AFTER THE HOUSE INSPECTION…

WHAT ARE MY OPTIONS

I often get asked this question, particularly from first time home buyers.  Understanding the process is something buyers need to know in advance, and I always take the time to ensure they fully understand the meaning of all the clauses contained in the Offer.

If you have a Home Inspector you would prefer to use, let your agent know.  If you don’t know of one, ask your realtor to provide you with the names of 3-4 that he/she would reocmmend and select one from that list.  I always refer clients to Home Inspectors I know and trust and who I know will provide outstanding service to the Buyer, their client.

I always try to educate them too on the primary purpose of the inspection, and that is to look for major structural defaults, cracks in the foundation, whether the shingles are in dire need or replacaing, whether the furnace is on it last leg, etc.  Small items like a leaky faucet or an outlet that doesn’t work are not reasons to back out of a deal.

After the Offer is accepted, and the home inspection has been completed, then what?

Buyers have 4 options after the inspection has been completed.

1.   If the  Buyers feel there are too many items identified that need repairing and it would be too costly for them to address these issues, then they walk away, as it is their right to do so.  Both parties sign a Mutual Release and Buyer get their deposit money back, in full.

2.  The second option if theBuyer feels the remedies are agan, too costly and are unexpected, they can then submit an Amendment asking the Sellers for a reasonable price abatement to compensate them for the deficiencies the house inspector identified that require immediate repair.

3.  Their third option, and one which I don’t normally recommend, is for the Buyer to request the Seller to remedy the deficiencies found.  This can lead to difficulties, as one person’e meaning of “workmanlike manner” does not necessarily have the same meaning as the others.  The work could be hastily done, and done incorrectly, causing the Buyer problems in the future.

4.  And the fourth option, is to be happy with the report and firm up the deal!!

Just remember, there is no such thing as a perfect home…all Home Inspections will reveal some small items that will need attention, now or in the future, but these are non issues that should not lead to your deciding to walk away from the home.  Your Inspector will point out what to monitor over the course of the next several years. He will provide you with a detailed report of his findings so you can refer to it in future.  If something needs to be repaired, he can he can usually provide you with a general idea of what the cost would be to repair it.

Several years ago, my clients and I viewed a home in an upper middle class neighbourhood that they fell in love with. The house needed some work, in particular the kitchen, but my client was in the kitchen renovation business!! When we went into the basement, I immediately noticed that the floor had just been painted… (my first red flag!) then when I looked up into the joists, I saw the holes that were drilled all along the length of the house to allow for the electrical wires to feed through for the grow lights. There was also some black mould visible on the joists. Then the light bulb went on!!! This was used as a grow house…

I informed my clients of my suspicions, but told them not to be too alarmed… we can have the house inspected by a certified/registered house inspector, and also have environmental testing done, and they could make an informed decision based on the outcome of these inspections on whether or not they wanted to proceed. I informed them of the potential dangers and health hazards, and also had them sign a waiver that they were aware of the situation.

In this instance, it was determined that the grow house was only used for a short period, (only a few months) and there was no permanent damage, and my clients proceeded and bought the property, and are still living there today.

What is a Marijuana Grow Operation?

Marijuana grow operations can occur in every range of home available, from a detached in a moderately priced neighbourhood, to large homes in a multi million dollar neighbourhood, and even in condo apartments. They can be in homes located in residential, commercial, industrial or rural areas. These homes are usually very well maintained and do not appear out of place, and in fact, look quite ordinary on the outside.

However, the inside of these properties have been altered significantly to accommodate the grow operation, and usually these alterations to the electrical and heating systems are unsafe and not up to code. These electrical and plumbing modifications are required in order for the hybrid plants to grow and flourish and produce a high potency marijuana. These modifications make these homes unsafe for human occupancy because of serious hazards from mould, structures that have been compromised, and from chemical residue.

It is therefore very important that you are aware of certain things in the house, that can alert you to the possibility that the property was used for illegal purposes, and that it was used as a grow house. If you suspect the home you are contemplating buying was a grow house, call your local police department… they usually have a list of these properties and can potentially verify your suspicions.

Some things that can possibly identify a grow op.

1. The basement floor has recently been painted (usually battleship grey)

2. Check the joists in the basement where holes have been drilled to allow the wires to feed across the basement

3. Check for condensation around the windows

4. Strange smell or odour coming from the house

5. Unusual number of electrical wires leading from the house

6. Infrequent activity from the occupants who don`t appear to have regular jobs

7. Expensive cars in the driveway

8. Children`s toys left around front yard, but no children are seen

9. House has lights on for very long period of time, and often during the night

10. Unusual number of roof vents

11. Lack of snow on roofs in winter

12. No communication with the neighbours

13. Dark window converings

14. Numerous garden hoses, soil and pots around the house, with garden hoses running from doors or windows

15. On garbage days, there is never any garbage at the curb

16. Appears to be vacant, and yard poorly kept

17. House is usually vacant when listed for sale.

18. Check the previous sold history of the house… if it sold about a year before the current listing date, that could also be a clue.

How to detect a Marijuana grow operation when purchasing a home.

When purchasing a home you suspect may have been used for illegal purposes, it is important to have the home thoroughly inspected. A home inspector can point out certain visible things and can also identify any mould where visible. If you can visibly see mould, then it potentially could also be behind the drywall and spread throughout the house, which can be a serious health hazard leading to long term conditions.

A thorough environmental assessment should also be conducted including spore testing. These comprehensive tests will also identify any hidden pollution and mould levels in the home as well as the air quality.

If you suspect a property is being used as a grow operation, or see a property with many wires that may have bypassed the electrical meter, contact the police in your area. Also, speak with the neighbours to see if they have any knowledge of the prior occupants.

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The real estate industry sometimes uses language that appears at first glance to be clear, but do you as a consumer know what some terms really mean? At first glance, the words “Client” and “Customer” seem pretty clear-cut, but they mean completely different things to a REALTOR®. It also means a tremendous difference in how seriously you are taken as a Buyer.

Think we’re splitting hairs? The words “Client” and “Customer” and the way they relate to the REALTOR® as individuals make a tremendous difference in the types and level of service you receive. After you read why, you’ll know absolutely whether you want to be one or the other.

First, let’s start with a little history. REALTORS® have always worked with home Sellers to list their homes for sale on the market. Along with this service comes the responsibility to advertise the homes, network with other REALTORS® to find a Buyer, negotiate the sales contract and guide the Sellers to successful closings. Because of the time and expenses incurred by the sales representative and broker which will not be reimbursed until the closing of the home, Sellers have always been required to sign a listing contract. This contract enables the sales representative/broker enough time to properly market the property, find a Buyer, negotiate a contract and get the property to closing within the time frame allowed. It also protects the agent from home owners who wish to use services without fairly compensating the professional.

The real benefit, however, is for the home owner. Once the home owner has signed the contract, the sales representative/broker has the fiduciary responsibility to get the highest price possible for the home and to protect the Seller’s interests above all else. The sales representative must also follow provincial and federal mandated regulations as to ethics and legalities that are enforceable by a provincial council in conjunction with the local Real Estate Association. In other words, the contract is legally binding with the REALTORS® performance at stake.

Now that a contract has been signed, the home owner is a “Client” of the sales representative/broker, and enjoys the full privileges of a close, working relationship.

Buyers have historically worked with REALTORS® too, but it wasn’t until fairly recently that they have been asked to sign ”Buyer Representation Agreement.”  This is a change that has come about because of two reasons…abuse to Buyer’s agents and increased consumer awareness.

Without a contract the Buyer’s agent was particularly vulnerable to working without getting paid. Too often, Buyers would ask them to show them house after house, and then buy from another sales representative. One favourite Buyer trick is to attend open houses without their REALTOR® and tell the listing sales representative they aren’t working with anyone. Buyers mistakenly believe that they are learning about more homes without a sales rep. at their side, or that they may possibly get a better deal. The truth is…they don’t! They usually pay more for the home than they have to when they buy from the listing sales representative directly.

Then consumer awareness dawned. Buyers began to realize that whoever represented them at the closing table was on the side of the Seller, not theirs. They realized that they deserved to have a true advocate, and the Buyer’s agent was born. The only way was to create a binding agreement that protected both parties.

Good REALTORS® didn’t want to be burned again so the ”Buyer Agency Agreement” (now called the Buyer Representation Agreement) was created. Again, it was a protection for the REALTOR®, but it generates much more benefit for the Buyer. The main advantage is that it releases the agent from a fiduciary responsibility to the Seller and enables the agent to pursue the Buyer’s goals without any agenda.

Once the contract is signed, the sales representative goes into motion searching the MLS® for homes, and seeking homes through other avenues – foreclosures, FSBO’s, and their own database. At negotiations, the contracted Buyer’s agent becomes a “bulldog for the Buyer”, unrestricted by the Seller or Seller’s agent. Now they can make more demands, get a better price and better terms of sale for the Buyer.

Despite these advantages, some Buyers are still reluctant to sign. They don’t want to be “tied down” or they may mistakenly think that getting several REALTORS® to work with them will get them a better home or deal. They won’t. Part of the strength of the industry is the REALTOR® communication network. A Buyer working with several sales rep’s will quickly become a joke.

Without a contract, the Buyer is clearly not a Client. He/She is a “Customer” and when a good listing comes on the market either by word of mouth, e-mail from another REALTOR®, or on the MLS®, who do you think the Buyer’s agent will notify first…the uncommitted Buyer (Customer) or the contracted Buyer (Client?).

A contract makes a difference in other ways. For example, there are things the Seller may not want disclosed to the Buyer such as their urgency to sell, which could compromise their bargaining position. A REALTOR® who then discloses this information is in ethical violation and can be brought before the Real Estte Council of Ontario (RECO) on charges. Some offenses are serious enough to have a REALTOR® license to practice suspended or revoked completely.

But the Buyer has no such protections without a contract! Anything they say to an un-contracted REALTOR® may be passed along to the Seller. Why? Because, any REALTOR® who works for the Buyer without a contract automatically becomes a sub-agent for the listing broker, and is therefore working on behalf of the Seller.

Surprised? It’s all spelled out – in the listing contract and in the “Buyer Representation Agreement.”

A contract makes the difference in whether you are a “Customer” or a “Client” in a real estate transaction.

Which do you want to be?

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We all need a break from time to time, and one important decision facing you before you take that well deserved break… is “who is going to take care of my clients in my absence?”

First and foremost, you need someone who is trustworthy and honest, and has the same ethic you do in the way you conduct your business, someone you can rely on without hesitation and know that your clients are in good hands.

The one thing you need without question, is a Vacation Agreement, or Commission Agreement between you and the covering agent, so there is no misunderstanding when it comes to commission.  I usually give the covering an agent a synopsis of my current active client list and include any pertinent information I feel is necessary for them to know in order to assist my clients to the best of their ability.

As a courtesy, also, you should notify your clients/contacts of your pending vacation, and reassure them that a qualified agent will be assisting them if needed on your behalf, while you are away… so there is no interruption of service to them.

Some things to consider in your agreement are:

1. How much commission are you going to pay on any sale of your listing, or presenting of an offer?
2. If the covering agent sells one of your listings, and receive a back-up, how much will the covering agent receive on the back-up?
3. If someone calls while you are away to list your home, how much is the covering agent going to receive to list the property for you?
4. I you sell it when you return, how much are you willing to pay the covering agent for writing up the listing when it sells?
5. How will the commission be split as a result of any sign calls from one of my listings if someone lists their home, or if a buyer buys another property?
6. How much will the covering agent receive if the covering agent sells a property to one of your existing buyers they introduced to the property?
7. How much does the covering agent receive if you refer them directly to a buyer in your absence?
8. When a listing is sold, and the seller becomes a buyer, how much will you pay the covering agent if they purchase a home through them?
9. Who do ad calls belong to in your absence?
10. If covering agent sells to an ad caller, how much commission will you/they receive?

These are just some of the important issues that should be addressed prior to your leaving on a vacation. I’m sure there are others, and if you have any to share, would appreciate hearing from you!

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Reality TV has “The Worst Handy Man” and I suspect that other “Worst of” TV programs might be possible too! Experience shows that “DIY” (Do it Yourself) disasters happen because people underestimate the work done by others.

I have been studying Real Estate for a few years now and in addition to my training for legal contracts, building concepts, marketing methods, Government requirements and negotiating principals there are some important aspects of applied common sense gained from experience.

One primary challenge that presented itself to me, immediately after spending two (2) years in school to learn the basics of the Real Estate industry was that there are a lot of people who decide they can do it themselves because they think it is easy to do.

Other seemingly standard every day tasks, like driving a car and picking suitable clothing have also spawned “Reality TV” programs showing what NOT to do.

What about Real Estate? How difficult can it be?

No one individual listing is particularly challenging when considered on it’s own but putting everything together creates quite a challenge.

For me, time and time again, I rediscover that I need experience to really understand what I have learned. Gaining experience unveils the essence of knowledge, that is when you understand what you have learned.

I am very passionate about the Real Estate business because I know that I can help my friends and the people they care about meet their goals. Of the large number of possible requirements to sell your house many or most things will have some element of new knowledge or new experience. What will it cost you to sell your house on your own? Is the cost of possible errors or omissions and the value of your time and the frustration and anxiety worth more than the real estate commission?

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What I Need From You …. To Give You The Best Service

A  few guidelines/procedures to keep in mind when your home is listed for sale.

Setting Up  Showings

My office will call you to request an appointment when an agent has a prospective Buyer that would like to see your home. If you are not available, a message is left on your answering machine if you have one, or depending upon arrangements made, we will grant the request and provide access to your home with a lock box.

Make Your Home  Accessible

Having your home accessible to prospective Buyers as much as possible, is critical in the sale of your home.  Agents try to give as much notice as possible for requests to show your home, but there are times when last minute requests do occur.  Granting requests as much as possible is desirable … the request you turn away may be the purchaser you’ve been waiting for.

Dress For Success

Looking good is important when you want to make a great impression, whether for a job interview or a social function. The same is true of a home that is on the market. When the “For Sale” sign goes up in front of your home, it should be “dressed” for the occasion.

Since the first impression will be of the front of the house, a well-groomed exterior is crucial, from the landscaping to the paint. The interior of your home should be clean and tastefully decorated. Take care of any minor cosmetic repairs that are needed, such as cracked plaster or peeling paint. A sparkling kitchen and shiny bathrooms, clean windows, and the absence of clutter will help your home “show well”. Keeping your home looking good at all times is hard work, especially if you have children and are packing for a move. The dividends are impressive, however, because a home that looks well cared for has an excellent chance of selling quickly for top dollar.

First Impressions

Good curb appeal is a major plus when we market a home. A little bit of work on the front of your can pay big dividends.

When a potential buyer pulls up in front of your house, their first impression is absolutely crucial. Sometimes buyers won’t even look at a home with droopy shutters, sagging gutters, peeling paint and a bumper crop of dandelions in the front yard. Or they might go in expecting to find a “fixer-upper” that could be purchased at a bargain price. If a house looks neat and cared for from the street, the initial good impression will carry over as the buyers step inside.

It is not necessary to hire a professional landscaper, but listen to your Realtor’s suggestions when you list your home. Local nurseries can help you select blooming plants that will thrive in your area. Keep the lawn mowed, and regardless of the season, take care of exterior maintenance. Strong curb appeal will help your home sell more quickly and for top dollar.

A Sparkling Kitchen

There’s no doubt about it–the kitchen is one of the most important rooms in the whole house for many prospective buyers. Smart sellers will take a close look at how they can make their kitchen a real asset when it is time to sell.

Your kitchen doesn’t need to be state-of-the-art to be attractive. The first step toward enhancing your kitchen’s appeal is a thorough cleaning. This includes the walls, cabinets (inside and out), floors, and appliances. Keep the counter tops as clear as possible of small appliances and gadgets. Consider low-cost improvements which can make a big difference, such as a coat of paint, fresh wallpaper, or new floor covering. Be sure to keep the kitchen sparkling when the house is being shown. This means no dirty dishes in the sink or mouldy cucumbers in the refrigerator. This extra effort will pay great dividends!

Help Your Realtor

Once your home is listed for sale, it may be difficult for you to step aside and let your agent take over. When prospective buyers arrive, you may want to stand by to point out the closet extenders, the hidden spice cabinet behind the kitchen door, the energy-saving storm windows or the updated copper plumbing. If you really want to help, however, you will leave the house whenever it is being shown!

We have found that the sales process does not really begin until buyers have begun      to voice their objections about a property. Sometimes these concerns are serious     enough to remove your house from consideration. Often, however, people voice objections as a defense mechanism because they really love the house and they want     to buy it. We are trained to know the difference. If a seller is standing at the agent’s elbow, the buyer won’t be comfortable enough to let this process take place, and we could lose the sale. The best way to help is to give us the room to do our job.

Summary

Very few people will buy a house because they are attracted by fantastic bathrooms. Buyers do react to bathrooms that are not cared for, however, because they view them as a reflection of the overall condition of the property.

Many buyers know that plumbing repairs potentially represent a major expense. They get nervous about dripping faucets, loose tiles, and running toilets. Your pre-marketing preparations should include making sure that your plumbing is working properly and that any cosmetic damage caused by former leaks has been repaired.

Keep the bathroom spotless while your home is on the market. Get out the scouring powder, mildew remover, glass and tile cleaner and a scrub brush. Re-caulk around the tub and shower, if necessary. A new shower curtain, bath mat, and nice smelling soap can help give the buyer one more positive reason for liking your home!

Quite a lot of you have also been asking about Land Transfer Tax (LTT), and what it means for first time home purchasers. Thanks to Revenue Canada, here is some information for you:

General

Land transfer tax applies to all conveyances of land in Ontario. First-time homebuyers may be eligible for a refund of all or part of the tax payable.

Amount of Refund

The amount of the refund claimed will, if granted, offset the land transfer tax payable. The maximum amount refundable is $2,000.

Examples:

There is no interest paid on this refund.

Limitation

• The refund will be reduced if one or more of the purchasers are not a first-time home purchaser. The refund will be proportionate to the interest acquired by the individuals who qualify for the refund.
• For example, where a parent who is not a first-time purchaser and a child who is a first-time purchaser, purchase a home with equal 50/50 interests, the child may claim 50% of the land transfer tax refund. The child’s claim cannot exceed 50% of the maximum allowable refund (i.e. 50% of $2,000).
• A qualifying purchaser may also claim a refund in proportion to his or her spouse’s interest if that purchaser’s spouse has owned a home before becoming the purchaser’s spouse, but not while that purchaser’s spouse.

Requirements to Qualify for a Refund

Eligibility Requirements

• The purchaser must occupy the home as his or her principal residence no later than nine months after the date of the conveyance or disposition.
• The purchaser cannot have previously owned a home, or had any ownership interest in a home, anywhere in the world, at any time.
• If the purchaser has a spouse, the spouse cannot have owned a home, or had any ownership interest in a home, anywhere in the world, while he or she was the purchaser’s spouse. If this is the case, no refund is available to either spouse.
• The purchaser cannot have previously received an Ontario Home Ownership Savings Plan (OHOSP)-based refund of land transfer tax.

Time Limit to Apply for Refund

A qualifying purchaser must apply for the refund no later than 18 months after the date of registration of the conveyance or the date the unregistered disposition occurs.

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