Real eState

The dangers of real estate auction sales – Ottawa Business Journal

Published

2 years ago

September 19, 2022

Ottawa residents may have noticed a new way to buy and sell residential properties: online real estate auction sales. Online real estate auction sale companies aim to disrupt the traditional buying and selling process by charging less than the standard real estate agent commission and by allowing potential buyers, or “bidders”, to see what other interested buyers are offering for the property. While the option to auction may seem appealing, interested parties should be aware of the risks.

While the perceived perks of listing or bidding on a property on an auction site may be attractive, buyers and sellers should be aware that real estate auction sale sites are not currently regulated. In contrast, real estate agents and brokers are regulated under the Real Estate and Business Brokers Act (the “Act”) which is enforced by the Real Estate Council of Ontario (“RECO”). Unlike auction sale websites, prospective real estate agents must complete courses to become licensed. Once licensed, they must undertake annual continuing education and be employed by a brokerage overseen by RECO.

Further, RECO ensures that all real estate brokers and agents are insured and that they follow a Code of Ethics. RECO enforces the Act and the Code of Ethics, such that real estate agents who fail to comply are subject to disciplinary measures. These additional protections are not available when buyers and sellers engage a real estate auction sale website.

While auction sale websites may bill themselves as a transparent alternative to the traditional buying and selling process, this transparency does not extend to the auction companies themselves. As they are unregulated, buyers must trust that auction sites are being run responsibly and ethically, without being able to rely on enforcement by RECO if they are not.

Finally, buyers and sellers have limited recourse if something goes wrong. Real estate auction sales are essentially private agreements and so the primary recourse would be through the Court. However, success in Court may be limited because, often, the agreements prepared by auction sale websites contain limitation of liability and indemnity clauses which protect the website to the detriment of the buyer and seller.

Considering the foregoing, real estate auction companies evoke the timeless phrase: “buyer beware”. Buyers and sellers should always consult a real estate lawyer prior to entering into any agreement of purchase and sale. However, this step becomes even more important if you are considering engaging an auction company rather than working with a licensed agent. The members of Soloway Wright’s Real Estate and Development Group are here to answer any real estate law or real estate development questions that you may have and to help guide you through the buying and selling process.

Author Bio: Vanessa Carment is an Associate practising in Soloway Wright LLP’s Real Estate and Development, Commercial Leasing, and Condominium Law groups. Vanessa’s practice consists of all aspects of real estate transactions, including purchases, sales, and financing. She also regularly advises condominium corporation boards on a wide range of condominium matters and is involved in commercial leasing work for both landlords and tenants.

Learn more about Soloway Wright LLP here.

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Real eState

Mortgage rule changes will help spark demand, but supply is ‘core’ issue: economist

Published

3 days ago

September 17, 2024

Anne Joseph

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.

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Real eState

National housing market in ‘holding pattern’ as buyers patient for lower rates: CREA

Published

4 days ago

September 16, 2024

Anne Joseph

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.

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Real eState

Two Quebec real estate brokers suspended for using fake bids to drive up prices

Published

1 week ago

September 11, 2024

Anne Joseph

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.

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