The following is excerpted from a Toronto Star column by noted real estate Lawyer, Bob Aaron.

Back in the spring of 2004, Timothy and Cherese Scherbak signed a listing agreement to sell their property on Boland Ave. in Sudbury, using the services of Wendy Weddell and Re/Max Sudbury Inc. The Sellers Property Information Statement (SPIS), which they signed at the same time, resulted in years of litigation, hundreds of thousands of dollars in legal fees, and damages amounting to twice the value of the house.

Following an open house, Zoriana Krawchuk signed an agreement to purchase the house from the Scherbaks.

The offer was not conditional on financing or home inspection, and came in at $10,100 over the $100,000 asking price.

Shortly after closing, Krawchuk discovered that the entire north foundation wall and the northern portions of the east and west foundation walls had settled and were continuing to sink into the ground below. The settling resulted in the failure of proper support for the floor joists and building above.

The city of Sudbury issued a work order requiring the problems to be rectified.

Correcting the foundation problem required lifting the home from its foundations, followed by excavation, removal and replacement of the cement basement floor, foundations and subsoil, and placing the house back on the new foundations.

Moving the home caused significant cracking of the interior finish in many areas, which required further repairs.

Fortunately, Krawchuk had purchased title insurance on the closing of her property, and the title insurer reimbursed her more than $105,000.

Krawchuk was still in the red on the deal. She estimated her total damages to be $191,414.94 and sued the sellers, the agent and Re/Max.

In the lawsuit, she claimed that the sellers were liable to her for breach of contract and misrepresentation. She argued that the problems with the foundation were hidden defects, which made the house uninhabitable, and that the Scherbaks had deliberately camouflaged them by attempting to level out the living and dining room floors back in 1995.

A significant component of the Krawchuk claim was based on the SPIS completed by the sellers. The SPIS is a controversial two-page form in widespread use throughout Ontario for residential transactions.

Its stated purpose is to protect sellers by disclosing correct information about the property to buyers.

On the SPIS form signed by the Scherbaks, the question “Are you aware of any structural problems?” was answered: “NW corner settled – to the best of our knowledge the house has settled. No further problems in 17 years.”

Read the full article here . . .

I’m always looking for new tools and in

formation to help consumers in their home buying journey. Yesterday, I learned of an online seminar all about the Ontario New Home Warranty program, administered by Tarion. Tarion is just launching it’s online seminar series, with their first offer, Understanding Warranty Coverage.

This seminar will be helpful, not only to those considering buying a new home but also those of you who bought a home with a Tarion warranty still in effect.

Check out the seminar by clicking on the picture below.

Take a look, and please leave a comment with your feedback on this information.

That’s an interesting thought, spurred on by the number of conversations I have on this very topic every week. The number of conversations seems to be increasing the last couple of weeks, as people looking at real estate in Milton Ontario, Mississauga, and Campbellville become confused with what is happening out there.

You see, the Main-Stream Media (MSM) has spent so much time and effort fuelling the doom and gloom, and has only just started reversing their story, about 6 months behind what I have been reporting, that the public is only just beginning to catch up with the real reality. As opposed to the reality the MSM has tried to create about the real estate markets in the GTA.

You have to be careful when believing what is being reported by some media giant, and they are all equally bad, because they do no

t have specific data, relevant to your immediate area, updated weekly. Perhaps more importantly, media like The Star, National Post, and The Globe & The Sun, do not have the local expertise to provide real, on-the-ground information with local interpretations of the data.

There’s one part of the key – ‘on-the-ground with local interpretations of the data‘. On my main real estate site, AllMiltonHomes.com, I have an Internet Warning:

REAL ESTATE INTERNET WARNING: Despite advertising claims to the contrary, the Internet is not an experienced Real Estate Professional. It cannot consult, counsel, advise, have knowledge of local laws and market conditions, make judgements, ‘own’ the result, or most importantly, understand your individual goals and needs and care about you as a Client. To obtain an accurate interpretation of any information  you obtain online, please contact us.

To me, this pretty much sums it up – data is worthless in the absence of skilled interpretation.

So, on to the subject of this post – are rising house prices better for buyers or sellers? Would a better question be “are rising house prices good for anyone?”

Let’s look at it from a seller’s point of view – when prices are rising, the value of your present house goes up. That’s great if you are in the segment of the market that is down-sizing, and it’s also great if you are relocating to a less-expensive marketplace. However, it is not so great if you are moving up in the same general marketplace. Let’s suppose your present house is valued at $400,000, and prices go up by 10%; that would make your house worth $440,000, which is pretty cool. However, the other side of that is, if you are like the average move-up buyer, you will be spending 30% to 50% more on a house, which means that the $550,000 house you were thinking of buying is now going to cost you $605,000. So, your current house went up $40,000, your new house went up $55,000, with the net result that you lost $15,000. I’d say that rising prices are not so good in that situation, wouldn’t you?

What about looking at things from a buyer’s point of view? Well, that’s a pretty simple conclusion – the more prices rise, the more a house costs you, so it can’t be a good thing, right?

Hmmmmm. So, if rising prices aren’t good for sellers or buyers, why is it that the real estate buying and selling public historically act against their best interests? To understand that thought better, look at the ‘feeding frenzy’ that was the real estate markets for most of the first 2/3rds of this decade – the faster houses were selling and the faster prices were rising, the more buyers their were competing for them. Now, when prices are, in general, lower and houses are, in general, taking longer to sell, there are less buyers out there and less sellers out there. Hmmmm.

So, where are you in the real estate market? Buyer? Seller? Are you active in the market right now? Why not? Let’s talk about it.

In my recent update on the Milton Ontario real estate market, I made a comment that eluded to the thought that perhaps a house is sold too quickly when it is sold with multiple offers within 24 hours of it coming onto the market. I’m now going to elaborate on that thought for you.

As a Realtor, when working with a client, I have what is known as a fiduciary responsibility to my clients. The definition of fiduciary, as found on Wiki is:

“A fiduciary duty is the highest standard of care at either equity or law. A fiduciary (abbreviation fid) is expected to be extremely loyal to the person to whom he owes the duty (the “principal”): he must not put his personal interests before the duty, and must not profit from his position as a fiduciary, unless the principal consents. The word itself comes originally from the Latin fides, meaning faith, and fiducia, trust.”

One of the reasons that homeowners hire Realtors to sell their home is so that they can get fair market value for their home. According to the Ontario Real Estate Association, fair market value is determined when a willing, informed buyer and a willing, informed seller come to agreement after the property has been reasonably exposed to the marketplace. Yes, this is not an exact quote, however, this is the essence of the definition as drummed into every Realtor who is licensed in Ontario. Another thing that I am convinced that most Realtors never consider is that there is usually more than one buyer for a home, and it is the Realtor’s job to attract and negotiate an offer with the best buyer for that home.

I gotta ask you, how can 6 or 12 or 24 hours possibly be considered to be ‘reasonable exposure’ to the marketplace? I challenge any one of my colleagues to convince me, or a judge for that matter, that this is even remotely close to reasonable exposure! After all, people work, they go away on weekends, etc.

Don’t get me wrong, I know there are times when a seller wants the process finished immediately, however, they are few and far between. I have to believe that if the vast majority of sellers were advised that it would be good for their home to have 3, 4, or 5 days exposure to the market, they could still get multiple offers AND get more money. Realistically, how many people are going to turn away $5,000, $10,000 or more in exchange for keeping their home ‘showings-ready’ for an extra couple of days? Would you?

I’ve been saying for most of my career as a Realtor that one day, somewhere, sometime, some smart lawyer will launch a class action suit against the real estate industry over this matter, and I have to say that I would be fully supportive of such a suit.

I’m not naive, I know that waiting a couple of days for offers could cause some people to walk away; it could, but it’s not likely when there is a drastic shortage of inventory. Heck, this is the perfect time for sellers to wait and get more money; there just aren’t another 3 houses for them to choose from!

There have been a few articles in the Toronto Star recently, talking about multiple offers – here’s a snippet from those pieces:

• For sellers, bidding wars or multiple offers from buyers are a dream come true. Numerous bidding wars took place in the United States and in many parts of Canada before the economic meltdown of 2008, but for the most part, such widespread buying frenzies are no longer taking place. Yet even in today’s balanced market, bidding wars continue on specific properties in certain areas. Although we are seeing many examples of multiple offers, it does not necessarily mean buyers
  Routing Number VIRGINIA COMMERCE BANK

  are overpaying for properties.
  Read the entire article here
  

• Sellers or real estate agents lying through their teeth; opening up offers after the allowed time period. Those are just a couple of the allegations I have received via email following my recent articles on bidding wars.

  We are now seeing an increase in people entering the market at the same time as the number of homes for sale are going down. As a result, buyers need to be even more aware of some of the practical problems they will face when they choose to participate in a multiple-offer situation.

  Here are some situations that I’ve been told about:
  Read the entire article here

Please, don’t think I am against the real estate industry; I’m not, and wouldn’t be such an active participant in it if I did not believe in the great value that Realtors bring to the public. However, there certainly is room for cleaning up some areas of the industry, and I believe this is one of them.

What do you think?

Are you enjoying this wonderful Summer time of the year? Certainly, the folks who are taking advantage of the strength of the housing market to sell their home are enjoying it! Just look at this first chart, the Weeks of Supply & the Absorption Rate. Weeks of Supply means how many weeks it would take for all the houses to sell if the current rate of sales continued and no new listings came on the market. Absorption Rate is the percentage of available listings that sold in the time period. So, from a seller’s perspective, the lower the Weeks of Supply number is (currently it is 3 weeks) and the higher the Absorption Rate is in the Milton Ontario real estate market (which is currently 34.9%), the better it is for selling a home. Click the image to view it full-size.

A pretty powerful way to view what is happening in the local real estate market. If you’d like a longer-term view of what has been happening, see this recent post. And here’s a view of what has happened on a quarterly basis in the area covered by the Oakville-Milton Real Estate Board: Click the image to view full-size.

Now let’s look at the breakdown of the milton ontario real estate market numbers for the week ending July 31st, 2009.

First, the weekly summary of listings, solds and expired listings, by price range. This chart reveals a number of things to the casual observer, such as the most active price range for the week being the $300,000 to $325,000 range. In this range, virtually all of the available properties sold, with just one remaining on the market. Is your home in this range? Let’s get it on the market now and get you a fantastic price!

This chart also shows an average days to sell of 19, however, removing the couple of anomalies, that number becomes 6 days, from the time the listing was signed, through when the house gets onto the MLS and when all conditions are removed. SIX DAYS! That is extremely fast, perhaps too fast? Look for a follow-up post on this thought in the next couple of days. Removing those same anomalies also causes the average list-to-sell ratio to rise to 99.9%! Are houses perhaps being listed at too low of a price? Just a thought.

The next chart shows the Annual Summary of Total Market Activity for the Milton Ontario real estate market. Compare the averages down each column for an historical perspective.

Seeing the number of sales in milton ontario for the week jump by 60% over the previous week could lead one to conclude that people are listening to the warnings of interest rates going up. It could lead to that conclusion, I’m not saying that is the cause.

The final chart is included so you have a graphical representation of the ongoing activity - it’s easier to see the trend in a line-graph than to just see the numbers. Click the image to view full-size.

There is a lot more information and background conclusions that can be drawn from this data – if you are thinking of selling your milton ontario home, you need the complete picture of the real estate market. Call me, Chris Newell, at 905-208-7002 and we can set a time to discuss it.