Sold for 81% of Asking!

Wow, wow and ….. wow!

Don’t worry “Sold for 81% of Asking!” is not what I said to my seller client nor am I talking about the American market.  While performing my daily routine of browsing through the day’s sales, I found one sold for 81% of asking!  You’ve got to be kidding me.  Talk about not knowing how to price reasonably.   Kudos to the buyer agent for talking some sense into the listing agent and seller and making the sale a reality.  My issue is that the seller would have fetched a better price by pricing near market instead of starting at way above market.  There were tonnes of comparables to use yet it was scrapped along with any logic and reason.  Months of non-productivity could have been eliminated as well.

Yes, the listing agent is suppose to work in their client’s best interest and get them the best price, but there needs to exist some justification and needs to be within limits e.g. is it tastefully renovated? are you in a condo that everyone is fighting to live in? are you a celebrity? etc.  As easy as it may sound, shouldn’t you drop your unrealistic client?  A deal was eventually made, but at what cost?  If a potential seller were to know about it, I think they’d pass the Agent 81% option.

Ontario Expands Land Transfer Tax Refund Program

First-time buyers of resale homes to benefit from new tax measure

The McGuinty government is giving all first-time homebuyers a break on land transfer tax by proposing to expand the Land Transfer Tax Refund Program to include purchases of resale homes, Finance Minister Dwight Duncan announced today.

“Expanding this Land Transfer Tax refund is an important part of our government’s commitment to helping Ontarians buying their first home,” Duncan said.

Effective midnight tonight, first-time buyers of resale homes, as well as newly constructed homes, would be eligible for a refund from the provincial government of up to $2,000 of the Land Transfer Tax paid.

The expanded Land Transfer Tax Refund Program for First-time Homebuyers is part of a package of new tax initiatives announced in the 2007 Fall Economic Outlook and Fiscal Review that would provide $1.4 billion in provincial tax relief for business and people over three years. The government is making strategic investments in people, communities and infrastructure to strengthen Ontario’s economic advantage and help manufacturers and other sectors challenged by current economic conditions.

For more information please visit: http://www.gov.on.ca

Bank Offers To Pay All Or Part Of City’s New Land Transfer Tax

It’s an offer many may not be able to refuse. The Bank of Montreal is offering to pay the land transfer tax for customers who use the financial giant to arrange a mortgage.

The city of Toronto voted in the controversial new levy in October, after months of delay. It was the focus of bitter acrimony, because it would increase the cost of owning a home for first time buyers by thousands of dollars. It kicks in during the New Year, forcing many to hurry their decision about whether they can really afford a residence.

But now the BMO is offering to cover the cost of the new tax up to 1.5 per cent of the mortgage on five year fixed terms. Buy a property worth $400,000 after February 1st and the bank will help pay off the $3,700-plus the city will ding you for. Get a property worth $300,000 and the institution will cover the whole thing.

“It’s important that Toronto homeowners don’t feel pressured into making a purchase decision based on this new tax,” avers BMO V.P. Cid Palacio in a statement.

Like most things involved with money and taxes there is one catch. The offer is only good until February 29, 2008, giving harried homebuyers some extra breathing room to work out their finances.

It’s the latest salvo in a war for your business. Last September, the CIBC announced it was going to be opening select branches in Toronto on a Sunday for those who needed help from tellers and couldn’t do their normal banking via the ABM. TD-Canada Trust responded by extending its own hours on Saturdays.

It’s good news overall for consumers, the only ones who don’t go by so-called ‘banker’s hours.’

Source

King Loonie comes knocking

Armed with currency that now packs a punch, Canadians are ‘coming over the wall,’ one real estate agent says of the U.S. market

MATT HARTLEY

There may never be a better time to consider becoming a snowbird.

If you yearn for Palm Springs when the snow starts to blow, or beachfront property across the border from Vancouver or just somewhere warm to go when the kids move out, now may be your best opportunity to grab hold of the dream.

It’s been a very long time since Canadians shopping for real estate options south of the 49th parallel have had this much going for them.

A soft U.S. housing market, jittery American sellers, fearing the ill effects of the credit-crunch fallout and the loonie reaching parity with the greenback, have combined to create a very friendly situation for Canadians looking to enter the U.S. housing market.

Just a short drive south of the Washington State-B.C. border sits the Horizon at Semiahmoo Resort community, a 650-home development spanning 200 acres nestled on the shores of the Strait of Georgia. When the developers began planning the project, they figured that about half the homes would be snapped up by residents of nearby Seattle, and the other half by Canadians.

That was before parity became a buzzword. Now it appears as though more than 85 per cent of the residences will be sold to Canadian buyers, according to Vince Taylor of Pilothouse Real Estate Inc. in New Westminster, B.C.

“When the magic parity hit the other day, our phones started to ring,” he says. “Everybody wants to find U.S. real estate. The Canadians are coming over the wall. They didn’t build the wall big enough.”

With “nothing more than the pesky border” separating Semiahmoo from Canadians looking for an attractive “green” community for a summer home, Horizon has become coveted real estate. The average price of a house in Semiahmoo is about 50 to 60 per cent less than a similar home in nearby White Rock, B.C., Mr. Taylor says.

“You take a spectacular project like Horizon, you couple that with a credit crunch and a softening U.S. economy, and parity on the dollar, and you just have this amazing selection of circumstances,” he says. “I can’t believe the difference on all our U.S. products - how the phone has started to ring recently.”

But it’s not just in Semiahmoo that Canadians are finding bargains; prices in places such as Maui are suddenly downright “wowie.”

“The stuff that we have in Hawaii is absolutely on sale from a Canadian point of view,” Mr. Taylor says. “The markets are soft, the prices are great, and now Canadians can afford it in unprecedented ways.”

Another advantage that Canadians have is their attitude toward mortgages. One of the reasons the U.S. credit market collapsed was that people were signing up for mortgages with deposits that sometimes totalled less than 5 per cent of the cost of the property, and then were unable to meet the payments.

Canadians are used to putting more money down on a house initially, so while it might be difficult for Americans to get money in the United States, banks are taking a longer and more favourable look at Canadian mortgage applications.

“We always put down 20 per cent in Canada, so what do we care?” Mr. Taylor says.

Canadians are also scrambling to scoop up property as prices plummet in other areas, such as Palm Springs, Calif. Local Re/Max agent Michael Layton says he’s entertaining a near constant stream of northern visitors on the lookout for retirement digs.

“I’m seeing a lot of people who are on that cusp - four to 10 years out from retirement - and they’re thinking now is a good time to buy,” he says.

Most of the Canadians Mr. Layton is dealing with come from Toronto, Vancouver and Calgary, and they arrive with ready cash. As the market has softened and American homeowners have been shaken by the credit crunch, Canadians are becoming increasingly attractive to American sellers.

“I’ve found that the sellers are a lot more willing to wheel and deal,” Mr. Layton says. “They’re getting very nervous, so now more than ever, it’s a great time to buy because I’ve had sellers who are adamant they aren’t going to go below a certain price all of a sudden … drop it $15,000 below that price if they smell a buyer.”

It’s not that the properties are bad or that anyone is worried about an out-and-out market crash, it’s just that with so many people looking to sell all at once, it’s truly a Canadian buyer’s market, he says.

A quick glance at the MLS.com website reveals just how real the credit crunch is. In addition to those in Palm Springs, home and condo prices in Phoenix and Miami have also been slashed. Mr. Layton says that before the credit crunch, the housing market in California was so robust that agents routinely didn’t bother running numbers to attempt to discern the true value of a home.

“If the house down the street sold for $500,000 last week and you wanted to sell your house, I’d say let’s try for $520,000,” he says. “We didn’t do statistical analysis of what the market will bear because the market was growing at 10 to 15 per cent a month. People began pricing their properties without doing their basic homework.”

As 2005 came to a close, sellers were still fixated on those never-before-seen numbers, and expected they would have to take only about $10,000 off the price to find a buyer, Mr. Layton says. The reality was that prices had to come down much further.

Now, he says, most of the Canadian buyers he works with come in with cash and are able to drive a hard bargain against prices that have returned to earth.

“Cash is definitely king,” he adds. “With the lenders defaulting and people hearing the big names like Countrywide [Financial Corp.] have problems, then they really start to get nervous. And then I bring them an offer from a Canadian buyer with cash and it’s closing in 30 or 35 days - those sellers stay up late thinking long and hard about that offer.”

While some real estate agents, like Mr. Layton, have had to do little to encourage Canadians to come south to find the vacation home of their dreams, others have been more aggressive in spreading the word about the advantageous situation for Canadians.

Forty-five minutes up the road from Palm Beach, Fla., sits the community of Spanish Lake Resorts in St. Lucie County, where the developers are offering a free two-night stay at a local hotel for Canadians dropping in to check out properties.

“We are seeing lots of inquiries this season,” says Mary Beth Bittan, director of international sales and marketing for Spanish Lake Resorts. “It’s a great time for Canadians to buy because of the fact the dollar has such a strong value comparable to the American dollar.”

It’s so strong, Spanish Lake is accepting straight-up transactions in Canadian dollars for the homes at their resort, which start at $130,000 (U.S.).

While the situation is currently tilted in favour of Canadians, the window on U.S. housing bargains probably won’t remain open forever. Some economists believe currency parity may last into 2008 and possibly 2009, but Mr. Layton doesn’t see the real estate situation staying the way it is for long.

“The builders are cutting back and I think it’s going to level itself out,” he says. “I don’t think it’s going to take a full two years to come back to balance and be a much more even market. But right now we have a high inventory and so the buyers are definitely in the driver’s seat.”

“I think our market has a little bit of a cushion, because we are where retiring people are going to retire to - they’re not going to retire to snowy, cold places.”

Details of Approved Toronto Land Transfer Tax (Booooo!)

Toronto City Council has approved a municipal land transfer tax that will be levied on top of the provincial land transfer tax. TREB 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. Some information from the City is available here.

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, regardless of the closing date. (Note: Media reports that closings must occur by Feb. 1, 2008 are inaccurate.) 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.

The secret’s out on phantom bids

Gail Swainson
Real Estate Reporter
tony wong
staff Reporters

The incoming head of the Toronto Real Estate Board has come out swinging against phantom bidding tactics after denying they even existed when she ran for the job three months ago.

“It’s dirty realty, it really is,” Maureen O’Neill said of agents who fabricate offers during bidding wars. She is now calling on the Real Estate Council of Ontario (RECO) to yank the licences of agents convicted of using phony bids.

“Boot them out, we don’t need them in the business,” O’Neill said. “I don’t think these people should be allowed to sell real estate.”

Phantom bids can be used by selling agents to spark extra rounds of bidding or to spook potential buyers into rushing or raising offers. The practice is considered a breach of ethics under the Real Estate and Business Brokers’ Act of Ontario – administered by the Ontario council – and realtors who are caught can face hefty fines.

There are more than 52,000 real estate agents in Ontario (26,000 in Toronto) and last year they sold 194,793 existing homes in Ontario (84,872 in the Toronto market).

An informal poll of 30 Toronto-area agents taken yesterday by the Star suggests that virtually all believe that some form of phantom bidding exists in the market. More than two-thirds said some kind of structural reform in the way bids were handled was needed to address the problem.

However, more than half the agents said the problem is being caused by “a few bad apples.”

One prominent broker, who handles one of the city’s largest brokerages, calls the problem “rampant.”

“This is a major problem and it’s causing a black eye for the real estate community,” said the broker, who did not wish to be named. “You end up with one man at an auction bidding against himself – it’s plain fraudulent.” The broker says he gets an average of one complaint per day from his agents about potential phantom bidding.

He said he has complained for three years to directors at the Toronto Real Estate Board who “really don’t have the stomach for this. They don’t want to deal with the issue.”

O’Neill made her comments after learning the Star had received documents proving the Real Estate Council of Ontario has been called upon to deal with complaints about bidding war tactics.

Until this week, she steadfastly refused to acknowledge made-up bids occur, saying the Ontario council’s CEO Tom Wright and registrar Allan Johnson assured the Toronto body’s 18-member board on July 19 that no complaints had ever been received.

But the Ontario council’s spokesperson Sandra Gibney said yesterday that Wright and Johnson made no such statements and “RECO does not know why Maureen O’Neill is claiming otherwise.

“If Ms O’Neill had contacted RECO prior to responding to questions about RECO’s complaints statistics, RECO would have provided the same information that you received,” Gibney added in an emailed statement.

In response, an angry O’Neill said she “will certainly be calling (RECO) and asking what the hell is the problem. Certainly they have strained this relationship.”

O’Neill doesn’t think the answer lies in a formal registry and open bid process, something Michael Manley, the owner of Prudential Properties in the Beach, advocates.

“If a buyer doesn’t like the process, they can always walk,” O’Neill said. “I think that in a free marketplace, everyone wins.”

Manley, who ruffled feathers by raising the phantom bid issue during the real estate board’s elections, is glad to hear O’Neill has come around. “I don’t know where she’s been. It’s incredible that anyone as experienced as her could not have heard about this,” he said.

Manley said the solution to phantom bidding is a registry system where every bid on every house is officially registered on the Multiple Listing Service. He is marketing an Internet program that would allow sellers to put a check mark on their listing to signal they are open to registered bids in an open process.

While no statistics are kept specifically involving phantom bids, the Real Estate Council of Ontario documents – obtained after a request by the Star – show the council received 60 complaints about bidding processes in the year ending March 31, 2007.

The Real Estate Council of Ontario, which regulates the activities of agents and brokers in Ontario, said in a statement that complaints about bidding “generally arise in a hot real estate market and are more common in highly desirable areas.”

In July, Kingston Re/Max broker Bill Batson had his November 2006 conviction for “misrepresenting the existence of an offer to another member” upheld on appeal by the council’s disciplinary panel. He was fined $10,000. The panel heard Batson suggested to a buyer’s agent that another, non-existent offer might be coming in on his listing, priced at $449,000.

This sparked a $450,000 offer from the buyers, which was accepted. The buyers were originally preparing to offer about $400,000.

When reached at his Kingston office Thursday, Batson said he preferred not to comment.

“It’s over and done with,” Batson said. “I’ve paid the fine. RECO didn’t believe the truth.”

Under Section 26 of the provincial code of ethics, an agent or broker is required to disclose the number of competing offers to every buyer. But the agent is prohibited from disclosing the substance – or price – of competing offers, unless the seller agrees.

In more than two decades of selling homes, veteran Toronto realtor Mike Donia has seen more than a few deals that looked so questionable that he encouraged clients to walk away. The phantom bid, says the ReMax agent, is “one of the oldest tricks in the book – it’s been out there forever and a day.”

The problem is proving it.

“You’ve got people out there creating an illusion to pump up their profit,” says Donia. “My advice to clients is not to get caught up in the bidding wars and make a decision on the spot, especially if you’re not sure there really is another bid.”

Heather Sherman, an associate manager at Sutton Group Admiral Realty who has served on various committees at the Toronto Real Estate Board, says phantom offers could be avoided if agents presented their offers the old-fashioned way: Show up in person.

Some vendors will only take faxed offers, which is a less transparent process and leaves potential buyers wandering if there really was a person on the other end of the phone line, said Sherman.

David Blair of Oakville put an offer on a house that was “conveniently” exceeded by $1,000 from the listing agent’s own client. “I’m positive the agent told his own client what our offer was. I was a victim of an agent in a double-ended deal.”

Even though the practice is not allowed under the provincial act, Blair’s agent didn’t file a complaint.

“She’s developing a network right now and doesn’t want to make any enemies in the industry,” Blair said.

Make Land Transfer Tax Election Issue

You Did Well Before. Continue to Make Your Voice Heard! Email Provincial Politicians!

The fight against the proposed Toronto land transfer tax is not over. As a result of REALTOR® and public pressure, City Council postponed making a decision on this proposal, but it will come forward again in October. With a provincial election scheduled for October 10, NOW IS THE TIME TO MAKE THIS A PROVINCIAL ELECTION ISSUE. PROVINCIAL politicians need to hear that a 100% increase in land transfer taxes is not the right solution to the City’s financial challenges and that PROVINCIAL ACTION IS NEEDED AND EXPECTED.

How to Take Action

A second land transfer tax is an unfair way to solve Toronto’s financial challenges. Take action below to let Provincial politicians know that you expect a PROVINCIAL commitment to help address Toronto’s challenges. It’s easy with one click.

1. Encourage your clients, friends, family and colleagues to email (with one click) the key provincial and municipal politicians. It is VERY important that they hear from REALTORS® AND the general public. As a REALTOR® you likely have many contacts that will be impacted by this tax who may appreciate being kept informed and would like to know how they can help fight it.

CLICK HERE and an email that you can send to your contacts will be opened with a message that will include a link to TREB’s special web site (www.NoHomeBuyingTax.com) to make it easy for them to send an email. Once you have emailed your contacts, see below for how YOU can send an email.

2. CLICK HERE for you to send an email (with one click) to the Premier, Provincial Party Leaders, and the Mayor (with a copy sent to other key provincial politicians, all Toronto Councillors and TREB). Tell them that you are looking for PROVINCIAL LEADERSHIP AND COMMITMENT on this issue before the provincial election on October 10, 2007.

(By clicking on the link above, an email will be opened with all of the noted individual’s email addresses already added. You just have to add your opinions and send the email)

TREB’s Key Messages

For background on the proposed Toronto land transfer tax you can view TREB’s detailed submission and visit www.NoHomeBuyingTax.com. Some of TREB’s key messages are provided below:

• A second land transfer tax, on top of the existing provincial land transfer tax, is an unfair way to solve the City of Toronto’s financial challenges.
• Provincial action is a key part of the solution to Toronto’s financial challenges. The provincial government must adequately support Toronto. Expecting the City to, instead, penalize homebuyers with a 100% increase to land transfer taxes is not fair.
• The City of Toronto must ensure that its house is in order and all creative solutions have been considered.
• A Toronto land transfer tax will hurt Toronto’s economy, which will have serious implications for the provincial economy.
• By making it more expensive to live in Toronto, a Toronto land transfer tax would contradict the provincial government’s plans to prevent urban sprawl.
• A Toronto land transfer tax hurts those who can least afford it, such as first-time buyers and seniors
• When impacts on mortgage interest and insurance are considered, a Toronto land transfer tax could ultimately cost over $15,000 for the average buyer.
• No other Canadian jurisdiction has two land transfer taxes
• With the proposed Toronto land transfer tax, Toronto would have the highest land transfer taxes in Canada and the second highest in North America

If this becomes reality, scores of people will begin to migrate to areas outside of Toronto.  It’s not just the financial concern, but also what else are city councillors willing to pull out of their sleeves to add to this mess.