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Can A Buyer Back Out Of A Real Estate Deal?

You’ve sold your home and are excited about the fact that you sold for well over your list price and in a short amount of time. You’ve popped the champagne and put the “SOLD” sign up, it’s now time to start thinking about your move to your new home. Your agent removes all of the staging furniture and other staging items and your house sits semi-empty until your move date as you put all of your furniture in storage in order to stage your home. You then receive a phone call from your agent a couple of weeks later to inform you that the buyers have decided to back out of the deal. Your heart starts to pound and your mind starts to race but you keep telling yourself that they can’t back out since you have a signed contract and a deposit. However, no matter how much you try to convince yourself that everything will be ok, the same question keeps popping up in your head: “can a buyer back out of a real estate deal?”

Read below to find out.

Can A Buyer Back Out Of A Real Estate Deal?

Even though the buyer has informed you that they don’t plan to move forward with closing the deal, the good news for you is that the real estate laws in Ontario do not include any type of cooling off period for resale real estate which would allow a buyer to back out of a deal within a certain period of time once the contract is firm and all conditions are fulfilled. If a buyer doesn’t close on a deal, they will typically face legal action if the seller decides to take that route. A buyer could be held accountable for any loss you as the seller incur should you need to re-list your home and you do not receive the same offer that they had originally made, including covering any legal fees, carrying costs and out-of-pocket expenses, among other expenses.

Keep in mind, a buyer still may choose to back out of a deal and incur legal expenses and potential settlement costs if they feel that it would be the financially wiser option for their particular circumstances as opposed to what they had otherwise committed to paying in order to close the deal.

Can A Buyer Back Out Of A Real Estate Deal?

With the market being as volatile as it has been due to rising interest rates, we have been seeing more deals not closing than we have seen in recent years. There are now more risks to consider when listing your home for sale than there has been over the last several years. In some cases, buyers may be using the threat of not closing as an opportunity to negotiate the price.

With each new interest rate hike announcement, buyers and their agents understand that sellers are likely under more stress and may be willing to negotiate on the price in order to get the deal done and move forward with their plans.

In addition to the above, we are seeing an increase in home appraisals required by lenders. If the buyer drastically over paid for your property and the appraised amount listed in the appraisal report comes in much lower, the buyer may be required by their lender to make up the difference out of pocket which could result in them attempting to negotiate the final sale price down from what they originally had offered. Should this happen, you will need to decide if you are willing to negotiate and by how much. If you decide to negotiate, your agent will negotiate on your behalf based on your instructions and if you and the buyer come to an agreement based on a reduced price, you will sign an amendment in order to lower the final sale price. If the parties are not able to come to an agreement, both the seller’s lawyer and buyer’s lawyer will get involved.

It is important to keep in mind that the legal process can take some time and can be costly if dragged out, so you will want to seriously consider your options before making a final decision as to how you want to proceed.

Can A Buyer Back Out Of A Real Estate Deal

The good news for you as a seller is that it’s more uncommon for a buyer to back out of a deal than it is for them to follow through and close on a deal. There are also laws that protect you and working with the right real estate agent and real estate lawyer will make the selling process a smoother one. By working with a reputable real estate agent and real estate lawyer, you will be in good hands should you run into the rare case of a buyer trying to back out of your real estate deal.

Can A Buyer Back Out Of A Real Estate Deal?

Have you been thinking of making a move? Whether you are selling or buying, feel free to contact me any time with your real estate questions. I’m always happy to help.

Top 10 ways to increase the value of your home

If you’ve had any thoughts of potentially selling your Toronto home now or in the near future, you may have wondered what you can do to increase the value of your home in order to ensure that your home sells for top dollar.

Over the last decade or so, Toronto real estate has been on fire with homes receiving multiple offers and selling for well over their list price within a few days (sometimes after only 1 day on the market). As I write this blog post in September 2022, things have drastically changed. With the introduction of increased interest rates and the potential of another rate hike announcement tomorrow (Sept 6, 2022), the market has cooled in regards to the number of buyers looking to buy. This is partly due to uncertainty, as well as buyers simply having less buying power. As I continue to check the local Toronto listings on a daily basis for my clients, I’m surprised by the homes that are not selling within a week and are often on the market longer than fifteen or twenty days, and in some cases, even longer. This amount of time on the market would have been unheard of a couple of years ago when buyers were fighting tooth and nail just to have their offers considered during a bidding war, let alone accepted.

Today, in this new market that we find ourselves in, it has never been more important to ensure that your home shows as best as possible. Buyers currently feel they have more negotiating power than they have had over the last several years. The last thing you want to do is to provide them with reasons to devalue your home during negotiations.

In order to help you sell for the highest price possible, I’ve included the top 10 ways to increase the value of your home below. Keep in mind, not all items on this list will apply to each home as some homes may require more (or less) upgrades to be in top listing/showing condition.

1) First impressions matter (enhance your curb appeal) 

The saying “you only get one chance to make a first impression” is true, so make sure you make the right impression from the start. The first thing buyers will see when they visit your property is the front of your home, including your landscaping. For this reason, it’s essential that you take the time and invest into making sure that the front of your home shows well. Below is a list of items to consider attending to prior to listing your home:

  • Prune your plants
  • Pull any weeds
  • Remove or replace dead shrubs
  • Replace dead grass
  • Cut overgrown grass
  • Plant colourful flowers to add some colour
  • Edge your garden beds
  • Add mulch to garden beds
  • Replace your dated front porch if it can’t be repaired
  • Re-paint your front porch if it’s looking worn out
  • Replace your dated front entrance door
  • Consider adding low voltage landscape lighting
  • Re-level your interlocking stone driveway or walkway
  • Pressure wash your interlocking stone driveway
  • Remove any garbage or debris from the front and side of your home

In addition to ensuring the front of your home makes a good first impression, it’s just as important that your back garden does the same. By applying the same options as above to the back of your home, you will be able to leave potential buyers with a positive first impression.

Top 10 ways to increase the value of your home

2) Kitchens can be deal killers

One of the rooms in a home that I often see clients look over in detail when visiting a home is the kitchen. Buyers often spend a lot of time looking over the kitchen and the appliances and take the time to visualize themselves making use of the space. Below is a list of items you may want to consider addressing prior to listing your Toronto home for sale:

  • Complete a full kitchen renovation
  • Paint cabinets (a light and neutral colour is ideal)
  • Add soft closing hardware to your cabinets and drawers
  • Replace cupboard handles with newer handles
  • Replace the light fixtures with newer more modern fixtures
  • Add additional lighting (a light and bright kitchen is typically desirable amongst buyers)
  • Replace outdated appliances with new appliances
  • Clean, clean, clean (the cleaner you make your kitchen, the better)

Top 10 ways to increase the value of your home

3) Beautiful bathrooms sell homes

Another top room of concern for buyers when viewing homes is the bathroom(s). If your bathroom is outdated, you will very likely receive offers at lower price points than if your bathroom is updated. Like kitchens, buyers tend to spend a lot of time considering the bathrooms in a home. It’s important to leave potential buyers with a positive impression and one that they will remember once they have left your home. Below are some items you may want to consider:

  • Keep the paint colours light (this provides a clean and bright feeling)
  • Make sure there is ample lighting
  • Consider replacing your tub with a glass shower
  • Install custom vanities and storage
  • Install heated flooring
  • Replace dated tiles with new neutral coloured tiles
  • Paint your existing cabinets and replace the counter
  • Update your sink and shower hardware

Top 10 ways to increase the value of your home

4) Add a fresh coat of paint 

Adding a fresh coat of paint can drastically improve the look of your home. If you decide to use the same colour as the existing colour on your walls, adding a fresh coat of paint will remove any scuff marks and will make the room feel newer. If you decide to change the colour, it is best to stick to light and neutral colours. I’ve included a list of both Farrow & Ball and Benjamin Moore colours that you may want to consider if you plan on painting your rooms with a new colour. I highly recommend using one of these two top brands when painting, if possible, as the quality of the paint is noticeable when compared to more cost effective paint brands. If these two brands are not within your budget, consider sticking to similar colours as the ones suggested below.

Farrow & Ball 

“All White” No. 2005

“Wevet” No. 273

“Strong White” No. 2001

“California Collection: Salt” CC5

“Wimborne White” No. 239

Benjamin Moore

“White Dove” OC-17

“Chantilly Lace” OC-65

“Cloud White” OC-130

“Classic Grey” OC-23

“Calm” OC-22

Top 10 ways to increase the value of your home

5) Update your lighting game 

Light fixtures don’t only provide light, they also make a statement when they are both on and off. It’s important that your light fixtures make the right statement and not a statement that leaves potential buyers with the impression that your home is dated or hasn’t been taken care of.  Below is a list of some prominent lighting stores where you can browse through many different light fixture options. My advice is to stick to a style that is timeless yet modern.

Union Lighting (best to view their products in person)

Hollis + Morris 

EQ3

Artemide

Top 10 ways to increase the value of your home

6) Replace your outdated flooring 

Whether you have a pet whose claws have scratched up your floors, kids or grandkids whose toys have left their mark or you have broadloom/carpeting, you may want to consider replacing your outdated or damaged floors. These days there are a wide range of both hardwood, engineered hardwood, laminate and tile products to choose from.

Top 10 ways to increase the value of your home

7) Make your home smarter with a smart home product

With new technology becoming more popular by the day and with society becoming accustomed to homes having cool features such as smart home systems, you may want to consider installing a smart home system in your home. Many smart home systems allow you to control various aspects of your home such as the temperature, lighting, alarm and more. The best part about these systems is that they are usually quite simple to install.

Top 10 ways to increase the value of your property

8) Cool down your home with an air conditioner

With the summers getting warmer and warmer, if your Toronto home doesn’t currently have air conditioning like many older homes in Toronto, you may want to consider installing an air conditioner. If you don’t have duct work already running throughout your home, don’t worry, there are many different styles and sizes of air conditioners these days. Speak to a licensed HVAC company about your air conditioning options as there will very likely be one that works for you and your home. If you’re selling your home any time between spring to late summer, buyers will definitely appreciate the fact that you have an air conditioner and will likely be willing to pay more for your home.

Top 10 ways to increase the value of your home

9) Upgrade your furnace 

If your furnace is coming to the end of its life, it may be worth considering replacing it with a new one. If there are any issues with your furnace and it isn’t working properly, buyers will likely use this as a negotiating tool to bring down the value of your home. In a red hot real estate market, you may not need to worry about this as much but when the market is cooler, this is definitely something to consider and not put off.

Top 10 ways to increase the value of your home

10) Transform your old wood-burning fireplace with a modern gas insert

Last November, I wrote a blog about the importance of checking the fireplace before submitting an offer  which discussed the fact that many of the older homes have outdated and unsafe wood-burning fireplaces and chimneys that are just as unsafe. A great way to increase the value of your home is by installing a gas insert fireplace into your old wood-burning fireplace opening.

Top 10 ways to increase the value of your home

Although this list may not be exhaustive of every single option available to increase the value of your home, I believe that these are the top 10 ways to increase the value of your home.

With over fifteen years of previous experience as the owner of a design and build firm prior to entering the word of Toronto real estate and as a full-time, award winning Toronto real estate agent, I have seen my fair share of homes throughout Toronto and the GTA and know what helps to sell a home for the most amount of money. If you are thinking about selling your home and have questions about how you can increase the value of your home or if you have any questions about the market, contact me any time – I’m always happy to help.

How to win a bidding war in Toronto

With Toronto being one of the hottest real estate markets with a level of demand that the supply can’t seem to keep up with, there’s no surprise that buyers often end up in a bidding war against other buyers.

I often tell my buyer clients that buying a home in Toronto is a process, one that involves more than just one attempt at finding the right house for them and sometimes involves some disappointment when one gets away.

How to win a bidding war in Toronto

Unfortunately, the Toronto real estate market is heartless; it doesn’t care about your feelings or your dreams, and it most definitely doesn’t care about how many homes you’ve missed out on. Most of the time, the only thing that Toronto real estate cares about is how much money you will pay for it.

Although offer price is usually the driving force when it comes to selecting the winning bid in a multiple offer situation, there are other deciding factors that come into play and which can work in your favour when putting together your offer.

As a full time Toronto real estate agent, I’ve had plenty experience with assisting both seller and buyer clients over the years. This has allowed me to view the deal from both sides of the table and to pick up on tactics and strategies that have resulted in a winning bid. I’ve also had the opportunity to see what doesn’t work.

How to win a bidding war in Toronto

Below, I’ve provided some of the strategies that have worked for my clients in the past in order to hopefully help you if you’re ever involved with a bidding war in the future.

Strategies:

Submitting a “Bully Offer” – This strategy typically only works if you are willing to pay an amount well above the list price and possibly slightly higher than market value. You essentially should be submitting an offer that the seller would be foolish to refuse. This offer would need to be completely clean and not include any conditions and with a limited number of clauses. This offer should also include the seller’s desired closing date.

Submitting a personalized letter with a photo – Although some may disagree with this strategy, I have seen personal letters work for both my buyer clients as well as for buyers submitting offers on my listings. I’ve personally been in situations where my seller clients were ready to take a lower offer price for their home simply because they liked the offer with the letter from the buyers as it felt more personal. It probably wouldn’t have been the wisest financial decision to accept a lower offer price due to a nicely written letter but it does go to show you that a personalized letter has the potential to sway a seller’s decision as to which offer to accept.

Submitting an offer with the desired closing date – One small way to help increase the odds of your offer being accepted is by matching the seller’s desired closing date. This is a very minor thing and likely won’t be the only thing that makes or breaks the deal, but if you can match the desired losing date, you will be that much closer to having your offer accepted.

Submit a clean offer – If you are up against other offers, the last thing you want to do is submit an offer with a bunch of conditions, reps and warranties and clauses. I realize this can be scary and you must make a decision that you feel comfortable and confident with but you may need to remove any home inspection or financing conditions or clauses you were planning on including. Based on years of experience with dealing with bidding wars, I can guarantee that the odds of your conditional offer being accepted are extremely low. However, if you are considering removing any conditions, make sure you are in a financial position to deal with any unexpected surprises that you may run into down the road.

Make sure your i’s are dotted and t’s are crossed – I often receive incomplete offers with missing information, sometimes important information such as the names of the parties to the agreement along with other very important information. Make sure all sections of the offer are filled out fully and accurately. The last thing you want to be doing is submitting an incomplete offer in a bidding war as this will not only result in the sellers potentially feeling uneasy with your offer, it may even result in you missing out on the home.

Don’t expect more than one chance – For some reason, some buyers and agents think that they will be guaranteed a chance to improve their offer after it has been submitted. This is not always the case as the seller is not required to provide additional opportunities for buyers to improve their offers. Do not go into a bidding war expecting a second, third or fourth chance to improve your offer as you may not get it.

Make sure to check in with the listing agent – Many agents simply submit an offer on offer night and wait to receive a yes or no answer. If you are working with an experienced and reputable Toronto real estate agent, they won’t stop at simply submitting your offer. Once your agent has submitted your offer, they should be checking in with the listing agent in order to see how your offer is doing compared to the others and to see if there is any way that you can make your offer stronger, whether that be financially or otherwise.

At the end of the day, bidding wars are complex and each one is different from the other depending on the different parties involved, including the the sellers, buyers and agents. A good real estate agent will be able to guide you through the process and help ensure that your offer stands out from the competition as much as possible while protecting your rights and working in your best interest throughout the process.

Are you thinking about making a move or do you have questions about the current market?

Contact me any time with your real estate questions or to discuss your real estate plans. I’m happy to help and to answer any questions you may have.

What is a pre-list home inspection?

You may or may not have heard the term “pre-list home inspection” before and wondered what it is and what it’s used for if you don’t already know.

A pre-list home inspection is an inspection that the listing agent typically arranges for their seller client prior to the property being listed for sale on MLS. By completing a pre-list home inspection, listing agents are able to provide such inspections to potential buyers and their agent when an inquiry is made regarding the condition of the home.

Toronto real estate (home inspections)

As long as your home doesn’t have any major issues, a pre-list home inspection often adds comfort to buyers, especially when they are involved in a multiple offer situation and likely won’t be able to submit an offer with a home inspection condition included.

A home inspection typically includes important information regarding different aspects and areas of the home and often includes details regarding the condition of following below as well as other items:

  • Foundation (limited)
  • Roof (limited)
  • Chimney
  • Decks & landscaping
  • Windows
  • Doors
  • Electrical (limited)
  • Plumbing (limited)
  • Heating & cooling systems (limited)
  • Bylaw related / safety issues
  • Moisture damage (typically available at an additional cost)

It is important to know that home inspectors are somewhat limited in regards to how deep they can dig into each section of the home. They mostly base their report on what is visible to the naked eye when looking over the different areas of your home.

It is also important to know that it’s extremely rare to receive a report that is squeaky clean without any issues at all, even in a newer home. Many sellers get nervous when they see a report that says there are issues with their home, even if they are minor issues. By completing a pre-list home inspection, you will have the opportunity to address the issues prior to listing your home for sale if you should wish to. Once the issues have been addressed, the home inspector will usually provide you with an updated report which reflects the repairs being completed. Over the years that I have been working in the real estate industry, I haven’t once seen a report completely free from any issues.

What is a pre list home inspection

Now that you know what a pre-list home inspection is, make sure you speak to your agent about this option prior to listing your home for sale.

If you aren’t currently working with another agent and have questions about the market or selling your home, contact me any time. I’m always happy to answer your questions and concerns and to assist you with achieving your specific real estate objectives.

Toronto real estate market (July 2022)

For the fourth consecutive month the Toronto and area resale housing market produced declining sales and lower average sale prices. The housing market peaked in February for average sale prices, in March for monthly reported sales. In February the average sale price for the greater Toronto area came in at an incredible (and unsustainable) $1,334,000. Sales in March hit 10,881, which was not a record. The record for March sales was achieved in 2021 when an unbelievable 15,627 homes of all types were reported sold.

In July the average sale price came in at $1,074,754, a 19 percent decline compared to February’s peak. It should be noted that July’s average sale price was still 1.2 percent higher than July 2021’s average sale price of $1,061,724. Sales in July were more than 47 percent lower than a year ago. There were 4,912 properties reported sold throughout the greater Toronto region. Last year 9,339 homes were sold. Compared to the 10,881 properties reported sold in March, sales in July have declined by almost 55 percent.

There is no mystery as to why the market has changed so dramatically in such a very short time period. The housing market, not only in Toronto and surrounding areas, but universally in North America, was supercharged by pandemic forces (the need for space and safety and the ability to work remotely) and historically cheap money. Money is no longer cheap and with society returning to a form of normalcy, the housing landscape is, compared to February and March and all of 2021, unrecognizable. The Bank of Canada’s benchmark rate is currently 2.5 percent. In March it was only 0.25 percent. In only four months it has increased by 900 percent! Mortgage interest rates have correspondingly also increased (although not as dramatically) from approximately 2 percent in March to close to 6 percent today. With the inflation rate in Canada at about 8 percent, it is anticipated that when the Bank of Canada meets in September, another rate hike is expected.

Toronto real estate market (July 2022)

Contrary to the commonly accepted view, the declining average sale prices that the market is experiencing are not making housing in the greater Toronto area any more affordable. In fact, rising financing costs are making buying a home in Toronto less affordable. A recent Ratehub study has indicated that with the stress tests and the higher borrowing costs, a buyer in Canada needs $18,000.00 more in household income per year to buy the average priced house than they would have required in February when the average sale price was $1,334,000. That number is even higher in cities like Toronto and Vancouver.

Two market sectors in the City of Toronto are, to some degree, operating contrary to overall market conditions. Firstly, condominium apartments. Notwithstanding declining average sale prices, condominium apartments continue to sell for strong prices. Overall condominium apartment prices were 7 percent higher than last July – 12 percent higher in the 905 region and 4.3 percent in the City of Toronto. The explanation is obvious. In an increasingly unaffordable housing market, condominium apartments remain the most affordable housing type. In July the average sale price of all condominium apartments sold was $719,000, somewhat higher at $744,000 in the City of Toronto.

Secondly, the City of Toronto’s eastern districts. In July all properties in Toronto’s eastern districts sold in only 15 days and for 102 percent of their asking price. The overall market saw properties selling at 99 percent of their asking price. Also, all eastern district properties sold after only 15 days on the market. This compares very favorably with the 20 days it took properties to sell in the overall Toronto and region marketplace. The explanation for this market phenomenon is less clear. It isn’t price. The average price for all properties sold came in at $1,014,000, marginally less than the overall average sale price of $1,019,000 for all City of Toronto properties reported sold. It would appear that the eastern districts, particularly Riverdale, Leslieville, and the Beaches, are viewed as more desirable than other parts of the City by buyers.

Looking forward we should anticipate that this cycle of declines in sales and average sale prices to continue, however not as dramatically as the declines we have experienced since February and March. Until inflation stabilizes and the Bank of Canada stops increasing its benchmark rate the prevailing housing landscape will remain unchanged.

Have questions about the market, selling or buying?

Contact me any time. I’m happy to answer any questions you may have.

Prepared by Chris Kapches, LLB, President and CEO, Broker, Chestnut Park® Real Estate Limited, Brokerage.

Why didn't I get any offers?

You put in a lot of work to declutter your home and prepare it for showings, you hired a realtor, your realtor staged your place and put together some great marketing materials and you had a week of showings, offer night comes along and you are excited to see how many offers you receive, but, you don’t receive any offers on offer night. You are probably scratching your head wondering how this could have happened.

Although the strategy of listing a property for below market value and holding off offers for a week until your set offer date arrives typically works very well, there are several reasons why it may not work. Below are 5 reasons why you may not have received any offers on your offer night.

1) Priced Incorrectly 

Once you have decided to work with a licensed, full-time, Toronto real estate agent, your agent should spend the time to look into the recent sales that have taken place in your neighbourhood. This will allow them to determine certain trends such as the average sale price for your area, average number of days on market along with other valuable market statistics that will assist with selling your home for the most amount of money in the least amount of time. If your real estate agent determines that homes in your area are listing for lower than their market value and are setting offer dates to review any and all offers, they may suggest doing the same with your property. Should you and your real estate agent come to an agreement to use this approach, it is crucial that your property is listed at the right price. By listing your property too high or too low, you may scare off potential buyers. If your agent is experienced, they should be able to determine the appropriate list price that isn’t too low or too high.

Toronto property values

 

2) Timing 

Historically speaking, some months such as December, January and August are some of the slowest months in real estate. If you are listing your home during one of these months, the odds of you not receiving any offers is increased. Buyers are typically busy with the seasonal holidays or vacationing during these months which means there are less eyes that will see your property once it hits MLS. In addition to this, even during other months, you need to keep in mind the statutory holidays and long weekends as you will want to work around these in order to ensure that you get as many potential buyers though your home as possible. Unless your local market it extremely hot, just like Toronto was a couple of years ago when properties sold any time of year for well over their list price, most properties don’t show as well as during the cold grey winter months as they do during the spring/early summer and early fall months. This can play a part in a buyer’s decision to put an offer on your home or not.

 

Toronto real estate market

3) Needed Repairs

Whether it be a list of needed repairs in your pre-list home inspection that is provided to potential buyers, or it’s visible needed repairs that potential buyers see during their showing, depending on the buyers, any needed repairs that aren’t already addressed may scare off potential buyers. It’s important to address as many issues with your home as feasibly possible prior to listing your home for sale.

Selling Toronto real estate

4) New Competition

Even if your home is in top showing condition and you have done everything necessary to ensure your home attracts as many buyers as possible, if a comparable home comes to market which is perceived to be more desirable at a similar price with the same offer date, you may miss out on receiving offers on your offer date. Should this scenario happen, you may want to discuss your options with your agent, including the possibility of changing your offer date.

 

Why didn't I get any offers?

5) Announcements

As we have all witnessed over the last couple of months, announcements such as interest rate hikes can play a large part in dictating the amount of demand there is. Announcements such as rate hikes and government announcements relating to new policies that affect the market can create uncertainty and make buyers second guess making a purchase. Should there be a big announcement soon after you list your home for sale, there is a good chance that the amount of demand may be put on pause until there is more certainty.

Toronto real estate market news

Above are just some of the reasons why you may not receive an offer on your offer night. With the help of an experienced Toronto real estate agent, you should be able to come up with a solution to this hurdle and sell your home.

If you aren’t currently working with an agent and have questions about the market, selling your home or any other real estate questions, contact me any time. I’m always happy to answer your questions and concerns and to assist you with achieving your specific real estate objectives.

*This is not intended to solicit individuals currently under contract with another real estate agent or real estate brokerage.

Toronto real estate market (June 2022)

Not unexpectedly June produced a substantial negative variance when compared to the numbers that the Toronto and Region residential resale market produced in June of 2021. Rising mortgage interest rates have over the last three months caused sales to drop fairly precipitously, and although sales prices are off from their high of February of this year, they remain higher than average sale prices achieved last June.

In June 6,474 properties were reported sold, a 41 percent decline from the 11,053 properties reported sold last June. The average sale price came in at $1,146,254, more than 5 percent higher than the average sale price of $1,088,991 achieved last June. Having said that, a review of what’s been happening since February, both as to sales and average sale price, gives a more accurate description of where the Toronto and Region residential sales market is going.

In February 9,044 properties were reported sold achieving an eye-popping sale price of $1,334,142. One could safely say that February was the height of the pandemic, liquidity-induced resale market. March produced more sales (10,902) but could not sustain the unprecedented average price. March’s average sale price dropped to $1,299,468. Higher mortgage interest rates kicked in April and since then both sales and average sales prices have declined dramatically.

Toronto real estate market (June 2022)

As the above-noted chart indicates, since February the average sale price has declined by $185,000, or 14 percent, and since March, sales have declined by more than 40 percent. These declines can be charted in direct relationship to the increase in mortgage interest rates. Although declines in both sales and average sale prices will continue as the Bank of Canada raises its benchmark rate in its effort to fight inflation, those declines will be more moderate going forward, unless the Bank of Canada raises rates so high that it tips the Canadian economy into recession.

Interestingly, June’s numbers continue to demonstrate that the demand in the Toronto and Region resale market has not dissipated with rising mortgage interest rates. In June, all properties (on average) sold in just 15 days, only 2 days more than the 13 days it took last year. (This number may not be entirely accurate since it does not reflect properties that were listed and cancelled, then re-listed at a lower price). Also, all properties reported across the region sold for 100 percent of their asking (also not an entirely accurate number) and in the City of Toronto at 101 percent of their asking price.

Regardless of the precise accuracy of these numbers they clearly demonstrate that there are many buyers in the marketplace searching to buy homes. As more immigrants settle in the greater Toronto area the demand will continue to grow and create the same market pressures that manifested themselves before and during the pandemic. They won’t be fully apparent until the Bank of Canada has inflation under some control and mortgage interests rates stop rising.

It should be noted that whereas during the pandemic (not that it is no longer with us) properties in Toronto’s 905 region sold faster and at higher prices than homes in the City of Toronto. That pattern has been reserved. As health and travel restrictions have eased, buyers are no longer looking for the space and safety that ground-level properties in the 905 offered. In June every housing type in the City of Toronto – detached, semi-detached, townhouse, and condominium apartments – achieved average sale prices substantially higher than corresponding counterparts in the 905 regions. Secondary markets – markets within 200 kilometers from Toronto – are similarly experiencing downturns both in average sale prices and sales.

The number of new listings coming to market will also have a substantial impact on both sales and average sale prices. In June 16,347 new listings came to market. This compares favourably with the 16,193 that came to market last year. However, due to declining sales, we enter July with 16,093 properties available to buyers, 42.5 percent more than June last year. If this continues buyers will have more choice, sale prices will be negotiated in the buyers’ favour, and more properties will languish on the market until they are sold or the listings cancelled.

Early indications in July are that the slide in sales and average sale prices will continue. Buyers are waiting to see how high the Bank of Canada will raise rates, and as a result how much lower prices will drop.

Have questions about the market, selling or buying?

Contact me any time. I’m happy to answer any questions you may have.

Prepared by Chris Kapches, LLB, President and CEO, Broker, Chestnut Park® Real Estate Limited, Brokerage.

Should I allow open houses?

Some common thoughts that may go through your head once you’ve decided to list your home for sale and have considered holding an open house are:

  • Do I really want strangers walking through my home?
  • Are people going to make a mess of my home?
  • Will my belongings be safe?
  • Should I even have an open house?

These are all common and valid concerns, I mean, who really likes the idea of random people walking through their home and looking at all of their belongings.

Unfortunately, the reality is, if you want to sell your home for the most amount of money in the least amount of time, your home will require as much exposure as possible. Allowing open houses ensures that you have covered every base when it comes to marketing your home for sale, even if doing so makes you feel a little uneasy. By allowing open houses, you are not only allowing potential buyers through your home but you are also allowing word of mouth marketing to take place among people who have visited your home and their friends and network.

Should I allow open houses?

Now, as much as the thought of allowing open houses may be stressful, your realtor should take several steps to make the process as comfortable and successful for you as possible. An experienced realtor will often take the following steps below when conducting an open house at your home to ensure your home is secure, tidy and well marketed:

Massive open house signage in your surrounding area 

We all see open house signs while driving around the city on the weekend, but how many signs should your realtor put out? The answer is as many as possible. In order to ensure your home receives the attention it deserves and requires to sell, you need to make sure your home stands out from the competition. Putting out more signs than the average open house does just that.

Open house online & print marketing 

An experienced agent will go above and beyond simply setting up open house signs to market your open house event. It’s important that you spread the word about your open house far and wide and to as many potential buyers as possible. There are a variety of ways of achieving this with the use of online and print marketing methods such as open house invites, flyers, online social media ads, evites  and other creative advertising methods.

“Please remove shoes” signage and requests 

A good agent will set up a “Please remove shoes” sign at the front entrance of your home and request all visitors to remove their shoes upon entering. This helps with reducing any potential mess or damage to your floors.

Sanitizing station 

As I write this blog, we are still dealing with the affects of covid19 and people are much more attentive to their hand hygiene than they were prior to the pandemic. Your realtor will likely set up a sanitization station near the front entrance of your home and ask visitors to sanitize their hands prior to viewing your home.

Limit Touching 

As mentioned above, due to covid19, many sellers don’t like the idea of random people coming into their home and touching everything. With that being said, buyers will want to view as much of your home as possible. How else will they know if they can fit their attire into your primary bedroom closet? Your agent will likely ask visitors to limit the touching of surfaces while in the home and will assist by opening doors and closets for visitors as needed.

Keep an eye on visitors 

During all open houses, your agent will ask visitors to sign in to keep track of who visits your home and will also keep an eye on visitors during their visit. Keep in mind that there may be times when your agent won’t be able to watch each and every visitor at the same time as they view different areas of your home. It is important to remove and or store any valuable items prior to allowing open houses or showings.

I’ve personally seen some agents install wireless wifi security cameras throughout the interior of the home while showing properties to my clients. Although this may be tempting to do, it often distracts potential buyers from focusing on your home’s beautiful features as they are too busy with the thought of being watched and listened to. Remember, you want to make visitors feel as comfortable while they are in your home and help them visualize themselves living there, you want them to feel at home.

Prepare the home before doors open 

Your agent will come to your home prior to your open house beginning to ensure that all of the lights are turned on and that the rest of your home is in perfect showing condition. It’s important to make sure you put away all dirty dishes, laundry, pet toys and food as well as any other clutter prior to the open house.

Should I have open houses?

Although the thought of having an open house may be a little intimidating, with the help of an experienced realtor, the process should really be quite straight forward. By not holding open houses, you are limiting your exposure to potential buyers could very likely limit your final sale price and possibly extend the number of days that your home has to be listed for.

Are you thinking about listing your home or do you have questions about the current market?

Contact me any time with your real estate questions or to request a free home evaluation to find out how much your home may be worth. I’m happy to help and to answer any real estate questions you may have.

Toronto real estate market (2022)

As forecast, the rising mortgage interest rates (not to mention other factors at play, like the war in the Ukraine, inflation, and ongoing supply chain problems) had a direct impact on the number of residential properties reported sold in April. At the end of April, the five-year fixed mortgage rate was 4.19 percent. In February the five-year rate was 2.79 percent, an increase of more than 50 percent in a mere two months. Coupled with the mortgage stress test that all borrowers must undergo when qualifying, it is not surprising that many buyers, particularly first-time buyers, have been forced out of the market. Those who qualify may have had to lower their price-point expectations.

One should not interpret the decline in sales as an indication that the Toronto and area residential resale market is softening or becoming more affordable. Properties sold at lightning speed in April and at strong prices. Prices were lower than the record achieved in February ($1,334,408), but still 15 percent higher than the average sale price of $1,090,414 delivered last year. This April the average sale price came in at $1,254,436, a 6 percent decline from February’s record number.

In April 8,008 properties were reported sold, down 41 percent from the 13,613 properties that changed hands last April. Sales reported in April 2021 remains the second highest monthly total on record, only behind the 15,613 reported in March of last year. It is important to note that since last April’s reported sales, no month has come close to April’s numbers. The best month after April last year was May, reporting 11,903 sales, and 10,939 properties reported sold in March of this year. Most months reported sales well under 10,000. This April’s sales are consistent with reported sales since the record peak early in 2021.

Days on market and sales to list prices are the litmus test of the strength or weakness in the market. April’s results clearly demonstrate the continued strength in the Toronto and area marketplace. In April all properties reported sold, including 2,173 condominium apartments, sold in only 11 days. Depending on housing type and location, properties were reported sold in even less time. For example, all detached properties throughout the greater Toronto area sold in only 10 days, while all semi-detached properties sold in only 9 days. Semi-detached properties in Toronto’s eastern districts continued to amaze, selling in only 7 days.

Toronto real estate market (2022)

Not only did all properties sell at the speed of light, but they did so at prices substantially higher than their asking price. All properties were (on average) sold at 107 percent of their asking price. In the City of Toronto, sales came in at 108 percent of their asking price, including condominium apartments. In Toronto’s eastern districts all properties sold at 113 percent of their asking price.

The clearest indication that the Toronto marketplace has not weakened and has not become more affordable is the performance of the condominium apartment sector. In April 2,173 condominium apartments were reported sold, 65 percent of them in the City of Toronto. The average sale price for all condominium apartments sold was $780,000. In the City of Toronto, the average selling price was $820,000, and in Toronto’s central districts, where 64 percent of all condominium apartment sales take place, the average sale price came in at an eye-popping $881,451. With average sale prices well above $1,000 per square foot, a buyer should expect substantially less than 800 square feet of living space for $881,451.

Rising mortgage interest rates should not cause market observers to lose focus on the fact that resale inventory levels remain historically low. In April months of inventory were only 0.9 for the entire greater Toronto area, and as in the case of days on market and sale to list price performance, even less depending on location and property type. Last year’s months of inventory were 1.3 months. With large numbers of immigrants making their homes in the greater Toronto area, the demand side of the market will continue. Almost 50 percent of more than 400,000 immigrants coming to Canada in 2021 relocated in Ontario and the greater Toronto area.

As we move into the late spring and summer months, and as interest rates continue to rise, we can anticipate negative variances compared to corresponding months in 2021. Notwithstanding these variances, and as this report has pointed out, the resale market will remain strong and as unaffordable as it has been since the beginning of the pandemic.

Have questions about the market, selling or buying?

Contact me any time. I’m happy to answer any questions you may have.

Prepared by Chris Kapches, LLB, President and CEO, Broker, Chestnut Park® Real Estate Limited, Brokerage.

Toronto real estate market (March 2022)

In the face of daunting obstacles, the Toronto and area residential resale market produced stellar results, albeit not the stratospheric results achieved during the same period last year. In the face of rising interest rates, the war in Ukraine and its global consequences, government legislation primarily directed against foreign buyers and investors, and a desperate lack of inventory, the Toronto and area market produced the third-best March and the second-best first quarter on record.

Any comparison with March 2021 is almost pointless. During the first quarter of 2021, the resale market was being driven by the frenzy of the pandemic, causing indiscriminate buying, particularly in suburban and secondary markets. Even without all the obstacles, the market is currently experiencing that level of activity was unsustainable.

In March, 10,955 properties were reported sold, almost 30 percent fewer than March of last year, but as indicated above, still the third-best March on record. As a clear demonstration of how strong the market was in March, the average sale price came in at $1,300,000, not far from the record price of $1,334,328 achieved just last month. March’s average sale price is almost 20 percent higher than the average sale price of $1,097,351 achieved last year.

Toronto real estate market (March 2022)

Given rising mortgage interest rates, it is not surprising that average sale prices have plateaued. The trend of constantly rising average sale prices is at an end and will stay steady until the current cycle of rising interest rates is at an end. Rising rates have the immediate effect of removing fringe buyers (often first-time buyers) from the market and lowering the price-point expectations of others.

If there was any doubt about the strength of the Toronto and area marketplace, two statistics dramatically prove the opposite. In March, all properties that hit the market (on average) sold in only 8 (unbelievable!) days. To emphasize this point, all 10,955 properties that sold in March were listed, marketed, negotiated, and sold in only 8 days. Even last year during Toronto’s strongest market in history, it took 10 days for all properties to be sold.

Not only did all properties sell in only 8 days, but they sold for an eye-popping 113 percent of their asking price, and this included 3,154 condominium apartments. In Toronto’s eastern trading districts all properties sold at 121 percent of their asking price. If a buyer were to go further east into the Durham region they would find that all properties that hit the market in March sold for 123 percent of their asking price. Semi-detached properties in Toronto’s eastern districts close to the central core continue to defy all market obstacles selling at almost 130 percent of their asking price. These statistics do not reflect a weakening market.

Despite the obstacles faced by the Toronto and area market, the growth in average sale prices was stronger in the 905 region as compared to growth in the City of Toronto. This continues the pattern that started during the pandemic, where less expensive homes offering more space were available.

Toronto real estate market (2022)

Overall prices in the City of Toronto increased by 15.8 percent and by almost 27 percent in the 905 region.

High-end luxury properties continue to sell well. In March 1,165 properties having a sale price of $2 Million or more were reported sold. Year-to-date 2,841 properties in this price category have been reported sold, 93 percent of these sales being detached properties in the City of Toronto and the 905 region. Last year only 982 properties were reported sold in this price category.

As the market moves into April, supply shortages continue to be a problem. In March a little over 20,000 new properties came to market, almost 12 percent fewer than the 22,747 that came to market last year. As we enter April, buyers’ choice remains limited. At month end there were 10,167 available properties for sale, down over 4 percent compared to the 10,603 available last year. Based on the pace of sales, there were only 0.9 months of inventory in the entire greater Toronto area. The supply was marginally better in the City of Toronto, primarily because of the availability of condominium apartments, coming in at 1.1 months of inventory. Given the population of the greater Toronto area (approximately 6.7 million) a healthy, balanced market requires at least 20,000 properties monthly on a continuous basis available to buyers.

Have questions about the market, selling or buying?

Contact me any time. I’m happy to answer any questions you may have.

Prepared by Chris Kapches, LLB, President and CEO, Broker, Chestnut Park® Real Estate Limited, Brokerage.

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