If I get cold feet, I can get my deposit back, right? Ah, no … not if the deal is firm.

I had a call from someone in the media a couple of weeks ago. They had received a complaint from a buyer (nothing to do with me) who had said that her realtor told her to pay a higher deposit than she was comfortable with, and had her sign a document that said she would lose it if she didn’t end up buying the property. The journalist asked if I’d ever heard of this kind of thing, and wanted to know my thoughts as an “expert.”

My first question was to ask if they  had actually seen the document. I suspected it was a standard form we sometimes use when buyers want to make an offer without any conditions indicating the buyers are aware they should get legal advice and that they understand what they’re doing. I explained to the journalist that yes, if they make an unconditional offer and then fail to close, they would most likely lose their deposit.

The reporter said, “But I thought if I backed out of the deal for any reason, I got the deposit back? Isn’t that true?”

The answer to that is no, not in unconditional offers. Those deals — the ones that either didn’t have any conditions, or where the conditions have been met — are firm and binding contracts. If the buyer can’t close, caselaw says the seller is entitled to keep the deposit as damages. The buyer may also be on the hook for other damages if the seller then resells for less than their accepted offer, which can happen if a hot market quickly cools.

It sounded to me like the agent wanted to make sure the buyer understood what could happen and was actually behaving in a prudent manner. Where they may have fallen short is in communications, by not explaining fully to the buyer what they meant by that. But then again, I was talking to a savvy journalist who wrongly thought deposits were automatically refunded no matter what happened, too.

According to the journalist, the buyer had also complained that the realtor pressured  her to make a higher deposit than she was comfortable with, and said that if she didn’t, she wouldn’t get the house. The journalist didn’t know how much the deposit amount was, or what the buyer wanted to pay, so I couldn’t really offer an opinion. But I’ve had buyers who thought they could get a house with a $ 1,000 deposit, and that’s not going to happen – it has to be a serious amount.

If two offers are almost identical and one has a higher deposit, the seller will go with the one with the higher deposit. And this is again because if the deal goes firm and then falls apart, their losses will be cushioned. As noted, if the deposit has been made to the sellers’ lawyer, the cheque can be cut by the lawyer to the seller as soon as the buyer’s lawyer confirms they can’t close.

If the deposit has been made to one of the real estate brokerages, things get a little more complicated. The parties have to agree to a Mutual Termination and Release and specify how the deposit will be dealt with before the brokerage can release it. If they don’t work it out (either through the realtors or the lawyers), then the deposit is kept in trust by the brokerage until they receive a Mutual Termination and Release, a letter from the lawyers indicating what is to be done to it, or a court order.

Just remember that once your unconditional offer is accepted, and you decide not to proceed because you get cold feet, or can’t get your financing, you will not automatically get your deposit back — while sometimes your realtor can negotiate a compromise with the other lawyer, the seller is entitled to the whole thing. So make sure you understand what you’re getting into, and ask lots of questions before you sign anything!

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Are Realtors Behind the Crazy High Prices? Short Answer: No.

A Twitter pal posted a tweet today blaming realtors for the hot real estate market in Ottawa, because most listings these days hold off on offers until a specified date.  So let me debunk that popular myth. There are a couple of reasons for the explosion in home prices. One pre-dates the pandemic; the other is because of it.

 A couple of years ago, the federal government made it harder for first time buyers to borrow money by tightening what’s called the mortgage stress test. As a result, they had to rent longer while they saved more money for a down payment. That put pressure on lower-priced properties, because these were more affordable for first time buyers but also  a good deal for investors, because the rental market had tightened and that meant higher rents. When lower priced properties become more expensive, that has an effect all the way up the food chain. Prices went up.

So the federal government then tightened up the mortgage stress test to make it harder for all buyers to borrow money, not just first time buyers.

Under the new rules, lenders  only look at income, not equity or assets. Retired and semi-retired people tend to have lower incomes, so it became harder for them to borrow. Most older folks want to find a place to move into first before they sell so they like to buy before they sell, but could no longer easily get that funding. The fear of selling and being homeless left many feeling stuck, and we saw a further drop in inventory. Prices began to spike even higher.

You can see the increase in prices in this graph which shows the  Ottawa Home Price Index,  For years, the graph showed modest increases. The first uptick is in 2017 when the feds tightened the mortgage stress test for first time buyers. The second is in 2019 when they applied it to everyone.

So pre-pandemic, we were seeing lower inventory and multiple offers on properties when the pandemic  suddenly hit. Inventory dropped to record lows, and not just in Ottawa, but across the country.

In Ottawa, where a few years ago, we would typically see around 4,600 listings around this time of year, we  dropped to around 3,500 in 2019 (pre- pandemic). Today we have 924. That isn’t just the city — that number includes listings in places like Brockville, Casselman, Arnprior, Perth etc.

So –right now, supply is the problem. Demand is still high, and we just don’t have enough properties to meet it. Because of this, there are multiple offers everywhere, driving up prices to  unforeseen levels. 

My Twitter pal blamed realtors for holding off on offers and creating these  bidding wars. But that’s not what’s causing the higher prices: as noted, it’s the limited supply. When it comes to holding off on offers, we do this for a couple of reasons. We have a fiduciary duty to our sellers to get the best price possible. If we are representing them, that’s our job. To do that we need to get as many people through the door as possible, so they get the best price.

The biggest complaint I hear is that realtors “under price” properties to get bidding wars. My Twitter friend thought a seller should be happy to get their list price. And in a balanced market, we could do that, but not in a market like this. Because in all honesty, no-one knows what fair market value even is  anymore. 

For example, a realtor I know told other realtors he would be listing a property on my street at $ 850K, but if they had a buyer who wanted to buy it before it was listed on MLS, his seller would accept $ 895K in a private sale. Apparently, he got an offer, but the deal didn’t come through, so he listed at $ 850K, held off for a few days, and sold with multiple offers for $ 937K.  That’s over $250K more than I paid for my similar house last August. So what was fair market value? The price I paid?  $850K? $895k? The market decided it was $937K. He did his job for his seller, even if that price seems insane.

If my Twitter pal was the seller, would he be happy with $ 675K if he found out later that he might have had $ 260K more by holding off on offers for a few days? I don’t think so. And remember, the listing agent’s primary duty is to their seller, not the buyer.

There is another reason we hold off on offers. Right now, if we didn’t hold off on offers for at least a few days,  buyers wouldn’t even have a chance to look at properties, much less put in offers. Properties would sell within hours of being listed without them even getting in the door. That makes buyers angry, and it makes their agents angry too, because it isn’t fair. 

By holding off on offers, we give buyers a chance to at least to get inside and decide if they want to make an offer or not. As one frustrated buyer said to me when a property sold before our showing appointment, “I at least wanted a chance to see it.”

When listing agents don’t hold off on offers, I get just as many complaints from buyers that they couldn’t even get in to see the property as I do about those complaining about bidding wars and the high prices.

So the bigger question is — how long will this last? And no-one knows. The Governor of the Bank of Canada, Tiff Macklem, has indicated that the “excessive exuberance” in the housing market  is a Canada-wide situation and that people shouldn’t get used to these high prices, implying the government will take action to cool things down.

The problem is that the tools they’ve used previously involved tightening the mortgage stress test and as I’ve indicated, that just gives an advantage to cash buyers and drives up prices on lower-priced properties, so prices go up even further. Higher interest rates may have a dampening effect, but can cause harm in a fragile economy. What we really need is more inventory and I don’t think we’ll see that until the pandemic is over. But whether things will get back to a balanced market, I don’t know. I expect to see a lot of pent-up demand when this is over. 

Finally, there’s this notion that realtors are making a killing. We’re not.  We work on commission. When listings are down by 75%, we have fewer properties to list and sell. Imagine how long a car dealership would stay in business if suddenly it had only 25% of its usual inventory!  And when we are working with buyers, we are working harder than ever, because we have to submit offer after offer, often without making anything at all. I know realtors who have put in forty offers without a single winning bid. That’s frustrating for the realtor who’s done a year’s worth of work or more without a single commission, but all the same expenses. 

This crazy hot market is not realtors’ fault: it’s the result of market forces we can’t control. I think most of us think this situation is unsustainable, but no-one knows how long this will last or when it may end, because it’s not us driving up prices, but buyers desperate to find properties and willing to pay whatever it takes.

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My country home – new front door!

So, while there was nothing wrong with the front door and side lites in my new country home, I found the entry a little dark and I had really loved the front door that I had in my old home that brought in tons of light and had lovely leaded glass. The other small problem was that I couldn’t see who was at the door in my new house if someone knocked, and I missed that. I also loved coming home to see my old dog waiting for me through the glass, and while I don’t have a dog right now, I will again someday. 

I had bought the door I loved in my old home from Canadian Comfort and I contacted them to find out if they could do something to fit in this space. Unfortunately, that required them ordering a custom transom because the manufacturer doesn’t make them.

They contacted the manufacturer to get an AutoCad drawing for me, and based on the drawing, I was happy to go ahead with the order. The pandemic delayed things, of course, but it finally arrived a couple of weeks ago. Needless to say, it was the coldest day of the year and having a huge hole at the front of your house for several hours wasn’t the best, but they arrived at 9:00 AM and by 2 PM, I had a brand new door. 

And I’m thrilled!  Here’s the old front door, which had the Mission style design in keeping with the overall style of the house.

And here’s the new one. I love the way the rich black colour grounds the space and draws in the eye. 

Here’s a close up so you can see some of the lovely detail (no way to take this picture without my reflection being in it, sorry!)

Here’s the inside view of the old door. (One thing I did do to keep costs down was had Canadian Comfort re-use the existing custom moulding and trim.)

Here’s a shot of Mike from Canadian Comfort installing the new door.

And here’s the new door with installation completed, as seen from the inside.

You can see the difference in the view I get now from the living room, before and after (note that the black “pillow” on the couch is actually the cat, sleeping):

Tons of light, incredible curb appeal — this really is one of the prettiest front entries and front doors imaginable. Now this kind of thing is not for the faint of heart — unlike most of my bargain purchases, this is a big ticket item. But this is my forever home, and I was prepared to splurge. Huge thanks to John, Charles, Chelsea, Mike and Trevor at Canadian Comfort for making it happen! This is the third door I’ve bought from these folks and they have fantastic customer service. Happy to recommend! 

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Very proud of this one!

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My new country home – transforming living space!

When I bought my new home, the basement contained a children’s playroom. The lovely thing about the room was that it had huge windows allowing a gorgeous view of the trees and lots of light. I decided immediately that rather than using a den on the second floor as a home office, I’d transform this space.

I didn’t have to do anything: the lighting was great, the vinyl plank flooring was terrific,  the wall colour was perfect. All I had to do was figure out where to put my furniture to make this a home office/TV room/library.

Here’s the before:

And here’s the after:

 

All of this is to remind you that while each room in your home should have a clearly defined purpose, that purpose can be quite different from buyer to buyer. For a young family, a playroom was much needed. But for someone who works from home and doesn’t have young children, the same room can easily be re-purposed as a home office, den or TV room, and in my case all three.

I did sit down with some graph paper before the move, and after measuring square footage and the size of the furniture, I marked off where I thought the furniture should go.  But I ended up making last minute decisions that were different when I saw how things looked as the movers came in, so while that was a guide, it wasn’t definitive.

I love working in this room: the light is amazing, and I don’t feel like I’m in a basement at all. (And right next door I have a home gym with a punching bag when I need it!)

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My new country home – bedrooms!

I had promised to post up pics of the bedrooms in my new home. Now, the previous owner had lovely taste, so this is just really to show how different people can interpret and decorate the same spaces so they end up being very distinct.

The master bedroom in this home is exquisite. It’s spacious with large windows overlooking the woods. The previous owner picked out a beautiful light fixture and upgraded this custom home to have a wall of beautiful wood panelling. As soon as I saw it, with my old bed falling apart, I knew I would put in bed with a tufted headboard — the room has 9′ ceilings so it can handle the height. I’m all about bedding and mixing it up. I also love to use lots of pillows and neck rolls/shams. 

Here’s the before of the MBR (with its lovely view of the woods outside):

And here’s the after:

I also added a very large armoire as this room has a fairly small walk-in closet and there is no linen closet on the main level. It holds sweaters and towels. (It’s an 1880 Lanark County cupboard I bought at a collector’s auction in Kingston back in the day when I had my antique store — beautiful piece in original condition: I love it.)

More pics of this room and a better shot of that lovely light fixture:

Upstairs, there are two other bedrooms that I’ve set up as guestrooms. Again, there was nothing wrong with these rooms – all I changed upstairs was lighting. In the case of the smaller bedroom, I swapped the light fixture from a flush mount to a semi-flush mount to account for the sloping ceiling.

I used one of my favourite lights: it’s called the Medusa and has multiple arms and crystals. (These lights have been discontinued. I had bought one at Living Lighting six years ago but they couldn’t get one,  so I had to search around. I couldn’t find any on-line except in NYC at an exorbitant cost,  but I happened to be wandering around the Electric Plumbing and Lighting Store in Bell’s Corners and they had one on display so I nabbed it!)

I also decided to put the metal (double-sized) bed against the far wall to provide a little more headspace. I have lived in a house with eaves before and always knocked my head on the ceiling when getting out bed!

Here’s the small bedroom, before:

And here is the small bedroom after:

The larger bedroom, also on the second level (the MBR is on the main level) is the one my daughter and her partner use when they come to visit. I left the light fixture in this room alone, so all I did here was put my own stamp on the furnishings. (This is the only light on this floor that I didn’t change out: I’ll do a blog post on that later).  Here’s the before:

And here’s the after:

All of these rooms have wonderful views of the trees and great light, so I’m loving my new home! Next blog post: transforming the living spaces! 

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Staging a rental unit (mine)!

My lovely tenants of three years decided to move back to New Brunswick and moved out yesterday so I decided to spend the day there today doing touch-ups and staging. The transition strips had become pretty worn and there were a few marks on the hardwood, so I stained those, and painted where needed. Then comes cleaning and the fun part, staging! Here’s a quick before and after of two rooms: the main bathroom (there are two) and the kitchen.

I renovated the main bathroom three years ago and it’s quite lovely in its own right, but doesn’t staging make it look terrific?

Here’s the before:

And here’s the after:

One of my main tips: close the toilet lid!!! I also almost always put a vase of roses in a bathroom — I think it’s a lovely, elegant grace note, and how can you go wrong with flowers? 

I also redid much of the kitchen three years ago: it has some custom cupboards and bookcases/shelving now, new pot lights, tile floors etc. I did clean the grout today and use a grout sealer/renewer to freshen it up, glued down some loose quarter round, touched up the MDF cabinet paint. Again, lovely room with wonderful light – but staging brings it to life! Here’s the before:

 

And here’s the after:

Not shown: some art I hung on the wall, plants in the windows and so on – I’ll post more tomorrow. This is just a very quick post to show you how much staging can do to enhance the good bones your property already has. Thinking of selling? Find out about staging — some realtors (like me) will do light staging for free as part of our service. 

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Bathroom renovation finished!

The upstairs bathroom in my new home had one of those acrylic tub surrounds that I really hated. If you’ve read my previous posts, you know that renovating this one was a chore – we had to move venting pipes and redo shower valves twice. But it’s done and I think it looks great! Here’s the before –

And here’s the after!

I’ve posted a couple of shots below so you can see the details. What you can’t see is how we had to remove the drop ceiling and create new part walls once we took the acrylic liner down.

Those lovely ceramic tiles in the tub surround are from Home Depot – they look like marble but aren’t. $ 6.88/ square foot! I used a darker grout this time (Platinum 27, Mepei) to show off the hexagonal shape. We ended up having to repaint the room because of all the drywall work we had to do: I chose Moonshine by Benjamin Moore in a pearl finish as I had it in my old house and found it worked with everything.

I added a second  towel bar and a proper shower rod that screws into the tiles (the first one  Alex installed was crooked so he had to come back to re-hang it, and then one of the little tiles broke, so it became a bit of a production to get that done, with multiple trips — luckily I still had a lockbox up and he finished yesterday).

The blue/grey/beige white shower curtain is from HomeSense, as I thought the room could use a bit of colour. The white fabric liner is from Bed, Bath and Beyond. The blue/beige woven hamper is from HomeSense as well (a purchase I made years ago) as are the new dusky grey-blue coloured towels that I picked up there yesterday. The painting came from a farmer’s market in Nice, France when I was visiting there several years ago — I met the artist, and watched him paint, so I’ve always loved it.

Next post, I’ll show you the transformed bedrooms and the master bath!

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Renovations continue – new lighting!

I move into my new house this week and there is a lot of frenzied activity underway to try to get these renovations finished. One thing I made a lot of changes to were the lighting in this house.  The previous owner preferred Mission-style fixtures to go with the Craftsman style and while it was lovely, I tend to like funky lighting, probably because I see so many standard fixtures.  I love mid-century modern, but my tastes are quite eclectic.

So, in some cases I removed potlights and replaced them with fixtures, and in others I removed fixtures and replaced them with potlights. My electrician Mark Dods spent two full days on lighting and will come back again in November to tidy up some loose ends, but here’s the progress we made so far:

Lighting over the fireplace. There are only two lights in the living room, and these were above the fireplace. I wanted something with a bit more heft. Here’s the before:

And here’s the after:

Lighting in the MBR ensuite. Before, there was a potlight above the tub. I replaced that with a chandelier:

 

And here’s the after:

Lighting in the kitchen. There was a large pendant light in the kitchen and three smaller ones over the island and sink. I took out all of them and replaced the smaller pendants with pot lights. I love the new mid-century light that will be over the dining room table! Here’s the before:

And here’s the after (pot lights are down so we can paint the ceiling where there were fixtures before, so I can’t show the room with the lights on, but you get the drift):

Lighting in the hallway.  There was a pot light in the hallway outside the MBR: I replaced it with a crystal light with six arms to tie into the MBR lighting. It’s really lovely (will try to get a better picture later, when everything is done).

There are more lighting changes in the bedrooms, but that will be the subject of another post!

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Bathroom Renovation – day 27!

Normally, I can get a bathroom done within a week or two but as usual, we ran into some glitches. I realized when I went out to look at the tub that the plumbers had put the shower valve in the wrong spot — it was 72″ when it should have been a minimum of 78″. I also wanted copper pipes not PEC. As I mentioned in my last blog post, I also wanted a different drain overflow than this standard “tombstone” style.

Like most things, it came down to communications. I can’t say enough good things about Jason at GK Plumbing — he took full responsibility for the shower valve and drain overflow and his guys were great after this at contacting me to get approvals.

I’m pretty hands on, which likely most owners aren’t — anyway, like any new relationship, we’ll get better at working together once we figure things out. Patrick and Thomas came out and everything looked great when they were finished! You’ll see that the shower valve is now at 80″, the pipes are copper and the drain overflow is round, which will match the flanges on the shower curtain rod. Much better! 

All of this slowed things down, however, because we had to get the plumbers back out and it meant Alex couldn’t get started on tiling. Once they were done, he got the greenboard and Kerdi down and started tiling, but couldn’t finish because the drywall around the tub needed to be repaired.

For that, I brought in Cedric Poon, who is one of the best drywallers I know, and he has been working around Alex’s schedule. All of which is to say I hope to have this done by this weekend!

I really do love the hexagonal tile. One small problem there too, though: if you look at the tile at the bottom, above the tub, one 12″ square doesn’t match (I’ve marked it with a piece of red tuck tape).

This particular tile comes in two patterns – the Carrara marble swirl and one with faint stripes. Somehow one of the striped tiles got mixed up with the Carrara and it’s so hard to see the difference that Alex installed it. (I almost bought a box of the wrong tile at Home Depot: it was the salesperson who pointed out there were two different patterns, so that was an easy mistake to make.) He’ll fix that when he comes back. 

It was a busy weekend at the house! Thomas Duncan was there, working on an extension to a wall (more on that later) and Mark Dods, my electrician, was installing new lighting for me. He’ll come back this weekend, but here’s a sneak peek of one before and after: the wall sconces above the fireplace. There is no other lighting in the living room, so while these were fine (the owner had lovely taste!), they didn’t provide quite enough light for me.

And I don’t have a TV over the fireplace, but a painting, so I wanted something to complement the art. This is what the sconces looked like when I bought the house — the “before”:

And here’s the “after” ! 

I had a couple of wall sconces I bought about 15 years ago for a condo I’d purchased in Montreal for my daughter while she went to McGill. They are the type that needed to be wired in, so they didn’t work there, but I hung on to them. And I’m glad I did, because they look perfect in this living room!

Ignore all the cards on the mantel and all the items on the bookshelves — I haven’t moved in yet, so I’m   putting stuff wherever I can until my furniture arrives. The crow, the painting and the bowl (which I purchased in Westport) will stay.

I have several book cases coming, so all these items will be curated and put elsewhere. But look at those lights — don’t they look great?

When I have time, I’ll do another blog post on the other lighting changes we’ve made to this house — they are pretty dramatic! And another on the work Thomas has been doing for me — there’s lots going on! 

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