For Realty Professionals | Oakville Real Estate, Alexx Coelho, Broker

GTA Set to Buck Canadian House Prices Trend

March 3, 2011 (Thursday) By admin

GTA resale home sales declined and average price increased in the first month of 2011. Sales in January 2011 dropped 13% to 4,337, compared to January 2010. The average price of a home in the GTA rose more than 4% to $427,037 versus $409,058 in January 2010.

The story is much as it has been for the past several months, with prices rising and sales declining year over year. However, as we’ve mentioned before, the hot housing market is cooling down. As to the future, opinions differ.

According to a report from UK-based Capital Economics, a rise in interest rates plus inflation could cause a 25% drop in Canadian housing prices over the next few years. And while the Toronto Real Estate Board continues to anticipate moderate growth of 3% to 5% in the average price of a home in the GTA, many trenders agree that there will be an overall decline in Canadian housing prices, although not at the level suggested by Capital Economics. The Canadian Real Estate Association, for example, has suggested that a slight price drop of 1.3% will occur in 2011, and the Bank of Nova Scotia expects a flattening of home prices over several years, perhaps by as much as 10%.

Helping this along are new mortgage rules that effectively eliminate 35-year mortgages and reduce the amount some buyers can borrow as well as rising interest rates.

So what are GTA sellers and buyers to do? It’s actually fairly simple. Ignore the experts and do what’s right for your family at this point in your lives.

Filed Under: For Buyers, For Realty Professionals, For Sellers, In the news

Ask the Agent: For a resale home, does the seller need to pay HST on commissions even if the home was sold before July 1st but closing later, say Aug/Sept?

June 17, 2010 (Thursday) By Alexx

GST/HST APPLICABLE ON REAL ESTATE SERVICES PROVIDED

The Government of Canada and the Government of Ontario have signed a Comprehensive Integrated Tax Coordination Agreement for the implementation of HST in Ontario. The HST will come into effect in Ontario on July 1, 2010, at a rate of 13%, consisting of a 5% federal part (equivalent to the existing GST) and an 8% provincial part. While most GST registered entities can claim the GST/HST paid on services as an Input Tax Credit, no such relief exists when the client is an end consumer. Therefore, during the transitional period, it is important to be as accurate as possible when assessing which tax rate applies to services for the end consumer who is most sensitive to the incremental 8% cost.

The following are the key rules that will determine how the GST/HST will apply to commissions charged for real estate services.

Services performed, due and payable prior to July 1, 2010 would only be subject to GST. For example, listing taken, offer accepted and transaction closed before to July 1, 2010.
Services performed after June 30, 2010 would be subject to HST, For example, listing taken, offer accepted and transaction closed after June 30, 2010.
Services started prior to July 1, 2010 and completed after June 30, 2010 might be exempted from HST based on a transitional rule. The transitional rule states that if 90% or more of the work is completed prior to July 1, 2010, then only GST would apply. Conversely, if 10% or less of the services is performed before July 1, 2010, the HST will apply. it is our opinion that transactions with a firm Agreement of Purchase and Sale or a firm Agreement to Lease dated prior to July 1, 2010, are effectively more than 90% complete and therefore, subject to only the GST rate of 5%.
Services started prior to July 1, 2010 and completed after June 30, 2010 that do not satisfy the 90% transitional rule requirement for HST exemption will be subject to a combination of GST and HST in proportion to the work performed.

CRA’s official response to us is as follows:

“Whether HST applies on an amount is a question of fact and determined on a case by case basis. REALTORS® often charge a service fee for arranging for the sale of a vendor’s property. A common question from REAL TORS® is how they determine the portion of their services performed on or after July 1, 2010. For example, a REALTOR® and a vendor enter into a listing agreement on May 1, 2010 (the listing date) and the property is conditionally sold on July 15, 2010 (i.e., a firm sale date) but the sale does not become final until August 15, 2010 (i.e., the closing date). The portion of a REALTOR®’s services performed on or after July 1, 2010 may not necessarily be determined by the firm sale date or the closing date. Realtors should determine the portion of their services performed on or after July 1, 2010 in a fair and reasonable manner.”

Another example:

Client signed listing agreement on March 22, 2010
Offer was conditionally accepted March 24, 2010
Conditions were removed and the deal firmed up by March 29, 2010
Closing is July 15, 2010

The determination based on our checklist, and point 3 above, is that this deal was 95% complete prior to the July 1 deadline. The remaining 5% being left for closing day activities (from a Realtor®’s perspective, lawyers are a different matter)

This client would only be charged GST on the commission payable.

Another example:

Client signed listing on June 15, 2010
Offer signed and accepted on June 30, 2010
Conditions removed by July 8, 2010
Closing on July 30, 2010

According to our checklist, and point 4 above, 75% of the work was done before June 30, 25% after July 1.

Client would be charged GST on 75% of the commission payable, and HST on 25% of the commission payable.

Determination of percentage of work done will vary from brokerage to brokerage. The above examples are based on our in-house checklist.

Alexx

Filed Under: Ask the Agent, For Realty Professionals, For Sellers

Eleven Reasons to Use a Real Estate Sales Professional When Buying a Brand-New Home

June 12, 2010 (Saturday) By admin

Existing and potential homeowners are looking at real estate from all angles as the U.S. economy and local housing markets continue their recovery. For many, there is strong appeal in buying brand-new homes as myriad builder incentives and low interest rates create significant value.

Today’s new homes boast exciting floor plans and designs tailored for specific lifestyles, complete with a huge array of features and appointments. They include energy efficient products and building techniques, reducing buyers’ utility bills. Of course, new-home consumers love that their properties, from roofs to appliances, will not need replacement for many years.

It might not seem necessary to involve a real estate professional in a transaction where a buyer can deal directly with a builder. Yet by using a real estate professional you gain a skilled professional to protect your interests and guide you along the right path.

Here are 11 advantages to using a real estate professional when buying a newly constructed home.

1. Just as a real estate professional calls on experience and knowledge of an area to help buyers locate pre-owned homes in a community, he or she can also direct buyers interested in newly built homes to developments and communities that match client specifications.

2. A sales professional can suggest builders with reputations for delivering a high-quality product, responding quickly to issues, and being financially sound.

3. A sales professional may be familiar with how a builder prices his products and where there may be room to negotiate price or upgrades.

4. Without representation, you are one buyer purchasing only one home. But a sales professional can significantly impact a builder’s bottom line by providing a steady supply of customers. This leverage may work in your favor at the negotiating table. [Note: The builder may require your sales professional to accompany you on your first visit to the site. Check with the builder.]

5. The lender approval process may go smoother if a sales professional schedules visits, accompanies you to lenders, and helps expedite required documents.

6. What may seem like a simple transaction can grow legally complex and risky. A sales professional is familiar with those complexities and risks inherent in the home buying process. When such questions arise, we can steer you to the right advisors and services you may require.

7. If your contract includes a contingency to sell an existing home your real estate sales professional assuredly can help, though your sales professional will explain that buying before selling isn’t always in your best interest as it can undermine your bargaining.

8. When relocating to a new area, sales professionals can be particularly valuable resources. In addition to providing local area information regarding schools, day care or elder care services, public transportation, proposed development, and so on, once construction is under way, they can periodically stop by the work site, supply you with progress reports, and photograph or videotape phases of the construction.

9. A sales professional can assist you as you face hundreds of design choices and consider which upgrades could potentially add value to the home when it comes time to sell.

10. A sales professional can accompany you at the site while you okay the plumbing and electrical locations prior to dry walling, as well as on the walk-through or builder orientation.

11. Lastly, most often the builder pays the sales professional’s commission. You enjoy individual attention and support at no cost to you.

Builder incentives and heightened affordability have many real estate consumers considering brand-new homes. Rather than rely on builders’ agents – who are paid by the builders – savvy shoppers are hiring real estate sales professionals to help them through the buying process and on to the American dream.

Filed Under: For Buyers, For Realty Professionals

Ask the Agent: How will HST impact the sale/purchase of my house?

June 9, 2010 (Wednesday) By Alexx

Effective July 1, the much-talked-about Harmonized Sales Tax (HST) will come into full effect in Ontario, blending the GST and the PST into a single 13% tax.

For businesses, the HST brings relief, as it transfers some burden to consumers. Under the new law, businesses will be able to recover the HST they pay to suppliers and on other goods and services.

For consumers, the HST means that items previously exempt from PST will now be taxed a total of 13%, costing the average household an additional $738 annually. Under the new law, 17% of consumer purchases will be affected, including real estate commissions.

When it comes to real estate transactions, there are two ways HST will have an impact: Firstly, on the price of a new, from the builder, home, secondly, on commission payable on resale homes.

For new homes purchased from a builder, HST will be applicable on the purchase price of the home, albeit new homes purchased as primary residences across all price ranges will qualify for a rebate of up to $24,000 of the 8% provincial component of the HST. The rebate is calculated from a stepped scale, and a series of thresholds. For a more detailed explanation of the intricacies of the program, see http://www.rev.gov.on.ca/en/taxchange/homebuyers.html

“This rebate ensures that buyers of homes priced up to $400,000 (about three-quarters of new homes built in Ontario) will, on average, pay no more – or possibly even less – tax than under the PST system.” – MOR

“93 per cent of all homes sold in Ontario, on average, will not be subject to an additional tax amount under the HST.” – MOR

For resale homes, GST and, now, HST apply to real estate commissions only, as it is a service being provided to the consumer, not to the price of the home. Let’s look at a scenario to analyze the actual impact of this change on a resale home. We’ll be selling a $400,000 home, paying 5% commission total (2.5% for listing agent, 2.5% for buyer’s agent):

	With GST		With HST

Sale Price	$ 400,000.00		$ 400,000.00
5% Commission	$ 20,000.00		$ 20,000.00

5% Commission including Tax	$ 21,000.00		$ 22,600.00

Additional Cost to Seller with HST vs GST		$ 1,600.00

In this case, the additional cost to the Seller is $1,600 or 0.4% of the sale price of the home. From this, we can come up with a rule of thumb for a typical transaction where 5% is the total commission charged (2.5% for listing agent, 2.5% for buyer’s agent), the impact of HST will be $400 for every $100,000 of property value.

While it is an additional cost to sellers, one that is not welcomed by most (all) accounts, the actual impact of the HST is small in comparison to the value of your home. There are a plethora of other factors that can cost you more on the sale of your home than this tax, and that should always be kept in perspective. A dirty carpet, a cluttered closet, a messy yard, to mention a few, will all cost you more than 0.4% of your home’s sale value.

NOTE for Buyers: If you are purchasing a resale home, you do not pay tax on it! This is a common misunderstanding when speaking of how HST will impact real estate.

Ontario Premier Dalton McGuinty says that the HST is a sacrifice consumers must make in order to invest in a better future. McGuinty says that the new tax will help businesses stay competitive, a big step in building a stronger economy. Services that will see increases in taxation include dry cleaning, landscaping, electricity and heating, esthetics, and fitness training. Hotel rooms, magazine subscriptions, gasoline, vitamins, athletic facility memberships, and cigarettes are some of the products that will now be taxed at 13%.

Ontario isn’t the only province to adopt a harmonized sales tax. HST was implemented in Newfoundland, New Brunswick and Nova Scotia in 1997. In British Columbia, a 12% HST will go into effect on July 1.

To learn more about how the HST will affect businesses and consumers, visit the Ontario Ministry of Revenue’s online resource at www.rev.gov.on.ca/en

Filed Under: Ask the Agent, For Buyers, For Realty Professionals, For Sellers, In the news

Air vents and scents

June 1, 2010 (Tuesday) By Alexx

Here’s a little tip to help get your home ready for a showing to a prospective buyer, if you’re selling, or to just spread a fresh scent throughout your home, using just one Reed Diffuser.

A little background/refresher: The furnace in your house takes in air from the cold air returns throughout your house (big metal grates low on the walls – typically one per floor in your house), runs it through the furnace to heat or cool it, and circulates it back into your house through the floor registers.

Take advantage of this setup by strategically placing a reed diffuser near one of your cold air returns (In the picture on the right, it is under the hall table on the main floor). The scent from the reeds is taken through the entire house via your heating and cooling system.

Works like a charm without overpowering or concentrating the scent in just one place.

-Alexx

Filed Under: For Realty Professionals, For Sellers, Homeowner Tips

Santa Speedo Run Alert

November 26, 2008 (Wednesday) By Alexx Leave a Comment

Hi!

Just wanted to give you the heads-up on a little event I’m participating in a few weeks.

The Toronto Santa Speedo run was conjured up in 2005 to help raise money for The Hospital for Sick Children (SickKids).

100% of the funds are used for the Toys and Games fund at the hospital, to help make the stay of Toronto’s bravest patients a little easier. Since 2005, the event has raised almost $70,000.

- You can make an online donation now at: http://my.e2rm.com/personalPage.aspx?SID=2024111

What is the Toronto Santa Speedo Run, you ask? Well, it’s a brief (pun intended) fun run through the streets of Yorkville on December 13, 2008. What makes this run so special is what we will be wearing — or not wearing, as the case may be. All participants run in only running shoes, Speedo bathing suits and festive adornments. As you might imagine it gets a bit “breezy”, but it’s all worth it knowing where the money’s going (and also to see the expression on spectators’

faces).

So you know where I’ll be on December 13th, what I’ll be doing and what I’ll be wearing. We’re starting from Hemingway’s Restaurant in Yorkville. I’m asking you to support me by showing up and cheering on the idiocy, and to donate to the cause, in the form of a one time donation or monthly gift.

Secure on line donations can be made with VISA, MasterCard or American Express and an electronic tax receipt will be sent to you by email.

You can make an online donation now at:

http://my.e2rm.com/personalPage.aspx?SID=2024111

You can learn more about the event at www.torontosantaspeedorun.com

Thank you for your support!

Alexx

Filed Under: Events, For Buyers, For Realty Professionals, For Sellers