In an effort to ease the burden on Toronto’s aging sewage system, the City of Toronto has approved a by-law making it mandatory for property owners, city wide, to disconnect their downspouts from the sewer system. The by-law will take effect in three phases in different areas of Toronto, starting later this year (2011).

When rainwater runs off a roof, it may flow through your eaves troughs into downspouts and directly into the sewer system. However, during heavy rainfall, the  system often becomes overloaded and untreated sewage can flow directly into our waterways, polluting them and local beaches. This is the biggest reason Toronto beaches get shut down in the summer time!!

At one time, the City would come and disconnect downspouts and replace old eaves at the City’s expense. Back in the year 2000, I lived in a bungalow in East York. The house had not been well maintained by the previous owner and the eaves were barely attached to the house. I applied to the City for the downspout disconnect program and they came and installed all new eaves and disconnected the downspouts for free…………..no wonder the City is always raising taxes.

Well finally the City of Toronto figured out that they could not sustain this kind of subsidy to property owners and you must pay for the expense on your own. There are some exceptions of course.

If disconnecting the downspouts is not technically feasible or would create a hazard, property owners can apply for an exemption.

The City may also provide financial assistance to low-income property owners.

For more information, you can call the City of Toronto at 311 or visit toronto.ca/water

This weekend (April 26, 2011), I sold this property in 4 days; 4 days ahead of its scheduled offer date. A buyer who didn’t want to compete on the night of offers and was prepared to make a bully offer. Always an interesting situation for sellers. To wait or act now!

The sellers agreed to entertain this bully offer after the buyer’s agent disclosed what the offer price would be. However since REMAX Hallmark has a policy on bully offers, I had to call at least 60 agents who were expecting offers to be reviewed on a certain date and let them know that the sellers had decided to change the offer date and would entertain offers at anytime. Two other offers materialized and a bidding war developed!

In the end, the original bully offer was the best one – best closing date – NO conditions – and the best price — $625,000 – a whopping 69.4% increase in their investment!

The Toronto Real Estate Market continues to offer investors and home owners a safe place to invest their hard earned money and see consistant gains.

If you’re interested in investing in Toronto Real Estate – call me at 416-462-1888.

Sam Soukas of REMAX Hallmark Realty Ltd.

1. Buy and Hold Investment Properties
2. Buy Pre-Construction Condos and Sell once construction is completed
3. Buying property to Flip and Sell

There are so many real estate shows on TV dedicated to the latter – showing us the exploits of “entrepreneurs” who see fast money ahead when they try to flip properties for profit. More often than not these entrepreneurs fail because they did one or all the following three things:

1. Overpaid for the initial property
2. Over-renovated and went over budget
3. Over-estimated the market when it came time to sell

To succeed at a venture of Flipping to Sell, its imperative that you have a realistic grasp of your numbers. The biggest mistake I would say is over-estimating what your renovated property is going to sell for once the work is done. In any case, you should always allow for some cushion in your construction costs and some caution that the market may have slowed down and you won’t sell for what you had originally estimated.

Having said all that, I bought a condo in Leslieville in Toronto with a business partner with the intention of renovating it to flip. Its a 3 storey townhouse with 2 bathrooms that was in terrible condition. The same people had lived in for at least 20 years and who knows how many cats. The broadloom reeked of cat piss but I managed to negotiate a pretty good deal for this unit.

For the most part, it was a matter of simply replacing existing flooring and replacing all the kitchen cabinetry but the bathroom on the lower level was a big surprise. First of all it was the weirdest bathroom I had ever seen. The shower head was above the toilet so you could be on the crapper and having a shower at the same time! Then we started to gut the room and discovered that plumbing had been leaking for years and had rotted all the subfloor turning wood into compost!

the joys of renovating

Today, I am going to deal with the electrical component of home built before 1950.

Electrical

The type of wiring in homes built in this era is called Knob and Tube. By today’s standards, its not considered safe. The primary reason being is that this type of wiring is not grounded. This is an important consideration when buying a home as ungrounded wiring could damage the type of electronics we have in our homes these days.

And good luck getting insurance. Most companies won’t even bother. A few of them will – but – on the condition that the wiring be replaced by a certain date – usually 30 days from possession.

When it comes to a home inspection, walls cannot be ripped down to see the wiring! The best an inspector can do is have the right tools for the job. I have seen some homes where the wiring in the basement was visible and it looked like everything had been brought up to code – but looks can be deceiving. Once the inspector got upstairs, none of the wiring beyond the kitchend was grounded!

So a warning to buyers. If you’re considering buying a home in Toronto built before the mid 1950s – assume the wiring needs to be replaced. Unless of course, the seller has verifiable documentation to the contrary.

Part 4 – The Furnace coming on Wednesday

The Basement

Today, let’s go to the opposite end of the home – the basement! In areas like Leslieville and Riverdale in Toronto, homes were built 75 years ago and more. The foundations of these homes are rarely water tight. And often moisture problems in a basement can be solved with simple solutions like changing the grading of the ground surrounding the home.

One sign of moisture penetration in the basement is efflorescence - white powdery deposits on the walls. To determine if the moisture problem is still present, your home inspector should have a moisture meter to guage how much moisture is in the walls. A reading of 10-12% is typical for older homes. Anything above that needs further investigation.

Waterproofing a home is a very costly undertaking. Make sure a basement is carefully inspected.

Toronto’s housing market roared back to life in the first half of 2010, with single-detached homes and condominium apartments and townhouses posting unprecedented double-digit gains in average price in most districts, according to a report released by RE/MAX Ontario-Atlantic Canada. This is in stark contrast to the July 2009 RE/MAX report that found that values in approximately 80 per cent of neighbourhoods surveyed in Toronto had depreciated over the same period in 2008.

RE/MAX examined 63 Toronto Real Estate Board (TREB) districts in the single-detached category between January and June of 2010 and found that 85.7 per cent experienced double-digit gains.  Mississauga’s Lorne Park (W13) led in terms of percentage increase in average price with a 30.2 per cent upswing in the first six months of the year, bringing year-to-date values in the area to $880,373 (vs. $676,289 in 2009 and $830,041 in 2008).  Markham (N01) ranked second with a 27.7 per cent jump to $779,168 (vs. $610,322 in 2009 and $683,050 in 2008) while Armour Heights, Bathurst Manor (C06) came in a close third at 27.5 per cent (rising to $732,535 from $574,599 in 2009 and $589,808 one year earlier).  Mississauga’s Creditview, Erindale area (W16) secured fourth spot with an average price of $561,973—up 26.5 per cent over 2009’s $444,221 and 2008’s $476,877.  Rounding out the top five was York Mills, Hogg’s Hollow, Bridle Path (C12) with a 26.2 per cent increase over last year and an average price of $1,868,591 (vs. $1,480,296 in 2009 and $1,580,851 in 2008).

While first-time buyers dominated housing markets during the first half of 2009, move-up buyers ruled during January to June of 2010.  Rising interest rates and the introduction of the Harmonized Sales Tax (HST) in the province helped drive activity, with more than 50,000 sales reported year-to-date—a figure on par with record 2007 levels.

As in years past—the exception being 2009—the second half of the year will be more tempered, with price appreciation moderating somewhat in most neighbourhoods. The one exception to the rule will be the hot pocket areas that continue to experience limited inventory.

With affordability a growing issue for many in the Toronto market, the city’s vast supply of existing condominium apartments and townhomes offer a financially attractive alternative.  Like single-detached homes, however, condominium prices were on the upswing in the first six months of the year in the 59 TREB districts examined—with 61 per cent reporting double-digit increases. 

The Danforth, East York (E03) was the top performing condominium market in terms of price appreciation—with values up 28.2 per cent to $222,421.  While the increase is significant compared to the same period in 2009, it’s a more moderate 15 per cent ahead of the $195,019 reported in 2008.  Yorkville (C02) secured second spot, with a 22.6 per cent increase in values, bringing average price to $653,745—a serious uptick over the 2009 level of $553,302 but only a nominal 5.6 increase over 2008’s $619,151.  Markham (N01) took third place with an increase of 22.1 per cent to $332,590 over the 2009 figure ($272,316).  Bayview Village (C15)—Toronto’s newest condominium corridor—saw a 19.6 per cent increase, with values rising to $331,063.  North York (C14) continued to experience upward momentum during the first half of the year, with average price on the Yonge St. line up 19.5 per cent to $363,685, compared to the $304,342 reported during the same period in 2009.

 Overall, single-detached homes in TREB’s North district (north of Steeles Ave.) saw the greatest percentage increase, with year-to-date average price rising 17.5 per cent to $617,723 (compared to $525,635 one year ago).  Not surprisingly, condominium apartments and townhomes in the central core experienced the most significant upswing, with average price in TREB’s Central district rising 16.8 per cent to $385,996, up from $330,517 one year ago.

Both housing types experienced serious percentage increases year-over-year – yet its important to keep those price hikes in perspective.  Last year, 80 per cent of those districts experienced a decline in value.  The bounce-back—fuelled by unprecedented market conditions including a severe shortage in listing inventory—simply returned average prices to their normal course.

Over the years, I have used several home inspection companies including one of the really well known ones in Toronto. All of their inspectors have degrees in engineering apparently.

But I am more confident with companies that have inspectors with building experience.

ROOF and ATTIC

Typically, the home inspector inspects the roof and the attic of a house on his own. He or she reports back to you what they discovered. You have no visual evidence of what they have seen unlike in other parts of the home where you can actually get to yourself and see with your own eyes what they are talking about.

The company that I typically use for my clients – Canspec Building Services - has all their inspectors use a video camera to take a movie of the roof, attic and other crawl spaces that you cannot access yourself. This is a very powerful presentation because now, you have seen with your own eyes the state of those parts of the home.

Apart from a fire, there is nothing worse than water penetration into your home. So when ordering a home inspection, shop around and see if your inspector will be giving you a video presentation of your roof!

The spring market in Toronto has been difficult to fathom. Apparently there is a recession but bidding wars are happening everywhere and not just in Toronto. Colleagues in Mississauga and Oakville tell me about similar events there too. Record low interest rates would be the likely culprit.

So what do you need to do to ensure that your offer stands out from the rest and that your offer is accepted?

5 Key Elements to Winning a Bidding War

Conditions in your offer

Typically a buyer would always have conditions in a offer – such as a condition for a satisfactory home inspection. Once an offer was accepted by a seller, then the buyer would proceed to have the property inspected. Assuming a satisfactory home inspection, then the transaction firms up and the deal is done.

In a competing situation, any conditions in an offer should be removed including a condition for financing as well. This could be problematic if the seller has not provided a pre-list home inspection of the property at the time the home was listed. Imagine in the scenario above, 8 competing offers. In theory, there could be 8 separate home inspections all taking place on a Monday afternoon if offers are to be reviewed that night. Crazy to be sure, but I have been in a home where several home inspections were going on at the same time.

• get your home inspection completed before the offer if one has not been provided
• speak to your mortgage consultant and explain the situation. There could be consequences when over-bidding in a multiple offer situation. That’s a different blog post altogether

Closing Date

Ideally, your closing date should be the one that is desired by the sellers if at all possible.  Often the listing says 60 or 90 days. Which is it? I would always contact the sellers’ agent and ask if there is a specific date preferred.

Deposit Cheque

A deposit cheque is given to the sellers broker and is held in trust by them until the closing date of the transaction.  A deposit is given to show your intention to close the deal. In a bidding war a bigger deposit cheque is always better! Remember that the deposit is part of your down payment and your lawyer will sort all that out on closing. And secondly, try to bring a certified cheque or a bank draft with the offer. 

• Make sure you bring a certified cheque or bank draft
• Larger deposits help make your offer more appealing

If you’re a first time buyer and your down payment is tied up in a RRSP account, getting access to the money quickly is a challenge. So to first time buyers, see if you can get the money withdrawn sooner rather than later!

How much do I pay?

This is always the most challenging aspect of any bidding war. How much over the asking price should you pay?  This is challenging because suddenly any comparable listings I use as a reference have no bearing.

It is important to know how many competing offers there are and the sellers’ agent by-law has to provide you with that information. And if at all possible, it would be good to know who the other agents are. This is not required but my own Brokerage – REMAX Hallmark - has set a policy so that everyone knows who is involved in any bidding war.

Some agents suggest that for every offer that is in play- add $10,000 to the purchase price. In the situation above where there were 8 offers, that means $80,000 over the asking on a home listed at $379,900! That would be nuts! Every situation is different and there are no hard and fast rules to deal with this aspect of a bidding war. Experience matters

So in a bidding war, you need to know:

• how many other offers are in play
• and who are the other agents involved.

Intangibles

Most homes in Toronto are sold with the appliances and light fixtures included in the purchase price. Sometimes not! In a bidding war situation, if the seller wants to keep a dining room chandelier for instance, then you’re best off to make sure that this chattel excluded.

Sometimes, sellers are selling before they have bought and therefore don’t know their next address and don’t know when they will be moving. In this case, I would add a clause allowing for the closing date to be moved if necessary.

Some of these intangibles can only be determined if I stay in constant contact with the sellers’ agent as they would have some insight into what would make the sellers happy thus making your offer the one that stands out from the crowd!

Good luck and call me if you need help with your offer – be it in a bidding war or otherwise.

Sam Soukas   416-462-1888

The Federal Home Buyers Plan

The Federal Home Buyers Plan allows first time home buyers to withdraw up to $25,000 from their RRSP for the purpose of buying or building a qualifying home. The primary benefits are that the RRSP issuer will not withhold tax on the amount nor will you have to claim the amount as income. The amount must be repaid to the RRSP within 15 years with a minimum annual payment of 1/15th of the amount withdrawn.

If a repayment is not made for a given year the minimum repayment is included as taxable income for that year.

Participation

To participate you have to withdraw the amount from your RRSP using form T1036 Applying To Withdraw An Amount Under The Home Buyers Plan.

Give the completed form to the RRSP issuer along with the certification that you meet or intend to meet certain conditions as follows:

Conditions

You have to make your withdrawal request in the same year you wish to participate in the Home Buyers Plan.

• You cannot have previously participated in the plan in previous years.
• You have to be a resident of Canada.
• You have to enter into a written agreement to buy or build a qualifying home
• You can withdraw a total of $25,000.
• Multiple withdrawals are allowed.
• Each of you and your Spouse can participate in the Plan and withdraw $25,000 from your own RRSPs.

You have to be considered a First Time Home Buyer

A qualifying home is a housing unit located in Canada. Existing homes and homes under construction are both qualifying homes and can be either:

• Single Detached Family Homes
• Semi Detached
• Town Home
• Mobile Home
• Condominium Unit
• Apartment in a Duplex, Triplex, Fourplex or apartment building.
• Share in a Cooperative Housing Corporation, provided the share entitles you to posses, and gives an equity stake in, a housing unit.

Who is Considered a First Time Home Buyer?

You are considered a first time home buyer if you have not owned home while you occupied it as your principal place of residence for five years. At any time in the fifth calendar year since you last owned a home you can qualify.