The Government of Canada has announced that the Stress Test is being revised to make qualifying for a mortgage a reality for more Canadians. Today we have to qualify clients at the benchmark rate of 5.19%, regardless of the client’s contract rate.


The changes will mean that instead of using 5.19% to qualify clients, I will be able to use a weekly median rate plus 2.00%. So let’s say the weekly median rate was set at 2.85% today, we would use 4.85% as the qualifying rate which is 34 basis points less than the old qualifying rate (5.19%). 34 basis points is a massive difference that will make the debt servicing ratios much more reasonable. Every other week I see situations where clients can debt service the real contract rate on a mortgage amount, but don’t pass the stress test at that same mortgage amount. In these scenarios we reduce the purchase price they would be approved for.


I will fill you in as more details come out. In the meantime, don’t hesitate to reach out with any questions.


 


It was announced today that the new benchmark rate will be the weekly median 5-year fixed insured mortgage rate from mortgage insurance applications, plus 2%.

These changes will come into effect on April 6, 2020.

Also, change is likely for uninsured mortgages. The Office of the Superintendent of Financial Institutions is considering the same new benchmark rate to determine the minimum qualifying rate for uninsured mortgages, and is seeking input from interested stakeholders before March 17, 2020.

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EARLY TRANSFER OF LAND ON NEW BUILDS

We have a high land transfer tax in Manitoba. It is so high that people will sometimes go to some effort and expense to avoid at least some of it. One method used by buyers of “new builds” is to transfer the lot at an earlier time in the building process, so they only pay land transfer tax on the value of the lot, not on the entire value of the lot with a new house on it. The idea is simple enough, the lawyer transfers the lot to the buyer just after the contract is signed so the land transfer tax is only payable on the lot value, instead of waiting until the house is built and then doing the transfer on the value of the lot and the house together. The difference can be $2,000.00- $7000.00 in land transfer tax depending on the value of the house and lot. Some, but not all, new build contracts take this into account and have a standard clause that allows this. Often the vendor (builder), or whomever owns the lot, will take a caveat out or have a land transfer back signed on file just in case the buyer does not complete the deal after the land transfer. This idea has some positives but it also does usually require that the buyer of the home has to make an earlier draw on their mortgage of course and then begin paying principal and interest right off the bat as opposed to waiting until the home is built (or until the first progress payment, if that is how they are doing it). Buyers will be tempted to do this because the land transfer tax is so distasteful, but to make a proper decision, they need to assess this choice against the cost of pulling out money early on their mortgage and beginning to pay interest as well as taking into account the opportunity cost of any cash they are putting into the early lot purchase. Have this talk with them before they make the decision.

Gord

**as always, every situation is different and laws can change, if you have doubts, call someone


Gord C. Steeves*

AVS Law LLP


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Getting a DIY Renovation Done On time and On Budget

Two of the biggest stressors for DIYers are projects that cost too much or take too long. Unfortunately, there’s no sure way to guarantee that one or the other (or both) won’t happen. But there is a lot you can do to minimize the probability. When budgeting, a big mistake DIYers make is not considering the little things. For example, you might budget for drywall panels but neglect to include the cost of nails, tape and plaster. It's easy to overlook these small items thinking they won't add up to much of an expense. But often they do. In fact, for many renovation projects, the little things account for up to 20% of the cost. Another expense that is often overlooked is taxes. When you find a bathtub you like for $399, be sure to budget for what you'll actually pay out-of-pocket. Also, don't forget possible delivery expenses. A budgeting tip many experts recommend is to price everything you need and then add 10%. That gives you a buffer. Regarding scheduling, consider whether or not you've done this type of project before. If you're laying hardwood floors for the first time, there's a learning curve. You'll likely take two or three times longer than you would if you were more experienced. Even if you have experience with the type of project you’re undertaking, it's human nature to underestimate how long it will take. So, if you feel confident you can install that sink in an hour, give yourself two. A lot of this, of course, is common sense. But if you take a common sense — rather than an optimistic — approach to budgeting and scheduling, you'll stand a much better chance of your DIY project going smoothly. 

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There may be no better time to sell your home than in the summer months. Though spring is usually seen as one of the more brisk homebuying periods, for those selling a home in summer, there are great opportunities to be taken advantage of when the temperature rises.

Whether tax refunds have (finally) been processed, meaning homebuyers have access to capital, or inventory is low when compared to the amount of people buying — or simply the motivation of most homebuyers to lock in a property before school starts in the fall — summer home selling can be one of the most lucrative ventures of your financial life.

But this doesn’t mean one can simply rely on the power of real estate seasonality in the summer to do the heavy lifting or that listing a home in the so-called “best month to sell a home” will have offers rolling in from the get-go.

That’s because getting an offer when selling a home in the summer is not the ultimate goal; getting an offer, at the best price possible, is.


To ensure your property gets discovered in a crowded, frantic — often profitable — market and to help you maximize top dollar for your home, here are three strategies to add to your homebuyer to-do list.

3 Tips For Selling A Home In Summer

Summer home selling


1. Showcase The Exterior


There’s no question about it: sprucing up the exterior of a home can do wonders for both a property’s curb appeal, as well as its ability to attract homebuyers. This is even more accurate during the busy summer selling season.

This is, essentially, for two reasons: One, the condition and presentation of a home’s exterior gives would-be homebuyers a snapshot of what the rest of the property is like. (Whether correct or not.) Two, summer is a time when outdoor living areas get their most use. Having a clearly-defined outdoor entertaining space can be a real boon to your selling efforts.


Here are a couple of tips to help you maximize the exterior of your house when showing it:

  • Trim and manicure: Be sure to mow the lawn, trim the shrubs, and water the plants and lawn to give a vibrant, clean look. Also look at other outdoor areas, such as driveways and exterior doors, that might need a going-over to bring your exterior up to standard.
  • Highlight outdoor living areas: Do you have an outdoor BBQ or pool or some kind of patio/deck on the premises? Stage them in a way that lets prospective homebuyers envision themselves making memories in this space.
  • Add outdoor living area space: You may not have the time or budget for this, but if you do want to inject some profit potential into your property, adding something like a fire pit or revamped deck can often do wonders for your bottom line.

2. Keep Things Cool 


With the sunshine and dry weather of summer also comes, depending on where you live, a fair amount of heat and humidity. It’s vitally important you keep your home as comfortable and inviting as possible for homebuyers that come over for a viewing.

Often this means thinking about things from a homebuyer perspective. What would make you comfortable if you had been traipsing around town all day, in the heat, looking at properties? A couple of things you might want to include:

  • Keep the A/C running: Yes, air conditioning can run up the energy bill considerably, but when staging a property, it’s important to think about a return on your money and ensure your home is cool and comfortable. Will a couple hundred dollars spent now be worth thousands of dollars later in the form of an offer? That’s usually the case.
  • But not too cold: You want your home to be cool and comfortable, not colder than the Arctic and having homebuyers reaching for the sweater. Find a middle ground and keep the thermostat set for a comfortable temperature.
  • Have refreshments ready: A pitcher of iced tea and snacks isn’t just something for realtors to set out. As a seller having these “stand-bys” at the ready can make a great (and eventually lucrative) impression on homebuyers.

3. Price It Right


Many folks selling a home in summer believe, and rightfully so, that summer is a great time tosell a home. With many more buyers than the available inventory can support, they reason that listing their property with a high starting price (and wait for the negotiations to begin) is the best approach to selling a house.

Unfortunately, this ignores one of the cardinal rules of real estate: the longer a property sits on the market, the more buyers begin to “wonder” what’s wrong with it? Rightly or wrongly, buyers — and the agents that represent them — see listings that have been on the market for multiple months as flawed.

The key is to price your home right, from the beginning. (Your real estate agent can help you with this.) Don’t worry, in a competitive market — and with the right price — you’ll often get offers above the listing price. But this is impossible to do if you price yourself out of a market, from the beginning, in the hopes that you get that stratospheric amount you’ve been dreaming about.


Hook, Line & Sinker


Selling a home in summer can be one of the most satisfying, if not life-changing, things you can do. But it requires more than simply putting a “for sale” sign in the front yard and waiting for the offers to flood in.

It’s your job when when selling your home to ensure your property is clean, fresh, comfortable — and priced realistically — to ensure that homebuyers can picture themselves living in your abode. Not focusing on what may or may not be wrong with your home.

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Protecting your Home Gadgets from Hacking


Imagine your coffee maker switching on by itself, staying on for hours, overheating and becoming a fire hazard. That's not science fiction. As more and more appliances incorporate WIFI, the opportunities for hackers to play havoc with your home gadgets increase. How do you prevent that from happening? Here are some safety tips:


• If your gadget uses a password to access the settings, change that password frequently. Ideally, change it once every 3 months. • Some gadgets, such as alarm systems, come with their own connection to the internet. Learn how to turn that connection off if it becomes necessary to do so.


• Don't leave an internet-connected appliance or other gadget on constantly unless it’s necessary. For example, you don't need your home speaker system connected to your digital music providers all the time.


• Baby monitors with video are a common target for hackers. Use a password unique to that device and change it often. Never leave the monitor on when not in use.


• Never share passwords with anyone unless it is absolutely necessary. Most home WIFI systems have a "guest" feature with a separate password and limited access. Use it.

In this age of internet connectivity — from coffee makers to stereos and even washing machines — it's smart to play it safe.


Know what's connected and protect yourself.

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The 4 Ps to Maximizing your Selling PriceSmile


When you sell, you’ll probably want to get the best possible price for your property. Who wouldn’t? Unfortunately, there are many ways to inadvertently leave money on the table – sometimes thousands of dollars.


How do you avoid that possibility?


Just remember the 4 Ps:


• Prep. Do everything you can to prepare your home so that it looks great to buyers. Clean, declutter, fix, make improvements. Home staging can also help. In fact, effectively staged homes have been shown to sell for up to 5% more than comparable unstaged properties.


• Price. Set the right asking price. That’s crucial. If it's too low, you'll attract only deal-hunters — and you might end up getting less than you should. If the asking price is too high, however, you'll discourage those buyers who might otherwise be interested and willing to make a good offer. Be careful with pricing!


• Promotion. There may be qualified buyers out there who would be eager to see your property. But, they need to find out about your listing and the great features of your home first! Reaching these buyers requires more than merely profiling the listing on the MLS. Homes that sell for top dollar often have strong marketing — directed to the right buyers.


• Proposal. Once an offer comes in, there may be an opportunity to negotiate with the buyer to maximize the final price you get. This requires deep knowledge of the local market as well as street-smart negotiation skills. If done effectively, these negotiations can help put more money in your pocket.


These four Ps are easy to remember, but sometimes not so easy to implement! That's why working with a great real estate agent is so important.


Contact me to get the conversation started.

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June 21, 2019

Good morning, a beautiful June day.

Most sales involve houses and lots that are solidly established and have existed for a very long time in very standard areas. The neighbourhoods were developed in good order and everything fit and there were few deviations. As time goes by though, additions are put on, land is divided or consolidated, things change, and there is more risk.

Title insurance

Title insurance is a type of insurance that clients purchase at closing, through the lawyers office, to protect them when they are buying a house. It costs around $300.00 and protects them from a variety of problems. When people purchase a house, there is risk. Buyers used to often insist upon receiving a survey document from the vendors or they would buy their own. A survey would show the legal boundaries of the lot and the location of the buildings on that lot. If anything was in the wrong place, either encroaching on another lot or if something encroaching from another lot, it had to be dealt with before possession.

Eventually, insurance companies presented themselves and decided to insure this risk of title defect for people and surveys became more rare. Title insurance covers other risks as well, defects and problems with title, liens, fraud, registration of documents, utilities issues etc. (one person submitted a coverage claim for haunting…apparently denied).

Banks and lenders would often not advance money without a survey, now they generally accept insurance in lieu of.

We want to be a bit careful though. Title insurance does not necessarily rebuild things, it takes them down and covers against loss of value but that is a bit different than a rebuild. Clients can sometimes have a false sense of security. I tell clients it is like any insurance contract, the details matter.


By Gord Steeves

Lawyer at AVS Law

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