Tag: real estate brokerage

All About Live-Work Properties

Posted on October 23rd, 2019

Homeownership can be a challenge in the GTA.  Home prices coupled with the desire to grow your business with a commercial space can add to that financial stress.  While some people can find solutions with co-working and shared space opportunities, others want to offer their customers a dedicated space.  Purchasing a live-work property gives entrepreneurs and small business owners the flexibility of having both a residential and commercial space in one.  While this option can be appealing, there are some things to keep in mind prior to starting your search:

1) Availability: there are limited options in the GTA for live-work units.  Working with a Realtor who can source different options can make your search easier.  However, you may have to sacrifice your ideal location in order to get into the right space.  Pre-construction condo projects are a good place to start as some developers offer live-work units on the ground level of their buildings.  Tip for Realtors: when looking for these types of spaces for your clients, a keyword search for “live work” in the Client Remarks or Brokerage Remarks of MLS will help find a list of opportunities.
2) Financing: not all lenders will finance mix-use properties. “Major banks won’t fund these properties under their residential financing policies.” says John Sinnott, mortgage broker with Dominion Lending Centres.  “For a property to be financed residentially, it cannot have more than 20% space allocated commercially. If it does, they consider it a commercial deal with different rates and policies.” continues Mr. Sinnott.  CMHC and comparable insurers will only insure spaces with less than 25% commercial space. Lucy Gagliardi, a mortgage broker with OZ Capital suggests: “have your income, down payment and current mortgage statement and property tax bill ready to give to your mortgage broker so that they can determine accurate figures for you before you go out looking.”  We agree – there’s no sense starting a search if you don’t have a sufficient down payment or you are unable to comfortably afford a property like this.
3) Property Taxes: the property taxes on live-work properties are higher, however they are assessed depending on the ratio of the space.  Therefore,  you would only pay the commercial tax rate for your commercial square footage. Also, all of the utilities are charged at a commercial rate and are not flexible depending on residential space.
4) Rules and Regulations: many live-work properties are condominium units.  Each condominium corporation has a set of rules regarding the use of all of the units within the building – including the live-work units.  Restrictions regarding the type of business, hours of operation, ability to make aesthetic changes to the unit (inside or out) or add signage could all impact your ability to run your business.  Hiring a real estate lawyer to review these rules along with the entire status certificate for the condominium, will ensure the property you are considering makes sense for you and your business.
5) Zoning: all commercial units are zoned for certain uses.  Together with your Realtor, ensuring that the permitted use of the commercial space will work for your business is essential.
6) Legal: Samuel Kazen, real estate lawyer with Hamburg Olson Kazen Law Professional Corporation, offers the following advice: “You don’t want to be subsidizing any purely residential units in the same building. If the property is in a building that has purely residential units, it would be wise to compare the common expenses you would be paying for a live-work unit to one of the residential units of comparable size. If you would be paying a lot more (as is often the case), then you might want to look elsewhere.”  Further, he suggests to “make sure whatever entity you are using to purchase the property is an HST registrant. Otherwise, the vendor would be required to remit HST and would seek to collect HST from you.”  Finally, “if the vendor wishes to structure the sale as a sale of shares to his/her corporation, make sure you obtain a full indemnity against any liability that may be associated with that corporation.”
7) Investment Opportunity: since these types of properties are few and far between, purchasing one as an investment could be a good way to get into the real estate investment world.  Your Realtor can guide you in terms of the rental opportunity available and can better direct you towards the properties that will yield you a good return.  Location (as with any property) is key and ensuring you are aware of the rules associated with leasing these units is important as well.
To get you started, here is a list of live-work opportunities throughout the GTA:
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Why We Said ‘Yes’ to Zillow

Posted on April 2nd, 2019

Can you believe it?  On The Block Realty Inc. has actually opted into Zillow displaying our listings on their website.  Yes, that’s right – we’ve sold our souls to the devil, surrendered to the enemy and are currently digging our own graves.

But hold up.  Who or what is Zillow?  If you aren’t in the real estate industry worried what Zillow is planning to do to our profession, you may have never heard of this company before, especially if you live in Canada.  In simple terms, Zillow is a real estate marketplace with a serious focus on technology and innovation.   Think of realtor.ca on steroids. From artificial intelligence that gives consumers a better user experience to Zillow’s home price estimate tool (called Zestimate home values), the company is continually evolving and empowering consumers with information.

I recently attended a Zillow event where employees of the company bravely stood in front of a large group of GTA real estate salespersons, brokers, managers and owners and answered the tough questions and debunked many of the myths that Zillow has fallen victim to due to their ‘disruptive’ approaches.

First, let’s look at some of the company’s most recent stats:

  • 195 million monthly users
  • 80% of US homes viewed on Zillow
  • $1.3 Billion in Revenue for 2018
  • 2 million real estate professionals listed on Zillow

How does Zillow make money?  Their main source of income comes from real estate professionals, property management companies and mortgage brokers paying to advertise to the millions of users flocking to their site daily.  Real estate professionals who pay to be “Premier Agents” can create targeted ads by location (not available to REALTORS® in Canada yet).  The higher the demand for that particular location, the higher the advertising cost.

Whether you are a skeptic or a supporter, Zillow is a company that isn’t going anywhere anytime soon.  It’s a billion-dollar company that caters to consumers and gives them the ultimate user experience.  For real estate professionals, Zillow provides the opportunity to get in front of potential clients and market your listings to a huge audience.  Yes, it will cost money but what kind of effective advertising or lead generation opportunity doesn’t cost money?  It’s also important to note that you aren’t forced to spend money with Zillow. Free options are available through the site.  A real estate brokerage can opt into getting all of their company’s listings added to the site for free.  Real estate salespeople and brokers can also create their own profile (a great way to market yourself), add client testimonials and receive leads on your own listings posted to the site (if your brokerage has opted in).

Should we be giving Zillow access to our listings?  From our perspective, we currently give access to our listings (for the most part) to other real estate sites that have opted into the listing feed with our local board, so what’s the difference?  More exposure?  More visitors?  Better stats about interest for the home?  How is that a bad thing?  Sure, those other brokerage sites aren’t actively making money by selling buyer leads to other REALTORS® but if a consumer visits a competing brokerage site, sees your listing and contacts a salesperson from that brokerage to see the home, aren’t they stealing your business?  How dare they! Or is this just another opportunity to sell your client’s home faster?

Here’s our perspective.  We can’t be so protective over our listings.  Listings shouldn’t be used as a way to generate more business.  Sure, listings typically generate leads, but that’s not the point, that’s a bonus.  At its core, when a home owner hires you to sell their home, they deserve the best possible service, which doesn’t include fighting over buyer leads.  We should want and be expected to expose a client’s home to the maximum number of buyers and what better way to do that then through a site that is likely going to be one of the (if not THE) top home search destination for consumers?

More importantly, before making a judgement or choice about what to do for your brokerage, it’s important to weigh the pros and cons and personally educate yourself on Zillow or any other ‘disruptor’ out there.  There are so many new companies, new approaches and new technologies entering our industry and although they may seem threatening from the outside, once you understand their goals, process and why they exist, you may realize that a lot of these companies were created to address a need that likely is focused on putting the consumer first.  Our brokerage has taken a similar approach and it only makes sense to embrace others who are doing the same.

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OREA’s New Forms, Clauses & Updates – Your 2019 Coles Notes Review

Posted on January 10th, 2019

It’s a new year which means new OREA forms, updates to existing ones and new clauses (can I get a what what).  Yes, this news might not be mind blowing enough to make you race to your computer to learn more but this is important.  Seriously.  Think about what could happen:

  • You look unprepared with a client or potential client
  • You look unprepared to an agent with whom you’re negotiating
  • You look unprepared in general
  • You could be one of those people who asks a question on a Realtor Facebook forum relating to these changes and get responses like this: “Why don’t you read the OREA updates, stupid.” “Don’t you know there’s a new form for that, stupid?” “Why don’t you know this? You are so stupid.”
  • You will feel stupid

There were A LOT of changes this year but thankfully, most of them are housekeeping related changes that won’t throw you off your game when reviewing an updated document.  However, it is important to still review the changes because a) you don’t want to look unprepared and b) you don’t want to look stupid.

To get you started on the path of learning more, here is my list of the most important changes for this year (based on my market of residential sales in the GTA):

  • New representation agreements for rental listings along with corresponding schedules and amendments related to these forms.
    • Form 346 – Tenant Representation – Agreement Authority for Lease: have you ever had a tenant question why the hell they are signing a form that says BUYER representation agreement? Well, OREA now has you covered with a much more understandable and appropriate Form 346.
    • Form 245 – Landlord Customer Service Agreement: used when a rental property is not listed but you have introduced/shown a tenant the property and want to set up a commission arrangement with the landlord. Point 3 – Representation and Customer Service in this form outlines in detail that the Brokerage is providing Customer Service to the Landlord and what the means for the business relationship – pretty useful in my opinion.
    • Form 353  Tenant Customer Service Agreement: when you list a property for lease and an unrepresented tenant wants to make an offer, use this form.
  • Residential/Commercial Listing Agreements & Buyer Representation Agreements have added an additional circle to initial on the first page where the seller or buyer acknowledges that they aren’t party to any other representation agreement with another agent (because you can’t trust anybody these days!)
  • Handy Clauses:
    1. ACC – 10 Seller to Provide Security Code(s): The Seller agrees to provide to the Buyer on or before closing any security codes necessary in order to control any security system or devices within or upon the property.
    2. CANNABIS – 1 Buyer Acknowledgement: The Buyer acknowledges that the use of the property and buildings and structures thereon may have been for the sale, distribution, cultivation, propagation or harvesting of cannabis or cannabis plants in accordance with the provisions of the Cannabis Act, S.C. 2018 c. 16 and the provisions of the Cannabis Act, S.O. 2017, c. 26 as amended from time to time and acknowledges that the Seller makes no representations and/or warranties with respect to the state of repair of the premises and the Buyer accepts the property and the buildings and structures thereon in their present state and in an “as is” condition.
    3. CANNABIS – 2 – Seller Represents and Warrants: The Seller represents and warrants that during the time the Seller has owned the property, the use of the property and the buildings and structures thereon has not been for the sale, distribution, cultivation, propagation or harvesting of any cannabis or cannabis plants within the meaning of the Cannabis Act, S.C. 2018 c. 16 and the provisions of the Cannabis Act, S.O. 2017, c. 26 as amended from time to time and that to the best of the Seller’s knowledge and belief, the use of the property and the buildings and structures thereon has never been for the cultivation, propagation or harvesting of any cannabis plants within the meaning of the Cannabis Act, S.C. 2018 c. 16 and the provisions of the Cannabis Act, S.O. 2017, c. 26 as amended from time to time.  This warranty shall survive and not merge on the completion of this transaction.
    4. LEASE/RES – 18 Tenant Cannabis Restriction (great for landlords!!): The Tenant and any occupants of the premises and, including without limitation, any visitors, guests and business invitees shall not sell, distribute, cultivate, propagate or harvest any cannabis or cannabis plants within the meaning of the Cannabis Act, S.C. 2018 c. 16 and the Cannabis Act, 2017, S.O. 2017, c. 26 as amended from time to time, anywhere in or upon the premises rented by the Tenant, the building where Tenant’s premises are located or in any of the common areas or adjoining grounds of such building. Contravention of this provision shall be deemed to be a material breach of the lease and grounds for termination of the lease.
    5. LEASE/RES – 19 Tenant Shall Not Smoke (yay!): The Tenant and any occupants of the premises and, including without limitation, any visitors, guests and business invitees shall not smoke anywhere in or upon the premises rented by the Tenant, the building where Tenant’s premises are located or in any of the common areas or adjoining grounds of such building, except for the following designated smoking area(s) (Insert Text).

      For purposes of this provision, the term “smoke” or “smoking” means to inhale, exhale, burn or have control over a lighted cigarette, lighted cannabis cigarette, cigar, pipe, hookah pipe or other lighted smoking implement designed to burn tobacco or any other substance, including without limitation, cannabis as defined in the Cannabis Act, SC 2018 c16 as amended from time to time for the purpose of inhaling or tasting of its emission. Contravention of this provision shall be deemed to be a material breach of the lease and grounds for termination of the lease.

    6. NEW – 03 HST – New Homes (finally!!): The Buyer and the Seller acknowledge and agree that the HST payable in connection with the purchase and sale transaction contemplated by this Agreement of Purchase and Sale is included in the purchase price subject to the provisions hereinafter set out. Notwithstanding that the purchase price payable by the Buyer includes HST, the Buyer hereby assigns and transfers to the Seller all of the Buyer’s rights, title and interest in any rebates, refunds or credits available, including Federal Sales Tax rebates and HST rebates to which the Buyer is entitled in connection with the payment of HST payable on the transfer to the Buyer of ownership or possession of the property. The Buyer further appoints and authorizes the Seller or the Seller’s agents to be the Buyer’s authorized representative and attorney for the purposes of applying for and collecting such tax rebates. The Buyer agrees to execute, at no cost to the Seller, any and all documents required to give effect to this provision. The Buyer represents and warrants to the Seller that the Buyer shall personally occupy the property or cause one or more of the Buyer’s relations to occupy the property as the Buyer’s or the Buyer’s relation’s primary place of residence upon completion and agrees to deliver to the Seller on closing a Statutory Declaration in the Seller’s form in which the Buyer declares that the property being purchased by the Buyer is for use as the Buyer’s or the Buyer’s relation’s primary place of residence and will be so occupied forthwith upon completion. In the event that the Buyer breaches the warranty or any of the provisions referred to above which results in the Buyer being ineligible or the Seller being unable to obtain the rebates referred to herein then the Buyer shall pay to the Seller forthwith an amount equal to the amount which the Buyer would have been eligible to obtain were it not for such breach or failure to carry out the Buyer’s obligations.


Ready to learn more?  Of course, you are!  Your real estate board should have sent out an email with a detailed review of the changes that you likely ignored or trashed before reading (no offence – don’t worry, I do it too).  Or click on this link (you’ll need to login first) for a full review from OREA – https://www.orea.com/~/media/Files/Members/OREA-Standard-Forms/Change-Summaries/OREA-Standard-Forms-2019-Summary-of-Revisions.pdf.  Happy learning!

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Why Real Estate Escalation Clauses Should Be Banned

Posted on June 8th, 2017

If bidding wars aren’t enough to turn buyers right off of the home purchase process, the introduction of an ‘escalation clause’ will definitely make matters worse. This clause is downright confusing and currently, there aren’t any rules and regulations beyond some warnings from the industry on how this clause should be used. An escalation clause is used when a buyer agrees to increase their bid by a certain amount over the highest bidder when bidding on a particular home. This amount can be capped at a certain price if the buyer chooses.

In our opinion, this clause is dangerous for many reasons:

  1. This increases the risk of unethical behaviour by realtors. If Agent Joe knows that buyer Paul is coming in with a $600,000 offer with an escalation clause of $5,000 over the highest bidder up to a maximum of $700,000, and if Agent Joe is extremely unethical, he could get bring in a fake offer to push buyer Paul to his maximum price.
  2. Due to the lack of rules surrounding this clause from The Real Estate Council of Ontario (RECO), what happens if an agent isn’t aware of the details of how to use this clause but uses it anyway? This agent might not know you can put a cap on the price. As a result, the selling agent can effectively force a buyer into purchasing a home that is likely way over his or her budget.
  3. What happens if two or three or more buyers use an escalation clause? This is a scary situation that would very quickly inflate the selling price of a home to each buyer’s maximum price limit (if they even set one).
  4. What kind of disclosure is needed to other buyers when a buyer uses an escalation clause? Again, RECO doesn’t have any set rules regarding this clause so other buyers would have no idea that this clause is in effect. Let’s say selling Agent Joe has two offers on the home – one from Buyer Paul at $550,000 using an escalation clause of increasing the price by $2,000 over the highest bidder and another from Buyer Sally at $600,000 without an escalation clause. Buyer Paul’s offer has now been increased to $602,000 and Agent Joe will likely go back to Buyer Sally and let her know that the offers are very close and ask if she’d like to improve her offer. Buyer Sally agrees to increase her offer to $625,000 and now Buyer Paul’s offer has automatically increased to $627,000. Again, Agent Joe will likely tell Buyer Sally that the offers are very close and if she really likes the home, she might decide to increase her offer again, which means Buyer Paul is going up $2,000 more over and above Sally’s improved offer. Buyers can quickly lose control within the offer process and may regret their decision.

What about sellers? You might think that this clause will benefit sellers but if buyers are pushed to their limit without having any control within the offer process, they might regret their decision and decide not to proceed with the purchase (even if they need to forego their deposit).  This could leave a seller in a very difficult position. Not only is the home put back on the market but if the seller has purchased a new home, financing for this new home is likely hinging on the sale of the current home. It’s a scary position to be facing and we would never want to put a seller in a state of uncertainty that this type of situation could create.

What’s the solution? First, let’s ban escalation clauses altogether. Next, why not consider an open and transparent auction model? This method of selling your home benefits both buyers and sellers for various reasons. Buyers have full control over how high to bid and are fully aware of the offer prices of other bidders at all times. Sellers can feel confident knowing they maximized the sale price of their home without worrying about a buyer having second thoughts over the price they paid.

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