Case Study: Walk away from a deal because of the deposit amount?

 

When Deposit Demands Derail Real Estate Deals

Here is a recent case study that happened to me and some of the everyday complexities and challenges in real estate transactions. The key points are:

• The buyers found a house in rough shape that had been on the market for 2 years, presenting an opportunity for sweat equity.
• The initial offer was over 90% of the asking price, with a $10,000 deposit and a quick 45-day closing timeline - a very strong offer.
• The seller countered, asking for a higher $25,000 deposit, citing it as "standard" for a 5% deposit.
• We argued that the $10,000 deposit was appropriate given the buyers' financial situation and the limited risk to the seller with the quick closing timeline. However, the seller insisted on the higher $25,000 deposit.
• Ultimately, the deal fell through, as the seller was overly focused on maximizing the deposit rather than working constructively with the qualified buyers.

This case study illustrates how a seller's inflexibility around deposit amounts, even when a buyer is making a very strong offer, can derail an otherwise viable transaction. A $10,000 deposit on a home under $1 million is already a substantial amount that demonstrates the buyers' commitment. Pushing for an even higher $25,000 deposit, without a clear justification, seems unreasonable and could cost the seller a sale.

A common question is how much deposit is standard on a real estate contract? The simple answer is that there is no simple answer. The deposit money is a term of the contract agreed upon between the buyer and the seller. The more deposit money put forward, the more security the seller gains once the conditions have been met. The deposit money forms part of the purchase price and is calculated as part of the total price offered and not in addition to it.

For sellers, the deposit serves as a security measure that provides peace of mind. A buyer who submits a large deposit demonstrates a strong commitment to the deal. This is an excellent thing in a multiple offer situation. This good-faith money acts as a safeguard, ensuring that the seller won't be left in the lurch if the buyer backs out without a valid reason. 

So in my case, the seller wanted a $25,000 security measure for a closing that would happen in 45 days. He felt that $10,000 was insufficient to enforce the closing, as it was such a small amount that the buyers might be willing to walk away if they changed their minds. I don't know how many people who are buying houses under $1 million don't think $10,000 is a lot of money. The only common reason why anybody would walk away from their deposit in a real estate deal that I can think of is if values drastically changed. The bottom dropped out of the market. The risk of that happening in 45 days is extremely low. Is it worth walking away from a deal altogether because of that fear?

Country Cabin Get-Away With All the Comforts of Home! $249,900 Presented by the Brad Sinclair Team

Escape to Nature's Embrace: Discover the Perfect Cabin Retreat

$249,900 

1891 ST OLA ROAD
Tudor and Cashel (Cashel Ward), Ontario K0L1W0

MLS^® Number: X12208348

Welcome to a hidden gem nestled in the heart of the wilderness - a beautifully appointed cabin that blends modern comforts with rustic charm. Bathed in natural light, this open-concept haven beckons you to experience the ultimate nature escape.

Step inside and be captivated by the warm and inviting atmosphere of the kitchen, dining, and living areas - the perfect setting for entertaining or simply unwinding. Retreat to the cozy bedrooms for a peaceful night's sleep, then awake refreshed in the sleek, contemporary bathroom.

But the true gem of this property lies just beyond the doors. Outdoor enthusiasts will delight in the abundance of hiking trails and opportunities to spot local wildlife in the area. Unwind in the private hot tub or gather around the landscape fire pit for an evening of pure tranquillity.

Recent upgrades, including professional spray foam insulation, a new furnace, and an on-demand propane hot water system, ensure this cabin is both comfortable and energy-efficient. The fully furnished interior and 4-season access road make this the complete package for your nature getaway.

Whether you're seeking a romantic retreat or a family adventure, this cabin provides the ultimate haven for creating unforgettable memories. Don't miss your chance to make this cabin your own. Schedule a viewing today and experience the perfect blend of modern amenities and natural beauty.

The vendor will consider a Vendor Take Back Mortgage.

Your local Realtor®

If you are looking to either Buy or Sell, contact me at 705-927-6236

Brad Sinclair, Sales Representative

Team Lead at The Brad Sinclair Team

Royal Heritage Realty

Your inside source to cottage country

Not intended to solicit clients under contract

 

Cottage Buyer's Remorse: 5 Tips to help you make a good decisions.

Secrets for Smart Cottage Buyers

 Did you know that 80% of first-time cottage buyers make at least one costly mistake? Don't let that happen to you! This article reveals the top 5 most common pitfalls to avoid when buying a cottage so you can purchase your dream retreat with confidence.

1. Make an Informed Decision

• Work with a real estate agent who specializes in waterfront properties. They'll have the local expertise to guide you through the unique considerations of cottage living.
• Thoroughly research the surrounding community - its amenities, services, and infrastructure. This will help you understand what daily life will be like.
• Carefully review the property deed and title to ensure clear ownership and avoid potential legal issues down the line. Your local lawyer can assist you with this.

2. Don't Fall for the "Cottage Charm" Trap

• Look beyond the rustic appeal and inspect the property closely for hidden issues, such as foundation problems, structural damage, or plumbing leaks. A local home inspector will help you with this.
• Assess the shoreline and waterfront access, taking into account factors such as erosion, permits, and water quality.
• Factor in the full cost of necessary repairs and renovations to avoid budget overruns.

3. Understand the True Costs

• Research property taxes and municipal fees, which can vary significantly by region.
• Estimate annual maintenance costs, including landscaping, utilities, and seasonal upkeep.
• Calculate the cost of insurance, taking into account the property's location, value, and flood risk.

4. Navigate the Mortgage Maze

• Compare mortgage rates and financing options from multiple lenders to get the best deal. Your local mortgage broker can assist you with this.
• Factor in potential closing costs, such as appraisal fees, legal expenses, and transfer taxes.
• Get pre-approved for a mortgage to demonstrate your financial readiness and speed up the buying process.

5. Why a Cottage is a Smart Investment

• The rising popularity of staycations and outdoor recreation is boosting cottage demand.
• Interest rates remain relatively low, making cottage financing more affordable.
• Increased remote work options provide more flexibility, enabling cottage living to serve as a primary residence.

In summary, first-time cottage buyers can avoid costly mistakes by taking a few key steps. Work with a local, experienced real estate agent, thoroughly inspect the property, and research all associated costs, including taxes, insurance, and ongoing maintenance. By making an informed decision and understanding the complete financial picture, you'll be able to purchase your dream cottage and enjoy the benefits of cottage living with confidence. With the proper preparation, your cottage investment can provide years of relaxation and outdoor adventures

Brought to you by: Your local Realtor®

If you are looking to either Buy or Sell, contact me at 705-927-6236

Brad Sinclair, Sales Representative

Team Lead at The Brad Sinclair Team

Royal Heritage Realty

Your inside source to cottage country

Not intended to solicit clients under contract 

Your On-Grid or Off-Grid Cabin Toolkit: Essential Tools for Every Owner

Introducing Your Cabin Toolkit: Essential Tools for Every Owner

As a cabin owner, having the right tools on hand can make all the difference in maintaining your little slice of paradise. In this post, we'll explore the essential tools every cabin owner needs to keep their home in top condition, from basic hand tools to powerful outdoor gear.

Essential Hand Tools: The Basics for Any Job

A high-quality toolbox is your starting point, including screwdrivers, wrenches, hammers, and pliers – the essentials for basic repairs and maintenance. Don't skimp on quality here - investing in durable, well-made tools will save you time and frustration down the road.

A versatile multi-tool is also a must-have, allowing you to tackle a variety of tasks with just one compact tool. And a level and measuring tape are crucial for ensuring your projects are straight and precise.A laser level and digital tape measure are game-changers, making it easy to measure and level with pinpoint accuracy.

Power Tools: Simplifying the Heavy Lifting

A cordless drill/driver is a powerhouse for drilling holes, driving screws, and even mixing paint. Look for one with interchangeable batteries so you're never caught short on juice.

For cutting wood with precision, a circular saw is invaluable, making it ideal for projects such as building decks or cutting lumber for firewood. A reciprocating saw is a versatile tool for demolition and cutting through tough materials like branches or old wood.

Outdoor Gear: Keeping Your Cabin Comfortable

A generator is essential for providing power in the event of an outage, ensuring you're never without lights, heating, or refrigeration. Invest in a quiet, fuel-efficient model that can power your cabin's essential systems.

A portable propane heater is perfect for quickly warming up your cabin on chilly evenings or mornings. A high-quality first aid kit is a crucial safety measure, stocked with essential supplies for treating minor injuries and emergencies.

Maintenance and Cleaning: Keeping Your Cabin Pristine

A pressure washer is a powerful tool for cleaning decks, siding, and other outdoor surfaces, removing dirt, mould, and grime. Look for a model with adjustable pressure settings to tackle a variety of cleaning tasks.

A leaf blower makes quick work of clearing leaves and debris from your yard, keeping your cabin area tidy. Upgrade to a battery-powered model for a quieter, emission-free experience.

In snowy regions, a sturdy snow shovel is a winter essential.

Closing: Your Cabin's Best Friends

We've covered the essential tools every cabin owner needs. These tools will help you tackle various tasks, from simple repairs to more complex projects, keeping your cabin in tip-top shape. Remember to prioritize safety and always wear appropriate gear when using power tools.

With the right tools at your fingertips, you'll be equipped to handle any challenge that comes your way as a cabin owner. From simple maintenance to major renovations, these tools will be your closest companions in keeping your little retreat in pristine condition. So stock up, get to work, and enjoy your slice of paradise!

Don't forget to subscribe and share this guide with your fellow cabin enthusiasts!

                                         Brought to you by: Your local Realtor®

If you are looking to either Buy or Sell, contact me at 705-927-6236

Brad Sinclair, Sales Representative

Team Lead at The Brad Sinclair Team

Royal Heritage Realty

Your inside source to cottage country

Not intended to solicit clients under contract 

The Bank of Canada is expected to keep its key interest rate unchanged at 2.75% when it meets on Wednesday.

The Bank of Canada is expected to keep its key interest rate unchanged at 2.75% when it meets on Wednesday. This decision comes after recent economic data showed stronger-than-anticipated inflation and growth in the first quarter of 2023.Canada's GDP grew 2.2% in Q1, while inflation fell to 1.7% in April. That said underlying price pressures remain elevated, with the Bank's preferred core inflation measures accelerating.

The impact of ongoing U.S. tariffs on Canadian exports is expected to be felt more strongly in the second and third quarters. This, combined with signs of weakness in the labor market, is why some economists believe a rate cut is still likely, even if it doesn't come at this week's meeting.

The continued trade uncertainty makes it difficult for the Bank of Canada to set policy and provide clarity on the path of interest rates going forward. As one economist noted, "it's unfortunate that they have to adjust and make decisions in a period of time where it's highly uncertain."

Overall, while the Bank is expected to hold steady this week, the consensus view is that rate cuts are likely on the horizon as the central bank aims to support the Canadian economy in the face of ongoing trade risks and the potential for a slowdown.

What does this all mean for the real estate market? Normal. Rates are still excellent, considered excellent for buyers. You can expect a 5-year insured Fixed-rate mortgage ranging between 3.94% to 5.24%. At the same time, variable rates start at 4.04%. These rates are for insured mortgages, which are typically required when purchasing a home with less than a 20% down payment. 

The key takeaway is that while the Bank of Canada looks like they are holding steady on rates for now, the mortgage environment is still quite positive overall. Buyers can still access excellent fixed and variable rate options, providing some reassurance in the current economic climate.

Brought to you by: Your local Realtor®

If you are looking to either Buy or Sell, contact me at 705-927-6236

Brad Sinclair, Sales Representative

Team Lead at The Brad Sinclair Team

Royal Heritage Realty

Your inside source to cottage country

Not intended to solicit clients under contract 

How to Read a Property Survey. Quick and Easy Explanation.

Decoding Property Surveys: A Step-by-Step Guide

Plan of Subdivision

In this guide, we'll break down the key elements of a survey plan and explain how to use them:

Boundary Lines

The boundary lines on the survey plan show the precise edges of the property. Knowing the exact boundaries is essential to avoid issues with neighbours. In the survey the boundary lines are noted as thicker black lines.

Boundary Measurements

Each boundary line has a direction (bearing) and distance associated with it. These measurements allow you to verify the accuracy of the boundaries and spot any encroachments.

Structures and Setbacks

The survey plan outlines the distances between buildings and structures on the property, as well as the surveyed boundaries. This tells you where you can build or make changes.

Survey Markers

Surveyors use various methods to clearly mark property corners, including setting monuments or measuring from known points. These markers are essential references.

Subdivision Details

The underlying subdivision plan provides historical context about how the property was initially developed and divided.

Land "Parts"

One parcel can be made up of multiple PARTs that are numbered. You can discover the PARTs that make up the one parcel by finding it on the survey or referring to the legal description of the property seen on a real estate listing, offer or GeoWarehouse report. 

Title and Description

Every survey has a title and description of the survey. Important notes are the date of the Survey, Plan numbers, who completed the survey and scale,

Additional Plans

Other survey plans may be referenced to provide supplementary boundary information to support the current survey.

By understanding these key elements, you'll be able to easily read and interpret a property survey. Mastering this skill is invaluable for anyone involved in real estate or land transactions.

Property Survey

Brought to you by: Your local Realtor®

If you are looking to either Buy or Sell, contact me at 705-927-6236

Brad Sinclair, Sales Representative

Team Lead at The Brad Sinclair Team

Royal Heritage Realty

Your inside source to cottage country

Not intended to solicit clients under contract