Tag Archives: sellers
Condo dwellers, expect an HST-related fee hike
While maintenance fees are HST exempt, condo corporations are likely to pass their new costs on to owners
Dianne Nice – Globe and Mail
Condo fees may not be subject to HST, but that doesn’t mean condo owners won’t be dinged by the tax.
Alan Kwan, a 32-year-old recruiter for a headhunting firm in downtown Toronto, says he expects to be hit with higher condo fees in a year’s time, after the managers of his building have gone over their financial statements and totted up their additional costs from the Harmonized Sales Tax.
As of July 1, condo corporations in Ontario and British Columbia will begin paying HST on certain expenses, including lawn care, snow removal, service calls and, in Ontario, electricity and heating. According to a study by the mortgage-comparison website RateSupermarket.ca, those expenses could add up to an extra $38 a month being passed on to condo owners through their monthly fees, based on the average fee for a 1,000-square-foot Toronto condo.
“Because we’re dealing with residential rents, that’s what’s called an exempt supply, so there’s no recovery of the HST by the condo owner,” said Janice Roper, the lead indirect tax partner at Deloitte & Touche’s Vancouver office. “So presumably … they will pass that on, and those fees will by definition go up.”
Mr. Kwan, who pays $330 a month in fees for his 730-square-foot condo, says that with 70% of his building occupied by renters, it’s unlikely the condo owners will have much of a voice when it comes to protesting against fee increases.
“You have to bite the bullet,” he says. “You can’t really do much about it. It’s taxes. It’s always going to be there.”
House owners and buyers will also face buried fees, Ms. Roper said. “There are a number of these exempt types of activities, particularly in the residential housing area, and there will be underlying costs that have HST on them now – 7 or 8% more than the GST was – and that will end up getting passed on, but they won’t see it as tax added. It will be kind of buried in there.”
While there’s no HST on resale homes, there is on certain services associated with closing a deal, including real-estate commissions for sellers, moving costs, home inspections and legal fees in Ontario. The Ontario Real Estate Association says this could add more than $2,000 in new tax for a resale house priced at $360,000.
With just over a week to go before the HST is implemented, home owners and buyers are still largely unaware of the additional costs they will be facing, says Kelvin Mangaroo, founder of RateSupermarket.ca.
A recent survey by his site shows 56% of 383 respondents admitted having “no knowledge” of how the HST will affect them, while a further 24% said they had “a little knowledge.” Only 20% said they felt knowledgeable about the effects of the HST.
“There seems to be a lot of confusing, conflicting information out there, and some of the specialists are unsure of how this is going to go,” Mr. Mangaroo said. “At the end of the day, owning a home or buying a house and moving home is going to get more expensive, and I think people just need to get expert tax advice to see how their individual situations will be affected by the HST.”
“A lot of people just don’t understand taxes very well, and while there has been some information out there, it’s difficult for people to understand all the different implications of a value-added tax,” Ms. Roper added. “The average person, until they actually see the taxes on their bill, they won’t really know which things are going to be taxed and which won’t.”
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Do your homework before listing your house
Jennifer Wilson-Speedy – Yourhome.ca
Thanks to a record number of “Sold” signs going up around the GTA in April, many homeowners are choosing real estate over renovating to achieve their dream home.
“I think people have confidence right now,” says realtor David Visentin of Love It or List It (Mondays at 9 p.m. and Thursdays at 11 p.m. on the W Network). We’re “seeing a lot more coming out on the market right now.”
In fact, Visentin, who handles the “list it” portion of the show, says it’s a “fantastic time” to sell in most parts of the city.
While eager sellers may be ready to stick that sale sign on the lawn immediately, Visentin cautions that even in a great market, it’s still important to do the legwork before letting potential buyers into your home.
The first step, he says, is for would-be sellers to consider their current situation and what comes next. “Think about what they want, where they are going to go . . . what they need to get out of their home,” he advises.
Once your priorities and plans for your future home are firmly in place, it’s time to focus on your current space. Start by finding out what your home is worth, suggests Visentin. “That usually takes getting three opinions of value,” he says. “A lot of people only get one (but) even if you decide on the realtor you’re going to use, get two more.”
Three sets of comparables “gives you a better chance of really understanding what your house is worth,” he explains. While you may end up with three copies of the same information, you could also get a better picture of what’s been sold recently in your neighbourhood and what buyers are looking for.
Sold signs in Toronto
“The more information you can get, the better off you are,” he says, adding that you shouldn’t take anything into consideration that was sold more than a year ago.
A real estate agent you can trust is also key. When chatting with potential agents, “You need to question them a little bit. Find out where they sell, how long they’ve been selling in that area,” he says. Look for someone with experience who you feel you can trust, and who is also knowledgeable, prepared to negotiate on your behalf and is going to be there when you need them, suggests Visentin, noting that you don’t want to miss out on a home showing or offer presentation because your realtor is not available
But the biggest mistake sellers make is “listing your home when it isn’t ready to be listed . . . when it doesn’t look the way it should.”
Even in a bustling market, you still want to make your home look as good as it can, he says, noting that even if you’re going to get six or seven offers, it’s worth putting in the extra effort to push all those offers a little higher — meaning your home might sell for thousands more.
And he says, “there are ways of making your home look better without spending money.” Perhaps the most important of these is decluttering.
“So many people don’t do it,” he says, telling the story of a home with beautiful kitchen counters covered with stuff. Despite the kitchen being fairly large, the clutter made his clients fear it wouldn’t be functional for them, so he ended up actually doing some clearing up during the showing to help give them a better idea of the space.
In addition to clutter making a space feel smaller, “People need to look at wall space, where they can put stuff – not where you put it,” he explains. Plus, “people fall in love with (the seller’s) stuff, and that leaves with them, so there’s no point leaving it out.”
Finally, he says, “always be out of the house. That doesn’t mean stay in the basement, that means get out.” He says that buyers tend to rush through the home when the owners are there. He also suggests you avoid talking to prospective buyers, because, if all goes well, this is a person you’re going to be negotiating with and you don’t want it to get personal. Instead, he says, “Let the real estate agent do their job.”
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The caveat conundrum
Making an offer on a house? Including an endless list of clauses could sour you to the vendor
Helen Morris, National Post
When putting in an offer to buy a home, you can attach any number of conditions. In many cities it is standard to offer to buy a home subject to a satisfactory home inspection, or to make the offer conditional upon mortgage approval.
However, in a hot market such as that found in Toronto, the option to tack on a raft of conditions may not be a wise move if you really, really want that house.
“If you’re looking for that perfect home that’s done up [the way you want], you are going to have to pay for it – and you can’t go in with conditions,” says Teresa Lorusso, sales representative, Freeman Real Estate. “I had an offer from a client for a property in the Annex; we went with two conditions: on home inspection and on financing. Our price wasn’t high enough but it was [having the conditions] that killed us.”
Too many buyers chasing too few homes makes it a challenging environment for purchasers.
“When you have a hot market as you do in Toronto, you are recommended by the agent to have no conditions in the offer,” says Ray Leclair, real estate lawyer and vice-president, TitlePLUS at LawPRO. “If there are going to be multiple offers on the property at the same time, vendors will look at your offer in a better light if it has no conditions.”
Mr. Leclair says buyers should consult their real estate lawyer so they are fully aware of the risks associated with making an offer with no conditions attached.
“Buyer beware is the rule,” says Mr. Leclair, but there are ways to minimize risks.
“When you go to see the house, you could bring your home inspector with you to do an inspection. Of course you’re going to be paying a home inspector to see a house you are not sure you are going to buy, so how many houses are you going to see? How many inspectors are you going to pay?
“For financing … they could get pre-qualified for themselves or they can maybe even prequalify [a condo] building,” says Mr. Leclair.
Yes, you can prequalify a building. According to Rob Regan-Pollock, senior consultant at Invis mortgage brokerage, “Some lenders do pre-screen real estate security and set aside a rate on a particular unit, subject to the borrower meeting qualification criteria. As such, it’s a rate reservation on approved property rather than a pre-approval based on the merits of the borrower.”
The building pre-screening is typically based on location, age, condition and the like.
As there is a great deal of variation in the Toronto market, you can use the law of supply and demand to your benefit, if, for example, you’re looking at buying a condo. This is when it may be possible to add conditions to an offer – as there are a good number of units on the market.
“If you’re getting into a larger building where there’s more inventory for sale or if you’re buying through a builder, I think you have a lot of clout,” says Ms. Lorusso.
The housing market is expected to cool later this year and into next year.
“Looking at the condo market particularly, the number of completions that are set to come on to the market this year and next … should mean that sellers have to give way in terms of flexibility, in terms of conditions,” says TD Economics economist Pascal Gauthier.
But Mr. Gauthier cautions that the market shift in Toronto may not be dramatic.
“We forecast that the market will transition from very tight conditions – in other words an environment that was very favourable to sellers – to one that is a little bit more balanced,” says Mr. Gauthier. “As we head into the later part of this year, heading into next year, given the current momentum we have in listings and construction I would think that by 2011 it will be slightly favourable to buyers … [but] not dramatically so.”
Mr. Leclair says local knowledge is crucial and your real estate agent will be able to advise whether an offer with conditions is likely to be accepted in your area.
Even as the market cools, Ms. Lorusso is not sure that the market will really slow enough to allow buyers to demand a raft of conditions.
“I think Toronto is a hot city,” says Ms. Lorusso. “The homes that are done up, it’s a battle to find them. People will pay for them [without conditions]; I don’t see that changing.”
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Contact the Jeffrey Team for more information - 416-388-1960
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