Posts in For Sellers

HST Applies to Commission Paid to Realtors

February 14th, 2013 Posted by Commentary, First-time buyers, For Sellers, HST, Uncategorized No Comment yet

Professional real estate services are a ‘service’ like any other: the commission you pay to the service provider is subject to HST. This may seem obvious to some people, but I have been surprised a couple of times over the years to find that some folks didn’t realize that. Of course, we can usually review the facts in a simple, straight-forward conversation, but I think it’s important enough to mention here.

When I first started in real estate in 2001 my services were subject to just the 7% GST (which declined over time to 5%). The old Province of Ontario sales tax didn’t apply. However, when the taxes were merged into the HST, the rate went to 13%. Please note that in this example the tax applies not to the sale price of the house/condo, but rather to the commission paid for representation by a Realtor.

For example, in the case of a sale price of $400,000, a seller with an industry-standard 5% commission contract with her Realtor will pay $20,000 to the listing Brokerage (which will typically pay half of that amount to the co-operating Brokerage that represented the buyer). It’s that $20,000 that is subject to the HST. In this example, the seller has to pay $2,600 HST. The listing Brokerage collects that amount in trust for the Realtor, who then files with CRA and remits his taxes directly to CRA. (As a ‘small business’, I have an HST account, and can claim back some of the HST that I pay out during the course of my business. However, the rest goes to CRA.)

This is all separate from the HST that is payable on new construction. That HST is charged on the value of the new home, and is often built-in to the list price. Some of it is rebated to first-time buyers.

Here’s a bit more information about the HST in Ontario. If you have any questions about HST charged on real estate services, please do feel free to contact me. Either way, don’t forget that you will have to pay HST on the commission you pay your Realtor. 🙂

Home Seller Tips – Fall 2012

September 26th, 2012 Posted by For Sellers, Toronto Real Estate No Comment yet

Last week I posted an updated set of recommendations for home buyers. Today, I’m doing the same for a “sellers’ tips” blog I posted a few years ago. Not a whole lot has changed, but enough to warrant an update. Here goes!

Homes sell in any market. Regardless of overall conditions, each home is judged on its own merits. If you want your home to sell promptly, for a good price and with good terms, you have to properly prepare it – and yourself – for sale. Here are a few tips to get you started.

1) Understand the market: As has been the case for quite some time, the Toronto real estate market is experiencing a low supply of houses (as opposed to condos; there are lots of those on the market). This has resulted in significant price increases since early 2009. For example, last week TREB reported that house sales for the first half of September (2012) were down in volume by 15%, but up in price by 9.5%. Condo sales dropped in volume by 28% – which seems like a lot to me – but prices in the 416 still managed to squeak up 5%. Condo prices in the 905 were actually down 2%, which limited the GTA average price increase to 3%. So, when you hear about ‘the housing market’, keep in mind that there are different segments of that market – not to mention different locations. If you intend to sell this fall, we’ll talk about local market conditions – there’s lots to consider.

2) Your expectations must reflect the market: The market has been going upwards for over three years (since the post-recession bounce began in early 2009). However, despite a steady (if somewhat sluggish) economy, decent employment levels and slightly rising incomes, there is still some negative pressure on the market: mortgage rules have been tightened again recently, the global economy is still wobbly, plus politicians and the media carp on incessantly about real estate. It’s perfectly rational that buyers would want to be cautious.

Plus, there has been some talk in the industry that buyers are less willing to get in to competition for a house. That’s not to say that we aren’t seeing competition this fall; we are. However, we are also seeing great houses sit on the market past ‘offer day’, with no obvious explanation – other than the possibility that some buyers are playing it a bit more safe these days. For sellers, that means being more realistic with pricing, and being prepared to negotiate. There’s more than one way to skin a cat, as they say, so we’ll put some time and effort into preparing our marketing strategy to reflect that current reality.

3) Get your home ready: Your listing is/will be in competition with similar listings in your neighbourhood. You need to stand out somehow. Home preparation and presentation (together with pricing) are key to a successful sale. By now, everybody knows about ‘de-cluttering’ and staging. The money you fork out (cleaning, patching, painting, putting extra stuff into storage, etc.) is money well spent. It will help capture the interest of potential buyers, and help overcome the objections that naturally arise in almost every case. In short, making a good first impression is just as important as ever!

4) Stay out of the way: Once your home is on the market, be sure to get out of the house/condo during showings. Viewers want to be able to comfortably wander around to get a feel for the place, and speak openly to each other or their Realtor. That’s hard to do when the owner is sitting right there – or worse, following them around. Tidy up before you leave for the day to make sure that your home shows its best, then make yourself scarce! 😉

5) Let your agent work for you: Like most Realtors, I’m a full time real estate professional. I know how to market your home; I have the knowledge and experience to determine who is a real buyer (as opposed to a tire kicker or low baller); and I know how to deal with other Realtors – which is extra important during difficult negotiations. Everybody has that friend or family member who wants to advise them. Take their advise for what it’s worth (your call), but choose for yourself a Realtor whom you trust, then let him/her (me!) do the job. After all, that’s what you pay us for.

As with the short list of buyer tips, there’s much more that you need to know about selling your home – this is just a primer. Follow me on Twitter for ongoing tips and commentary. As always, if you have any questions about market conditions or the home selling process, please feel free to get in touch with me. If you are ready to sell, call me today and I’ll put my continuous marketing strategy and commitment to success to work for you!