New Condo Buyers Could Face Big Bills at Move-in Time

Toronto Star

Business / Real Estate

Excerpted from the Toronto Star

Toronto real estate: New condo buyers could face big bills at move-in time

Plan to double fees for condo construction in the City of Toronto likely to be downloaded onto buyers.

If Toronto city council goes ahead with a proposal to double condo development charges, those extra costs — some $7,671 on the average one-bedroom unit and $10,624 on the average two-bedroom — are likely to land right in the laps of unsuspecting buyers, warns an industry lawyer. CARLOS OSORIO/TORONTO STAR

By:Susan PiggBusiness Reporter, Published on Thu Jun 27 2013

 

Thousands of people who’ve bought preconstruction condos in the City of Toronto over the last two years or so could find themselves faced with an unexpected extra bill when it eventually comes time to move in.
 

If city council goes ahead with a proposal to double development charges, those extra costs — some $7,671 on the average one-bedroom unit and $10,624 on the average two-bedroom — are likely to land right in the laps of unsuspecting buyers.

Related:

· Interactive: Development charges in the GTA

“Most new condominium contracts provide that the buyer is responsible for any increased development charges that the developer incurs after the date that the agreement (of purchase and sale) is signed,” says veteran real estate lawyer Mark Weisleder, who writes about real estate law for The Star.
 

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The get-rich-quick mentality that became the hallmark of the condo boom of the last few years may have also left thousands of buyers of preconstruction units vulnerable.
 

Some buyers became so convinced they could make a quick buck by the time the unit was built and ready to occupy, they didn’t have lawyers even review the complex sale documents and may not know the clause even exists, says Weisleder.
 

Real estate lawyers have been able, in many cases, to negotiate a cap on any potential increases from developers keen to make the sales targets needed to get bank financing, but others have simply refused to assume the possible risk, he notes.
 

“I always recommend the cap, and while many developers agree, some developers still refuse to give it.”
 

While it’s almost impossible to determine exactly how many buyers of preconstruction units could be impacted if city council supports staff recommendations to double development charges, there were more than 20,000 condos in the preconstruction phase across Toronto as Q1 of 2013, according to market research firm Urbanation.
 

And thousands more are just in the excavation phase and also likely to be impacted. That’s because development charges in Toronto only kick in after the foundation has been poured and the “superstructure” building permit is issued.
 

“Builders have two choices here — they can pass the added costs on to buyers or they can absorb them. But these proposed increases are so great, they can’t be absorbed in most cases,” says Bryan Tuckey, president of the Building Industry and Land Development Association (BILD), the umbrella group for the development industry.

“It has been brought to the City of Toronto’s attention that there are a number of buyers who will be impacted.”
 

A city official declined to comment on the issue, other than to say that any increases would likely be phased in over a year, to July, 2014, and are need to cover the costs of city services, from transit to sewers and water mains, that are impacted by every condo project that’s built.

The increases would still leave Toronto development charges below what’s charged in 905 municipalities.
 

Developers have asked the city for more time to assess the impact and have cautioned that the sudden jump (increases in 2008 were phased in over four years) could further threaten the condo industry, which has already been impacted by softening sales and tougher mortgage lending rules imposed by Ottawa that have knocked many first-time buyers out of the market.
 

This could knock out more, notes Tuckey.

Banks Raise 'Special Discounted' Fixed Mortgage Rates

Toronto Star

Business / Personal Finance

Excerpted from Toronto Star

Banks raise ‘special discounted’ fixed mortgage rates

Canada’s largest banks are moving to increase some of their mortgage rates. BLOOMBERG

By:The Canadian Press, Published on Thu Jun 20, 2013

 

A number of Canada’s largest banks are moving to increase some of their mortgage rates.

Scotiabank and the Royal Bank of Canada on Thursday became the latest to announce a round of increases covering various terms of what they call special discounted rates.
 

Those increases came a day after TD Canada Trust, the retail arm of TD Bank , boosted its “special” five-year closed rate a tenth of a percentage point to 3.39 per cent. The rate is a discount off the posted rate.
 

Scotiabank said its special discounted rates on two-year, four-year, seven-year and 10-year fixed-term residential mortgages were all going up a tenth of a percentage point effective June 22.

Its special four-year, fixed-term special rate, for example, rose to 3.09 per cent.

Royal Bank said is special discounted four-, five- and seven-year rates were going up June 24 by two-tenths of a percentage point to 3.29, 3.39 and 3.79 per cent respectively.
 

Royal also said its posted three-year closed rate would go up a tenth of a percentage point to 3.75 per cent.

MORE ON THESTAR.COM:

 

 

Pre-approved Financing May Not be Enough for Home Purchase

Toronto Star

Business / Personal Finance

Pre-approved financing may not be enough for home purchase

Excerpted from The Toronto Star

If you waive financing condition in your offer to purchase house or condo, you are in trouble if lender says you bid too high

DAVID COOPER / TORONTO STAR

Whether you're looking for a condo or house, just make sure the value of the property you're bidding on will be accepted by your lender - even if you have a pre-approved mortgage.

By:Mark WeislederReal Estate, Published on Fri Jun 14 2013

 

Many buyers get pre-qualified for financing before they start looking for a home. This means that they find out in advance the maximum amount that a lender will provide to them based on their income. The mistake is thinking that no matter what home you buy, the lender will just give you the money you need, provided that it is within your approval limit.
 

Buyers need to realize that just because a lender pre-approves you does not mean they will lend you all the money. The property you buy must, in the lender’s opinion, be worth what you paid for it.
 

Most real estate agreements are conditional for a few days on the buyer arranging satisfactory financing. In many cases, however, the buyer waives the condition before the lender conducts an appraisal of the home itself. Even worse, in most bidding wars, buyers do not even include a condition on financing, hoping that their pre-approval will be enough.
 

In the last two months, I have seen two situations where lenders requested an appraisal of the property just days before closing, and when the appraisal stated that the house was not worth what the buyers paid, the lender just cancelled the loan. The buyers had already paid the deposits and were preparing to close. Now they faced the possibility of losing their deposits and getting sued.
 

In both cases, we were initially able to arrange for an extension of the closing date to give the buyers time to solve their problem. In one case, the mortgage broker got creative and was able to find the buyer a new mortgage, albeit at a higher interest rate and for a shorter term than the original mortgage. Still, the deal got done.
 

In the second situation, the buyer had purchased a brand new condominium from an original investor, who flipped it just before closing. The original price was $200,000 when the development started four years ago, but the buyer today paid $240,000. The problem was that when the bank asked for the appraisal, the appraiser said that since other investors closed at the original price of $200,000, he would not agree that the unit had in fact appreciated to $240,000 today. The buyer was fortunate to have relatives who lent him the shortfall to close the deal.
 

Buyers, when you are looking at potential lenders to assist with your home purchase, ask in advance how long it takes them to do their appraisals. Many lenders can get this done within 3-4 days, so that you can have assurance that you will get all your money before you have to waive any financing condition.
 

Be very careful about bidding on a home without a financing condition, unless you budget an additional 10 per cent down payment in reserve, just in case the lender surprises you just before closing with a reduced loan. Being prepared will assist you in closing on time, and with the right amount of money.

Mark Weisleder is a Toronto real estate lawyer. Contact him at mark@markweisleder.com  

Click here for more columns by Mark Weisleder

Mortgage Rates Going Up Monday June 10, 2013

Toronto Star

Business

Excerpted from the Toronto Star

Mortgage rates going up Monday, Royal Bank says

Royal Bank of Canada is the first of Canada’s major banks to announce higher mortgage rates since Canadian bond prices plunged last month.

By:The Canadian Press, Published on Fri Jun 07 2013

 

One of Canada’s biggest mortgage lenders says many of its rates are going up Monday.

Royal Bank of Canada says the increases will range from one-tenth to two-tenths of a point, depending on the type of mortgage.
 

The biggest increase affects a five-year closed mortgage that RBC has been offering at 3.09 per cent — a promotional rate below the regular rate of 5.14 per cent.

The special five-year rate will rise to 3.29 per cent.
 

Royal’s one-year closed mortgages will rise 0.14 of a percentage point to 3.14 per cent and there will also be increases of one-tenth of a point for two-, three- and four-year mortgages.

Royal is the first of Canada’s major banks to announce higher mortgage rates since Canadian bond prices plunged last month.
 

Canada’s banks use the bond market to fund their commercial lending activities, so other mortgage lenders may follow RBC’s lead.

Man caught texting on hood of moving car | Weird | News | Toronto Sun

Man caught texting on hood of moving car | Weird | News | Toronto Sun

Toronto House Prices Hit Record High in May

Toronto Star

Business / Real Estate

Excerpted from Toronto Star

Toronto house prices hit record high in May

The average price of a house in the GTA hit a record $542,174 in May.

Mark Blinch / Reuters

There's no signs of a bursting bubble in real estate numbers released Wednesday.

By:Susan PiggBusiness Reporter, Published on Wed Jun 05 2013

 

Toronto’s housing market continues to defy the odds, with prices up an average of 5.4 per cent in May, year over year, despite cool, wet weather that has put a bit of a damper on the spring buying and selling.
 

The average price of a house in the GTA hit a record $542,174, up from $514,567 in May of 2012, according to May sales figures released Wednesday by the Toronto Real Estate Board.

Even condos saw price gains of 1.2 per cent in the City of Toronto — and just under one per cent in the 905 region. The number of condos sold in the GTA fell 9.3 per cent last month compared to May 2012, but for the first time in months, that figure wasn’t in the double digits.
 

There are no signs of a bursting bubble. In fact, indications are that the condo market is “rebalanced,” says condo market research firm Urbanation, as developers have held back on new projects and first-time buyers seemed to be out looking again in May.
 

The average price of a condo in the City of Toronto rose to $372,768 in May and $293,398 in the 905 region, according to TREB.
 

More real estate stories on Thestar.com

But “the market will be tested” in 2014 and 2015 when condos that have sold over the last couple of years begin construction or start flooding into the market, said Benjamin Tal, deputy chief economist for CIBC World Markets, which could help drive down prices as well as record-high rents.

Even building permits are pointing to surprising signs of renewed life in the housing sector where starts have been dropping since last fall: Some $7 billion worth of building permits were issued by Canadian municipalities in April, up 10.5 per cent from March.
 

Analysts had been anticipating a four per cent decline. The increase was mainly because of condominium construction in Ontario, British Columbia and Quebec, according to Statistics Canada. It the second-highest month for condo permits ever, noted Ben Rabidoux, a housing analyst with M. Hanson Advisors.
 

While GTA home sales remain soft overall, except for detached houses in the City of Toronto where transactions and prices were both up three per cent year over year, “the sales picture in the GTA has improved markedly over the past two months,” said TREB president Ann Hannah in a statement.

The MLS Composite Benchmark price — an average of home sales with extremes averaged out — was up by 2.8 per cent year over year-benchmark.
 

The GTA remains on track to see price growth, overall for 2013, of 3.5 per cent, said Jason Mercer, TREB’s senior manager of market analysis.
 

Toronto remains plagued by a shortage of inventory, with demand far outstripping supply, accounting for much of the price growth. While demand for houses remains strong, new listings just aren’t growing and realtors say some sellers are holding off listing in hopes prices will take off again.

The average days on market was up slightly year over year, to 23 days last month compared to 21 days a year ago.
 

The average price of detached homes averaged $676,797 in May, up 5.5 per cent in the 416 region to $864,536 and $602,576 in the 905 region, according to TREB.
 

Semi-detached homes were up 4.1 per cent to an average $496,120 across the GTA with the biggest growth in the 416 region where average prices were up almost 8 per cent to $633,625 compared to $409,632, a 2.3 per increase, in the 905 regions.
 

Townhouse sales saw the biggest decline in sales next to condos, with transactions down 7.3 per cent across the GTA. Average prices, however, came in just under $400,000.
 

The average townhome sold for $463,772 in the 416 region, up .2 per cent year over year, while prices in the 905 region hit $375,576, up 4.4 per cent over last May.

7 Reasons Your House May Not Be Selling

Toronto Star

Business / Personal Finance

Excerpted from The Toronto Star

7 reasons your house may not be selling

Here are some of the common mistakes people make when putting their home up for sale.

/ TORONTO STAR FILE PHOTO

Good timing - April to June is ideal - and a realistic asking price are among the factors that will ensure your house sells in a timely fashion.

By:Mark WeislederReal Estate, Published on Mon Jun 03 2013

 

Selling a home isn’t as simple as planting a sign in the ground any more. It involves preparation, timing and strategic advice. If you don’t do all of the above, do not be surprised when your home does not sell while others in the area are doing so.

Here are some common mistakes:
 

1. Good photos matter

More and more, buyers are being introduced to properties online. Pictures and videos matter. Before you take any picture, make sure your home has been properly de-cluttered, inside and out, and consider staging tips that will make the rooms appear larger. Pictures from your own iPhone will not impress anyone. Make sure all photographs are taken by professionals.
 

2. An MLS listing isn’t enough

In addition to the MLS, your home needs to be marketed on social media and should be directly advertised to other real estate agents, here and abroad, who are more likely to bring a buyer to your home. Foreign investors want Canadian real estate, as they view it as a safe investment. You need to reach every potential buyer.
 

3. The price isn’t right

A home is likely to attract the most interest within the first two weeks it is listed for sale. If the home is overpriced, buyers will move on. Be realistic when you set a sale price. Check out the competition and see what recent sales have been in the area. Remember, the longer a house sits on the market, the more likely that people will start asking whether something is wrong with it.
 

4. Buyers can’t get in to have a look

You never know when a potential buyer will want to see it. It might be late in the evening or at other times that are not convenient for you. If you say no, the buyer will typically just move on to the next home for sale, where the owner is more accommodating.
 

5. Your timing is wrong

Most buyers like to close before the beginning of the school year, to avoid too much disruption. Since closing usually happens 60 days after the offer is signed, you want to try to time your sale to happen between April and June. People generally go on vacation in the summer.
 

6. The house has a stigma

Sometimes two homes look similar, but one backs on to a ravine and the other to a hydro line. Make sure your agent asks for feedback from people who have seen your home but have decided not to put in an offer. If there is something outside the home that is bothering buyers, either figure out how to address it or adjust your price. If your neighbours know about prior problems with your home, be upfront and tell buyers in advance. They are going to ask the neighbours anyway, as part of their due diligence.
 

7. You have the wrong agent

When you interview agents, it should never be about choosing the one with the cheapest price. You have too much money riding on this choice. Ask any agent you interview about their own marketing plans and social media presence, and above all, get references. In addition, ask a simple question: Why should I hire you? If they can’t demonstrate why they are different, move on.

Mark Weisleder is a Toronto real estate lawyer. Contact him at mark@markweisleder.com