Brampton and Georgetown Real Estate
Real Estate Breaking News and Tips
RE/MAX Consumer Survey
In a recent RE/MAX Consumer Survey, 91% of Canadians said that when looking for a REALTOR® for outside support, the top must-haves are ethics in business, patience, active listening and empathy.
No surprises here.
Buyer Down Payment - Q1, 2021
On average, buyers anticipate being able to contribute 35% of the purchase price of the home as a down payment. Even among first-time homebuyers, the average down payment is 23%.
The April 19 federal budget referenced the recent announcement by the Office of the Superintendent of Financial Institutions (OSFI), which is proposing a new stress test rate for uninsured mortgages of 5.25% effective June 1. This is higher than the current 4.79% and, going forward, will no longer be based on bank posted rates. It will be set a minimum of once per year by OSFI.
What is the stress test? When getting a new mortgage, lenders must ensure that you pass a stress test, which means that you can handle payments at a certain qualifying rate. This is not the same rate as your actual contract rate, it’s for mortgage qualifying only.
Uninsured mortgages (i.e. when you have more than 20% equity) approved before June 1 are not subject to this tougher stress test so qualifying will be slightly easier.
Budget 2021 proposes to provide $4.4 billion to the Canada Mortgage and Housing Corporation (CMHC) to help homeowners complete deep home retrofits through interest-free loans worth up to $40,000. Loans would be available to homeowners and landlords who undertake retrofits identified through an authorized EnerGuide energy assessment.
Examples of deep retrofits to make our homes greener:
* Replacing oil furnaces or low-efficiency systems with a high-efficiency furnace, air source heat pump, or geothermal heat pump.
* Better wall or basement insulation and/or wall or roof panels. Installing a high-efficiency water heater or on-site renewable energy like solar panels.
* Replacing drafty windows and doors.
Capital Gains Tax
Currently, the sale of a principal residence is exempt from capital gains tax. However, a proposal to tax the capital gains on the sale of a principal residence keeps raising its head.
Some see a capital gains tax on a home as a way to cool housing markets. We need to watch and listen to politicians and their staff very closely on this issue.
Short Term Market Forecast
Easing restrictions and vaccinations should kick in soon, resulting in more listings coming online in the spring. This should help to lower the intense Seller's Market and reduce the number of bidding wars.
Showings/Viewings During COVID-19
Many Sellers are naturally concerned during COVID-19 about strangers going through their home while it is on the market. There seems to be 2 basic alternatives being adopted in dealing with this issue;
· Trust the protocols imposed by the listing Brokerage and carry on as before the pandemic. Obviously, with this approach, it would make sense to review company protocols before selecting a Listing Agent.
· Don’t let people through the home until an offer has been negotiated and conditionally accepted. In other words, a Buyer submits an offer before they see through the property and they include a conditional clause in the offer which allows them to get out of the deal if they don’t like what they see when they walk through the home. This Buyer viewing should take place as soon as possible after the offer is negotiated. This approach is based on the valid assumption that only serious Buyers will go to the extent of negotiating an offer and perhaps even submitting a deposit on a property that they haven’t viewed.
This issue can be further complicated if the property being sold is occupied by a Tenant who may have legitimate health concerns.
Seller Risks in a Bidding War
Lets say you are a Seller and there is a bidding war for your property. One of the offers has no conditions, a large deposit and the offer price is far more than your asking price. Awesome you think. MAYBE!!! What questions should you and your agent ask? Will the deposit be provided on time; will the Buyer need a mortgage; is the Buyer prequalified. You can expect that the answers you will get to all three questions will be a confident "Of Course" from the Buyer's Agent. That isn't nearly good enough. Make no mistake, there are significant financial risks to you, the Seller, by blindly taking people at their word in these competitive circumstances. There are several steps that you can take to minimize your risk. Contact me and I will be happy to review these steps.
Condominium Buyers' Guide
As of January 1, 2021, developers across the province are required to provide purchasers of new or pre-construction residential condos with a copy of the guide at the time of purchase and sale. The guide includes information on a variety of aspects of condo ownership, including:
• The condo purchasing process
• Information surrounding purchases of pre-construction units
• Condo living and governance
• Resources for resolving issues related to condo living
Under the Condominium Act, purchase agreements for new or pre-construction condos purchased from developers are not binding on purchasers until developers provide purchasers with a copy of the current disclosure statement. As of January 1, 2021, this requirement has been amended to also require developers to provide a copy of the guide.
Please contact me if you would like me to email a copy of this guide to you.
Let me be clear; you MUST, MUST, MUST do a final walk-through of the property you are buying, as close as possible to the day the deal closes and you get the keys. Don’t worry if the Seller has lots of boxes lying around and the place looks untidy. Remember, they are moving soon! What you are really looking for includes, but is not limited to;
Appliances - Are the appliances the same ones that were there when you previously viewed the property and which you included in your offer.
Repairs - The Sellers might have agreed, for example, to repair the walls after taking down photographs or even TV brackets. Make sure that this has been done.
Condition on closing - Most Agreements include a clause obliging the Seller to leave the property in a ‘clean and broom swept’ condition and to remove all garbage, before the deal closes. It would surprise you how often garbage is pilled up at the back of the garage, a shed, or even under the stairs to the basement.
Hidden surfaces - If some furniture has been moved, check the wall that it covered, for damage or even mold. A Home Inspector is not permitted to move furniture during an inspection so a final walk-through might be the only chance you will get to check this out.
There are remedies if, for any reason, the walk-through reveals problems.. Your agent and lawyer know what to do.