Monday, April 14, 2014

It's Spring - Come Out of Hibernation

  Other than on the ski slopes and up on top of the escarpment, the snow is almost gone and the ice coverage is retreating from the Bay.  It's been a long cold winter and most are glad to be getting back outdoors to partake in warm weather activities.

  I have been assessing some of the clean up work needed around my own home and it is extensive!  With all the snow we've had this winter there is an abnormal amount of sand on my lawn thanks to the liberal amount of sanding that was needed on our snow covered streets this winter.

  Many of you may be thinking about getting back out into the yard for clean-up and other gardening chores.  Not where to start?  My Home Cents Help Tip titled "Spring Out of Hibernation" may help you.  

  If you are perhaps thinking of selling this year, creating strong curb appeal is an important aspect of getting your home ready for market.  It not only creates a positive image and feel when prospective buyers arrive to look at your property but a well kept home appearance-wise suggests that it has probably received due care relative to other maintenance task.  A neglected home in terms of its appearance suggests that other aspects of the property such as the mechanical systems may have been neglected as well.  Buyer are fussy and with three times the number of homes listed for sales versus those that sell, they have plenty of choice.  

  Make sure that your property "stands out" from the rest of the competition.  Start by improving the exterior to create a good first impression and a positive story about the rest of the property.  

Wednesday, April 9, 2014

The Sale Is Dead - What Happens to The Deposit?

  Buyers and Sellers entering into a real estate Agreement of Purchase and Sale are usually at opposite ends of the spectrum on a number of issues the most important of which is money.  Obviously the purchase price is the biggest hurtle to agree on, secondary to that, deposits can sometimes be a thorny issue as well.

  Contrary to what you may believe, an Agreement of Purchase and Sale is a binding contract even if there is “zero” monies paid as a deposit.  A contract is made based on considerations being made.  In real estate, the considerations made in an Agreement of Purchase and Sale includes the Seller transferring the title to the property to the Buyer.  It may also require the Seller to include specific items ie: the appliances and other things that are specified in the Agreement.  Similarly the Buyer agrees to pay the Seller the agreed to purchase price on a specific date etc.  All of these items are essentially promises that are being made by both parties in the terms of the contract.  What makes the contract binding is not the deposit but the fact that the Agreement is signed “under seal.”  As you will note on most real estate forms, signatures are make next to a small black seal and the Agreement is noted as being SIGNED, SEALED and DELIVERED…..

  Virtually all Agreements of Purchase and Sale do however include a deposit the mount of which can vary.  There is no specified or accepted deposit amount ie: 10% of the purchase price etc.  The deposit is a further show of good faith by the Buyer.  The amount of the deposit is not only based on price but also the length of the closing date is an important factor as well.  If a Buyer purchases a property with a long closing date ie: 6 months with say a $2,000 deposit, there is not much of a deterrent for them to not complete the Agreement if all they have at risk monetarily is $2,000.
  Most real estate transactions today have “conditions” that for the most part need to be satisfied by the Buyer.  These can include the sale of the Buyer’s current home, securing a mortgage to complete their purchase, obtaining a satisfactory home inspection report and so on.  Conditions are typically worded such that if they have not been either satisfied or waived by the Buyer by a set date and time, “…the offer shall become null and void and the deposit shall be returned to the Buyer in full without deduction.”  Seldom are deposits “non-refundable” unless specified as such which is rare.  Sellers are as a rule not eligible to keep the Buyer’s deposit even when the Seller feels the Buyer has reneged on the terms of the Agreement. 

  Deposits are for the most part held in the trust account of the real estate Brokerage representing the Seller(s).  So what happens with the deposit when an Agreement of Purchase and Sale becomes null and void or should a conflict arise between a Seller(s) and Buyer(s) and the Agreement is not completed?
  Real estate Brokerages can release a Buyer’s deposit one of two ways.  When an Agreement is aborted, the Seller and Buyer sign a “Mutual Release.”  This releases both parties from the contract, the Brokerage holding the deposit refunds it to the Buyer(s) and life come goes.  If either the Seller or Buyer refuses to sign a Mutual Release it may be an indication that one of the two parties is going to litigate in an attempt to make the Agreement enforceable.  Should that be the case, the only way in which a Brokerage can release a deposit to the Buyer is via a Court Order.  

  If you are a Seller, you want a sufficient enough of a deposit so as to feel comfortable that the Buyer is committed.  A relatively large deposit potentially signifies that the Buyer(s) have the financial ability to complete the transaction.  As a Buyer, you naturally may want to cough up as small a deposit as possible as most deposits are held on non-interest bearing trust accounts.  This means that if your money is sitting in a real estate Brokerage’s trust account for several months, it is not earning you any interest.  As a Buyer, providing a larger deposit shows you are serious and depending on the Seller it may give you more leverage with respect to negotiating the price, closing date and other terms that you want.


  I hope you find this information helpful and I encourage your comments.

Saturday, April 5, 2014

Technology Can Make or Break a Deal

 Even those of you that may be not so inclined to use it extensively will readily agree that technology has and will continue to impact our lives.  I am an ardent believer and typically an early adopter of technology, provided it offers a meaningful purpose.  At the same time however, it is not meant to replace the personal contact or the human oversight that is a hugely important part of a legal transaction such as real estate.

  It is not uncommon during the real estate transaction to have documents transmitted back and forth between both REALTORS® and their respective clients via fax or more likely email.  All real estate documents in the province of Ontario have been reformatted to letter versus legal sized pages for this purpose.  While this mode of document transmittal is fast and in the case of email much more legible than faxing, it does not lessen the burden on all parties of making sure the required forms are fully and legally executed.

  Today’s forms require initials on every page to ensure none are missed, and any and all changes must be initialed by both the Buyers and Sellers.  I just read an article titled “How Email Killed the Deal” in a real estate publication I follow that went like this.  A recent court case arose when a change in price on an Agreement of Purchase and Sale had not been fully endorsed or acknowledged by both, the Buyers and Sellers resulting from an initial(s) and or a signature(s) having been missed on the documents.  Who was at fault?   In this case it was the REALTOR® for the Buyers.  The Buyers were under the impression they had an accepted offer at one price whereas in the Seller’s mind it was a higher price.  The matter went to court and due to the missing initial(s) the Judge ruled there was in fact no contract.  The Buyers got their deposit back but no house and the Sellers lost a sale.

  All of this stemmed from the fact that documents had been transmitted back and forth as attachments to emails but were seemingly not opened and checked by one or both REALTORS® to make sure that all changes etc. were duly executed by both the Buyers and the Sellers.  With something as complex as today’s real estate transactions, no amount of technology can take the place of the required human intervention and care as is required to cross all the T’s and dot all the I’s.  This is where a trained and conscientious REALTOR® must exercise due care on behalf of their clients.  Even when not dealing with people face-to-face, I always make a call during which we review the documents, I answer any questions and most importantly cover all the areas where they need to initial and sign.  Just one missing initial can create a loophole thus jeopardizing a sale so it’s a matter of checking and double checking everything.

  In my next post I will explain the process of what happens with Buyer’s deposits when a real estate transaction is aborted.  

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Royal LePAGE Locations North (Brokerage)

330 First Street, Collingwood, ON L9Y 1B4



Email:
rickcrouch@propertycollingwood.com



Direct: 705-443-1037



Office: 705-445-5520 ext 230




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I am a licensed Real Estate Broker and MVA (Market Value Appraiser Residential.) Throughout the buying and selling process, I am committed to REDEFINING YOUR REAL ESTATE EXPERIENCE by delivering the utmost in service, performance and real estate expertise to my valued clients. Please visit my website, better yet download my new APP. To learn more visit: www.propertycollingwood.com