Posts in Toronto Real Estate

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!

January 2008 eNewsletter

January 9th, 2008 Posted by Buying opportunity, eNewsletter, First-time buyers, Toronto Land Transfer Tax, Toronto Real Estate No Comment yet

As you know, the new City of Toronto Land Transfer Tax comes in to effect on February 1st, 2008. Some details are becoming a bit more clear. According to the information below (provided by the Toronto Real Estate Board), first-time buyers spending less than $400,000 will not be forced to pay the exempted amount up front and then wait for a rebate. First-time purchases up to $400,000 are now going to be fully exempt from day one. However, it is important to note that the LTT will NOT BE FULLY EXEMPT for purchases over $400,000. From the start, those first-time buyers will have to pay the full amount up front, then wait for the maximum rebate of $3,725. Hopefully, the Teranet system will be fully udpated soon, after which time first-timers spending more than $400,000 will only have to pay the LTT on the amount over $400,000!

First time home buyers of new AND re-sale homes will receive a rebate of the Toronto land transfer tax of up to $3,725 (this equals a 100% rebate on homes purchased for up to $400,000). Teranet will be collecting the Toronto land transfer tax for the City of Toronto. Once the City’s rebate policies are reflected in Teranet’s collection system, the rebate-eligible amount will be exempt at the time of registration. The City previously indicated that these arrangements would not be made until the “spring of 2008”, but has now indicated that changes will be made by February 1, 2008, when the Toronto land transfer tax takes effect. According to the City, purchasers who are eligible for a FULL rebate of the Toronto land transfer tax will not have to pay the tax (meaning that they do not have to pay the tax upfront and be rebated later). This means that first-time home buyers where the total Toronto land transfer tax is $3,725 (the Toronto land transfer tax payable on a home purchased for $400,000) or less, will not pay Toronto land transfer tax (see exception noted below). If you have any concerns, please check with your lawyer.

Note: First-time home buyers with Toronto land transfer tax payable above the maximum rebate amount of $3,725 (those purchasing homes above $400,000) will be required to pay the total Toronto land transfer tax, and then receive the maximum rebate of $3,725 at a later date from the City. Once all changes have been made to Teranet’s collection system, in the spring of 2008, these buyers will only have to pay the balance of the Toronto land transfer tax above $3,725.

Who qualifies as a first-time home buyer?

According to the City of Toronto, eligibility rules for the Toronto Land Transfer Tax first-time buyer rebate will mirror provincial rules, as follows:

– The purchaser must be at least 18 years of age.
– The purchaser must occupy the home as his or her principal residence no later than nine months after the date of the conveyance or disposition.
– The purchaser cannot have previously owned a home, or had any ownership interest in a home, anywhere in the world, at any time.
– If the purchaser has a spouse, the spouse cannot have owned a home, or had any ownership interest in a home, anywhere in the world while he or she was the purchaser’s spouse. If this is the case, NO refund is available to either spouse. Note: If a purchaser’s spouse owned an interest in a home BEFORE becoming the purchaser’s spouse, but not while the purchaser’s spouse, the purchaser may be eligible for some rebate.

Are Toronto Land Transfer Tax Rebates in addition to Provincial Land Transfer Tax Rebates?

– Yes. The provincial government also provides a rebate of the provincial land transfer tax for first-time buyers.*

*As of December 12, 2007, the Province of Ontario started offering first-time home buyers a $2000 rebate of the Provincial Land Transfer tax.

As a reminder, please note that the new Toronto LTT does not apply to transactions closing before February 1st, 2008. I’ll do my best to keep you up to date with these changes. As always, please feel free to contact me with any questions or comments.

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Bully Offers

As some of you have experienced recently, there is a relatively new phenomenon occurring in the Toronto real estate market: the Bully Offer. By now, most market watchers are familiar with the typical marketing cycle for homes listed for sale. The listing is posted this week, an open house is scheduled for the weekend, and offers will be viewed next week. In the hectic Toronto market it has become important to make sure that we do sufficient marketing of a listing to ensure as good exposure as possible; we don’t want a listing being scooped up in one day. That leaves everybody wondering if the listing could have sold for more money – and maximizing the proceeds from a sale is the real estate agent’s duty to the Seller.

This procedure has basically become the de facto standard in recent years. However, a counter-strategy has emerged that can really make things difficult for everybody. A “bully offer” is one registered prior to the scheduled date – often several days early – to be presented ASAP. The Listing Agent is obliged to present the offer to the Sellers. The ball is then in the Sellers’ court: do they take the ‘bird in hand’, or wait for the scheduled date in the hopes of getting competition? To be attractive to the Seller, the bully offer is typically (almost always, in fact) for more money than the asking price, and often ‘firm’, meaning with no conditions attached. It’s a tough decision that can only be made by each Seller on a case-by-case basis.

What about other potential Buyers? The Listing Agent is obliged to inform only Buyer Agents who have registered an offer intended for the scheduled date. Since we usually don’t register until the scheduled day of offers, every other Buyer who has looked at the house may be left out. However, it seems most Listing Agents are taking the time to notify every other agent who has shown the property. (Also, I typically call the Listing Agent if my Buyers express any interest at all in a property; I ask to be kept up to date with changes or developments.) A bully offer puts tremendous pressure on the other Buyers, who may have been counting on more time to make their decision, arrange financing, etc. But, that’s the point of the bully offer – to ‘box out’ the competition.

How do you beat a bully offer? Firstly, be as ready as you can be to make a purchase: have your financing pre-approved. Secondly, if you are interested in a property, consider a pre-home inspection. That costs money, and you might still get out-bid, but that will allow you to make a ‘firm’ offer, if necessary. Thirdly, try not to fall in love with any particular house! You may not get the house, and if you are emotionally committed to it you risk disappointment. (Remember: in any negotiation, you have to be ready to walk away if you don’t get what you want/need.) If you are ready and willing to make a competitive offer, you have just as good a chance against a bully offer as any other situation.

Being prepared to deal with bully offers is now part of the whole buying process. No matter what we encounter, I always recommend that my clients be flexible and co-operative in negotiations – even if the other side starts to get prickly. Staying cool and ‘professional’ helps get you through even the most difficult negotiations.

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New Toronto Land Transfer Tax

Recently, I sent you some information about the new Toronto Land Transfer Tax; I got a number of follow-up questions and comments, so I thought that I would respond with some figures and brief comments about what’s happening in the market as a result of the recent decision by Toronto City Council to basically double the existing Land Transfer Tax.

Here’s what the actual taxes will be for a sale at $400,000:

Ontario Land Transfer Tax $4,475
Toronto Land Transfer Tax $3,725
Total $8,200

Here’s what the actual taxes will be for a sale at $500,000:

Ontario Land Transfer Tax $6,475
Toronto Land Transfer Tax $5,725
Total $12,200

Here’s what the actual taxes will be for a sale at $600,000:

Ontario Land Transfer Tax $8,475
Toronto Land Transfer Tax $7,725
Total $16,200

Here’s what the actual taxes will be for a sale at $1,000,000:

Ontario Land Transfer Tax $16,475
Toronto Land Transfer Tax $15,725
Total $32,200

Basically, the total Land Transfer Tax rate will be 4% per $100,000 over $400,000! That’s a powerful incentive to act now. The new tax could hurt first-time buyers who are on a budget by eating up a significant portion of their down payment, even if the City provides a refund of some or most of the amount. For buyers of more expensive homes, the dollar amount will be quite high, which won’t be fun to deal with. (Plus, anybody who rolls the amount into their mortgage will pay double or triple the tax amount over time.) Either way, acting now to avoid the tax makes sense.

Not surprisingly, this has already motivated a lot of buyers to try to buy ASAP to beat the tax. (Please refer to yesterday’s email to find out how that works.) As a result, in the last couple of weeks the market has become busier than ever. If you are a buyer, that means a bit more competition – which is added incentive to buy sooner rather than later, as these price increases will be compounded over time as the market continues to rise due to other factors. If you are a seller, it makes now a great time to sell, as the number of prospective buyers for your home has spiked.

Overall, I don’t expect the new Toronto Land Transfer Tax to have a serious negative impact on the market; it’s basically 1% of the average sale price (which is still under $400,000). Considering that the market is rising at greater than 5% per year, that’s not a big deal. However, markets almost always react to new taxes by trying to avoid them – thus the recent increase in activity. If you are thinking of buying or selling, now is a great time to do it!

As always, please call me with any further questions or comments. I’m here to help!!

Toronto Land Transfer Tax Approved

October 31st, 2007 Posted by Interest Rates, Market Commentary, Toronto Land Transfer Tax, Toronto Real Estate No Comment yet

Details of Approved Toronto Land Transfer Tax

Toronto City Council has approved a municipal land transfer tax that will be levied on top of the provincial land transfer tax. The Toronto Real Estate Board worked very hard to oppose this tax and commends the efforts of REALTORS® on this issue. TREB took a strong position to oppose this tax as unfair in principle and refused to compromise. As a direct result of this strong position, City Council was forced to make a number of amendments to the City’s original proposal, including rebates for first-time buyers, a reduced rate, and grandfathering for existing transactions.

The City has not yet provided detailed information on administration or implementation issues. The following is based on currently available information.

What was approved by City Council? A second land transfer tax, on top of the provincial land transfer tax, at the following rates:

Residential:

0.5% of the amount of the purchase price up to and including $55,000
1% of the amount of the purchase price between $55,000 and $400,000
2% of the amount of the purchase price above $400,000
Commercial / Industrial / Etc.:

0.5% of the amount of the purchase price up to and including $55,000
1% of the amount of the purchase price between $55,000 and $400,000
1.5% of the amount between $400,000 and $40 million
1% of the amount above $40 million
When does this take effect? February 1, 2008.

Are existing transactions grandfathered? Yes. Any transactions where the purchaser and vendor have entered into an Agreement of Purchase and Sale for the property prior to December 31, 2007 will be rebated the full amount of the Toronto land transfer tax. The City has not yet provided clarification on how rebates will be administered. If your clients have concerns, they should check with their lawyer. Once the City of Toronto provides clarification, more information will be provided.

What about Agreements of Purchase and Sale signed after December 31, 2007 with closing dates before February 1, 2008? Purchasers with a Purchase and Sale agreement signed after December 31, 2007 with a closing before February 1, 2008 will not be required to pay the Toronto Land Transfer tax.

What about Agreements of Purchase and Sale signed after December 31, 2007 with closing dates on or after February 1, 2008? Purchasers with a Purchase and Sale agreement signed after December 31, 2007 with a closing on or after February 1, 2008 will be required to pay the full Toronto Land Transfer tax.

Where does this apply? The Toronto land transfer tax only applies to transactions within the City of Toronto. This does NOT apply to property transactions outside of the City of Toronto.

Are first time home buyers affected? First time home buyers of new AND re-sale homes will receive a rebate of the Toronto land transfer tax of up to $3,725 (this equals a 100% rebate on homes purchased for up to $400,000). The City has not yet provided clarification on how rebates will be administered. If your clients have concerns, they should check with their lawyer. Once the City of Toronto provides clarification, more information will be provided.