REDISCOVER REAL ESTATE

Bully Offers: the newest dragon in real estate?

It’s foreseeable that, in Toronto’s hyper-heated market, bidding wars are essentially part of the home-buying process. But what about the newest phenomenon: bully offers?

Bully offers are gaining prevalence as buyers attempt to circumvent the exhausting bidding wars and jump straight to their top price for a property. In all of my 16 years in real estate, I have never seen so many bully offers.

In desirable neighbourhoods, the offers, if any, are typically scheduled to be reviewed a week after the house hits the market. It is done to allow as many people as possible to look through the home with the purpose of finding an ideal Buyer.

But what if that ideal Buyer shows up the day the listing hits the market and wants to buy it? What if the Buyer doesn’t want to wait a week to submit his offer, and most likely end up competing, and worst still, losing that house?

He can do what is called a pre-emptive offer or as we often call them “bully offers”. This is when a Buyer jumps the line and submits his offer for consideration before the offer date. This basically short-circuits the whole system.

The problem isn’t so widespread in the outlying areas of the GTA or in Toronto’s condo market. But for the single-family homes, which are difficult to come by in the first place, bully bids are becoming more and more common and this drives property prices up higher and faster than ever before.

As a listing agent, you can request ‘no’ to any pre-emptive offers on the MLS listing itself, but you can’t stop someone from submitting one and you can’t stop your Sellers from looking at it. Essentially, the Sellers have the final say so it is wise to be informed and prepared for any probable bully bids regardless if you’re the Buyer or the Seller.

My prediction for the fall market in Toronto is it will continue to go up, prices will increase across the board primarily due to the fact that there is an absence of available homes and interest rates remain at all-time lows.

Have questions about bully bids? Looking to buy, sell or refinance? Know your options. I can help! Direct line: 416-219-6662

Unrealistic buyers need to get finance in order...

Home buyers may have big aspirations and bank balances but they are still coming up short when it comes to making bids.

While most home buyers expect to pay the big price tags in urban markets, their level of market expectation is still far removed from reality.

According to the latest Bank of Montreal Fall Home-Buying report, four in 10 potential homebuyers can expect to pay a whopping $83,556 (21 per cent) more than what they had initially planned.

Naturally, buyers in tight urban markets have to pay the higher price. A majority of those surveyed from Toronto planned to spend about $630,000, have to increase that figure by an average of $100,000 to get their desired property.

Buyers, however, have become more accepting of the fact that they will have to pay top dollar with eight in ten of those surveyed saying they now have a better understanding of current prices. They are also changing their buying strategy to suit their strategy.

“By shifting toward semis and townhomes and away from detached and condos, buyers appear to want their cake and eat it too - a backyard for the kids to play in, but also something that won't break the budget, notably in Vancouver and Toronto," said Sal Guatieri, Senior Economist, BMO Capital Markets.

 

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New site opens boundary information for investors

Investors across the Greater Toronto Area are being reminded to check the official boundaries of a property during the home buying and selling process, in an effort to reduce the prevalence of boundary disputes.

“Everywhere I go, everyone has a boundary story for me,” says Saša Krcmar, executive director of Krcmar Surveyors. “Somebody has an issue with a boundary then you start to feel the emotions come out.”

The issue of boundary disputes can easily rack up hundreds of thousands of dollars in legal costs should the issue go to court. In British Columbia, for example neighbours found themselves ordered to remove an in-ground swimming pool that was placed over their neighbour’s property. In Ontario, a court case revolving around a strip of land about a foot wide spent four years in the court system and cost $100,000 in legal fees.

“If you have a problem with, say, heating, it’s a limited amount of money to deal with it,” Krcmar says. “But you can’t easily fix a boundary problem. If neighbours don’t like each other, how do you fix that? You don’t feel comfortable in your own home anymore. It hits you on a different level.”

A report compiled by Krcmar Surveyors revealed that almost half of residential properties in Toronto have boundary-related issues, whether that means a fence built technically on a neighbour’s property or a tree or structure that extends beyond the owner’s lot.

Krcmar Surveyors has 216,484 plans in its database for the GTA, and has made the results of those surveys available through its new site ProtectYourBoundaries.ca. The site enables investors, property owners and potential buyers to purchase an up-to-date survey of a property. Krcmar says the site will help people to understand where their property boundaries are, mitigating any issues before they become problems.

“It starts with a survey plan. That will show you where the boundaries are supposed to be,” he says. “It’s a more objective starting point versus the emotional – ‘he ripped down my hedges, she took down my fence’. It’s a starting point.”

Source: Canadian Real Estate Wealth

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CREA forecasts continued growth for fall 2014 as Canadian home sales rise in August

Canadian existing home sales rose nearly two per cent in the month of August, marking the seventh consecutive month-over-month increase and the highest level for sales since January 2010.

That’s according to a report released today by the Canadian Real Estate Association, which predicts home sales will rise to 475,000 units in 2014, up 3.8 per cent compared to 2013.

Fueled by increases in Vancouver, Calgary and Toronto, actual home sales for the month stood 2.1 per cent above August 2013 numbers, with the national average sale price jumping 5.3 per cent compared to the same time last year, reaching $398,618.

At the same time, the MLS Home Price Index also rose 5.3 per cent on a year-over-year basis in August. The MLS Home Price Index is considered a more accurate gauge of price trends that is unaffected by changes in the mix of sales activity the way the average price is.

“Listings and sales this spring were deferred due to unseasonably harsh weather, which subsequently supported activity once the delayed spring home buying season got into gear,” said Gregory Klump, CREA’s chief economist.

Klump pointed out, however, that while national activity has yet to lag, sales were down in the majority of local markets across the country, which could be an early indicator that the transitory boost is fading.

But for now, he said, low interest rates will continue to support housing affordability and sales.

The national average home price is expected to rise to $405,000 in 2014, an increase of 5.9 per cent from a year earlier, with similar price rises in British Columbia, Alberta, and Ontario.

 

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Bosley Infographic

Every month we scientifically monitor stories in the media on both freehold and condo markets in Toronto.

Then through a patent pending process we are able to create a visual representation of what the media thinks the market is doing. Is it facing a slow deatheor is it party time?

Click here or on banner below for your MONTHLY REVIEW OF TORONTO’S REAL ESTATE MARKET.

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Searching for a Home? Consider the High Cost of the Commute

Location is important when looking for a house, of course, but consideration needs to be given not just to what neighbourhood you want to live in, but to where your new home will be in relation to work and other obligations. The costs of a commute are more than a tank of gas or a monthly transit pass — there’s auto insurance and car maintenance, subway delays and missed connections, and the stress of dealing with all of this on a daily basis. When making a purchasing decision, don’t forget to factor in the real costs of a commute.

Maclean’s magazine reported on a 2013 survey by Oxford Properties and Environics Research Group that found “many Canadians consider the time it takes to get to work as important as the job itself.” The average length of a commute in Toronto? Forty-two minutes.

Commutes can also take a toll on health and happiness. An article in The Guardian newspaper explains some surprising findings from a University of Zurich study about overall life satisfaction: “A person with a one-hour commute has to earn 40% more money to be as satisfied with life as someone who walks to the office. On the other hand, for a single person, exchanging a long commute for a short walk to work has the same effect on happiness as finding a new love.”

So what does all this mean when looking for a home? “Commuting has the potential to impact the quality of your life dramatically,” says Bosley sales representative Steven Fudge. There are health and well-being costs, as mentioned above, but “transportation expenses can really add up and take a substantial chunk of your income,” he says.

“While most people allocate the majority of their financial resources to housing costs, transportation expenses can really add up and take a substantial chunk of your income.,” Fudge says. “As a buyer, it's critical you assess the potential day-to-day costs to commute between your work and a prospective property in advance of making a purchase. In fact, areas with the most affordable housing may not actually be as value-added as you think once you tally the costs to commute, while areas with more expensive properties may be more accessible, convenient and, in fact, cheaper while offering a better quality of life.”

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