April 14, 2009
Dual-Agent Roles Cloud Home Sales
Question: If a selling agent neglects to inform a homeowner that a higher bid has been made and chooses instead to sell the house to a person he’s also representing as a buyer’s agent, what rights do the seller — and the higher bidder — have?
Answer: Generally speaking, real estate experts caution buyers and sellers against using the same real-estate agent because of the conflicts it can create. Negotiating a final sales contract involves lots of give and take on both sides, and if your agent is also representing the other party in the transaction, that immediately puts you at a disadvantage. How will you know if the agent is doing more to serve your interests — or the interests of the other party?
Despite the potential for trouble, it’s still common for agents to represent both the buyer and the seller, especially since doing so greatly increases the agent’s commission. In Ontario, such arrangements are legal, though these so-called “dual agents” have to get a “multiple representation” consent of the buyers and sellers first.
The law gets trickier when two agents within the same real-estate company represent both sides of a transaction. In theory, that situation can lead to big conflicts if the two agents, who probably work in close proximity to one another, share information. Such arrangements are allowed without consent of the buyers and sellers, although the agents involved are not supposed to share information.
Although real estate agents have a fiduciary duty to their clients to give them the best possible service, if they’re acting within a sanctioned dual-agency arrangement, the agent is fulfilling obligations that you essentially agreed to in advance.
Obviously, it’s often wise to avoid a dual agency relationship from the get-go. No matter how you handle your sale, be sure to keep all the correspondence between you and your agent, and don’t be afraid to snoop around to learn more about other possible bids — and more about your agent’s reputation. In many cases, sellers don’t even know they’ve been taken advantage of, so it pays to know a lot about your local market, including the recent sales prices of nearby homes, before you get far along in the home-sale process. Doing some research on your agent and on recent nearby transactions can make you a more informed seller — and help keep the agent honest.
December 29, 2008
Your Home-To-Be
You’ve filled out your wish list and figured out how much you can afford. Now you’re ready to grab your car keys, your checkbook, and… wait! Let’s not jump the gun.
Before you even think about going shopping for your home there are a few more things to consider. Are you excited about that new home community that just popped up down the street? Or are you set on the castle after all? Or maybe you’re just looking for a good deal.
The Worst House on the Best Block
You may have heard this before: It’s always better to buy the worst house on the best block than the best house on the worst block. Here’s an extreme example. Say you live in a 2500-square-foot colonial that’s only two years old. You happen to look out your breakfast nook window one day and find that the lot next door is being cleared. “That’s nice,” you say — until you find out that your neighbor’s new house is only as big as your living room. What does that mean to you? It means your property value is going to fall. Why? Because the value placed on your house also takes into account the homes surrounding your property.
What does this say about your new neighbour? She’s one smart cookie. Her property value will increase because she’s living next door to your beautiful abode. This doesn’t mean you can’t despise her. Go ahead. We’ll understand.
Once you’ve transcended your petty emotions, though, you should know that many communities have covenants to prevent such an event from happening. But you can apply this rule to any neighborhood. The least valuable home benefits from the more expensive homes and the most valuable home is harmed by the lower valued homes. Keep this in mind while you are shopping.
Now, on to our different home types.
New Home — One of the main advantages to a new home is… it’s new! New homes have new appliances, new plumbing, new roofs, new boilers, new electrical systems, etc. You get the point. You shouldn’t expect to outlay money for repair costs anytime soon, and most new homes come with five- or 10-year warranties. Another advantage is the design process. If you sign a new home contract early enough in the building process, you can make some, if not all, of the decisions about the interior and exterior design.
One important thing to note about buying a new home is that most new home communities welcome real estate agents. So here you should have a strong buyer’s agent. It’s important that your interests are represented; don’t count on Joe Builder and his agent to represent you. That friendly agent at Happy Acres legally represents Joe Builder and not you. As we’re fond of saying in Fooldom, “Do your own research.” In this case, find out all you can about the builder.
The grand model unit that Joe Agent shows you — while Bach suites lull you into a delighted reverie from the in-wall speakers — is sure to have a luxury bath, a finished basement, an upgraded kitchen, and designer wallpaper and floor coverings. It’s important for you to know that your new home will likely not have all these options unless you pay for them. You could spend tens of thousands of dollars more than the base price for those goodies. Does it sound suspiciously like buying a car? It is, in this regard anyhow. Sit down and decide which options you must have and which options you could live without. Also keep in mind that you can always make certain improvements after the house is built.
Also, everything is negotiable. As with all home purchases, don’t hesitate to ask your agent to negotiate on price, options, and closing costs. If you’re looking to make a deal on your new home, you’re in a strong position if the builder has a completed house without a buyer. That vacant house isn’t making a dime for him and he’s likely to want to unload it as quickly as possible. If you’re not in a hurry to move in, some builders will actually sell you their model and then lease it back from you. Usually you’ll get a great deal on a well-optioned and designed house and a guaranteed return on your investment.
Resale Home — In some parts of the country it’s downright impossible to find a new home. An older home or a resale is a house that’s had at least one owner. When shopping for an older home, remember it’s not going to be perfect. There are likely to be repairs or alterations that you’re going to want to make prior to occupancy. It’s often best that you consider this in your offer rather than ask the owners to fix them.
It’s a good idea to purchase a warranty for a resale home. The cost is usually only a few hundred dollars and your agent can help you choose the one that’s best for you. As an added incentive, many home sellers purchase home warranties. These cover the home while the owner is trying to sell it and for a certain period of time after it’s sold. Also, definitely pay the few hundred dollars to have a home inspection. It’s better to find out the roof needs to be repaired now, rather than two days after you close and the first storm hits.
Fixer-Upper — Buying a fixer-upper is a good way to own a home that you ordinarily wouldn’t be able to afford. If you’re a handyman or a handywoman, or you know someone who is, this could be the home for you. The real estate industry has placed an annoying little word on the difference between the improved home’s value and the price you paid plus the repairs — sweat equity. For instance, if the improved house is worth $150,000 and you paid $130,000 for the house and $10,000 in repairs, your sweat equity (arghhh) is $10,000. Again, you should definitely have a home inspection with this house, and have a contractor give you an estimate on repair costs. Also, ask your lender about special loans with which you can build the repair costs into your mortgage.
A fixer-upper may not be for you, especially if you have small children. Keep in mind that there will be various disruptions, with rooms being closed off, different teams of workmen trooping in and out of the place, the kitchen potentially becoming unusable for a period of time, and so on. And that assumes that all the work goes as is planned, and on time. Weigh the potential savings against the potential disruption of your home life.
Power of Sale — Another option in finding a better price is a foreclosure home. This is one in which the previous owner could not make the payments, so the mortgage company or note holder has taken possession of the house.
Foreclosures come in all shapes, sizes, and states of disrepair. Some look as though they’re about to be condemned; others are in pristine condition. Any home can be foreclosed on, so don’t be surprised to find foreclosures worth a million dollars or more. Look for many incentives when buying foreclosed homes — decreased prices, closing cost assistance, quick closing incentives, low down payments, and special loan programs, just to name a few. If you’re interested in this type of home, find a real estate agent who specializes in Power of Sale properties and knows the tricks of the trade.
Now you have a pretty good idea about how much you can afford and what kind of home you want. You’re not quite there, though, but you’re in the neighborhood.
September 6, 2008
Warmth And Convenience At Its Best
A corner gas fireplace can be a great solution to those brutally cold days of winter.
When the months of November to February come around, staying warm can sometimes be difficult. Think of having a fireplace is more of a necessity than a luxury. Here is a look at how a corner gas fireplace may be the solution you’re looking for in staying warm this year.
While most people are very familiar with a standard wood burning fireplace or wood stove, a lot of people don’t realize the benefits a corner gas fireplace can provide. Not only will it keep you and your family warm from those freezing temperatures outside, but the convenience is hard to beat as well.
Gas fireplaces really don’t require a lot of upkeep in the sense that they do not burn wood, so there is no mess with ashes in the firebox all the time. You will not be chopping your own wood or having it delivered. There is no stacking and carrying it inside all the time. You simply turn up the gas and you have an instant fire providing a warm relaxing glow.
If you live in an area where there are no gas lines or it would be extremely difficult to set up, you can always use propane as an alternate fuel. Propane fireplaces are becoming quite common for people in these types ofcircumstances.
There is no substitute for the warmth and ambience that only a fireplace can provide. Whether it be alone reading a book or sitting around the fire with family or friends, a fireplace is one of life’s great pleasures.
If you are considering adding a new fireplace in your home you may want to take a closer look at this type of gas fireplace. You can find many websites online that specialize in this type of fireplace that have catalogs and pictures that show you all of the different styles.
By choosing gas instead of wood will give you all the benefits of a wood burning fireplace without all of the mess. It’s convenience at its best. So stay warm this winter season with a corner gas fireplace.
A corner gas fireplace can be a great solution to those brutally cold days of winter. When the months of November to February come around, staying warm can sometimes be difficult. Think of having a fireplace is more of a necessity than a luxury. Here is a look at how a corner gas fireplace may be the solution you’re looking for in staying warm this year.
While most people are very familiar with a standard wood burning fireplace or wood stove, a lot of people don’t realize the benefits a corner gas fireplace can provide. Not only will it keep you and your family warm from those freezing temperatures outside, but the convenience is hard to beat as well.
Gas fireplaces really don’t require a lot of upkeep in the sense that they do not burn wood, so there is no mess with ashes in the firebox all the time. You will not be chopping your own wood or having it delivered. There is no stacking and carrying it inside all the time. You simply turn up the gas and you have an instant fire providing a warm relaxing glow.
If you live in an area where there are no gas lines or it would be extremely difficult to set up, you can always use propane as an alternate fuel. Propane fireplaces are becoming quite common for people in these types of circumstances.
There is no substitute for the warmth and ambience that only a fireplace can provide. Whether it be alone reading a book or sitting around the fire with family or friends, a fireplace is one of life’s great pleasures.
If you are considering adding a new fireplace in your home you may want to take a closer look at this type of gas fireplace. You can find many websites online that specialize in this type of fireplace that have catalogs and pictures that show you all of the different styles.
By choosing gas instead of wood will give you all the benefits of a wood burning fireplace without all of the mess. It’s convenience at its best. So stay warm this winter season with a corner gas fireplace.
Source: Northern Pine Improvements
July 15, 2008
Phantom real estate bidding report slammed
Toronto Real Estate Board task force argues system already in place to address ethics breach.
A Toronto Real Estate Board task force report that found no additional enforcement is needed to curb phantom bidding completely misses the mark, says a prominent local realtor.
“TREB evidently doesn’t think that ethics is their responsibility,” said Michael Manley, owner of Prudential Properties in the Beach.
“They should be putting some internal mechanism in place because right now, there is nothing at TREB to deal with this,” Manley added. “They are leaving it all up to RECO (the Real Estate Council of Ontario) to enforce.”
Manley was reacting to a TREB task force report presented to TREB members on their private website yesterday on the contentious practice of phantom bidding, which involves fabricating an offer to spark a higher counter bid.
The report said RECO – which regulates agents and brokers – already has all the enforcement tools it needs to investigate and prosecute agents who flout the rules.
The issue of phantom bids was pushed to the forefront last year when Manley ran for president of TREB. During the campaign, he vowed to stamp out the practice – which many agents agree is widespread in Toronto – through an online mandatory bid registry system.
TREB president Maureen O’Neill said yesterday the report was for internal use only and would not be made public. However, the Star was able to obtain a leaked copy.
In its findings, the seven-member task force concluded “the RECO code of ethics is the only avenue to deal with” phantom offers.
Any agent or broker involved in such tactics is “committing a criminal act,” said O’Neill, who agreed with the six-page report’s findings. She said members of the public can complain to RECO if they have an issue with how agents handle bids.
But Manley said this approach is akin to shutting the barn door after the horse has bolted.
“They are going after agents after they have already broken the rules instead of setting up a system that helps prevent that type of activity in the first place,” Manley said.
He said requiring agents or brokers to register all bids online is the only real solution to the problem.
The report said a registry would be cumbersome and unworkable.
“For instance, it wouldn’t allow for last-minute bids,” said O’Neill who had initially backed the idea.
O’Neill said TREB will issue pamphlets and hold education sessions to help end unethical tactics.
July 6, 2008
Ontario real estate: Cottage country woes
Ontario cottage country may be losing some of its part-time American residents. Preliminary reports out of cottage country show a huge uptick in cottages for sale and fewer U. S. buyers.
While there are no hard data, real estate brokers report they are not seeing the same type of activity from American buyers as they have over the past 10 years, thanks to a rising loonie, a sluggish U. S. economy and out-of-control gas prices.
U. S. citizens have been flocking to buy in Ontario since the province eliminated in the mid-1990s a special 20% land transfer tax that applied only to non-Canadians. John O’Rourke, president of Royal LePage Lakes of Muskoka, confirms gas prices alone are not reason enough for people to sell their cottages. He doesn’t see a panic. “We went through an episode like this with the tax and nobody sold,” says Mr. O’Rourke, referring to when the 20% tax was implemented. “There are some U. S. citizens trying to sell, but it’s not a large number. But the supply has gone up. It’s a buyer’s market.”
The real problem is the lack of American buyers. “The dollar is almost on par. We’re not getting too many calls. When the dollar was 60¢, 70¢ [compared to the U. S. dollar], the advantage was huge,” says the broker.
The Muskokas have long been an attractive summer home for Americans, but when Goldie Hawn and her husband, Kurt Russell, moved in and celebrity citings became common, the lake region north of Toronto took off. It didn’t hurt that the greenback’s strength compared with the loonie gave U. S. citizens a powerful incentive to buy.
Susan Pryke, the Mayor of the Township of Muskoka Lakes for the past eight years, says Ontario cottage country has always been popular with Americans as a getaway and she doesn’t believe that will change.
“Muskoka is easy to get to from New York and Pennsylvania. Even in the early days, there were trains that came up here and then you got on a steamboat. It was a natural fit. The early cottagers were Americans and supported the hotels that started here,” says Ms. Pryke.
Even today, the Muskoka area has a corner called “Little Pittsburgh,” which was set up by cottagers escaping Steeltown. Their descendants still summer there and Ms. Pryke doesn’t expect them to be leaving because of their long-established roots in the community.
But she does admit there are signs the U. S. presence has died down. “I don’t hear the American accents as much around town,” says the Mayor.
Judging by the fact he’s not getting many calls from Americans these days, Muskoka lawyer Bill Grimmett says volume is definitely down. “There are just not as many people buying,” says Mr. Grimmett. About 90% of the business out of his Port Carling, Ont., office is real estate.
But he doesn’t believe the sellers today are Americans taking profits from cottages that have appreciated in value. U. S. citizens who owned cottages have also made a healthy profit from the rise in the loonie, he notes. “The American family compounds stay in the family forever,” says Mr. Grimmett.
He agrees that the problem in cottage country is that there are no new American buyers. Even hockey players, who get paid in U. S. funds, are reconsidering major cottage purchases. “The hockey players are much more price-conscious than they used to be,” says Mr. Grimmett.