How to safeguard yourself in a home bidding war

Once your mortgage financing has been secured, finding a home you love is an exciting part of the process. It is easy to get swept up in the excitement of it all, and it is also commonplace for a listing agent to indicate there are other offers to stimulate a faster response from a client. A trend that has emerged and is gaining a lot of media attention, is bidding wars that emerge with only one bidder. Recently, a Toronto couple 'won' the bidding war on their desired property with a bid that was $90,000 over the asking price. They discovered after the fact that they had been the only bidders. In this article from Moneyville, we learn there are methods to protect ourselves against these situations.

The law does state that in the event of a bidding war, an agent must inform all bidders how many offers have been made. However, bidders names and offer amounts are never disclosed. A practice has been recently developed in Toronto for the buyer's agent to call the seller's agent to inform them a formal offer will be made later that day, although the potential buyer can always back out. This can result in a seller receiving several 'registered offers' throughout the day, with no guarantee any will actually become a legitimate bid. Still, a listing agent may tell potential buyers there are several offers, in hopes of encouraging them to make one as well.

So how can potential buyers protect themselves? Mark Weisleder, a Toronto real estate lawyer, has developed a bidding war clause that has proven very useful. The clause states that the buyer is making an offer based on the belief that other offers will be received that same day, and goes on to say that if there are no other offers received by a certain time that day, the buyer can rescind the offer or change the price. If the buyer's offer is accepted, the seller must provide the name, address and phone number of the real estate agent that presented the other offer. This clause gives potential buyers the security of knowing there is at least one rival bid. To learn more about the process, contact a qualified real estate agent or Canadian mortgage broker.

Click here for the full article from Moneyville.

Bank of Canada holds lending rate, cuts growth forecast

The Bank of Canada decided to keep its main interest rate unchanged yet again on Tuesday, a decision that was widely anticipated by economists. The rate remains at 1%, unchanged since September of 2010. This article from the Financial Post shares the highlights of Tuesday's announcement.

Taking into account the current global economic state, The Bank of Canada kept the wording of the announcement similar to that of the previous release in June, stating, "to the extent that the economic expansion continues and the current excess supply in the economy is gradually absorbed, some modest withdrawal of the present considerable monetary policy stimulus may become appropriate." This is surprising to some, as the economic outlook caused many to believe the Bank of Canada would possibly lower rates or give a longer time line for borrowing costs to rise.

The Bank of Canada also revised predictions for Canada's economic growth, stating results for 2012 to lower to 2.1% and 2013 at 2.3%, a departure from the previous forecast of 2.4% for both years. It was acknowledged that while the global economy is straining Canada's economic activity, "domestic factors are expected to support moderate growth." Bank of Canada Governor Mark Carney touched on a slowdown in the housing market, but did not mention new mortgage lending regulations. Carney will expand on the Bank of Canada's outlook for Canada's economy on Wednesday when the quarterly monetary policy report is released.

For more information on how these factors affect you, contact a Canadian mortgage broker.

Click here for the full article from the Financial Post.

Add value to your home with an addition

In an era of uncertainty surrounding home prices and the mortgage market, several home owners are looking to increase the value of their property by renovating. Kitchens, bathrooms and finished basements tend to be the most popular projects, but an addition can provide greater reward, if planned properly. A recent article from the Globe and Mail provides some helpful hints, and shows readers how adding to the home may be a better investment than simply relocating to a larger home.

As with any renovation, it is important to start with the proper research. The article suggests consulting a real estate professional in your area to find out what potential buyers are looking for. This information can be very beneficial when you decide on your expansion. The agent can also keep you informed on prices and recent sales, so you can stay within a reasonable price for your neighbourhood. It is also important to be honest about how much more time you plan to spend in the property. If you intend to sell shortly after completing the expansion, you will likely have a very different renovation plan than you would if you wish to spend 5 or 10 more years in your home.

If the idea of the research and costs of an expansion seems like too much, relocating may seem like an attractive option. This article includes a helpful chart to estimate the potential moving costs, making it easy to compare what will be the more feasible option for you.

To find out more about refinancing to renovate, contact a Canadian mortgage broker.

For the full article from the Globe and Mail, click here.

Canada’s housing market at ‘tipping point’: Royal LePage

Although it is believed that new mortgage legislation will keep a number of buyers out of the housing market, a recent study from Royal LePage forecasts that the year will end ahead of its expected growth percentage. This article from the Financial Post shares the highlights of the recent report.

Phil Soper, chief executive of LePage Real Estate says that although growth in home prices has been steady for almost three years, they cannot be expected to continue to increase faster than salaries and the economy. Recent historically low mortgage rates have caused several regions to reach what is believed to be an upper level of price resistance. Historically, following a period in which home prices increase significantly, statistics show that Canadian home prices have tended to stay flat, rather than decline. The report also states that the last marked national price drop was in 2008, after a 16 year period with no decline. The drop lasted 11 months.

The new tighter mortgage regulations were announced June 21st and came into effect July 9th. It is believed the changes, most notably decreasing the maximum amortization period of insured mortgages to 25 years, will have a significant impact on many first time home buyers. However, a recent survey estimates that approximately 50% of Canadians are still unaware of the changes. To find out more, contact a Canadian mortgage broker.

For the full article from the Financial Post, click here.

In Vancouver, the seller's market recedes

June is traditionally one of the busiest months in real estate, yet one of the country's priciest cities saw a significant decline in activity. Vancouver's June sales fell by 17% compared to the previous month, and 27.6% below June 2011. Economists are seeing this drop as a sign of market correction, and predict that home prices will start to decrease as well. This article from the Globe and Mail explores industry statistics and possible causes.

The average price for a detached home in Vancouver has reached a high of $961,600, an increase of 35% from the average three years ago, and 50% higher than the Toronto average. A price decrease would move Vancouver closer to a buyer's market, a welcome change for those seeking their first mortgage.

Financial analysts are unsure of the exact cause of the slowdown, but it is believed that new lending regulations are partly responsible. Industry professionals in the city have seen buyers back out of potential sales, citing new income requirements as the reason. Over the month of June, only 2,362 properties were sold, the lowest Vancouver has seen since the year 2000. Following the Vancouver slowdown, some analysts believe the Toronto market will follow.

To read the full article from the Globe and Mail, click here.