New Rules Regarding the Principal Residence Exemption

Tax season is upon us.  Canadian tax residents must file tax returns for 2016 income with the Canada Revenue Agency (CRA) before the end of April 2017.  Who is a Canadian tax resident?  In principle, anyone for whom Canada is a home base is regarded as a tax resident.

In reporting income, Canadian tax residents also have to report any capital gains earned during the year, HOWEVER, unlike other income (such as income from employment, interest payments, rent, etc.) only ½ of capital gains are treated as income.  In effect, therefore, the tax rate on capital gains is only ½ the tax rate on regular income.   Moreover, there are a few types of capital gain that are entirely exempt from taxation.  For most taxpayers the most important exemption from capital gains tax is for the capital gain earned on the sale of a family home known as the “principal residence exemption”.

Some of the key issues surrounding the principal residence exemption as follows:

  • Q: Does a taxpayer have to report the capital gain on the sale of a principal residence?
    Yes, the new policy requires the gain to be reported when tax returns are filed with CRA.   This is a new requirement.  The gain is only reportable for the taxation year in which the property is sold.  If the property has, throughout the period it was owned by the taxpayer, been a principal residence then no tax is payable.
  • Q: Who can claim the exemption?
    The exemption is only available to Canadian tax residents who must declare world-wide income and capital gains when filing tax returns.
  • Q: What type of property can be a principal residence?
    Only “capital property” can be a principal residence.  Property bought to “flip” is not “capital property”; it is inventory in a trading business where the profit from the sale of such property is treated as ordinary income, not even a capital gain.  100% of such gains are taxable.  Only properties that were “ordinarily inhabited” by the taxpayer are eligible for the exemption.
  • Q: Can different family members each own a “principal residence”?
    There is only one residence that can be claimed by a family unit as a principal residence.  Of course, adult children living apart from their parents are regarded as having their own family unit and are thereby entitled to claim an exemption for their own principal residence.
  • Q: Are there penalties for failing to report?
    If the sale is not reported in the tax return then CRA can, without any time limitation, audit the taxpayer at any time in the future. Moreover, taxpayers who have failed to designate the home as their principal residence could be subject to a late designation penalty of up to $8,000. It is expected that the new policy will give CRA auditors new audit leads and give rise to many more homeowner audits and re-assessments in the future.

In summary, anyone who sold their principal residences in in 2016 would be well-advised to report the sale and any associated capital gains in their tax returns for the 2016 fiscal year.  Any questions concerning this new policy should be directed to experienced tax advisors.


Written by Peter Scarrow, former immigration lawyer, currently is the Director of Asian Business at Macdonald Real Estate Group.

Macdonald Realty listings get extra exposure on international website LeadingRE.com

 PrintMacdonald Realty offers consumers an easy way to search home listings and identify top real estate firms in markets worldwide through its participation in the new LeadingRE.com.

The site also brings global exposure for our BC real estate listings and provides consumer resources, such as cost of living comparisons, school information, recent home sales and other local resources and statistics. LeadingRE.com can be accessed via macrealty.com by clicking the Global Home Search logo on the homepage.

“LeadingRE.com now provides home buyers and sellers an easy way to identify the top-performing real estate companies in a given market by searching over 400,000 member listings or by using our comprehensive member directory,” notes Leading Real Estate Companies of the World Director of Strategic Development Rhett Damon. “Our network linking strategy connects many of our high-traffic member sites to LeadingRE.com’s national or global search, providing valuable listing exposure to home sellers.”

 

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For more information about Macdonald Realty and our LeadingRE partnership please email macrealty@macrealty.com or call 1-877-278-3888.  Looking to buy or sell, locally or globally?  Allow us to make a quality introduction to be matched with an independent brokerage and REALTOR® working in your area.

The Principal Residence Exemption

Recently the Canada Revenue Agency (CRA) changed its administrative rules so that, unlike the past, if you sell your principal residence in 2016 or later years, you must report:

  1. The sale including the date and price of acquisition, the sale price and date and a description of the property; and
  2. The fact that the property was a principal residence

on your income tax return filed in 2017 if you want to claim the full principal residence exemption.  The exemption means that no tax is paid on a property that is the principal residence of the seller.  In the past CRA did not require taxpayers to report the capital gains on the sale of principal residences.

If you don’t claim the exemption then CRA will treat any gain in the value of the property as a taxable capital gain.  One half of capital gains are deemed to be income in the year in which the capital gain is realized.   The top marginal rate for income taxes in British Columbia is nearly 48% for income in excess of $200,000.

[Read more…]

Greater Vancouver Real Estate Market Statistics – January 2016

Here are the latest real estate market statistics from Macdonald Realty on Vancouver, North Shore, Tri-Cities and other Greater Vancouver listings and sales in January 2016.

Vancouver

In the Vancouver Westside, there were 135 sales of detached homes and 502 active listings at the end of January. The benchmark sale price was $2,928,800, with an average days on market of 42. The hottest market for sales was Shaughnessy with 16 sales.

In comparison, the condo market had 307 sales, 768 active listings and a benchmark sale price of $599,200 with 32 average days on market. The hottest market for sales was Downtown VW, 75 sales.

Townhome sales were 31, active listings were 80. The benchmark sale price was $892,600 with an average days on market of 48. University VW, 5 sales, was the hottest market for sales in January.

Listings are down. Sales are up. It’s a seller’s market.

 

Jan2016_VanWest

 

The Vancouver Eastside had 98 sales and 314 active listings for detached homes at the end of the month. The benchmark sales price was $1,234,100, and the average days on market were 35. The hottest sales market was Killarney VE with 15 sales.
The condo market featured 88 sales, 209 active listing, and a benchmark sales price was $373,800. The average days on market were 43 days, and the hottest market for sales was Mount Pleasant VE with 21 sales.
The townhome market, on the other hand, had 10 sales and 36 active listings. The benchmark sale price was $661,200 with 36 average days on market. Champlain Heights had the most sales in January at 4.
Jan2016_VanEast

[Read more…]

Squamish, Whistler, and Sunshine Coast Real Estate Market Statistics – January 2016

Here are the latest real estate market statistics from Macdonald Realty on Squamish, Whistler and Sunshine Coast listings and sales in January 2016.

Squamish

In January 2016, there were 17 sales of detached homes and 54 active listings in Squamish. The benchmark sale price was $651,400 with an average days on market of 48.
The Condo market had 7 sales and 32 active listings at the end of the month. The benchmark sale price was $312,600 with an average days on market of 37.
Townhome sales were 4, active listings were 17. The benchmark sale price was $482,900, and the average days on market were 9.

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[Read more…]

Okanagan Real Estate Market Statistics – January 2016

Here are the latest real estate market statistics from Macdonald Realty on Kelowna and Okanagan listings and sales in January 2016.

South Okanagan: Osoyoos, Oliver, and Penticton

In January 2016, there were 48 sales of detached homes and 579 active listings in South Okanagan Area, including Osoyoos, Oliver, and Penticton. The average sale price was $433,040 with an average days on market of 105.
The Condo market had 21 sales and 214 active listings at the end of the month. The average sale price was $238,821 with an average days on market of 114.
Townhome sales were 10, active listings were 78. The average sale price was $278,305, and the average days on market were 87.
[Read more…]

Surrey, Langley and Fraser Valley Real Estate Market Statistics – January 2016

Here are the latest real estate market statistics from Macdonald Realty on Surrey, Langley and Fraser Valley listings and sales in January 2016.

White Rock/South Surrey

There were 140 sales, 299 active listings, and a $1,122,100 benchmark sale price for detached homes in the White Rock/South Surrey market.

The condo market featured 39 sales, 240 active listings and a benchmark sale price of $277,200 at the end of the month.

In comparison, townhome sales were 55, active listings were 131 and the benchmark sale price was $467,400.

Listings are down. Sales are up. It’s a seller’s market.

Jan2016_WhiteRockSouthSurrey

[Read more…]

Victoria Real Estate Market Statistics – January 2016

Here are the latest real estate market statistics from Macdonald Realty on Vancouver Island and Greater Victoria listings and sales in January 2016.

Greater Victoria

In January 2015, there were 225 sales of single family homes and 607 active listings in Greater Victoria. The benchmark sale price was $524,000 with an average days on market of 53. The hottest market for sales was Saanich East with 49 sales followed by Langford with 35 sales. There were also 13 sales and 150 active listings at the end of the month for waterfront homes.

In comparison, the Condo market had 151 sales, 511 active listings at the end of the month. The benchmark sale price was $302,900 with an average days on market of 70. The hottest market for sales was Victoria, 56 sales.

Townhome sales were 58, active listings were 172 and the benchmark sale price was $425,100. The average days on market were 68, and the hottest market was Saanich East with 9 sales.

Listings are down. Sales are up. It’s a seller’s market.

Jan2016_Victoria

[Read more…]

Okanagan Real Estate Market Statistics – December 2015

Here are the latest real estate market statistics from Macdonald Realty on Kelowna and Okanagan listings and sales in December 2015.

South Okanagan: Osoyoos, Oliver, and Penticton

In December 2015, there were 64 sales of detached homes and 574 active listings in South Okanagan Area, including Osoyoos, Oliver, and Penticton. The average sale price was $422, 547 with an average days on market of 110.

The Condo market had 17 sales and 213 active listings at the end of the month. The average sale price was $211,324 with an average days on market of 95.

Townhome sales were 16, active listings were 79. The average sale price was $205,253, and the average days on market were 81.

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[Read more…]

Greater Vancouver Real Estate Market Statistics – December 2015

Here are the latest real estate market statistics from Macdonald Realty on Vancouver, North Shore, Tri-Cities and other Greater Vancouver listings and sales in December 2015.

Vancouver

In the Vancouver Westside, there were 135 sales of detached homes and 376 active listings at the end of December. The benchmark sale price was $2,885,000, with an average days on market of 42. The hottest market for sales was Dunbar with 24 sales.

In comparison, the condo market had 336 sales, 593 active listings and a benchmark sale price of $590,400 with 41 average days on market. The hottest market for sales was Downtown VW, 72 sales.

Townhome sales were 39, active listings were 79. The benchmark sale price was $897,400 with an average days on market of 35. Kitsilano, 10 sales, was the hottest market for sales in December.

Listings are down. Sales are up. It’s a seller’s market.

Dec2015_VanWest

The Vancouver Eastside had 122 sales and 229 active listings for detached homes at the end of the month. The benchmark sales price was $1,222,900, and the average days on market were 28. The hottest sales market was South Vancouver with 18 sales.

The condo market featured 108 sales, 171 active listing, and a benchmark sales price was $364,500. The average days on market were 36 days, and the hottest market for sales was Mount Pleasant with 30 sales.

The townhome market, on the other hand, had 19 sales and 25 active listings. The benchmark sale price was $651,200 with 39 average days on market. Champlain Heights had the most sales in December at 7.

Listings are down. Sales are up. It’s a seller’s market.

Dec2015_VanEast

[Read more…]

Squamish and Whistler Real Estate Market Statistics – December 2015

Here are the latest real estate market statistics from Macdonald Realty on Squamish, Whistler and Sunshine Coast listings and sales in December 2015.

Whistler

In the Whistler market, the benchmark sale price was $1,069,900 with an average days on market of 135 days for detached homes. At the end of December, there were 13 sales and 88 active listings.

In comparison, the condo market had 38 sales and 134 active listings. The benchmark sale price was $285,500, and the average days on market were 126.

Townhome featured 23 sales, 53 active listings and a $530,600 benchmark sale price with 83 average days on market.

Listings are down. Sales are up. It’s a seller’s market.

Dec2015_Whistler

 

[Read more…]

Surrey, Langley and Fraser Valley Real Estate Market Statistics – December 2015

Here are the latest real estate market statistics from Macdonald Realty on Surrey, Langley and Fraser Valley listings and sales in December 2015.

North Surrey

In December 2015, there were 99 sales of detached homes and 116 active listings in North Surrey. The benchmark sale price was $670,000, an increase of 19.0% compared to December 2014.

The condo market had 63 sales, 287 active listings at the end of the month.  The benchmark sale price was $200,000.

In comparison, townhome sales were 19, active listings were 51 and the benchmark sale price was $263,200.

Listings are down. Sales are up. It’s a seller’s market.

Dec2015_NorthSurrey

[Read more…]

Victoria Real Estate Market Statistics – December 2015

Here are the latest real estate market statistics from Macdonald Realty on Vancouver Island and Greater Victoria listings and sales in December 2015.

Greater Victoria

In December 2015, there were 209 sales of detached homes and 578 active listings in Greater Victoria. The benchmark sale price was $521,100 with an average days on market of 58. The hottest market for sales was Langford with 46 sales. There were also 19 sales and 161 active listings at the end of the month for waterfront homes.

In comparison, the Condo market had 114 sales, 499 active listings at the end of the month. The benchmark sale price was $305,000 with an average days on market of 64. The hottest market for sales was Victoria, 49 sales.

Townhome sales were 46, 189 active listings and the benchmark sale price was $419,100. The average days on market were 85, and the hottest market was Victoria with 8 sales.

Listings are down. Sales are up. It’s a seller’s market.

[Read more…]

$94K micro condo in Surrey attracts hordes of home buyers | Platinum Project Marketing

Macdonald Realty Estate Group’s project marketing team, Platinum Project Marketing had a busy Saturday, launching sales on Evolve, a new condo development in Surrey, which Developer WestStone Properties said sold 300 condos worth about $70 million in a frenzied 90 minute rush.

Read on for the full story as reported by The Huffington Post.

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Photo from The Huffington Post

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Surrey Condo Sales: Hundreds Line Up For Chance To Buy $94,000 Micro-Units

The opportunity to buy a brand-new condo for under $100,000 in Metro Vancouver’s sizzling real estate market brought hundreds of people to a Surrey sales centre on Saturday.

Prospective buyers stood in line for hours to buy into the 35-storey Evolve concrete tower. A big draw were the micro suites, starting at 316 sq. ft. and $93,900.

Twin brothers and WHL players, Connor and Curtis Honey, drove up from Edmonton to be the first people in line at 4 a.m. for the opening day of sales. They snapped up one of the 80 micro condos.

“It is pretty small, but I think there’s ways to work around it and maximize the space,” Curtis Honey told CTV News.

Developer WestStone Properties said 300 condos worth about $70 million were sold in a frenzied 90 minutes Saturday.

The majority of Evolve’s 406 units are priced at less than $250,000.

The condo project’s marketers, Platinum Project Marketing, also credited the high-tech sales presentation, including holograms and augmented reality, for drumming up interest. (Watch video above.)

Evolve is scheduled to be finished in 2018. It’s one of several new towers in Surrey’s developing West Village.

With about 1,000 people moving to Surrey every month, the city is forecast to become B.C.’s biggest by 2041.

How $500 Can Save You $30,000: Why You Should Get a Home Inspection

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Many purchasers of homes decide to forgo the optional home inspection in some cases. They have a tough time trying to decipher why they would shell out anywhere between $450-$800 for a ‘jack-of-all-trades’ to come into their potential new home and tell them things they think they already know. If you fit into this category, STOP and give your head a serious shake.

Like a general practitioner doctor, a home inspector may not know a ton about one particular subject of a house, yet they do know a little bit (or more) about a lot. A good home inspector will use all the latest and greatest tools to inspect your home and should give you a full written report for you to take home at the end. They don’t need to know exactly where that leak is coming from, but they sure can point you in a better direction to figure it out than anyone else.

So why put out the expense? A familiar case sample from numbers of happy clients I have helped in the past, including a story of my own. When I set out to buy my first home, I was excited. It is such a cool experience to go house shopping and even better to imagine all of the amazing ideas, memories and plans you could experience in that new home. After a few weeks of shopping, I had decided on a 2 storey basement entry in North Delta.

The home needed some work, I could see that, and being a relatively handy guy with a good eye for what needed to be done, I wrote my offer accordingly. Now, I realize the importance of a good home inspector so as part of my conditions, I made sure to give myself some time to get my inspector into the house.

When working with clients, I have no emotion invested into what they buy and this allows me to be very unbiased. I can see many things that they typically cannot, due to the large amounts of homes I see every week and also from what I have learned from my home inspector in the past. The challenge is when emotion and excitement get involved, that trained eye can get cloudy. This was also the case for my own almost first home. I was excited and thinking more like a buyer than a Realtor.

My home inspection lasted over 3 hours and my inspector took his time to ensure he got everything I needed to know. At the end of the inspection, together we went through the list of things that needed to be done and the even bigger list of things that the average eye would not see.

There was over $30,000 worth of immediate work that was important to the life of the home that needed to be dealt with asap. This included unsafe electrical, huge drainage issues, sloppy previous home owner renovations, and more. Having a great relationship with my inspector, he jokingly remarked to me, “You need to run away from this house!”

That day was great to cement the lesson into my head that a home inspection is critical. I, nor most other Realtors, do not have a construction/electrical/plumbing/general home construction backgrounds so we cannot catch everything either. By investing around $500 in a 3.5 hour inspection, I saved myself from making a $30,000 mistake.

The moral of the story, get the home inspected everytime before you buy. You never know what yo may discover later if not. As for me, I am in a different home, with much less work to take care of. I get to save my money for bigger and better things!

Blog post provided by Darin Germyn Personal Real Estate Corporation, a REALTOR® with Macdonald Realty in South Surrey / White Rock.   Visit Darin’s blog at Germyn.ca  

The 8 Dangers of Overpricing Your Home

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An asking price that is beyond market range can adversely affect the marketing of a property. Here are the 8 dangers of overpricing your home.

Missed showings

Buyers and REALTORS® search within a price range when looking for a home using the Multiple Listing Service (MLS®). If your price is above market value, your home will not come up in their search and you lose showings from buyers who can afford your home.

Helping to sell the competition

Buyers comparison shop when considering a home purchase. When a buyer compares
an overpriced home versus one that is priced at market value it will likely convince them to place an offer on the well priced property instead of yours; you’re helping the competition get sold.

Missing out

The perfect home for you to purchase may present itself while your home is listed. If you are overpriced, you will have very little chance of selling and therefore you won’t be in a position to buy your desired home. Watching another buyer purchase your dream home is not a fun position to be in, and it can be avoided with a well priced listing.

Low Ball offers

If you receive an offer it is much more likely to be a ‘low ball’ offer, which results in a frustrated contract and a very low chance of getting an accepted offer. Today’s buyers are quite saavy and overpriced listings don’t survive their analysis.

Tough to Close

It’s tough to close an accepted offer on an over-priced listing. This is due to the fact that buyers continue to look at the competition and they quickly realize they have overpaid, which results in buyer’s remorse and a collapsed sale prior to subject removal.

No Chance of Competition

An overpriced listing will not result in competitive offers, whereby a well priced listing will have a greater chance of receiving offers from more than one buyer, and possibly getting an offer over asking. Real estate agents may forego showing an overpriced listing, as the price shows little motivation by the seller. Buyer’s agents are always keen on getting their clients through the doors of a well priced home first, in order to give their clients first crack at getting the home of their dreams. The best homes sell first.

Risk of falling market

The longer a listing stagnates on the market the more likely it will sell for less than it would have had it been priced right in the first place. This used to be a coined term by Real Estate professionals, but now it is contained in a study by Ken Johnson of Florida State University.

Bank appraisals

Appraisals are required on all new loans. The appraised value is based on the recent sales prices of similar properties. If your home is overpriced, the appraisal may fall short of the offer, and the buyer, not willing to pay more than the appraisal price, will cancel the offer. The bank also will not lend money on an overpriced property to a Buyer looking for a high ratio mortgage, or 20% or less downpayment. A large portion of buyers are high ratio mortgage seekers.

These are just some, and by no means all the reasons why you should consider what the market is doing when it comes to pricing your home. By over pricing a home, you are esentially hoping to win ‘the home seller’s lottery,’ meaning you are hoping that someone will come along and pay an unreasonable amount of money for your home, despite all the facts and comparative information available. In the long term, over pricing your home hurts the overall value of your home, while also sacrificing your time as you wait and learn that overpricing was a mistake.

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Blog post provided by Darin Germyn Personal Real Estate Corporation, a REALTOR® with Macdonald Realty in South Surrey / White Rock.   Visit Darin’s blog at Germyn.ca 

Macdonald Realty Home Selling Infographic

We know that selling your home can be a stressful time. That’s why Macdonald Realty agents are here to help you through the home selling process from start to finish making your experience a comfortable one. From the first meeting to the final day when the keys are handed to the new owner, you can lean on your REALTOR® to offer professional advice and guidance every step of the way.

Use this handy Home Selling Infographic as an at-a-glance guide to where you are in the process and what to expect next.

If you have any questions, your Macdonald Realty agent is always just a phone call away. 1-877-278-3888

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Want to Ask a Higher Price for Your Home ?

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Our spring real estate market is in full swing now although it took a little longer than usual to get started. There are many, many new listings coming into the market in the Fraser Valley and there are also lots and lots of serious buyers for those new listings. The good news is that, banks & government willing, this market should be with us for some time.

The title of this column is one of the topics that REALTORS® are running into a lot these days. It seems to make good sense. If we ask a little (or a lot) more money for our home than what the REALTORS® Comparable Market Analysis indicates our home’s market value is, maybe one of those buyers will fall in love with our home and pay the higher price. If not we can always lower the price later. Besides, people can always make offers and we can negotiate. It seems like a can’t-lose situation. A deeper analysis, however, uncovers some very uncomfortable problem areas.

Perhaps the most obvious one is that when the in-love-with-your-home buyer applies for a mortgage to complete the purchase they run smack head-on into a flinty-eyed, tight-fisted, banker who is only prepared to lend money on the bank appraised market value which turns out to be remarkably similar to the price range from the REALTORS® market analysis and much lower than the agreed upon price. Consequently the buyer can’t get the mortgage because there isn’t enough collateral in the appraised value to cover the mortgage according to Canadian legal requirements. So the buyer is unable to complete the purchase unless they can come up with more cash and don’t mind doing that. That special sale that you thought you had turns out not to be attainable.

But there are other less noticeable problems that could actually turn out to cause worse problems for the homeowner. When your house appears for sale in the market there are a certain number of serious buyers who are searching the market for the right home, now. They have been looking for a considerable amount of time and have seen a substantial number of houses. In fact, many have seen everything that appears to suit their wants and needs and haven’t yet found the right one. Maybe they have even tried an offer on one or two but haven’t been successful, maybe because they have been outbid by another buyer, or perhaps because the seller wasn’t willing to accept the market’s analysis of the value of the home and wanted more. They have seen everything and have gained a very accurate and intimate knowledge of market value because of all the houses they have seen and the eventual selling prices of those that sold. They have become experts and they, and their REALTOR® are watching the new listings daily. If they come across one that seems to meet their needs and is market priced they want to see it now and they are quite prepared to write their offer and pay full market value. They have been looking for a long time and are prepared to act now.

If you are asking a significantly higher price than market value they are not even prepared to make an offer—they have “”been there, done that”” before and don’t want to waste any more of their time. They just move on. After 2 or 3 weeks your REALTOR® has gone through the current buyers that are out there and now the REALTOR® has to begin to develop new buyers—ones that are just entering the market. It’s a long, slow, expensive and arduous process and these buyers have not become knowledgeable about pricing. They are more inclined to make a much lower offer and try to negotiate you down.

So the net result is you’ve scared away a knowledgeable buyer who would have paid you market price and now you’re dealing with buyers who want to pay less because they aren’t knowledgeable about the true value of your home.

You’ve ended up in a no-win situation instead of a can’t-lose situation.

For more information contact Stewart Henderson, Managing Broker of Macdonald Realty in Langley
Originally printed in the Langley Times

I wish you wouldn’t listen to the market hype

All the hype, is just that. Hype.

It is tough today to get a firm grasp on what is taking part in our real estate market. If you have read any articles or watched the news lately, it is filled with a ton of gloom and doom, stating ‘our’ market is down 10% from this time last year. What a terrible time to own a home!

Let’s pull back on that thought a bit to exam some facts. When you hear about ‘our’ market, most of the time that means the Vancouver market, not the Fraser Valley. We are the little brother to the Vancouver market and tend to follow their trends, yet there are some reasons why we may not.

  1. We are affordable in the Fraser Valley, much more so than North of the river (Vancouver, Burnaby, ect.)
  2. At this time last year, a large Asian influx was purchasing up a ton of high end homes in Vancouver, Richmond and White Rock, squewing our numbers dramatically.

The facts are in our numbers. In our area, we have 3 types of markets:

  • A Buyer’s Market – over 7 months of inventory (where buyers are favoured with tons of inventory and choice)
  • A Seller’s Market – under 5 months of inventory (Where sellers are favoured with minimal inventory promoting competition among buyers)
  • A Balanced Market –between 5-7 months of inventory (where both buyers and sellers have equal opportunity and prices remain stagnant)

With the latest statistics, we can see there are huge differences in the areas based on what we hear on the news. Look below to find your area and product type to get an accurate idea of what is happening right now.

So what does all this mean? Not a whole lot unless you are planning to get out of the market today. When you are buying or selling, you are getting into the market and likely going to stay in there. Whether you buy high or buy low, sell high or sell low, everyone is riding the same wave of activity you are. At the end of the day, no one has a crystal ball to dictate what may happen tomorrow yet all things tend to come back around regardless of if we are on a high or a low. If you don’t believe me, type “hipster” into Wikipedia and you won’t believe people think that style is back. Believe me, it’s back.

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Blog post provided by Darin Germyn Personal Real Estate Corporation, a REALTOR® with Macdonald Realty in South Surrey / White Rock.   Visit Darin’s blog at Germyn.ca  

Happy Birthday to the Property Transfer Tax

This week the dreaded BC property transfer tax turns a quarter century old. For those who do not know, the Property Transfer Tax (PPT for short) was a tax brought in by Bill Vander Zalm back in 1987, the same Bill Vander Zalm who looks like a BC hero, who recently helped overturn the HST back to the traditional PST and GST models in BC.

The tax is 1% of the 1st $100,000 spent on a home, and 2% on the remaining balance, a considerable amount for most BC homes.  In 1987, the average price of a Vancouver home was a mere $187,000.  Today the average in Greater Vancouver is about $1,034,000, what a difference a quarter century can make. The tax was originally intended to tax speculation and wealth in our province, so high earners and those purchasing expensive homes paid a transfer tax on those purchases. The threshold was $200,000 in 1987 and approx. 95% of the homes in metro Vancouver were under that mark. Unfortunately for home buyers, times have changed.

Since 1987, BC home buyers have paid nearly 12 BILLION dollars in PTT since its inception, or about 900 MILLION dollars a year goes into the province. On the purchase of a $500,000 home in a suburb of Vancouver, a family would be looking at about $9,000 in PTT on top of all their other fees. This outdated threshold is something the BC Liberals are looking at and have suggested they would review the thresholds in the near future. The problem is, if you remove 900 million dollars a year from the system, what happens?

It is definitely time for a change to make it more affordable for families in BC to purchase a home. Be sure to speak your voice when the opportunity to be heard is there, and let’s see if we can adjust or extinguish this tax to make property ownership more affordable and attainable for more BC residents.

Contact Jordan Bateman of the BC Taxpayers Association and speak your mind, I know he would want to hear it.

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Blog post provided by Darin Germyn Personal Real Estate Corporation, a REALTOR® with Macdonald Realty in South Surrey / White Rock.   Visit Darin’s blog at Germyn.ca  

When to accept an offer on your house: Are we there yet, Realtor?

When a homeowner decides to sell their home they usually hire a REALTOR® and the REALTOR® gets to work having the home prepared for sale, getting the home, with all the relevant information, listed on the real estate board’s MLS® system, and starting to notify the real estate industry and the public that the property is for sale and inviting interested buyers to come and view the home. In that order.

Sometimes, within a week or two, the seller receives an offer from an interested buyer. This sudden offer is quite unexpected so soon and, human nature being what it is, the seller often feels that they should wait until more buyers view the home with the hope that the offers will only get better and they may ultimately end up selling the home for more money than the first offer contained. It’s a pretty normal reaction and, at first glance, it seems logical.

In the thirty-two years that I have been involved in selling homes, both as a REALTOR® and as a manager, I have learned that the opposite is often the case. After the initial flurry of interest, things die down, there are fewer buyers looking and the offers are less than that initial offer. What’s gone wrong? How can this be? It doesn’t seem to make any sense.

Well, if you consider the local real estate market in a macro sense you can begin to see the logic behind this phenomenon. Every day, including today, I would guess that out of the almost 500 licensed REALTORS® in the Langley area at least 25 of them have appointments today to show their buyer clients some homes that their buyer might be interested in buying. Many of these buyers have been looking for some time now and have seen many homes. Some of those homes have sold since the buyer saw them and their REALTOR® has dutifully kept them informed of the final selling prices. They may have even made a low offer on one or two homes that they just loved and had their offer rejected and subsequently seen the house sell for a higher price than they had offered. They have been searching for some time, they have become acutely aware of market values for the homes, and they are tired of the search and just want to buy a home. They have seen everything that might be suitable and desirable for them and they, and their REALTOR®, are now reduced to watching for each new home coming into the marketplace. If they see one, and it looks like it meets their needs, and is properly priced in the market (and they are now very knowledgeable about market values) they want to see it right away and, if it meets their needs and desires, they will have their REALTOR® write an offer at market value right away. But they do know market value and if the property isn’t priced correctly they will just pass it by without even looking. So the seller gets a quick offer at market value and wonders if they shouldn’t wait until more buyers show up in the hopes of getting a higher price. However, after a couple of weeks, all of those knowledgeable and motivated buyers have considered the home and have made their market value offer or have discounted the home and moved on. Activity on the home has dropped and the buyers who are now looking at the home don’t seem very interested in the home. What happened?

Well, here’s what happened. The seller’s REALTOR® went through the currently available supply of buyers and now has to generate new potential buyers through their advertising. These new buyers haven’t yet seen sufficient homes to be able to make market based decisions. They are still ” just looking”. If they see your home and like your home they may make an offer but, because they are not yet knowledgeable on market prices they will make a low offer in the hope of getting the home at a below market price. Now you’re negotiating hard just to try and get the price up to the level of that initial offer that you decided not to accept in the hope of getting something better and, instead, you’ve ended up getting something worse.

So, if you get an offer soon after you have put your home up for sale don’t be too quick to reject it. It may turn out to be the one offer that you should have accepted. We might be already there.

For more information contact Stewart Henderson, Managing Broker of Macdonald Realty in Langley.
Originally printed in the Langley Times

Legal Mistakes to Avoid When Buying or Selling a House

 The process of buying or selling a house seems to involve a million details.  It is important that you educate yourself on as many parts of this process as you can—this knowledge could mean the difference of thousands of dollars in the long-run.  The legal issues involved in the process are often particularly intricate, ranging from matters of common knowledge to subtle details that might escape the untrained eye.  Any of these issues, if not handled properly, could develop into larger problems.  With so many  legal issues to consider, your first step should be to seek out experienced professionals to help educate you and represent your best legal interests.  Begin with an experienced real estate agent, who can help guide you through the initial hoops.  S/he should also be able to point you in the direction of a reputable local real estate lawyer to assist you in all legal matters involved in the purchase or sale of your house.

While there are countless legal details involved in a real estate transaction, some seem to pose larger problems than others.  We’ve outlined two legal clauses that are commonly misunderstood and may cost you money if not worded correctly.  Handle these carefully and you will be on track to a successful sale or purchase!

Home Inspection Clause

Some real estate transactions have been sabotaged due to the wording of the home inspection clause.  This clause originally allowed that the buyer has the right to withdraw their offer if the home inspection yielded any undesirable results.  However, this allowance was known to backfire, as Buyers took advantage of it, using some non-issue stated in the inspection as an excuse for having changed their minds.  Of course, this was unfair to the Sellers, as they’d poured time and money into what they believed was a sure deal.  Not only might they have missed out on other offers in the interim, but their house might also now be unfairly considered a “problem home.”  Additionally, they’d now have to shoulder the costs of continuing to market the property.  All of this adds up.

In order to remedy this potential problem, the clause should indicate that the seller has the option of repairing any problems the home inspection might point to.  With this slight change in the clause, both buyer and seller are protected.

To ensure this clause is fair from one side of the bargain to the other, work closely with a lawyer experienced in these transactions and all the nuances that may affect the outcome for you.

Survey Clause

It is the right of a home buyer to add a survey clause to the real estate contract on the home they’d like to purchase.  If you are on the selling end of the contract, be aware.  If you have added an addition or a pool to your property since the last survey was produced, your survey will no longer be considered up-to-date and the Buyer may request that a new one be drawn up—the cost of which you will incur.  The price of this process will run anywhere from $700 to $1000.

Your real estate agent has the responsibility to provide you with the most recent survey of your home.  It is then the Buyer’s right to decide if it is acceptable.  An experienced agent should offer you reliable counsel if you encounter an issue with this clause, but it is advisable to talk to your lawyer if you’re unsure at all of the potential ramifications involved.  Remember, the wording of this clause could cost or save you thousands of dollars.

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Blog post provided by Darin Germyn Personal Real Estate Corporation, a REALTOR® with Macdonald Realty in South Surrey / White Rock.   Visit Darin’s blog at Germyn.ca  

 

 

 

How is winning at the stock market like selling your house?

What’s a great way to make some cash without exerting a ton of energy? The stock market of course! Where else can you pick a lucky fund, invest some hard earned cash and come out with a big return? Now, you could choose to do it yourself, that would be a cheap way of getting it done yet you may worry some of the fact that you don’t know too much about the idea. It would be silly to invest a bunch of money on a hunch or a ‘stock tip’ from a friend who knows less about it than you do. What are your options then? Hire a stock broker.

Stock brokers are required to go through educational requirements in order to serve you and your money, such as a completed Canadian Securities Course,  and thank goodness too, because you want to make sure you are in the best hands. When picking a stock broker, how do you know who is the best? To pick do you

A) Go with the trader who offers you the best rate on your trading, the professional that offers you the biggest discount saving you money per trade?

Or

B) Go with the trader that has a track record of making their clients significant gains and produces extraordinary results?

The answer is B. The answer should always be B.

The same goes for real estate. We are in an extraordinary time where we have begun to see competitive convergence in our market place, where we have so many Real Estate professionals competing over price to help sell your home. This is such a great opportunity to help the industry get better because it lets those who shine be brightest of them all. When choosing to sell your home, are you worried about who will give you the best discount, or who will sell your home and net you the most amount of money? Like a stock broker, real estate professionals are not all created the same and I caution you, to pick based on track record and results, not discount. Because doing the latter would be considered silly, wouldn’t it?

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Blog post provided by Darin Germyn Personal Real Estate Corporation, a REALTOR® with Macdonald Realty in South Surrey / White Rock.   Visit Darin’s blog at Germyn.ca 

 

 

Dealing with Low Ball Offers on Homes

Real estate listing inventories in Greater Victoria have been relatively high in the past few months, so it comes as no great surprise to us that we are seeing more “Low Ball” offers in the market of late.

That being said, sales activity remains steady, albeit at a lower level than the frenetic pace set last year in the wake of low interest rates and an unwinding of demand left over from the financial crisis of late 2008 & early 2009.

When faced with more homes to choose from than usual in the current market, some buyers are starting to write very low offers in the hopes of “getting a deal”.  I used quotes there because in real estate, a “deal” means different things to different people; no two houses or lots are alike.

Resist the urge to walk away

Most people realize that real estate transactions usually involve a mix of logic, emotion and pride, on both sides of the transaction.  Those realizations usually fly right out the window for both the buyer (when writing the offer) and for the seller (when receiving the offer), even when the purchase price is not in “low ball” territory.

Your REALTOR® is there to help you not only with the legal, logistical and negotiating aspects of selling your home, but to also be a sounding board, an ally and your advisor for those times when emotions are running high!

If you receive a low offer on your home, do your best to limit your emotions & pride and do your best to focus on the facts.

It may help to keep in mind that even a low purchase price offer means that the buyer wants to buy your home.  Many buyers may prepare a really low offer because they are afraid they will pay too much, because they are trying to get an indication of where your expectations are, or simply because they think a low ball offer is normal business practice.

Unless the offer is ludicrously low, prepare to counter the offer to keep the buyer engaged and interested in your home, because, as mentioned, they have more than a passing interest in your house.

In the absence of multiple offers for your listing, consider countering a low ball offer with the price, conditions, closing dates and other details that you’re willing to accept.  If you choose to just ignore a low ball, you won’t ever know if there was a possibility of a low offer turning into a negotiated sale that leaves both parties happy!

Consider the comparable sales

Some buyers will provide a list of recent sales with their offer to attempt to justify a low offer price.  Your REALTOR® will be able to help you decide if those comparables are similar to your home, or not. If the sales in that list do represent similar homes to yours and are at lower prices, you may need to lower your price if you truly want to sell your home.

In the absence of a list of comparables from the buyer, your REALTOR® can also help you prepare a list of comparable sales to send back along with your counter offer that support your asking price.

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Blog post provided by Sean Farrell, a REALTOR® with Macdonald Realty in Victoria.  Visit his website farrellgroup.ca for more information. 

The value of an expert and why you need one in real estate

An expert as defined by Wikipedia is a person with extensive knowledge or ability based on research, experience, or occupation and in a particular area of study. An expert can be, by virtue of credential, training, education, profession, publication or experience, believed to have special knowledge of a subject beyond that of the average person, sufficient that others may officially (and legally) rely upon the individual’s opinion.

If your car is broken, do you send it to a mechanic or your hairdresser? If your refrigerator stops working, do you call in the technician or call you accountant? When you decide to purchase or make available your most valuable asset, your home, do you call a realtor or take advice from your neighbour? Buying and selling a home is best left to an expert.

Everyone seems to have an advanced knowledge of many things, and real estate is no different. Quite often you have someone who has bought and sold a home as many as 5 times in their lifetime, and feel that this warrants an advanced knowledge of the subject. I have baked cookies about 5 times in my life, and that does not make me an expert baker.

A self-proclaimed expert as defined by Urban dictionary is The annoying know-it-all in everyone’s social circle, or quasi-member thereof, who always insists on one-upping the person controlling a current conversation with useless factoids or name-dropping to make himself appear more knowledgeable or superior to the audience in question. Considers himself (herself) the perfect candidate for “Jeopardy.

Now this description is humorous yet also strikes to a point. John Nesbi made famous so many years ago by saying, “We are drowning in information but starving for Knowledge.” With the likes of Google making information readily available to the public within micro seconds, anyone can be a self-proclaimed expert on anything within minutes online. This does not make you an expert based on our Wikipedia understanding.

It is ever so important to have someone that you like and trust when deciding to acquire or dispose of your most valuable asset. The right real estate professional will guide you to the best practises, the ins and outs of the industry, the common pit falls, and most importantly, represent your best assets on your behalf. The right real estate professional will help you get what you want, on your terms, and ensure you are looked after. The process of buying/selling is full of major hazards, legalities, and costly ventures. Trust the professionals and experts to handle the ride as you sit back and enjoy the view. When it comes to taking advice from your neighbour, family, or co-workers, double check their day to day job descriptions and thank them for thinking of your best interest. Smile and kindly remind them, you will take their recommendations to heart, and relay their concerns and advice to the expert, your real estate professional.

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Blog post provided by Darin Germyn Personal Real Estate Corporation, a REALTOR® with Macdonald Realty in South Surrey / White Rock.   Visit Darin’s blog at Germyn.ca  

 

 

Bright ideas to get your home show ready to sell

Is your home show ready? Before you list your home for sale, here are a few tips to get you started:

1. Remove clutter and clear off counters.
Throw out stacks of newspapers and magazines and stow away most of your small, personal decorative items. Put excess furniture in storage, remove out of season clothing items that are cramping closet space. Get rid of family pictures, trophies and knickknacks. Make sure to clean out the garage too.

2. Wash your windows and screens.
This will help get more light into the interior of the home as well as looks better.

3. Keep everything extra clean.
A clean house will make a strong first impression and send a message to buyers that the home has been well cared for. Wash fingerprints from light switch plates, mop and wax floors, clean the stove and fridge. Polish your doorknobs (inside and out) and address numbers.

4. Get rid of smells.
Clean carpeting and drapes to eliminate cooking odours, smoke and pet smells. Open the windows to air out the house. Scented candles will help.

5. Brighten your rooms.
Put higher wattage bulbs in light fixtures to brighten up rooms and basements. Replace any burned out bulbs in closets etc. Clean the walls, or paint them with a fresh neutral colour.

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Blog post provided by Greg & Liz Holmes, a REALTOR® Team with Macdonald Realty in South Surrey / White Rock.   Visit The Holmes Team blog at holmesteam.ca

 

What is a Flat Fee / Mere Posting?

With the recent CREA agreement with the competition bureau, there have been a number of questions about what Flat Fee models are and how they work.

Flat fee, or For Sale by Owner (FSBO), companies typically provide a kit to a seller that may include a sign and the ability to place a property on the MLS® system, now known as a “MERE POSTING”, for an up-front and non-refundable fee.

These companies allow a seller to “contract out” of other services provided by full-service agents. Of course, along with allowing sellers to contract out of these services, they also allow agents to contract out of their fiduciary responsibilities of disclosure, confidentiality, and agency. In addition, agents who merely post may not be able or willing to: qualify buyers, provide advice on the market, contracts, legal issues, questions about the house, or even how to deal with an offer. In these cases, sellers would be responsible for showing their own property, being knowledgeable about the market, understanding their legal responsibilities, and hiring a lawyer to draw up contracts, which can run thousands of dollars and are paid regardless of whether a transaction is completed. In addition, a seller, under this model, may not be covered by errors and omissions insurance, meaning that they would be fully liable for a litany of offences, many of which could potentially run hundreds of thousands of dollars.

This Flat Fee model and others such as discounted brokers, contrary to popular belief and media’s reports, have always been allowed to exist in the BC real estate industry. However, the rest of the country has historically placed barriers or restrictions on alternative business models trying to use the MLS® (multiple listing service) system as a selling tool. With the recent CREA agreement, the rest of Canada has adopted BC’s progressive stance, which may have the effect of lowering the rest of Canada’s commission rates (typically 5-6 % of the total selling price) to where they are now in BC. This is a good thing, and, as we can see from the BC example, will improve the industry’s competitiveness. That said, despite having alternative models available to consumers for decades in BC, they still only represent less than 10% of the market, in part because sellers typically understand the important role a competent agent plays in effecting the successful sale of the most important asset in most people’s lives.

 

Moving Tips

Here’s a few tips/suggestions that we thought you might find useful when moving.

About a month before moving day:
– as a client of ours, you will receive a “Holmes Team After the Sale/Moving Checklist”
– call a moving company and book moving date
– notify post office for change of address
– notify school(s) of change of address
– contact your home insurance company to update info
– notify bank of change of address

A couple of weeks before moving day:
– contact your lawyer/notary to ensure they have all the information needed regarding the sale/purchase of your home
– arrange to have utilities disconnected at current home and connected at new home
– hold a garage sale to sell unwanted items
– arrange for transportation and care of your pets
– start packing and labeling boxes
– discontinue newspaper delivery
– plan to carry valuable documents/jewelery with you on moving day
– take down curtain rods, drapes and shelves

A day or two before moving day:
– confirm with Greg and Liz what time you will be leaving your home and moving to your new home
– clean fridge and oven
– finish packing personal items
– set aside items to go into your vehicle with you
– confirm contact information, address and moving time with movers
– verify that utilities have been/will be connected at new home

Moving day:
– have vacuum ready
– empty and clean out your fridge and freezer
– make a final inspection of house before leaving
– check all rooms, closets, cupboards and drawers
– get keys from Greg and Liz for your new place
– enjoy your new home!

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Blog post provided by Greg & Liz Holmes, a REALTOR® Team with Macdonald Realty in South Surrey / White Rock.   Visit The Holmes Team blog at holmesteam.ca

The Value a REALTOR Provides

There has been a ton of information tossed around recently in the media about REALTORS® and the value they provide.  I wanted to share a short story about a person I have recently helped who tried to sell their home on their own.  I received a phone call from this gentleman last month regarding coming to list his home and for some professional marketing advise. He had recently undergone the process of selling by owner and had even received an accepted offer from a private buyer. The buyer had committed to purchasing his condo and they went through the legal requirements and were deeply involved financially and emotionally. The deal came to fall apart as the prospective buyer could not close on the deal due to financial and personal reasons. This is where my value as a real estate and marketing professional was valued and called upon.

I listed the home and had it sold within 5 days of having it listed, as a result of my 90 step marketing strategies and knowledge of the area. Not only did I only show the property to the most qualified buyers after screening them personally, I arranged the entire process and assisted in closing the deal. Now many of you may be thinking, “Yah Darin, but the Seller also had to pay you to do this all for him,” and you would be absolutely right. The Seller received an additional $16,500 more than his private sale that was supposed to ’save’ him money. After my compensation, the seller walked away with more money in his pocket, actually, it was an additional $6000.

 

I believe strongly that you pay a professional to do their job. You go to a doctor because they have specialized knowledge and understand how to fix your health issues. You go to a Real Estate professional because you can expect a certain level of service and expertise. I have knowledge you as a Seller may not, and that is okay. Take the example written above, you can bet my Seller is smiling as he not only had the conveyance roll out as smooth as can be, he also plans to take his family on a 2 week holiday with the extra money I was able to achieve for him.

So the next time your body aches or you have the flu, call your doctor. The next time you hear of a friend or family member trying to sell their home on their own, remind them of this story, and have them call me.

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Blog post provided by Darin Germyn Personal Real Estate Corporation, a REALTOR® with Macdonald Realty in South Surrey / White Rock.   Visit Darin’s blog at Germyn.ca  

 

3 Ideas to Help You Sell Your Home This Spring

In anticipation of the spring market, here are three helpful tips to help you sell your home this spring:

Be a Minimalist and hire a cleaner – Presentation of your home is critical in selling quickly and for more money. An uncluttered home allows people to see themselves living there, their own furniture and their decorating ideas. If it’s overly cluttered, people may see a home that is not well cared for. Have a friend offer insight as sometimes we don’t notice things in our own home because we’re used to it.

Hire a professional photographer – Buyers are looking online at MLS® data and photos before they even visit their first open house these days. They want to see as many photos as possible online and as much information as they can. Show off your home and have it ready for the photo shoot. You will be amazed how great your place looks with a wide angle lens.

Keeping your place in showcase condition– Okay this is the hard part, and the stage many sellers find the most stressful. With your online photos and marketing in place, Buyers are now convinced to attend an open house or call your realtor to make an appointment, ensure you keep your home in the best possible condition for all viewings. Don’t cook onions before an open house, it’s a turn off! If you’ve got tenants, offer a cleaning service to get the place spic and span! (perhaps the day before an open house).

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Blog post provided by Carol Palfrey, a REALTOR® with Macdonald Realty in Vancouver East.  Visit her website eastvanlistings.com for more information.