Meaningful change coming to home inspection industry

Happy Holidays to all of my subscribers. Thank you for all of your emails and good wishes throughout the year. I wish all of you and your families good health and continued success in 2014.

Today anyone can call themselves a home inspector in Ontario. That is a scary proposition since most consumers depend on the opinion of a home inspector before making one of the biggest purchases of their lives. There are over 1500 home inspectors operating in the Province yet there are no mandatory training or technical standards for them to meet. The results are often a leaky roof, cracked foundation or outdated electrical wiring or plumbing that was missed and which ends up costing unwary consumers thousands of dollars to repair after closing. In extreme situations, consumers have lost their homes. Many inspectors do not carry errors and liability insurance, meaning that if they make a mistake, even if you win a lawsuit, you may recover nothing later.

The Ontario Minister of Consumer Services formed a panel of industry experts to make recommendations to change the home inspection industry, which included home inspectors, educators, a Realtor, a lawyer, educators, engineers and an insurance broker.

Their report is aptly titled "A Closer Look: Qualifying Ontario's Home Inspectors".

The main goal of the recommendations is consumer protection. This is proposed to be achieved through the following main principles:

• Home inspectors should be regulated and called "Licensed Home Inspectors";
• There will be minimum qualifications to become a licensed home inspector, including a written exam, a field test and experience requirements. Ongoing professional development and education will also be required so that home inspectors stay up to date;
• Increasing consumer awareness by providing information as to what service is or is not provided by a home inspector; for example, some inspectors may provide additional services such as energy audits, new home warranty inspections, chimneys, well, septic, mold, drainage or termite testing, while others may not. Home inspectors should not be required to enter any area of a home that is unsafe or not readily accessible.
• Access to a centralized registry of licensed home inspectors;
• A code of ethics that outlines expected behavior of home inspectors, including disclosure of any referral fees or incentive programs.
• Mandatory errors and omissions and general liability insurance to be carried by any licensed home inspector;
• A complaint and dispute resolution process for consumers; and
• A delegated administrative authority, similar to the Real Estate Council of Ontario that regulates real estate agents, overseen by the government, to license and regulate home inspectors; For example, the code of ethics referred to above would be written by the government, but the administrative authority would enforce it, with the power to penalize or suspend any home inspector who violates the code of ethics. This authority would pay for itself through the fees charged for licensing and education.

The goal is to move to this new regulatory environment within the next 18 months, to permit home inspectors to become licensed.

I spoke with Graham Clarke, an experienced home inspector with Carson Dunlop who was on the panel. As Graham indicated, almost everyone involved with the home building and selling business, from real estate agents, lawyers, mortgage brokers, lenders, builders and appraisers are all regulated by the government in some manner. It is time for the home inspection industry to become similarly licensed and regulated.

The government is also asking for feedback. If you go to the government website at

http://www.ontariocanada.com/registry/view.do?postingId=14645&language=en

then scroll down, you can get a copy of the form to complete.

If you have your own views on this important issue, send in your feedback to the government now. Change is coming to the home inspection industry, and the consumer should be the winner.

Mark Weisleder, Lawyer, Author

Steven Porter

Real Estate Broker

RE/MAX Aboutowne Realty Corp., Brokerage

www.PorterRealEstateSystem.com

Black Belt Negotiating for Homebuyers

How would you like to save $10,000 or more off your next house? It's really quite easy if your real estate agent has a black belt in negotiating. The challenge is that most people in general and real estate agents in specific rarely take advantage of the power of bargaining, except on rare occasions when making large purchases like cars and houses. In other countries, like Asia, people there negotiate everything everyday and save thousands.

Negotiating is like a martial arts contest where power, leverage and timing can mean the difference between winning and losing. For instance, a martial artist would never go into a contest without first spying on his opponent to find weaknesses. In the same way, you can gain bargaining power by doing your homework. When buying a house find out how long it's been on the market, why the owner is selling, if there have been previous offers and if you will be the only one making an offer at this time. Obviously, finding the answers to questions like these could save you a lot of money.

First, make sure that your agent presents your offer in-person, if possible. It's very difficult to negotiate a good deal by fax.

Before engaging in contest, a martial artist warms up by stretching. Likewise, a savvy negotiator warms up by building rapport and finding common ground with the other party, because people like to do business with people they like. In real estate, a smart agent will try to get the seller emotionally involved with you before he brings out your offer. He should have you compose a hand-written letter about why you want the home and perhaps even show a few photos of you and your family. When faced with several competing offers I know of instances when a client's contract has been accepted even when it didn't present the highest price because the seller took a likeness to the buyers.

Next, fighters will cautiously probe each other looking for weaknesses. In bargaining this is done by throwing offers onto the table to see how the other party reacts. Experienced fighters often use guile to lure their opponents into range by pretending a blow has hurt them more than it really did. Similarly, your agent could pretend to be shocked by a seller's counter to your offer to get him to come down in price. Visibly showing surprise or hurt is called flinching and it used by master bargainers to gain concessions without giving up anything.

Martial artists are taught to read the body language of their opponents so they can see a blow before it is unleashed. Experienced negotiators can literally read the other party's mind by watching body language and listening carefully. If a seller says, "Make us an offer" you know their price is flexible before you even start. Also, without saying a word their body language can also tell you if they like or dislike any offer you make so be sure your agent watches very carefully as they show the seller your purchase contract. If the pupils of the owner's eyes get larger as they read the price you are well on your way to a deal but if his pupils get smaller your agent will have to do a lot of selling.

Martial artists do not believe in win-win and neither should you. Even when sparring with their best friend they want to give their best effort. Expect and demand your agent fight for the best deal possible assuming that the seller and his agent will take care of themselves because they will.

Fighters are supremely aware of time and try to use it to their advantage by saving as much energy as possible for the last few seconds of a round when they can score points against a tired opponent. Black belt negotiators put their opponents under time pressure by setting deadlines. Be sure that your agent mentions to the seller that you are considering several other similar properties in the area and that the seller must give a prompt response to your offer.

In martial arts, as in life, there are unfair fighters who will do anything to win, so you must protect yourself at all times. Negotiators must be aware of unfair tactics such as nibbling, which is asking for concessions after an agreement has been reached. If this happens to you just remember this blocking technique, "Before you give a concession - get a concession." For example, if a seller suggests that to hold the deal together that you'll have to pay for the transfer tax or other fee, simply respond with, "If we did, what can you do for us?" When a nibbler realizes that every time they ask for something you will respond in kind they will stop nibbling.

Finally, when a contest ends, fighters will bow to each other in mutual respect.  You should congratulate the seller for having done good deal  otherwise he might change his mind and try to find a way to wiggle out of the agreement.

So, how do you find a real estate agent who is a black bet in negotiating? Just ask these hypothetical questions and see how he or she answers them:

   1. What information do we need before making an offer and how would you get it?
   2. What's your experience with negotiating?
   3. What's your philosophy of negotiating? (If the answer is "win-win" find another agent!)
   4. Do you prefer to present offers in-person or send them in?
   5. How can we make sure the seller responds to our offer right away?
   6. When you sit down with the seller what's the first thing you do? (If the answer is "I pull out the contract" keep interview agents. You want someone who knows that closing a deal begins with building a relationship.)
   7. How can you tell if the seller immediately likes or dislikes our offer?
   8. How would you react if the seller gives us a full price counter-offer?
   9. What would you do if the seller asks for something additional after the contract has been signed?
  10. If the we were five hundred dollars apart from having a ratified contract what would you do? (If the answer is, "I'd give it to you from my commission" find another agent. Anyone who cannot negotiate their own fee will have difficulty protecting your interests.)

Steven Porter ABR CNE SRES
is a Real Estate Broker of 27 years with
RE/MAX Aboutowne Realty Corp. Brokerage.
Steven is an Accredited Buyer Representative,
Certified Negotiation Expert and has been student of
Japanese Martial Arts for 46 years
Steven can be reached at 905-875-2582, email: steven@stevenporter.ca
Or www.PorterRealEstateSystem.com

Literary credit to Michael Soon Lee

November 2013 Sales Results - Realtors Association of Hamilton Burlington

Residential Sales by Price Range December 2013

Residential Sales by Price Range December 2013

 

To rent or to buy? 8 questions Canadians should ask before taking theplunge

Should you rent or buy?

Conventional wisdom suggests it’s a no-brainer – buying real estate is a worthwhile investment with a high return.

Despite record low interest rates,  the sky high prices and carrying costs are causing many to rethink the allure of home ownership.

When you factor in the costs of repair, maintenance and other expenses associated with owning a home, Toronto-based financial planner Shannon Simmons argues that renting and putting saved money into another investment – such as a stock portfolio – could earn more in the long run.

Simmons gives new clients a questionnaire asking where they see themselves in 10 years. Many answer “buying a house.”

“Then we meet in person, and they say, ‘Oh I don’t really care if I buy a house, but shouldn’t I want to?’”

Based on advice from financial planners—both independent and those employed by banks—Global News has compiled a list of questions (and some context) to help you decide whether buying or renting is the right move for you.

You can also use our affordability calculator to figure out where you rank when it comes to affording a house:

1) Do you have 10-20 per cent of the home’s purchase price saved for the down payment?

While it’s possible to purchase a home with as little as five per cent down in Canada, big banks prefer first-time home buyers to have an average of 10 per cent.

“If this is the property of your dreams and it’s a really good buy, and you don’t have the full 20 per cent down,” says Royal Bank of Canada’s Rachel Wihby, it may make sense to pay the mortgage loan insurance charged to anyone who doesn’t put 20 per cent or more down on the home.

But “the less you put down, the higher the amount that you’re actually being charged,” Simmons said. That could mean you end up paying an additional $10,000 or more.

2) Do you have another 1.5-5 per cent saved for closing costs?

First-time home buyers don’t have to pay realtor fees, but there’s a number of other closing costs that need to be taken into account.

Depending where you live, land transfer taxes can carry a “significant” price tag, said Farhaneh Haque, director of mortgage advice for TD Canada Trust.

“Lawyer fees, seller/buyer property tax adjustment, appraisal fees, home inspection fees, even just your moving costs,” Haque said.

David Stafford, Scotiabank’s managing director of real estate secured lending, added fire and loss insurance to the list, suggesting $50-$100 per month as a ballpark figure.

Stafford also stressed the value of a building inspection, particularly for first-time home buyers, who may be easily impressed by granite countertops and hardwood floors but miss such other details as an old furnace, a leaky roof, or electrical wiring that’s in need of repair.

“Given you’re contemplating a multi-hundred thousand dollar purchase, a building inspection for a couple hundred dollars isn’t a bad idea.”

3) Can you keep debt servicing below 40 per cent of your income?

Your total debt service ratio measures the percentage of your gross annual income needed to cover housing payments (principal, interest, property taxes and heat, known as “PITH”) plus registered debts like car loans, personal loans and credit cards if applicable. Simmons says this 40 per cent rule is “specifically to please the bank” and is the general eligibility criteria when applying for your mortgage at most financial institutions.

So if you add it all up, housing payments and other debts should be between 35 and 40 per cent of your gross annual income.

4) Are your monthly fixed costs at 50-60 per cent of your after-tax income?

These “fixed costs” include housing and transportation, groceries, toiletries, and “everything you have to pay every month whether you like it or not,” Simmons said.

“When the money hits your bank account, if more than 60 per cent is tied up in things that you can’t get out of every single month, then you have no room after that for spending money which is not a fixed cost – things like going out for dinner, going out with friends, weddings, anything else that’s not just a bill.”

Keeping this ratio under control ensures you have enough money left over to keep saving, and avoid becoming “house poor.”

“Once you buy a house, it’s not like retirement’s done; you still have to save for other things,” Simmons added. “You also want to make sure that you have enough cash flow every single month that you don’t have to go into credit card debt – and that’s what I see: house broke, all the time.”

5) Can you save 1-2 per cent of your income in a “housing maintenance fee” each year?

The top mistake Canadian homebuyers make? Underestimating “significant renovations needed to the property,” according to a recent RBC poll.

Stafford suggests asking your realtor, and getting a home inspection.

“Even if it’s in pretty good shape, most homes of any age, there’s something you’ve got to do every year…and you need to factor that into your cash flows,” he said.

Simmons advises setting aside 1-2 per cent of your after-tax income each year to what she calls a “house maintenance fund” to avoid going into debt.

“When there’s not that extra cash sitting in an emergency fund, if there’s a $10,000 renovation or if you get cockroaches … It has to go on debt, because you’re not going to live in a place with cockroaches,” she said. “That can take a long time to pay off if you don’t have flexibility with your cash flow.”

6) Do you plan to stay in your home for at least three years?

Haque said TD advises clients to think about their life in three- to five-year chunks when considering purchasing a home.

A young couple buying a condo, for example, should consider how soon they’ll need a bigger space if they want children in the near future.

Wihby suggests regarding a home as a long-term investment – it might not be worth it if you buy a home and sell it a year later.

7) Is your job stable?

Are you planning to stay in your field? What would happen if your income decreased?

These are some of the questions RBC planners ask clients to determine how monthly payments and lifestyle would change as a result of job fluctuations.

“So you need to think of things like, will you be on a single income household instead of two?” Wihby said. “Maybe that means you won’t be taking those trips you thought you’d be taking or maybe you won’t be going to the gym as often.”

8) Are you emotionally ready to own a home?

It may sound hokey. But this is a big lifestyle leap to take.

“A lot of people heard that it was almost a no-brainer to go into property, especially when we saw property prices rising like we did in the past,” Wihby said. “But I think a lot of people got into purchasing a home before they were ready emotionally.”

The impact of what Stafford calls the “single biggest financial commitment for most people” includes the mental shock of going from a tenant to a homeowner.

“When you’re a tenant, the month that cheque goes out, it clears your account, and then you don’t think about it for the next 30 days,” Haque explained. “But when you’re a homeowner, you have those multiple payments like home insurance, maintenance fee, utilities, property taxes, that you have to account for on an ongoing basis. And sometimes it’s very much a shock to your system.”

Simmons emphasizes that homeownership is a personal choice, and isn’t the imperative it was 30 or 40 years ago.

“I know a lot of professionals who just don’t want to be bothered cutting the grass on Saturday, and doing the gardening. … They would much prefer to rent and save a bunch of money, so they can travel every weekend,” she said. “If you’re not actually going to enjoy the house, what’s the point in buying it?”

Global News - Erika Tucker, Nov 27, 2013

Nest Egg: The lowdown on low down payments

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Hot markets and cold feet might keep some people out of the housing market, but a lack of upfront cash doesn’t have to be an obstacle. While it’s long been the convention in the industry to start with a 20% down payment, the availability of mortgage default insurance means ownership is still possible with as little as 5% down, as long as the buyer meets industry standards of income and creditworthiness.

“What mortgage insurance allows people to do is to get into the market with today’s prices, with today’s low interest rates, once they have determined that home ownership is right for them,” says Mary Stergiadis, principal for Ontario business development at Canada Mortgage and Housing Corp. The insurance repays lenders if a homeowner defaults on payment.

People with insured mortgages can take advantage of the same interest rates as those taking out conventional mortgages, she says. And the insurance doesn’t cost as much as some people think.

Here’s how it works: With 5% down, the insurance premium is 2.75% of the mortgage. On a $400,000 property with $20,000 down, the mortgage insurance premium would be $10,450. That would bring the total being borrowed to $390,450. Assuming a five-year closed at 3.75% amortized over 25 years, the monthly payment would be about $2,000, including less than $55 a month for the insurance. The same property with 20% down would have a monthly payment of $1,640.

“What consumers have to ask themselves is what $60,000 means to them in terms of savings,” Ms. Stergiadis says, referring to the amount needed to reach a 20% down payment for this property. “How long would it take to save that additional down payment? Where will home prices be within that time? Where will interest rates be?”
(But note that the tax on the premium — 8% in Ontario — cannot be amortized and is due on closing.)

The insurance rate goes down as the down payment goes up. For buyers with 10% down, for instance, the premium is 2%; with 15% down, it’s 1.75%.

A popular misconception is that this insurance applies only to the primary residence of the borrower. But it is also available for a second property, such as a home or condo in the city to cut a commute or to house an aging parent or a student. CMHC does not, however, insure recreational properties.

Private mortgage insurers, such as Genworth Canada and Canada Guaranty, also insure high-ratio mortgages. The rates offered match those of CMHC; consumers usually aren’t aware of differences, as lenders apply directly to the insurers once an offer has been made and accepted on a property.

Genworth estimates about 30% of Canadian mortgages are insured, down from historical levels of as high as 40%. That percentage tends to be lower in the GTA, says Jason Neziol, Genworth’s regional vice-president of sales for Ontario and the GTA. That’s because higher prices mean more people make larger down payments in order to quality for mortgage loans.

‘What mortgage insurance allows people to do is to get into the market with today’s prices, with today’s low interest rates, once they have determined that home ownership is right for them’

Mr. Neziol says private insurers play an important role in the market by providing more choice for lenders and helping to educate the public about options. “It gives options to consumers,” he says. “It’s good for lenders to have a choice in terms of what insurance providers would do.”

You don’t have to be a first-time buyer in order to qualify. Plus, even conventional mortgages, those with 20% or more down, can be insured. This can happen if a loan is slightly outside of a lender’s usual parameters.
And there can be a rental component. A buyer can purchase a duplex with 5% down, for instance, but must live in one unit. A 10% down payment is the norm for three- and four-unit properties, where one unit is owner-occupied and the others are rented out.

The point, Mr. Neziol says, is to be aware of the many options available.


Susan Smith, Special to National Post | 23/11/13 

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Key Stats from CAAMP's Fall 2013 Report

Top 10 CAAMP (Canadian Association of Accredited Mortgage Professionals) Mortgage Stats:

1. 16%: Share of mortgages on homes purchased in 2013 that had amortizations over 25 years
• Versus 34%, for homes bought between 2008 and 2010
2. 8%: Percentage of respondents who believe the housing bubble will burst within the next five years
3. 2.15: Average percentage point discount from "posted rates" for 5-year fixed rate mortgages obtained this year
4. 82%: Percentage of new mortgages that were fixed rate mortgages—for homes purchased in 2013 
5. 2%: Percentage of buyers with less than 20% down who chose a variable or adjustable rate mortgage 
6. 42%: Share of new mortgages in 2013 that were obtained directly from a Canadian bank
• Down from 47% in 2012
7. 40%: Share of new mortgages in 2013 that were obtained from a mortgage broker
• Also down from 47% in 2012
8. 70%: Percentage of households with mortgages that have 25% or more equity
9. 57%: Percentage of 2013 homebuyers who were first-time buyers, about 250,000 buyers YTD
10. 5.0%: Decrease in average monthly sales following the government's 2012 mortgage insurance policy changes.

Other Stats of Note:

Amortizations

• 84%: Share of mortgages on homes purchased in 2013 that had an original amortization of 25 years or less
• Up from 78% in 2011/2012
• 30%: How much faster mortgages have been repaid (versus their original amortization)—applies to mortgages repaid during the past two decades

Lump Sum/Accelerated Payments

• 16%: Percentage of borrowers who increased the amount of their payments in the past year
• $400: The average monthly increase
• 17%: Percentage of borrowers who made a lump sum payment
• $14,000: The average amount
• 8%: Percentage of borrowers who have increased their payment frequency in the past year (e.g., gone from monthly payments to accelerated bi-weekly or weekly payments)
• 38%: Percentage of borrowers who took one or more of these actions
• 62%: Percentage of borrowers who took none of these actions

Professionals consulted when obtaining current mortgages

• 69%: Percentage of current mortgage holders who consulted a bank representative about getting a new mortgage
• 43%: Percentage of current mortgage holders who consulted a mortgage broker about getting a new mortgage 

Feelings About Mortgages

• 17%: Percentage of respondents who strongly agreed with this statement: "I regret taking on the size of mortgage I did"
• 63%: Percentage of respondents who indicated that they did not regret their mortgage choices
• 68%: Percentage of respondents who were in agreement that mortgages are "good debt" 

Interest Rates

• 3.50%: The average mortgage interest rate for homeowners’ mortgages
• 3.23%: The average mortgage interest rate for mortgages on homes purchased in 2013
• 3.20%: The average mortgage interest rate for mortgages renewed in 2013
• For these borrowers, their average interest rate is 0.82 percentage points lower than prior to their renewal

Mortgage Discounting

• 3.06%: The average mortgage interest rate for those with 5-year fixed rates in 2013
• 3.90%: The highest recorded actual rate
• 1.3 percentage points: The worst discount off posted rates received by a 5-year fixed borrower in CAAMP's survey

Variable vs. Fixed Rates

• 86%: Percentage of borrowers with less than 20% down who chose a fixed rate

Equity

• 46%: The average equity ratio for owners with mortgages but not HELOCs
• 43%: The average equity ratio for owners with both mortgages and HELOCs
• 76%: The average equity ratio for owners with HELOCS but without mortgages
• 83%: Percentage of Canadian homeowners with 25% or more 

Equity Take-Out

• 11%: Percentage of homeowners who took equity out of their home in the past year
• $57,000: The average equity take-out amount
• Up from $49,000 in 2012
• $59 billion: The estimated amount of total equity take-out in the past year
• $16.6 billion was used for debt consolidation and repayment
• $15.1 billion was used for investments
• $12.3 billion was used for home renovations

Real Estate/Mortgage Market

• 9.52 million: The number of homeowners in Canada
• 4.28 million: The number of renters in Canada
• 5.58 million: The number of homeowners with mortgages (who may also have a HELOC)
• 3.94 million: The number of homeowners who are mortgage-free
• 2.3 million: Number of total homeowners who have HELOCs

Mortgaging Activity

• 450,000: The number of households that bought homes over the past year
• 400,000: The number of buyers who took mortgages
• One-third: Ratio of borrowers who have a HELOC, out of those renewing their mortgage this year

Mortgage Market Outlook

• 8.6%: Average annual growth of mortgage credit in Canada over the past decade
• 4.5%: The likely growth rate for all of 2013, estimates CAAMP
• 10.3%: The decline in the rate of sales since the last mortgage rules took effect in July 2012 (compared to the decade prior)

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Study details

The data quoted from this report was commissioned by CAAMP and produced by Will Dunning, Chief economist of CAAMP, in collaboration with Maritz. This report is based on online survey responses from 2,223 Canadians compiled during October 2013. Nearly 60 percent of those surveyed were homeowners with mortgages.

Canadian home sales fall back in October

Ottawa, ON, November 15, 2013 – According to statistics released today by The Canadian Real Estate Association (CREA), national home sales declined in October 2013.

Highlights:

• National home sales declined by 3.2% from September to October.
• Actual (not seasonally adjusted) activity came in 8.3% above levels in October 2012.
• The number of newly listed homes declined by 0.8% from September to October.
• The Canadian housing market remains in balanced territory.
• The national average sale price rose 8.5% on a year-over-year basis in October.
• The MLS® Home Price Index (HPI) rose 3.5% year-over-year in October.

The number of home sales processed through the MLS® Systems of Canadian real estate Boards and Associations and other co-operative listing systems fell 3.2 per cent on a month-over-month basis in October 2013. The decline returned activity back to near where it stood last June and July.

“October’s lower activity provides early evidence confirming that sales in the later summer and early fall were boosted by homebuyers with pre-approved mortgages at lower than current interest rates jumping into the market before their preapprovals expired,” said Gregory Klump, CREA’s Chief Economist. “Now that interest rates appear to be going nowhere fast, sales activity in the near term may be held in check by homebuyers who are in less of a hurry to purchase. While the Finance Minister will no doubt continue to keep a close eye on Canadian housing markets for signs of overheating as interest rates remain low, October sales results may provide him with reassurance that tightened mortgage regulations and lending guidelines are working as intended.”

Sales were down in a little over half of all local markets, including Greater Vancouver, the Fraser Valley, Greater Toronto, Hamilton-Burlington, and Montreal. The monthly decline in activity among these markets offset increased activity in a handful of less active major urban centres.

Bank of Canada holds rate, drops forward guidance

Fri, 10/25/2013 - 09:00

The Bank of Canada announced on October 23^rd 2013 that it was keeping its trend-setting overnight lending rate at 1 per cent. It has been at this level since September 2010.

The biggest change from previous statements was that it no longer hinted that the next move will be a rate hike. Instead, the Bank defended its decision not to cut rates amid persistently low inflation.

The Bank said it does not want to risk reversing the current “gradual unwinding of household imbalances” and slowdown in household debt growth. In other words, the housing market is well behaved right now and the Bank wants to keep it that way.

The Bank said global growth had become “less favourable” for Canada. This is a reference to the slow pace of economic recovery and increased uncertainty in the United States, which is resulting in weaker than expected Canadian export growth and business investment.

Accordingly, the Bank has lowered its projections for Canadian economic growth this year and in each of the next two years.

The Bank now expects economic growth of 1.6 per cent in 2013, down from the 1.8 per cent projected back in July. Growth is expected to pick up to 2.3 per cent in 2014, which is down from a 2.7 per cent projection in July, and edge up further to 2.6 per cent in 2015, also down from 2.7 per cent in July.

The Bank now expects that inflation will not return to its 2 per cent target and the economy will not return to full production capacity until “around the end of 2015”. That’s been pushed back from the previous expectation of their doing so by mid-2015.

As such, the possibility of the Bank hiking interest rates anytime this year or next is likely off the table at this point. If anything, the odds that rates could be cut has increased; however, unless the economic outlook deteriorates further, the most likely scenario is that the Bank will keep interest rates on hold for quite some time yet.

As of October 23rd, 2013, the advertised five-year lending rate stood at 5.34 per cent, unchanged from the previous Bank rate announcement on September 4th.

(CREA 10/23/2013)

As a buyer, how much detail can I get on a property before making an offer?

It’s up to the property owner as to what specifics they disclose prior to an offer. This holds especially true for information that includes private data, such finances, other offers, etc. Certain questions, both the listing broker and owner have a duty in answering honestly and to the best of their knowledge. For example questions whether a building meets code requirements, past illegal use, in a flight path, etc. should be disclosed without hesitation.

A buyer can uncover some facts by accessing publicly-available information. A visit to the local municipal office could unearth some general information related to property taxes, registered liens and potential work orders. Keep in mind this information will vary from city to city. A simple Internet search may also reveal some information about the property.

Once these avenues for information have been investigated a buyer may consider putting in a conditional offer to the seller. Conditions could include property inspections, review of any documentation and due diligence a buyer may see fit. Moving forward with a deal would only be contingent on these conditions being met to the satisfaction of the buyer.

This approach allows a buyer to move forward with complete confidence and minimal risk. The deal can also be structured that if conditions aren’t met to the satisfaction of the buyer, any deposit money would be returned in full and the agreement of purchase cancelled.

An experienced buyer representative is a trained professional, sensitive to the needs and requirements of the buyer and a definite asset to a buyer in any real estate transaction.

Before you make your next home purchase consider hiring an ABR (Accredited Buyer Representative).

Steven Porter ABR CNE SRES
Broker
RE/ MAX Aboutowne Realty Corp.,
www.PorterRealEstateSystem.com

Is The Bank of Canada hinting that we should go ?

Is the Bank of Canada hinting that we should all have Variable Rate Mortgages? Did you read our last newsletter?.

The Bank of Canada speaks a little differently than we do, so let me translate.

First, they said it by dropping one line that was in all of their reports over the past few years:

“Over time, as the normalization of these conditions unfolds, a gradual normalization of policy interest rates can also be expected…”

 They replaced it with this line: 

“the substantial monetary policy stimulus currently in place remains appropriate”

Then they said they were worried that prices don’t seem to be moving up as they expected despite of all the new money that was printed. Here is how they said that:

“the fact that inflation has been persistently below target means that downside risks to inflation assume increasing importance.”

The Bank of Canada doesn’t think they will have to act to slow growth until at least the end of 2015, which means no movement in the Prime Rate for at least 2 years.

This isn’t only happening in Canada. The trend to more dovish policy (meaning a bias towards keeping rates low or dropping them) is spreading around the world right now. Have a look at this article from Bloomberg.

Yesterday’s report should really not come as a surprise to any of our Clients who read our last newsletter, or have been in our offices in the past month or so. The Prime Rate is pretty much guaranteed not to go up for at least 2 years. So, what type of mortgage should you take? It is really hard to make a case for a bloated 5 year Fixed Rate Mortgage. Especially when you can take a Variable Rate Mortgage from a NON BANK LENDER who will guarantee to lock you into a low market priced fixed rate when we fear rates might spike up. If you forgot how Banks price their fixed rate mortgages when you are already their client with a Variable Rate click here.

This is great news for anyone with a mortgage. Fixed rates are high, which means penalties to break mortgages are low, and variable rates are cheap, which means you can save a bundle. Your Mortgage Lender is scared that you will leave them, use this to your advantage, get someone negotiating for you. Get your existing Lender to start competing for your business, or move your mortgage while your penalty is still cheap. The average client can save about $7,250.00 by switching from their 5 year Fixed Rate Mortgage over to a Variable Rate Mortgage right now.

Marcus - Morcan Direct

Realtors. Can we call ourselves professionals?

In recent years, from many quarters, concerns have been expressed about the continuing decline in professionalism. This includes medical doctors, lawyers, accountants, other professions and certainly Realtors, assuming that we who transact in real estate as agents for sellers and buyers could be considered as a profession in the first place. 

That all Realtors can legitimately call themselves “professional” is questionable, because many of the basic canons of a profession seem to be lacking. One only has to follow the blogs and opinion pieces in real estate publications to prove the point. The public is very cynical about this. Some place Realtors in the same category as used car salesmen and politicians. In the real estate industry there appears to be less focus by Realtors on the needs of clients and more on making that sale or getting that listing. It is suggested that many have forsaken their professional roots and regard their agency solely as a business, and professionalism is a lesser priority. This creates the need to inform the public more by deed than word that Realtors are indeed professionals. We as Realtors must demonstrate by high standards of ethical behaviour, service and conduct that we live up to the tenets of professionalism and the Codes of Ethics we and the public so often hear preached.

Professionalism is best described as a relationship between a person who has a high level of expertise and discipline in a chosen field and who is a member of an organized group of like-minded individuals with the same expertise and discipline in the same field, and the relationship they have with their clientele. The building blocks of professionalism are being well educated in the chosen discipline, integrity, honour, leadership, independence, pride, collegiality and service, all balanced with commercialism.

This includes the relationship between a Realtor and a client and the unwritten contract between the Realtor and society. An essential attribute is the ability to provide sound advice, competent service and to quote the medical profession, “Do no harm.” Real professionalism involves a pride in one’s work, a commitment to quality, a dedication to the interests of the client and a sincere desire to help. Professional success is about attitudes and about character. These are demonstrated by energy, drive, initiative, commitment, involvement, enthusiasm and the ability to provide sound advice.

Professionalism does not mean wearing a suit, carrying a briefcase, driving a high-priced automobile or always having your cell phone at the ready, just in case. Nor is it having a collection of meaningless (to the public) designations and diplomas, which many associations and commercial diploma mills are far too anxious to hand out. It is not one, but a combination of qualities; not a skill but a blending and integration of a variety of skills and attributes.

In real estate brokerage there are many very competent, very conscientious and very honest Realtors who could justifiably call themselves “professional”. They demonstrate all the mandatory characteristics just referred to. However, this is not the majority. In so many areas of the real estate brokerage industry commercialism and old-fashioned greed has taken over. To earn a good living is a common goal and a necessity, yet many are given over to avarice. Fundamental ethical behaviour, which often is in competition with increased revenue and profit, is losing.

Realtors win prizes and in-house recognition, not for doing a good job, not for advancing the acceptance of the industry, not for assisting the less knowledgeable or for high-quality professionalism, but for making the most sales, getting the most listings or earning the most commissions.

The real estate brokerage industry is a fractured commercial system comprised of largely poorly trained, ill-fitted candidates who were initially attracted by romantic notions of what selling real estate is all about and anticipation of high earnings, but for whom the starvation rate is high and the retention rate low. Although the pre-licensing courses have reduced the revolving door concept to a degree, the high failure rate persists. No other industry or profession would tolerate such seduction of the innocent and this waste of human resources as does the real estate brokerage industry.

There is a philosophy, not spoken about but certainly practiced by the real estate brokerages. If at the beginning of a fiscal quarter you hire 10 new sales agents and if at the end of the quarter two remain, your real estate brokerage has done well.

Professionalism must start with the Realtors themselves, insisting that all practitioners uphold the tenets of true professionalism and eliminate from their ranks those who do not. Until this occurs, acceptance by society will never be attained. The greatest challenge will be the elimination of unprofessional conduct from all unethical and incompetent Realtors. This is to consider the interests of real estate clients and the public as the No. 1 priority. This will demonstrate care and concern of the real estate client’s welfare in all of Realtors actions, not by giving only lip service or obtaining continuing education credits for having taken an ethics course, but a genuine commitment.

Inspired by an editorial by Lloyd R. Manning AACI, FRI, CCRA, PApp

Hot Housing Market Expected to Cool Through the Winter

Susan Pigg - Business Reporter

Expect house sales and prices to cool down over the next few months and maybe even years as this summers surge of buyers armed with the lowest mortgage rate commitments peters out.

Read on:

http://read.thestar.com/?origref=?origref=#!/article/51165fe17b1eace16f0414c7-hot-housing-market-expected-to-cool-through-winter 

JUST LISTED - Burlington (Aldershot) Detached

The Owner Wasn't Planning to Sell

 

Here's your opportunity to own this "Turn-Key-Home" in Burlington's historic Aldershot Village. This bright, spacious family home invites you and your family to move right in. Located in a quiet little neighbourhood in south Aldershot, close to Burlington Golf & Country Club. Other area amenities (including Tim Horton's) are no more than a short walk away.

 

Enjoy the features of this home like natural hardwood flooring and original cornice mouldings. The large living room features double skylights that stream sunshine throughout the day and an attractive, electric fireplace as a focal point. All The expense has been taken care of for you. There's an updated kitchen with ceramic tile flooring and tumbled marble backsplash, two refinished and remodelled bathrooms. And the kids will enjoy their own space in the bright rec-room with a cozy wood burning fireplace.

 

Wait, we're not finished. There's no cramming here. A large, 68 foot wide, private, fenced rear yard with patio big enough for you and Rover. Plus a double driveway big enough for six cars.

 

We're betting this home won't last so don't wait.

 

For details visit http://362Finch.StevenPorter.ca

Most Condo Owners Unaware of what Home Insurance Covers

6 October, 2013,

Home Insurance is pretty easy when you live in a single-family home. You need insurance for any disaster that could strike your home, for major repairs such as roofing that you may need to cover, and you need to protect your home from things like theft. But what about when you live in a condo? When the surrounding units could cause damage to your home? Or when there’s a governing board that also has their own insurance to protect against the building? What insurance then, do you need for your own unit? Surprisingly, most condo owners don’t know what kind or how much they need.

According to Real Estate Magazine, two-third of condos don’t know how much their building’s insurance will cover should their unit be damaged from water or fire coming from another unit. And while the building will have some kind of insurance to cover such instances, it likely won’t be enough if that’s all the homeowner is relying on. And if they should ever need insurance, they will find out too late that they don’t have enough. Because the fire, flood, or other damage will have already occurred.

“It’s just an assumption by most condo owners that their board insurance covers it all. It’s only when something arises, like a fire, that it comes to light and then it’s too late,” says Brian Persaud of ReMax Realty.

They may also not know just how susceptible their unit is to certain disasters, especially when it comes to fires. People often assume that just because their home comes with all the modern amenities, or because it’s recently been updated for things like wiring and plumbing that they’ll be okay. But that’s just not the case. In fact, Windsor Fire and Rescue states that newer homes that are equipped with modern technology – including many things oil-based products, burn eight times faster than older homes. This was the case a couple of weekends ago when a fire at a condo construction building in Edmonton caused over $20 million worth of damage.

“It does happen a lot, where condo owners believe their management company has taken care of it all in respect to checking renters’ insurance. They trust that it will be enforced, but it can often go unchecked,” says Persaud.

These findings are also backed by research done by Allstate. They found that 74 per cent of Canadians currently wanting to buy a condo don’t know what their own personal insurance will cover, or even what the insurance of the condo corporation will cover.

New condo regulation looms over Ontario

Ontario’s explosive growth in condominium development has triggered an in-depth review of how condo communities should conduct and govern themselves. Read more: http://renx.ca/82974/

Looking to Buy an Rental Property? Beware of Big Bank Changes.

If you’re looking to buy an income property, you should know about the changes introduced by the big banks a few weeks ago.

In order to be approved for a mortgage, your lender will be looking at your debt service ratio. This will tell them how much income to debt you have, and essentially how capable you’ll be of paying back a mortgage loan. It’s changes within this ratio that now has many lenders including buyers of income property very upset.

Now, for every $100 of rental income a borrower expects to bring in, only $50 of that will be taken into consideration by lenders when deciding on mortgage approvals. It used to be $70 for every $100 – a big difference, if your income was already tight to begin with.

The big question is not only whether borrowers of income properties will be able to afford mortgages for these properties now, but whether or not some independent lenders will see an opportunity and start catering to this currently unserviced niche.