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Time for the latest Alberta Real Estate Market update –  I am happy to report that Alberta has seen home sales increase year over year for the first time in over 2 years!  According to the Alberta Real Estate Associations latest statistics, Alberta completed 4527 home sales last month, compared to 4327 of 1 year ago.  Additionally, the average home price is up 1.9% from the same month of the previous year; the average price has risen from $384,381 to $391,692.    This is great news, and may signal the beginning of increased sales and growth over the months to come.

Alot of people I come across are unaware of how exactly Realtors work.  Most are shocked to learn that using a Realtor when buying a place is generally free.  In this case, there is really no downside to using a Realtor when buying a home.  The way we get paid is through the seller.  When listing your home, you will actually be paying 2 realtor fees- one for the selling Realtor and one from the buying Realtor.

Typically we use a 7% + 3% method to calculate our commissions.  That meaning it will cost you 7% on the first $100,000 and 3% on the remaining balance.  Keep in mind that this is then split between both Realtors, each receiving 3.5% and 1.5%.

As an example:

A sale price of $300,000 on a condo would result in:

3.5% on first $100,000 + 1.5% on remaining balance for listing Realtor = $3500+$3000= $6500 + GST

3.5% on first $100,000 + 1.5% on remaining balance for buying Realtor = $3500+$3000= $6500 + GST

TOTAL = $13,000 + GST

That may seem like a lot, but generally speaking listing through an accredited Realtor typically gets you a sale price higher than the cost of the Realtor fees than if you were to decide to list on your own.  In addition, you will have exposure to many more prospective buyers, often reducing the time to sell by a substantial amount.  Any time you work with a Realtor it is important to be up front and discuss what fees are involved so there are no surprises later.

Our Edmonton market has generally held strong amidst the low oil prices and struggling Alberta economy.  However, we are starting to see the effects on the market and as we get into the summer months expect to see the volume of sales to continue to decrease.  Although historically we have seen moderate growth in sale prices year over year, the last 2 years have reported a small dip in house prices.

The Alberta Real Estate Association have released the latest stats for June.  Here is a quick summary for Alberta as a whole:

• total of 6059 units solds, this is down 9.2% from the month of June/2015
• the average mls sale price is also down 1.4% from last june, averaging $397,269

The good news is that the Edmonton Region saw one of the smallest year-over-year changes of only -0.6%.  Calgary and Lethbridge regions saw the only positive changes (of .2% and 2% respectively) in Alberta, while the South Central Alberta and Fort Mcmurray regions saw the greatest decreases; between -19.8% and 32.3% respectively.

Whether you are selling or purchasing a property in the Province of Alberta, you will be required to sign a form called the Consumer Relationships Guide.  This is not part of the purchase contract, rather a form that will be held on record by the Real Estate company representing you in the transaction.  The purpose of the form is to explain the relationship and responsibilities of both the Realtor/and or client so that everyone involved is aware and well informed about the role both parties play throughout the transaction.

Although fairly self-explanatory, these are the major issues it brings to awareness:

1. Agency relationship – explaining that when you enter to this relationship, you are represented by an agent as well as the agents brokerage that is acting in your best interest.
2. Agents responsibilities – undivided loyalty, confidentiality, full disclosure, obedience, reasonable care and skill and full accountability are the responsibilities that every agent must exhibit.
3. Customer relationship – if you choose not to be represented by a Realtor in a transaction, the Realtor is not able to provide you the same services as if they were to act on your behalf.
4. Conflicts of interest – if you choose to have the same Realtor represent both the seller and buyer in a transaction, you are entering into what we call a transaction brokerage.  You must be made aware of this, and are required to sign another form which explains this situation fully.

You will come across these, among other items when completing the form to agree to be represented by a Realtor.  If you have any questions at all regarding this subject matter, do not hesitate to ask your Realtor and/or their brokerage for further explanation.

Every time an offer on a home occurs in the province of Alberta, it only becomes legally binding once some sort of financial consideration has been made- ie. a deposit.

As discussed in the previous post, part of making an offer is giving a deposit.  This deposit can be anywhere from 1 dollar to the full purchase price.  However, a common deposit may be somewhere around $2500-$10000 on a house under 500,000 to $20,000-$50,000 for a home over $500,000.  These amounts will vary and are all part of the negotiating process when presenting an offer.

The way the deposit works is this – once an offer is accepted, the deposit is given by the buyer and held in trust by the sellers real estate company.  Now most likely your offer would have conditions on it.  If everything is fine and you are able to remove conditions, your deposit is forwarded directly to the sellers lawyer who will then hold in trust until possession.  This deposit counts toward whatever downpayment you will putting on the house.

If for some reason, you can not remove conditions, the deposit will be returned to the seller in full.  NOTE:  As long as you are abiding by the terms of the legally binding contract, the deposit will be returned.  If, for example, you have only a financing condition on the property, but as you were waiting to go through with the deal, another WAY better house that you prefer comes on the market so you decide not to remove your finance condition and buy the other one instead, the seller has a strong case to hold your deposit.  In this case you are able to meet the conditions (able to receive financing on the property) but choose not to proceed for other reasons, so you are in fact breaking the terms of the contract.

The deposit is designed to protect the rights of the seller, as well as demonstrate the willingness of a buyer to proceed with a purchase.  99 out of 100 times things go as planned, but as both a buyer and a seller, it is in your best interest to know all scenarios that may affect you should something go awry.

There is a lot of doom and gloom in the local economy these days as a result of significantly decreased gas and oil prices.  As a city that relies heavily on this industry you are right to assume this has an effect on our economy, job growth and real estate prices.

HOWEVER – the third quarter market report for the city of Edmonton was recently released and you will be surprised to know that despite the negative publicity we have been receiving, our economy is holding strong.  Some things of note: (all stats can be found on the Realtors Association of Edmonton website).

– Employment from Jan to Aug of this year vs. last year is actually up 1.4% (meaning a net increase of 15000 jobs)

– The unemployment rate was only 5.5% – compared to 5.3% of 1 year ago.

– Average weekly earnings of Edmonton residents 1.4% that of 1 year ago.

– CMCH’s average absorbed house price in Edmonton is actually 3% higher than 1 year ago.

Now, there are many other stats and criteria to take into consideration as there are indicators as well showing areas of decrease.  However, to this point I think we should be a lot more optimistic as to how well our city has responded and continues to grow and prosper even in times of economic uncertainty.

A few years back I did a post on what a RPR (Real Property Report) is.  Just to reiterate, its a land survey of the boundaries and structures within your property lines.   There are a lot of common questions that still come up regarding RPRs (some listed by AREA – the Alberta Real Estate Association) and I figured I would relay some of them on to you:

1) I was provided a RPR when I purchased my home 5 years ago, but cant find it now and want to sell

– there are many places that may still have a copy of it: your lawyer, the sellers lawyer from when your purchased it, the realtor that represented you or the seller, or even your lender may have requested a copy at time of purchase.

2) Should I accept title insurance in lieu of an RPR when purchasing a home?

– this question is one that should only be answered by your lawyer.  There are many benefits and some instances that make sense to accept title insurance, but normally in addition to a non-compliant or non-conforming RPR, NOT in lieu of one altogether though.

3) The clause in the purchase contract states that the RPR must be current and compliant.  What does this mean?

–   Compliant means there is a letter from the city stating that property bides by all city bylaws.  Current means that there have been no changes to the exterior of the grounds since the last RPR.  Again, a question best directed to your lawyer, as each case is different – but adding a shed, concrete pads, etc may mean that your RPR is no longer current.

With the age of some of the more mature communities approaching 70-80+ years, many houses may be reaching the end of their life span.  This is leading to a large increase in the amount of teardown/rebuilds currently under construction.  If you’ve thought about doing a teardown and replacing it with a duplex, here is some information you will need to consider:

1) Zoning – there is potential to do a duplex for lots zoned RF4 (the most common designation).  RF1, RF2 and Rf3 zoning are also usually acceptable for duplex development.

2) Lot size-  needs to be minimum 14.4 m wide, 30 m deep and over 442.2 sq m for duplex.

3) Total site coverage-  maximum 40-45% (includes garage) depending on lot and area

4) Application – Here is a link to the form you would need to submit to get approval from the city:

http://www.edmonton.ca/city_government/urban_planning_and_design/residential-infill-guidelines.aspx

5) Building costs – There is a large range in costs depending on the builder you use, and the quality of product you build.  However, I have received estimates in the range of $200-$225/sq foot. The reason it is a bit higher is because of the need for twice as many of the expensive areas (ie. mechanical, electrical, kitchens,etc…)

Many listings come on the market today with the caveat “GST may be applicable”.  Basically this a lazy way to say you may have to pay GST, but I don’t know for sure.

First of all, it is entirely the sellers responsibility to determine whether or not GST is to be paid.  However, even as a buyer, it is in your best interest to do some research and make sure what the seller has determined is correct, otherwise future issues may arise during conveyencing.

On the surface you can expect to pay GST on the sale of any brand new home or commercial property and buildings, commercial land, and farm land.

On the other hand, any USED residential complexes (including anything lived in, mobile properties and multi family dwellings) are exempt from GST.

Personal use property is also usually exempt from GST – this includes vacant residential lot for personal use, recreational property with a cabin, or a rural property that has never been used commercially.

The biggest grey area for GST is usually around farm land.  If there is any revenue generated from the farm land (pasture or crops) than GST applies – however only to the revenue generating portion (not the house and the land that it resides on).

So – as long as you are purchasing or selling a USED home, GST is not applicable.  However in any other scenario it would be prudent to have you and your Realtor do some further research into the topic, regardless of whether you are on the buying or selling end.

The Alberta Real Estate Board defines it as:

A Home Owners Association (HOA) is created by the developer of a community.  Functions vary, but many HOA’s monitor architectural guidelines or provide maintenance services for the amenities the municipality will not maintain.

More and more communities are beginning to adopt an HOA.  It is important to know if where you are buying will have an HOA because there is a fee that comes with it (Although normally quite nominal ~ $100/year).  Nevertheless, the best way to tell if a community has a HOA is to get your Realtor to pull title on the property you are interested in purchasing.  If there is one, there will be an encumbrance on the home listed right on the certificate.

I generally hear mixed reviews from clients with regard to having a Home Owners Association.  Communities with a HOA have higher aesthetic appeal due to the restrictive architectural guidelines.  However you could be subjected to uncontested fee increases and may need to seek approval for any additions/changes to your property.  Either way is important to have your Realtor do the research to determine how a HOA may or may effect you and your new home.