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Now that things have cooled down, and the Bank of Canada has significantly increased interest rates on mortgages, buyers have had to tighten their pockets and reduce their purchasing power. In a trickle effect, sellers have had to adjust and consider lowering their selling price to balance the market.

There’s always an ebb and flow in real estate. There’s never a perfect formula, or a perfect time, but staying informed is key, and adapting to the trends. The easiest way to remember is this:

– Lower interest rates = Higher purchasing power
– Higher interest rates = Lower purchasing power

Today, we’re discussing how changes in interest rates affect the real estate market. While this is certainly a hot topic right now, it’s always important to know how interest rates changing affect your situation as a homebuyer.

When the Bank of Canada increases its rates, this eventually trickles down and affects the interest rates for mortgages. So when the mortgage rates increase, this essentially means what the bank is willing to lend you goes down.

Let’s say Johnny homebuyer gets a 4% rate on a $400,000 mortgage, and his monthly payments will be approximately $2,104. But if the rate went up to 5%, and his monthly payments would be $2,326. So an increase of 1% represents $220 more per month for Johnny.

What this means is that as interest rates increase, affordability decreases. In this example, Johnny homebuyer, lenders can only afford to offer Johnny a $355,000 mortgage based on his qualifications. What this means is that a 1% increase in the mortgage rate decreases Johnny’s purchasing power by $45,000, leaving Johnny with a much smaller budget than before.

As a result of these changes, buyers having less purchasing power in general. Which means that sellers might have to consider selling their home for a little bit less.

While we’d love to be able to time the market perfectly and know when to sell and when to buy, that’s just not realistic. So it’s important is to keep an eye on the trends, which will help you make a decision.

Applied to our current situation, it’s not all doom and gloom–there’s actually some really good news here.

1. For Buyers who have been really struggling to find a home during this really heated market, things are cooling off a little bit. And with a little less competition, prices may start to fall, making it easier for buyers to enter the market.
2. Another positive outcome here is that there was a segment of the market that was afraid to sell their home because they didn’t want to sell before they bought another home first. The good news is now with things cooling off, there’s that opportunity to sell your home after finding property and putting in a conditional offer.

In situations where homes gets multiple offers, sellers are often given the option to accept the second offer, which acts as a backup if ever the first offer falls through. Let’s look at this from both the buyers and the sellers perspective, as there are important things to note from both sides in deciding whether taking a second position is the right move or not.

The seller’s perspective

A backup offer is ideal for someone who has a relatively tight timeline to sell their home. Let’s say you already have an accepted offer on your next home and need to sell your current home with a certain timeframe for the deal to go through.

Having a secure backup offer means that if for some reason the first offer doesn’t go through because of financing or any other condition, then you can move forward with the next buyer without having to put your home backup on the market and go through the showing process all over again.

The most important thing to note is that if the first offer doesn’t go through, you are legally bound to proceed with the offer you accepted in second position. This means it’s important to decide if you’d be happy with it either way.

The buyer’s perspective

The most notable thing for buyers to consider is that while you’re in second position, you cannot make offers on any other homes. And you have to wait to all the conditions clear on the first offer before doing so.

But I do often suggest to my clients to take the second position because I can tell you it’s happened on more than one occasion that we have gotten the house.

In market conditions where there’s less inventory like right now, it can give you an extra chance of getting a home. But when it’s a more balanced market, homes are coming up less often, it’s less of a risk.

As with everything, the right choice becomes a personal one. And understanding all the details, really helps to make the right decision.

So, you’re thinking about buying or selling a home in Quebec? Let me tell you about one of the most important documents you’ll encounter – the Seller’s Declaration. As a real estate broker in Quebec, I often hear this question: “Why do I need to share everything about my home, even the not-so-great stuff?” Well, let me break it down for you.

Understanding the Seller’s Declaration: Your Property’s Report Card

Bonjour! Think of the Seller’s Declaration (or “Declarations by the seller of the immovable” in official terms) as your property’s detailed report card. It’s a mandatory form created by the OACIQ (our Quebec real estate association) alongside the AIBQ (inspector association) that tells the whole story of your home.

💡 Pro Tip: This isn’t just another piece of paperwork – it’s your best protection against future legal issues, whether you’re buying or selling.

What Does the Declaration Cover?

When you’re filling out a Seller’s Declaration, you’ll need to share:

• Basic property details (year built, purchase date)
• Current mortgage status
• Property systems information (roof, plumbing, heating)
• Any past issues (water damage, structural problems)
• Renovation history
• Service types (well or city services)
• Location-specific concerns (flood zones, soil conditions)

Why Honesty is the Best Policy

Here’s the thing about real estate – every home has its quirks. That’s just the reality of homeownership. While it might feel strange sharing your property’s imperfections when everything else (like staging and photos) aims to present it in its best light, being thorough and upfront isn’t just a legal obligation – it makes good business sense.

For Sellers

Being honest in your declaration:

• Reduces liability for hidden defects
• Makes transactions smoother
• Protects against future legal action
• Creates trust with potential buyers

For Buyers

A properly completed declaration:

• Helps make informed purchasing decisions
• Provides valuable property insights
• Offers legal protection
• Prevents unwelcome surprises

Real-World Example: The Case of the Aging Roof

Let me share a common scenario. Say a seller declares their roof is 27 years old. Three months after purchase, the roof leaks. Is this a hidden defect? No! Since the buyer knew about the roof’s age through the Seller’s Declaration and proceeded with the purchase anyway, they accepted this condition as part of their purchase decision.

When Is It Required?

The Seller’s Declaration is mandatory for:

• Residential properties with fewer than 5 units
• Divided and undivided condominiums

While not mandatory, it’s strongly recommended for:

• Properties with 5+ units
• Commercial properties
• Industrial properties
• Vacant land

Taking Action: Next Steps

Whether you’re buying or selling, here’s what you need to do:

For Sellers:

1. Complete the form thoroughly with your broker
2. Document all renovations and repairs
3. Be honest about known issues
4. Keep supporting documentation

For Buyers:

1. Review the declaration carefully
2. Ask questions about unclear items
3. Use it to inform your home inspection
4. Keep a copy for your records

The Bottom Line

The fact of the matter is, a Seller’s Declaration isn’t just another form to fill out – it’s a crucial tool that protects everyone involved in the transaction. Don’t be shy to ask questions about anything that seems unclear. After all, whether you’re buying or selling, this document helps ensure everyone starts on the same page.

Need more information about Seller’s Declarations or other aspects of Quebec real estate? Don’t hesitate to reach out – I’m here to help make your real estate journey smoother and more successful.

Ready to Navigate Your Real Estate Journey?

Selling or buying a property in Quebec involves important documents like the Seller’s Declaration – but you don’t have to figure it out alone. At Peter Thompson Real Estate, we pride ourselves on making complex real estate transactions feel simple and straightforward.

 

According to the National Association of Realtors, 89% of homebuyers work with a real estate agent. But what happens when you visit a property without yours? Let’s break down this common yet tricky situation that many first-time homebuyers encounter.

Understanding “Cause of Sale” in Real Estate

In the real estate world, there’s an important concept called “cause of sale” that determines which broker earns the commission on a property sale. Think of it as a way to track who helped make the dirty happen.

Three main factors determine cause of sale:

1. Initial interest in the home (who shared the listing?)
2. In-person property visits
3. Intention to make an offer

The Awkward Situation: Visiting Without Your Broker

Here’s where things can get complicated. Let’s say you spot a beautiful home online and decide to visit an open house or schedule a viewing directly with the listing agent. Later, you love the property and want your regular broker to help submit an offer.

💡 Pro Tip : The listing broker could claim “cause of sale” if they showed you the home and provided information about it, potentially creating confusion about commission and representation.

Best Practices for Home Viewings

If You Already Have a Broker

• Always ask your broker to schedule viewings
• Inform them immediately if you’ve already scheduled a viewing
• Let listing agents know you’re working with a broker

If You Don’t Have a Broker Yet

While you’re free to visit properties independently, remember that listing brokers primarily represent the seller’s interests. Their responsibility is to get the best deal for the seller, not protect your interests as a buyer.

Choosing the Right Representation

The smartest approach is selecting your broker before starting serious home visits. Here’s how:

1. Research potential brokers online
2. Ask friends and family for recommendations
3. Multiple brokers interview
4. Consider their experience and communication style
5. Ensure they’re a good personality fit

Why Professional Representation Matters

Working with a dedicated buyer’s agent offers several advantages:

• Expert negotiation skills
• Market value assessment expertise
• Property issue identification
• Legal protection throughout the process
• Professional guidance on offers and contracts

Avoiding Common Pitfalls

To prevent awkward situations and ensure smooth transactions:

• Be upfront about your representation status
• Communicate clearly with all parties
• Keep your broker informed about any property interests
• Allow your broker to handle scheduling and communications

The Bottom Line

While it’s technically possible to buy a home without an agent, having professional representation typically leads to better outcomes. When you find the right broker, they become your advocate throughout the entire home-buying journey.

Need more guidance on choosing the right real estate broker in Quebec? Don’t hesitate to reach out. At Peter Thompson Real Estate, we’re always happy to help you navigate the complexities of home buying.

Remember: The right broker isn’t just about experience – it’s about finding someone who understands your needs and makes you feel confident throughout the buying process.