Vernon Real Estate – Blog & News

Subject to Sale Offers

Posted by admin on June 28, 2011 | No Comments

 When selling, have you ever wondered why you should or should not consider offers which are subject to the sale of a Buyer’s property?
 Many possible factors can influence your decision.  At the top of the list would be to find out if the Buyer will accept you adding a “time clause.” A time clause allows the seller to keep their property on the market.  If the seller receives another acceptable offer then the Seller notifies the first buyer (through their Realtor®) that they have so many hours to remove any and all conditions from their offer or step back and let the second Buyer proceed to buy the property.  The number of hours for notice is set at the time the purchase price, possession etc are negotiated.  Sellers should be aware that the higher the number of hours, the more of a deterrent it is to any other buyer.  Commonly 24 to 72 hour periods are used.
 In a time clause, buyers sometimes ask to exclude weekends, or at least Sundays and statutory holidays from the calculation of time.  Sellers need to be cautious about such exclusions. This can directly affect out of town buyers who come to the area to look on weekends.  If that buyer must make their choice, or even prefer to make their choice on the concerned weekend, they may be put off by the existence of a time clause.  The shorter the time clause, the less effect it has on the saleability of the property.
 If you are a buyer and you have made your offer subject to the sale of your current home, it is best you decide early if you would actually finance the purchase of you new home, rather than wait to sell your existing home.  Even if you only think you might wish to bridge/interim finance then go see your banker or mortgage broker as soon as you sign the purchase contract.  Don’t wait until a second buyer comes along and triggers the time clause.  You may find your banker needs more time to process your loan application than the time clause allows.  Better to be safe than sorry.
 As a seller, another question you may have is trying to assess if there would be fewer showings, if you have accepted an offer to sell that is subject to the sale of the Buyers home.  The answer is that it doesn’t change the number of showings substantially.  Realtors® accept that “subject to sale” seldom means they will not be able to bump the first offer, and they are therefore usually happy to show the property.  Of course the shorter the time clause, the less the effect it has on showings.
 Sellers, please know that your Realtor® is not required to notify the Multiple Listing Service that a subject deal is pending.  In the case of “subject to sale” it is doubtful your Realtor® would report the sale and it is your right to ask your Realtor®  not to.  Your Realtor®  will have to tell Realtors® who show your property of the existence of a time clause; however.  Once the Realtors® get the details, they usually do continue efforts to show the property.
 All in all, I think “subject to the sale” offers can be managed to not have too much negative effect on the Sellers position.

Jane Field works with RE/MAX Vernon.  To suggest topics for future articles or to ask Jane questions, email her at jane@vernonrealestate.ca or call 250.503.3755. 

Downsizing

Posted by admin on May 31, 2011 | No Comments

 Downsizing is a popular trend.  This type of consumer forms a large part of our current pool of buyers.
 Most downsizers don’t choose a smaller house, but rather they choose to go to apartment condos or townhouses.  Part of the joy of downsizing is the joy of no longer being a slave to yard work.  Yard work is just fine if you have physical health and you enjoy the gardening and upkeep as a hobby.  Somehow though, most empty nesters call it work and look to other activities to fill their leisure time.  They choose golf, camp, boat or do any number of other activities that potentially conflict with maintaining their own lawns and gardens.
 Deciding on what type of real estate the downsizer will choose can be a multi-faceted question.
 The first basic decision is between apartment-style or townhouse style.  In an apartment you generally have more privacy.  Your neighbours don’t see your comings and goings.  Usually they don’t even know if you are at home.  You enjoy lower heat bills in most apartments and good views are easier to come by.  However, the amount of daylight in units with only one face to the sunlight can be an issue.  Storage can be a factor.  Many apartments have both a utility room and a storage locker, but not always.  Secure underground parking is commonly available.  The majority are in downtown locations and so one can benefit by using one’s car less or even not at all.
 Adult community townhomes offer different benefits.  Firstly, you have a front door and back door and no elevators.  So, it feels like a house.  You usually have the use of a rear green space.  Sometimes one can find green space in both front and rear yards, as in the case of detached bare land strata developments.  Your covered parking is commonly attached in most cases.  That saves the trips with the grocery cart from the parkade that apartment dwellers experience.  Adult communities are generally safer than regular communities but apartments are safer yet.  Access is more difficult for thieves and so on.
 The transition for a homeowner from a house to a townhouse is easier.  It is not such a stark change.  Many adult community townhomes feel almost exactly like homes on their own lots.
 You can see there is diversity in the benefits and the differences.  I recommend that if you are downsizing, you look at both types of properties.  You will soon know which type feels the most like home to you.

To suggest topics for future articles or to ask Jane questions, email her at jane@vernonrealestate.ca or call 250.503.3755.  Previous articles published in the Morning Star appear on Jane’s website – www.vernonrealestate.ca

Importance of Deposits

Posted by admin on April 28, 2011 | No Comments

 When making an offer to purchase, it is a good idea to show your sincerity by offering as good a deposit as possible. Sellers look most favorably at offers that give them peace of mind. 
 Every aspect of an offer effects the seller. For instance, if your offer is subject to financing the seller is aware that they cannot be sure your offer will become firm. The same thing applies if you have made your offer “subject to the sale of your present home”. Again, your offer is not a “sure thing” to the seller. All conditions have some effect on the confidence of the seller.  The more confident you can make the seller, the more favorably the seller looks at your offer. Deposits are a vital part of this picture.
  (I am not suggesting for even a minute that you should refrain from putting your necessary conditions on your offers. You absolutely need the protection these clauses provide. i.e. subject to home inspection, financing, sale of home etc.)
  If you tender a poor deposit , the seller is less assured that they can rely on you. Alternately, if you offer a generous deposit, the seller knows you mean business.
 Remember to, that most sellers will become buyers themselves, as soon as they accomplish a sale on their present home. If a sturdy deposit is part of the contract of sale on their existing home, they can go forward to buy, having the necessary faith that nothing is likely to happen to their sale.
 In our area, deposits are sometimes tendered in two parts.  A small amount of perhaps only $1000 at the time of the offer, and then significantly more, often $9000 to $20,000, when you remove your conditions and make your offer firm and binding.  This practice works quite well as it keeps the buyer from surrendering savings account interest or avoiding borrowing charges until and unless they are actually going ahead with their purchase.  Deposits are often even larger on more expensive properties.
  Your deposit is not an added expense. Rather it forms part of your purchase price and it goes towards the monies you will need to complete the transaction.
 Deposits are not paid to the seller until the property actually goes into the buyers’ name. Instead, they are typically held in trust by the buyer’s real estate company. In private sales, notaries or lawyers hold the deposit monies in trust.
 In the United States, they call deposits “Earnest Money”.  That pretty much says it all, does it not?

Jane Field works with RE/MAX Vernon.  To suggest topics for future articles or to ask Jane questions, email her at jane@vernonrealestate.ca or call 250.503.3755.  Previous articles published in the Morning Star appear on Jane’s website – www.vernonrealestate.ca

New Listing at Turtle Mountain

Posted by admin on March 18, 2011 | No Comments

#105, 3808 – 35th St. Vernon, BC

Listing Price – $ 189,900

2 bedroom – 2 bath  with quick possession possible.

Beautiful city & mountain views with a South-eastern exposure.

Showings will start on Saturday, March 26th – Be the first to view!

2287 Catt Avenue, Lumby BC.

Posted by admin on February 22, 2011 | No Comments

Don’t miss our new listing in Lumby…

Immaculate 4 bedroom + den, 3 bath home situated in a nice quiet neighbourhood!      $379,900

View details and more photos here!

What’s up for 2011?

Posted by admin on February 22, 2011 | No Comments

This truly is a multi-faceted question. The MLS system still maintains a large inventory.  The North Okanagan residential  listings, combining both single family homes and strata homes is already numbering close to 1300.  Many more listings are expected to arrive on the marketplace as Winter gives way to Spring.  More listings means the laws of  supply and demand are activated.  When sellers outnumber buyers, buyers maintain the stronger position when making offers.  As long as that situation is present, downward pressure on prices continues and prices inch downward.

A change in this pattern may be just around the corner. I am pleased to be able to say that there appears to be a lot more interest from buyers. I am getting a considerably higher number of inquiries and more showing appointments are being booked on my listings. I assume this is true for many other Realtors®. That is certainly a welcome market indicator after several months of a less than exciting market.
Buyers are likely back on the scene because it is simply a good time to buy.  Prices have been corrected and our record low interest rates have moved only very slightly upward on some of the fixed rate mortgages. According to many reports that cross my desk, the economy is showing renewed strength. The bond markets will reflect that and the mortgage interest rates will be raised, accordingly.
One has to think this is an excellent time to buy. If enough buyers make their move and make a purchase soon, that will curb the decrease in prices. So, as long as the economy continues to recuperate, the possibility of a return to increasing prices is feasible.  Although, I can see it will take a while to consume the excessive number of listings.  I would just be pleased to see the prices stabilize, never mind rise.
My hope is that this renewed interest from buyers is the beginnings of a return of a healthy, balanced market.

Originally published in the Vernon Morning Star Feb. 20, 2011.   To suggest topics for future articles or to ask Jane questions, email her at jane@vernonrealestate.ca or call 250.503.3755.  Previous articles published in the Morning Star appear on Jane’s website – www.vernonrealestate.ca

Purpose of Deposits

Posted by admin on February 9, 2011 | No Comments

It is customary to tender a deposit when making an offer to buy real estate. Usually within 24 hours of acceptance of the offer, all or part of the deposit is collected from the buyer and placed in a trust account. Most often it is the real estate company who is representing the buyer who places the buyers’ deposit into their trust account. Occasionally, there are some special circumstances and the deposit is placed in the buyers or sellers lawyers trust account. In all scenarios, the buyer can only take their deposit back with the written permission of the seller.

But, why is the deposit important? It used to be that it was necessary to show what is legally called “consideration.” Even the sum of $1.00 was considered necessary to make a contract binding. This has not been the case for many years. Consideration has evolved to be simply that the parties are both receiving some benefit by entering into the contract. Those benefits can be defined by the sellers’ expectation of receiving money and the buyers’ expectation of receiving ownership of the property.

So “consideration” is not the main point of the deposit.

The deposit is intended to demonstrate the good faith of the buyer. It is felt that buyers would not tender deposits unless they are seriously interested in contracting to buy the property. Americans call deposit monies “earnest monies” – very appropriate words. That is exactly why we care about deposits and about the amount of deposits. The higher the deposit, the more peace of mind the seller has.

The deposit is normally returned to the buyer if they are unable to remove their subject clauses. Examples of this would be subject to financing or subject to satisfactory home inspection. But when in those cases, both the sellers and buyers signatures are required when releasing deposit monies back to the buyer. In the case of the seller refusing to sign the deposit release form, the money is forthwith paid into court and a judge will decide the fate of the deposit monies. This is extremely rare. As long as the buyer has made sincere and reasonable efforts to remove their conditions, there are typically very few problems with the return of deposits.

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Did You List Too Low?

Posted by admin on February 9, 2011 | No Comments

This can happen, but it’s extremely rare. Perhaps you have put your property on the market and in less than a week you get an offer.  Maybe that offer is at or close to your asking price.  Your first thought may well be that you have not asked enough for your property.

When your Realtor© does their market analysis they look through the most recent sales on the properties sold that are the most comparable to yours.  When your Realtor© looks at the sold prices on three or more properties they can establish a value range pretty quickly.  The other information your Realtor© gathers is what price homes currently on the market are asking.  Your Realtor© in most cases will supply you with a printout of both the sold and competing listings, which you should review with them.  They can go over individual points and features of the various properties with you and help you see the pattern in the prices shown.

In a competitive market such as this one, the best way to catch the attention of buyers, is to list at a price just a little less than your most obvious competitors.  The buyers who have been shopping immediately see true value when they view your new listing and voila!  You get to sell in a short period of time.  So it’s really competitive pricing that gets a sale quickly as opposed to actually under-selling.

In some markets we have even seen listing a little lower than your worst competition create a situation where multiple buyers write offers.  The Seller is nearly always the winner in this situation.  They often end up with a sale price that is higher than their asking price.

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Basic Principles of Pricing

Posted by admin on February 1, 2011 | No Comments

 When listing your home or property, it is critical in all but the hottest of markets, to ask the right price.  The first thing to consider is what prices have recently been obtained in your area or in areas of equivalent value, on homes/properties similar to yours.  This is when a knowledgeable Realtor® is your best ally.  Many times your Realtor® has toured or shown the properties they use in their analysis.  Realtors® know how to adjust for critical pricing differences like lake views vs. view, or view vs. non-view.  Garage vs. carport, finished basement vs. unfinished basement, hardwood vs. carpet, dated vs. up-to-date and so on.  This list is a long one, but I am sure you understand the concept.
 Realtors® can also evaluate the accuracy of the sold data.  By that, I am referring to their ability to know if a property was priced under value, or if there were two or three buyers competing on the purchase which would likely have driven the price upward.  They often know if there was a Seller who sold too low because there was particular motivation to sell.  They may know if a property had some particular unique feature that “certain” Buyers would pay more for than an average buyer.
 To get the price right, accept that you must meet or beat the competition.  Don’t kid yourself.  Expecting buyers to make an offer on an overpriced listing will only end in a Seller’s disappointment.  When Buyers go out looking at property they make a shortlist of properties they like enough to consider. When they see one they like, and it’s overpriced, it seldom if ever, makes it to their shortlist.  The reason is simple.  No one wants to spend more than they have to.  Remember, these purchases are usually made with hard earned dollars.  Buyers automatically migrate towards the listings that are delivering the best value.
The next factor is how quickly you need or want to sell.  Faster sales require discounted prices.  Perhaps only a two or three percent lower price will make the difference between a good listing and a great one.  If Buyers can see it’s a great deal, they will make the offer with little hesitation.
 Also, assess the competition.  Are there a lot of properties similar to yours currently on the market?  If supply exceeds demand, prices need to be lower.  If demand is high and the inventory of listings is low then the opposite is true.
 Don’t be concerned if you have to lower your price to meet current market conditions.  If you buy on the same market you sold on, you presumably will also be buying at a lower price.  You’d be none the worse off.
 A policy when pricing your property to sell, is to put yourself in the Buyer’s shoes.  Look at your price through the Buyer’s eyes.  It will help you keep focus on how very important the right asking price is.

Originally published in the Vernon Morning Star – November, 2009.      To suggest topics for future articles or to ask  questions, email Jane at jane@vernonrealestate.ca or call 250.503.3755.

Back Up Offers

Posted by admin on February 1, 2011 | No Comments

 Back up offers are offers that are accepted by a Seller, after they have already accepted an earlier offer.  The back up offer is accepted “Subject to the Seller ceasing to be obligated in any way under the previously accepted Contract of Purchase and Sale on the subject property by a certain date”.   Realtors® are very careful in assisting the Sellers they are representing so as to prevent the Seller from inadvertently being under contract to sell the same property to two different Buyers.
 An interesting question arises when the Seller and the first Buyer wish to amend the first contract.  Does the second Buyer have a right to protest that any change to the first contract constitutes a collapse of that first contract?  The answer is “that depends”. 
In a recent Provincial Court of British Columbia decision the court concluded that amending non fundamental terms of the contract did not cause the first contract to collapse.  In that particular case only the completion dates and deposit amount were being changed. 
What if something as basic as the price were changed?  The court ruling might well have had a different outcome.
Bottom line is that if you are a Buyer in backup position and you become aware of changes on the first contract, get legal advice.  If you really want to be able to buy that property you’ll need your lawyers’ opinion as to whether or not you can challenge that amended first contract.

Originally published in the Vernon Morning Star – July, 2009.      To suggest topics for future articles or to ask  questions, email Jane at jane@vernonrealestate.ca or call 250.503.3755.