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Real estate buyers muscle in with heavy demands – The Globe and Mail



A home for sale in Toronto’s Annex neighbourhood on July 18.Fred Lum/The Globe and Mail

In a nearly dormant real estate market, some sellers are confronting the revival of an anachronistic practice: Nervous buyers are making their offer to purchase a property conditional on the sale of the one they already own.

Buyers in a hot market have no chance with an offer tangled in such a gnarly condition, but in a market downturn or a region where properties are slow to trade, sellers become more amenable.

Matthew Regan, a broker at Royal LePage Real Estate Services, saw a few buyers attach the clause during the market slowdown of 2018 but it disappeared when sales rallied again.


In Oakville and Mississauga, where Mr. Regan concentrates much of his business, offers conditional on the sale of the purchaser’s property are rare today but starting to pop up, he says.

In Mr. Regan’s view, the strategy can be successful but sellers need to be wary. Once a property has been sold conditionally, that information become public. The property remains visible on the Multiple Listing Service but some buyers may avoid even booking a showing.

“It can slow the momentum,” he says. “It kind of red flags the house in the buyer’s eye.”

Mr. Regan says such a deal usually includes an “escape clause” in the Agreement of Purchase and Sale. The clause allows the seller to continue to market the house and show it to other potential buyers. If a second buyer submits an offer acceptable to the seller, the seller informs the first buyer, who then has a period time – typically 48 hours – to waive the condition or back off.

To trigger that escape clause, the second buyer must be willing to come forward with a tempting offer that forces the hand of the original buyer.

The risk for the second buyer is that they may end up being used as a pawn, cautions Mr. Regan because they are providing the seller with leverage over the first buyer.

“The seller is, in theory, very happy with that offer. The seller is in the driver’s seat,” Mr. Regan says. “As the second buyer, you can waste a lot of emotional time.”

Mr. Regan says sellers should be aware that a lot of house hunters would rather avoid such a convoluted process and just look for a property that hasn’t been sold conditionally.

He knows of one deal in Oakville that fell through after the sellers of a home around the $2.5-million mark accepted an offer conditional on the sale of the buyer’s home in the $3.2-million range.

“In a market like this, it’s in an area where there’s just not a lot of houses selling above $3-million,” he says.

Two homeowners recently accepted the condition on sales agreements in the firm’s London, Ont., offices, he adds.

Mr. Regan says the pace of sales in London tends to lag the Greater Toronto Area by six to eight weeks, and sellers are more likely to be receptive to such a condition in areas where their property has been sitting for a long time.

“This might be the first offer they’ve seen.”

According to the London-St. Thomas Association of Realtors, the number of new listings was the highest ever recorded in the month of June, while the number of sales was at its lowest point in the past 10 years for June. That trend has pushed “months of inventory” – a measure of the time it would take to sell all the active listings at the current pace of sales – to 2.8 in June from 1.7 in May.

In the Waterloo region west of Toronto, broker Thien Nguyen of TrilliumWest Real Estate says he has seen more conditional offers in the past couple of months than in the previous two years.

In the first week of July, the number of conditional sales jumped 47 per cent from one month earlier.

The Kitchener-Waterloo Association of Realtors reported a 24-per-cent drop in sales in June compared with June, 2021. Prices have dipped as the number of properties for sale has steadily increased, according to the association.

Sales in the GTA plunged 41 per cent in June compared with the same month last year and dipped 4.7 per cent from May on a seasonally-adjusted basis.Fred Lum/The Globe and Mail

Making an offer conditional on the sale of the buyer’s property is also a growing trend, says Mr. Nguyen, with 38 per cent of conditional offers containing that clause.

If Mr. Nguyen is representing the sellers, he first gathers as much information as he can about the house that needs to be sold. He talks to the buyer’s agent to find out when they plan to list, in which neighbourhood, and at what price. If the house is not in a great area or needs a major renovation and therefore might take longer to sell, he would advise the homeowner not to accept and keep the listing on the market.

Elise Stern, broker with Harvey Kalles Real Estate Ltd., says the market in midtown Toronto is holding up better than those in the suburbs but, on average, houses are taking longer to sell compared with earlier this year. In recent years, when supply was tight, Ms. Stern advised homeowners to buy their next property before selling an existing one. Now she recommends they sell first.

Sales in the GTA plunged 41 per cent in June compared with the same month last year and dipped 4.7 per cent from May on a seasonally adjusted basis.

Buyers are adding more conditions to their offers, she says. The most common conditions concern financing or home inspection, but on some occasions they include the sale of a purchaser’s home, Ms. Stern says, “which we haven’t talked about in years but now is here again.”

She says some buyers have floated the idea but she thinks it’s better for sellers to agree to a longer closing if they can.

“I try and steer the deal that way,” she says.

In one recent transaction, the seller agreed to a closing after 120 days instead of the more usual 60 or 90.

If day 120 arrives and the purchaser hasn’t sold the property, she would suggest that the seller extend the closing again rather than lose the buyer all together.

Ms. Stern is also working with buyers who looked at a house they like but they need time to mull before making an offer. The seller’s agent called to say the homeowner is thinking about taking the house off the market and relisting in the fall. Ms. Stern asked if they would accept closing at a later date since they may have to wait for a buyer until the fall in any case.

“Why not offer a longer closing if it gets the deal done,” says Ms. Stern, who is a former lawyer. “The veterans have seen tough times. Now you have to be smart and creative.”

Mr. Regan of Royal LePage expects demand to pick up again, but if the market remains slow, more homeowners who are seeing their property languish may be motivated to consider such a deal. He would do his homework on the potential buyer’s existing home before recommending a seller accept such a condition.

He would ask for details on the home’s condition, neighbourhood and the marketing plan of the buyer’s agent.

If the house appears to be worth $1-million but they plan to list it at $10-million, he’d advise the sellers to send them on their way. But if the buyers plan to list their existing house at $999,000 and it seems likely to sell quickly, he might advise the sellers to accept.

“You would hope for a buyer with an easy sale,” he says.

If the buyer is unsuccessful in selling their first home before the agreement runs out, the buyer receives their deposit back and the two sides agree to a mutual release. Mr. Regan cautions that even that outcome can be hazardous to the seller.

“The unknown is, you don’t know how many showings you lost.”

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Real estate giant makes prediction over housing affordability squeeze



As U.S. home prices show signs of cooling and the Fed continues its aggressive rate hike campaign, one of America’s largest real estate groups is signaling market affordability will continue to put pressure on homebuyers this year.

“Affordability has certainly been a hot topic,” RE/MAX President and CEO Nick Bailey said in an exclusive interview on “The Claman Countdown” Tuesday. “If people are going to have a chance at better affordability, we need more product out there, and we’re not going to see that any time soon with new construction.”

Even though U.S. home prices fell for the seventh month in a row by 0.6% from December to January, mortgage rates have dampened consumer demand. The Federal Reserve has remained focused on its inflation reduction goals, lifting the benchmark federal funds rate nine consecutive times.


Interest and mortgage rates are likely to continue “bouncing up and down” as the Fed tries to tame decades-high inflation, Bailey noted.


“We always have to keep in mind that mortgage rates are based on the 10-year Treasury, and that can fluctuate at a different rate than the short term. So what it means to buyers is, rates are going to bounce around, we believe. They have been over the last couple of quarters and we believe they will continue as the year progresses,” the CEO explained.

RE/MAX logo on cell phone

RE/MAX President and CEO Nick Bailey said housing affordability will be a market issue that continues throughout the year on “The Claman Countdown” Tuesday. (Getty Images)

Bailey detailed other affordability solutions for homebuyers, such as considering a 15-year fixed mortgage or lower down payment and loan opportunities.

“The average homeowner in the U.S. lives in their home eight years and the median is 12.3,” he pointed out. “So in many cases, people are choosing this long-term, three-decade mortgage, but they may not need it. They can have an option at a lower rate.”

“Ninety percent of homeowners out there have an interest rate less than 5%. And of that, 50% of them are under 3.5% percent,” he continued to note. “And so until a life event like getting married, having another child, really has a forcing function on a different property, it’s going to be first-time homebuyers that stay at the forefront of these lower interest rate, more affordable-type products.”

Ticker Security Last Change Change %
RMAX RE/MAX HOLDINGS INC. 18.77 +1.31 +7.54%

While market factors play an important role in housing affordability, Bailey again put the onus on new home construction. According to the Census Bureau, housing starts in February 2023 were down 18.4% year-over-year.

National Association of Home Builders CEO Jerry Howard affirmed this trend, telling FOX Business’ Neil Cavuto on Thursday that construction companies aren’t seeing the “uptick in demand” that the industry was expecting this spring.


What we’re really seeing right now, I think, is a very cautious housing market because no one knows what’s going on in the banking sector,” Howard said. “And until that gets clarified, I think you’re going to see builders being a little bit leery about going forward.”

“New construction can’t come out of the ground fast enough. We have less than a million homes on the market, and so it really comes down to supply,” the RE/MAX CEO said. “And because of the move up, buyers being comfortable with their rates, inventory is going to continue to be tight and affordability is going to continue to be an issue this year.”


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2 real estate agents fired over their ‘you could do worse’ ad campaign double down on their brand



A pair of real estate agents in London, Ont., who were fired from a realty firm for taking their advertising campaign, “You could do worse,” to billboards and social media have doubled down on their mantra.

Tristan Squire-Smith, 42, and Johnny Hewerdine, 43, were fired in December from a real estate business they don’t want to publicly name, but were quickly snapped up by the Realty Firm. CBC News has seen a copy of their termination letter, which cites “professional differences.”

We might not be for everybody, but the people who like us, really love us.– Tristan Squire-Smith, real estate agent

“They fired us for excessively using the phrase, ‘You could do worse,'” said Hewerdine, a Realty Firm broker who previously worked as an electrician. ‘We just stuck with it and actually doubled down on it, and now it’s just completely taken off.”

The mantra is polarizing, Hewerdine admitted.


But the two say they’re working to humanize the industry.

“It’s a great sort of self-deprecating phrase that means you’re actually not doing too bad,” said Squire-Smith, a registered nurse who retrained as a real estate agent during the pandemic and still works part time in long-term care.

“We might not be for everybody, but the people who like us really love us,” he said.

Randy Pawlowski, past president of the London St. Thomas Association of Realtors, wouldn’t comment directly on the billboard or the slogan, but told CBC that he stands for professionalism in the industry.

‘Zero awards won’

The latest billboard by Squire-Smith and Hewerdine is up on Wharncliffe Road, a busy thoroughfare in London, and features photographs of them as teenagers. Squire-Smith has long curly blond hair and Hewerdine is wearing his graduation robes from his Grade 8 portrait. Another one of their billboards proudly proclaims, “Zero awards won! (No fine print required).”

Johnny Hewerdine and Tristan Squire-Smith pose in front of their newly minted billboard on Wharncliffe Road in London, Ont.
Hewerdine and Squire-Smith pose in front of their newly minted billboard on Wharncliffe Road in London. (Submitted by Johnny Hewerdine)

The two men met two decades ago and were on the varsity swim team together at Western University.

“These photos are taken at our most awkward moment of our lives,” said Hewerdine. “I’m a 13-year-old Grade 8 graduate in this photo and I believe Tristan is 15 years old.”

Both say they’re trying to humanize the industry.

“We’re just really focusing on the consumer, opposed to us standing up on a billboard with arms crossed, trying to make us look perfect,” said Hewerdine.

Tristan Squire-Smith and Johnny Hewerdine have more conventional photos too, but say they enjoy using videos and photos that are a bit more 'human.'
Squire-Smith and Hewerdine have more conventional photos too, but say that for their work, they enjoy using videos and photos that are a bit more ‘human.’ (Submitted by Squire-Smith and Hewerdine)

“They’re total professionals,” said Pete Greenwood, who hired Hewerdine to sell his condo earlier this month. It was listed for $389,900 and sold for $400,000 in five days.

“He’s just a good guy to work with, and so’s Tristan,” said Greenwood. “They did a 30-second video of my house and turns out we’re all big Seinfeld fans, so we actually did a Seinfeld-themed video of my house.

“I never laughed so hard in my life,” he said.


London Morning7:11What’s behind the billboard with the slogan ‘you could do worse’?

London Morning host Rebecca Zandbergen gets to the bottom of a fresh billboard with an odd advertising slogan. Real estate agents Tristan Squire-Smith and Johnny Hewerdine explain how they were going for something out of the ordinary.



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For resort town workers, housing scarcity is worsening



Max Martin outside of the home he rents in Jasper, Alta., on March 19.Peggy Plato/The Globe and Mail

For more than seven decades, housing availability in the mountain town of Jasper, Alta., has been a challenge.

Although the total number of dwellings is slowly growing, in the past 10 years, the rental units in the primary market – units built specifically as rental – has declined as some units have transitioned into condo ownership. The shortfall in the number of dwellings needed to meet demand in Jasper has gone from 235 units in 2002 to roughly 700 in 2022.

“In Jasper, housing has always been in short supply,” says the town’s mayor, Richard Ireland. “Over the years, efforts have been made to correct that, but the problem seems to just continue regardless of all the steps that have been taken.”

These steps have consisted in asking Parks Canada to release land for the construction of both market and non-market, or subsidized and co-op housing.


Located on a national park, Jasper’s town boundary is constrained by Parks Canada’s regulations to limit the townsite’s physical expansion and protect the environment.

To ensure the town’s population remains in balance with the 118,222 square metres of developable land allocated to Jasper, Parks Canada requires that only those who work or run a business are eligible to live there – and releases parcels as needed.

“We’ve been able to get housing that’s more affordable and stays that way,” Mr. Ireland says. “But even with all the units that have been built, the pressure continues.”

In the face of skyrocketing visitor numbers, the need for more staff in Jasper is growing, and the availability of well-maintained, affordable housing for workers in Canada’s second most popular national park seems to be reaching a breaking point.

Since 2014, vacancy rates in Jasper’s primary rental market have remained close to zero, driving rents up by 30 per cent over the same period.

Christine Reyes (whose name has been changed to protect her identity) and her boyfriend share a one-bedroom apartment in Cavell Apartments, the town’s first purpose-built rental complex developed to provide staff accommodation in the 1970s.

Originally from the Philippines, Ms. Reyes moved to Cavell Apartments in the fall of 2021. Since then, the couple’s rent has gone up by 20 per cent – from $1,075 to $1,270 – and further increases are expected in 2023.

“What we’re paying now is just enough for us to make [ends meet],” Ms. Reyes says, noting she pays an additional $185 a month in parking, storage and pet fees. “I have family back home that I’m sending money to. I don’t think I could send money if rent [goes] up.”

In February, some tenants of Cavell Apartments received a letter from property management, informing them rents would be rising by about 40 per cent this year. The notice cites inflation, interest rates, as well as supply and demand as the drivers of such an increase.

While the proposed hike for existing tenants has been reconsidered, a bachelor suite in the complex was listed in March for a monthly rent of $1,604.50 – a rate akin to downtown Vancouver’s average rent for the same type of unit.

The property management company did not respond to requests for comment.

In a town where a significant share of renters are employed in the tourism industry, and whose hourly wage averages $18.36 (roughly $1.80 less than in B.C.), spending more than $900 a month in rent isn’t a viable option.

For local businesses, this challenge means they have to step in and absorb some of the cost of housing on behalf of their staff.

To ensure she can hire full-time staff year-round, Lynn Wannop, owner of Coco’s Café, has rented a two-bedroom unit in Cavell Apartments for nearly a decade. “That apartment makes it so that I can hold on to staff in the winter, when it’s really slow,” she explains.

Currently, she pays $1,225 a month in rent for the unit, and charges her staff $500 to live there. But in the face of the proposed increases, she wouldn’t have a choice but to continue to pay whatever rate the landlords ask. “As a business owner I have to suck it up and pay,” Ms. Wannop says. “I can’t operate my business without it.”

But spending more in staff housing costs means Ms. Wannop can’t raise wages either.

“I want my staff to be able to afford to live,” she says. “But I can’t afford to pay them any more.”

Moreover, Jasper’s housing shortfall doesn’t only drive rents up – it also creates challenges for tenants who end up living in sub-par accommodations for a lack of alternatives within their budget.

Since November, Max Martin and four friends have shared a five-bedroom, two-bathroom bungalow in the middle of town. While the group pay what they consider a reasonable amount in rent, the condition of the home is precarious.

Max Martin in an unusable, mould-filled bathroom in the home he rents with four friends.The Globe and Mail

“We have mould that [the landlords] have refused to come help fix,” Mr. Martin says, adding that “we went without heating for almost seven weeks.”

According to recent inspection reports from Alberta Health Services and the Jasper Fire Department, the dwelling presents critical safety issues, including windows that don’t open, exterior doors that can’t be locked for a lack of keys, faulty heating, and no smoke alarms.

In Mr. Martin’s view, Jasper’s tight rental market allows landlords to take advantage of young workers who, like him, come from overseas attracted by the natural beauty of the Rocky Mountains.

“People should be held accountable for their actions and the choices they make,” Mr. Martin says. “Especially when it comes to other people’s lives. As a landlord you’re in a privileged position where you can have a house that provides you passive income to let live and do what you want.”

But more supply is on the way.

Last December, a new purpose-built rental complex finally received a development permit, six years after the project was first announced. However, a building permit application is yet to be received by Parks Canada (the developer has until Dec. 13 to apply for this permit).

Featuring 144,822 square feet of apartments spread between two buildings, this development is expected to make a dent on Jasper’s housing gap when completed – but it’s unlikely that new market units can support the affordability levels required by tourism and hospitality staff.

Because market housing is subject to speculation and financialization, providing rental housing at rates commensurate to the wages of workers isn’t always possible, as returns for shareholders take priority.

“This model prays on power imbalances and problems that were already in place,” says Laura Murphy, research coordinator at the University of Alberta’s Affordable Housing Solutions Lab. “Especially in Alberta, where tenants are really dependent on landlords … because we don’t have lot of protections for tenants.”

In Alberta there are no limits to how much landlords can hike rents, as long as these increase only once a year.

To address this, Ms. Murphy suggests governments invest in non-market housing, as this “has proven to work time and time and again.”

Currently, there are about 155 non-market units in Jasper, but only 21 of them are rentals – and the landlord’s agreement with the municipality to provide housing at below market rates in the latter ends in 2029.

Like anywhere else in Canada, to boost the supply of suitable housing that remains affordable in perpetuity, Jasper requires support from senior levels of government.

“[In] 2023, council has budgeted a $5-million debenture to assist housing, but we will need some other partners to do that,” Mr. Ireland says. “We now need matching funds from either the province or the feds. We’ve gone to the province and made that application, so we will see what comes of that.”

On March 22, the municipality announced it would receive $6.5-million from the provincial and federal governments.

Combined with private investment, this new funding is expected to create 40 affordable units.



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