A conditional sale occurs when an offer to purchase has been accepted, but the final sale is dependent on certain conditions being met. In Winnipeg, we call this a conditional sale. Often, these conditions are used to benefit or protect the buyer in the transaction, and must be fulfilled within a specified timeframe for the sale to proceed. If these conditions, also known as contingencies, are not met, the buyer can withdraw from the agreement without penalty, and their deposit will be refunded.

Common Conditions in a Real Estate Sale

1. Financing Condition

This condition is used to protect the buyer during the process of securing mortgage approval. If the buyer cannot obtain financing approval from their lender, they can cancel the purchase agreement without penalty.

2. Home Inspection

This condition allows the buyer to have the property inspected by a professional to check for any issues or defects with the property. It ensures the buyer is aware of any potential problems and if the inspection was to reveal significant issues, the buyer can negotiate or choose to back out of the sale.

3. Sale of the Buyers Property

This condition is based on the buyer successfully selling their current home. It allows the buyer to avoid the financial burden of owning two homes simultaneously. If the buyer is unable to sell their existing home by the date the condition specifies, they can withdraw from the purchase.

The Process of a Conditional Sale

1. Offer and Acceptance

The buyer makes an offer that includes certain conditions, the seller can accept as is, reject, or counter it with modifications.

2. Meeting the Conditions

Once accepted, the buyer now works to fulfill the conditions within the agreed timeframe (for financing & home inspection conditions this time frame is typically a week or less). Depending on what conditions the buyer has inserted this may mean securing financing, conducting an inspection, or selling their current property.

3. Waiving the Conditions

Once the conditions are met, the buyer signs a form declaring the satisfaction of these conditions. If the conditions cannot be met, the buyer can declare this and withdraw from the transaction, having their deposit returned.

Your friend in real estate,

Sheyla Duncan

Winnipeg Realtor

In a move that's been eagerly anticipated, the Bank of Canada has announced a reduction in its policy rate by 0.25%, bringing it down to 4.75% from the previous 5%. This adjustment marks the first change since July of last year and comes as a response to evolving economic conditions.

Why Did the Rate Change?

The decision to decrease the rate stems from a series of economic shifts starting in March 2022, when the Bank began increasing rates in reaction to unexpectedly high inflation. This inflation surge was a byproduct of pandemic-related financial stimuli and global supply chain disruptions, which impacted prices across the board.

What This Means for You

This rate cut is particularly significant for those in the housing market. Prospective homebuyers securing fixed-rate mortgages and current homeowners with variable-rate mortgages will likely benefit from lower interest costs. This change could make home ownership more accessible to many Canadians and provide some relief to those currently repaying loans.

Economic Overview

The Canadian economy showed signs of recovery in early 2024 after a slowdown in the latter half of the previous year. Despite the GDP growth rate being a modest 1.7%—slower than expected due to dips in inventory investments—consumer spending has remained robust at around 3%. Additionally, there have been noticeable increases in business investment and housing activities. While employment growth has not kept pace with the growth in the working-age population, the job market remains active, and wage pressures are starting to ease.

Inflation and Economic Outlook

As of April, the Consumer Price Index (CPI) inflation rate has dropped to 2.7%, showing a decline from earlier rates. Core inflation metrics have also fallen, indicating a trend towards continued easing. The breadth of price increases across various CPI components has decreased, nearing historical norms.

Despite these positive trends, the Bank of Canada maintains a cautious stance. The Governing Council's recent rate cut to 4.75% reflects growing confidence that inflation will gradually align with the 2% target. However, risks in the inflation outlook still exist, and the Council is closely monitoring factors such as core inflation, the balance of demand and supply, inflation expectations, wage trends, and corporate pricing strategies.

The Road Ahead

The Bank of Canada is committed to achieving price stability and continues to monitor economic indicators closely. This latest rate cut could signal more adjustments in the future, depending on how economic conditions unfold. For Canadians, this means it's essential to stay informed and consider how these changes might impact their financial decisions.

Stay tuned for more updates as we continue to follow this developing story and analyze what it means for Canadians and the economy at large.

The Real Cost of Purchasing a Property

Thinking of buying a house? Most buyers already know there are costs associated to purchasing a home (apart from the obvious purchase price) but what are those costs exactly?

In the real estate world, we refer to these costs as “closing costs”. These closing costs account for all of the extra fees, taxes and more that are required at the time of closing to ensure the property transfers ownership. On average, we tell our clients to set aside 2-2.5% of the total purchase price of the home to cover these closing costs. What this means, is that if you are purchasing a home for $350,000.00, with a 20% ($70,000.00) down payment you would need to have $8750.00 aside PLUS your down payment to close on this property. If this comes as a little bit of a shock to you, don’t worry, you aren’t the only one! Good news is, after reading this article you will be an expert in what to expect when it comes time to writing that big, scary cheque on possession day!

Just a tidbit of advice before I get started, mortgage lenders will usually want proof that you have the amount needed for closing prior to approving your mortgage financing, so having a rough idea how much you will need will help you understand how much you can afford.

THE BREAKDOWN:

Lawyer Fees:

This is the most variable cost of all of the closing costs. Lawyer fees well vary depending on which lawyer you use, the amount of labour needed, what documents are required and much, much more. The majority of real estate transactions go pretty smooth once they are with the lawyers (we have already done the majority of the back and forth!) and if this is your case, you should be budgeting for roughly $800-1200 for these costs.

IMPORTANT NOTE: If you are NOT using a real estate agent to write the offer, these costs will be significantly higher.

Title Insurance:

We have spoken about title insurance in the past but here is a quick summary once again. Title Insurance is required by most lawyers and lenders when closing on your property. This insurance has replaced the need for a survey of the property. It covers you for encroachments, easements and building permits that were not disclosed to you prior to you purchasing your home. Buyers MUST do their due diligence to ensure this information was not readily available to them prior to them purchasing the insurance. Title insurance will cost between $250-$400 depending on which provider you use.

Land Transfer Tax

This is the big one. This is a provincial tax that is calculated as a percentage of the purchase price of your home. The calculation is a little complicated as it depends on the price of your home. As the purchase price of the home increases, the percentage paid increases as well.  If you would like to see a more accurate calculator you can go to ratehub.ca and go to Land Transfer Calculator and input your information. In Manitoba there is also a registration fee for $70.

Property Tax

Depending on what time of year you are taking possession, and how the previous owners were paying their taxes, you will have to reimburse the sellers for the amount paid already. If they are part of the TTIP program, you will only be reimbursing them for the portion of the taxes they paid for that MONTH after the property transferred. If they paid their taxes in one lump sum in June, you will need to reimburse them for the portion of the YEAR after the property transferred to you. As you can see, this amount can be substantially different depending on how they paid and when. Therefore my advice to you is be prepared to have to pay as though they made one lump sum and there will be no surprises!

Commission

Normally, the buyer does not pay any commission to their real estate agent. The price of the commission has already been built into the purchase price and is paid by the sellers. There are situations where the sellers are not willing to pay commission, when that happens, there is a fee agreement drawn up between the buyer and agent for an amount or percentage agreed to by both parties. This is very rare but does occasionally happen.

Mortgage Default Insurance

This one is an honorable mention, this is not technically a closing cost but it is something to be aware of when purchasing a home. Mortgage default insurance is associated with any mortgage where the buyer has put down LESS than 20% (also called an insured mortgage). This mandatory insurance is tacked on to your mortgage, thus not an upfront cost.

Other costs:

We have covered the fees that will be required on the day of possession but I just want to touch on a few others that may come up during your move!

-          Moving Truck

-          Boxes

-          Internet/Cable set up

-          Renovations 

-          Locksmith

-          Cleaning companies/supplies

-          Storage Locker (depending on when possession is)

-          Painting

Like I had said at the beginning of this article, this may all seem a little overwhelming and not mention expensive. Being aware of the costs to be expected will hopefully take away some of the surprise and prepare you for the realty for what it cost to buy. 

#AgentAshton

Ashton Augert

Phone: (204) 781-1767
Email: Ashton@JenniferQueen.com