Case Study: Disclosure of Leak and Remedies

A Leak was Discovered, Corrected and Disclosed

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After the deal was firm, the seller noticed a water leak in the basement. He then discovered a crack in the basement wall and had it corrected with a 25-year transferable warranty to the buyers. The insulation on half the height of the basement wall was partially removed and subsequently taped back once the correction to the wall was made. The seller now disclosed it to the buyers.

The Buyers Inspected; Seller Declined Request

On inspecting the remedial work the buyers noticed sweating on the insulation inside the vapor barrier. They became suspect and wanted the seller to remove all of the insulation on the damaged wall, to see whether other cracks existed. The seller declined the request and would not allow the buyers any further inspections. Though not agreed to in the contract, the seller felt they had already generously given the buyer a number additional inspections to measure the kitchen for a renovation quote, and to measure for flooring and other updating plans.

Extended Warranties are Unlikely

The seller said that once the deal closed and the buyers owned the property they could open it up themselves. If by chance other cracks were discovered, which they doubted, the seller suggested they could contact the concrete subcontractor that built the basement and/or the builder of the home. Typically, however, the basement subcontractor gives a 2-year warranty on the foundation and at this point the house is 10 years old. Though unlikely, if any such extended warranty existed, the seller should produce written evidence of its existence and transferability.

The Deal Closed with No Additional Problems

The buyers were instructed to talk to their lawyer. They, however, said that they didn’t want to complicate the matter with lawyers and wanted the sales representatives to help work it out. The respective sales reps, though, could do no more as the seller was firm on his position. On consulting with their lawyer, the buyers closed on the deal and subsequently no further problems were discovered.

Some Take-aways

The seller was forthright in making the buyer aware of the leak, the crack and the fix. As advised, the buyers were wise to close. Under our system, if additional cracks were found they could go after the seller, though the onus would be on them to prove the seller was aware of other cracks. If the buyers chose not to close they could be sued for breach.

Before Closing

Before closing lawyers typically ask if the buyers have performed a final viewing and whether they noticed any issues compared to when they initially saw the house. The buyers then tell about the crack and fix…as well as other concerns should they have any.

Some Possible Solutions:

  1. They can try to negotiate a holdback until they discover if other cracks are present.

  2. They might attempt a price reduction.

They could threaten not to close, leaving them open to legal action: a risky idea. Closing was the right approach.

Are Niagara Region House Prices Dropping?

It’s a Commonly Asked Question Today

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One of the questions homeowners continue to ask lately is, “Are prices dropping?” A legitimate question when they notice “New Price” and “Reduced” stickers on any number of for sale signs, not to mention homes lingering on the market, unsold compared to last year.

To date the answer is “no,” at least prices, that is to say, have not gone down overall. To the end of September, versus the same time last year, the number of sales is down by about 13% to 15%, yet average and median sale prices indicate positive numbers as follows:

  • The overall average price year-to-date for the Niagara Region is up by about 2.6%, and

  • The median price by and large is up by about 4%.

Of course average and median prices cannot determine how any one home or neighbourhood has performed. They do, however, point toward general market conditions and trends. As well, in certain districts within the region and in high-end properties average and median prices are down somewhat.

What has been going down are list prices

The hot seller’s market of 2017 brought about a sizable increase in sale prices. By the end of December 2017, the overall average sale price for the region was up by about 23.8% and the overall median price by 21.2%. Homeowners still have the benefit of this appreciation.

Yet in many cases, sellers this year have overextended their asking prices, possibly thinking that prices were going to continue to rise to a similar degree as last year. Such a strategy has not served them; hence the noticeable number of price reductions and listings that remain unsold. Market conditions change and experience has shown that there is often a delayed reaction to such shifts on the part of sellers.

Some of the following have contributed to this shift:

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  1. The mortgage stress test introduced in January of 2018 caused some buyers to opt out of the market;

  2. Home price increases contributed to reduced affordability;

  3. The number of out of town buyers coming to the region has dropped as sales of single family homes in and around Toronto have gone down as well as their average prices.

  4. Interest rates continue to inch up shrinking affordability and creating buyer concern.

In spite of this, and to reiterate, prices for the most part have gone up, and properly-priced homes continue to sell. Even during the hot seller market overpriced listing prices did not result in a sale. Today properties have to be priced to attract buyers and their representatives.

Fear Can Drive Many Buying Decisions

In a hot seller’s market buyers fear they might lose out. In a slower market buyers fear they might pay too much. They question whether their home purchase will maintain its value.

Preparing for a Power Outage

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You’re familiar with sweater weather, hot chocolate season and the holidays. But this time of year is also the start of storm season. With the cold weather coming in, it is time to start preparing for winter storms and power outages. The best way to avoid a total blackout is to get a backup generator, but you will also need a good stock of supplies to get you through the storm. A storm bin to keep in your home during all seasons, will be especially handy during in the winter time!

Here is our C21 storm prep list:

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Lights

Candles and flashlights are essential in any storm bin. Make sure you have a lighter/matches and extra batteries in there as well.

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Food/Water

Experts recommend four liters of water per person per day in your storm bin. For food you will want to have nonperishable items that are quick and easy to cook. Soup, chili and beans make for great meals. It is worth investing in a small camping stove and a couple of canisters of propane, so you have something to cook on. Throw in some granola bars and snacks in there too just to be safe.

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Blankets

You never know how long the power could be out for and how long you could be without heat. Have extra blankets and sleeping bags readily available to get cozy when the temperature starts to dip.

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Prepare to Work From Home

If there is a big storm forecasted, it could be wise to be ready to work from home. Bring your computer home and save everything just in case the power goes out. You don’t want to come in after a power outage to find all your hard work gone!

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Games

In times like these it is important to stay positive and try to find light in a dark situation. Cards and board games are easy to pull out for entertainment while you are camped out in the dark!

Niagara Region Residential Sales Prices and Statistics for October, 2018

Residential Sales, Average Sale Prices and Days to Sell for the Niagara Region

For the Niagara Region: 01-Oct-2018 to 31-Oct-2018 vs. Same Time Last Year*

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Residential Average Sale Prices for the City of Niagara Falls

For the Niagara Falls: Month to Month comparison for 2017 and 2018 to October 2018

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Residential Sales Average Days to Sell for the City of Niagara Falls

For the Niagara Falls: Month to Month comparison for 2017 and 2018 to October 2018

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*The above statistics are based in whole or in part on the MLS® System data owned by the Association.

Prepare Your Home For Winter: 10 Tips!

Prepare Your Home for Winter

 

Winter is not quite upon us yet, but here in the Niagara region cold weather has a habit of creeping up on us suddenly and without warning. With that in mind, don’t wait too long to prepare your home for winter before the cold temperatures hit. To help you get going, here are 10 quick tips!

  1. If you have wooden windows, check them carefully for decay or rotting. If they are damaged, repair or replace them to keep the heat from escaping your home.

  2. Another way to prevent heat from escaping is to check the weatherstripping on your doors and windows and replace them if required.

  3. Also check the windows themselves for cracks or gaps. If you find that your windows are damaged, repair or replace them before winter.

  4. If there are overgrown branches on your property, make sure that they are not too close to the home or to electrical wires. If they are, be sure to trim them because the weight of snow and ice combined with strong winds could bring these branches down.

  5. If you have stairs on the outside, check to make sure that they are secure. Their integrity is sure to be tested by the ice and snow.

  6. Check carefully to make sure that the firebox and flue system are clear of creosote and/or soot. Also check for cracks to avoid fire hazards.

  7. In order to ensure that your furnace is functioning at full capacity and that the indoor air is clean, check to see the condition of your filters. Clean or replace them as needed.

  8. Always check the smoke alarms and carbon monoxide detectors inside your home on a regular basis.

  9. Plug up any leaks that you find in the basement, in the attic, or in crawl spaces.

  10. Ice and snow build up can become so heavy that it can cause gutters to collapse. Before winter sets in be sure to check that all of the gutters are properly fastened, and if you notice any sagging or loosening, tighten them up as soon as possible.

While this is not an exhaustive list, these 10 tips will get you well on your way to preparing your home for winter. For more information, feel free to call Barbara Grumme or Ashley Czinege at 905-356-9100.

 

5 Steps for Planning An Affordable Christmas

Christmas is fast approaching and for many of us the stress of social and financial commitments detracts from the celebrations and enjoyment of the season.  The better prepared you are, the more likely you are to enjoy the festivities.  Here are five steps that may help you make better decisions around planning your Christmas events.

1. Give based on your actual financial situation, not your wishful financial situation

The fact is, people who overspend on Christmas gifts and parties by putting everything on credit may have a wonderful December, but an incredibly stressful January.  If you aren't able to pay off the entire credit card bill when it comes in after the holidays, then you've spent too much.

Perhaps it is the fear that friends and family will consider us similar to the character Scrooge, from Dicken's A Christmas Carol that cause us to overspend.   The truth the financial burden of spending more than we have creates a far more dire reality than any perception of being "cheap".

In your Christmas planning, you must establish boundaries.

  1. Financial Boundaries (often called making a budget) — How much money do you have to spend on Christmas?

  2. Scheduling boundaries — How many Christmas parties can you logically attend?

  3. Hosting boundaries — How many people can you feasibly host?

As a result, 'no' must become a part of your Christmas vocabulary. For many, Christmas is about a time of over-commitment, so it is essential that we know our limits.

 

2. Giving a gift doesn't necessarily mean spending money

You can express your love and appreciation for people without spending money.  Marketing over the years has become extremely effective at associating buying expensive gifts as showing how much you love someone.  We need to reset that misconception.

If you are handy or crafty, make a gift.  It could be a scrapbook from a special event, an upcycled piece of furniture or event passing along a cherished family heirloom like grandma's teacup.  It could be as simple as a handwritten Christmas card you've made yourself.

 

3. Make a list and check it twice, then check it again.

Start your list by writing your total gift budget at the top of the page.  Then start writing down a list of everyone you'd like to give a gift.  Go through your list and allocate portions of your budget to everyone on that list.  This may take several passes to make sure you don't go over your original limit.

Whilst going through your list, who will get a store bought gift?  Who will get a lovely handwritten card from you?  Who will get the gift of your time and energy?  Taking the time now will prevent impulse buying and overspending when you are at the mall.

 

4. Start saving money as soon as you can

Even though the stores decorate for Christmas earlier and earlier each year, it can be a positive trigger for you.  Start saving as soon as you can so all of the bills don't hit you in December.  Take a look at your total budget and look at how many paycheques you have between now and Christmas.  Plan to put equal portions of each pay aside to match your budget.  If you aren't able to do it, then take another look at your budget - perhaps you'll have to decrease it.

 

5. Be watching for sales today

Time is always a friend of a savvy shopper.

Stores almost always have sales, but they don't put everything on sale at the same time (typically). This means that if you start watching for sales today, you can snag a pair of running shoes for junior today, and then in a few weeks they might have a video game on sale. Far too many of us wait until the last week and are forced to pay full price for everything. But since you've already got your list, your budget, and you're even setting aside money, you can start taking advantage of sales now.

Decorate by Nature

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As hard as it is to say goodbye to summer there is something very comforting about snuggling up in a warm sweater, watching the leaves drop and of course the best part about fall- thanksgiving! As we cover up the BBQ and put away the patio furniture we must now bring our summer entertaining indoors. But don’t fret- we’ll help you bring some of the outdoors to your Thanksgiving entertaining with our nature inspired decorating tips!

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Fall Wreath

As hard as it is to say goodbye to summer there is something very comforting about snuggling up in a warm sweater, watching the leaves drop and of course the best part about fall- thanksgiving! As we cover up the BBQ and put away the patio furniture we must now bring our summer entertaining indoors. But don’t fret- we’ll help you bring some of the outdoors to your Thanksgiving entertaining with our nature inspired decorating tips!

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Thankful Tree

Thanksgiving is all about taking the time to be grateful for what we have so why not write these things down? You don’t need much to make a thankful tree, just a small potted tree, some scrap paper and fishing line or thread. During dinner get your guests to write down what they are thankful for and hang them on the tree. Keep the tree up past Thanksgiving to remind yourself of all the wonderful things in your life.

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Pumpkin Spice

Give your pumpkins some spice, elegance and charm by painting them. For an elegant look try painting them white and, for something jazzier, use teal or pink. It will give a little more attitude to your Thanksgiving table.

Net Cost of Owning Versus Renting Your Home

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Mr. Will Dunning, Chief Economist for Mortgage Professionals of Canada, released an insightful report called, Owning Versus Renting a Home in Canada, release September 2018.

Increase in Home Prices vs. Renting:

  • According to the Canadian Real Estate Association, over the last twenty years, home prices in Canada have appreciated by an average of 6.2% per year.

  • According to CMHC, rents over the past twenty years have increased by an average of 2.7% per year.

Given the discrepancy, does home buying still make sense and are young people better off renting?

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Yet Home Ownership is at an All-Time High

Notwithstanding the perceived “deterioration in affordability” due to price increases, “Canadians remain highly interested in becoming homeowners, and they continue to succeed at buying homes.” Mr. Dunning reports that compared to renting, those able to invest in ownership would be better off in the long term as opposed renting. He agrees that upfront monthly costs for renting can be cheaper in most locations. However, the net cost of owning a home compared to the comparable rental cost is less and more cost effective over time. And that’s without considering a home’s appreciation.

The Net Cost of Owning Trumps Renting

Over time the cost of owning or renting will both rise. The net cost of owning, however, takes the following into account. The largest cost of ownership is the mortgage payment which typically becomes a fixed amount over the term of a mortgage contract, as in a five year term. During this period, and with each mortgage payment, a portion of the principal is paid down increasing the owner’s equity in the home. This savings effectively reduces cost resulting in a net cost savings.

Here is the Result On Average

According to Mr. Dunning, the result, based on a Canadian average price of $569,849, 20% down and a 3.25% over 25 years is as follows: On average, the cost of owning exceeds renting a similar home by about $541 per month. Yet once the “the principal repayment is considered, the net cost of owning is $449 less than the cost of renting.” Over 25 years or less, once the mortgage is paid off, he projects the cost of ownership at about $1,549 per month versus $4,655 for renting a corresponding dwellings.What’s more, because the lifetime costs of housing is lower than that of tenants, owners have a greater opportunity to accumulate more savings tend to be better off financially.

How Does This Pan Out in Niagara?

The regional overall average price year-to-date is about $470,000. Based on the same parameters as above, the net cost of owning exceeds the cost of renting by about $640. Minus the principal repayment, the net cost of owning is $380 less in the first month. Over year it’s about $6,400 less.

Other Housing Costs

Average annual increases for housing costs in Canada for the past 5 years: Property taxes 2.8%; Repairs: 1.9%; Home insurance: 5.4%; Utilities: 1.6%; Rents: 2.4%; Utilities: 1.6%; Rents: 2.4%. For full report, do an internet search on “Owning versus Renting in Canada-Mortgage Professionals.”

5 Reasons Why October Is the Perfect Month for Your Niagara Falls Vacation

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It’s not uncommon for people from all over the world to get the urge to visit Niagara Falls. For over 100 years now, it’s been one of the world’s most popular destinations. While most visitors make their way to the Falls and surrounding area during the balmy summer months, autumn has an appeal that’s hard to deny. From the thinned out crowds to the fantastic foliage, here are four reasons October is the perfect month to take your Niagara Falls vacation.

  1. Hornblower Niagara Cruises Still Operates

    One reason people are often more inclined to visit the area during the height of the tourist season is due to the fact that all the fun rides and attractions are going full-tilt.While October does see some reduction in hours and entertainment, for the most part, the fun is still accessible.In particular, Hornblower Niagara Cruises is still in operation during the month of October.There is simply no better way to get up close and personal with Niagara Falls while getting doused with spray and deafened with what sounds like thunder, you can do it just as easily in October as you can in July.

  2. The Crowds are Gone

    Some people genuinely enjoy the thrill of a crowd, but if you aren’t one of them, planning an October trip is a perfect way to see the Falls without triggering your agoraphobia. Reservations at the area’s finest restaurants are easier to get. Tickets to shows are more readily had. Just strolling around town or gazing at the Falls is more easily accomplished when the happy glut of visitors has mostly gone home. It’s true that the summertime crowds can feel electric thanks to the energy and cosmopolitan nature of the thousands upon thousands who show up to experience the place. If you don’t need that sort of electricity, however, October’s slower and less-peopled pace is ideal.

  3. The Weather is Amazing

    It’s not as if it ever gets really hot in Niagara Falls. The weather’s remarkable mildness is one of the reasons the grapes produced along the Niagara Peninsula produce such excellent wines. That being said, the autumn weather is often perfect. The sweet chill in the air can often be taken care of with little more than an extra windbreaker or sweatshirt during the mornings and evenings. It can rain a bit, so you’ll want to bring an umbrella and galoshes, but overall, fall in Niagara Falls usually includes plenty of sun.

  4. The Fall Foliage

    The Niagara Region is a very fertile place, and the autumn highlights the ways the changing seasons affect it remarkably. Whether you love to hike or you love driving around the countryside, taking Niagara in during the month of October is often a feast of autumn colour that can rival New England. You’ll definitely want to bring your camera.

  5. Amazing Offers at Greystone Manor Bed & Breakfast

    We'd love to have you stay with us. As always, our rates include FREE onsite parking, FREE Wi-Fi, a full nutritious breakfast and so much more. In October, we are including some special treats to make your visit to Niagara Falls even more enjoyable. Click here to check out the offers on our official website: www.greystone-manor.ca

So, plan your vacation for the Niagara region during the month of October. As these five reasons more than show, it’s the perfect time to visit.

Abandoned Gas Wells and the Environment

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When an Abandoned Gas Well is Discovered?

The home purchased had an additional back piece of vacant land attached to the property. On viewing the home before buying, the buyer did not inspect the back parcel.  On searching title, the buyer’s lawyer obtained a copy of an old survey that indicated an abandoned oil well on a corner of the attached back parcel. With its discovery, the buyer inspected the back parcel found the well, visible from the surface and took a picture. He noted the smell of gas in and around the well. 

Disclosure of a Gas Well Should be Made

He was somewhat upset as he felt the gas well’s existence should have been disclosed. He discussed his concern with both his lawyer and real estate agent. His lawyer asked for a price reduction through the seller’s lawyer and some three days later still hadn’t received a response. The buyer now turned to his brokerage. He wanted the property but also wanted some resolution. Recognizing this as a problem, brokerage did some research and made some of the following discoveries.

According to the Niagara Peninsula Conservation Authority,

  • “An abandoned oil and gas well on your property is a hazard to the environment and your health and safety.”
  • They can also be obstacles to new development and “can be a financial liability to the landowner.”
  • So it’s important to report and plug abandoned wells.

Information from the Ministry of Natural Resources

We learned that the Ministry of Natural Resources and Forestry has what’s called the Abandoned Works Program to help “Ontarians properly plug wells on their property.”  They will:

  • Establish as to whether a well qualifies for the program,
  • Rank the well according to its “risk to public safety and potential for environmental damage to determine when it should be plugged…,
  • “Arrange for a certified well contractor to plug the well.’ 

If there is no gas well operator to be found, the landowner is responsible for plugging the well. In our search, we thought we located the well in the Oil, Gas & Salt Resources Library and reported our findings to the Ministry. As they could not find it in their database, they recommended the buyer hire a consultant. Apparently unlicensed and abandoned gas wells, not properly decommissioned, abound in southwestern Ontario.

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Cost to Plug the Well

The cost of plugging a well can range from as little as $2,500 to thousands. In one reported case the landowner ended up being on the hook for $20,000. By now some days had gone by and the closing date was fast approaching. The buyer hired a contractor who estimated a cost of $28,500 to properly plug the well. Armed with this quote, the parties negotiated a reduction in purchase price of $25,000, with the buyer agreeing to take responsibility to plug the well after closing.

More Pre-Listing Research by REALTORS Needed

This should have been disclosed before the buyer made an offer. Luckily it was discovered before the deal closed. REALTORS would be wise to walk the property prior to listing and have the seller fill out the “OREA Property Information Checklist" to uproot any required disclosures.

How to Seamlessly Transition from Summer to Fall at Home

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As hard as it is to say goodbye to summer there is something comforting knowing that it is almost time for sweaters, changing leaves and of course pumpkin spice everything. With the change of seasons comes a change of routines and the inevitable stress of switching from summer mode to back to school and work mode. But don’t fret- we are here to help you get your house ready so you’ll be able to enjoy fall!

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Schedule/Calendar

Your calendar will become your best friend this school year if you use it properly. We recommend having two calendars, one for the week and one for the month. This way you can see what you need for the day to day as well as into the future.

Century 21 Tip: Use a blackboard for your weekly calendar! This will allow you to change and add things as the week goes by. As we all know – nothing ever stays the same day to day!

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Food Prep

Prep your food to prep your life! Once you get into the habit of prepping your food for the week you will wonder how you ever survived before. Essentials for food prepping:

  • Freezer safe Tupperware
  • A food prep cook book with lots of yummy recipes
  • A slow cooker/ Instant Pot, this will help you cook faster and more efficiently. These are especially great for soups, sauces and meat!
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Home Chores

As it hard as it might be, it’s time to put away your summer clothes. Only keep out what you will use, this well help you mentally get ready for fall. When it comes to chores, decide what your top priorities are and set realistic cleaning schedules for your chores. Saying you will dust, mop and clean the windows every week is likely not going to happen (you are only human) so don’t set yourself up to fail. Like your weekly calendar, set up a cleaning schedule for daily, weekly and monthly cleaning duties and assign tasks to each family member. Many hands make light work!

*Source: http://www.organizedtransitionsllc.com/interesting-facts-organized/

6 Mortgaging Mistakes to Avoid

Avoiding Mortgaging Mistakes

The Inability to close a purchase for lack of mortgage funds can occur for any number of reasons. some of which are:

  1. Not Acting in Time: The buyer may not have acted within the time frame specified in the offer to arrange a mortgage and, instead of requesting an extension of time, removes the mortgage condition on the assumption that arranging a mortgage is “no problem. Left with a condition-free offer the buyer scrambles to get the mortgage funds and ends up with a high-rate private mortgage with high upfront fees and payout penalties. 
     
  2. a. Seller Won’t Extend: Alternatively, the seller is getting a lot of interest and refuses the buyer’s request to extend the mortgage condition. The buyer takes the risk of removing the condition making the agreement firm and binding. In this scenario, the mortgage company is often awaiting additional paperwork from the buyer before committing, such as: tax assessments or a letter of employment and income verification.

    b. A Conditional Approval: The lender may have given the buyer an approval conditional on the appraisal of the home being purchased and buyer removes condition. The seller who might not allow an appraiser to view the property once the mortgage condition is removed. 
     
  3. Buyer Misunderstand the Process: The buyer may fail to understand that aside from being approved, the lender may want to approve the home by way of an appraisal. The lender will approve a mortgage based on the lesser of the purchase price or the appraised price. The buyer could be caught short of downpayment funds if the valuation cannot justify the price paid.
     
  4. The buyer makes a cash offer in the hope of negotiating a lower price, all the while knowing that funds need to be borrowed to close the sale. This approach too can be harmful if sufficient funds cannot subsequently be borrowed. The mortgage stress test for conventional mortgaging added to this dilemma when it came into effect. 
     
  5. Credit Purchases Before Closing: Prior to closing the buyer makes substantial credit card purchases--for say furniture and appliances--that negatively affect credit qualification. Then the lender, as a common practice, checks the buyer’s credit one last time before closing and discovers that the credit purchases no longer qualify the buyer for the needed mortgage. Buyers would be wise to avoid this between signing an offer to purchase and closing date.
     
  6. Incomplete Paperwork: The mortgage agent or representative for the lender did not have all of the proper paperwork in place and the mortgage, conditional on documents to be received, was withdrawn.

Why It Is Better To Buy Now Rather Than Later

Buy Now Or Later

It’s More Important Than Ever:

As you know, the internet can be a great source of information. Some buyers though are too anxious to start looking at homes without confirming what they can afford with a lender. And with today’s mortgage stress test, the need for a buyer to confirm their mortgage affordability is more critical than ever before.

Don’t Assume Affordability:

In one such case, a young couple assumed they could afford their desired price range in spite of the salesperson’s encouragement to obtain a pre-approval. So they viewed some ten homes and signed a purchase agreement conditional on obtaining a mortgage and a home inspection.

Stress Test Failure:

After meeting with their lender they were told they did not qualify for the price of the home they were buying. Though they did qualify based on the current mortgage rate, they failed the stress test. Such an occurrence affects about 18% of prospective buyers today. They would have to reduce their expectations by about $30,000 to buy or increase their downpayment.

Other Possible Measures by the Salesperson:

As well, the salesperson, against his better judgment, was influenced by their confidence, enthusiasm and motivation to buy. He also did not want to lose them as a client. He might have taken one more step though and suggested that, though he cannot pre-approve them, he can certainly run through the same exercise a lender uses to find out what buyers can qualify for based on their income and debts.

Opting to Wait and Improve Downpayment:

The couple was initially upset with the bank but mostly at themselves. They felt the salesperson had done a good job and admitted they should have followed his advice before proceeding. Because of their let down, they decided to put a hold on buying. They did not want to reduce their expectations on the home they wanted. They wanted to save a larger downpayment, about $20,000 more, which they determined would take about two years at a savings of $10,000 per year.

Why it is Better to Buy Now:

Yet buying a lower-priced home today might turn out to be the better strategy, and here’s why: According to the latest statistics, the average house price across Canada has risen by about 6.2% per year for the last 20 years. As an example, barring a downturn and if things remain equal, a $300,000 house today would potentially be worth around $338,000 in two years.

How Equity Can Increase:

If the buyers purchased a home at a lower price today of $270,000 to qualify, after their downpayment of $30,000 they would have a mortgage of $247,440 with CMHC insurance of 3.10% added. Given the 6.2% average annual increase, this home might be worth about $304,500 in two years. That’s a potential gain of $34,500. As well, if they paid down the mortgage by the $10,000 per year they planned to save, their equity would increase again by $32,738.

Their Total Equity:

They would then have the following equity: the original $30,000 down, the capital gain of $34,500, plus an additional $32,738 from reducing the mortgage principal. That’s a total of $97,238 allowing them to buy a better home in two years. It’s worth pursuing.

National Average Price Up 6.2% Per Year Since 1997

House Prices Up

In July 2018, the Mortgage Professionals Canada released their Report on Housing and Mortgage Market in Canada” authored by their Chief Economist, Mr. Will Dunning.

The following is a small but important indication of what is in the report.

1.     Adjusting the Purchase Price:

The report points out that 18% of buyers who could actually afford the home purchase of their choice would fail the stress test. It’s estimated these buyers would have to adjust their purchase by an average of $28, 750. They would also need to increase the amount of down payment. This affects about 120,000 buyers per year.

2.     Number of Resale’s:

To date this year, national resale home activity is down 12.5% compared to last year and 16.5% versus 2016. For the Niagara Region, the overall number of sales in resale homes is down by an average of 21% year-to-date to June 30, 2018.

3.     Average House Prices:

Since 1997 (2 decades) the national average price of resale homes has increased by 6.2% per year from $155,000 in 1997 to $510,000 in 2017.  To date for 2018, the average price of homes in Niagara varies from a low of $334,000 in Welland to a high of $755,000 in Niagara-on-the-Lake. The overall average lies at $471,000. The increase in average price to the end of June is up 1.7% compared to last year. Yet this varies: some cities are indicating an increase, others a decrease from last year.

4.     The Home Ownership Rate:

 In Canada the home ownership rate was at 67.8% in 2016 according to Census Canada. This is down from 69% in 2011. The report attributes this to first-time buyers taking longer to buy. Yet with the additional challenge of the stress test, Mr. Dunning expects that “will fall further during the 2016 to 2021 Census period, with the burden being borne, once again, disproportionately by young adults.”

5.     Sources of Down Between 2015 to 2018:

  • As the main source, 85% of down payments come from personal savings.
  • Another 39% derives from gifts from parents and other family members.
  • 25% is sourced from loans from parents and other family members.
  • Loans for a down payment sit at 43%.
  • From an employer, loans are at 8%.
  • Withdrawal from RRSPs through the Home Buyers Plan: 38%.
  • And finally down payments from other sources stands at 6%.

The total down payments are made up of a combination of any number of the sources mentioned above. The most prevalent source, personal savings accounts for about 50% of the total down payment for first time buyers.

During the 1990’s the average down payment for first-time purchases was about 22%. Between 2014 and 2017, the average has been 26%.

Repairs and Upgrades: How Much Will They Cost?

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During the process of buying or selling a home, your clients often learn about recommended or required repairs and upgrades. This can happen as a result of the home inspection as well as your expert knowledge of your market and comparable homes. Of course, the first thing homeowners want to know is, “How much will that cost?”

Pillar to Post is pleased to offer our popular Residential Construction and Remodeling Estimates cost guide, which provides estimated cost ranges for repair and/ or replacement of the major systems and components in a home. It also includes general guidelines for the life expectancies of those systems.

Request complimentary copies of the cost guide from your local Pillar To Post Home Inspector or download it at pillartopost.com/costguide.

 

Curious as to which upgrades will increase your home's value the most?  Which upgrades will get you the best return on investment?  Contact Barbara or Ashley today for the answers with their free, no obligation consultations.

Natural Home Cooling

Here are some ideas on passive cooling your home to reduce your need to turn on the air conditioning.

Quick Tricks to Reduce the Heat in Your Home

Keep Your Blinds Closed

This very simple tip can lower indoor temperatures by up to 10ºC.  Up to 30% of unwanted heat comes from your windows, especially those windows facing south and west.  By utilising shades, curtains you can prevent your house from becoming a miniature greenhouse.

Create a Thermal Chimney

Open the lowest windows on the side from where the breeze is coming. Leave interior doors open, and open the upstairs windows on the opposite side of the house. The warm air in your house will draw upwards and out the upper window, an effect called ‘thermal siphoning’. This is most effective when the inside temperature is higher than the outside temperature.

Create a Faux Sea Breeze

Fill a mixing bowl with ice or ice packs and position it an an angle in front of a large fan so the fan blows over the ice.  The breeze from the fan will be extra cooling and feel like an ocean breeze.

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Longer Term Heat Reduction Solutions

Insulation

Insulating, caulking and weatherstripping are essential to keeping your home warm in cold climates, but they also help keep your home cool in hot weather. The attics of most homes absorb heat through the roof, and insulating the attic floor will keep this heat from radiating down into the house. Fiberglass insulation, at least R-30, is easy to install. The cost will be recouped quickly in lower energy bills throughout the year.

Landscaping

Trees, vines and shrubs can be used to shade your home and reduce your energy bills. Trees or shrubs can also be planted to shade air conditioning units, but they should not block the airflow.

Rock walls, paved areas and rock features should be kept to a minimum on south and west sides of the home, because they increase temperatures by radiating heat.

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Reflective Barriers

An important consideration in passive cooling is house colour.  Dark-coloured home exteriors absorb 70% to 90% of the radiant energy from the sun that strikes the home’s surfaces. Some of this absorbed energy is transferred into your home by way of conduction, resulting in heat gain. In contrast, light-coloured surfaces effectively reflect most of the heat away from your home.

Absorption Rate and Months of Inventory - June 2018

The DOM (Days on Market) indicates the market time of homes that have sold. It’s not necessarily reflective of a home’s actual market time though. In a number of cases and as a marketing tactic, when a home’s list price is reduced, the salesperson will relist the home to have it show up on MLS as a new listing. This distorts a home’s DOM: it may have sold within 30 days from the new listing date but could have been on the market for any number of days prior.

The Absorption Rate and Months of Inventory

The Absorption Rate helps resolve any distortion in the DOM. It indicates the following:

  •  How many homes are absorbed (or sold) in the market on a monthly basis within a given period, say 6 months,
  • How many months it will take to sell the current listing inventory,
  • How the seller might position their listing to improve its marketability.

Positioning the Listing:

So, for example, if a seller wants to sell in one month and the months of inventory is 3, the seller would need to position the home in front of the market by pricing it more aggressively than its competition. This helps the seller to set realistic expectations and improve a reasonable buyer’s perception of value.

The following chart shows the absorption rate or average number of sales per month and the months needed to sell existing inventory.

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