Have you ever come across a roadblock, turned to take an alternative route and found yourself up against another obstacle?
During Saskatoon’s construction season (basically any time not designated winter), it can be frustrating trying to find a route without some hurdle.
Likewise, commercial real estate buyers and sellers can potentially encounter endless roadblocks during the course of a transaction.
Unlike driving, though, you can anticipate these snags and potentially veer around them.
Control the clock
Sellers hoping for quicker closes should assemble due diligence items which most buyers are going to ask for. This includes reports from third parties that take time to complete, such as environmental audits or asbestos investigation.
A buyer, on the other hand, can be prepared to save time by understanding all documentations their financiers will want to see.
Weeks into due diligence is not the time to discover you require an appraisal, for example, by a third-party firm.
Know what you need to satisfy proceeding with the sale and get it ordered as soon as the contract is under acceptance.
Read the fine print
Lease reviews, for investment buyers, are probably on par with getting their teeth pulled. But just like our smiles, this needs to be taken care of.
I will review leases on investment sales in advance if I’m listing the property, so I know what items could potentially come up.
Clauses I pay attention to are early terminations, occupancy costs definitions and options to renew.
A client on a recent sale transaction had read the fine print and was preparing for close when she encountered an issue with insurance.
If she hadn’t completely understood what was required of her as a new landlord, she could have put herself at a major risk of breaching her contract with the tenant.
She knew what was expected of her thanks to her thorough review and resolved to sort out the insurance issue prior to taking possession.
Ask questions, then ask more questions
Ultimately, a due diligence period is the time to start asking and answering questions between the transaction parties.
Leave nothing to assumption. Once a deal is unconditional, it may be too late to ask.
As an agent representing a seller, I might start asking questions myself if I’m not hearing from the buyer or their agent. I want to make sure they are going to be able to complete any and all inspections they require in the agreed timeframe.
Both sides should be engaged in regular communication during the due diligence period to ensure the deal is moving along smoothly.
And hopefully, by the end, they’re headed down a clear path to closing with no potholes to deter the final steps.
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
