Ontario homebuyers faced a two-pronged challenge in 2021: the ongoing impacts of COVID-19 and a housing market that remained red hot across the province.
I received a lot of questions from consumers last year about the real estate market. Here are 2021’s top five questions and a quick recap of the answers.
1. As a homebuyer, what can I expect when there are competing offers on a home?
During a bidding war, the listing brokerage must disclose the number of active offers on a property, whether any of the buyers are represented by the listing brokerage, and whether any offers include an adjustment to the commission the seller would pay the buyer’s brokerage. These disclosures help ensure a level playing field for all buyers.
The seller can accept or reject your offer, make a counter-offer, or even give one or more buyers an opportunity to “improve” their offers.
2. We were involved in competing bids on a home and the seller accepted an offer that was lower than ours. Doesn’t the seller have to accept the highest offer?
Sellers are not required to choose the highest-priced offer. Other factors can influence their decision, such as the size of the deposit, the closing date and other terms and conditions they prefer.
3. What’s the difference between listing price and sale price, and why are they often so different?
In years past, the asking or listing price was generally a close estimate of what the home was worth, and the selling price would end up being very close to the asking price.
However, in today’s hot housing market, the list price is more often being used as a marketing tool to generate interest in a property. A seller has the legal right to set the asking price at whatever amount they believe is best for selling their home. RECO does not regulate the decisions of sellers or buyers.
4. We are first-time buyers frustrated by the current real estate market. What advice or tips do you have for us?
First, interview a few real estate agents and choose the one who best understands your needs.
Second, manage your emotions: make sure you know what you want or need in a property and stick to what you are prepared to pay.
Third, if you want to submit an offer without any conditions, be sure you’re comfortable with taking that risk as it can have significant repercussions.
And fourth, real estate contracts are legal documents, so you read and understand everything before you sign, and get legal advice.
5. In this pandemic, how can I protect myself while viewing homes?
Brokerages and salespeople must follow public health guidelines and safety protocols when showing a home. Many brokerages offer virtual showings to maximize the number of buyers seeing a property, while limiting in-person visits to those who are particularly interested.
As a seller, you can request a limit to the number of visitors during all viewings, insist that no one displaying symptoms is allowed inside, and also provide specific instructions to reduce the touching of surfaces, among other protocols.
As a prospective buyer, you should make sure to wear a mask and use hand sanitizer as you enter the home.
If you have a question for Joe about the home buying or selling process, please email email@example.com.
Canadian home sales up 0.2% in December
The national average selling price was C$713,500 ($569,161) in December, up 17.7% from a year earlier, the industry group said.
($1 = 1.2536 Canadian dollars)
(Reporting by Julie Gordon in Ottawa)
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Who’s Minding the Store?
We’re seeing it more and more now at AgingParents.com: elders as landlords who can’t do the management job any longer. Sometimes it’s the adult children who bring the issue to our attention. They see Dad failing maintain those rental houses he has had for decades. If tenants complain, he does not do anything. They see Mom fail to collect rents from her commercial enterprise, a small shopping center. They realize that rentable spaces are vacant and have been for some time. No effort to lease them is underway. The kids are alarmed. It may be a single rental home, a commercial building, a vast portfolio or anything the elder owns. Cognitive decline was not anticipated. No one was paying attention and things go wrong.
Financially successful people often invest in real estate, but for those who manage the properties themselves, we see a lack of planning about how to ease out of the management role. The same problem can occur when a property owner has a long time management company which is not held accountable for its work due to the cognitive impairment of the owner. Again, no one is watching management. It is a perfect opportunity for theft from the owner.
Real Life Examples
In one case a wealthy man owned a rental apartment next to his house. The long time tenant took ruthless advantage of the 85 year old owner and simply stopped paying rent. He lived for free and manipulated the owner into thinking the tenant was giving him help in exchange for use of the apartment when no such exchange actually took place.
In another case the 87 year old owner of an office building with long-term tenants in it did not take steps to terminate a very problematic tenant who had been there for 20 years. The landlord hated her but failed to exercise his rights to simply not renew her lease. Instead he waited for her to give notice that she was going to vacate. He had another person interested in the space, willing to lease it but he seemed confused about what to do to secure that new lease. He managed the property by himself.
Both of those elders who were landlords had adult children who could have stepped up. In the first matter, the rental apartment, the elder resisted the son’s attempts to intervene. The elder did have dementia but functioned rather well in other things. He angrily fought his son’s attempts to take over his financial affairs. He had previously appointed his son to do this very thing. The freeloading tenant manipulated the elder into signing an agreement to give the tenant free rent for five years.
In the office building matter, the daughter of the 87 year old was clearly not close to her father and was not paying attention to his confusion. She may have been stopped from getting involved by her father, who was stubborn and unwilling to admit that he was having trouble with managing the investment. In both cases, the only way to prevent abuse and manipulation was for someone appointed earlier to step in and assume responsibility for property management. That works smoothly when the elder is cooperative. It creates a legal mess when the elder resists.
Cognitive Decline and Money Management
Research tells us that even in the earliest stages of dementia or other cognitive impairment, financial judgment is impaired. It is, in a way, the first ability to decline and it is hard to see at first. The older person with impairment for financial judgment can carry on a normal conversation, sound and look okay. But if you asked them about the bookkeeping or accounting, they likely can’t keep it straight. Decline is subtle at the beginning and gets worse over time. Something is amiss before any family member may notice it. Sometimes this leads to loss of value in the property as well as lost income.
What family members can do is to be aware that as a person ages, their sharpness for financial management of property (and other matters too) can slide downhill. If you are aware of aging parents’ real estate investments, it is helpful to educate yourself about them, and to offer to help “in case of any emergency”. Ask your aging parent to teach you about them, even if you know plenty already. This approach can appeal to one’s ego: asking for advice. Do this before you see any sign of a problem and you are likely to be successful in preventing loss of income and value of any real estate they own.
If you simply assume that if Mom or Dad has been managing the family real estate investments for decades and it’s all just fine, you are taking too much chance that it will stay fine. Aging takes its toll. Most of us need some sort of help as we age, especially as we reach 85. By that time, one in three people will have Alzheimer’s disease. If you don’t like those odds, make your best effort to get involved in the real estate they have before the investment loses its value for lack of attention. Fraud is all too common. Predatory real estate brokers, crooked management companies and dishonest tenants can take ruthless advantage of vulnerable elders. Don’t let it happen in your family. If you see your aging parent declining in ability to manage real estate and they fight you on stepping in, it is time to seek legal advice so you can learn what options you have.
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