COVID and the housing market

[GreyGhost]

I'm not getting what I expected for my place so start all over. In years gone by there could be more than one conditional sale in the chain.

Also possible. I don't think I'd play along with conditional upon the sale of a property as a seller. I'd either take less money or keep looking. Theoretically you could use an escape clause to keep it on the market but I don't think that works. It's the kiss of death and nobody looks at your property anymore as they have no interest in a bidding war. I don't think I've ever seen an escape clause house that sold for more than the conditional sale price.

 

[nobbie48]

Also possible. I don't think I'd play along with conditional upon the sale of a property as a seller. I'd either take less money or keep looking. Theoretically you could use an escape clause to keep it on the market but I don't think that works. It's the kiss of death and nobody looks at your property anymore as they have no interest in a bidding war. I don't think I've ever seen an escape clause house that sold for more than the conditional sale price.

We were involved in a conditional purchase decades ago. The place we were looking at wasn't moving (neither was ours) and they accepted our conditional offer even though it was low. We feel real estate used our conditional offer to pry out a firm one.

Fortunately for us the deal fell through. We would have taken over a mortgage that would have come due at 22% and killed us. The area as well has gone downhill.

 

[backmarkerducati]

My buddy "sold" his house back in September--unconditional offer. The buyer couldn't close, as we understand it, due to finance.... Mid five figure deposit is now in my buddy's bank account--surprisingly with no fight. Sucks for that buyer to be short at closing and then to lose a pile of money! The buyer's lawyer started asking stupid permit question a week before closing, the property was sold as-is so all were hail-marry moves to find a hole to try and get him out of the deal.

Luckily the house sold immediately after being put back on the market, for more than the first deal. It was someone that missed out (waited too long) to put in an offer the first time around. Knock on wood this one closes....

 

[GreyGhost]

My buddy "sold" his house back in September--unconditional offer. The buyer couldn't close, as we understand it, due to finance.... Mid five figure deposit is now in my buddy's bank account--surprisingly with no fight. Sucks for that buyer to be short at closing and then to lose a pile of money! The buyer's lawyer started asking stupid permit question a week before closing, the property was sold as-is so all were hail-marry moves to find a hole to try and get him out of the deal.

Luckily the house sold immediately after being put back on the market, for more than the first deal. It was someone that missed out (waited too long) to put in an offer the first time around. Knock on wood this one closes....

That is ideal for the failed buyer. I expect most transactions that fall apart to end up in a lawsuit with buyer losing six figures.

 

[mimico_polak]

Also possible. I don't think I'd play along with conditional upon the sale of a property as a seller. I'd either take less money or keep looking. Theoretically you could use an escape clause to keep it on the market but I don't think that works. It's the kiss of death and nobody looks at your property anymore as they have no interest in a bidding war. I don't think I've ever seen an escape clause house that sold for more than the conditional sale price.

My sister did this with no issues a few years ago before the insanity.

They put in a deposit on a property near Mississauga Rd that they liked, on the condition that they sell their house first.

However, IF the seller could prove there is another offer on the table (more or less than what sis offered), my sister had 24h to either buy it, or pull out of the deal with no penalty.

They couldn't sell their house for what they needed, the seller of the new house showed an offer that my sister stated 'we won't complete the transaction'. Sister got her deposit back, seller sold for a higher price to someone else, everyone walked away happy.

Then she dropped 700k on a renovation and on a backyard upgrade (pool + half basketball court) to create the house they wanted all along from what they had.

 

[Scuba Steve]

That is ideal for the failed buyer. I expect most transactions that fall apart to end up in a lawsuit with buyer losing six figures.

We did this when we bought and surprise in a few days there was a firm offer for more. I don't think they expected us to be able to come up with the funds. We just said fine went firm and that was it


Sent from the future

 

[crankcall]

Think we covered it a few pages back , many preapproved 6 months ago , are not now . Preapproved is no guarantee, it means your an excellent candidate . And you now have time for an inspection and to shop a bit , that nonsense of bid today or it’s gone by dinner is loosing traction, for now .


Sent from my iPhone using GTAMotorcycle.com

 

[nobbie48]

Expert, regurgitation or pot stirrer?

If a buyer seems to be headed for disaster due to a pre-build agreement is this a possible parachute?

That one is scary with the builder going from boutique size to blockbuster in one step.

 

[mimico_polak]

Yet another example of not understanding the risks of buying a pre-build property....

Ontario couple walks away from $140K after dispute with developer

The last year and a half have been an emotional roller coaster for engaged couple Joe Jennison and Alicia Murrell.

kitchener.ctvnews.ca

Lost 140k because they walked away from their deposit.

TLDR:
Builder started offering incentives to keep selling properties, which they felt they're entitled to AFTER they bought their property.
Occupancy fees effectively doubled to $6600

Just wow...wonder how they'd feel if the market went the other way.

 

[Evoex]

Yet another example of not understanding the risks of buying a pre-build property....

Ontario couple walks away from $140K after dispute with developer

The last year and a half have been an emotional roller coaster for engaged couple Joe Jennison and Alicia Murrell.

kitchener.ctvnews.ca

Lost 140k because they walked away from their deposit.

TLDR:
Builder started offering incentives to keep selling properties, which they felt they're entitled to AFTER they bought their property.
Occupancy fees effectively doubled to $6600

Just wow...wonder how they'd feel if the market went the other way.

just watched this, your take is not quite accurate.

1) the builder devalued their home by $200k shortly after they closed the deal
2) the builder doubled the maintenance and occupancy fees vs what was on the contract they signed.

They opted to get out the deal to lose only their down payment, because the builder could not/would not give a date that the condo corp would be formed which would stop the occupancy payments. Those payments do not go towards anything, for those not aware.

They got off lucky, could have lost more if the builder opted to sue.

 

[mimico_polak]

just watched this, your take is not quite accurate.

1) the builder devalued their home by $200k shortly after they closed the deal
2) the builder doubled the maintenance and occupancy fees vs what was on the contract they signed.

they opted to get out the deal to lose only their down payment, vs that and have the builder sue them.

I’ll agree with #2 that I’m off. But they did double it against the contract.

Builder can offer incentives to entice buyers to sell their product. Yes it devalues the product they bought…but the market changed. Simple.

Elon drops the price of the ModelY by 10k on day 5. Does the buyer on Day 4 have any recourse except for stopping their feet?

Same situation. Just more zeroes.

 

[Evoex]

I’ll agree with #2 that I’m off. But they did double it against the contract.

Builder can offer incentives to entice buyers to sell their product. Yes it devalues the product they bought…but the market changed. Simple.

Elon drops the price of the ModelY by 10k on day 5. Does the buyer on Day 4 have any recourse except for stopping their feet?

Same situation. Just more zeroes.

well as per the interview i watched, they 'claimed' they don't necessarily care about not getting the incentives

they cared more about the fees doubling with no end date in sight. 6 months = about an extra 40k that doesn't go towards squat. this compounded with the devaluation..yeah that's rough.

 

[mimico_polak]

well as per the interview i watched, they 'claimed' they don't necessarily care about not getting the incentives

they cared more about the fees doubling with no end date in sight. 6 months = about an extra 40k that doesn't go towards squat. this compounded with the devaluation..yeah that's rough.

That is the risk of pre builds. My cousin had 2 years of ‘occupancy fees’ when he first moved in.

Is the builder wrong in doubling the fee? Yes.

But the incentives do devalue the house because effectively those add value whereas here they took away.

They could’ve stuck with it and not lost 140k. But they chose to walk. They’re lucky to only lose 140k.

 

[nobbie48]

well as per the interview i watched, they 'claimed' they don't necessarily care about not getting the incentives

they cared more about the fees doubling with no end date in sight. 6 months = about an extra 40k that doesn't go towards squat. this compounded with the devaluation..yeah that's rough.

Sadly, price matching is only a thing at some grocery stores. It's costing them $140K to wipe the slate and that sucks. However with the uncertainty in the RE market, what if there is a total melt down and they in essence, rent for the next three years until enough units are sold to register the property. $6K X 36 = $216K. Got a crystal ball?

Will these horror stories affect the market long or short term? I know a couple of people that did very well buying pre-construction and moving up every five years after a tart up and bit of landscaping.

When I bought my industrial condo it was a buyer's market but some projects were builder controlled and they were gouging on maintenance fees. I could afford the 13% interest but not the triple fees.

Interesting watch on some Canadian housing regulations. The various recovery lags are of concern. Drastic action is needed but it is a double edged sword. Somebody gets slashed, the buyer, bank or builder. Then there are the dominoes.

 

[Evoex]

They could’ve stuck with it and not lost 140k. But they chose to walk. They’re lucky to only lose 140k.

The correct answer is possibly.

For all we know the developer could have gone under in 2 years, maybe the place never gets built. Remember the fiasco downtown, what was it One Bloor that had to be restarted 2, 3 times? Maybe the occupancy fees get tripled in the meantime.

If no one is willing to tell you when the place will actually finish, what kind of timeline do you put on it that doesn't see your family under a bridge?

Maybe they were lucky to walk when they did, time will tell!

That aside, they were dumb for getting into real estate in 2022. There I said it.

 

[GreyGhost]

The correct answer is possibly.

For all we know the developer could have gone under in 2 years, maybe the place never gets built. Remember the fiasco downtown, what was it One Bloor that had to be restarted 2, 3 times? Maybe the occupancy fees get tripled in the meantime.

If no one is willing to tell you when the place will actually finish, what kind of timeline do you put on it that doesn't see your family under a bridge?

Maybe they were lucky to walk when they did, time will tell!

One bloor was recently declared insolvent. It is a long way from finished. I would be very nervous holding one of those units. Given the length of time since they were purchased, I expect most people will close and dump asap. Even fire sale prices are far above what they paid.

 

[Mad Mike]

I wonder if the Ontario gov't would have the massive balls it would take to enact the same ban here.

Personally I don't think so. Not with the current party, or any of the other options have the balls for it.

I don’t know what portion of the market is short term rentals, or if banning them would free up enough inventory to alter supply/demand enough to alter prices.

I think one of the biggest drivers of short term rentals is risk mitigation. Current laws make small landlording an extremely risky business, short term renting mitigates a lot of that.

 

[mimico_polak]

The correct answer is possibly.

For all we know the developer could have gone under in 2 years, maybe the place never gets built. Remember the fiasco downtown, what was it One Bloor that had to be restarted 2, 3 times? Maybe the occupancy fees get tripled in the meantime.

If no one is willing to tell you when the place will actually finish, what kind of timeline do you put on it that doesn't see your family under a bridge?

Maybe they were lucky to walk when they did, time will tell!

That aside, they were dumb for getting into real estate in 2022. There I said it.

Let’s also consider the fact they wanted to buy a precon to flip. Their ‘loss’ was nothing but on paper and the bank could’ve pulled the mortgage due to reduced appraisal.

Lots of what ifs. But if you can easily (seemingly) walk away from 140k…it ain’t that bad.

 

[Evoex]

Let’s also consider the fact they wanted to buy a precon to flip. Their ‘loss’ was nothing but on paper and the bank could’ve pulled the mortgage due to reduced appraisal.

Lots of what ifs. But if you can easily (seemingly) walk away from 140k…it ain’t that bad.

flip? must have missed that part.

yeah, gg

 

[mimico_polak]

flip? must have missed that part.

yeah, gg

They didn’t say it. That’s my assumption.