Red Deer, AB - Blog

Ask The Broker, Possession Timing?

patrick.galesloot@century21.ca — Thu, 24 May 2012 00:00:00 GMT

What time frame do most buyers want to move in?

I get that question quite often. We see a whole variety of dates and requests for a possession date for buyers. Probably the most common phrase you will see on a MLS listing or marketing piece for a home for sale is a 30 day/negotiable possession date offering.

Sometimes buyers will get all worked up on the number. "They said 30 days so offer them exactly 30 days!" only to be perturbed later when the seller counters their offer to a different date. In reality, how fast a selelr can move out and provide vacant possession varies and differs with each seller. To move out within 30 days is quite reasonable and doable. However sometimes buyers forget that they are asking for a week or two weeks for conditions to be met by them. Conditions such as subject to financing and a home inspection most likely. If this is the case that first week or two weeks the sellers has a "maybe" and left with 2 or 3 weeks to plan their move after the buyer removes conditions.

The best advice on a possession date is be reasonable and flexible. All the terms on the offer to purchase can be negotiable and really you should have a conversation with your real estate agent about your schedule and how the request to move out by a certain date works for you.

For marketing purposes the most common is 30 days, and I would recommend that to open your listing up to as many buyers as possible. However if 60 days or 90 days or a specific date are a must, chances are those requests can all be accommodated. Sometimes time maybe more important to the buyer or seller than settling on a specific end price.

Patrick Galesloot

The Broker, Century 21 Advantage

@pgalesloot

Thursday's Ask The Broker Foreclosures

patrick.galesloot@century21.ca — Thu, 10 May 2012 00:00:00 GMT

With the change in the economy and employment we've unfortunately have seen an increase in the number of foreclosed properties on the market. While foreclosures are not new, the increase in the number of foreclosed homes has made them more and more common place. Due to this increase we've had a number of questions pertaining to foreclosures and the process such as:

Can I still negotiate price?
Can I get an home inspection?
Who looks after the property?
What can I expect on closing?

With respect to price and inspecting a property the answer is a definitive "YES".

There is always an opportunity to inspect the property and negotiate price and terms of the offer to purchase contract. The owner is a foreclosed property is either the bank or the mortgage insurance company CMHC or Genworth. While they will not offer warranties or make representations tot he property you can negotiate other aspects of the offer to purchase such as price and of course inspect the property prior to proceeding.

Who looks after the property?

The owner of the property is still responsible for the property. So if the bank owns the house now, then yes they are responsible for the maintenance and upkeep as required by the area or municipality. To do this they typically hire a property management company to assist them with the properties and to "winterize the property". The water is turned off, sometimes utilities are turned off and they make arrangements to mow the lawn to meet the minimum standard for the municipality.

What can I expect on closing?

The best answer is you never know. The bank will cross out on the offer to purchase phrases such as:

6.1 The Seller represents and warrants to the Buyer that:

(b) the Attached Goods and included Unattached Goods are in normal working order and are free and clear of all encumbrances;

(d) the current use of the Land and Buildings complies with the existing municipal land use bylaw;

(e) the Buildings and other improvements on the Land are not placed partly or wholly on any easement or utility right-of-way and are entirely on the Land and do not encroach on neighbouring lands, except where an encroachment agreement is registered on title, or in the case of an encroachment into municipal lands or a right-of-way, the municipality has endorsed encroachment approval directly on the real property report;

(f) the location of Buildings and other improvements on the Land complies with all relevant municipal bylaws, regulations or relaxations granted by the appropriate municipality prior to the Completion Day, or the Buildings and other improvements on the Land are “non-conforming buildings” as that term is defined in the Municipal Government Act (Alberta);

(g) the current use of the Land and Buildings and the location of the Buildings and other improvements on the Land comply with any restrictive covenant on title;

(h) except as otherwise disclosed, the Seller is not aware of any defects that are not visible and that may render the Property dangerous or potentially dangerous to occupants or unfit for habitation.

6.2 All of the warranties contained in this Contract and any attached Schedules are made as of and will be true at the Completion Day, unless otherwise agreed in writing.

While often the house you saw, and made an offer on will be exactly as you saw it, it is possible that the home can be further damaged or even the occupancy changed. It is best to consult with your re4al estate agent and lawyer about what can happen on possession day and whether or not that day is actually a moving target. You may not be able to move in on closing day if the previous owner hasn't moved out. If that is the case then you will need to involve your lawyer and a Sheriff to remove them.

While foreclosures can appear to be a great deal financially they are not without risks. Those risks could involve great expense and that deal is no longer as great as you thought. Remember the phrase "Buyer Beware" it is always true and you should act accordingly.

Make sure that you read the clauses that are being stricken from the contract as they could impact your financing, the ability to obtain title insurance or the extent of insurance coverage.

Lastly, court ordered sales are similar but the process and procedures are vastly different. You should have a detailed consultation with your real estate agent on the proceedings and the possible outcomes when buying a property that is a "Court Ordered Sale".

The Broker,

Patrick Galesloot.

@pgalesloot

Thursday's Ask The Broker (The broker was a slow typer so it's late)

patrick.galesloot@century21.ca — Mon, 30 Apr 2012 00:00:00 GMT

This weeks question pertains to the deposit on an offer to purchase.

I get the deposit if the buyer doesn't buy my house right? (asked from a seller)

A common question this is on what happens to the deposit and why we would ask and hold one. The deposit is part of the offer to purchase and would only be forfeited to the seller if the buyer removed conditions and failed to close on the contract.

I possible scenario where that may happen is:

A buyer removes their conditions on a property. Perhaps they misunderstood the instruction or "conditions" the bank place on their financing approval. Later the bank informs them "No we're not financing you." This can also happen if the buyer's credit changes significantly prior to closing. So, don't go shopping for new vehicles because you've learned you have good credit.

Basically in this situation the buyer has communicated in writing that they will buy your home and subsequently they can't because of whatever reason. The offer to purchase contract states:

3.5 The Deposits shall be held in trust for both the Seller and the Buyer and shall be:

(a) applied against the Commission and paid directly out of trust to the brokerage(s) when the Commission is earned in accordance with the terms of the Listing Contract;
(b) refunded forthwith to the Buyer if this offer is not accepted;
(c) refunded forthwith to the Buyer upon the Buyer’s cheque clearing the brokerage’s trust account if a condition is not satisfied or waived (as per clauses 8.5 and 8.6) or the Seller fails to perform this Contract; and
d) forfeited to the Seller if this offer is accepted and all conditions are satisfied or waived and the Buyer fails to perform this Contract.

Often the confusion comes when a seller may think that they get the deposit if they can't get financing. That is not the case if that condition has not been satisfied or waived.

Deals collapsing or not closing after conditions are removed do happen but that is certainly not the norm. It is rare circumstances and events that would cause a buyer to not complete.

Patrick Galesloot,

Broker/Owner

@C21Advantage

Thursday, Ask The Broker, Disclosure

patrick.galesloot@century21.ca — Thu, 19 Apr 2012 00:00:00 GMT

What do I have to disclose to a buyer?

Great question, and quite a common one. In real estate transactions it is often the best course of action to always disclose when it comes to defects in the property or troubles from days gone by. The last thing you would want is for the basement to be wet come spring time and the new owner learns from the neighbor that "oh ya they had water there every spring". That will only come back to bite you in the butt.

What are you "required" to disclose? The listing contract that you'll most likely be asked to enter into contains the following term:

Sellers are required by common law to disclose defects that are hidden, not visible or discoverable through a reasonable inspection of the Property, and that render the Property dangerous or potentially dangerous to the occupants or unfit for habitation. Sellers may also be required to disclose government and local authority notices, lack of development permits and hidden defects that would involve great expense to remedy.

Many sellers have questions on disclosure such as:

So if the sump pump broke, we got some water, and I fixed the water and cleaned up the damage do I have to disclose that?
We had a hail storm 3 years ago and had to replace the shingles as well as repair some water damage from the storm do I have to disclose that?

Often the best rule of thumb is yes you "should" disclose that to the potential buyer. It's like buying a car. It may have been in an accident and repaired, it looks as good as new, would you want to know it was in an accident? It operates as good as new, looks as good as new, do you or would you want to know? If you answer that question with a "Yes" then if you were the seller, do onto others as you would have done onto you.

Sure the buyer can order a home inspection which would inspect the shingles, the house, the sump pump and pit, test for moisture levels, but it can not see behind walls and under paint, or lift up the flooring etc.... so while you may have repaired all the damages to the best of your knowledge it is possible that the problem was not rectified. So disclose and sell with that piece of mind. When we try and hide or "forget" about an issue that really looks bad in the eyes of the buyer and creates even more questions than there really are.

A proactive seller that is on top of repairs and fixes them regularly knows "stuff happens". This happened we fixed it, this happened and we fixed that, it's part of home ownership when stuff happens we take care of it. If you keep your home maintained that attention to detail will be clear and a home inspection is welcomed, and telling the buyer about replacing the hot water tank when it failed is no big deal. It happens.

Any Questions?

Patrick Galesloot,

Broker

@C21Advantage