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Archive for October, 2014

Scam cost homeowners a bundle

Selling your home without a real estate agent means you need to be extra diligent with potential buyers, as a New Brunswick couple found out.

John and Julie Wickham put their home up for sale in spring and in late April a woman made an offer for the $229,000 asking price and agreed to pay separately for the appliances. She gave the Wickhams her lawyer’s name and the name of the company that would be financing the deal,adding that she needed to move into the house within a couple of days.

Here’s what happened next:

The Wickhams agreed to vacate and rent the house to the buyers for a month to allow the purchase details to be finalized. They also made arrangements to move to Ontario where they stayed with Julie’s parents pending John’s new job in the U.S..

When the Wickhams tried to cash the rent cheque, it bounced. They then learned the couple didn’t have the financing to buy the house and the lawyer who was supposed to be handling the deal had not been retained.

They made immediate efforts to get the people out of their house, but the couple resisted, saying they had the right to stay there. Then Julie’s father- in-law visited the home with an RCMP officer and the couple was warned that if they took possession using fraudulent means, they could be charged.

After a lot of anguish, a threat that utilities would be cut off and an eviction notice, the couple finally moved out, the local newspaper reported. The Wickhams lost thousands, related to moving expenses, the storage of their belongings and lost wages. Because of that, Julie told the paper they planned to file criminal charges against the couple.

In fact, the Wickhams were fortunate to get the tenants evicted so quickly. In Ontario, landlords do not have the right to cut off utilities and the police will usually not get involved. That leaves the landlord with no alternative but to go to the provincial Landlord and Tenant Board to evict the tenants, which can take months.

Whenever you are selling or renting a home, do not give the keys to the buyer or seller before you have the purchase money in your hands. If it is not a money order or certified funds, do not give out the keys until the cheque clears.

Be very careful to qualify properly any buyer or tenant in advance. In this case, the Wickhams should have called the lawyer given to them by the buyer immediately, before doing anything further.

To avoid this ever happening to you, remember the following:

  • Never guarantee a loan or add your name to a mortgage unless you fully intend to purchase the property.
  • Always know who you are doing business with, if you are buying, selling or renting a home.
  • Conduct proper background checks in advance.
  • Never sign anything until you know exactly what you are signing.
  • Find out who actually owns any property you are thinking about buying or renting. You can go to either the government registry offices to do a search for a fee, or you can ask a real estate agent or lawyer to assist you, as they have access to the government Teranet computerized search system.
  • If any deposit is required, make sure the funds are paid to the actual owners.
  • Never give out keys until the cheque clears.

Remember, if it sounds too good to be true, it is.

This piece by Mark Weisleder was originally published in 2012 but the facts remain relevant at any time. Robert.

Bidding wars – almost anything goes

When it comes to bidding wars, it sometimes sounds as though the real estate market in some places is like the old wild west, where anything goes. I recently was told that a buyer in a bidding war put in an offer without a price, telling the seller to just “fill it in.” Here are answers to some of the bidding war questions that I have received:

1.    What does “holding back offers” mean?

A listing real estate agent may try to create an atmosphere for bidding wars by inserting a term when the property is listed for sale, that the seller will not consider any offers until 5-7 days later. The strategy is to get potential buyers in to see the property, hoping to create interest, leading to a potential bidding war later. It also could permit a buyer to conduct a home inspection early if they wanted to present an offer without any conditions on the offer date.

2.    If the offer date is next week, can I still submit a bid this evening?

This is called a pre-emptive or bully offer. It is permitted as the real estate agent is ethically bound to inform a seller about any offer received. If the seller changes their mind and does want to consider the bully offer immediately, the agent will update their listing information to provide that offers are now being considered and should also advise anyone who has expressed an interest in the property that offers are being considered earlier. In my opinion, there is nothing wrong with submitting a bully offer. The worst thing that can happen is that the seller says they will not consider it, and you can then join the bidding when the offer date arrives.

3.    What does a listing agent have to tell all of the bidders?

The listing agent needs to tell everyone the total number of offers received, whether they have an offer from their own office and whether an offer contains a commission discount, which would provide the seller a higher net price. An agent cannot disclose the sale price in any offer.

4.    Can I put in an offer that says that I will pay $5,000 more than the best offer received, to guarantee that I will win?

This is referred to as an escalation clause. A real estate agent cannot accept an offer with this type of clause as it would mean that they would have to disclose the price that someone else bid, which they cannot do.

5.    What about the case where the buyer puts in an offer with no price, and tells the seller to just “fill it in?”

In my opinion, this is not a valid offer as the price was not included and would likely be considered void for uncertainty. Imagine if the seller just picked a number over $100,000 more than the property was actually worth. Not a good plan.

6.    What if one offer was accepted but it is still conditional, and then a second offer is received.
Does the listing agent have to tell the first buyer about the second offer?

The answer is no. Since the first offer was already accepted, there is no obligation on the agent to inform the first buyer about the second offer, although some agents may in fact disclose the information to the first buyer in the hopes that this will persuade the buyer not to try and change the terms of the agreement as a result of their home inspection, for example.

7.    How should I prepare for the bidding war process, when there are so few rules?

Use an experienced real estate agent who has had success before in a bidding war situation. You need a professional who will tell you what the home is actually worth, so that you do not overbid so much that you will live to regret it later.


If you have any stories to share about bidding wars, or just need some advice, please contact me at


Robert’s comment:  Mark Weisleder, whose words of wisdom I am always happy to share, is in this specific article talking about the Toronto market. Not that there are no “bidding wars” in Ottawa, but they are rarer at this time. However it’s good to have the benefit of Mark’s advice up your sleeve in case you are involved in such a situation.

Don’t blame home inspector for mould found after closing

When you buy an old home you must be aware of the possibility of mould behind the walls. If you are suspicious, have the proper tests done during the home inspection. It is not easy to sue a home inspector later if problems arise after closing.

Here’s why:

Buyers David and Debbie purchased a home in Halifax in May 2013. They had received a positive report from their home inspector.  Later that year, significant amounts of mould began to develop around many of the windows in the home. It appeared that there was a moisture build up problem. The solution recommended was to retrofit the house with a Heat Recovery Ventilation System that cost $5,000.

The buyers then sued the home inspector for this amount because the buyers claimed that they were not alerted to the potential problem. There was no visible evidence of mould during the inspection. It turns out that the home was not occupied for some time prior to closing, and as a result, very little moisture was being generated from cooking or showers.

The inspector noted that the fans in the bathroom were working and that the range hood in the kitchen was not connected to the outside. This complied with the building code when the house was built.

In a decision dated August 19, 2014, Adjudicator Eric Slone indicated that in his opinion, the inspector should have advised the buyers that since the kitchen range hood did not ventilate to the outside, this could lead to potential problems, especially since there were new windows in the home, which cause less leakage of air.

As a result, the judge would have allowed this claim against the home inspector. However, since the inspection report had a clear disclaimer stating that the limit of any liability was $400, that is all the buyers recovered.

In my opinion, this decision was wrong on many levels. Mould can be caused by so many things. In fact, many people install new windows for the purpose of reducing heat loss. I suppose that this could result in excess moisture in the home, if you do not make sure that the home is properly ventilated at the same time. For example, if you do not leave your windows open and generate a lot of moisture, whether by cooking or having lots of indoor plants, mould can occur. A home inspector cannot see behind walls. If a buyer is concerned about possible excess moisture, they can pay for a thermal imaging test to check for this.

Home inspectors will generally look at the grading outside your home and the downspouts, to make sure that water is being carried away from your home, to avoid potential water problems in the foundation that could later lead to leaks.

Buyers need to understand that home inspectors are not magicians and cannot see through walls. It is also standard that most inspection reports do have this limitation of liability clause so it is difficult to sue a home inspector in most cases, unless you can prove that they were very negligent in their report.

If you are buying an older house, consider having some additional tests done for moisture and then after closing, when you are contemplating any renovations, speak with your contractors about how to find ways to both reduce your energy costs and at the same time, keep your home properly ventilated, for a healthy home for you and your family.