Have you noticed that the news headlines seem to be very doom and gloom about the economy lately? It’s true that interest rates and inflation are on the rise, but conditions are not nearly as bad as you might think. Right now, we are enjoying a strong economy that is recovering well from the pandemic restrictions of the last two years. To top it all off, unemployment rates are at a record low of 4.9% as of July.

Nevertheless, the uncertainty has hit the real estate market. Yes, housing sales are down from the boom we experienced in the winter. Relatively speaking, however, the market is still strong.

Whenever there’s a change, some people begin to wonder if they should use the services of a real estate agent when buying or selling a house. The temptation to forgo a Realtor is clear. The average home in Burlington now rivals that of Toronto at nearly $1.3 million. 

At that price, even the lower commission at a discount brokerage seems expensive. It’s times like these where professional expertise is even more critical.

The best part is that working with the right agent doesn’t necessarily cost you money. They can, in fact, help you earn or save far more than you would ever pay out in commissions. 

Let’s examine some of the facts versus fiction about working with a real estate agent.

Fiction: I’ll earn more when selling my house if I do it alone or by using a low-commission agent.

Fact: The old adage is true. You get what you pay for. 

When selling on your own, the slightest mistake can cost you thousands of dollars or even lose you the deal altogether. In the worst case scenario, you could land yourself in some legal hot water. 

In this market, buyers are hesitating. Some are even trying to back out of their deals as prices drop. 

Effective negotiation and comprehensive marketing are essential to your success. An experienced and savvy homeowner might be able to pull it off. However, you’ll still have to pay the buyer agent commissions, and the lawyer fees are often higher for For Sale By Owner (FSBO) transactions. 

Information is power when it comes to a successful real estate transaction. Here are some other resources that can help you achieve your goals:

• Conditions and Clauses on a Real Estate Contract
• How To Stand Out In A Changing Market
• What Happens When a Buyer Breaches their Contract?

Fiction: I can sell a house by myself in my spare time.

Fact: Maybe it isn’t all about the money in your case. But how much is your time worth? 

Listing a home for sale is more complicated than it looks at first sight. There is research, home preparations, showings, marketing, photography, and staging. Trying to do everything is a full-time commitment. If you have a career, doing it all is simply exhausting. And at the end of the day, you’re likely to have even less money in your pocket than you would have if you had somebody to do it all for you.

Working with a local real estate expert doesn’t just make your life easier and protect you legally. Statistics show that an agent-assisted sale typically earns as much as 20% more than an FSBO property. 

Think of it this way: Your buyer probably has an agent representing them. Don’t you want somebody to advocate for your best interest?

Fiction: You should use your friend as an agent.

Fact: It’s understandable that you want to be supportive of your friend who may be just decided to get their real estate license. However, your home is your biggest investment. 

Buying or selling is an emotional experience and even if your friend is a true professional, the stress can ruin a personal relationship. Some people would say that you shouldn’t use your friend to sell your house any more than you should let them perform surgery on on you.

Fiction: All real estate agents are the same.

Fact: The boom of the last two years has attracted many new and inexperienced real estate agents to the industry. 

As a result, there’s been an influx of agents who only have experience working in prime conditions. 

They’ve never had to work in a cooling market, and they certainly never had to deal with a recession. 

Currently, there is a lot of buyer hesitation in the market. Selling a home successfully requires extensive negotiation experience and comprehensive marketing skills. Many new agents do not have these skills and they are struggling.

If you want to achieve the best results, use an experienced professional who has the tools and expertise to succeed in all conditions, not just when times are good.

Fiction: Real estate is a people business, so it doesn’t matter if my agent doesn’t have a web presence.

Fact: This myth is a pervasive one, because it contains a hint of truth. 

Real estate is, in fact, a people-driven business. A large social media following or flashy website isn’t everything. However, it’s important to remember that the world has changed dramatically over the last few decades. Nearly everyone begins their search online before deciding what to look at and whether they will schedule an in-person visit. Technology is here to stay, and your real estate agent should be well-versed in all of the tools to help you succeed. 

Are you ready to buy a new home? Here are some resources to guide you:

• Interest Rates are on the Rise. Should You Get a Fixed Rate or Variable?
• How To Win In A Multiple Offer Scenario
• The Hidden Gems of Burlington You Need to Know About

Fiction: Using a buyer agent will add to my purchasing cost.

Fact: You should always use an experienced agent when buying a house because it usually doesn’t cost you anything at all. 

The buyer agent gets paid by the seller after the house closes. You get all of the guidance and protection of a licensed agent at no cost. And an agent with rock-solid negotiation experience can help you save thousands on your purchase. 

There are many myths about working with a real estate agent, but we are happy to clear them all up for you. Feel free to reach out today with any questions you may have. 

Did you know that Burlington took the top honours for the best community in Canada in 2019 by Maclean’s Magazine? It was also voted number one as the best place to raise a family, and for a good reason. It’s safe and scenic, with all the amenities you could ever need and has access to top-notch schools and parks. 

Of course, downtown Burlington tends to get all the glory because of the cute shops, transit and waterfront access. The attention is well deserved, but there are other beautiful, lesser-known neighbourhoods in the city that you may just want to know more about. Here are a few of our favourites:

Elizabeth Gardens

You could argue that Elizabeth Gardens has just as much to offer as downtown Burlington. You’ve got easy access to the waterfront, with endless independent shops, restaurants and ice cream shops along Lakeshore. The boardwalk is fantastic for walking, jogging or cycling any time of the year.

And move over Spencer Smith Park! It has nothing on the Burloak Waterfront Park, where kids will spend hours on the giant playground featuring a soft, rubberized floor and even has a zipline! 

You may notice one thing missing as you take in the scenery along the boardwalk – there are no crowds! Can you believe this beautiful neighbourhood is one of the most affordable areas in the city?

Buying a home can be challenging during a changing market but these resources can help:

• Interest Rates On The Rise: Should You Get A Fixed Rate Or Variable Mortgage?
• Conditions And Clauses On A Real Estate Purchase
• The Market Is Changing: Is Real Estate Still A Good Investment?

Tyandaga 

You’ll find the affluent neighbourhood of Tyandaga on the northwest side of Burlington. Though best known for its large, sprawling estate-style homes, the occasional listing for a bungalow or split-level residence does come up. Larger-than-average-sized yards make it easy to enjoy your privacy when you want it. However, Tyandaga is also known for its sense of community, which is there for you when you need it. 

As one of the more mature neighbourhoods in the area, there are plenty of trees, shrubs and green spaces. It’s also close to the Bruce Trail, the oldest and longest footpath in Canada. 

Cityview Park is one of the main attractions, with a playground, sports field, artificial turf and a boardwalk that winds through the naturalized wetlands.

Brant Hills 

If Tyandaga proves to be a little rich for your blood, you might consider its neighbour to the north. Brant Hills is surrounded by the beauty of the Niagara Escarpment, making it a paradise for nature lovers. You’ll still find plenty of luxurious, 2-storey Colonial and Tudor-style homes. However, there is also an abundance of more affordable bungalows, townhouses, and split-level houses.

If you’re looking for some fun family time, head on over to the Brant Hills Community Centre, where you’ll find a library, a gymnasium and a giant outdoor sports field. Drop-in programs are often available, offering fun and educational activities for all ages!

The best part of living in Brant Hills is the scenery. The second best thing may be the ease of commuting. The 407 and QEW are close by and making getting around a breeze.

The Orchard

Looking for the ultimate family-friendly neighbourhood? The Orchard may just be the answer you’re looking for. It’s an extremely friendly area, and nearly everyone has a front porch, where you can sit and enjoy a coffee while waving hello to the neighbours. Your little ones will quickly find new friends to play with as plenty of children are around. The Orchard Community Park is a a great place where the young and young at heart can play sports, explore beautiful nature trails and cool off in the splash pad during hot summer afternoons.

There are several elementary schools within easy walking or biking distance, so getting to and from class will never be a problem. 

The Orchard is located as far north as you can go in Burlington, meaning Bronte Creek Provincial Park is practically in your backyard! 

Are you open to other areas in the GTA? Here are some other comparisons you might be interested in:

• Hamilton Vs. Toronto: Which Should You Choose?
• Our Complete Guide To Central Hamilton

Millcroft

Millcroft is the place to be for golf nuts. This neighbourhood is so crazy about golf that instead of deer crossing signs, you’ll encounter signs telling drivers to watch out for golfers. It consists mainly of executive-style houses on extra-large lots. 

And it isn’t just for golf fanatics. Anyone who enjoys gorgeous scenery and the feeling of being in the country while enjoying city amenities will love living in Millcroft. It’s not the most walkable neighbourhood but is just a 15-minute drive to downtown Burlington. And the Millcroft Shopping Centre is around the corner, with over 40 shops to choose from and plenty of restaurants where you can stop for a bite.

Whenever you feel the need for exercise, Millcroft Park offers baseball diamonds, a soccer field and a tennis court. Plus, there’s a children’s playground and splash pad. It’s a great way to get a taste of the outdoors, with fun activities for everyone.

Are you looking for your forever home in Burlington? We work extensively in the area and can help you find your new perfect neighbourhood! Reach out today for a free, no-obligation consultation.

Last week, the Bank of Canada dropped a bomb on what was already a softening real estate market. People were reeling from a series of interest rate increases beginning in March, which were not unexpected. Inflation is still rising, with out-of-control gas prices driving up the cost of everything from food and clothing to construction supplies. 

Raising the interest rate is one way for the Bank of Canada to try to slow inflation.

However, rising rates can have a significant impact on the real estate market. The last few months have been proof of this. Buyers begin to hesitate because of the higher cost of borrowing. Less competition means fewer offers, and housing prices start to fall.

Will this spell the end of the hot housing boom sellers have enjoyed for the last two years? Fear and hesitation have made their way into the market, but for the most part, there is no need to worry, not even after the last rate increase. What we can expect is a simple correction to a hectic market that was never sustainable.

The Numbers At A Glance

The year started with a target rate of 0.25%, a historic low put in place to boost the sagging economy brought on by the pandemic. This ultra-low rate worked better than anyone anticipated and triggered one of the most aggressive markets we’ve ever seen. 

As housing prices soared and inflation rose, the Bank of Canada had no choice but to raise interest rates.

The market cooled slightly in April but remained highly competitive compared to recent years. Everyone knew another increase was around the corner. We all held our breath for weeks as we waited for the Bank of Canada to make the announcement. We knew it would be a steep one, and the market braced itself for an increase of 0.75%. 

Instead, they dropped the news of a full percentage point hike in the interest rate. This is the biggest jump since 1998, bringing the target rate up to 2.5%. (Recent update: Since July, there have been several other increases. The latest 0.50 point hike in December brings the rate up to 4.25%.)

With everything going on in the market, it might be an excellent time to review some of the basics. Here are a few more resources to help you become an educated buyer or seller:

• Conditions And Clauses On A Real Estate Contract
• How To Stand Out In A Changing Market
• 7 Amazing Benefits Of Working With A Real Estate Agent

Balance Returns To The Market

At the end of the second quarter, the Canadian Real Estate Association (CREA) reported that there were 2.7 months of inventory available in the housing market. Under normal conditions, these numbers would look like a hot seller’s market. A balanced market takes place when supply reaches about six months’ worth. 

Compared with March, when inventory dropped to 0.9 months, this now seems like a balanced market. Homes take longer to sell, and multiple offer scenarios are no longer a sure thing.

A homeowner who had their property appraised at $2 million in February may feel dismayed that their house is now only valued at $1.8 million. They see a $200,000 loss, but they’re not seeing how much they stand to gain as the market corrects. However, the newly balanced market benefits everyone, especially sellers.

What The New Rates Might Mean For Sellers

News headlines are reporting that interest rates have “taken a hammer” to the real estate market. Prices will likely decrease a little further as the market continues to self-correct. And that’s a good thing. How? The previous scorching hot market was actually a nightmare for sellers who also wanted to buy.

Many homeowners found themselves priced right out of the market a few weeks after their closing date. This new balanced market gives you some breathing room. You have time to look at homes and choose something suitable for your family. And while you may earn less from selling your home, you will also pay less for your new home.

When you look at current conditions calmly, you’ll see that rising interest rates have little effect on existing homeowners. Even if you sell for less than you would have in February, your house is still worth far more than what you paid a few years ago.

What Rising Interest Rates Mean For Buyers

Buyers are panicking more than anyone over the interest rate jump, but they don’t need to. Interest might be higher now, but in March, the average price of a Burlington home reached $1.4 million! Now, housing prices are finally coming down.

Knowing your financing options is one way to shield yourself from higher rates. Read our interview with a top mortgage expert right here.

Buyers who are also selling are at a clear advantage as prices drop. Since interest is based on a percentage, the lower cost of houses helps reduce their monthly payments.

First-time buyers are the ones who will struggle the most with the higher rates. However, there are ways to offset the increased costs and resources available to help you. The best thing you can do is to raise as much as possible for your down payment. The more you pay upfront, the less you need to borrow. Your interest rates and your monthly payments will be lower. 

Under the Home Buyer’s Plan, you can withdraw up to $35,000 without penalty to put towards your purchase. You can also look into the First Time Buyer’s Incentive, a shared equity program where the government provides up to 5% of your down payment on a resale home or 10% on a new build.

You can also help offset higher interest rates by purchasing at the bottom or the middle of your budget. As prices decrease, finding homes within a lower range will be easier.

Whether buying or selling, there is no cause for alarm over temporary market corrections. Remember that housing values rise over the long term, making real estate one of the safest investments you can make. 

Are you ready to make a move or want to talk about what the current interest rates mean to you? We are happy to answer your questions. You can reach out to us right here.

All over the country, potential homebuyers are breathing a sigh of relief. After two years of soaring prices, record-low inventory, intense competition and all-out bidding wars, the market finally seems to be balancing out. 

However, now there’s something else for potential homebuyers to worry about. Interest rates are rising, and the higher cost of borrowing is scaring some people away from the market. 

Unfortunately, there will likely be even more interest rate hikes to come. Will the higher rates negate any benefit of lower prices? Mortgages can be complicated. That’s why we put together this guide to help you navigate the different types of loans and find the best option to help make your purchase affordable. 

We talked to our mortgage specialist Alexandra Trahiotis, who has been helping clients secure the best rates and terms for over 20 years.

We did our best to throw her for a loop, but there was no question that Alexandra could not answer!

What do you recommend during a shifting market, a fixed-rate or variable-rate, and is it different from a “normal” market?

Alexandra Trahiotis: My advice would definitely have been different six months ago. When the rate was 1.89%, I would have leaned towards a fixed rate. It was so low that you would have wanted to lock it in for as long as possible.

With the current fixed rate of 5.19%, I recommend going with a variable rate because in the majority of cases variable rates tend to outperform the fixed rates on interest costs. This means you would pay less interest overall. I would also recommend increasing their payment up to the fixed-rate payment to offset the interest cost to have more of your monthly payment go to the principal, then interest.

I recommend first-time buyers go with a fixed rate because they don’t have to worry about their payments changing.

It always pays to be an informed buyer, especially as the market changes. Here are some other posts you may find helpful:

• 7 Benefits Of Working With A Real Estate Agent
• Pre-Qualification Vs Pre-Approval: Which Is Better?
• Ready For Condo Life? Here’s What You Should Know

What are some of the pros and cons of variable rates that some people don’t know about?

Alexandra Trahiotis: First of all, the variable rate will almost always be lower, so there are very few downfalls to choosing that route. You’ll pay your mortgage off faster because more of your payment goes towards the principle of your loan rather than the interest.

Of course, some people are concerned about fluctuating payments. With the five central banks, that might be an issue. 

However, many other A and B-level lenders provide more flexible options.

• If the rate scales down, more of your payment goes toward the principle. 
• If it goes up, your payment remains the same, but more is allocated to interest. 
• The only time your payment might change is if the interest rate goes up by a full percentage point. In that case, your lender will make adjustments so that your amortization period doesn’t increase.

What is your advice for anyone who is looking for a mortgage?

Alexandra Trahiotis: I have three tips for anyone who is serious about getting a mortgage and buying a house.

1. Get pre-approved.
2. Get pre-approved.
3. If you haven’t already, get pre-approved.

Not to sound repetitive, but so many clients come to me and have no idea of what they can afford. You don’t know what you don’t know. People assume things, and they shouldn’t.

You have to know how much you can qualify for.

Some people think that they can afford to spend much more than they actually can. Many factors come into play, like how much debt you have, your salary and your expenses. If you have a commission-based job, you can’t qualify based on your best months’ income. You have to take your two-year average. No institution wants you to be house poor, so they look at everything. 

On the other hand, some people think that they can’t afford a house at all. I had a retired couple recently who came to me thinking that they wouldn’t be able to buy, but they decided to give it a shot. It turns out they qualified for an $800,000 mortgage! 

Now they’re living in a nicer home than they ever imagined they could afford. But they would still be renting today if they hadn’t taken that first step of getting a pre-approval.

Do you have any tips for current homeowners looking to refinance?

Alexandra Trahiotis: To anyone coming up for refinancing, I recommend a thorough financial review with myself, a qualified mortgage broker. For example, if you have a ton of credit card debt, consider rolling it into your mortgage. If you’re making the minimum payment on a card with a 20% interest rate, you will never pay off that debt.

But when you consolidate your debt into your mortgage, your rate drops to 4.8%. You can pay down your debt faster and free up more monthly cash flow. 

Everyone should do a regular financial review because you never know what opportunities are waiting for you.

You can get rid of debt or even find ways to grow your wealth.

Another example is investing in real estate. Many people with a mortgage think they could never afford to have a second home.

But you might be surprised at how affordable investing in that second property can be, especially if you have equity in your home.

Speaking of investing, here are some other helpful resources:

• The Market Is Changing. Is Real Estate Still A Good Investment?
• How To Grow Your Real Estate Portfolio in 2022

What are your clients most surprised by when they apply for a mortgage?

Alexandra Trahiotis: I find clients are often surprised by just how much they can afford. People come in with bruised credit or are self-employed. Sometimes people have been rejected by the central banks, and they start to feel pretty discouraged. 

For the banks, you must have a pristine credit rating before they even look at you. But you should talk to a mortgage broker because there are so many opportunities you don’t know about. There are high-quality lenders who will help you, no matter what your situation. 

There are lenders for retirees, the self-employed, and those with a spotty credit history.

It’s important not to write off your potential before you’ve explored all of your options.

Do you have any other advice to help clients secure the best product?

Alexandra Trahiotis: Once again, I recommend getting pre-approved. It doesn’t just let you know how much you can qualify for – It also enables you to lock in the lowest interest rate for up to 120 days.

I have clients who locked in the ultra-low rates back in March, and they’ve just started looking for houses. 

One last piece of advice I have is to try not to be discouraged by the news. All you hear is that interest rates are increasing and making houses unaffordable. 

But housing prices are coming down!

Your rate might be higher, but the house doesn’t cost as much, making your payment lower. You have to look at the actual numbers, not just the percentages. In February, you could have locked in 1.4% on a house with a listing price of $1 million. But there was so much competition that you might have had to add hundreds of thousands to your offer. Now, that same house is only $800,000. The rate has increased to 4.8%, but your payments would still be lower.

Even with the recent increases, interest rates are still low compared to a few years ago. I recommend getting a pre-approval to lock in the best rate now. If rates happen to go down when you buy, that’s great news. Your lender will adjust to the lower amount. Locking in your rate now only protects you from further increases and makes buying a home more affordable than you might realize. 

If anyone has any questions about mortgage rates, they can reach out to me by email.

Are you ready to start searching for your new home? Our featured listings page is a great place to start.

The Canadian real estate scene is quickly approaching the closest thing to a buyer’s market we have seen for a long time. As early as two months ago, you’d have faced stiff competition if you wanted to purchase a house. Many buyers had to bid hundreds of thousands of dollars over asking to have  a shot at success. 

Now, after a series of interest rate increases, the Canadian market has dramatically slowed. By the numbers, we can’t exactly call it a balanced market, at least not yet. With two months of inventory available, conditions still favour sellers at the moment. But for buyers, things are definitely looking up. There are far more listings to choose from, which provides a little more negotiating power. Now, you can often get your offer accepted at the list price or even a little below.

Real estate can be unpredictable, but these articles may help answer your questions:

• Our Guide For First-Time Buyers
• Are Conditional Offers Making A Comeback?
• The Market Is Changing. Is Real Estate Still A Good Investment?

As conditions swing more in favour of buyers, it may be a good time to review some of the most common terminologies you should know.

Two terms you will often encounter are pre-qualification and pre-approval. They are sometimes used interchangeably, but they are very different. What do they mean, and which one gives you a better chance of placing a winning bid?

Pre-Qualification

Getting a pre-qualification is easy. You can go online to any of the major banks to complete the process, which only takes a few minutes. You’ll submit basic information about your income, marital status and personal assets. Based on your answers, the bank will give you a rough estimate of how much of a mortgage you may be able to qualify for.

It’s important to remember that a pre-qualification isn’t 100% accurate because it does not verify the data you enter. The lender gets only basic information and isn’t performing a credit check or looking closely at your financial history.

Why bother with a pre-qualification when it doesn’t seem to hold much weight? It depends on where you are in the buying cycle. Getting a pre-qualification is a helpful first step if you’re in the beginning stages or just starting to think about buying.

When you’re done, you’ll have a quick snapshot of what you might be able to afford based on your current financial situation.

• For example, if you earn $25,000 a year and the average house in your area costs $1 million, you might be facing an uphill battle.
• If you’re earning $120,000 and a house costs $400,000, your chances are much higher, barring a heavy debt load or poor credit history.

If you want to buy a house quickly and have done some research and preliminary work, you might decide to skip a pre-qualification altogether. In this case, you can go straight to getting pre-approved.

Pre-Approval

A pre-approval shows that you mean business about buying a home. It provides the lender with much more in-depth information and is more involved than a pre-qualification.

Your lender will ask you to complete an official mortgage application, and you’ll have to supply documentation to verify your identity, income, assets and debts.

You will also have to pass a credit check.

Once a thorough investigation is complete, you’ll have an accurate picture of how much you can borrow and what kind of home you can afford.

Your pre-approval is usually good for 90 to 120 days, which protects you from further interest rate increases. If you run out of time, you may be able to get an extension but could lose the interest rate protection.

After your application, it could take a few days for your pre-approval to go through. It may take longer if you are self-employed or have a complicated credit history.

Once the lender is satisfied with your ability to repay, they will write you a letter of pre-approval. With this letter in hand, you can now start searching for your new home!

You can place offers up to the maximum amount of your loan, plus whatever down payment you have saved.

A Pre-Approval Is Not Guaranteed

A written pre-approval is a commitment by the bank based on your current financial position. However, it’s crucial to remember that it is not guaranteed. If anything changes in your life, the bank can refuse your mortgage. For that reason, we recommend holding off on other major purchases, such as cars, vacations or furniture. And if possible, avoid switching jobs until the transaction is complete.

Pre-qualifications and pre-approvals are just two concepts you should understand before buying or selling. Here are a few other things you should know:

• What Happens When A Buyer Breaches Their Contract?
• Deposit Vs Down Payment: What’s The Difference?
• Conditions & Clauses On A Real Estate Purchase

Why Is Getting Pre-Approved So Important

A pre-approval will give you a serious advantage if you intend to buy a house within the next few weeks or months, especially in a competitive market with multiple buyers.

A pre-approval in advance helps you craft a compelling offer that sellers are likely to accept because you can remove the financing condition.

Once a seller accepts your offer, the full mortgage process begins. Not to worry, however. You have already completed most of the work involved. All you need to do now is start planning your move into your brand new home! 

No matter what stage of the home buying process you’re in, we can help! You can book a free meeting with us here, and we will happily answer any questions you have.

When gearing up to buy or sell a house, you may believe that the deal is over once the offer is accepted and signed. 99% of the time, you’re right. After all, a sales agreement is a legally binding contract, and there can be significant repercussions if either the buyer or seller backs out. 

Once the paperwork is taken care of, you should feel confident in moving on to the next step. However, you should be prepared and have a backup plan in the rare situation that the deal falls through. 

Let’s take a look at some scenarios and what to do if one party fails to live up to their end of the agreement.

Contingencies Aren’t Met

For the past two years, sellers have gotten used to receiving unconditional offers from buyers in an ultra-competitive market. However, the market has slowed down since its peak earlier this year, and conditions have become more frequent. What does this mean, and how can it cause your sale to fall through? 

Let’s say you accept an offer with a condition of home inspection. If the home inspection turns up an unexpected flaw, the buyer can back out without repercussions. 

You may be able to negotiate by lowering your price. Still, the buyer will be under no obligation to continue with the purchase, and their deposit will be returned to them.

Yes, the rumours are true, and the market is shifting. Here are some articles to keep you well-informed:

• How To Stand Out In A Changing Market
• Are Conditional Offers Making A Comeback?
• The Market Is Changing. Is Real Estate Still A Good Investment?

Can A Buyer Change Their Mind?

If there is a verbal agreement, but no signature, either the buyer or seller can back out without consequences. Once the paperwork is signed and the conditional period has passed, it becomes much more difficult to cancel the deal. However, sometimes things don’t go according to plan, no matter how thorough you are. A buyer can try to back out for several reasons.

• Perhaps they couldn’t get the financing they were counting on. Some buyers will make an unconditional offer to try to be competitive, only to find they can’t qualify for their loan after all.
• Or maybe they found a different home that they like better and want to back out of the contract. Legally, this isn’t allowed, but it does happen.

If a buyer breaches a contract after conditions are met, you have several recourses. You can try to renegotiate the sale under different terms if the buyer is willing. 

As a last resort, you can even consider legal action to compel the buyer to meet their obligations. In any case, there’s a good chance you can keep the deposit if the buyer is in breach of the contract. 

You will have to decide if legal action is worth your time and effort. In a strong seller’s market, you may be better off starting over with a new buyer. A good real estate agent or lawyer can walk you through your options to help you reach the best outcome.

What If The Seller Backs Out?

What if you’re the buyer and the seller is the one who gets cold feet? Buying a home in this market is a challenge, and it can be disheartening to find the perfect place only to have the seller withdraw from the agreement. Though rare, a seller may want to back out of the deal for several reasons:

• A sudden family emergency such as a job loss or severe illness may make moving impossible at this time. 
• They may have received a higher offer for their home. Typically, the seller would be obligated to honour the sale unless they’ve negotiated an escape clause into the contract.
• The market has changed, and houses are now worth more. The seller wants to cancel your agreement and sell the home to someone else for more money.
• Perhaps they’ve changed their minds and don’t want to move at all. This happens frequently during hectic seller’s markets where the homeowner worries that they won’t be able to find a suitable house before the closing date.

Can a seller back out legally? Not usually, but they may have outlined conditions in the contract. Sellers can use contingencies to protect themselves, just like buyers can. 

Are you looking to buy a home but not sure where? These neighbourhood posts will give you some food for thought?:

• Hamilton Vs Toronto: Which Should You Choose?
• 5 Things To Know About Moving To Burlington
• What To Expect When Buying A House In Waterdown

What Are Your Recourses as a Buyer?

If the seller tries to back out, the first thing you should do is call your real estate agent and lawyer for advice. You can take legal action and get the courts to force the seller to close. Otherwise, you may be able to sue the seller for the difference if you end up buying a similar property for more money. Of course, legal action is stressful and time-consuming and should only be used as a last resort. 

It will save both of you a lot of time and worry if you can come to a mutually beneficial agreement outside of the courts. 

Your real estate agent may help you save the deal by negotiating a longer close or different terms that work for both parties. Otherwise, you’ll likely get your deposit back. You may even find another suitable property for a similar amount of money. 

In any case, it’s important for both the buyer and seller to read the contract carefully with an agent or lawyer, so you understand what you are agreeing to.

Are you planning to buy or sell a home this year? Our dedicated agents are well-versed in the Hamilton, Burlington and Dundas areas and will happily answer any of your questions. Reach out to us today.