Market SummaryThe market did not respond to the interest rate increases, and the end of summer as expected in September. The expectation for September was that there would be an uptick in sales after the holiday months were over. This was not the case as sales dropped across CREB by just over 7%. The sales to new listing ratios across CREB are 45.74% which is resulting in rising inventory. The pricing has continued to remain stable in most sectors but prices are expected to soften with rising inventory.
What does this mean for sellers? For the sellers that need to sell, it would be wise to get ahead of the market and price aggressively to sell. It will be competitive getting the attention of the buyers that are in the market. For the sellers that have the flexibility to sell, it may make the most sense to wait until Spring when the market typically picks up. The tire kickers testing the market will only help drive values down by contributing to the high inventory levels. As always it is important to determine what is happening in the community prior to creating a price strategyWhat does this mean for buyers? The potential for a "better deal" is just around the corner with softening markets. The challenge is that should interest rates continue to rise,teh affordability may become less. The higher cost of lending could off set any drops in pricing that we see over the winter months. As always, real estate is a long term investment and all we can do is time a move that works for our current lifestyles and requirements. with lots of options available on the market it is a great time to buy.With recovering oil prices and the economy further stabilizing, there is great confidence building which should translate to the real estate market.CIR Realty
The costs associated with selling a home
Deciding to sell your home is a big decision, so it’s always good to remind yourself of what that decision entails, including the associated costs you might incur. Many real estate industry groups have resources available to the public on the home-selling process, such as the Real Estate Council of Alberta’s Home Seller’s Guide. However, most resources don’t specify selling costs, in part because they can vary greatly depending on the individual property and circumstances of the sale. To provide a frame of reference, here is a summary of costs associated with selling a typical $500,000 home in Calgary:
Commissions – $19,950
Using a professional REALTOR® to sell your home provides many benefits, and that expertise is repaid in the form of commissions, which are split between your Realtor and the buyer’s Realtor. The industry standard in Alberta is typically seven per cent on the first $100,000 of the selling price, then three per cent on the balance, plus GST.
Legal Fees – $1,000
The cost of legal services can vary, but Calgary real estate lawyer Jeffrey Kahane says typical legal fees usually run about $1,000, which includes all necessary disbursements. Kahane adds that if your property is a condominium, there is an additional cost for an estoppel certificate/certificate of insurance, which, depending on the management company, might cost $200 to $350.
Real Property Report – $800
The Alberta Land Surveyors’ Association does not set a standard cost for preparing a real property report, as the work required can vary greatly depending on the property and what has been done to it since the original boundaries were placed. Expect to pay an average of about $600 for a new report and $500 to update an existing one, plus about $200 for a Certificate of Compliance from the City of Calgary.
Mortgage pre-payment penalty (if applicable) – cost varies
If you sell your home before the maturity date of a closed mortgage there might be penalties for pre-payment. Typically, that will be three months of interest on a closed, variable-rate mortgage, but can be much more if you have a closed, fixed-rate mortgage with an interest rate higher than current rates. In that scenario, you might be charged for interest on the remainder of the term, based on the interest rate differential. Check with your mortgage provider to be certain of the terms of your mortgage and pre-payment penalties.
Home staging/renovations – cost varies
Selling a home has sometimes been compared to speed dating, as buyers viewing several homes have only a short period to decide whether your home might be a potential candidate for purchase. So, to boost the chances of selling a home, many people make renovations or minor modifications to freshen things up, such as a new coat of paint. Others hire a home staging professional to make their home stand out from the crowd.
Moving expenses – $1,500
Lance Laliberte with Premiere Van Lines says professional moving is billed at an hourly rate, based on the number of movers and trucks needed, so they always recommend an in-home survey to provide the most accurate quote possible. However, he says the average cost for a local move within Calgary for a standard three-bedroom home with between 10,000 and 12,000 pounds of household goods is $1,500 to $2,000 during peak season in spring and summer months and $1,000 to $1,500 during fall and winter months, not including packing or unpacking services.
FYI: Bridge financing
If the closing dates for the home you are selling and one that you’ve already purchased don’t coincide, then the solution is bridge financing to cover the gap between your current mortgage and the one on the new property.
Nicole Wells, vice-president of home equity financing products and segments with Royal Bank of Canada (RBC), says a bridge loan is a temporary financing option that enables homeowners to use equity in their existing home to pay the down payment on their next home, while they wait for their property to sell or as they complete renovations on a new home.
“It allows you to own both homes at the same time and, for some, can help you buy first and sell later,” said Wells. “It can reduce stress of moving, strengthen your purchase offer and mitigate the need for temporary storage.”
She says a bridge loan is a short-term solution defined by the number of days between your purchase close date and subsequent sale date, which can be as short as one day or run as long as six months.
Wells adds that interest rates for bridge loans can be more expensive than conventional financing, but the shorter loan term can offset the cost.
Currently, the cost of bridge financing at RBC is set at RBC prime plus 4.5 per cent.
She suggests anyone considering the use of bridge financing should speak to their mortgage specialist to find out if it’s right for them.
Source: CREB NOW
Do your research before selling a second home
Owning an investment property can provide useful income, while having a recreational property can provide a great place to spend time with family and friends.
But if you are thinking it’s time to sell, some careful research is in order.
“There’s a lot to consider when selling your investment property or a vacation home,” said Laura Parsons, the Calgary-area manager for mortgage specialists with BMO Financial Group. “Do your homework.”
A major factor when selling a property that is not your principal residence is the potential for capital gains.
Generally, if you sell the property for more than your original purchase price, half of the capital gain is taxable at your marginal tax rate.
However, the Canada Revenue Agency has strict rules on calculating capital gains, and changes do occur, so Parsons recommends talking to your accountant and making sure they are knowledgeable about investment real estate.
“The impact of when you sell may have a bearing on how much tax you pay,” she said. “So, it’s really important that you speak to your accountant and make sure that this is a good time for you to sell.”
Your accountant can determine if there are ways to reduce your capital gains for tax purposes – any renovations you’ve made to the property of a capital nature, for example.
On the flip side, an accountant might caution you against a sale if you are expecting increased income that would bump you into a higher tax bracket.
“If you’re in a high-income-earning year, you may not want to have some capital gains on top of that,” said Parsons.
She says if you’re paying a mortgage on an investment property or vacation home, you should also consider the effects on financing if you sell.
“THE IMPACT OF WHEN YOU SELL MAY HAVE A BEARING ON HOW MUCH TAX YOU PAY. SO, IT’S REALLY IMPORTANT THAT YOU SPEAK TO YOUR ACCOUNTANT AND MAKE SURE THAT THIS IS A GOOD TIME FOR YOU TO SELL.” – LAURA PARSONS, BMO FINANCIAL GROUP
“Are you going to have penalties? Are you losing a great [interest] rate? Because sometimes you can port your mortgage if you plan on buying another investment property,” she said.
There are also ways to try and maximize the selling price for your property and determine when to sell.
Parsons recommends talking to your REALTOR® to see what the local market is like for the type of property you own, and to get an idea of vacancy rates if it’s a rental property.
Find out what’s going on in the neighbourhood, such as plans for improved transit or construction of a leisure facility that might appeal to buyers.
“Any time you go to sell, make sure you’re sharing a lot of the knowledge, because it will be more desirable from a buyer’s point of view,” said Parsons.
If the property needs fixing up, Parsons recommends highlighting the availability of the Purchase Plus Improvements program that allows a buyer to finance some renovations into a mortgage.
“Position it with your Realtor and your banker to do what’s called mortgage staging, where we actually show people coming in to buy the house that they can build the renovations right into the purchase,” she said.
Parsons’ final piece of advice is to talk to the experts – your financial adviser, accountant, lawyer and Realtor – before any sale.
“Everything matters, especially with investment properties,” she said. “You really want to make a great decision.”
Maybe you’re buying a home for the first time. Or maybe you’re selling your old home to move to something new. Whether buying or selling, you’re involved in an intricate process requiring many specialists. One of these specialists might be a REALTOR®, who’s responsible for making the transaction as easy as possible for you.
The REALTOR® Difference
However, not every licensed or registered broker or salesperson is a REALTOR®. To be a REALTOR®, the agent must be a member of The Canadian Real Estate Association (CREA). And to be a member of CREA, an agent is expected to be:
- Committed to the REALTOR® Code: The code is the accepted standard of conduct for all real estate practitioners who are REALTORS®. It’s your guarantee of professional conduct and the quality service. Read more about the REALTOR®Code.
- Knowledgeable about developments in real estate: A REALTOR® can get you the information needed to make an informed decision: comparable prices, neighborhood trends, housing market conditions and more.
- Actively updating education: Through courses, workshops and other professional development, a REALTOR®maintains a high level of current knowledge about real estate.
- Access: REALTORS® have access to Board MLS® Systems, which facilitate the cooperate sale of properties to benefit consumers.
Benefits of a REALTOR®
Whether buying or selling a home, you can trust that your REALTOR® will ensure the transaction is completed competently and professionally. You don’t have to worry about the details – your REALTOR® can take care of them for you. You can get advice from someone with an intimate knowledge of the local housing market. And you can count on the help of a professional who has committed to serve with integrity and competence.
Again this is not a comprehensive list of what you need to do to sell your property but by incorporating these few suggestions it will help immensely in the marketing of your property and to get you the most out of your real estate and for a happy and successful real estate closing.
Source: John D. Mayfield ABR, ABRM, GRI, e-PRO, CRB