Maybe a better question is how do you know what the asking price should be?

We recently sold a townhome in a popular northwest Calgary neighbourhood for over the asking price with multiple offers, despite its almost original condition. Picture original 1982 carpet, wallpaper on every wall, original cabinetry but in great condition given the age. The owners did a fantastic job de-cluttering and cleaning, but a new owner would likely have to spend not a small amount of money to bring the property to current standards.

Pro Tip – Understand Market Conditions

What percentage of available properties in the property’s market segment are selling? What has been the trend over the last few months and is the trend likely to continue? This will tell you if it is a “buyers” market or a “sellers” market or somewhere in between.

If there is a lot of inventory (listings) compared to the number of sales it is a “buyers” market. Like the experts say, real estate is all about supply and demand. If you are trying to sell quickly and over the asking price in a “buyers” market your asking price should be somewhat lower than recent sale prices of comparable properties in order to attract buyers. This creates a perception that the property is a “good deal” compared to the competition.

If the percentage of sales compared to the number of listings is balanced and the market doesn’t favour the buyer or the seller, your asking price should be equal to the sale prices, not the asking prices, of recently sold comparable properties. Again, this creates a perception that the property is a “good deal” compared to the competition.

If the percentage of sales compared to the number of listings is high and there is a shortage of inventory, the choice of a list price is trickier. The asking price should be higher than recent sales but not at a price which would create a perception that it is unreasonably high for current market conditions. Even in a super-heated “sellers” market, over-priced properties will not sell.

Pro Tip – Whatever the Market Conditions, Marketing is Important

In order to sell for the highest possible price, presenting the property well is still important. Cleaning, de-cluttering and sometimes staging will always provide a better result.

Take the time to prepare the marketing – photography, aerial, video, virtual feature sheets with great ad copy and virtual “walk-throughs” should all be done. Consider a “Just Listed” and/or “Open House” announcement post card drop to target market areas and social media posts and ads.

Target an MLS® list date on a Thursday with public open houses on the Saturday and/or Sunday with a notice of offer presentations on the Monday or Tuesday of the following week.

Obviously, this is an overview and a simplification of the process. Each market and market segment has its own set of challenges and idiosyncrasies.

If the research and the preparation are done correctly, just sit back and let the offers roll in! comparing and deciding which offer to work with is a whole other process.

As always, should you have any questions please feel free to let us know. We are always happy to help!

You can reach us at 403-686-1455 or book an online or in-person meeting here: https://www.cbcompleterealestate.com/book-an-appointment

A Real Property Report (RPR) is a legal document an Alberta Land Surveyor prepares. It’s basically a high-level drawing of the property, the boundaries, and the buildings and structures on it including homes, garages, large sheds, decks, pools, fences, etc. An RPR will also show relevant land facts such as utility rights of way, easements, and overland water drainage restrictions, so buyers know exactly what they’re buying.

The Compliance Stamp is issued once the RPR has been reviewed by the municipality or the city confirms that all structures and buildings on the lot meet the regulatory standards set by the zoning Bylaws of the municipality or city.

Why is an RPR required when a property is sold?

In the real estate purchase contract term 6. REPRESENTATIONS AND WARRANTIES

6.1 The seller represents and warrants to the buyer that:

(e) the location of the buildings and land improvements:

(i) is on the land and not on any easement, right-of-way or neighbouring lands unless there is a registered agreement on title or, in the case of an encroachment into municipal lands or a municipal easement or right of way, the municipality has approved the encroachment in writing; and

(ii) complies with any restrictive covenant on title and municipal bylaws, regulations and relaxations, or the buildings and improvements are “non-conforming buildings” as defined in the Municipal Government Act (Alberta)

This means that the seller is promising that the property complies and the document used to prove that the property complies is the Real Property Report with the Compliance Stamp.

Pro Tip for Sellers – order or update the Real Property Report and ensure it has a Compliance Stamp well in advance of listing your property.

It can take several weeks for the surveyor to prepare the report and if there is an issue with compliance it can take several weeks to remedy the issue.

If you purchased your home from a builder, you may have received an RPR from the builder without a Compliance Stamp so you will need to get the Compliance Stamp. If you have constructed a fence or a deck or installed a concrete pad or patio or a retaining wall or a garage you will need to update the RPR.

What could go wrong if you don’t have the RPR when you list your property or when you accept an offer?

• It could delay the removal of conditions. Many buyers request a review of the RPR during the conditional period.
• It could impede the buyer from getting financing. If a company or bank is lending money secured against the title to a property, then they must ensure that their investment is safe and will often ask to review the Real Property Report to confirm compliance.
• It could delay the closing or create the need for a holdback. If there is not sufficient time for the seller to ensure compliance the closing could be delayed or the buyer may ask for an amount of money to be held back from the proceeds of sale until compliance is confirmed.
• It could be costly to the seller. If there is a serious issue where the only remedy is removal of a structure the buyer may require a reduction of the purchase price or the rebuilding of the structure in a different location on the property where it would comply.

Pro Tip for Buyers – Make sure that you review the Real Property Report during the conditional period.

If the seller or the listing REALTOR® has not provided a current RPR with the listing make sure that your offer has a condition to review the RPR.

What could go wrong if you don’t review the RPR during the conditional period?

• The property may have an issue which requires a remedy which may affect your use and enjoyment of the property. The seller has committed in the purchase contract to ensure that the property complies but what if that means that garage needs to be removed? Or the beautiful wrap around deck that you love needs to be taken down?
• There may be a restriction on the lot right in the location you wanted to build a garage or a patio which will not allow you to do so.
• There might be the need for an encroachment agreement with your neighbour and the neighbour may not agree.

Pro Tip About Title Insurance – Title insurance will not cover all problems with a property.

Some sellers will offer title insurance instead of a compliant property. If there is a known defect, a buyer is better off having the seller fix it. Title insurance will not insure a known defect. Also, the insurance is not transferrable to the next owner so you would have to either buy new title insurance when you sell or if the buyer refuses to accept title insurance you will need to ensure that the property complies.

If you have any questions about the importance of Real Property Reports, ask your trusted real estate professional or a trusted real estate lawyer.

Send us your questions here: https://www.cbcompleterealestate.com/contact

Thanks for reading!

Susanita

The answer is – it depends on why you are making the move, it depends on the market, and it depends on your financial position.

Remember when you bought your first home? Maybe you were renting or maybe even still living in your family home… either way you did not have to consider the risks – how do you buy when you need the equity you have in the house you currently own? How do you reliably know how much equity you have when you haven’t yet sold the house you currently own?

This is where being prepared and knowing market conditions can help you save money and make the most of your equity.

When it comes to buying and selling when you are relying on the equity from your current home to buy your next home, generally speaking, you should always do the most difficult part first. If the market favours the seller – buy first. If the market favours the buyer – sell first. But it still depends on your financial position and your tolerance for risk.

• The first step is to know your market. Engage a trusted real estate professional to provide you with a thorough market review which includes not only the current market value of your home but all of the costs involved in selling your home, the typical number of days or months it should take to sell and whether the market favours sellers or buyers. They will also be able to let you know what to do to prepare your home for sale so that it will sell for the highest possible price.

Pro Tip: Focus on the data – what have buyers paid for similar homes? How do those homes compare to yours in size, location and finish?

By this point you will likely have already been dreaming online so you will know how much you will need to pay for your next perfect home.

• The second step is to know your financial position. This step is crucial to allow you to know your negotiating position. Check with your lender to see if you would qualify to keep and rent your current home and how you would structure the financing of your new home. For this part of the process, you will need to know how much rent homes like yours are achieving in the rental market. This doesn’t mean you are obligated to keep your current home. If you are pre-approved to carry both properties you will be able to make a more competitive offer on your next home without a “subject to the sale” condition. More on this later.

Pro Tip: If you want to be sure that you find and purchase the perfect next home first do whatever you need to do to get pre-qualified to carry both homes including having a co-signer.

• The third step is to decide what to do first – buy or sell. For this step you need to know yourself and the market. If you want to find the perfect home first and the market favours the seller you could take the chance that if you buy first, your home will likely sell easily.

If you have been pre-approved to carry both properties – but don’t really want to – the worst possible scenario is that the market shifts before you sell your current home and you will need to sell your current home for less or keep and rent it.

If you have not been pre-approved to carry both, and you need to write your offer subject to the sale of your current home, and the market favours the seller – prepare yourself for disappointment. You could lose the perfect home if your offer is competing with other offers if those buyers do not have a “subject to the sale” condition either because they don’t have a home to sell or they are pre-approved to carry both homes.

If you are not in competition the seller will almost always add a “sellers condition” which allows the seller to accept another offer and require you to remove all of your condition within 24 or 48 hours. In a market which favours the seller this will be a likely occurrence.

If the market favours the buyer both of the above scenarios could still occur but you may have a little more time.

If you just want to be absolutely sure of the sale of your home and your equity position before you buy it is still important to check with your lender about the financing terms of your purchase. Has anything changed since you purchased your current home? Has your income or the terms of your employment changed? Have you increased your debt by purchasing a vehicle? It is not a given that you will qualify for the same or an increased or decreased mortgage amount.

In this scenario you would ideally negotiate a long closing date to allow you enough time to find your next perfect home. The risks in selling first are that you run out of time and have not found a home within the time allotted and you have to rent while you continue your search or that the market shifts and you have to pay more than you anticipated for your next perfect home.

During the time your home is listed for sale your trusted real estate advisor will likely have created a customized online search so that you see how often homes with your specific criteria are listed and sold so that you have a good idea of the likelihood of finding that perfect home. Just don’t fall in love until you have received an offer on your current home.

Pro Tip: Beware of guaranteed sale offerings. The terms can sometimes be expensive and eat into your equity.

A trusted real estate professional will help you choose the best path based on your financial position and level of risk tolerance.

We would love to work with you to achieve the best outcome for you!

Please call us at 403-686-1455 or book an online appointment – we look forward to speaking with you!

The answer is… yes.

Because it could be either!

The other answer is…your assessed value is very rarely a reflection of current market value, because it is already old information by the time you receive your notice.

In Alberta, the Municipal Government Act and the Regulations under the Act which are called Matters Relating to Assessment & Taxation (MRAT) set out how and when properties are assessed.

MRAT sets the “Valuation Date” in Alberta which is July 1st. You receive your assessment sometime during the month of January so the assessment is already six months old, and as we have seen in the City of Calgary, the real estate market stats can change a lot in six months, one way or the other!

The best way to get an idea of the current market value of a property is to ask your favourite REALTOR® to provide you with recent sales through the MLS® of homes which have features similar to the features of your home.

This shows the range of how much buyers have been willing to pay.

I hope this answers your question – if you have further questions or if you would like to know the current market value of your home I would be happy to help!

Send us your questions here: https://www.cbcompleterealestate.com/contact

Susanita

If you are in a competing bid situation, it is important for you to know your negotiating position. You need to know how many offers are coming in, what you can afford, and what risks you are willing to take. When it comes to submitting a competing bid, you must be aware of which conditions need to be in the offer for your specific situation and which ones you can risk not having on the contract. An experienced real estate professional will help assess and communicate the benefits and consequences of each variable   to help safeguard your interests.

In Vancouver and Toronto there were lots of subject-free competing offers, Calgary has seen fewer. I would only be comfortable presenting a subject-free offer if my client is a sophisticated buyer who fully understands the ramifications of that type of offer..

Whenever I have a client considering entering a competitive bid situation, I ask, “What price will you feel good about and not regret, regardless of which way it goes?” I want to ensure if they lose the bid, they won’t feel like they should have paid an additional $5,000, or if they win the bid, they don’t feel that they’ve paid $10 000 too much. To help the client make that decision, we provide our clients with research about what similar properties have sold for in the area. It is always the client’s decision.

Have a question you would like answered?

Send us your questions here: https://www.cbcompleterealestate.com/contact

It depends on why the new homeowner is buying. If they are buying because they see the long-term benefit of owning their own homes and they are ready to make the change from renting to home ownership, then buying may be a good choice because of the low interest rates. However, I would recommend they find a good real estate professional who can discuss their personal situation to determine if now is the right time for them or not. In June, we started seeing price reductions and homes coming off the market then coming back on, both are signs that the market conditions are changing.

If they are buying because they want to see a capital increase in a short period of time to make a quick buck, now is not the time to buy. It is likely that we have already seen peak prices. As inventory increases the prices will level off.

When the pandemic has passed and the balance between supply and demand results in prices levelling off, it will be a good time for new homeowners to start looking. In a more stable buying climate, they may not have to compete with others when writing an offer so they can take more time making the right decision for their families.

Have a question you would like answered?

Send us your questions here: https://www.cbcompleterealestate.com/contact

Alberta is still largely dependent on the oil and gas industry for its economy and the North American political leaders are taking an anti-oil policy stance, so recovery may be slow. The city is starting to attract sustainable energy companies.

However, it will take decades for sustainable energies to significantly increase jobs in the province due to this sector being relatively new. We have seen growth in the technology and health care sectors which bodes well for the economic future of our economy.

Have a question you would like answered?

Send us your questions here: https://www.cbcompleterealestate.com/contact

To judge where a market has been and where it is going, I analyze the absorption rate. Simply put, this rate measures how many properties sell in comparison to the number of properties for sale during the month. As I track this metric over time, I can see the balance between supply and demand.

Let’s look at the largest market segment driving Calgary’s real estate growth, detached homes. In March, the absorption rate was 77.46%, which means 77.46% of all homes for sale in the month of March were sold. In April, the rate dropped to 73.60%. In May, the rate dropped to 59.77% and in June the rate dropped even further to 55.78%. This signals a reduction in demand during normal times, however, in today’s environment this does not mean the demand is shrinking. The buyers are still there, they just have more to choose from as more properties have come onto the market. This is a normal occurrence after a super-heated market like March’s because people realize that they can get a good price for their home. This year it’s a bit different because along with the natural interest in getting the best dollar for a property, those sellers who would have sold in 2020 but were hesitant to list are now listing their homes because they feel safer due to Covid-19 safety protocols and vaccinations.

The next few months will be telling for the Calgary market. If the detached home absorption rate falls below 40%, we will see prices level off and potentially go down a bit.

Have a question you would like answered?

Send us your questions here: https://www.cbcompleterealestate.com/contact

The reason all the real estate markets in Canada went a bit crazy was because two events happened simultaneously. First, we had a pandemic. Many potential sellers chose not to sell their homes because they didn’t want people bringing the coronavirus into their environment which caused low inventory. The lowering of inventory occurred when interest rates were at their lowest ever levels making borrowing money cheaper, thus increasing the demand in the market.

When you have low supply and high demand, prices are pushed up as buyers compete for the limited number of properties.

Experts were a bit mystified about why Calgary’s real estate market was so strong. Other Canadian cities like Vancouver and Toronto have immigration and migration of citizens looking for jobs in diverse labour economies to support the demand for homes. Calgary’s current economic prospects are not as strong, so the reason for the run-on real estate was the low cost of borrowing, a desire to be isolating and working in a bigger home, and the housing market’s low inventory. As a result, Calgary didn’t see the increase in prices as early as the other cities and the market is cooling down sooner.

Have a question you would like answered?

Send us your questions here: https://www.cbcompleterealestate.com/contact

Susanita

Real Estate is a constantly changing industry!

Keeping up with all of the rules, regulations & market updates are things that your professional REALTOR® is equipped to handle.

In fact, it’s part of our daily practice. We subscribe to several industry regulation bodies, local real estate boards, social media groups, etc. in order to keep up to date and collaborate with colleagues around the globe.

This blog category is dedicated to sharing answers to many common Real Estate questions we are asked.

We hope you find the information valuable and we welcome your questions any time!

Please feel free to send us a note on our Contact Coldwell Banker Complete Real Estate page and we’ll be happy to get back to you, and possibly post your Q&A for others to learn from.

Thanks for visiting! Click this link to read all of our: Calgary Real Estate Questions & Answers

Sincerely,

Susanita de Diego