Real estate in Calgary - another bubble?

[you&me]

Originally Posted by Erick Estrada

That's not a house as that's a dumpster fire. Safe to say that's not the typical house being sold in Calgary.

Material latent defects is far from indicative of a "dumpster fire".

For example, tons of homes have unpermitted developments, such as basements or decks, or unremedied notices from the city.

[Weitz]

Originally Posted by DoubleF

This doesn't totally make sense. Many banks will refuse to finance without an inspection (hell, my mortgagors ate the cost of the inspection). But if you can get away without one, great. But also as others mentioned, the inspection is pretty superficial anyways.

Furthermore, caveats can be put on the inspection if the condition is disclosed beforehand on the listing (ie: considered built into the price).

ie: HVAC is older but functional at this point, should still work fine for a few more years. Roof is older, but no issues with leaks and not expected to require replacement for another few years. Windows are old, price reflected, you replace at your own time etc.

I've received conditions on the home inspection that I can only renegotiate for things in excess of what have already been disclosed. So if they told me that there are certain things that may need repairs/replacement within a few years, I cannot renegotiate about that. But if the inspector finds something extra, that I can renegotiate price on.



You can state that, but I believe my realtor says you can't put conditions that lock them in and don't offer a way out. So you can state that they cannot renegotiate on anything disclosed due to the inspection. But you cannot basically state they cannot use the inspection to pull out of the deal or renegotiate for things not previously disclosed.

Maybe I just had better realtors who understood not just the sales side, but the seller/negotiations side/legal side and were great at explaining that to me.

We view the money as value but value isn't just the purchase price for both sides.

- Deposit (Amount, non-refundable/refundable (conditions for refund), how fast you can get the cheque to the seller realtor etc.)

- Possession date (A month of extra mortgage and expenses adds up to a certain value, consider using the mortgage calculator in reverse when negotiating a possession date with the seller). But whether the owners need to move out vs an empty house are things to contemplate too.

- Chattel (Ask about things you wouldn't mind keeping and put a value to it. Things that would cost you way more to get one into the house and isn't relatively valuable to the seller but would cost them money to have the movers move. ie: BBQ, extra fridges, furniture, vehicle etc.) Sometimes you negotiate on price aggressively because there are things you need to buy for several thousand dollars. You can decide not to push so hard on that last few grand if you don't need to spend that money, but also put into wording the repercussions if the chattel you want isn't left behind (ie: seller realtor would have to cough up equivalent value from the commissions vs no idea where family disappeared to). I dunno if that last part is enforceable, but usually the realtor will help to facilitate that part to ensure it doesn't happen when they give the seller the gift and whatnot.

- Misc: Once you open up the "how can we make this sale easier for you" convo between the realtor, you can ask if there's other considerations that can help make it easier for the seller to take on your demands. For any of these side deals though, definitely write out a contract external to the house sale. Don't roll all of it into the purchase price, don't rely on verbal agreements.

---

Personally, on the realtor side, I've asked for the seller's furniture, extra fridge, BBQ etc. and relaxed my stance on a few grand of negotiations. In our current place, my wife laments that we should have asked for a really nice bunk bed that the seller had moved last to stage the home. I bought a brand new townhouse and I arranged a side deal with the seller to buy all the new~ish staging furniture for a steal in exchange for not negotiating as aggressively on the final last bit of the selling price (as it would be used as a comparable for him selling the other units). He was happy to save costs/time on moving/storing and selling it and I got nice fricken stuff I would never be able to justify buying myself.

My buddy stored a car (for a super miniscule fee) for a few months for a guy moving to BC for work on short notice, and then was able to buy it off him for a great price (as it was super low hassle for the seller) when the guy got a company car and didn't need his car anymore. I think the story was the guy was super appreciative, offered to give my buddy a 10-15% final sales price commission for his time for helping him show and sell the car while he was in BC, so my buddy asked him what the price was to sell to him instead.

Another friend, because he didn't need to move right away, offered to let the family stay for a few months with inexpensive rent as somehow it was mentioned by the seller realtor they were going to move to temporary accommodations for a few months after the possession date. Considering that it would have been less moving and storage costs, more time to pack, less mortgage/expenses other than rent etc. while the other home they bought became available (possession date), it was a good idea. The family was surprised and really wanted to take him up on the offer, but afterwards couldn't take him up on the offer (stored some stuff at the place in the garage for a few months though) because they couldn't break the deal with the accommodations they had already arranged for.


And anyone who wants to try and squeeze a few extra bucks out of selling your home, clean the floor of the garage till it's basically as clean as the kitchen floor. All it'll cost you is a little bit of time and a bit of vacuuming and it makes a ridiculously huge difference in impression. Lots of homes have pristine interior, dusty ass garages. It's just a tiny way to stick out a little more and give an impression that the home is super well kept (kinda like how you can tell how a restaurant kitchen is probably run based on the cleanliness of the bathroom).

I never said you can write it terms that say no negotiation. But it’s a hot market for sellers. If they run an inspection and then ask for a cheaper price you have no requirement to accept it. Tell them to pound sand and relist. They can pull out or agree to pay the offered price.

I’m not sure I would ever agree to a lower price because of what a home inspector found unless I was really desperate.

[Erick Estrada]

Originally Posted by you&me

Material latent defects is far from indicative of a "dumpster fire".

For example, tons of homes have unpermitted developments, such as basements or decks, or unremedied notices from the city.

I don't consider that a big deal though. If you have to get a window enlarged or a deck permit for $450 so be it. It's on the buyer to do some diligence themselves when making a large purchase like this.

[MillerTime GFG]

First news of potential changes from the Feds...

Looks like the Stress Test will be increasing from a qualifying rate of 4.79% to 5.25%, on conventional mortgages only ( >20% equity). The below CBC article says it WILL be in place as of June 1st, but nothing is for certain yet, as OSFI has left it open for consultation as of today.

https://www.cbc.ca/news/business/osf...ules-1.5979558

This won't really move the needle a ton to be honest, so I'm not really sure what they're trying to do here.

Let's allow no limit to unsecured debts at interest rates 6-7 times higher and vehicle loans that require no income confirmation, but really tighten up the qualifying on 2% secured debts. But that's a whole different story...

[troutman]

Hot water tank is a common example. Almost monthly we see a case where the tank fails right after closing. Who is responsible depends on how hold the tank was and what the seller knew about problems with it.

The grow op cases can be resolved when you pull the permits proving all the remediation work was done and approved by AHS.

[DoubleF]

Originally Posted by Erick Estrada

It makes perfect sense to me because it happened.

Sorry, I didn't mean your story doesn't make sense. My brain is on the next page saying it doesn't make sense that a buyer wouldn't need an inspection to consummate the deal... unless this wasn't recently, then that makes a ton more sense.

I mean it seems so odd that there's been several posters mentioning that they did not need an inspection. Both my insurance AND mortgagors needed to have an inspection done and I've acquired/sold properties several times in the last decade. But I also think that the home inspector sent by the mortgagor was also basically a pseudo appraiser to ensure that I didn't end up with a situation where I'd exceed the lending capacity of the lendor if things went sideways with the properties.

Originally Posted by Weitz

I never said you can write it terms that say no negotiation. But it’s a hot market for sellers. If they run an inspection and then ask for a cheaper price you have no requirement to accept it. Tell them to pound sand and relist. They can pull out or agree to pay the offered price.

I’m not sure I would ever agree to a lower price because of what a home inspector found unless I was really desperate.

I think we kinda agree, but my wording sucks. From what I understand, a seller is often supposed to disclose things that may require attention within the next 1-2 years. So if you disclose those things on the listing (ie: Windows, HVAC are original, roof is 20 years old), then say you cannot renegotiate the offer based on these things after the inspection, then it's kosher.

But maybe I misunderstood something one of the realtors told me (someone feel free to correct me)... but if you say something like, "Doesn't matter what the inspection report says, you cannot renegotiate at all." it supposedly could open up a situation that's advantageous to the buyer. The prospective buyer can cut bait based on the inspection report and get a refund on the deposit even if it was stated as a non-refundable deposit. But supposedly, if you disclose things and say you can re-negotiate, but only on things discovered in the inspection not previously disclosed that require immediate attention, then if the buyer wants to cut bait, they'd lose their non-refundable deposit.

The reason why I mention this was because I was sorta in this type of situation putting an offer on a home once. The deposit was half non-refundable, but the inspection yielded lots of non-disclosed illegal work/code violations etc. that required immediate remediation, so I was able to pull out and get my deposit back in full. It was quite a few years ago though, so I don't recall the exact details of the scenario. I don't even know what it was, the inspector just said, "I'll write down what it is in the report, kill the deal. It'll cost at least $50K+ to address and that's not including the other stuff like the roof, windows etc. that need to be done within 5 years." No idea what it was though, I never got a copy of the inspection report (mortgagor covered). The home looked pretty normal to me as a layman.

Maybe the rules have changed though.

[Slava]

Originally Posted by Flamenspiel

I have always used an inspector. To me if you have to forgo an inspector because it’s a hot market, you are following the crowd and maybe should not be buying at that time. All markets pause from time to time and there will always be another house, it’s not musical chairs.

An inspector(and a builder/architect) has always been a winner for me, 5-700 hundred usually results in thousands of dollars in savings. Even if you know the problem, the seller wants to see evidence of it.

Meh, I’ve always used an inspector but I’m lukewarm at best on the actual value. If there’s something major, I want to know and potentially renegotiate things, and of course that’s meaningful. But in all honesty the inspector opening and closing every door, or flicking light switches and such isn’t really worth a lot to me.

I also hate the inspection because it just gives people a chance to walk through and second guess their purchase. The. They can come back and grind you for a thousand dollars or whatever. It’s pretty ridiculous. When I sold a few years ago the inspector was documenting things like a cracked receptacle cover on the plug for the garage door opener (located on the ceiling of the garage). Sure, it did have a crack, but I’m selling a used house and I think they cost $0.79 to replace. Anyway, the way that contract is written (inspection to the buyers satisfaction) is just asking for trouble and people to get cold feet or try to grind down prices.

[GGG]

Originally Posted by troutman

Hot water tank is a common example. Almost monthly we see a case where the tank fails right after closing. Who is responsible depends on how hold the tank was and what the seller knew about problems with it.

The grow op cases can be resolved when you pull the permits proving all the remediation work was done and approved by AHS.

I just found out that my insurance doesn’t cover a tank older than 12 years. There really should be a better way to prevent corrosion. Seems pretty wasteful.

[Vinny01]

I just moved into my new place on Monday. We bought our place with a 4 hour offer and financing and inspection as the only conditions. I think those are very fair and decent conditions.

We paid/offered list price and we knew there was one more offer we competed with. I remember thinking 4 hours seemed tight but our realtor told us we were giving them what they were asking for so it shouldn’t take them all day to make that decision. In that previous example I think a 20k over list offer with a tight turn makes sense.

[jwslam]

Originally Posted by GGG

I just found out that my insurance doesn’t cover a tank older than 12 years. There really should be a better way to prevent corrosion. Seems pretty wasteful.

There is. It's called preventative maintenance by changing out the sacrificial anode rod, as well as regular flushings

[bizaro86]

Originally Posted by jwslam

There is. It's called preventative maintenance by changing out the sacrificial anode rod, as well as regular flushings

Sure. But keeping a tank that your insurance won't cover is a risk even still. Seems like you if you could prove preventative maintenance on an older tank that would be reasonable.

[#-3]

Originally Posted by troutman

Technically, the seller paid all the commissions.

There's a concept called a reserve pricing model, where you consider your vendors input costs as bearing directly in the prices you pay as the person contributing actual funds to the transaction.

Ignore the marketing ploys they come up with, the buyer is the one bringing the money to the party, they are the paying the rent seekers. The seller is liquidating an asset for cash and passing on all of the transaction expenses to the buyer, the first time the money hits the sellers bank account it is already the amount they are netting.



Also if you are going to make an aggressive offer what 5%? over list price on something, it doesn't seem unreasonable at all to me to pair it with some pressure tactics (like a 4 hour time limit). you've already tipped your hand that you are going hard, doesn't leave you a lot of leverage other than threatening not to negotiate.

[Mazrim]

Originally Posted by Slava

I also hate the inspection because it just gives people a chance to walk through and second guess their purchase.

Isn't this a good thing? Making the largest purchase of your life based on one visit to a house seems crazy to me. The second visit is the fresh eyes/reality of the situation and gives you a new perspective.

[stampsx2]

Originally Posted by Mazrim

Isn't this a good thing? Making the largest purchase of your life based on one visit to a house seems crazy to me. The second visit is the fresh eyes/reality of the situation and gives you a new perspective.

Oh good. I’m not the only one that thinks this. I’d like to see the property, talk to the neighbors, take a walk through the community to see if it appeals, research the schools etc. I guess in today’s market that’s not as much of an option.

I always wondered how people buy a million dollar home on house hunters by only seeing three properties for 15 minutes each. I’m sure there’s a lot that goes on behind the scenes on those shows.

[Fuzz]

^
LOL
ya, that's an understatement. They've already boguht the house they "choose" at the end before the show even starts. It's all a setup.

[GGG]

Originally Posted by Mazrim

Isn't this a good thing? Making the largest purchase of your life based on one visit to a house seems crazy to me. The second visit is the fresh eyes/reality of the situation and gives you a new perspective.

Then you shouldn’t have put in an offer with a non-refundable deposit for cold feet. If you are willing to give up the deposit that’s fine but to use the inspection to try to get out the deal because you no longer like it is unethical.

[nik-]

There is zero chance I would agree to a deal where you still had to accept regardless of the inspection. That being presented to me would be enough for me to walk.

[OutOfTheCube]

Well, the Redstone townhouse market is still crap if anybody is interested. Our former neighbors who listed at the same price just after we sold (two months ago) are still sitting.

[CroFlames]

Originally Posted by OutOfTheCube

Well, the Redstone townhouse market is still crap if anybody is interested. Our former neighbors who listed at the same price just after we sold (two months ago) are still sitting.

How's the airport noise there? Any worse than other neighborhoods close to the airport?

[rotten42]

Interesting site that gives you some history on houses you may be interested in....things like being a grow-op or if someone was killed there.



https://www.housecreep.com/directory/ca/alberta/calgary