Tuesday, March 27, 2012

Bidding wars spark complaints from homebuyers, says Real Estate Council of Ontario

The Real Estate Council of Ontario is feeling the heat from Toronto’s hot housing market with a surge in calls from potential homebuyers upset they’ve lost out — or won — high-stakes bidding wars.

About 30 per cent of the 15,000 inquiries the council has had in the last year are from house hunters overwhelmed by the multiple bids process, says Bruce Matthews, deputy registrar in charge of complaints for RECO, the regulatory body for Ontario’s 58,000 realtors.

What’s most worrisome is how many homebuyers have waived home inspections in a desperate bid to win the house of their dreams, only to end up with a nightmare of costly repairs and upgrades later, says Matthews.

The concerns and confusion around multiple offers, which have spiked across the GTA in the last six months in particular, are part of the reason the council is launching a new education campaign this week.

The ads on public transit and YouTube are meant to encourage house hunters to do their homework before making the biggest purchase of their lives — and look beyond whether the home is in the best neighbourhood or school district.

“We’ve had numerous circumstances brought to our attention where a buyer, even against the advice of their realtor, has waived home inspections or conditions around financing when they found out there were other offers on the property,” says Matthews.

“Unfortunately in bidding wars, reason and rational thought are often replaced by emotion and haste. We can’t legislate human behaviour, but we’re trying to put more of the emphasis on information and knowledge in advance (of going to open houses and putting in offers) to prevent these kind of situations.”

The council has seen some homebuyers walk away from hefty deposits, or end up in costly court cases, because they waived financing conditions to get a leg up in multiple bids. Some couldn’t close because they were rejected for financing or the bank felt they had paid too much, says Matthews.

Others found out too late that the house had knob and tube wiring or structural damage that would have been discovered in a home inspection.

Some of the calls have come from house hunters angry that they lost out to a lower bid.

“With the current supply and demand issue, a lot of power is with the seller,” says Matthews.

Sometimes a seller will choose a lower bid because the buyers can close at a specific time, have kids or don’t plan to raze the house: “We don’t regulate the buyers or sellers themselves,” says Matthews.

The council has a website and a host of information brochures meant to educate buyers, and sellers, about the ins and outs of bidding wars, the legal obligations when you sign a contract with a realtor, issues around mortgage fraud. It also has a complaints line and email address: 1-800-245-6910or complaints@reco.on.ca

The council also stresses safety and recommends that sellers put personal photos, valuables and medicines out of sight during open houses. The photos, for instance, can tip would-be thieves off to the fact you live alone or travel a lot.

Realtors are required to alert all potential bidders that multiple offers have been registered against a property. The council has had what Matthews calls “sour grapes” calls from house hunters who believe those numbers are being exaggerated to drive up emotions and house prices.

RECO has the power to investigate so-called “phantom bids” which are prohibited under the code of ethics in the Real Estate and Business Brokers Act which regulates realtors.

Even some realtors are becoming concerned at how high emotions are running in the Toronto market right now, fuelled by low interest rates that have no where to go but up. Last week ReMax reported that some 50 per cent of homes in the “coveted” $600,000 to $900,000 range in prime Toronto neighbourhoods have been selling over asking.

But bidding wars are also emerging in Winnipeg and a number of other resource-rich areas of Canada, it noted.

“We want people to really think about what they’re doing,” says Tom Wright, president and CEO of RECO. “Buying a house is the largest transaction most of us are ever likely to make and it stays with you for years.”



Source: Susan Pigg Business Reporter (Toronto Star)

Wednesday, March 21, 2012

GTA condo sales down 59 per cent in February

Condo sales declined 59 per cent across the GTA in February as builders sold remaining inventory from last year and geared up to launch new projects for spring.


That saw the sale of new single-family homes outpace highrise sales for the second month in a row, according to figures from RealNet Canada Inc. released Tuesday by the Building Industry and Land Development Assoc.

The sales figures also show that the GTA new housing market “is easing back into stability” after last year’s record pace of sales, said RealNet.

“Following a slow period in late-2011, the lowrise sector has once again stabilized and we are seeing steady activity, particularly in the 905 markets,” said BILD Acting President Joe Vaccaro in a statement Tuesday.

“On the highrise side, while it may appear that sales are down from last year, it actually reflects the typical February lag as existing units are purchased while new condominium projects prepare to launch in the City of Toronto later this year.”

But pricing is another matter.

While condo prices increased just two per cent in February over the same month a year ago, new home buyers were faced with a 10 per cent increase in prices, largely because of the delays in building approvals by municipalities and government-imposed development charges, Vaccaro noted.

Just 913 condos were sold across the GTA in February, down from 2,226 a year earlier. That compares to 1,666 new low rise properties sold last month, up 16.2 per cent from the 1,434 homes sold in February, 2011.


Source: Toronto Star (by Susan Pigg )

Thursday, March 08, 2012

Bank of Montreal brings back 2.99 per cent., five-year mortgage

The Bank of Montreal has fired another shot across the bow of its housing market rivals by renewing its record-low 2.99 per cent rate on five-year mortgages.

The bank also said Wednesday it will offer a rate of 3.99 per cent on 10-year mortgages.
Both products come with a 25-year amortization period.

The offer takes effect Thursday for the five-year mortgage and Sunday for the 10-year. Both will be available until March 28, said Frank Techar, head of Canadian personal and commercial banking at the Bank of Montreal.

The special offers – a boon to heavily indebted home buyers – come amid worries that Canada’s real estate market is cooling, and that prices in big cities such as Toronto and Vancouver may be headed for a decline.
The deals also highlight increasing competitiveness among Canada’s big banks.

The 25-year amortization periods, which would leave some borrowers unable to qualify, are “good for Canadians and good for the stability of the Canadian housing market,” Techar said.
“We want to minimize interest rate risk for our customers and help them understand the benefits of paying their mortgage faster.”

The maximum amortization period on a mortgage is typically 30 years.
The products carry some restrictions. Customers can pre-pay and make lump sum payments as long as the total doesn’t exceed 10 per cent of the principal amount owed. Most mortgages let you make monthly and lump sum payments of as much as 20 per cent.

As well, you cannot refinance or switch your mortgage to another lender for the length of the term.
“We’re trying to reinforce the fact we want customers to have the benefit of the low rate but we also are catering to customers that want to live in their house and repay their mortgage as fast as possible,” Techar said.

Bank of Montreal was the first to offer the 2.99 per cent rate in January as a time-limited offer.
The reaction was fantastic, Techar said. “We saw an increase in volume almost immediately and it continued for the whole two-week period.”
It was later matched by Toronto-Dominion Bank and Royal Bank of Canada, though both banks ended the promotion early, citing changing conditions in the bond market, making it more expensive for banks to fund these loans.


Source: By Madhavi Acharya-Tom Yew (moneyville.ca)