I have been keeping in the loop as much as seems humanly possible and practical with respect to developments with the complaint launched by the Competition Bureau against the Canadian Real Estate Association(CREA). Frankly I have found the whole situation rather a bore, simply because from my perspective there is really no issue.
There are 98,000 REALTORS® in this country and just about as many business models. I know there are agents that charge much less than me and some that charge much more. Some Real Estate professionals have a large staff of people working to sell a home and include a bundle of services ranging from staging to organizing, photography and professional consultations and some simply get the info, put it on the MLS® and wait for it to sell. There is no right or wrong business model, just a variety of different products that meet different needs and concerns. The diversity of this industry is what makes it great!
However, lately I have read a few articles, in well respected newspapers, that seem to insinuate that CREA is in some way telling REALTORS® what they must charge. Nothing could be further from the truth. In fact all the governing bodies within the Real Estate industry make it VERY VERY VERY clear that discussing commissions (with other agents) and telling the public their is a 'standard' commission is absolutely prohibited. In fact we are instructed that if asked we are to tell the public that commission is always negotiable. What other industry tells their practitioners that they must let their potential clients know that their fee is up for debate.
Think about that, the last time you went to the lawyer, accountant, grocery store, did anyone stop you at the door and tell you to haggle on the price and direct you to a cheaper option at a different business...NO... BUT in Real Estate we have to let the public know they are free to negotiate commission.
I have a business model, and I am an independent contractor which essentially means, like other REALTORS® I am a small business person. My business is selling homes. I invest a lot of time and money in my small business. I have spent thousands of dollars on education, training and upgrading. I spend thousands on maintaining my license, keeping my office and paying my fee's. I have advertising and marketing costs as a component of my business model as well as signage to contend with...
Like every other small business owner I take a risk, I put money into my small business in the hope that I will make money! There are no guarantee's in Real Estate. Given the stat that roughly 95% of new agents leave the business in the first year and 99% are gone within 5 years I am guessing that maybe it isn't quite as easy as it seems to create a viable small business in Real Estate. It just might take a bit of hard work, investment, time, expertise and probably a share of luck too!
With all small business there are varying degrees of return on investment. You take a risk, it might pay of, it might not... Contrary to popular belief, not every Real Estate agent is a millionaire, driving a Porche, and taking 6 months off a year. In fact we are probably guilty as an industry of portraying this image as, for years, old school theory said that the public was attracted to perception of your wealth in order to think you are successful. The truth is, I know a LOT of agents and I don't know many that don't work darn hard for every penny they make. The vast majority live in your standard, middle class, neighbourhoods, with children in public school, living 'normal' lives, as mom's, dad's, community volunteers, coaches, friends etc... Sadly,
it doesn't help that recent TV shows depict agents as somewhat dimwitted and overpaid, but just like most reality TV it is a little light on the REALITY side of things! It might be fun to watch but it doesn't reflect the true nature of Real Estate in the REAL WORLD!
I built my business, like most other respected REALTORS® on trust and referrals. In fact last year 90% of my business came from referrals and repeat business. 90% think about that. If you own a business and 90% of your business comes from people appreciating your service enough to use you again, or tell someone about you, I think that speaks volumes. It is funny that not one of these people ever tells me I get paid too much, or I don't work for my money... In fact I get clients telling me all the time they don't know how I do it and I don't get paid enough!!! Imagine that! What it comes down to is service. They come to me for a specific service and I provide that service and they are satisfied that they got good value.
I encourage sellers to find the right fit for them. If you want a bargain price you can find it and it may well be the service that meets your needs. It is not the service that I provide but it is available.
In my estimation as long as the information that is provided to me on the MLS® systems is reliable I don't care how much the person who put it there is getting paid. I want Real Estate to continue the steady ascent to becoming a respected profession and for that to happen the system we all rely on for data has to be maintained. As soon as we compromise the MLS® data the consumer will suffer. It will be the consumer buying a home without being made aware of any possible areas of concern. Even less serious but almost more annoying... imagine going onto the REALTOR.CA to start looking for a home in the town 500 km's away that you are being transferred to. Imagine you get to REALTOR.CA only to find that there are no pictures, properties are not mapped at all, room sizes are not listed, the house square footage and age are missing, taxes are a guesstimate and all the other information you rely on when determining what properties to view are missing or inaccurate. If we remove the requirement for REALTORS® to be accountable for their data then how will we police the accurate inputting of sale prices? If the MLS® data is compromised to this degree we will see a breakdown in other areas. When you get a mortgage the lender will no longer be confident enough to rely on this sales data for appraisal purposes or lending value verification... This could mean an increase in costs, difficulty and time, again for the consumer.
There is so much more at stake here than what is being carved out to be a public vs organized Real Estate debate. The reality is that the only people who will suffer from any drastic changes to the MLS® database (ie. opening it up to unlicensed people) are the consumers. Ensuring that those people, with access to adding properties to our current database, are licensed is the only effective way of policing and protecting the accuracy of the data. In our current system consumers have more choice than you can imagine both within the MLS® system and outside it, after all you don't HAVE to use a Real Estate Agent to sell your home!
The Real Estate industry has long been advocating for consumer protection, for programs that increase quality of life, provide affordable housing and affordable and realistic lending option not to mention working tirelessly to make sure that when you buy or sell a home you are legally protected... This isn't about the Public vs The REALTOR®, we are all on the same team, look around your community and you will see Real Estate professionals doing exactly the same things you do every day, building a business, going to work, working hard, paying taxes, paying the bills and making a life...
We are all playing on the same team here!
Next time you need to buy or sell a home, shop around and find the business model and fee structure you feel comfortable with and be sure to work with someone you trust, because at the end of the day that is all that will really matter!
Feel free to ask me questions on this topic or send me your comments. www.realgem.ca
Thursday, 25 March, 2010
Tuesday, 23 March, 2010
Save some TAX $$$ when moving
Have you recently moved to a new location? Do you know that you can deduct certain moving expenses on your next tax return, including transportation, packing and storage costs.
Many people never realize these tax benefits because they don't know what can be deducted. If you are preparing to move, it's best to be informed beforehand so you know which receipts to keep. You may find it worthwhile during a move to pay for various services that are tax-deductible rather than doing them yourself. A typical move involves a number of costs including hiring a company to transport personal effects and furniture, hotel stays and meals (if the move involves driving a long distance to a new home), and service fees to disconnect and reconnect utilities. In addition, renters who leave on short notice may have to pay the cost of breaking a lease.
Homeowners will incur closing costs and commissions on the sale of their home as well as legal and other fees on the purchase of their new home. This article provides information regarding tax deductible moving expenses.
To claim moving expenses on your taxes, your move has to meet the following conditions:
You moved to your new home or new apartment to start a job or a business, or to attend full-time post-secondary courses at a university, college or other educational institution
Your new place of residence is at least 40 km closer to your workplace or school than your previous home.
You moved from one place in Canada to another place in Canada.
Two groups are eligible to deduct a portion of their moving expenses: students moving away from home to attend school and people moving to a new area for a job or relocation by their employer. There has been a challenge to the rules regarding eligibility for the self-employed as you'll read later in this article.
Students
Students must fulfill two main qualifications: the distance between your home and school must be at least 40 km (by the shortest public route) and you must be a full-time student. A full-time student is defined as someone who regularly attends a college, university, or other educational institution in a program at a post-secondary school level (whether in Canada or not) and is taking at least 60% of the usual course load during each semester.
As a student, you can only deduct eligible moving expenses from award income (scholarships, fellowships, bursaries, prizes, and research grants) that you report on your return. Your moving expenses must be greater than your award in order to deduct any moving expenses. As Revenue Canada's website reads, "If your moving expenses are more than the award income you report for the year, you can deduct the unused portion of those expenses from the award."
Although many students will not earn award income and will therefore not be able to deduct moving expenses, tuition fees themselves are a tax deduction. If a student has a part-time job, tuition can reduce taxes paid on those earnings. Students who meet the qualifications and have received award income can deduct the costs of travel, shipping and transportation of belongings, as well as items listed below under 'Expenses you can deduct'.
Employees
If you are moving for work (e.g. a company relocation or new job), are employed and establish a home at least 40 km closer to a new job than your old home, then you qualify to deduct moving expenses. Similarly, if you are self-employed, and you establish a home at least 40 km closer to your new operational business than your old home, you also qualify to deduct moving expenses.
According to Revenue Canada, you must establish your new home as the place where you and members of your household ordinarily reside. For example, you have established a new home if you have sold or rented (or advertised for sale or rent) your old home.
Employed and Working from Home: an Exception to the Rule
Until recently, employees who work from home and move have faced some restrictions regarding moving expenses. In the court decision Gary Adamson v. the Queen, Mr. Adamson had incurred moving expenses as an employee who was required to provide his own office in his home.
Expenses you can Deduct:
transportation and storage costs (such as packing, hauling, in-transit storage, and insurance) for household effects, including items such as boats and trailers;
traveling expenses, including vehicle expenses, meals, and accommodation, to move you and members of your household to your new residence (you can choose to claim vehicle and meal expenses using the simplified method);
costs for up to 15 days for meals and temporary accommodation near either residence for you and the members of your household (you can choose to claim meal expenses using the simplified method); and
the cost of canceling a lease for your old residence, except any rental payment for the period during which you occupied the residence.
When your old residence is sold as a result of your move, eligible moving expenses also include:
legal or notaries fees for the purchase of the new residence, as well as any taxes paid (other than GST/HST or property taxes) for the transfer or registration of title to the new residence, if you or your spouse or common-law partner sold the old residence, and
the cost of selling your old residence, including advertising, notarial or legal fees, real estate commission, and mortgage penalty when the mortgage is paid off before maturity.
Expenses that are not Deductible:
expenses for work done to make your home more saleable;
any loss from the sale of your home;
expenses for house-hunting trips before you move;
the value of items movers refused to take, such as plants, frozen food, ammunition, paint, and cleaning products;
expenses for job hunting in another city (such as traveling expenses);
expenses to clean or repair a rented residence to meet the landlord's standards;
expenses to replace personal-use items such as tool sheds, firewood, drapes, and carpets;
mail-forwarding costs (such as with Canada Post);
costs of transformers or adaptors for household appliances; and
costs incurred in the sale of your old home if you delayed selling for investment purposes or until the real estate market improved.
Remember to keep receipts and documents supporting your claims, you do not have to include these documents in you tax claim but Canada Revenue Agency may want to see them at a later date.
Keep in mind that this article is for information only. The tax laws are frequently modified. We recommend that you visit the Canada Revenue Agency's website for specific details about which moving expenses you can claim or consult a professional accountant to maximize your tax return.
Reprinted from Canada Realty News
Many people never realize these tax benefits because they don't know what can be deducted. If you are preparing to move, it's best to be informed beforehand so you know which receipts to keep. You may find it worthwhile during a move to pay for various services that are tax-deductible rather than doing them yourself. A typical move involves a number of costs including hiring a company to transport personal effects and furniture, hotel stays and meals (if the move involves driving a long distance to a new home), and service fees to disconnect and reconnect utilities. In addition, renters who leave on short notice may have to pay the cost of breaking a lease.
Homeowners will incur closing costs and commissions on the sale of their home as well as legal and other fees on the purchase of their new home. This article provides information regarding tax deductible moving expenses.
To claim moving expenses on your taxes, your move has to meet the following conditions:
You moved to your new home or new apartment to start a job or a business, or to attend full-time post-secondary courses at a university, college or other educational institution
Your new place of residence is at least 40 km closer to your workplace or school than your previous home.
You moved from one place in Canada to another place in Canada.
Two groups are eligible to deduct a portion of their moving expenses: students moving away from home to attend school and people moving to a new area for a job or relocation by their employer. There has been a challenge to the rules regarding eligibility for the self-employed as you'll read later in this article.
Students
Students must fulfill two main qualifications: the distance between your home and school must be at least 40 km (by the shortest public route) and you must be a full-time student. A full-time student is defined as someone who regularly attends a college, university, or other educational institution in a program at a post-secondary school level (whether in Canada or not) and is taking at least 60% of the usual course load during each semester.
As a student, you can only deduct eligible moving expenses from award income (scholarships, fellowships, bursaries, prizes, and research grants) that you report on your return. Your moving expenses must be greater than your award in order to deduct any moving expenses. As Revenue Canada's website reads, "If your moving expenses are more than the award income you report for the year, you can deduct the unused portion of those expenses from the award."
Although many students will not earn award income and will therefore not be able to deduct moving expenses, tuition fees themselves are a tax deduction. If a student has a part-time job, tuition can reduce taxes paid on those earnings. Students who meet the qualifications and have received award income can deduct the costs of travel, shipping and transportation of belongings, as well as items listed below under 'Expenses you can deduct'.
Employees
If you are moving for work (e.g. a company relocation or new job), are employed and establish a home at least 40 km closer to a new job than your old home, then you qualify to deduct moving expenses. Similarly, if you are self-employed, and you establish a home at least 40 km closer to your new operational business than your old home, you also qualify to deduct moving expenses.
According to Revenue Canada, you must establish your new home as the place where you and members of your household ordinarily reside. For example, you have established a new home if you have sold or rented (or advertised for sale or rent) your old home.
Employed and Working from Home: an Exception to the Rule
Until recently, employees who work from home and move have faced some restrictions regarding moving expenses. In the court decision Gary Adamson v. the Queen, Mr. Adamson had incurred moving expenses as an employee who was required to provide his own office in his home.
Expenses you can Deduct:
transportation and storage costs (such as packing, hauling, in-transit storage, and insurance) for household effects, including items such as boats and trailers;
traveling expenses, including vehicle expenses, meals, and accommodation, to move you and members of your household to your new residence (you can choose to claim vehicle and meal expenses using the simplified method);
costs for up to 15 days for meals and temporary accommodation near either residence for you and the members of your household (you can choose to claim meal expenses using the simplified method); and
the cost of canceling a lease for your old residence, except any rental payment for the period during which you occupied the residence.
When your old residence is sold as a result of your move, eligible moving expenses also include:
legal or notaries fees for the purchase of the new residence, as well as any taxes paid (other than GST/HST or property taxes) for the transfer or registration of title to the new residence, if you or your spouse or common-law partner sold the old residence, and
the cost of selling your old residence, including advertising, notarial or legal fees, real estate commission, and mortgage penalty when the mortgage is paid off before maturity.
Expenses that are not Deductible:
expenses for work done to make your home more saleable;
any loss from the sale of your home;
expenses for house-hunting trips before you move;
the value of items movers refused to take, such as plants, frozen food, ammunition, paint, and cleaning products;
expenses for job hunting in another city (such as traveling expenses);
expenses to clean or repair a rented residence to meet the landlord's standards;
expenses to replace personal-use items such as tool sheds, firewood, drapes, and carpets;
mail-forwarding costs (such as with Canada Post);
costs of transformers or adaptors for household appliances; and
costs incurred in the sale of your old home if you delayed selling for investment purposes or until the real estate market improved.
Remember to keep receipts and documents supporting your claims, you do not have to include these documents in you tax claim but Canada Revenue Agency may want to see them at a later date.
Keep in mind that this article is for information only. The tax laws are frequently modified. We recommend that you visit the Canada Revenue Agency's website for specific details about which moving expenses you can claim or consult a professional accountant to maximize your tax return.
Reprinted from Canada Realty News
Monday, 8 March, 2010
What do the new mortgage rules do to or for you?
The 5-year Funnel
Take all the high-ratio borrowers with above-average debt ratios and funnel them into 5-year fixed terms.
That’s what the government has done with its new posted qualifying rate.
The instinctive conclusion after hearing about posted qualifying rates is that droves of people will no longer be able to qualify for a mortgage.
Not so. Posted qualifying rates won’t keep the masses from buying homes.
To illustrate this, pretend you live in the typical Canadian household which makes about $66,343 a year. Perhaps your family has $500 a month in non-housing debt obligations. How much mortgage can you afford?
Well, maybe your name is ‘Mr. Leveraged’ and you want to stretch your budget. You can get yourself qualified today using a 3-year fixed rate of, say, 3.49%. That’ll get you a $314,000 mortgage, or thereabouts.*
If the new qualifying rules were in effect today, you’d get more buying power with a 5-year fixed mortgage. That’s because variable-rate mortgages and 1- to 4-year fixed terms would (will) require you to qualify using a 5-year posted rate. Posted is 5.39% today.
The qualifying rate on a 5-year fixed mortgage, however, might only be 3.75% (and even less with some lenders).
Having to qualify with 3.75% instead of 3.49% would knock Mr. Leveraged’s maximum mortgage down to $304,000. That’s a mere $10,000 less than he can get under today’s qualifying rules (which still apply until April 18, 2010).
This small loss in buying power isn’t that big a deal. The government’s new qualifying rate policy will not be an obstacle to people buying homes.
What it does, however, is funnel people with higher debt ratios and less equity into 5-year fixed mortgages.
Who’s happy about that?
Big Lenders: Because 5-year fixed terms are usually more profitable than variables or shorter terms.
Bankers and Mortgage Professionals: Because they often get paid more up front for selling 5-year fixed mortgages as opposed to shorter terms.
Many Others: Because 5-year fixed terms help: 1) Keep high-ratio applicants with less equity from overextending themselves; and, 2) reduce payment shock as interest rates start climbing.
Who’s not happy?
Qualified Homeowners Without 20% equity: Because many of them will no longer be approved for lower-cost variable-rate mortgages, 1- to 4-year fixed terms, or hybrid mortgages.
Smaller Non-Bank “A” Lenders: Because it’s harder to compete with big banks in the prime 5-year fixed market.
A final reminder for good measure: The new posted qualifying rate will not apply to all mortgages. CMHC says it will apply after April 19 only to insured mortgages with less than 20% down.
Take all the high-ratio borrowers with above-average debt ratios and funnel them into 5-year fixed terms.
That’s what the government has done with its new posted qualifying rate.
The instinctive conclusion after hearing about posted qualifying rates is that droves of people will no longer be able to qualify for a mortgage.
Not so. Posted qualifying rates won’t keep the masses from buying homes.
To illustrate this, pretend you live in the typical Canadian household which makes about $66,343 a year. Perhaps your family has $500 a month in non-housing debt obligations. How much mortgage can you afford?
Well, maybe your name is ‘Mr. Leveraged’ and you want to stretch your budget. You can get yourself qualified today using a 3-year fixed rate of, say, 3.49%. That’ll get you a $314,000 mortgage, or thereabouts.*
If the new qualifying rules were in effect today, you’d get more buying power with a 5-year fixed mortgage. That’s because variable-rate mortgages and 1- to 4-year fixed terms would (will) require you to qualify using a 5-year posted rate. Posted is 5.39% today.
The qualifying rate on a 5-year fixed mortgage, however, might only be 3.75% (and even less with some lenders).
Having to qualify with 3.75% instead of 3.49% would knock Mr. Leveraged’s maximum mortgage down to $304,000. That’s a mere $10,000 less than he can get under today’s qualifying rules (which still apply until April 18, 2010).
This small loss in buying power isn’t that big a deal. The government’s new qualifying rate policy will not be an obstacle to people buying homes.
What it does, however, is funnel people with higher debt ratios and less equity into 5-year fixed mortgages.
Who’s happy about that?
Big Lenders: Because 5-year fixed terms are usually more profitable than variables or shorter terms.
Bankers and Mortgage Professionals: Because they often get paid more up front for selling 5-year fixed mortgages as opposed to shorter terms.
Many Others: Because 5-year fixed terms help: 1) Keep high-ratio applicants with less equity from overextending themselves; and, 2) reduce payment shock as interest rates start climbing.
Who’s not happy?
Qualified Homeowners Without 20% equity: Because many of them will no longer be approved for lower-cost variable-rate mortgages, 1- to 4-year fixed terms, or hybrid mortgages.
Smaller Non-Bank “A” Lenders: Because it’s harder to compete with big banks in the prime 5-year fixed market.
A final reminder for good measure: The new posted qualifying rate will not apply to all mortgages. CMHC says it will apply after April 19 only to insured mortgages with less than 20% down.
Tuesday, 2 March, 2010
Rate Holds steady...
Bank of Canada Holds Rate Steady
Bank of Canada maintains overnight rate target at
1/4 per cent and reiterates conditional commitment to hold current policy rate until the end of the second quarter of 2010
OTTAWA – The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1/4 per cent. The Bank Rate is unchanged at 1/2 per cent and the deposit rate is 1/4 per cent.
The ongoing global economic recovery is being driven largely by strong domestic demand growth in many emerging-market economies and supported in advanced economies by exceptional monetary and fiscal stimulus, as well as extraordinary measures taken to support financial systems.
The level of economic activity in Canada has been slightly higher than the Bank had projected in its January Monetary Policy Report (MPR). The economy grew at an annual rate of 5 per cent in the fourth quarter of 2009, spurred by vigorous domestic spending and further recovery in exports. The underlying factors supporting Canada’s recovery are largely unchanged – policy stimulus, increased confidence, improved financial conditions, global growth, and higher terms of trade. At the same time, the persistent strength of the Canadian dollar and the low absolute level of U.S. demand continue to act as significant drags on economic activity in Canada.
Core inflation has been slightly firmer than projected, the result of both transitory factors and the higher level of economic activity. The outlook for inflation should continue to reflect the combined influences of stronger domestic demand, slowing wage growth, and overall excess supply.
Conditional on the current outlook for inflation, the target overnight rate can be expected to remain at its current level until the end of the second quarter of 2010 in order to achieve the inflation target.
The risks to the outlook for inflation continue to be those outlined in the January MPR. On the upside, the main risks are stronger-than-projected global and domestic demand. On the downside, the main risks are a more protracted global recovery and persistent strength of the Canadian dollar. The Bank judges that the main macroeconomic risks to the inflation projection are roughly balanced.
Information note:
The next scheduled date for announcing the overnight rate target is 20 April 2010.
A full update of the Bank’s outlook for the economy and inflation, including risks to the projection, will be published in the MPR on 22 April 2010.
This press release is now available on the Bank of Canada’s website at:
http://www.bankofcanada.ca/en/fixed-dates/2010/rate_020310.html
Bank of Canada maintains overnight rate target at
1/4 per cent and reiterates conditional commitment to hold current policy rate until the end of the second quarter of 2010
OTTAWA – The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1/4 per cent. The Bank Rate is unchanged at 1/2 per cent and the deposit rate is 1/4 per cent.
The ongoing global economic recovery is being driven largely by strong domestic demand growth in many emerging-market economies and supported in advanced economies by exceptional monetary and fiscal stimulus, as well as extraordinary measures taken to support financial systems.
The level of economic activity in Canada has been slightly higher than the Bank had projected in its January Monetary Policy Report (MPR). The economy grew at an annual rate of 5 per cent in the fourth quarter of 2009, spurred by vigorous domestic spending and further recovery in exports. The underlying factors supporting Canada’s recovery are largely unchanged – policy stimulus, increased confidence, improved financial conditions, global growth, and higher terms of trade. At the same time, the persistent strength of the Canadian dollar and the low absolute level of U.S. demand continue to act as significant drags on economic activity in Canada.
Core inflation has been slightly firmer than projected, the result of both transitory factors and the higher level of economic activity. The outlook for inflation should continue to reflect the combined influences of stronger domestic demand, slowing wage growth, and overall excess supply.
Conditional on the current outlook for inflation, the target overnight rate can be expected to remain at its current level until the end of the second quarter of 2010 in order to achieve the inflation target.
The risks to the outlook for inflation continue to be those outlined in the January MPR. On the upside, the main risks are stronger-than-projected global and domestic demand. On the downside, the main risks are a more protracted global recovery and persistent strength of the Canadian dollar. The Bank judges that the main macroeconomic risks to the inflation projection are roughly balanced.
Information note:
The next scheduled date for announcing the overnight rate target is 20 April 2010.
A full update of the Bank’s outlook for the economy and inflation, including risks to the projection, will be published in the MPR on 22 April 2010.
This press release is now available on the Bank of Canada’s website at:
http://www.bankofcanada.ca/en/fixed-dates/2010/rate_020310.html
Get in the buying mood...
http://morrisontheweb.com/InformedHomeBuyer/Informed%20Home%20Buyer%20Mar%2010.pdf
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