Real Estate Today

What is Your Intention In Buying Property?

In Tax Court of Canada, a recent appeal sided with the person making the appeal and against CRA.

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Background: In short, Steven B. owned a townhouse in Ontario since 1998. At the time of purchase, his brother, Patrick, contributed to the downpayment, moved in and shared expenses. In and around 2006 the brothers discussed going their separate ways because of brother Patrick’s changing circumstances. So Steven wanted to sell the townhouse and move to a smaller home that was closer to his work.

The New Condo Purchase: In 2006 Steven purchased a preconstruction condo which was scheduled to close on April 27, 2008; yet the occupancy date was postponed by the builder to October 28, 2009.

Changing Circumstances: In 2008 Brother Patrick married, had a child and all lived in the townhouse. Also in 2008, their father passed away and in 2009 their mother moved in with her two sons. Steven soon refinanced the home and paid his brother for his interest in the property. Brother Patrick used the funds to buy a home for him and his family.

New Plan to Sell the New Condo Purchase: Steven had every intention to sell the townhouse but plans changed when his mother moved in. He now felt the condo he purchased was too small for them and by 2009 his plan changed to selling the new condo instead of the townhouse. Steven became the registered owner of the new condo on August 10, 2010. He now arranged to list the property for sale and the sale closed on November 2010.

Sale Results in a Questioned Gain by CRA: His gain on the sale was $13,412 and was reported as a capital gain. He appealed the Minister of National Revenue’s reassessment that this gain was unreported business income from an adventure or concern in the nature of trade, as opposed to a capital gain, so gross negligence penalties were levied against him. Tax on a capital gain is based on one half of the net gain. Tax on business income is on the entire gain after expenses.

The Court’s Decision: The tax court judge based her decision on the following four factors which are a good takeaway.

  • Intention: Steven’s intention was to sell his current property and move into the new condo. This plan was thwarted by the death of his father and his obligation to look after his mother. According to the Judge, “Therefore, this factor favors a finding on account of capital” as opposed to income.

  • Nature of business of trade of the taxpayer: Steven and brother were both transit operators. Prior jobs had no connection to real estate transactions and the townhouse was the first and only property he had ever owned until buying the new condo. Again this evidence favored capital.

  • The nature of the property: As a new condo which sold quickly after closing, “this factor favors a finding on account of income.

  • Extent and Use of Borrowed Money and length of time the real estate was held: The agreement to buy was September 2006, yet the closing took place in August 2010. Steven only borrowed money to refinance the existing townhouse to pay off his brother. There was no financing on the new condo and he could not afford to own both homes. The sale took place quickly but time between agreement to buy and closing was long: about 4 years. This factor was found to be neutral.

Decision: The sale of the new condo was determined to be a capital gain and properly reported. The appeal prevailed and CRA’s penalties were dismissed.

The Future of Real Estate Professionals

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Recently one of our salespeople asked our broker of record how he thought the role of the real estate professional would unfold in the future.

Big and highly financed technology companies have been and continue to make efforts to seize the real estate industry and in some ways attempt to bypass the real estate salesperson. Other technology sites are trying to capture potential buyers in most cases and sell these leads to real estate salespeople. Still other tech avenues involve a combination of agent and technology services at a discount.

As well, these large tech companies consider real estate “an appealing target for disruption.” That’s because of the fragmented nature of real estate, these companies claim. Fragmented is certainly one way to describe the industry. Possibly a better way to portray it is that real estate is hyper local. National figures talk about nationwide average prices and number of sales. That’s fine to see overall trends, yet what really matters to buyers and sellers is what is going on given market conditions, number of sales and prices on a local level. Take that one step farther and a home’s value is not based on averages but on comparable homes sold relative to the home’s neighbourhood.

According to the 2018 Profile of Buyers and Sellers, an annual study conducted by the National Association of Realtors, the following highlights how Buyers’ use Real Estate Professionals:

  • Eighty-seven percent of buyers recently purchased their home through a real estate agent. Most wanted to have an agent help them find the right home

  • About 41% used an agent referred by a friend, neighbour or relative.

  • 90% of buyers would recommend or use the agent again.

The following are Seller highlights from the same study:

  • 63% used an agent that was referred or one they previously worked with.

  • 85% would definitely (69 percent) or probably (17 percent) recommend their agent for future services.

Transaction Becomes More Complex

What’s more the real estate transaction continues to grow in complexity, requiring the help of a savvy real estate professional who can counsel, negotiate and help solve problems as they surface. So the most practical role of tech sites is their ability to identify potential buyers and in some cases sellers; in other words: to generate leads. Beyond that the one-to-one experience between the client and the real estate professional continues to be pivotal in successful buying and selling and the reduction of stress and anxiety that can play a part in the transaction for the most part.

Many top real estate people continue to invest more in technology annually. They also continue to employ traditional methods of obtaining business: direct response advertising, staying in touch with past clients and centers of influence, open houses and more. They see technology as another effective tool in their arsenal. Many casual salespeople seem to view it as the shiny new object to catapult them into more sales.

As well, the iBuyer concept for instant transactions, introduced in 2014 in the US, accounted for .2% of US transactions in 2018. That included 15,000 purchases and over $10,000 sales, this according to analyst Mike DelPrete.

Lastly, and in our experience, any attempt to buy a home sight unseen is anything but a good idea. Enhanced photography, in some cases digital staging and omission of negative features of the home can lead to disappointment at the very least, possible litigation and attempts to back away from the sale. None of the advertising and photography can take the place of physically walking through the property and neighbourhood and getting a feel for what is being purchased with a REALTORS® third eye.

Bottom line: Real estate professionals will continue to play an important role in successful buyer and selling.

Home sales increase, but local real estate market still robust

St. Catharines, ON (July 8, 2019) - Residential home sales activity recorded through the MLS® system for The Niagara Association of REALTORS® (NAR) totaled 702 units in June 2019. This was an increase of 4.8 per cent from June 2018 and a decrease of 5.3 per cent from May 2019.

On a year-to-date basis, a total of 3,673 homes have sold over the first half of the year, an increase of 9.4 per cent from the same period in 2018.

“Home sellers in Niagara enjoyed a robust spring market this year,” says Deanna Gunter, President of the Niagara Association of REALTORS®. “Although the number of units sold has increased over 2018, new listings coming onto the market and our inventory, as a whole, are still down. This keeps Niagara in a seller’s market moving into the summer months.”

The MLS® Home Price Index (HPI), tracks price trends far more accurately than is possible using average or median price measures. The overall MLS® HPI composite benchmark price for the Niagara region was $415,000 in June 2019. This was an increase of 6.7 per cent compared to June 2018.

The characteristics of the HPI composite benchmark is a home between the age of 51 to 99 with three bedrooms and two bathrooms. A full list can be found in the accompanying chart.

“Working with a Niagara REALTOR® to set a list price which reflects the current market value is key for sellers who wish to take advantage of a market moving in their favour,” says Deanna Gunter.

The dollar value of all home sales in June 2019 was $314.9 million, a 15.5 per cent increase from the same month in 2018. It was one of just a handful of times in history that the MLS® system for The Niagara Association of REALTORS® has processed more than $275 million in a single month.

Please refer to the accompanying chart for residential market activity in select areas in NAR’s jurisdiction. Note: these statistics now include the Township of West Lincoln.

About The Niagara Association of REALTORS® The Niagara Association of REALTORS® represents over 1200 REALTORS® serving the communities of Fort Erie, Fonthill/Pelham, Lincoln, Niagara Falls, Niagara-on-the-lake, Port Colborne/Wainfleet, St Catharines, Thorold and Welland. Our mission is to empower REALTORS® to thrive. Our vision is to foster an environment where leadership and members provide influence, advocacy, enhance professionalism and business acumen.

New Rules on Disclosing a Death In Home

How would you feel if…

… you purchased a home and after closing found out that someone had died, was murdered or committed suicide in the house?

Feelings Vary Among Buyers

We have found that some people wouldn’t care, and yet others would be quite put off simply because they were not informed. Still others would be disturbed that someone died in the home; had they known, they would not have purchased. Still, different buyers would have reservations about buying depending on whether it was a natural or a violent death such as a murder or suicide.

Concern Over Resale Value

As well, finding out after the sale can still be upsetting for financial reasons. They are concerned that it would affect the resale of the home down the road. Had they known, they argue, they either would not have purchased or they would have offered less.

Case Study 1: Don’t Tell

In one case, the buyer bought after he was told that the previous owner had committed suicide in the home. He purchased to fix and flip. Yet when he decided to sell, he did not want the suicide disclosed. His lawyer informed him that he did not have to disclose it. The salesperson, however, felt that it should be disclosed as it could be construed a material fact, meaning that it might influence the buyer’s decision to buy or how much to offer. The seller eventually did agree to disclose the death and the property sold without a problem, and with very little variance from the list price.

Case Study 2: In or Out

The buyer asked if anyone had died at the property. The listing representative said, “Yes,” and mentioned that the owner had died from natural causes. The buyer proceeded with an offer in which the death was restated in writing. The buyer then asked whether the owner had died inside the home. On being told the death occurred outside the back door, the buyer proceeded with the purchase.

Case Study 3: 2 Offers

Here two buyers were competing for the same home. On being told of the suicide at offer presentation, the buyer with full price cash walked away. The 2nd buyer didn’t care, increased his offer to full price, obtained the needed financing and closed the deal.

Buyer Beware Applies But Now A New Ruling Exception

In a recent Canadian case, Wang v. Shao, 2019 BCCA 130 the Court of Appeal dealt with dealt a buyer complaint for nondisclosure of a murder on the property purchased The appeal court ruled that “buyer beware” applies. That is, when a buyer has a fear or subjective concern about a death, it’s up to the buyer to ask specific questions. Once asked the Seller must answer truthfully and cannot be silent or fail to disclose. The buyer did not specifically ask if a death occurred at the property but only asked why the seller was selling.

This is a New Twist. Prior to this, if the seller did not want to disclose and the buyer asked, the agent would have to say that he/she was not at liberty to disclose.

Does a pool add value to your property?

According to Doug Ellwood of Appraisals Niagara Real Estate Appraisers Inc., In-ground pools have gained greater acceptance in the last 5 or so years. When it come to market value, we need to consider the fact that some people want in-ground pools and some do not. We all know that pools are expensive to install, but when it comes to added value, we would expect most-likely a range from $10,000-$15,000 as a contributory value. Having said that, if the pool is brand new, we would adjust the value higher accordingly. We do not consider above ground pools as adding value.

In our last survey regarding pools and landscaping, here’s what our survey participants had to say.

1. Would you buy a house with a pool?

2. What is a pool worth to you?

Average value $6,000

3. Rank in order of importance.

4. Would an above ground pool add value?

5. What shape of pool do you prefer?

Niagara Region Residential Home Sales Statistics for May 2019

For the Niagara Region: 01-May-2019 to 31-May-2019 vs. Same Time Last Year*

The market is balanced, which is good news for both buyers and sellers. It is a great time to upsize or downsize your home. To learn more about how the market might affect you contact Ashley Czinege or Barbara Grumme for a no obligation, no charge consultation.

The average sales price for residential properties in Niagara Falls in April 2019 has continued the trend of being higher. The average sales price for residential properties in Niagara Falls has been consistently higher than last year’s prices for the past 12 months. This is a trend that is likely to continue with a moderate, but steady increase in home values.

The average number of days to sell a property remain relatively consistent over the past 18 months.

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

It's Important to Know Today's Mortgage Rules

Confused About Getting a Mortgage Today?

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You’re not alone. Recently reports state that a majority of people (some 57%) are befuddled about qualifying for a mortgage. It has further been reported that the stress test causes some 47% of people additional confusion.

Mortgage Pre-Qualification Is More Important Than Ever

Why? Aside from the stress test, qualifying for a mortgage has become quite complicated. The website for Canada Mortgage and Housing (CMHC) includes an article called: How key inputs calculate a borrower’s debt service ratios. This can help to clarify some of the essential steps lenders have to look to today to qualify you or a mortgage. Here are the highlights of these key inputs.

What is GDS?

GDS or Gross Debt Service represents 32% of your gross income. So if you have a combined gross income of $100,000. Your GDS works out to $2,667 per month. This amount must cover the mortgage Principal and Interest, property Taxes and Heat. The acronym PITH is commonly used.

What is TDS and How Can It Reduce GDS?

TDS or Total Debt Service represents 40% of your gross income. At a gross income of $100,000 your TDS works out to $3,333 for all debts, or $667 more for Other Debt Obligations. Should other debt obligations be greater, they will reduce your GDS. So if your other debts are $1,133, this will reduce your GDS to $2,200 for mortgage, taxes and heat.

Condo Fees

If applicable, 50% of condo fees must be included in the calculation.

What’s Included in Other Debt Obligations

These include credit cards, lines of credit, car and personal loans. For this type of debt, the lender must calculate and factor a monthly payment of 3% of the outstanding balance. A balance of $15,000 works out to $450 per month.

What’s Different About a Secured Line of Credit?

For a line of credit that is secured on your property the formula differs. Here the lender takes the outstanding balance and calculates a monthly payment based on a mortgage amortized over 25 years at the benchmark rate if the contract rate is unknown. The benchmark rate, currently at 5.34% represents a cross-section of posted bank rates and is set by the Bank of Canada.

For example, a $20,000 secured line of credit based on the above would have a monthly payment of $120.22 to factor into the qualifying mix.

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Finally the Stress Test

For an insured mortgage, typically one with less than 20% down, the borrower must qualify at the benchmark rate of 5.34%, though the contract rate might be in the area of 3% for a five-year term mortgage.

For an uninsured mortgage, typically a mortgage with 20% or more down, the borrower must qualify for the greater of the benchmark qualifying rate or the contract rate plus 2 points.

What’s More,CMHC requires a recommended minimum credit score of 680. With all of these rules, knowing how much mortgage you qualify for requires the help of an expert before you decide to shop for a home.

7 Dangers in Overpricing Your Home

Overpricing in today’s market can be hazardous to your sale. Here are 7 reason why:

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1. You Might Lose Qualified Buyers

That’s because they won’t even look at the home because the price is either out of their affordable range or higher than the maximum price they want to buy in.

2. Buyers Comparison Shop

Buying is a process of elimination by comparing competing homes to each other. So over-pricing helps to sell other homes and the over-priced home only serves to reveal the better value of competing properties. Your listing strategy should be to position your home to attract prospective buyers, not drive or scare them away.

3. Today Lenders are Often Require an Appraisal

The mortgage companies lend on the appraised price or the price paid, whichever is less. So if the appraisal is less, the buyer would have to kick in any shortfall. In most cases, the buyer does not have the extra cash. What’s more the buyer tends to lose confidence in the purchase and walks away from the deal. This make it futile to price a property for more than it's worth.

4. The Property May Become Stale After a Time

Properties left on the market for extended periods can become shopworn and even stigmatized. Prospects may wonder why it has been on the market too long and think there is something wrong with the home, even after you lower your price.

5. A Longer Marketing Time Can Have Negative Consequences

It can affect a lower selling price than would have been otherwise attained. You lose a strong negotiating position when your home is on the market a long time, both financially and mentally! Prospects will not "rush" to make an offer on an overpriced property, and you may feel compelled to accept less when they finally do.

6. Over-pricing Reduces Motivation from Buyer Agents

In today’s world of Buyer Representation, selling salespeople are obligated to give their opinion of a home’s market value as part of the disclosure process. As well, salespeople will not promote an overpriced property because they risk losing their client’s trust. All this makes it less likely the property will be shown.

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7. The Selling Price is Simply a Function of Supply and Demand

The buyer ultimately establishes the value of a property. Yet, as a seller, you need a pricing consultation report, prepared by a qualified real estate professional that provides an analysis of facts and figures, available to real estate brokers and salespeople, to help you arrive at a proper pricing position in a competitive marketplace. Resist giving into an agent that gives you a price you want to hear. Most unsold listings usually expire and are taken off the market because of overpricing. Select your agent on his/her ability to help you price your home for best market price based on comparable sales.

5 Things to Avoid When Applying for a Mortgage

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Whether you are purchasing your first home or refinancing your mortgage, there are harmful things you can do to jeopardize your own approval. Here is our list of what to avoid and why:

Don’t change your job

Depending on how long you have to purchase or refinance, you could wait this one out, but typically mortgage providers are required to see you have stable employment. When you move between jobs, the mortgage provider will then need to wait until you are out of your probationary period. With probation often lasting about 3 months, this can hurt your purchase or refinance application in this window. Occasionally, if you have been in the same industry, the employer may waive the probationary period, but I wouldn’t count on it!

Don’t buy a car

This is a big mistake for many borrowers. When being qualified, mortgage brokers take all your debt, loans, and car payments into the calculations for your mortgage approval. Car payments themselves can range from $200/month to $800/month. With that in mind, these payments reduce your monthly cash flow, and in turn reduce the amount you can be eligible for in your mortgage. The best bet is to wait until after your mortgage funds to buy a car.

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Don’t extend credit balances further than when you were approved

With your mortgage approval, we are required to use a 3% payment on most of your debts (unless there are set payments such as car loans, or other set obligation loans).

Don’t miss any payments

When you are approved for a mortgage, the mortgage provider takes into account your income situation, your credit worthiness, and overall property to approve your mortgage. With that in mind, you do not want your credit situation to change – this means keeping all payments up to date and ensuring none slip to past due. Mortgage providers will usually do a final credit check right before funding to ensure everything is still in order. You do not want your mortgage approval getting cancelled last minute!

Don’t make unusual or large deposits between accounts

When you are approved for a mortgage, the bank requires 3 months of statements showing the accumulation of your down payment. When there are large deposits (typically over $3,000) which are not payroll deposits, these deposits must also come with 3 months of statements from the transfer account. That means if you are moving a lot of money around, this could be a headache to gather the appropriate statements!

Despite these things to avoid, the home buying process shouldn’t be challenging or alarming. Once your mortgage provider supplies you with your mortgage funds, you will be able to go buy that car you want, change your job, or extend credit card balances. But don’t neglect to make your mortgage payment!

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Sherri Vigna - Mortgage Agent

CENTUM Omni Mortgage Corp.

282 Geneva Street, St. Catharines, ON

T: (289) 337-1304

Niagara Region Residential Home Sales Statistics for April 2019

For the Niagara Region: 01-Apr-2019 to 30-Apr-2019 vs. Same Time Last Year*

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The market is balanced, which is good news for both buyers and sellers. It is a great time to upsize or downsize your home. To learn more about how the market might affect you contact Ashley Czinege or Barbara Grumme for a no obligation, no charge consultation.

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The average sales price for residential properties in Niagara Falls in April 2019 has continued the trend of being higher. The average sales price for residential properties in Niagara Falls has been consistently higher than last year’s prices for the past 11 months. This is a trend that is likely to continue with a moderate, but steady increase in home values.

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The average number of days to sell a property remain relatively consistent over the past 18 months.

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The number of residential sales, total listings, new listings and expired listings follow a fairly consistent pattern with a slight drop in sales and new listings in the December - January time frame which is expected in the winter season.

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

Average Prices versus Home Price Index

Tremendous Gains in Home Prices Since 2016

Buyers from the greater Toronto area continue to buy in the Niagara region and it’s a real financial benefit for sellers. Over the last few years home prices have made tremendous gains. As a reflection of this phenomenon, and though these percentages may differ in diverse parts of the region, our records, drawn from MLS sales, indicate the following overall average price increases:

  • In 2016, the overall average price increased by about 18% compared to the year before;

  • In 2017 the average price increased by about 23.8% versus the previous year;

  • In 2018 the average increased by about 3% over the prior year.

  • Though not a strong metric, the 3-month year-to-date average to the end of March, 2019 indicates an overall average price increase of about 6%. This, of course, is subject to change over the following months.

The Internet’s Role

Through the internet, today’s buyers research homes for sale in any area. They can also shop different regions, cities and towns to compare prices. This ability to comparison shop has played a significant role in attracting people to Niagara. With this increased demand on a limited supply, prices have soared.

Let’s Take it One More Step...the HPI

Through the MLS® Home Price Index (HPI), we REALTORS® have the ability to track changes in home prices by comparing price levels at a point in time with price levels in a base (reference) period. The base period value is always 100.

The composite benchmark price for the Niagara Region is shown below as is the HPI. The HPI base period having a value of 100 is 2005. So the MLS® HPI composite value for homes in March 2012 is 122.1. This means the value of homes is up 22.1%, compared with the 2005 base period (122.1 − 100 = 22.1%). The chart below gives both the benchmark price and the HPI index to March 2019. The composite price is made up of the various styles of homes.

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How Does the HPI Differ from Average and Median?

CREA’s “MLS® HPI is based on the value home buyers assign to various housing attributes over time. Price changes, hence, are less volatile than average and median prices, which can swing dramatically in response to changes with high-end or low-end sales volumes over time. This is a great tool.

Should You Sell First or Buy First?

Whether to sell or to buy first depends on market conditions, affordability, and your tolerance for risk.

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In a balanced or buyer’s market, offers conditional on the sale of the buyer’s home are fairly common. Today in Niagara, we are again starting to see conditional sale contracts.

In a seller’s market, sellers favor purchase contracts free of a condition to sell the buyers property. Sellers often have the choice of accepting an offer with the fewest conditions possible. This is especially true if the home’s list price is based on a valuation that reflects market pricing.

Regardless of Market Conditions...

The most desirable homes tend to be positioned in seller’s market territory. These are homes that are competitively priced, appeal to and are affordable to the highest concentration of buyers. Also, the supply and demand of homes varies within different price ranges. For high-end homes the market can shift to a buyer’s market as seen below. Market conditions can be measured by the months of inventory, also known as the absorption rate.

Months of Inventory Analysis For Homes Listed for Sale

Under 5 Months Supply = a Seller's Market

5 to 6 months supply = a Balanced Market

7 to 9 months supply = a Buyer’s Market

Over 9 months supple = an Extreme Buyer’s Market

As an example, in a recent St. Catharines study of MLS listings and sales over three months, the following clearly makes the point: .5 months of inventory at $250,000 or less; 8 months at $250-$350K; 2.3 months at $351-$450K; 4.5 months at $451-$650K; 9 months at $651K +.

Anything under $650 indicates a seller’s market in varying degrees while anything above $650,000 points to a buyer’s market.

So How Does this Relate to Whether to Buy or Sell First?

  • There are buyers who have to know where they’re going before they can sell and those who have to sell before they’re ready to buy.

  • Not everyone can afford to buy a house before they sell theirs as you might have to qualify for two mortgages. Can you afford to hold two properties if your current home sits on the market and does not sell for a few months? If so, consider an open mortgage that can be paid off at any time. Once your home sells, lock into a fixed mortgage.

  • Have a detailed conversation with a mortgage broker and your REALTOR®. Strive to understand your options and costs.

  • Be ready to put your home on the market. Repairs take time, as does staging and listing a home for sale. Time is precious when you’ve got a pending closing date quickly coming up.

  • Ideally, you should be ready to list within 48 hours of signing paperwork to buy. You should also have had the property evaluated by your sales representative.

  • Selling first might mean temporary accommodation but eliminates the risk and cost of owning two homes. It can also give you a strong negotiating position.

  • Bridge financing can only be obtained when you have a firm and binding sale on your home.

Rooting Out Fraud & Tax Avoidance

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13% of Canadians Would Lie Applying for a Mortgage

A survey by Equifax Canada, a leading consumer credit company, indicated the following regarding mortgage fraud:

  • 13% of Canadians felt when applying for a mortgage, a white lie to get the house they want is okay.

  • 16% believe “mortgage fraud is a victimless crime.”

  • 8% “admitted to misrepresenting the facts on credit or loan application.”

Equifax further noted that since 2013 there has been a 52% increases in “suspected fraudulent mortgage applications.

What is Mortgage Fraud?

CMH defines mortgage fraud as deliberately misrepresenting in order to obtain a mortgage. It cites the following 8 deceptive acts::

  1. “Misstating your work position, your income or the length of time you’ve held your job

  2. “Stating you’re a full-time salaried employee if you are not

  3. “Misrepresenting the amount or source of your down payment

  4. “Claiming a rented property is owner-occupied

  5. “Not disclosing other mortgages or debts

  6. "Omitting information to inflate the value of the property

  7. “Adding purchasers’ names on the mortgage application who do not intend to take responsibility for the mortgage

  8. “Acting as or using a “straw buyer” – a person whose good credit is used to get a mortgage for someone else”

Fraud May Create Liability and Criminality

Such acts, CMHC warns, make the borrower liable for financial shortfalls should default occur, and they can be held criminally responsible. Aside from some borrowers inflating their income, CMHC believes that notices of assessment from Canada Revenue Agency can be printed and easily falsified.

CMHC Asks CRA to Verify Incomes

CMHC recently asked CRA to take a more active role in verifying income borrowers are claiming on mortgage applications. CMHC sees this association as necessary due to sophisticated increases in fraudulent threats. So CRA is looking into secure ways to share information with financial institutions conditional on client consent. Such direct access by lenders should speed up income accuracy and verification, speeding up the approval process.

Budget: CRA to Crack Down on Tax Avoidance

To address tax non-compliance in real estate, the Feds are giving CRA $50,000,000 to create audit teams to ensure the following:

  1. Taxpayers report the sale of their principal residence,

  2. Any capital gain from a property sale is identified & taxed,

  3. Ensure money on real estate flipping is reported as income,

  4. Commissions earned are reported as taxable income,

  5. Builders of new residential properties remit the appropriate amount of tax GST/HST to the CRA.

To Deter Financial Crime in Real Estate, including mortgage fraud and money laundering, the Budget is strengthening enforcement by expanding its “outreach and examinations in the real estate sector.”

Share Equity First Time Buyer Incentive

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To Help First Time Buyers: the Liberal Government Budget included a First Time Home Buyer Shared Equity Incentive, and an increase in the RRSP Home Buyer Plan.

1. The First Time Home Buyer Shared Equity Incentive: One catch about this new initiative is that details of the plan won’t be out until sometime in September of this year, 6 months down the road. This may actually cause first-time buyers to wait it out until more details become available on how the plan will work.

The basic information: Through Canada Mortgage and Housing, the government will contribute 5% for a resale home and 10% for a newly built home to bring down the mortgage on a shared equity basis. The money is interest free and there is no monthly payment. You can choose to pay it back at any time or when you sell the home down the road.

What still needs to be unraveled is how the money is to be paid back. Will you simply be required to give the money back without interest or will the repayment include an equity share in the home’s value? With the second option, if for any reason the home’s value goes down will CMHC take a proportionate share of the loss?

To qualify the down payment required is 5%, the minimum for an insured mortgage and a household income of $120,000 or less. As well, the mortgage including the equity loan is restricted to 4 times the household income. So at an income of $120,000, the maximum mortgage loan would be limited to $480,000. A household income of say $100,000 would qualify for a mortgage loan of $400,000.

No Stress Test Relief or 30-Yr Mortgage

The hope prior to this announcement was that the government would ease up on the stress test and/or increase the amortization to 30 years from 25 years. Instead the stress test to qualify for a mortgage remains unchanged and the maximum amortization stays at 25 years. Here is a comparison in savings if the government had simply increased the amortization to 30 years vs. the Equity Plan of 5% & 10%:

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A Significant Savings with 30-Yr Plan

The 30-year mortgage gives a savings of $247.85 versus $119.88 and $239.65 per month. The 30 year versus the 5% assistance for resales ($247.85 - $119.88) gives a savings of $127.97 more per month. That would be especially significant for first-time buyers.

2. The RRSP Home Buyer Plan for first time buyers now allows a withdrawal of up to $35,000 per individual to purchase a home. Two first-time buyers in the same household can withdraw up to $70,000 for a downpayment to be repaid over 15 years.

People in marriage or common-law partner breakdowns will also be able to participate in the Home Buyer Plan as of this year.

Niagara Region Residential Home Sales Statistics for February 2019

For the Niagara Region: 01-Feb-2019 to 28-Feb-2019 vs. Same Time Last Year*

Niagara Real Estate Stats 2019-02.jpg

As seen in the above charts, the real estate market in the Niagara Region is very stable. The number of sales year over year are consistent and generally the prices are increasing at a steady rate. There are a few noticeable % changes (positive and negative) in several municipalities, but the fluctuations can be easily explained by the small sample size. When looking at the 12 month rolling average prices, the market shows a steadier increase in prices.

The market is balanced, which is good news for both buyers and sellers. It is a great time to upsize or downsize your home. To learn more about how the market might affect you contact Ashley Czinege or Barbara Grumme for a no obligation, no charge consultation.

Average Sales Price Stats Niagara Falls - 2019-02.jpg

The average sales price for residential properties in Niagara Falls in February 2019 has continued the trend of being higher. The average sales price for residential properties in Niagara Falls has been consistently higher than last year’s prices for the past 9 months. This is a trend that is likely to continue with a moderate, but steady increase in home values.

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

Niagara Region Residential Home Sales Statistics for January, 2019

For the Niagara Region: 01-Jan-2019 to 31-Jan-2019 vs. Same Time Last Year*

Niagara Real Estate Stats for Blog 2019-01.jpg

As seen in the above charts, the real estate market in the Niagara Region is very stable. The number of sales year over year are consistent and generally the prices are increasing at a steady rate. There are a few noticeable % changes (positive and negative) in several municipalities, but the fluctuations can be easily explained by the small sample size. When looking at the 12 month rolling average prices, the market shows a steadier increase in prices.

The market is balanced, which is good news for both buyers and sellers. It is a great time to upsize or downsize your home. To learn more about how the market might affect you contact Ashley Czinege or Barbara Grumme for a no obligation, no charge consultation.

Average Sales Price Stats Niagara Falls - 2019-01.jpg

The average sales price for residential properties in Niagara Falls in January 2019 has continued the trend of being higher. The average sales price for residential properties in Niagara Falls has been consistently higher than last year’s prices for the past 8 months. This is a trend that is likely to continue with a moderate, but steady increase in home values.

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

Video/Audio Surveillance of Buyers: Not Cool!

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What Buyers Want Viewing Homes

Most buyers, when viewing a home, want to feel comfortable and relaxed so they can focus on looking at the home and what it has to offer.

Anything that makes them feel discomfort or at all uneasy will detract from the showing.

Four Behaviours Seller Should Avoid:

  1. When the sellers are home, buyers can feel constrained as they can’t speak freely with their sales representative or between themselves.

  2. Even if sellers do their best to stay out of the way, buyers might take less than the time needed to have a good look and get a good feel for the home.

  3. In some cases the sellers’ dog follows the buyers around. In spite of the sellers’ insistence that the dog is friendly one of two things can happen: the buyers are looking down and behind not sure whether the dog might nip at them; or they give the dog playful attention.

  4. To add to the discomfort, some sellers shadow the buyers and follow or lead the buyers around pointing out all the wonderful things they’ve done to the house. They seem unaware that they are coming off somewhat aggressive and, if anything, turning the buyers off.

Today’s Surveillance Technology in Homes Calls for Caution

Home surveillance devices are becoming increasingly common and this too can make buyers uncomfortable. What’s more, if buyers and their reps aren’t aware of video and/or audio scrutiny, they might say something that can give sellers an advantage when negotiating; or even say something that might offend sellers.

RECO (The Real Estate Council of Ontario) has advised salespeople “to caution homebuyers…that there may be a recording device in the home.”

Buyers Deserve a Little Time, Space and Privacy

In most of these scenarios, buyers are distracted from looking at the house. With surveillance, they can also feel a bit creepy. Their reason for being there in the first place is to determine whether the home suits them and is worth buying. So they might find surveillance offensive.

With homes being the biggest purchase in most people’s lives, they deserve a little privacy and freedom to view without feeling impaired. They are, after all, accompanied by their licensed real estate person. What’s more, most often they have looked at the pictures, read the information and discussed the property before viewing. Now they simply want to take a hassle-free look, see whether they get a positive feel for the home, as well as voice concerns or questions their REALTOR® can get answers to in a timely manner.

Realtors® are Wise To Advise Sellers

REALTORS® already ask sellers not to be present during showings. They should also ask whether they have video/audio devices that buyers should be told about in advance of seeing the home. Understanding honoring that buyers prefer a certain level of privacy is also a good marketing practice and can promote showings. Looking over a buyer’s shoulder by any means is anything but cool. Allow them to converse with themselves and their salesperson while viewing, even opening the cupboards to see how much room they would have for storage.

Niagara Region Residential Home Sales Statistics for December, 2018

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

Niagara Real Estate Stats for Blog 2018-12.jpg
Niagara Real Estate Stats for Blog 2017-2018.jpg

As seen in the above charts, the real estate market in the Niagara Region is very stable. The number of sales year over year are consistent and generally the prices are increasing at a steady rate. Looking at the December comparison chart, although there are significant swings in several municipalities, when looking at the annual averages (2018 versus 2017) the data shows a steadier market. Only Niagara-on-the-Lake and West Lincoln have shown an annual average drop in sales prices and that can be misleading due to the small sample size and number of sales.

The market is balanced, which is good news for both buyers and sellers. It is a great time to upsize or downsize your home. To learn more about how the market might affect you contact Ashley Czinege or Barbara Grumme for a no obligation, no charge consultation.

Average Sales Price Stats Niagara Falls - 2018-12.jpg

The average sales price for residential properties in Niagara Falls in December 2018 has continued the trend of being higher. The average sales price for residential properties in Niagara Falls has been consistently higher than last year’s prices for the past 7 months. This is a trend that is likely to continue with a moderate, but steady increase in home values.

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The annual average number of days on market in Niagara Falls is 36 with a slightly slower December which is historically consistent with previous Decembers. The spring 2017 was a very active market, but it has evened out to a steady pace. This is great for people who are looking to sell and buy a new property, giving you time to find the right property for you.

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