In this issue

Hi Brenda

Welcome to the February issue of my monthly newsletter!

This month’s edition looks at the property assessments vs. their market value, as well as talks about how a backup offer can secure your dream home. You will also find some interesting statistics on the mortgage and the real estate markets. Please let me know if you have any questions or feedback regarding anything outlined below.

Thanks again for your continued support and referrals!

Annual Provincial Property Assessment notices have been arriving in most mailboxes across the country (timing of delivery varies), giving some homeowners a smile, others a frown. But wait, this assessment is not tied to a current true market value. Provincial property assessment values are determined in July of the previous year, in an automated fashion. Considering the time lag alone an assessment should never be solely relied upon as any sort of relevant indicator of true current market value. Not for the purposes of purchase, sale, or financing.

Think of the assessed value instead as something akin to a weather forecast, spanning far larger and more diverse areas than the unique ecosystem that is your neighbourhood, your specific street, or your specific property. A weather forecast made the previous July, not the previous week.

If you wish to determine a selling price on your own property, enlist a professional. Valuing your own property is not a do-it-yourself project.

Consider the expert opinion of your skilled local Realtor.Consider ordering an appraisal for an accurate reflection of current market value.

Estimations, and professional appraisals have a limited shelf life, perhaps as little as 4 weeks in fast moving markets.

Ultimately market value is determined by what a well-informed buyer is willing to pay for a home, and what a well-informed seller is willing to accept. The key of course is to be well-informed.

In closing, please do not rely on your government property assessment for a fair market value of your property. Do not rely entirely on the buyer’s opinion or the seller’s opinion in an unlisted private transaction for a fair market value. Do not rely on your neighbours, friends, or family members opinions for fair market value of a property.

Do enlist the services of a professional, start with a call to your local Realtor and speak with somebody who has their head in the game.

Have you found the house of your dreams?

But there is already an accepted offer in place?

OK, but are there outstanding subjects on the offer? Perhaps there’s a ‘subject to sale’ with a 72-hour trigger clause against the potential buyer, and this one condition might still be anywhere from two to six weeks from removal. Why sit back and wait to see what happens over the following weeks?

In a softening market ‘subject to sale’ becomes more common.

Get in the game: write a backup offer.
Over the last few years, more purchase offers have fallen apart due to financing than in the past couple of decades combined. Financing has become that challenging, and few people realize it until they actually write an offer and make the application.

When it comes to mortgage financing, while money never have been cheaper… it’s also never been harder to get.

So, if you find your dream home and it already has an accepted offer, follow through with writing the backup offer anyway. It is not a waste of time for you or your Realtor. Historically clients and Realtors alike may have felt this was a wasted process. No longer!

If you’re the seller, take the time to think through the written offer in front of you before accepting one with an exceedingly long subject removal period of, say, two to six weeks, or an offer containing a ‘subject to sale’ that lasts

a month or longe. Keep in mind that despite what I am urging buyers to do, very few will write a backup offer if another offer is already in place. People don’t like to bump other people; it feels confrontational. So in effect you are removing your home from the market whether you think so or not.

These subject-to-sale offers typically have a '72-hour clause'. This clause means that if another offer is written, the original buyer has 72 hours to remove all subjects and go firm. Whether they have met these conditions or not, it becomes their decision to roll the dice and follow through with their offer.

As Canadians, we are often very polite, perhaps too polite. We give thanks to those who thank us for thanking them. We apologize when offered an apology. It’s the Canadian way.

And so, we don’t really want to trigger the 72-hour clause on somebody. We don’t like putting others in uncomfortable situations. The reality for the seller is, if you have a long subject removal offer on your property, it is highly unlikely that anyone else is going to write an offer on it.

Conclusion
As a seller: Be wary of taking placeholder offers laden with long subject removal dates which put you in a position where you are subsequently hoping for a backup offer. You’re unlikely to get one.

As a buyer, write backup offers. If you are serious about the property, don’t be shy about triggering the 72-hour clause. Get your elbows up, get in the game, and make it happen.

Homeowner Tips

Recent studies have shown that the old adage of buying the worst house on the block may not offer the best rate of return. Often it is the worst house, and priced accordingly, for good reason. As an investment strategy one is often better off focusing on the neighbourhood itself, with an average home in a hot neighbourhood often doing far better than the ugly duckling in a less desirable area.