Breaking News - CMHC raises premiums

CMHC is increasing its mortgage insurance premiums for homeowners and 1-4 unit rental properties effective May 1, 2014.

The change will only apply to mortgages underwritten after May 1, 2014 and it will apply to all homeowner business from that day forward as a result of increasing capital targets. Premiums will rise about 15 per cent, according to CMHC, though it isn’t expected to have a major effect on the housing market.

 “In 2013 the average CMHC insured loan at 95 per cent loan to value ratio was $248,000; using these figures a higher premium will result in an increase of approximately $5 to the monthly mortgage payment for the average Canadian homebuyer,” Peter De Barros, at CMHC ‘s executive director of communications said during the media conference call. “This is based on a five-year term using current mortgage rates and 25 year amortization. The premium increase is not expected to have a material impact on the housing market.”

CMHC also expressed its plans to make an announcement about its premiums – which are reviewed each year – in Q1 of every year going forward. The Crown Corporation has made a number of changes to its premiums; though this hike is the first increase since decreases between 2002/2003 and 2005/2006.

The increase was not a department of finance initiative, according to CMHC.

“Not in response to anything in particular although, certainly, the international and Canadian regulatory guidelines over the past years have trended to higher capital holding levels for mortgage insurers and obviously we are no exception to that,” Brian Nash, chief financial officer of CMHC told reporters.

It remains to be seen whether Canada’s two other insurers, Canada Guaranty and Genworth follow suit.

“I can’t comment on what they might do,” Steven Mennill, CMHC’s vice-president, insurance operations told reporters.

by Justin da Rosa MortgageBroker News

Don't Rely on Listing Details

Listing details should be double checked

Visit and confirm home’s specifics before the deal closes

As a buyer, how do I know the information from the online listing is accurate? If it isn’t, is there anything I can do about it?


Chances are. the first time you glimpse your dream home will be while you’re flipping through the real estate section of your local paper or scrolling through online listings. Regardless of how you find it, the listing information and accompanying photos or videos play an important role in landing the property on your short list and ultimately helping to determine if it’s a property you want to see.


A typical listing may include a broad range of the property’s attributes, including the number of bedrooms and bathrooms, the sizes of those rooms, the age of the home, the size of the lot, the age of the building’s main components (for example, the roof, furnace and air conditioning, etc.) and other useful information for buyers.


If the seller is working with a real estate agent, the agent is generally accountable for the accuracy of information contained in both the listing and any other information they share with buyers. That means they are expected to take steps to confirm the seller’s claims about renovations, square footage, municipal taxes and any other information that appears in a listing. As a registered real estate professional, they are required to be fair and honest with anyone involved in a transaction and use their best efforts to prevent error.


You may see some listings that note the information provided is “to be verified by the buyer.” It’s important to understand that sentence doesn’t release the listing representative from his or her accountability for accurate details. However, you or your salesperson should be pro-active role in double-checking the information you have about the property.


As a buyer, it’s in your best interest to do your own research before making an offer, or during a conditional period. The best way to verify the seller’s claims on the condition of the home is to have the property inspected by a qualified home inspector, engineer or contractor. Hand them a copy of the listing; it will help them to have some information to work with and they’ll be in a better position to confirm the property’s details are what you expect.


Your real estate agent can also help by including conditions in your offer that allow you to verify what is important to you (for example, that all knob and tube wiring has been removed or that the property is zoned as a multi-unit dwelling, allowing the buyer to install a basement apartment).


The Agreement of Purchase and Sale may also be drafted to allow you to return to the property once or twice before closing; take advantage of these opportunities and dust off the measuring tape to confirm room sizes. Go and look around, and check the other details about the home before you move in.


The impact of inaccurate information can be significant depending upon the attribute in question and the importance of that attribute to the buyer. If you find an inaccuracy in the listing after your offer has been accepted, seek the advice of your real estate professional and lawyer. They may be able to work with the seller’s representatives on some price adjustment or other remediation. If not, it may become a matter for the courts.


While RECO can’t get involved in civil proceedings, if you have serious concerns about the accuracy of listing information, consider filing a complaint with us. You can find the complaint form on our website at reco.on.ca.


Joseph Richer is registrar of the Real Estate Council of Ontario (RECO). He oversees and enforces all rules governing real estate professionals in Ontario. Email questions to askjoe@reco.on.ca . Find more tips at reco.on.ca, follow on Twitter @RECOhelps or on YouTube at http://www.youtube.com/RECOhelps .

Steven Porter ABR, Broker - RE/MAX Aboutowne Realty Corp. For experience that counts when buying a home contact Accredited Buyer Representative.

Poster child for the wonders of miscommunication by email

A small claims court decision last month illustrates the complexity of using email to conclude real estate contracts.


“This case,” wrote Deputy Judge J. Sebastian Winny, “would make a good case study for realtors on how not to conduct a real estate transaction. And it is another poster child for the wonders of miscommunication by email.”


In the fall of 2011, Ian and Anita Pilon put in an offer on a Kitchener property owned by Adrian and Florica Rosu. The price on the agreement was $400,000. The Rosus signed it back at $420,000, and initialed all the pages except Page 4, the critical signing page.


The sign back was then scanned and emailed back to the agent for the Pilons missing the signature page. Thinking it was valid, the buyers countered at $410,000 and sent the document back to the sellers, again missing the signature page.


The sellers met with their real estate agent, Ninoslav Orasanin. There was some confusion about whether they intended to accept the $410,000 price, or sign it back at $420,000. In any event, the change in price was never initialed and the document was returned to the buyers — still missing the signature page.


Looking back on the events, the deputy judge later noted, “it did not appear that (Clifford van Dincten, the buyers’ agent) examined the document with any significant care — if indeed he opened that email attachment and looked at it at all.”


In this comedy of errors, all parties thought an agreement had been reached. The buyers thought they were paying $410,000, and the sellers apparently thought the price was $420,000.


The sellers acknowledged receiving a “final” copy of the agreement of purchase and sale from their realtor, but did not open the email attachment believing they were aware of its content and felt no need to review it.


The buyers had the home inspected, and waived the condition on home inspection. They were ready, willing and able to close on the scheduled closing date, but the sellers could not provide vacant possession since their tenant had not moved out. The deal died because of the confusion over the price.


The buyers sued for damages exceeding $17,000 and return of their deposit.


After analyzing the evidence, the deputy judge decided that a complete contract was never concluded since it was missing Florica Rosu’s signature, and communication of the acceptance to the buyers was never completed.


The buyers were denied damages but they were awarded return of their deposit.


Sadly, cases like this are all too frequent. A number of lessons emerge for buyers and sellers:

•Always initial every page of an agreement, and every change to the price and the wording.

•It is imperative to retain a copy of every document version that has been signed. If a copy is not available, take a picture of each page with a cellphone.

•Open, print and review all email attachments.

•Monitor every step taken by the real estate agents to ensure nothing is missed.

•Above all, make sure the real estate agent retained has a minimum level of experience and is focused on properly completing the transaction.


Ref. Bob Aaron, Toronto real estate lawyer



Steven Porter, Real Estate Broker, RE/MAX Aboutowne Realty Corp. Brokerage serving home buyers and sellers since 1986. Contact me for experience that counts

5 Important Things You Must Know Before You Invest in Property

With extremely high returns on investment, it’s no wonder why more and more people today are hopping on the bandwagon, expecting to make a fortune from buying and renting property.

Just look around you and you’ll probably find a few friends, colleagues or relatives investing in property. That’s how big the market is today.

Before you plonk your hard-earned money on a piece of real estate, bear in mind that property investment is not a decision to be made on impulse – especially if everybody’s doing it.

There is a substantial amount of information that you should research and a sensible strategy to adopt if you ever want to be successful.

According to Robert Kiyosaki’s Rich Dad Real Estate Advisor, Ken McElroy, there are 5 important things you must know before you decide upon your investment.

First of all, you must know the type of property you want to invest in:
The choices can range from residential to private housings, commercial property, or even land that is waiting to be developed. You need to know the type of property you’re interested in before you can even think about financing, and other areas in the investment process.

The second thing you must know is the geographic area of your property:
According to Ken, this is called “Level 1 Research”. This level determines whether you want to invest in property within your state, city, or somewhere else in your country. Level II and III Research narrows that decision down to even greater detail, concentrating on the particular housing estate in which you want the property to be located.

The third thing you must know is your financing strategy:
How are you going to pay for your investment property? Small properties are usually paid for completely, but bigger properties typically require investors or a major loan from a bank. There are banks that will even loan you the money for smaller properties as long as the real estate has a proven record of profitability.

The fourth thing that you must have is a team:
Do you have a team of professionals who can help you manage the work involved in your investment? Typically, your team should include an accountant, mortgage broker, lawyer and a property manager. Later, you might also want to welcome on board architects, engineers, surveyors and tax consultants.

The final thing you must consider are the necessary costs for repairs even before the property can begin to earn a profit:
The value of your property is affected by the state of its interior and you will have to consider arranging for minor or major repairs before you can lease it out and get a return on your investment.

With these 5 important things in mind, you can then build a solid foundation for your investment strategy and avoid the risks that beginner investors commonly make.

Request a FREE, Hot List of Cashflow Properties with pictures and descriptions in Halton Region. Visit www.HaltonInvestmentProperties.com to request your copy.

This article is based on the teachings of Rich Dad Real Estate Advisor, Ken McElroy

Why Are Real Estate Practitioners Paid On Commission?

  How the commissions (the fee real estate practitioners "earn" for selling a house), came into being and what the future will bring.

Several years ago The GBR Business Report ran a story on real estate commissions. It discussed how the commissions (the fee real estate practitioners "earn" for selling a house), came into being and what the future will bring.  It goes without saying that the way the real estate industry is structured, and the way practitioners are paid is a bit of a mystery, particularly when you factor in that what is "the norm" (even though commissions are purportedly "negotiable"), is taken for granted until you're facing the possibility of selling a house.  Perhaps sharing some insights on the way we got to where we are today will give you a better appreciation for this side of the business, likewise, will shed light on why an agent earns his/her keep in such a way and from whence the practice originated - keeping in mind that its very nature is referred to by many practitioners as a "feast or famine" way of making a living (and that's not far from the truth for many!).

The "standard" commission as we've come to know it today, came into practice in the 1940s, when local Realtor boards came together to "fix" the rates their members could charge for services leading to the sale of real estate. Some of the practices prior to this "re-organization" were fraught with dishonesty and abuses of all sorts, particularly towards the ill-informed consumer, who would sometimes be the victim of deceptive practice, such as "net fee" arrangements, or paying a hefty "flat fee," and in the worse of the cases, unsuspecting and trusting consumers would sign over the property on a type of arrangement where payment would come after certain events, leading to these machinations. While the practice of a unilateral percentage of the sale price quickly became the norm, (the fee is a cost to the seller, typically), there have been onslaughts on this practice by people and companies that literally don't buy into this arrangement, e.g., folks who would rather do-it-themselves avoiding a commission, or companies that cater to these types, where they charge some type of consultant fee or a minimal brokerage for a minimalist menu of services (a breakdown of some of the typical services a full-service broker provides under the "traditional" model).

However, before we get away from the backdrop of why the fee that an agent expect might not appear apropos to the consumer, let's first review what any good agent does to earn his keep - besides putting up a For Sale sign and waiting for the buyer to buy your house.

• Marketing: Includes advertising, promotion, traditional, i.e., Multiple Listing, and via the internet. This is a critical component in a good agent's arsenal, s/he has all the tools in place to adequately promote the property to the most-likely buyer (group) from which to elicit the best and highest offer your property can command, and you should expect (from the research done beforehand) -- leading to a sale.

• Representation: Includes advocacy for your best interest, knowledge of pricing strategies - insuring that you are fully apprised of factors affecting valuations; consulting on financial and fiscal implications of the transaction; advising on best financial and fiscal options given your circumstances; insuring compliance with mandated ordinance and due diligence obligations, e.g., completion of disclosures, inspections, and the likes; all the while keeping your interest at the forefront to insure a smooth sale.

• Research: Includes investigating the competition, the market trends, and factors influencing the sale and appeal as it relates to the circumstances, e.g., sellers sell for a variety of reasons, and a good representative takes these reasons into account; also, depending on local and regional norms, recommends strategies to enhance the marketability of the property to specific target groups, i.e., staging, videos, open house, tours, etc.

• Negotiations: Includes making the best case on your behalf for what you expect in price and terms, particularly if the research is thorough, and confirms your entitlements. Handle the actual agreement(s) to buy/sell between you and the buying party, insures that the terms are both clear and understood, and adhered to by all concerned.  Generally works to make sure your end of the bargain is being met in as much as can be done with and through other parties, etc.

Additionally, with the advent of complex and time sensitive transactions, e.g., short sales, foreclosures, and the likes, the agent also negotiates with the lien-holders, achieving an effective transition and insuring compliance with even more burdensome activities and processes as are typical in such sales. 

• Transactional Management: Once a buyer has been secured, in a "typical" sale (as opposed to a short sale), there will be a plethora of steps and coordination of processes, e.g., disclosures, signatures, inspections, appraisals, evaluations of financing applications, further negotiations of anything that is uncovered along the way, escrow and title issues, insuring all timelines are adhered to, etc. During this task and time sensitive stage, there is a delicate balancing act to get thing right and on time. Conversely, if things are not in line, the agent steps in to make things right - with your best interests and intent (as stipulated in the agreement) at the forefront, among other things.

These and many other tasks are the domain of a good agent and agency. If anything is typical of the process is that there is nothing so standard that one can lump any sale into an "average sale".  Yes the standards are there, otherwise there would be no standards across the board, but, each transaction has unique qualities that require a seasoned practitioner's expertise, if not know-how to address.  Now that you have a slightly better perspective of what an agent does to earn his/her keep, let's continue with the topic at hand.

The original intent of the Realtors was to "standardize" the fees in order to prevent abuses and/or disparity in the way practitioners would be compensated.  However, in 1950, the U.S. Supreme Court declared this violated antitrust laws, so they adopted "suggested fees," however, that too met with an unfavorable response. The Department of Justice sued in the 1970s effectively nixing that as well, setting the Realtors up to make commissions "implicit," yet the local bureaus or departments of Real Estate, governmental regulators, mandated that all commissions be negotiable.
This leads us to modern day real estate. There are numerous studies showing that the average commission rates across the country remain fairly consistent at about 6%, although market conditions impacts on this rate slightly. As of late, with the advent of internet model companies where they offer huge incentives, there have interesting results.  While these companies aim to make enough of an impact on buyers and sellers to win them over with those incentives, they have yet to show a profit or to be viable alternatives to the traditional agent.  Furthermore, these cyber companies offer very little in the way of actual person-to-person dealings, relying instead on algorithms and the sorts, and leaving much to be desired for the consumers' experience.

There will continue to be an evaluation of the way real estate is sold, however, one thing can be sure, whenever two parties come together on anything of such importance -- like buying a house, unless there is unanimity in this event, there will be room for misunderstanding or disagreements, and such muses.  As such, an agent, if for only this reason, serves as a good buffer to allay concerns and insure compliance, and ultimately the sale.  Now the question is, what is that worth to you (on top of all the other tasks and responsibilities outlined previously)?

And, unlike what some say that an agent isn't worth as much as whatever percentage you are able to negotiate, one thing is certain, if you're dealing with a true professional, and not a neophyte, you'll soon discover that this person is your best resource for a variety of things, not the least of which is installing a for sale sign to get the house sold!

Originally posted on CA by J.Mario Preza