Monthly Archives: July 2014
Are Bidding Wars Here to Stay?

Written by guest blogger Frederick Chan (Mortgage Agent – Lic# 12070, Mortgage Alliance Performance Group)

…I hope not! Unless I’m on the selling side of course! Check out this article in the Star about the Toronto Real Estate Council debating ways in which they can curb these crazy bidding wars on houses. I think the key is that when buying a house you need to do so with your head, not your heart. Buyers are getting way too emotional when purchasing and it can come back to bite you!

If you buy a house for $400K and the bank values it at $380K, YOU HAVE TO PAY THE DIFFERENCE! How does that work? Let’s say you were planning on putting 5% down on $400K and the bank or insurer values the property at $380K. You could finance the house at 95% of $380K, requiring a down payment of $19K + the $20K difference between the purchase price and the appraised value. For most people with only 5% down, this is a big issue!

Here are some things to look out for if you’re buying a house in this crazy market:

– Regardless of whether you are pre-approved, the house is not. If the lender or insurer value the house lower than your purchase price, you’ll have to live with that value. So if you are putting down the minimum 5%, make sure you have a financing condition, so you can get out of the deal if this happens.

– Lenders don’t like properties that say “renovators dream” or “sold in as-is condition” very much. It implies there is something wrong with the property. Make sure you have an exit strategy for these types of places in case the bank has an issue.

– Banks understand the strategy of sellers pricing low to initiate a bidding war, but you can bet they will scrutinize the application a little bit more if the selling price is $200K over the asking price!

– Make sure to send me (or your lender) a copy of the MLS listing prior to putting in an offer so we can have a look. Especially if you are planning on putting in a “firm” offer.

Happy Hunting!


The Dangers of Overpricing Your Home

It’s completely understandable that Sellers are eager to maximize their profit, unfortunately some make risky pricing decisions and end up making a lot less than they could have.

Common Misconceptions from Sellers:
“My home is much nicer than the others on the market. A higher price is completely justified”

“I’m not in a rush to sell”

“Let’s test the market, price high and see what we get”

Overpricing your home does have consequences.
An asking price that is beyond market value can impact the marketing of your property. Some risks include:

  • Fewer buyers attracted = fewer offers received
  • The property helps competing houses look better by comparison
  • Days on market is prolonged – Houses that have been on the market for a longer period of time tend to get lower offers
  • The best time to capture a buyer’s attention is within the first week – overpricing could deter potential buyers from seeing the home

The following image illustrates the percentage of buyers that will view your home relative to the asking pricing.

market2

If you are a serious seller, price your home appropriately and attract serious buyers. You will stand a much better chance of getting full-market value, and your property will sell much faster.


Buying a Condo? Don’t Forget About the Status Certificate!

When buying a condo, you’re given the option of requesting for a status certificate before the offer is “sold firm”. There is no legal obligation to obtain one before purchasing a condo, however it is highly recommended that you do.

Your Realtor will typically include a clause that contains two parts:
1. Request that the sellers provide a copy of the condo’s status certificate, and

2. Conditional upon the review by your lawyer

The status certificate is a document, prepared by the Board of Directors, which outlines important information concerning the overall state of the condo corporation. The document details things such as how the building is managed, if there are any pending lawsuits, and the overall financial health of the condo corporation.

The status certificate is often packaged with other important documents such as the condo declaration, by-laws, budget, reserve fund, insurance certificate and financial statements.

The status certificate typically costs $100 (+ HST) and is often paid for by the seller.

The document outlines everything you need to know about the condo upfront so there are no surprises. If you’re buying a condo, this is definitely one piece of document you don’t want to close without!


Address
Century 21 Atria Realty Inc., Brokerage*
1550 16th Ave. #C200 South
Richmond Hill, ON L4B 3K9
Contact
D 416.684.5372
O. 905.883.1988
E. info@cynthiahu.ca
Century
*Each office is independently owned and operated
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