We walked in to a Condo Sales Centre, and bought on the spot, without doing our homework.

We get this a lot. Your buddy at work told you about a new project that he just bought in, your brother in law has made a killing on 2 condos he bought 3 years ago, and you feel like you’ll be left out if you don’t do something.

You go to the sales office with your Venti Latte in hand. The receptionist is nice, and the model suite looks amazing. The sales rep tells you that “they’re selling fast” and you sign the paperwork, even though your gut tells you that you should take your time.

What you don’t know is that the best suites were already sold 2 months ago, to friends and family of the builder, and to industry insiders and their clients, AND they were $30,000 less on average.

We registered online, and then waited in line to buy a condo. We didn’t get our first pick, or even the layout that we wanted, but we felt like we didn’t have a choice, and that we’d miss out.

Night club owners learned decades ago, that the best way to fill up an empty night club, is to make people wait in line to give the impression of demand. This leverages the “Principle of Exclusivity”. People want what everyone else wants. And the more exclusive, the more they want it.

Developers are experts at building hype for their projects through ads, signs, websites, and NOW even resorting to offering higher and higher commissions to rookie realtors in hopes that they will convince their clients to buy, and create a buying frenzy at organized “VIP” events.

We panicked and sold our condo too early. If we had waited just a little longer, we would have netted MUCH more on closing.

In this market, 40% – 60% of preconstruction condos are sold to investors. Many of them are buying long term, and intend to rent them upon completion. The others are merely speculators. The problem comes up at occupancy, and prior to closing. Many of these speculators either don’t want to close to avoid closing costs, or worse, CAN’T close because they can’t get financing. These sellers are more desperate, and because they are all trying to sell at the same time, this keeps prices LOW. It seems to happen with almost EVERY new building at the same time. The savvy investors are those that close on the purchase, rent out the suite for a 12 – 18 months, and once the dust settles sell for much more.

I Didn’t Know About the govt rebates and grants that can save condo buyers THOUSANDS.

It’s not surprising that most people don’t know about some of these programs, because they are not advertised or promoted. Both before and after you purchase a condo, there are rebates, and outright grants that are potentially available to condo buyers, but you have to use the right forms, depending on your situation, and you have to file them within very specific deadlines.

This can save you Thousands of Dollars, but only IF you know about them, and if you file them on time.

Our all new 2012 Condo Buyer Survival Guide is is now available, and best of all, it’s FREE.

Whether you’re buying your first condo, upsizing, downsizing, or investing, resale or preconstruction, this guide is sure to help. It’s customized for each person, and will include a detailed report on condos available in your area, AND a list of condos recently sold in your area, which can help give you a much better idea about real market values in the area.

Call or email me NOW for your Free Copy:  416.366.9090 or info@reccanada.com

Rates remain at historical lows. A $300,000 mortgage is only $1263 based on a 5 year fixed rate! No matter what happens in the next 5 years, your payment is in most cases, lower than RENT.

If you are thinking about buying a new home, or refinancing, check with us FIRST, as our in house Mortgage Experts work with over 30 lenders and can get you the best rates, guaranteed. For more info, call 416.366.9090, or info@reccanada.com

Here’s this month’s report on the best rates in the market:

Rates remain at historical lows. A $300,000 mortgage is only $1263 based on a 5 year fixed rate! No matter what happens in the next 5 years, your payment is in most cases, lower than RENT.

If you are thinking about buying a new home, or refinancing, check with us FIRST, as our in house Mortgage Experts work with over 30 lenders and can get you the best rates, guaranteed. For more info, call 416.366.9090, or info@reccanada.com

Here’s this month’s report on the best rates in the market:

Couldn’t resist. . .please forgive the visual pun . . .

Badly Placed Fences Can Make For Angry Neighbours!

Frank and Dolores Lipischak are next-door neighbours to Diana DeWolf and Joe Russ on Caille Ave. in the town of Lakeshore in Essex County. Their homes front on Lake St. Clair and their deep lots back onto the municipal street.

When the Lipischaks bought their house in 1969, there was a wire fence running north-south separating the two properties. Shortly afterward, Frank Lipischak replaced it with a new chain link fence in the same location. The fence that was intended to divide the two lots along the property line in fact extended into the DeWolf property by about 3.6 inches.

Due to this misalignment of the boundary fence over a period of many years, the Lipischaks claimed ownership by adverse possession (also known as “squatter’s rights”) to two specific areas of the DeWolf and Russ property, measuring a total of 192 square feet.

In Ontario, the right to acquire title to a part of a neighbour’s property requires exclusive, open, continuous and obvious use without the neighbour’s permission for a period of 10 years prior to the date title to the property was converted to the electronic Land Titles system.

DeWolf and Russ objected to the misalignment and eventually the boundary dispute wound up in court before Justice Anthony E. Cusinato in Windsor. The Lipischaks asked the court for a declaration that DeWolf and Russ had lost their title to the disputed area.

The evidence showed that the Lipischaks had occupied a narrow strip of land belonging to the lot next door for more than the minimum 10-year period, starting with their purchase in 1969. The judge concluded that this state of affairs continued for so long because neither of the owners bothered to obtain a land survey report from an Ontario land surveyor.

In his written decision in June 2010, the judge ruled that the Lipischaks owned the disputed strip and DeWolf and Russ were ordered to remove any fences, concrete, trees and other improvements they placed on that land.

Justice Cusinato noted in his decision, “To state that these neighbours . . . have been anything other than neighbourly is an understatement. Each . . . maintained a selfish view of their own rights. While their homes are their castles, it does not extend over the property rights of another.”

The judge found that each neighbour was “overly sensitive to their property rights and did not conduct themselves in a manner that may have avoided the conclusion of these issues in a court of law . . . ”

In court, DeWolf admitted that she had removed the chain link fence, cut the concrete sidewalk and installed a new fence in the space between the two homes. For this conduct, and her “arrogance to take the law into (her) own hands,” the judge awarded her neighbours $5,934 plus taxes for the new fence and sidewalk, $7,500 in punitive damages for her “ horrific and excessive conduct,” and a further $15,000 in damages for trespass.

Following the release of the judge’s decision, DeWolf was also ordered to pay the plaintiff’s court costs of $89,371 for an 11-day trial. (The plaintiffs had asked for considerably more.)

DeWolf and Russ appealed to the Ontario Court of Appeal. Last fall, a three-judge panel refused to interfere with the trial judge’s findings, and dismissed their appeal, ordering them to pay appeal costs of $20,000 to the Lipischaks.

I calculate the damages and costs awards against the defendants at $138,577, in addition to their own lawyer’s bill of perhaps another $100,000 plus.

But it looks like the case is far from over. After the trial, DeWolf and Russ sued the Lipischaks claiming the right to travel over the parcel of land they had lost. As well, they also sued the prior owners of their property for the cost of defending their title and for the loss resulting from the change in the property line.

Windsor lawyer James K. Ball acted for DeWolf at the trial and in the Court of Appeal. In an email last week, he told me “there were no winners in this case.” I tend to agree.

Thanks to Bob Aaron for this story . . . . Bob Aaron is a sole practitioner at the law firm of Aaron & Aaron in Toronto and a board member of the Tarion Warranty Corp.  Bob specializes in the areas of real estate, corporate and commercial law, estates and wills and landlord/tenant law. His Title Page column appears Saturdays in The Toronto Star.

Usually, the press release and all media stories have some sensational headline like “Run down home sells for record $1 Million in Toronto.”  (Those of you living in San Francisco, New York or London feel free to post in the comments.)

What virtually all of these studies do is look at median or average prices, and compare them to the median or average income. This metric worked okay in the 20th century in most cities when bungalows on modest lots were the first homes of young families. It is becoming increasingly meaningless in the 21st century. Here’s why.
1. Average and median home prices are being driven up by the larger, mature demographic (think those over 50) who have equity and are now trading homes. Some are buying a nicer location, some are downsizing to a penthouse condo. Everyone has their own reason. Regardless, they are not taking out a $1 million mortgage on their $80,000 salary.

Average prices are also being driven up in some cities, like Vancouver, by an increase in “Luxury Market” sales. Over 700 homes priced at over $3 Million sold in Vancouver in 2011, nearly doubling the previous record of 375.

This luxury product is not about homes for younger families. Therefore, we should stop including it in analysis of housing market affordability for young families.

2. With number one said, we can still see that demand today is strong and growing in walkable, mature cities and neighbourhoods; the detached houses are often in highest demand (even when more modest priced homes exist). Because you can’t make more detached homes on lots in these mature areas, demand exceeds supply for this type of product. This drives up the average and median price of even fixer-upper, non-luxury product; increasingly only those trading an existing home or coming in with cash can purchase them. Families are buying in these neighbourhoods, but they are typically not first-time buyers; they have above average incomes and often equity from a condo or suburban home.

3. Points one and two above illustrate that detached bungalows are no longer typical first-time buyer product. When individuals, couples or families buy their first home in larger Canadian cities (and many cities around the world), increasingly it is more likely to be a townhouse or a condo. According to Realnet, In the Greater Toronto Area, 62% of homes sold in 2011 were high rise condos. And from watching House Hunters on HGTV this is also happening in many US cities as well.

Therefore a statement like “Toronto is the most unaffordable city” is not that helpful if we are concerned about the “affordability” of buying a decent home for young families. Measuring something that is not first time buyer product against the incomes of first time buyers is comparing apples to Yugos.

If we are truly interested in understanding the ability of individuals with average incomes to buy a home in the higher priced, metro areas, then at minimum we need to look at townhomes and condos instead of detached homes. Ideally you also remove the product coveted by the multi-millionaire club from the analysis. Suddenly the income needed to get into the market looks more familiar to most of us — $50,000 for Metro Vancouver, $38,000 in Greater Toronto according to this study.

Flashy headlines about Toronto, Vancouver and other cities being unaffordable get the publisher of the reports and newspaper articles attention–this is why they publish them. Also it’s much easier to calculate median price and median income, and harder to do real housing market analysis.

What worries me is that politicians, policy makers and lobby groups are using this mis-information. I fear for the results. So banks and others, please move your thinking into the 21st century!

First Time Buyers: you can now lock in a fixed mortgage rate for a 10 Year Term for less than 4%. Any concerns about rate changes affecting you are out the window, AND, you can own for the same as rent. Your excuses are now gone. Anyone who has the ability to buy instead of renting and doesn’t today, is in my humble opinion NUTS.

Investors: rents are on the rise, and costs ( mortgage interest rates) are dropping. In business terms expenses are down, and revenues guaranteed to rise. Any questions?

When you put your house up for sale and expect a real estate agent to spend time and money marketing and advertising your property, you have to take the process seriously. If not, you may have to pay a commission later, even if you change your mind about selling.

Here’s a recent small claims court case that was heard in October in Woodstock, Ont.:

Richard Fody owned a vacant piece of land in Tillsonburg, Ont., and in early 2009 signed a standard listing agreement, with T.L. Willaert Realty Ltd., to sell it for $199,000.

The language in his listing agreement was standard and said he agreed to pay the broker 4.5 per cent commission for any valid offer to buy the property during the listing period. In February, 2009, there were a few low offers.

In March, Benjamin Vink made an offer close to the listing price and Fody signed it back for $195,000. It was not accepted, but Fody told his agent he did not want to lose this buyer and asked to see what could be done. At the end of April, Vink offered the full listing price of $199,000.

But when the agent brought it back to Fody, all of a sudden Fody was unreachable and the deal fell through. As it turns out, he had changed his mind and decided not to sell.

The agent sued in small claims court for his commission. At the trial, Fody argued there were problems with the offer including that the buyer would not close fast enough and the buyer did not agree to install, at his own cost, a well and septic system.

The judge found that these two arguments were irrelevant and did not affect the sale price. Since the buyer knew there was no well or septic system, there was no risk to Fody, he reasoned.

Fody also argued that the agent should have explained more clearly that if he brought in a full-price offer which was not accepted, he still had to pay commission. The judge found the clause was self-explanatory, meaning that commission was payable even if a deal wasn’t signed.

The judge found that the agent had worked hard to bring in a full-price offer and Fody had just decided to change his mind. Willaert won its commission of $8,995.50 plus GST of $449.78 and $1,050 for his legal fees.

This case is important for sellers to understand. In my opinion, it was wrongly decided because commission should not be paid unless the seller accepts an offer. This decision is currently being appealed.

Here’s why you should be careful though. Some sellers try to create bidding wars by deliberately listing their properties below fair market value. If you do this, make sure that your listing agreement is clear that you only will pay commission if you actually accept an offer.

For a FREE Copy of our Guide To Selling Your Home, which includes tips on preparing your home for sale, pricing, negotiation, and much more, call 416.366.9090 or send me an email: info@reccanada.com

Thanks to Mark Weisleder, original article appeard in Moneyville.ca

Couldn’t resist. Too funny. http://youtu.be/HAeprWIOQqQ

Click on the video below to check out our first Video edition of the show. And and all feedback is welcome and appreciated!  

The result is that buyers pay more than they should, or are disappointed later when they find defects in the home or discover the neighbourhood isn’t quite what they thought.

So, here’s an updated list of six ways to prepare yourself:

1. Sell or buy first?

We are still in a seller’s market in the GTA, with the number of buyers exceeding the number of available homes. In this type of market, you should buy your new home first and then sell your existing home. If you sell first, you may find yourself running out of time, with no home to move into, as the closing date nears. This leads to panic buying.

In a buyer’s market, sell your home first as you won’t have as much trouble finding a new one.

2. Research, research, research

Walk any neighbourhood you are interested in and talk to people. You will learn the demographics of the area and its facilities. What schools are in the area and is there a waiting list to get in? Are there activities nearby for children, including parks, libraries and community centres? You also get a sense of the friendliness of the community and whether there are surprises that no one is going to advertise — vandalism, former grow houses, or the neighbour from hell.

3. Find a competent Buyer Agent that knows your area.

Do not go into an open house alone, thinking you can save commission. The agent is working for the seller and their job is to get the seller the most money possible. While focusing on saving a few dollars negotiating commission, you will invariably give away important information about yourself, which will hurt you later.

Our team is hand picked, highly trained, and knows your area. We’ve found that by providing excellent customer service, our clients come back again and again, and tell their friends. Call me anytime for an introduction to an expert Buyer Agent in your area.

4. How much can you afford?

You should never live just to pay your mortgage, or else the rest of your life will suffer. Meet with a mortgage broker in advance to determine how much you can safely borrow, based on your income and family needs. Buyers should also realize the lender will do an appraisal and if the lender believes you paid more than the house is worth, they will not give you the full amount of the loan you expect. So, be very careful about stretching yourself to the limit when you make an offer.

5. Choose a home inspector carefully

The home inspection is becoming even more important, as it is one of the only ways for a buyer to check against unwanted surprises after closing.

Ask for references and call these references yourself, especially the ones who bought older homes, where problems are more likely to occur later. There are now additional inspections that test specifically for mould or termites. There are video cameras that can tell you the condition of your sewage system and scanners that can look behind walls. If it is an older home, it is worth this extra investment.

Remember, most inspection firms have a limitation of liability clause, which states that if they miss something that costs you money, they are not responsible.

6. Title insurance is a must

Title insurance can be arranged through your lawyer. You will be protected against unpaid taxes or water bills by the seller, as well as problems that are not known at closing. This includes problems where part of the home or swimming pool is in fact on your neighbour’s property.

However, it is a mistake to believe title insurance will protect you against everything. For example, it won’t compensate you if you thought your lot was 50 feet and a later survey showed it was only 48 feet. That is why you should always ask for an up-to-date survey on the property.

Source:  Moneyville.ca

Here’s why:

Mortgage rates at historic lows: They can’t get any lower. Four to five-year fixed mortgages at 3 per cent are unheard of. It is lower than the variable rate that most Canadians have been paying for years. Rates have nowhere to go but up, either later this year or next. If you are paying a variable interest rate, lock in now.

Canada’s appeal: This country has everything going for it — a stable banking and political environment, steady real estate market, the natural resources people want and few social tensions. That makes us a safe haven in a volatile world.

Our immigrant draw: Because of the above, we’re a draw for immigrants, often wealthy ones. When they get here, they need a home. So in my view while the real estate market may level off in some areas of Ontario, it should stay strong in most of the GTA and likely Canada’s other large urban centres as well.

Mortgage defaults: According to CMHC, over 99 per cent of Canadians pay their mortgages on time. It quite a different picture in the U.S. where 7 million homes are in foreclosure and perhaps another 7 million homeowners are under water. This represents almost 15 per cent of all homes. So while the American housing market will likely be weak for the next few years, this should not occur in Canada. Our banks are not dumping homes onto the market, so there is no downward pressure on prices.

Recourse Mortgages: In many U.S. states, if you can’t pay your mortgage, the only thing the bank can do is foreclose; they cannot sue you for any shortfall. So when homes go under water, owners give the keys back to the bank. In Canada, loans are almost all Recourse, meaning if you don’t pay and there is a shortfall, the lender can sue you for the difference. This is another reason why, in my opinion, even if times do get tough, Canadian homeowners will find a way to make the payments until things improve.

Income-to-price ratio: Another misleading statistic is that in major markets, like Toronto, the average price of a home is now 4.6 times the income of the average Canadian. This same statistic was found just before the U.S. and UK markets went into the tank. However, if you look at median incomes of Canadians against the median cost of homes, this average comes down to around 3.5, which is not dangerous. Using averages are wrong. A person receiving social assistance will not buy a home, and should not be included in any relevant statistic.

High consumer debt: The warnings about rising debt ratios must be examined carefully. The Governor of the Bank of Canada is worried that the average personal debt ratio is now 156 per cent in Canada. This means a household making $100,000 per year, owes $156,000, two-thirds of which is mortgage debt. Why is this so bad? At an interest rate of 3 or even 5 per cent, the amount needed to service the debt is manageable. Most people do not pay off their mortgages in one year. Still, this is another good reason to consolidate your debt now, at these low interest rates, and lock in.

No guarantees: Nobody can predict the future and there’s always the possibility of a major economic shock. Yet, in a U.S. presidential election year, politicians will do whatever is necessary to prevent it. If the economy goes into the tank, so do re-election chances. The U.S. is already showing signs of economic recovery.

No matter what, do not take on a monthly payment higher than what you can afford. Meet with your lender or mortgage broker in advance to figure out what you can afford before you start looking for a home. It may be the best time to buy, but you need to buy smart.

Source:  Mark Weisleder in Moneyville.ca.

“The consistently strong performance of Toronto reflects the growing diversity of the city’s economic engine,” says CIBC’s deputy chief economist Benjamin Tal. While the labour market “is showing signs of fatigue, the quality of employment continues to improve.”

The city’s population rose 3.9% , while employment rose 4.6%. In addition, personal and businesses bankruptcies declined at a faster rate compared to the rest of the country.

All of these are great signs given the fact that Toronto suffered the most after the economic downturn.