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In the final blog regarding the purchase contract Ill touch on possession date.  Again, this is a point of negotiation between seller and buyer.  Quite often when a seller lists their home, the listing will include the sellers preferred date of possession (ie. 30 days, June.1, negotiable, etc….).  When a buyer writes their offer, they may take this into consideration, but ultimately will want to put a date that is ideal for them.  Once a date has been agreed upon by both parties, this will be the actual date that you take possession of the property.  As per the terms of the contract, vacant possession will be made available at 12 noon on that day; meaning that both parties will have met and signed papers with the lawyer before this date, financing will have been arranged, and the property has been emptied, cleaned and vacated.

Now there are circumstances where possession is delayed.  The most common I see is a a delay in the bank sending over the money to the lawyers.  In this case, most often your lawyer will have the seller sign a form ahead of time, stating that you are still able to take possession of the property at that time, but only as a tenant.  You will not in fact own the property and will be paying interest on it until the funds are actually received by the lawyer, at which point only then you become the new owner of the property.  It is important to discuss with your lawyer the options ahead of time, should there be an unforseen delay in the possession of the property.  I always recommend avoiding Friday possession dates (although these tend to be most common), as a delay on Friday would mean nothing will be resolved until Monday at the earliest – meaning you could be on the hook for interest for 2 extra days, or even worse be without a home for the weekend.

Further to the last few posts, one of the many points to consider when buying a home is conditions.  When a property goes “pending” we mean that an offer has been accepted by the seller, and it is pending removal of conditions.  During this pending state, there is a legal document in place, meaning the seller can not sell to anyone else at this time, and the buyer will only not proceed if one or more of their conditions are not met.  If the purchaser is not satisfied that their conditions have met, they will choose NOT to remove their conditions, and thus terminate the contract, have their deposit returned and allow the property to go back on the market.  If the purchaser is satisfied that their conditions have been met, they will choose to remove their conditions and officially complete the sale of the home.

A condition can be anything you want it to be (sellers can theoretically put conditions on as well).  The most standard conditions are:

1) property home inspection – the buyer to have a certified inspector to examine the property at the cost of the buyer.

2) finance condition – the purchase of the home to be approved by the lender in order to obtain a mortgage

3) condo document review – every condo in Alberta is a corporation, and thus must keep financial and property specific records.  The buyer has a chance to review these and ensure they are acceptable to them before proceeding.

These are the most common conditions, however like I mentioned before a buyer can put forth whatever condition they want to have the seller accept.  For example – purchase is conditional to review of the property by purchasers father (when a parent isnt able to attend an intial showing), or purchase is conditional to the buyer receiving and signing official job transfer papers (when the buyer is still waiting on confirmation they will be relocated to a new city).

Typically conditions run anywhere from 5-10 business days, although quite often 5 business days should be more than sufficient to complete everything, provided you have already been preapproved.

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 bit more to negotiating the purchase of a home than just the actual sale price.  When placing an offer on a property as a buyer, we present an on offer to purchase on a contract.  The main items that are listed in the contract and may be negotiated include:

1)  Non – attached goods:  Quite often we want items with the home that are not part of the property itself, so we need to list them in the contract – these items may include fridge, stove, dishwasher, window coverings, garage openers, etc….

2)  Deposit:  To make a legal contract there must be some kind of financial compensation that must accompany the offer.  This amount will vary depending on the transaction.

3)  Purchase price:  Of course the most important for most buyers/sellers, this is the item we spend the most time negotiating.

4) Possession date:  The exact date when the property is turned over to the new owner

5) Conditions and condition dates:  Again these items will vary, as well as the time needed to fulfill them, but the usual conditions include property inspection, financing, and condo document review if necessary.

This list is definitely not inclusive, as many items can be added and deleted from the original purchase contract.  However, these are the items that will have to be considered with most purchases.

There are many different types of home buyers – downsizers, move up buyers,  investors and first time home buyers to name a few.  Although a lot of the characteristics of each group may be similar, it is important to recognize the individual needs of each.  I intend on doing a blog for each of the groups, but for now lets start with first time home buyers.   Are you looking for your first home?  Here are some important factors to consider:

1)  Timeline:  It is important to have an idea of when you want to be living in your new place by.  Ive had people living in a new house or condo anywhere from 1 week!! to 2 years from the day they started looking.  Once you have an idea of your ideal scenario you can set a general timeline of how to proceed (keep in mind no matter how prepared you are it still all depends on actually finding the right place).   On average it may take a typical buyer 3 -4 weeks of looking houses, 1 – 2 weeks of offering/negotiating and another 3-6 weeks til possession date.

2)  Location:  The one thing you will hear over and over is that no matter what house you buy you can not change the location once you buy it.  Even if you have your mind set on 1 community, its a good idea to look at a few different areas to see the pros/cons of each.  What neighborhood or location within the neighborhood (on a busy street, next to a pawn shop, etc…) will influence your ability to resell the home in the future.

3)  Financing:  Obtaining financing is usually most difficult for first time home buyers.  Typically they will only be putting 5% down, have to pay CHMC fees to insure there mortgage and will most likely be doing it on a lesser income than the investor/move up buyer groups.  Its a good idea to get preapproved by a mortgage broker- its free and gives you a letter stating you are qualified to purchase a home up to x dollars.  This way you know what price range you are comfortable going up to.

4) Associated costs:  There are costs that come with buying a home that you will want to consider.  Lawyer fees (average $1000-1200) a purchase, CMHC fees (varies depending on how much you put down), property home inspection (~ $500), title insurance (optional ~ $250) and potential utility hook up fees are costs you will want to budget for.  You may also owe the vendor back pay for property taxes/and or condo fees that they have already paid for the remainder of the year

5)  Characteristics of home:  It is important to decipher between cosmetic characteristics and the mechanical/foundational characteristics of the home.  Or in other words, wants vs needs.  Quite often first time home buyers can get wrapped up in the cosmetic beauty of the home while disregarding the operational aspect of it.  Paint, trim, doors, lights, taps – all can be added fairly easily at minor costs whenever the budget allows for it.  However, some expenses are necessary to keep your home dry and warm so it is important to look at these as well.  Windows, shingles, furnace, electrical panel, hot water tank, siding – all expensive fixes that may have to be completed whether you want to or not.

If you are looking at buying your first home it is important to have a Realtor you trust and respect to fill you in on everything there is to know about buying a home.

AREA ( Albert Real Estate Association ) just released their latest sales statistics and you may be surprised by the data.  The general mentality of the public is that our real estate market has taken a big dip, but the stats say that this is yet to happen.

The average residential sale price for the month of December 2015 was $389,486 – only down 0.3% from the $390,528 of December 2014.  Surprisingly enough, December 2015 sales were still 2.37% higher that that of December 2 years ago ($380,477).  To make matters better,6 of 10 real estates boards in Alberta actually saw an increase- including Edmonton which saw a 1% year over year increase.  Unfortunately, Calgary, Fort Mcmurray and Grand Prairie were the few communities to see a decrease in price.

As a whole, the number of sales were down for the month of December for the whole of Alberta.  Over the past 5 years, the province has seen an average of 2929 sales in December.  This December however, we only saw 2532.  Again the entire provincial numbers have been affected by a few of the markets that have seen a more substantial decrease.

All in all however, this is very encouraging news.  Ill keep you posted when the data from the first few months of the new year come out, but hopefully our real estate economy in Edmonton continues to remain strong, and maybe even continue to see some increases.

Effective February 2016, the federal government has made some slight changes to downpayment requirements when purchasing a new home.  The new requirements are:

1) 0-$500,000: buyers will still only require a 5% down payment.

2)$500,000 – $1,000,000 : buyers will now require 10% down payment (previously it was only 5%)

3) $1,000,000 + : buyers still require 20% down.

With ever increasing prices of homes, it is important that the government continue to put these rules in place to ensure first time home buyers dont get themselves in too deep should interest rates go up or house prices decrease substantially.

However, keep in mind if you are purchasing in the 500,000-1,000,000 range, you only need 10% down on the amount over $500,000.  For example: a $600,000 home requires ($500,000*.05=$25,000) + ($100,000*.1= $10,000) = $35,000 down payment.  As opposed to the only ($600,000*.05) = $30,000 that was required before.

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…)