Parents to the rescue! As home prices keep on surging, a new report from CIBC shows more parents than ever before are giving increasingly more money to their adult children so they can buy their first or a bigger and better home. Benjamin Tal, CIBC’s deputy chief economist, estimates that in Toronto’s red-hot market, the average parental help topped $130,000. While parents helping their children with home purchases is certainly not a recent development, the share of first-time home buyers who received a financial gift rose to nearly 30 per cent over the past year. “The involvement of parents in their kids’ life has risen when it comes to wanting a house, there’s no question about it,” says Tal, adding that two-thirds of people who received financial gifts reported the money was their main source for a down payment.
First-time buyers are not the only ones receiving this“fast-tracked inheritance.” Move-up buyers are also being helped and that help comes in various forms. Tal explains
that some parents co-sign on homes, while others use their equity or credit scores to take out better loans to help their children save on interest. Some parents purchase another property while their children are young to secure a home for them before prices escalate any further. There are several benefits to giving money to your children while you’re still alive, in what is known as “living inheritance.” According to Moira Somers, a Winnipeg
psychologist specializing in behavioral finance, the main upside to giving while alive is “getting to see how the money is making their loved one’s life better or easier.”
That’s an obvious upside, but there are also financial benefits for the family. Cash gifts, given while alive, reduce the size of the estate, probate fees, costs and taxes on the
estate, according to Samantha Prasad, a partner in the tax group at the law firm Minden Gross LLP in Toronto.There’s no gift tax in Canada (as there is in some
countries like the United States) and no threshold for how much you can give, Prasad explains. However, there may be tax implications in giving real estate or investments or
“attribution rules” if the gift is used for an investment. Prasad advises the best option is often giving money directly from savings, or selling an asset first, paying the
applicable taxes, and then giving the proceeds.
MORE TRANSPARENCY PROPOSED in the OFFER PROCESS
Currently in the multiple offer process in Ontario, offers are submitted to the seller, and only the seller and listing Realtor know the content of all the offers, as Realtors are prohibited by law from sharing details of any offer with other buyers bidding.
Buyers are frustrated at having to “guess” what price to offer to win the bidding war and sellers are often also frustrated that they can’t ask a buyer if they are willing to beat the current best offer. There have been increased calls to implement a transparency model, where all buyers bidding on a home would know what the best offer is and are given the opportunity to beat it.
It has been argued that the current process has added to the excessive price growth we continue to see in some areas of Ontario.
Recently iPro Realty asked consumers and Realtors in the GTA for their thoughts on offer transparency. More than 1,000 Realtors and 150 consumers responded, with the following results:
• 88 per cent of consumers think transparency should be allowed
• 72 per cent saying it should be mandatory
• 89 per cent of Realtors think there should be transparency
• Only 41 per cent of Realtors and 34 per cent of consumers think implementing transparency may have a cooling effect on the market.
Allowing the option for offer transparency doesn’t have to be complicated. Sellers, through their listing agent, could be allowed to disclose the best offer on the table to all competing offers, with all participants given an opportunity to resubmit their offer or walk away. This isn’t an auction process, it is keeping the process the same as it is today, but allowing Realtors to disclose the top terms of an offer to competing buyers, while personal information about buyer is kept confidential.
The auction process could also be an option as the more choices offered the better.
Source REM Update
Mortgage renewal strategyBe proactive
Mortgage renewal can be an easy task. All that’s typically required is signing the renewal notice your current lender sends you 30 days before your mortgage maturity date. But by going this route you may miss a chance to improve your finances.
Generally, with the mailed renewal slip, mortgage providers only offer their existing customers a discount from their posted rate and the same terms as before. But that rate may not necessarily be the lowest possible rate you can get and the terms you agreed to five years ago may not suit your current financial and life situation. It’s in your best interest to renegotiate your mortgage and potentially save a lot of money. Here’s a strategy that may get you a better deal on your mortgage renewal
1. Set up a timetable and choose your approach – If you are planning to seek the best possible rate and/or different terms and conditions, start the process early by contacting your lender three months before your maturity date. If you can’t negotiate a better offer with your current lender, you’ll have plenty of time to shop around for another lender. You may want to recruit a mortgage broker in this search. A mortgage broker can access your credit
report and find a list of lenders who will work with you and the best rates they can offer if you choose to switch.
You can also ask your mortgage broker to put a hold on another lender’s favorable rate and leverage that to see if your current lender can match it or do better.
2. Negotiate a better offer – Armed with competitive rates offered to you from other lenders puts you in a strong position to negotiate. Remember, your lender is motivated to keep your business. You simply ask your current lender for a lower rate, as an existing, long-term customer with a good credit rating and a spotless payment record. If your lender’s offer is not to your satisfaction, you can switch to a better one. But, be aware that switching lenders sometimes means you have to go through another mortgage application process and you may incur some costs.
Following the above strategy can save you substantial amount of money over the life of your mortgage.
With a continuing wave of tech support coming to real estate, Realtors need to ask themselves one important question: “Is my technology useful in
boosting the existing home buying and selling processes, or is it aimed at solely replacing the role of the real estate salesperson?”
Dan Weisman, the director of emerging technology in the Strategic Business, Innovation & Technology group at the National Association of Realtors (NAR) recently stated,
“The broker and agent will continue to exist in this tech-enabled ecosystem because, unlike ordering something online that you can return, buying a house is a significant financial and emotional commitment and can’t be returned. Buyers and sellers need the human support and reassurance, and what technology will continue to help with is improved process and increased efficiencies so brokers and agents can continue to be at the centre of the experience.”
Buying and selling a home is complicated, so there’s no one catch-all technology solution that can solve every potential snag in the process. It’s also a deeply emotional and personal process and likely the largest single investment any individual is going to make. It’s clear that people want to rely on experts to guide them through the process.
The best technology solutions are those that facilitate a transaction versus attempting to replace the emotional components of buying and selling a home. Realtors that succeed, rely on human interaction to support the insights created by technology.
At VILLAGE LIFESTYLE, it is important to us, that as we work together, whether you are a Seller or a Buyer, the choices you make, are the right choices for you.