There is a lot of information out there for first time buyers, but not a lot for second time, or move up buyers. This is because after going through the process once, what else do you need to know? At this point you're a buying expert, right? For all those second, or even third time buyers, we have one word of caution or advice. Don't buy and sell on the same day. You may think that you are being smart and saving money, after all, now you don't have to carry the cost of two properties at the same time, but think again. Sellers have until 6:00 p.m. on the closing day to move out. You could be paying for a moving van to sit loaded and then pay for overtime to unload your furniture. Lawyers have until 5:00 p.m. to register their title documents and afterwards, you still have ...
Advice for Second Time Home Buyers
February 3, 2016
Problems with In Trust Offers
January 28, 2016
In Strong real estate markets, we tend to see more ‘in trust’ offers. What is an ‘in trust’ offer? In trust offers occur when one person buys a property ‘in trust’ for someone else. It sounds simple enough but there are a few problems that can arise. The first problem is the seller does not know who ‘that someone’ else is. The second problem is that the buyer named is not liable for the contract either. Our company does not except ‘in trust’ offers, and neither should you. If someone wants to represent or front another buyer, there is another solution... Let them buy it in their own name. Let them be personally liable to perform and close the contract. Then allow the buyer to transfer his interest to the undisclosed buyer just before closing in the lawyer’s office. It’s simple and you get to protect the seller.
The 65 Cent Dollar
January 18, 2016
How will the Canadian Dollar affect the Toronto Real Estate Market? As you recall, last year we predicted a 65 cent Canadian dollar for 2016. Now, a 65 cent dollar is not bad for everyone. In fact, it’s pretty good when it comes to real estate, and particularly for foreign investors. The low dollar makes buying Real Estate today in Canada cheaper than three years ago. What other country can claim that. What About Canadian Investors? Where is the best place for Canadians to put their money? Should they put it in the bank, at 0% interest? Or is it better to invest it in the stock market which was down over 13% in the last 12 months? Or, in Toronto real estate, which is up 9% on average over the past year. The answer seems obvious. What About the Real Estate Bubble? When you do a little research, there ...
January 2016 Market Forecast
January 7, 2016
In Review Most experts got last year’s forecast for Toronto real estate correct: that there would be no slowdown in sales or prices. But we were the only one to call for a record sales year for TREB and for a growing imbalance in sales between 905 and 416 areas. For 2016, CMHC and all the big banks are calling for lower sales and a slowing of price increases to zero or just the rate of inflation. In fact CMHC says that TREB sales will fall to 87,500 units by 2017 – a 13% decrease. The reasons advanced are that previous price increases have removed buyers from the market along with an expected increase in interest rates. In fact RBC is forecasting that the Bank of Canada five year bond yield will double to 3.3% by year end. In contrast, our forecast focuses on demand and supply issues. While affordability ...
How To Avoid One of the Biggest Buyer Complaints in Real Estate.
December 16, 2015
What is the biggest complaint we hear from buyers? The biggest complaint we hear from buyers is that the newly purchased property is a mess on the final pre-closing visit. The buyer then goes back and re-reads his offer to purchase and sees that his agent has included a clause that the property will be left in ‘broom swept’ condition. This is all well and good, however, what IS the definition of ‘broom swept’? What is the penalty if it is NOT in broom swept condition? Unfortunately for the buyer he cannot refuse to close on the transaction, but a little foresight might have saved the buyer’s angst. This is where a great agent would have helped in drafting the offer. The offer could have included a definition of broom swept. The offer could have also spelled out the penalty if the property was not left clean, say $250. Everyone ...
The Seasonal Rental Market
December 8, 2015
Renting an apartment or a condo used to be a seasonal activity. In Montreal, most people moved on May 1st. In Toronto the market is at its busiest in May and June, then of course for September 1st which is the start of the school year. Recently, Toronto has become Manhattan North. There are roughly 2.5 times more condo leases (rentals) than sales, just like what is happening in the Manhattan market. On a personal level I know leasing is a 12 month a year business. I took occupancy of a new condo on November 20th, the worst time of the year. However, by November 25th it was leased for December 1st and I had 4 offers in just 6 days. So to all your potential tenants, when you go to look at a condo for rent, always bring your cheque book, and not just for May and June but ...
November 30, 2015
This week we want to talk about flipping properties. Flipping properties happens when you buy a property and sell it before you actually take title or own the property. This activity is not illegal but it is not a practice that we would recommend. In the pre-construction condo market, an investor may buy a condo on the first day of sales. Four years later the project is finished, the property has gone up in value and the buyer wants to bail before closing to save on land transfer taxes and having to get a mortgage. It sounds simple. However, a sale like this will attract plenty of taxes too. This isn’t the capital gains, but a straight income tax deal. The sale will also be treated as a commercial sale with HST, not a resale or residential sale which is HST exempt. So, flippers beware! Talk to a tax accountant ...
2016 Outlook on Canadian Mortgage Rates
November 24, 2015
The U.S. Federal Reserve Bank has indicated that they will be raising their lending rate in December. A number of experts are telling the public that this is the start of a climb back to significantly higher interest rates. But hold on there, currently the federal rate is 1/4 percent and it will rise by 1/4 percent to ½ percent in total. That’s the same rate as the bank of Canada rate right now, 1/2%. Currently, both fixed and variable mortgage rates are under 3%. Do we expect a slight bounce in rates in the near term of ¼ percent? Probably. Our best guess is that rates will remain where they are in 2016. While everyone seems concerned about whether buyers and homeowners can stand the stress of an interest rate increase, instead we should worry about Governments being able to pay interest on billions of dollars’ worth of debt ...
Market Report November-December 2015
November 17, 2015
Sales Summary Sales were unusually strong in October according to the Toronto Real Estate Board. The pre-occupation with the Blue Jays was more than offset by the good weather in October. Sales were ahead by 3% over October of last year. Our commentary from last month remains unchanged in that 2015 sales are now close to those of 2014 on a monthly basis since the summer. Remember, weather only impacts the timing of sales, not the total number of sales over a lengthy period of time such as a year. Buying real estate is not time sensitive for most – unlike buying groceries each week. Let’s look at last year. Normally the Spring Market starts at the end of February and into March. Record cold temperatures in February delayed the start until April, yet we experienced a strong, record breaking sales market throughout the balance of the year. Another market ...
Rental Guarantees for New Condo Developments
November 10, 2015
This week Inside the Real Estate Market I want to talk about rental guarantees for new condo developments. This is the latest trend offered by developers. Usually how it works is a developer will pay the buyer somewhere around 6% per year of the purchase price for a period of two years. A $300,000 condo will generate $18,000 per year or $1,500 per month. The developer is responsible for renting out the unit, paying the commissions, and any vacancies. The developer also keeps the rent. What does the buyer get? The Buyer receives peace of mind and a guarantee return for two years max. Why does the developer do it? They offer this service to attract more buyers. Real Estate can be risky and real estate can also involve some work dealing with tenants. The idea is to get passive investors involved in real estate, making it feel like buying ...