was said & done, the sellers probably came out ahead by $5,000 & my clients by $15,000 - and that's how my clients benefitted from another buyer's breach!</p><p><br /></p><p>One thing you may have noticed with both of the stories I've shared, is that the losses were small (relatively speaking, they are) & the sellers did not pursue damages beyond the deposit.</p><p><br /></p><p>Coming back to the failed sale that inspired this blog series...we're talking an $85,000 loss on the selling price, plus carrying costs for an additional month & a half between when the house was supposed to close with the original contract, & when it closed with the 2nd contract...plus any number of the damages from the list in <i><a href="http://www.athomeindurhamblog.com/2022/10/what-happens-when-house-doesnt-close.html" target="_blank">Part 1</a></i> that we don't even know about.</p><p><br /></p><p>It seems very unlikely that the sellers got a large enough deposit to cover all of that & I think it would be a safe bet that the sellers will be taking those original buyers to court for the deposit + $85k, + the rest of the damages! I mean, if you're going to court, you might as well make it count, right?!</p><p><br /></p><p>So I thought that this was where I was going to end this - I just have personal experience with the 2 stories, both from the buyer perspective, BUT I've come across some interesting tidbits around what happens when the SELLER refuses to close... so stay tuned for a <a href="http://www.athomeindurhamblog.com/2022/11/part-3-what-happens-when-house-doesnt.html" target="_blank">Part 3</a>!</p><p><br /></p><p>Until next time,</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEikRfLWnIp1NMPDScQVHHtueqj7HMtud6k05EqkbyZFnKzBKKx94KYfhm5DqUNOdh9GL1fF8KTcnS3uMh6Lc0VOR2GnNl8qg__XIYE1ZDlO_BFraRAAw-lBQlLiQB3gU8rk0nTyBOjUbwm3Vp_e-dNdA31lWS8rOHuWa6kSn3_TlIa-bcK32F4ivq3p/s406/Kelly.png" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="251" data-original-width="406" height="108" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEikRfLWnIp1NMPDScQVHHtueqj7HMtud6k05EqkbyZFnKzBKKx94KYfhm5DqUNOdh9GL1fF8KTcnS3uMh6Lc0VOR2GnNl8qg__XIYE1ZDlO_BFraRAAw-lBQlLiQB3gU8rk0nTyBOjUbwm3Vp_e-dNdA31lWS8rOHuWa6kSn3_TlIa-bcK32F4ivq3p/w174-h108/Kelly.png" width="174" /></a></div><br /><p><br /></p><p><br /></p><p><br /></p><p><br /></p>Kelly Baynehttp://www.blogger.com/profile/10346740244333549143noreply@blogger.com0tag:blogger.com,1999:blog-2679791478468988480.post-20643036481284866332022-10-15T10:28:00.047-07:002022-10-31T19:14:21.865-07:00What Happens When A House Doesn't Close?<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhDjQsnAFU1xQC_tf-2GHXJ8NjRfRZ7ja8XLnvZ8x97OkFBBy8Yhn7gZMS0XBap4OuASOE64kHzRYGLlMWuOWd4sfZ1-_9rgvSAbrT4ogzmVdAKUmqqUGM96Kg706WDOT_SVze1nVfjjov-iMT8tisSgUeqjfwaF0o3Xra_ftqtdHaSExRrZfgcDkfZ/s1200/house%20poor.jpg" style="margin-left: 1em; margin-right: 1em;"><span style="font-family: arial;"><img border="0" data-original-height="694" data-original-width="1200" height="231" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhDjQsnAFU1xQC_tf-2GHXJ8NjRfRZ7ja8XLnvZ8x97OkFBBy8Yhn7gZMS0XBap4OuASOE64kHzRYGLlMWuOWd4sfZ1-_9rgvSAbrT4ogzmVdAKUmqqUGM96Kg706WDOT_SVze1nVfjjov-iMT8tisSgUeqjfwaF0o3Xra_ftqtdHaSExRrZfgcDkfZ/w400-h231/house%20poor.jpg" width="400" /></span></a></div><span style="background-color: #fefefe; color: #666666;"><span style="font-family: arial;">This is not a step-by-step guide per se, but
rather some real life scenarios & how they did (or might) play out.</span></span><p></p><p><span style="background-color: #fefefe; color: #666666;"><span style="font-family: arial;"><br /></span></span></p>
<p class="MsoNormal"><span style="font-family: arial;"><span style="background: rgb(254, 254, 254); color: #666666;">This post was inspired by a home in Oshawa
that sold firm in May of this year & was due to close in August - but didn’t. In
September it resold for $85,000 less than what it had sold for in May.</span><span style="background-color: #fefefe; color: #666666;"> <span></span></span></span></p><a name='more'></a><p></p>
<p class="MsoNormal"><span style="background: rgb(254, 254, 254); color: #666666;"><span style="font-family: arial;"><br /></span></span></p><p class="MsoNormal"><span style="background: rgb(254, 254, 254); color: #666666;"><span style="font-family: arial;">To be clear, I wasn’t involved in either the
May or September transactions, but I have been involved in a situation like
this twice before representing the buyer, once when my client benefitted from
another buyer’s breach & the other where my client was the one who breached
the contract.</span></span></p>
<p class="MsoNormal"><span style="background: rgb(254, 254, 254); color: #666666;"><span style="font-family: arial;"><br /></span></span></p><p class="MsoNormal"><span style="background: rgb(254, 254, 254); color: #666666;"><span style="font-family: arial;">Let’s talk first about how things went down
for my client who breached his <i>Agreement of Purchase & Sale</i> contract in
2017.</span></span></p>
<p class="MsoNormal"><span style="background: rgb(254, 254, 254); color: #666666;"><span style="font-family: arial;"><br /></span></span></p><p class="MsoNormal"><span style="background: rgb(254, 254, 254); color: #666666;"><span style="font-family: arial;">His financing fell through at the last minute.
His lawyer & the seller’s lawyer negotiated a 3 week extension. In exchange
for that extension a new closing date was negotiated & the following "penalties":</span></span></p><p class="MsoNormal"><span style="background: rgb(254, 254, 254); color: #666666;"><span style="font-family: arial;"><br /></span></span></p><p class="MsoNormal"></p><ul style="text-align: left;"><li><span style="color: #666666; font-family: arial;"><span style="background-color: #fefefe;">an additional deposit, to be paid immediately</span></span></li><li><span style="color: #666666; font-family: arial;"><span style="background-color: #fefefe;">an "Irrevocable Direction" was agreed to by all parties which stipulated that the original deposit + the additional deposit would be released to the seller immediately if the buyer failed to close the transaction on the new closing date.</span></span></li></ul><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEigS1dw__CLCfgFKx2X8_P9bRHuvlRbNPE465CaQnjAbKXZqS-L7rsLywylfG8ikiYUFqmv12bhuqg7yj18PMJt_cdPGDP8Ynes0rGMk0w2XZmzpp_dyEP9pdqM0wx8avOu1uHIvd9beIw6gSDWHpNO4chZpF3Psi3eYP0VyGu90WRbavzF7DAQRa34/s6625/pexels-rodnae-productions-7841458.jpg" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"> </a></div><p class="MsoNormal"><span style="background: rgb(254, 254, 254); color: #666666;"><span style="font-family: arial;"><br /></span></span></p><p class="MsoNormal"><span style="background: rgb(254, 254, 254); color: #666666;"><span style="font-family: arial;">Long story short, that's exactly what happened...and I consider my client lucky because his losses could have been so much worse! This happened back in 2017, which was the last time we had a declining market & the house ended up selling for less money the 2nd time around.</span></span></p><p class="MsoNormal"><span style="background: rgb(254, 254, 254); color: #666666;"><span style="font-family: arial;"><br /></span></span></p><p class="MsoNormal"><span style="background: rgb(254, 254, 254); color: #666666;"><span style="font-family: arial;">Despite this, my buyer client only lost $20,000. The seller's losses were covered by that $20,000 & everyone moved on.</span></span></p><p class="MsoNormal"><span style="background: rgb(254, 254, 254); color: #666666;"><span style="font-family: arial;"><br /></span></span></p><p></p><p class="MsoNormal"><span style="background: rgb(254, 254, 254); color: #666666;"><span style="font-family: arial;">Typically until there is a new firm & binding deal, the extent of the damages cannot be determined; however due to the circumstances in this particular case, & therefore the way the <i>Direction </i>was written, it released everyone from liability after the forfeiture of the deposits & BEFORE the house went back on the market.</span></span></p><p class="MsoNormal"><span style="font-family: arial;"><span style="background: rgb(254, 254, 254); color: #666666;"><o:p> </o:p></span></span></p><p class="MsoNormal"><span style="font-family: arial;"><span style="background-color: #fefefe; color: #666666;">But when I say the losses could have been
worse, let’s look at exactly how bad it could be – some or all of the following
may be applicable:</span></span></p><p class="MsoNormal"><span style="font-family: arial;"><span style="background-color: #fefefe; color: #666666;"><br /></span></span></p>
<p class="MsoNormal"></p><ul style="text-align: left;"><li><span style="background-color: #fefefe; color: #666666;"><span style="font-family: arial;">The original deposit</span></span></li><li><span style="background: rgb(254, 254, 254); color: #666666;"><span style="font-family: arial;">Any difference in selling price between the 1<sup>st</sup>
contract & 2<sup>nd</sup> contract</span></span></li><li><span style="background: rgb(254, 254, 254); color: #666666;"><span style="font-family: arial;">Financing costs on the current mortgage and
on any bridge financing the seller may have undertaken for the time period between
when the house was supposed to close & when it actually closes</span></span></li><li><span style="background: rgb(254, 254, 254); color: #666666;"><span style="font-family: arial;">Additional carrying costs such as property
taxes, utilities, insurance, costs to maintain the property, for that same time
period</span></span></li><li><span style="background: rgb(254, 254, 254); color: #666666;"><span style="font-family: arial;">Other costs like staging the property again,
moving fees, storage fees, legal fees – including court costs to sue the defaulting
buyer</span></span></li><li><span style="background: rgb(254, 254, 254); color: #666666;"><span style="font-family: arial;">Other impacted closings – if there are other
transaction that were unable to close as a result of this one not closing, the
chain reaction of damages can be significant</span></span></li><li><span style="background: rgb(254, 254, 254); color: #666666;"><span style="font-family: arial;">Commission – the seller’s obligation to the
listing brokerage for commission can be included in the damages</span></span></li></ul><p></p>
<p class="MsoNormal"><span style="font-family: arial;"><span style="background: rgb(254, 254, 254); color: #666666;"><o:p> </o:p></span></span></p><p class="MsoNormal"><span style="font-family: arial;"><span style="background-color: #fefefe; color: #666666;">If there was any negotiating around a closing
extension then there may also be:</span><span style="background-color: #fefefe; color: #666666;"> </span></span></p><p class="MsoNormal"><span style="font-family: arial;"><span style="background-color: #fefefe; color: #666666;"><br /></span></span></p>
<p class="MsoNormal"></p><ul style="text-align: left;"><li><span style="background: rgb(254, 254, 254); color: #666666;"><span style="font-family: arial;">A further non-refundable deposit</span></span></li><li><span style="background: rgb(254, 254, 254); color: #666666;"><span style="font-family: arial;">A negotiated non-refundable fee</span></span></li></ul><div><span style="color: #666666; font-family: arial;"><br /></span></div><div><span style="color: #666666; font-family: arial;">A quick search in the <a href="http://www.canlii.org" target="_blank">CanLII</a> database( which provides access to court judgments from all Canadian courts), will bring up many judgments (in favour of the seller) in the 6 figures for homes in a variety of price points...just type in "buyer fail to close"</span></div><div><span style="color: #666666; font-family: arial;"><br /></span></div><p></p>
<p class="MsoNormal"><span style="font-family: arial;"><span style="background: rgb(254, 254, 254); color: #666666;"></span></span></p><blockquote><span style="font-family: arial;"><b><o:p> </o:p><span style="background-color: transparent; color: #1c1e21;">Largest award to date for "buyer failed to close" is $1.215M</span></b></span></blockquote><p></p>
<p class="MsoNormal"><span style="background-color: #fefefe; color: #666666;"><span style="font-family: arial;"> </span></span></p>
<p class="MsoNormal"><span style="background: rgb(254, 254, 254); color: #666666;"><span style="font-family: arial;">If closing cannot be negotiated, a smart
seller would:</span></span></p><p class="MsoNormal"><span style="background: rgb(254, 254, 254); color: #666666;"><span style="font-family: arial;"><br /></span></span></p><p class="MsoNormal"></p><ol style="text-align: left;"><li><span style="background: rgb(254, 254, 254); color: #666666;"><span style="font-family: arial;">not sign a <i>Mutual Release</i> (which signs away their right to go
after the defaulting buyer for damages) and </span></span></li><li><span style="background: rgb(254, 254, 254); color: #666666;"><span style="font-family: arial;">hire a skilled litigation
lawyer to take over from the real estate lawyer at the 1<sup>st</sup> sign of
trouble.</span></span></li></ol><p></p>
<p class="MsoNormal"><span style="background: rgb(254, 254, 254); color: #666666;"><o:p><span style="font-family: arial;"> </span></o:p></span></p>
<p class="MsoNormal"><span style="background: rgb(254, 254, 254); color: #666666;"><span style="font-family: arial;">A litigation lawyer would prepare a case
& present the seller’s damages to the court & in the best case scenario,
a <i>Summary Judgment</i> would be awarded in the seller’s favour.<o:p></o:p></span></span></p>
<p class="MsoNormal"><span style="background: rgb(254, 254, 254); color: #666666;"><o:p><span style="font-family: arial;"> </span></o:p></span></p>
<p class="MsoNormal"><span style="background: rgb(254, 254, 254); color: #666666;"><span style="font-family: arial;">Once there is a <i>Court Order</i>, the deposit can
be released. This is 1 of 3 ways a deposit can be released from a <i>Trust Account</i>
(typically the listing brokerage’s), the other 2 are by the deal closing &
by a <i>Mutual Release</i> signed by all parties.<o:p></o:p></span></span></p>
<p class="MsoNormal"><span style="background: rgb(254, 254, 254); color: #666666;"><o:p><span style="font-family: arial;"> </span></o:p></span></p>
<p class="MsoNormal"><span style="background: rgb(254, 254, 254); color: #666666;"><span style="font-family: arial;">If the deposit does not cover the total
damages awarded in the <i>Summary Judgment</i> then the outstanding balance would
need to be collected from the defaulted buyer. Which is not as hard as it may
sound. The <i>Judgment</i> is given to the Sherriff who has the authority to seize
any of the defaulted buyer’s assets including bank accounts, initiate wage
garnishments & even force the sale of their existing house (there’s a
process & timelines involved in this) in order to pay off the <i>Judgment</i>.<o:p></o:p></span></span></p>
<p class="MsoNormal"><span style="background: rgb(254, 254, 254); color: #666666;"><o:p><span style="font-family: arial;"> </span></o:p></span></p>
<p class="MsoNormal"><span style="background: rgb(254, 254, 254); color: #666666;"><span style="font-family: arial;"><i>Summary Judgment</i> is fairly quick & simple
if there are no “triable” issues. If the case goes to trial then the process
will take longer, cost more & the outcome may be less certain that all
damages will be recouped..<o:p></o:p></span></span></p>
<p class="MsoNormal"><span style="background: rgb(254, 254, 254); color: #666666;"><o:p><span style="font-family: arial;"> </span></o:p></span></p>
<p class="MsoNormal"><span style="background: rgb(254, 254, 254); color: #666666;"><span style="font-family: arial;"><b>Some Key Take Aways:</b><o:p></o:p></span></span></p><p class="MsoNormal"><span style="background: rgb(254, 254, 254); color: #666666;"><span style="font-family: arial;"><b><br /></b></span></span></p>
<ul style="margin-top: 0cm;" type="disc">
<li class="MsoListParagraph" style="color: #666666; margin-left: 0cm; mso-list: l0 level1 lfo1;"><span style="background: rgb(254, 254, 254);"><span style="font-family: arial;">The
<i>Agreement of Purchase & Sale</i> is a legally binding contract<o:p></o:p></span></span></li>
<li class="MsoListParagraph" style="color: #666666; margin-left: 0cm; mso-list: l0 level1 lfo1;"><span style="background: rgb(254, 254, 254);"><span style="font-family: arial;">The
courts don’t care about the impacts of interest rates or market conditions or
inflation<o:p></o:p></span></span></li>
<li class="MsoListParagraph" style="color: #666666; margin-left: 0cm; mso-list: l0 level1 lfo1;"><span style="background: rgb(254, 254, 254);"><span style="font-family: arial;">Long
closings in a declining market are a BAD idea<o:p></o:p></span></span></li>
<li class="MsoListParagraph" style="color: #666666; margin-left: 0cm; mso-list: l0 level1 lfo1;"><span style="background: rgb(254, 254, 254);"><span style="font-family: arial;">Sellers
must be able to show the courts that they did their best to mitigate
damages which means among other things, the property was relisted
immediately & the listing price/strategy is defensible<o:p></o:p></span></span></li>
<li class="MsoListParagraph" style="color: #666666; margin-left: 0cm; mso-list: l0 level1 lfo1;"><span style="background: rgb(254, 254, 254);"><span style="font-family: arial;">Get
a 2<sup>nd</sup> opinion from a litigation lawyer if your real estate lawyer
says “it’s not worth going to court for, sign a mutual release and just
re-sell it” A recent judgment (Sept22) cost the seller just 2.6% of the
judgment value to go after their defaulted buyer<o:p></o:p></span></span></li>
<li class="MsoListParagraph" style="color: #666666; margin-left: 0cm; mso-list: l0 level1 lfo1;"><span style="background: rgb(254, 254, 254);"><span style="font-family: arial;">Appealing
a low appraisal and/or accepting a price reduction to get a property closed
could be the better/smarter way to go depending on the buyer’s financial
situation – if they don’t have any assets then taking them to court is not
going to help the seller<o:p></o:p></span></span></li>
</ul>
<p class="MsoNormal"><span style="background: rgb(254, 254, 254); color: #666666;"><o:p><span style="font-family: arial;"> </span></o:p></span></p>
<p class="MsoNormal"><span style="background: rgb(254, 254, 254); color: #666666;"><span style="font-family: arial;">Whew! This got very long & involved & there’s a lot to
digest here! <o:p></o:p></span></span></p>
<p class="MsoNormal"><span style="background: rgb(254, 254, 254); color: #666666;"><o:p><span style="font-family: arial;"> </span></o:p></span></p>
<p class="MsoNormal"><span style="background: rgb(254, 254, 254); color: #666666;"><span style="font-family: arial;">Stay tuned for <a href="http://www.athomeindurhamblog.com/2022/10/part-2-what-happens-when-house-doesnt.html" target="_blank">Part 2</a> where I discuss how my
buyer clients were able to take advantage of another buyer’s breach…<o:p></o:p></span></span></p>
<p class="MsoNormal"><span style="background: rgb(254, 254, 254); color: #666666;"><o:p><span style="font-family: arial;"> </span></o:p></span></p>
<span style="background: rgb(254, 254, 254); color: #666666;"><span style="font-family: arial;">Until next time,</span></span><div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhf-Xou8pI9C0TjntTtkIIXatMuhMttIq86FZ_pk8z4UgmsXpCvEYjCV-TWAMRm52_mnBmpT2jwDLGXV_1Ujaj_IcVdY4C4v_OP3jZyo9A6nz7x5-Wfxa5ZYEd1CnMcJG0uQto4qqkexPZaUUAya5vOIQyBuNOVVq57X9U24EJWYxgg_5cG-f0OWj8V/s406/Kelly.png" style="clear: left; float: left; margin-bottom: 1em; margin-left: 1em;"><span style="font-family: arial;"><img border="0" data-original-height="251" data-original-width="406" height="103" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhf-Xou8pI9C0TjntTtkIIXatMuhMttIq86FZ_pk8z4UgmsXpCvEYjCV-TWAMRm52_mnBmpT2jwDLGXV_1Ujaj_IcVdY4C4v_OP3jZyo9A6nz7x5-Wfxa5ZYEd1CnMcJG0uQto4qqkexPZaUUAya5vOIQyBuNOVVq57X9U24EJWYxgg_5cG-f0OWj8V/w167-h103/Kelly.png" width="167" /></span></a></div><span style="font-family: arial;"><br /></span><span face=""Lato",sans-serif" style="background: rgb(254, 254, 254); color: #666666; font-size: 10pt; mso-ansi-language: EN-CA; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin;"><br /></span></div>Kelly Baynehttp://www.blogger.com/profile/10346740244333549143noreply@blogger.com0tag:blogger.com,1999:blog-2679791478468988480.post-50085476956704173322020-01-28T10:39:00.001-08:002022-10-31T19:18:20.339-07:00Insurance Conditions Making A Comeback in 2020?<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjaFZforK1_M4ReYSdSDCYbd39uZbYX9ZIWZl-sfNI8BPRRfWAINFIWcLQi4wnseBNQJy6WHKwGvrrUASOJRik2g1JZo4Q9_vWexPMcWig0zAJQqjpfZsESZd9nyHy3I005BWx1uSE0tx8/s1600/Home+Insurance.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="900" data-original-width="1600" height="360" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjaFZforK1_M4ReYSdSDCYbd39uZbYX9ZIWZl-sfNI8BPRRfWAINFIWcLQi4wnseBNQJy6WHKwGvrrUASOJRik2g1JZo4Q9_vWexPMcWig0zAJQqjpfZsESZd9nyHy3I005BWx1uSE0tx8/s640/Home+Insurance.jpg" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Photo Credit - Architectural Digest</td></tr>
</tbody></table>
<br />
<div class="MsoNormal">
Insurance conditions in an offer have fallen by the wayside
in most cases over the last few years. Especially in an active market where the fewer conditions you have, the more attractive your offer is from the seller's perspective.</div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Not to worry, in specialty-type homes like century
homes, rural, waterfront, even log homes, it’s still the norm…but for the average subdivision home it just hasn't seemed necessary anymore. But that’s changing!</div>
<div class="MsoNormal">
<o:p></o:p></div>
<div class="MsoNormal">
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Here’s a quick sample of some of the asks we’re seeing from insurance
companies:</div>
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<ul>
<li><span style="text-indent: -18pt;">Criminal checks on the buyer (huh?!)</span></li>
<li>Buyer’s credit score</li>
<li><span style="text-indent: -18pt;">Asking agents to make declarations (at great
liability to ourselves) on whether there is knob & tube wiring or galvanized plumbing in a home, when we are not electricians or plumbers, nor do we have x-ray vision to see behind the walls</span></li>
<li>Requesting home inspection reports & adding clauses or limitations to policies based on those reports</li>
<li>There is even a particular insurance company
that will not insure a home where there is a certain breed of dog in residence, namely Pitbulls, Rottweilers or Dobermans.</li>
</ul>
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<span style="text-indent: -18pt;">f The really scary part is if any of the information provided is incorrect,
whether inadvertently or not, a future claim could be denied!</span></div>
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<o:p></o:p></div>
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With so many questions & so many of them seemingly irrelevant, & it being much tougher to qualify in general than it used to be, it would seem that the insurance companies are
getting as bad as the banks at squeezing people! Now apparently some
of this is due to new ratings software, & it’s frustrating for the
front-line insurance agents as well, but the onus is on you to figure this out
because if you need a mortgage to purchase a home, you can’t get it funded
without proof of insurance.<o:p></o:p></div>
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Whether you're talking life insurance, car insurance or home insurance (and I'm sure there's other types of insurance as well), it's all about risk assessment & risk management for the insurance companies. Realistically they are in the business of making money, not paying money out.</div>
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When it comes to home insurance they want to know every single detail they possibly can about the home so that they can assess the chances of you making an insurance claim. And with the new ratings software that I mentioned above, if any of the information is missing, you can't even get a quote! </div>
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They will want to know things like age of the house, condition of & age of all the major components of the house, where is the nearest fire hydrant & fire station, what is the neighbourhood profile when it comes to crime & even other insurance claims in the area...basically the greater the risk of theft, storms or damage, the higher your premiums will be...or they may choose to not insure that home at all. They will even look at what YOUR personal history is when it comes to making insurance claims. <i>Side note, professional appraisers & lenders will factor in neighbourhood profiles as well when determining the value of the home & establishing how much they are willing to lend on it!</i></div>
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They don't like knob & tube or aluminum wiring, cast iron plumbing, mold, oil tanks...and the list probably goes on, but those are some of the big ones off the top of my head! And it doesn't matter if an insurance company has insured a home before, for example, using the same insurance company that the seller used. Once a policy ends, a new policy evaluates a home starting from scratch using the insurance company's most current policies.</div>
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<blockquote class="tr_bq">
Condo owners in a Fort McMurray complex are struggling with a <b>551%</b> increase in their insurance premiums, which still leaves them under insured when it comes to replacement cost - it's an unprecedented situation...</blockquote>
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Take a look at current events & I guess it shouldn't come as that much of a surprise that this issue is rearing its ugly head! </div>
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There are some truly heartbreaking stories coming out of Alberta recently about the continued fall-out from the Fort McMurray fires in 2016. Sky-rocketing insurance premiums are causing people to lose their homes - read about it <a href="https://www.cbc.ca/news/canada/edmonton/fort-mcmurray-bankruptcy-condo-insurance-1.5393448" target="_blank">HERE</a></div>
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<br /></div>
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And of course the wildfires in Australia - Global News has a very insightful article tying what's happening there, with real estate here in Canada - read it <a href="https://globalnews.ca/news/6376312/australia-fires-home-insurance-mortgages-property-values/?fbclid=IwAR2V3LGSejn--MTMAvcikUTitJ5fpoPWKAYMpl7nUzvrhzttGvrcJWTxGI8" target="_blank">HERE</a>. </div>
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Even right here in our own backyard we're seeing the effects of weather events & insurance...after the hard spring we had in 2019, I had a client trying to arrange insurance on a waterfront property & she had to wait as there was a hold on issuing new policies for waterfront because of all the flooding!</div>
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Bottom line…talk to your REALTOR® to see if it makes sense to
include a condition of "arranging insurance satisfactory to you, the buyer, in
your sole & absolute discretion".</div>
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The conditions you include in an offer are YOUR tools for risk management, use them wisely!</div>
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<br /></div>
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Until next time,</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiNp_TeiC4V6S2EdBWCHwGlM_BnwZY0dHTL47D9H_KUIue47bd8ld9PCA9EOVXfMIQfjeL2IwRjHbk-0DWyUKjOizjwMHM2Y58na9BZVa42u0QN5Z8rrSnQ3MVqiBukPAlUFywpHoVZ_sE/s1600/Kelly.png" style="clear: left; margin-bottom: 1em; margin-right: 1em; text-align: center;"><img border="0" height="123" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiNp_TeiC4V6S2EdBWCHwGlM_BnwZY0dHTL47D9H_KUIue47bd8ld9PCA9EOVXfMIQfjeL2IwRjHbk-0DWyUKjOizjwMHM2Y58na9BZVa42u0QN5Z8rrSnQ3MVqiBukPAlUFywpHoVZ_sE/s200/Kelly.png" width="200" /></a></div>
Kelly Baynehttp://www.blogger.com/profile/10346740244333549143noreply@blogger.com5tag:blogger.com,1999:blog-2679791478468988480.post-24106526803735160142018-04-11T19:42:00.003-07:002022-10-31T19:19:43.286-07:00The Value of a View<br />
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<span style="font-family: inherit; font-size: large;"><b><i>What’s in a view? </i></b></span></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiAbqqoqUBFHL1YHSn9Pvsv0Zwzl4tPKtEspJX0fufn8zWzmVaKe4e5UxHQ8BmGPaOWohJ7HDICEyxknubcwMWKVtMq1D5atbRBpiHsppl288Kc-Dk3DEBn9kur8gPOH_QoRFaDzEJ1p84/s1600/22+Butterfield+Cres-197.jpg" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="427" data-original-width="640" height="213" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiAbqqoqUBFHL1YHSn9Pvsv0Zwzl4tPKtEspJX0fufn8zWzmVaKe4e5UxHQ8BmGPaOWohJ7HDICEyxknubcwMWKVtMq1D5atbRBpiHsppl288Kc-Dk3DEBn9kur8gPOH_QoRFaDzEJ1p84/s320/22+Butterfield+Cres-197.jpg" width="320" /></a></div>
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<span style="font-family: inherit;">Well, depending on what type of property
we’re talking about & whether it’s a good view or a “bad” view, whether it’s
something that creates privacy, or the perception of added or decreased value, it
could mean the difference of tens of thousands of dollars! Plus or MINUS!
Or…you could pay a premium for a view that disappears over time or that you
simply can’t recoup the cost of when you sell. Tricky Business!</span></div>
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<span><a name='more'></a></span><span style="font-family: inherit;"><br /></span></div>
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<span style="font-family: inherit;">Builders charge a premium for things like backing onto
greenspace/treed or forested areas, storm water ponds & corner lots, just to
name a few. </span><span style="font-family: inherit;">Problem is, sometimes, like with corner lots for example,
you can’t recoup the actual dollar value of the premium you paid to the builder
for it. A corner lot in a subdivision home will give you extra windows &
light on the one side (as opposed to a view of a brick wall from the house next
door) but many people don’t like the extra traffic that comes along with siding
onto a road. I once sold a property that was both on a corner lot & backed
onto a popular neighbourhood park & it was a surprisingly tough sell! Yes
there were no neighbours behind or next door, but buyers shied away from this
property because of perceived noise & traffic.</span></div>
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<span style="font-family: inherit;">How about a disappearing view? These are a heartbreaker!
Especially if the builder promised one thing when you purchased & then they
changed the “plan”…it’s not like they give you your money back when your view
disappears. All of a sudden greenspace turns into a block of houses &
you’re SOL! I feel so bad for the people on both Tooley Rd & Centerfield Dr
in Courtice who backed onto greenspace for decades, but who now back onto a newly-built
condo townhouse complex…that’s a real tough pill to swallow & has sadly
stripped away some of their homes’ value.<o:p></o:p></span></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjpK56wws_0X_wPmEuoU0-dT610B6jXUux7c7H41fKfVV7uset4PoZsza2uRdDnvgHQnl8O1JC0yqkpVD62m4EcGmsXitCAnAZhPgo1irzWGTRhCo-9JrC-ya1ZzrxuBQA6NX8We9K2WCw/s1600/Back+Facing+Ravine.jpg" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="425" data-original-width="640" height="212" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjpK56wws_0X_wPmEuoU0-dT610B6jXUux7c7H41fKfVV7uset4PoZsza2uRdDnvgHQnl8O1JC0yqkpVD62m4EcGmsXitCAnAZhPgo1irzWGTRhCo-9JrC-ya1ZzrxuBQA6NX8We9K2WCw/s320/Back+Facing+Ravine.jpg" width="320" /></a></div>
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<span style="font-family: inherit;">Ravine lots & lots that have great privacy due to mature
vegetation or landscaping, are both always in demand & will usually command
a premium as well. How much of a premium? $30k or more here in the Durham
region! I’ve sold a few & boy were those HOT properties! Recently an agent
in Brighton (a good hour east of here in Northumberland County) had a ravine
lot home sell for $150k more than a very similar home across the street that
didn’t back onto the ravine…same age, same builder, same finishes, same selling
timeframe…$150,000 difference…just let that settle in for a moment! <o:p></o:p></span></div>
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<span style="font-family: inherit;">Examples of views that can be challenging? And by
challenging I mean that a home will take longer to sell & will most likely
sell for less than a comparable property with a different view:<o:p></o:p></span></div>
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<ul>
<li><span style="font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;"> </span><span style="font-family: inherit; text-indent: -18pt;">Hydro corridors</span></li>
<li><span style="font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;"> </span><span style="font-family: inherit; text-indent: -18pt;">Backing onto a main road</span></li>
<li><span style="font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;"> </span><span style="font-family: inherit; text-indent: -18pt;">Fronting onto a main road if the house is not
well set back from the road</span></li>
<li><span style="font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;"> </span><span style="font-family: inherit; text-indent: -18pt;">Overlooking something less than desirable</span></li>
<li><span style="font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;"> </span><span style="font-family: inherit; text-indent: -18pt;">Backing onto something less than desirable</span></li>
</ul>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjmIo8RtyMuweDXKkt_6UNaGxVV_PH8_2oKqRu_1ntYRruJXzZBzR2rKk876etX531Ki9O0YK7STT7nunlsKA8OM8eNbl-lNxyoM8epIOOT0HQRyXLvoe3Q5iPxX4AYlK_6ykCJDaewd_E/s1600/100+Roser+Cres-141.jpg" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="427" data-original-width="640" height="213" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjmIo8RtyMuweDXKkt_6UNaGxVV_PH8_2oKqRu_1ntYRruJXzZBzR2rKk876etX531Ki9O0YK7STT7nunlsKA8OM8eNbl-lNxyoM8epIOOT0HQRyXLvoe3Q5iPxX4AYlK_6ykCJDaewd_E/s320/100+Roser+Cres-141.jpg" width="320" /></a></div>
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<span style="font-family: inherit;">Now presumably someone who owns a house with a challenging
view like one of the ones that I’ve just listed, likely paid a purchase price
that took that challenge into consideration…not always, but more often than not,
that’s the case. And so selling for a little less, when you paid a little less
in the first place, is easier to come to terms with. For those with the
disappearing view, or a view that that can be subjective as to whether it’s a
good view or a bad view, unfortunately all you can do is be realistic &
work with the hand that you’ve been dealt.<o:p></o:p></span></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj1mwrv9_GT8vlF62QV6ReLFY2mNf6p6BdcBcUxJdTv2DwBdBl1_OW_hhr5YB40PhkcHYDjdm5S_Q2weCxlxhnMqNmdjj-DOnBJ8R9IuUYU_TEYXU3BMXDWiiz5mIniZUQ_hqyyLanwQBk/s1600/78+AINO+BEACH+RD-12.jpg" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" data-original-height="600" data-original-width="900" height="213" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj1mwrv9_GT8vlF62QV6ReLFY2mNf6p6BdcBcUxJdTv2DwBdBl1_OW_hhr5YB40PhkcHYDjdm5S_Q2weCxlxhnMqNmdjj-DOnBJ8R9IuUYU_TEYXU3BMXDWiiz5mIniZUQ_hqyyLanwQBk/s320/78+AINO+BEACH+RD-12.jpg" width="320" /></a></div>
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<span style="font-family: inherit;">Privacy, & what one of my clients calls “elbow room” have become a luxury, at least here in the ‘burbs. Luxury items come with higher
price tags & they don’t tend to go on sale. </span></div>
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<span style="font-family: inherit;"><br /></span></div>
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<span style="font-family: inherit;"><i>And one final thought, the perception of value BECOMES the value & perception can be subjective...as I said at the start of this, it's tricky business!</i></span></div>
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<span style="font-family: inherit;">Until next time,</span></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhtSMXAlDWRyM816CS_Jim4mmKShRB0F1sqteGuH7JhuKGRlXVIm8MaemMH3QzQ55DZpaCMoS25SrbLkOZmEALWdFKLN-k1SgLZ8T40L_RrxT8qCIPxOsWgaWuw5EHfhSkjCh8rpe2snUc/s1600/Kelly.png" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="252" data-original-width="406" height="123" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhtSMXAlDWRyM816CS_Jim4mmKShRB0F1sqteGuH7JhuKGRlXVIm8MaemMH3QzQ55DZpaCMoS25SrbLkOZmEALWdFKLN-k1SgLZ8T40L_RrxT8qCIPxOsWgaWuw5EHfhSkjCh8rpe2snUc/s200/Kelly.png" width="200" /></a></div>
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Kelly Baynehttp://www.blogger.com/profile/10346740244333549143noreply@blogger.com3tag:blogger.com,1999:blog-2679791478468988480.post-15059954946706531662018-03-26T14:44:00.002-07:002022-10-31T19:21:16.301-07:00Pot & Real Estate<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj8JrpLEh4tt16k-qBddu__zrFCtvTSQQ1z9ZFHCtIhSuQMbF9YeQJ5XiXlkaVCfUbTJsoGrwjlXPvQfXzkA6TikQQ2XJVN-nxJtUEEEaxf0e8Sa9mwdnxMMW3J4MlBlsXl6Meqqn_1_2M/s1600/up+in+smoke.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="800" data-original-width="1280" height="250" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj8JrpLEh4tt16k-qBddu__zrFCtvTSQQ1z9ZFHCtIhSuQMbF9YeQJ5XiXlkaVCfUbTJsoGrwjlXPvQfXzkA6TikQQ2XJVN-nxJtUEEEaxf0e8Sa9mwdnxMMW3J4MlBlsXl6Meqqn_1_2M/s400/up+in+smoke.jpg" width="400" /></a></div>
<span style="font-family: inherit;"><span style="background-color: white; color: #1d2129;"><br /></span></span>
<span style="font-family: inherit;"><span style="background-color: white; color: #1d2129;"><br /></span></span>
<span style="font-family: inherit;"><span style="background-color: white; color: #1d2129;">If you were a fly on the wall in a room full of </span><span style="background-color: white; color: #1d2129;">REALTORS</span>®<span style="background-color: white; color: #1d2129;"> when the topic of marijuana & real estate came up</span>, <span style="background-color: white; color: #1d2129;">these are some of the things you would hear...</span></span><br />
<span style="font-family: inherit;"><span style="background-color: white; color: #1d2129;"><br /></span></span>
<blockquote class="tr_bq">
<span face=""helvetica" , "arial" , sans-serif" style="background-color: white; color: #1d2129; font-size: 14px;"><span style="font-size: 13px;">I had one, totally renovated, was raided 10 years back, full home inspection, air quality tests, even infrared imaging and not one A lender would provide a mortgage. Very pretty house, good quality reno.</span></span> </blockquote>
<blockquote class="tr_bq">
<span face="helvetica, arial, sans-serif" style="background-color: white; color: #1d2129; font-size: 13px;">Even B lenders are declining mortgages on former grow ops, even if the property is completely re-mediated. I only know of one lender - other than private lenders- that will do a grow op at this point in time and they will put you through the ringer.</span></blockquote>
<blockquote class="tr_bq">
<span face=""helvetica" , "arial" , sans-serif" style="background-color: white; color: #1d2129; font-size: 13px;">Legal is legal RIGHT? So tell that to my client who leased 2000 sq feet in an Industrial Mall to a legal grow op... RBC called his mortgage, only about a 40-50 % ltv but he had to come up with $600,000 to pay them out.</span></blockquote>
<span><a name='more'></a></span><span style="font-family: inherit;"><br /></span>
<span style="font-family: inherit;">Soooooo, you can imagine my surprise when I read <a href="https://www.repmag.ca/news/why-clients-should-be-encouraged-to-buy-marijuana-grow-ops-239188.aspx">THIS</a> article by another </span><span style="background-color: white; color: #1d2129;">REALTOR</span>®<span style="font-family: inherit;"> suggesting it would be a good idea to steer clients towards purchasing former grow-ops because they can get a "deal" on them. But if you look at the real-life examples above, it's an uphill battle. Sure, I've heard about the odd "unicorn" deal that actually goes through, but that would be the <i>ultra</i> ultimate in exceptions to the rule.</span><br />
<span style="font-family: inherit;"><br /></span>
<span style="font-family: inherit;">With the legalization of cannabis just a few short months away, it feels like there are still so many details to be ironed out, especially when it comes to understanding the potential fall-out on real estate.</span><br />
<span style="font-family: inherit;"><br /></span>
<span style="font-family: inherit;">When pot is involved, one of the biggest & most difficult issues to overcome is financing. Lenders are all about risk management, especially the "big 6" institutions who tend to take the position that they don't need to take on the less than desirable properties or mortgagees. They're looking for the cream of the crop & all the rest can look for alternative options...and don't let the door hit you on the way out!</span><br />
<span style="font-family: inherit;"><br /></span>
<span style="font-family: inherit;">When a live deal goes in front of a lender there are many things that they look at when deciding whether or not they're willing to lend on it - the buyers' financials, the house itself, the neighbourhood, their own internal policies - and if it's an insured mortgage then CMHC or Genworth have their own criteria that need to be met as well.</span><br />
<span style="font-family: inherit;"><br /></span>
<span style="font-family: inherit;"><i>Stigma is the key concept to understand here. </i> A property can be "stigmatized" by any number of things....by being too close to something "undesirable", by having something undesirable happen in the house itself, like a violent act, or an illegal one, or even an environmental issue affecting the land that the house sits on.</span><br />
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</div>
<span style="font-family: inherit;"><br /></span>
<span style="font-family: inherit;">I sold a property last year in an "emerging" neighbourhood in Central Oshawa. Great entry level home & it sold in multiple offers. The appraisal that the buyers' lender ordered had a LOT to say about the neighbourhood & treated it like a defect in the same way that they made note of some issues with the foundation. The lender felt that the neighbourhood was stigmatized & didn't want any part of it. Luckily for my seller clients, the buyers were able to get an "exception" from their lender & the financing went through & the house closed.</span><br />
<span style="font-family: inherit;"><br /></span>
<span style="font-family: inherit;">That was just a neighbourhood issue that needed an exception - lenders take a </span><i style="font-family: inherit;">really</i><span style="font-family: inherit;"> hard line when it comes to former grow-op homes. These properties are stigmatized with a capital S! </span>Re mediated<span style="font-family: inherit;"> or not, and even if it was rebuilt - yes you read that right, even if you tear the house down & rebuild it from the ground up - the stigma is attached to the address & can last forever when it comes to lending on that property. Also there is no Statute of Limitations on disclosure in Ontario so regardless of how many years have passed it always needs to be discussed if the property is being sold.</span><br />
<br />
<blockquote class="tr_bq" style="margin-bottom: .0001pt; margin: 0cm;">
<span face=""Arial",sans-serif" style="color: #1d2129; font-size: 10pt;">We need to deal with the bank
rules on these places. I sold a "grow op" where the tenant was caught
before any damages to home, all signed off on by municipality, required no
remediation, but stigmatized, and banks wouldn't touch it.</span></blockquote>
<br />
<div style="margin-bottom: .0001pt; margin: 0cm;">
<span face=""Arial",sans-serif" style="background: white; color: #1d2129; font-size: 10pt;"><br /></span></div>
<blockquote class="tr_bq" style="margin-bottom: .0001pt; margin: 0cm;">
<span face=""Arial",sans-serif" style="background: white; color: #1d2129; font-size: 10pt;">The issue is,
safe by who's guidelines? Until the big 6 agree it's also safe, home-growers
might as well put money through the shredder. Same result.</span><span style="font-size: 13.5pt;"> <o:p></o:p></span></blockquote>
<br />
<span style="font-family: inherit;">I think we can all understand the dangers to a home that has been used to grow pot in it. We hear about them on the news - police in hazmat suits bringing out hundreds or thousands of plants, electrical systems altered, mold, tons of damage to the interior etc. But what about the "little guy", the one who has a license to grow pot for medical purposes? They're getting caught up in this as well even though what they're doing is legal. Bottom line is, <b><u>the lenders don't care.</u></b></span><br />
<br />
<blockquote class="tr_bq" style="margin-bottom: .0001pt; margin: 0cm;">
<span face=""Arial",sans-serif" style="color: #1d2129; font-size: 10pt;">I had a client who grew over 200
plants, did everything 100% by the book and when it came to selling he was SOL.
Now, I haven't searched records, but if it hasn't happened yet, we will see a
case where someone legally allowed to grow for medical purposes will challenge
a bank on discrimination. An important side note for those worried about grow
ops, you need to change the pre-printed clauses and remove "illegal"
as for many growing or those who have grown in the past, it is 100% legal.</span></blockquote>
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<span face="Arial, sans-serif" style="background-color: white; color: #1d2129; font-size: 10pt;"><br /></span></div>
<blockquote class="tr_bq" style="margin-bottom: .0001pt; margin: 0cm;">
<span face="Arial, sans-serif" style="background-color: white; color: #1d2129; font-size: 10pt;">The banks take
the stance that..Just because it is legal it doesn’t mean that I have to
lend my money and accept a mortgage on it . Be careful advising your Clients ,
this is a new business with new legislation.</span></blockquote>
<br />
<span style="font-family: inherit;">So there's the disconnect right there, in that last quote. Our various levels of government are famous now for not involving ALL the stake-holders in discussions around important legislation like this one. "Unintended </span>Consequences<span style="font-family: inherit;">" was the tagline for real estate in 2017 & perhaps will continue to be in 2018 as we see the impacts that stress-testing uninsured mortgages have on the real estate market & the faster than expected slow down of the economy. Until the big banks get involved in the discussion, look at changing their policies, that disconnect will continue & leave a lot of homeowners in big trouble.</span><br />
<span style="font-family: inherit;"><br /></span>
<span style="font-family: inherit;">More to come on this topic...stay tuned for Tenancy, Insurance & Valuation issues when it comes to Pot & Real Estate.</span><br />
<span style="font-family: inherit;"><br /></span>
<span style="font-family: inherit;">Have a fabulous day!</span><br />
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Kelly Baynehttp://www.blogger.com/profile/10346740244333549143noreply@blogger.com55tag:blogger.com,1999:blog-2679791478468988480.post-5049036384906151532018-01-17T13:36:00.003-08:002022-10-31T19:21:53.724-07:00The Power of Re-Living The Past<div class="MsoNormal">
So I’ve been working on a fun little side project with the CRA
for the past 3mos (and by fun I mean <b>NOT AT ALL</b> fun, lol!)</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg1in62DzPEUaM_ewPM1NVwMWXNOnc86g7KxB_YlF3yPgSpwt7OAtWy0BxekUFt1cLGSvUZ8Oh6J2AV_DPOjKyfkFbFRQBL1cstztxej7agGHyeDAVQPRV0EbENW_zQ8QgMguoQrAdEPIk/s1600/drowning+in+paperwork+2.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="198" data-original-width="286" height="221" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg1in62DzPEUaM_ewPM1NVwMWXNOnc86g7KxB_YlF3yPgSpwt7OAtWy0BxekUFt1cLGSvUZ8Oh6J2AV_DPOjKyfkFbFRQBL1cstztxej7agGHyeDAVQPRV0EbENW_zQ8QgMguoQrAdEPIk/s320/drowning+in+paperwork+2.jpg" width="320" /></a></div>
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But as I’ve gone through tens of thousands of emails, text
messages & files, both electronic & paper, to find the supporting
documentation that I’m looking for, I’ve discovered somewhat of a silver lining
to this whole miserable exercise…<o:p></o:p></div>
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<br /></div><span><a name='more'></a></span>
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And it’s that I’ve gotten to know myself better. Patterns of
behaviour, both good & bad have become crystal clear. Things I couldn’t or
wouldn’t see when I was in the thick of them are so obvious now that I can see
the big picture. Successes, failures, decisions & consequences – they’re
all there in black & white. I’m not going to lie, it’s been more than a
little painful at times, to see that who I think I am is not always who I
actually am. But I think I will be better for it in the end. A better REALTOR®,
a better friend, a better wife. The lessons are there if I’m willing to learn…and
I am. I’ve literally got a blueprint of what to do & what not to do so it
would be foolish not to take advantage of it!<o:p></o:p></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjmWu5D8jbRX0GkBKmLIeyZeOYz1zsK48AnVCrA2gxl9JDfv8QvgUjJLcE3oC8S-rDNbbVFOcD3qSmnmL9RYeTvk47I4Tmy_fx-svFt9SYt30WdeVbte2ZKwGqq33fg8CIXdh_rbIUMFZM/s1600/Don%2527t+look+back+you%2527re+not+going+that+way.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="531" data-original-width="526" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjmWu5D8jbRX0GkBKmLIeyZeOYz1zsK48AnVCrA2gxl9JDfv8QvgUjJLcE3oC8S-rDNbbVFOcD3qSmnmL9RYeTvk47I4Tmy_fx-svFt9SYt30WdeVbte2ZKwGqq33fg8CIXdh_rbIUMFZM/s320/Don%2527t+look+back+you%2527re+not+going+that+way.jpg" width="316" /></a></div>
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I know, I know, they say you’re not supposed to look
backwards, but I think the key is not to unpack & live in the past, just take
the lessons & move on…<o:p></o:p></div>
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January is a time of resolutions, self-improvement & goal
setting for many, so that’s why I thought I’d share this story with you. You
don’t have to go pedal to the metal like I have (thanks to scary deadlines,
lol) but pick a year, and go through it to see what you can learn. Reflect. About
yourself & about the people around you…and then pick another year, and then
another and another & I bet you’ll find your own blueprint! Be bold &
be brave & most of all, take action on what you find!<o:p></o:p></div>
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I’m going to make 2018 my best year yet, how about you?<o:p></o:p></div>
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Have an awesome day!</div>
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Kelly Baynehttp://www.blogger.com/profile/10346740244333549143noreply@blogger.com1tag:blogger.com,1999:blog-2679791478468988480.post-11715147443018090182017-12-11T12:13:00.001-08:002022-10-31T19:22:55.015-07:00The Sold Data Saga...<div>
So you may have heard that the Toronto Real Estate Board (TREB) has lost its <a href="http://www.cbc.ca/news/business/treb-court-ruling-1.4428262">appeal </a>against the Competition Bureau regarding releasing sold data to the public. And my understanding is that they will be appealing again...sigh. It could take another year before we have a decision again & that's very frustrating for both consumers & forward thinking REALTORS<span style="color: #1d2129; font-size: 12px;">®</span>.</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjXm63P-LSSxk9BxquvDyEjnpq2sO81w_8X0qcgdRyXB521Z2qfJyl4Ozy9z9b6pGVWH9b48UkmR_AmnmmEsZSQ7UtuhGeTFF85ABUcY8QaqNZStxvWcp43d67r57z3RbGTTv_3aIl-2w0/s1600/competition2.jpg" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" data-original-height="426" data-original-width="640" height="213" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjXm63P-LSSxk9BxquvDyEjnpq2sO81w_8X0qcgdRyXB521Z2qfJyl4Ozy9z9b6pGVWH9b48UkmR_AmnmmEsZSQ7UtuhGeTFF85ABUcY8QaqNZStxvWcp43d67r57z3RbGTTv_3aIl-2w0/s320/competition2.jpg" width="320" /></a></div>
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<i><b>A few thoughts on this:</b></i></div>
<div>
<ul>
<li>A REALTOR<span style="color: #1d2129; font-family: Times New Roman; font-size: xx-small;"><span style="font-size: 9pt;">®</span></span>'s value is <i>NOT </i>in being the gatekeeper for the sold data, our value is interpreting that data & educating consumers to help them make informed decisions. Taking the raw data & determining how it applies to a property that is to be bought or sold is the difference between success or failure for our clients. </li>
</ul>
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<br /></div><span><a name='more'></a></span>
</div>
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<ul>
<li>We bring additional value through our experiences in different market cycles, continuing education, knowing how & what to do to protect our clients' interests, innovative marketing strategies, our trusted network of contacts who can get done things done for you, when you need them done...guidance, counselling, mediation, helping people make their dreams come true...<i>THIS </i>is the value we bring to the table & the list truly goes on & on!</li>
<li>Am I concerned about the never-ending government intervention in the private sector & free market all in the name of the "common good"? <i>Yes</i>.</li>
</ul>
</div>
<div>
<ul>
<li>Am I questioning the yearly & monthly dues I pay to collect, distribute & access the data in question? <i>Kind of</i>...I have no problem with free public access but <i>MY </i>access to the same information costs BIG BUCKS & the fairness of that gives me pause in this debate.</li>
</ul>
</div>
<div>
<ul>
<li>TREB did not consult with its member REALTORS<span style="color: #1d2129;"><span style="font-size: 9pt;">®</span></span> regarding the first appeal or this one either. The amount of time & money spent fighting this is just mind boggling!</li>
</ul>
</div>
<blockquote class="tr_bq">
<b><i><span style="color: blue;">If we can keep our competitors focused on us while we stay focused on the customer, ultimately we'll turn out alright -Jeff Bezos</span></i></b></blockquote>
<div>
<i><br /></i></div>
<div>
<i>This is by no means a comprehensive analysis of the situation, just a collection of random thoughts that have been percolating in my brain in the past week since the verdict was announced...</i></div>
<div>
<i><br /></i></div>
<div style="text-align: center;">
<i><b>#educate #empower #athomeindurham </b></i></div>
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Have a fabulous day!</div>
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Kelly Baynehttp://www.blogger.com/profile/10346740244333549143noreply@blogger.com0