Showing posts with label buyers. Show all posts
Showing posts with label buyers. Show all posts

Tuesday, March 15, 2016

When Real Estate Brokers Don't Measure Up - Why Inaccurate Measurements are a Big Deal

CBC Radio jolted me from my "Oh gawd it is the first Monday of Daylight Saving Time" stupor yesterday morning with a real-estate report.

A woman in Alberta has been left frustrated and her retirement put in jeopardy because the house she purchased and later sold was considerably smaller than what the agent who originally sold it to her claimed. You can see the TV report here.

Pam Whelan paid $800,000 for an Okotoks bungalow in 2007, believing that she was buying a house with 2,580 square feet of living space. Turns out, the bungalow is about 25 per cent smaller, 2,094 square feet. She complained to the Real Estate Council of Alberta, saying the original listing agent providedd misleading information. Had she known the real square footage at the time of purchase she could have made a "more educated guess"  on whether or not to buy.

Whelan says she was counting on the proceeds of the sale of the house for her retirement. She sold in 2014 for $775,000, after having put money into upgrades.

The Real Estate Council of Alberta acknowledges the listing agent had committed a "minor breach" of the province's Real Estate Act by misrepresenting the square footage. The council found no reason to believe the misrepresentation was intentional. The agent got a note in her file. A note is not a sanction, apparently.

That's the part that blew my mind. No sanction.

A few things about this story struck me. First, 500 square feet is a lot of space to go missing. Second, there would be hell to pay for the agent who made that mistake here.

Real-estate professionals in la belle province are ruled by the Real Estate Brokerage Act,  provincial legislation. The OACIQ (Organisme d'autoreglementaion de courtage immobilier du Québec) polices the industry and enforces the brokerage act.  The law is unequivocal. Real estate brokers are responsible for the things written in their listings.

 Sections 83 and 85 of the Regulation respecting brokerage requirements, professional conduct of brokers and advertising are clear on this point:
83. A broker or agency executive officer must act with objectivity whenever advising or informing the party represented by them or the agency for which they act and all other parties to a transaction. That obligation extends to all the material facts relevant to the transaction and to its object, and must be fulfilled without exaggeration, concealment or misrepresentation. If applicable, the broker or officer must inform the parties of products and services that concern heritage protection and relate to the transaction.
85. A broker or agency executive officer must inform the party represented and all other parties to a transaction of any known factor that may adversely affect the parties or the object of the transaction.

 If you don't know the square footage, don't say. If you aren't sure, don't say. You cannot rely on the measurements another broker took - like the measurements from an old listing. Adding a disclaimer like "all measurements to be verified by the buyer" is illegal and has no force.

So you can imagine how gob-smacked I was to hear the Real Estate Council of Alberta's director of professional standards say that "caveat emptor is alive and well in all real estate markets in Canada."

In other words, buyer beware.

Again, it is written into law that Quebec brokers must verify the information in their listings. They must be ready to prove anything asserted in a listing, if asked. That's why listings sometimes do not specify the net living space. Better not to say than to say the wrong thing.

In Quebec, every time a house is put up for sale, the seller is obliged to provide a certificate of location prepared by a land surveyor. The certificate shows the dimensions of the lot. It also shows the dimensions of the building. It does not show interior square footage. A certificate of location for a condominium will show interior square footage.

It is common practice now for notaries to examine the certificate of location with a buyer prior to the closing of the sale. They verify the dimensions together, look at servitudes and make sure the buyer understand what he or she is buying. No surprises that way.

I have to wonder whether the unhappy Okotoks woman saw a certificate of location or survey plan before buying. If she had, a bit of quick math  might have shown there was no way it could be as big as advertised. Maybe such survey plans are not required in other parts of the country.

 Living space is the space within the walls of the dwelling. Balconies do not count (even though some condo developers include outdoor space in the square footage on their spec sheets.) parking spaces do no count. Storage lockers in the basement of a condo building do not count.

Mistakes happen. Misrepresntations happen too but when they do there can be real consequences for the Quebec broker, including a fine or license suspension.

The CBC story asserts that the number of these complaints are growing across the country, but it is telling that the report did not mention Quebec, where the real estate brokerage laws have teeth and where consumers get better than a form letter saying "buyer beware".





Monday, July 9, 2012

Mortgage Rules Change Today

Starting today, borrowers face a new set of rules when it comes to mortgage lending in Canada.
The changes will have particular impact on younger/first-time buyers and could make it harder and/or more expensive to buy that first home.

As of today, buyers with less than a conventional 20-per-cent down payment will no longer be able to spread their mortgages over 30 years. The amortization period is being shrunk to 25 years. This is the measure that has been making headlines since June when the new rules were announced by Finance minister Jim Flaherty.  Funny thing is, the 25-year mortgage was the norm until relatively recently. The 30-year mortgage was introduced to stimulate the housing sector. Now that the job is done, we are reverting to the old rules.

 If you have 20 per cent to put down and thus don't need the Canada Mortgage and Housing Corp. to insure your mortgage, you can still get a 30-year term.

The second change to the mortgage game is that home owners will no longer be able to take quite as much equity out of their homes. Starting today, owners will be able to refinance up to 80 per cent of the value of their homes, down from 85 per cent.

 Flaherty put the new measures in place to A) cool key overheated housing markets. B) to discourage Canadians from taking on too much debt C) to persuade homeowners to stop treating their houses like ATM machines and pay off those pesky mortgages.

Flaherty announced the new measures largely in response to overheating in the Toronto market. Not everyone thinks they were the best approach.

In an interview with The Globe and Mail, Philip Soper, the head of Royal LePage, said that Flaherty used a hammer, when a fly swatter might have done the job.

 “The market is clearly cooling on a national basis, and I’m concerned that what is essentially a Toronto problem is being attacked with a blunt instrument that’s going to hurt the housing market nationwide,”

Maybe so. Mortgage industry insiders say the tightening will have the same effect as a one-per-cent interest rate hike. The government says the more stringent requirements will have an impact on about 5 per cent of new buyers, forcing them to the sidelines until either they save more or have higher paying jobs.

Some think the tighter lending rules will result in a market slowdown that would make it easier for young/first-time buyers to get into the market. Guess we'll see.

Several of my buyer clients have asked me what the mortgage rules will mean. I'm not convinced it will have much impact in Montreal. I don't see too many buyers opting for 30-year mortgages. I think I've had two clients over the course of the last two years. In Greater Toronto, some 40 per-cent of first-timers opt for 30-year mortgages. Different market, different circumstances. If clients ask my opinion, I encourage them to put down as much of a down payment as possible and to opt for as short an amortization period as possible. Call me crazy but I don't think it would be a terrible thing if marginal buyers were forced to the sidelines.

One last point. As of today, the CMHC will no longer insure mortgages priced above $1 million. It boggles my mind that the federal government was up until now insuring houses worth that much. Whatever happened to buying within your means. scraping and skimping to buy that first home? Seems to me that a $1-million home ought to be a move-up property. It would be in Montreal, but I suppose that in hotspots like Toronto and Vancouver, that kinda cash will get you a crack house or shack.

Check out  Crack Shack or Mansion and you'll see what I mean.








Friday, September 23, 2011

A Glimpse Inside Cirque Du Soleil

I just came across this fantastic YouTube video about Montreal's own Cirque du Soleil today. It offers a peek at life in the Cirque's St. Michel headquarters/
"Headquarters" hardly begins to describe the depth and breadth of activity that goes on in that part of the world. World class athletes, world class costume makers, world class designers, world class . . . creators do their thing in an amazing environment. The building was designed so that everyone who works there can see the performers as they develop each act. There's no brick wall between the business and art.
They grow their own produce on their campus in St. Michel and recuperate rainwater for the bathrooms and such. They even have their own water-bottling plant which allowed the Cirque to reduce the number of water bottles it purchases annually from 19,000 to 120. (Access to clean drinking water is a favorite cause of Cirque founder Guy Laliberté.)
Gotta love the passion they put into what they do.
Watching the video made me realize that I have worked with three clients who work for the Cirque in the last year, buyers all. Funny how things happen. None of them know each other, so it isn't like one referred me to another.
I don't know what it means except that the Cirque is a significant employer in Montreal and its employees make a decent living and have the kind of stability and peace of mind that lets them invest in homes.
I tip my hat to the Cirque for doing Montreal proud all around the world and for bringing me three clients.