A wave of buyersa国际传媒檚 remorse is taking shape in several heated real estate markets, after housing prices started dropping and the number of sales slowed over the last two months.
Realtors and lawyers in Toronto and Vancouver say they have noticed buyers looking at what options they have to get out of a purchase and sellers hoping to ensure one goes through because conditions have shifted dramatically from the previous highs and frenzied pace.
The country experienced a 25.7 per cent drop in the number of homes sold over the last year and a 3.8 per cent slide in housing prices between March and April, the Canadian Real Estate Association said Monday. The average home price last month totalled $741,517.
Such numbers have prompted some sellers to explore lawsuits to ensure transactions move forward and other purchasers to worry about the value of pre-sale properties they bought years ago but have yet to take possession of.
sa国际传媒淲ith todaysa国际传媒檚 real estate prices, theresa国际传媒檚 really no option but to go all in and if yousa国际传媒檙e going all in, and then suddenly yousa国际传媒檙e realizing that perhaps you made a bad bet and theresa国际传媒檚 a way out of that bet, yousa国际传媒檙e going to do whatever you can to get out,sa国际传媒� said Mark Morris, a Toronto real estate lawyer.
In recent weeks, he has seen nine cases where buyers want to back out of deals but on Monday alone was approached by three sellers keen to use legal channels to keep purchasers from walking away.
Morris doesnsa国际传媒檛 call the encounters a trend because itsa国际传媒檚 unclear how many other lawyers are seeing the same spate, but three queries in a day is his new record. He used to see one case of that nature every few months.
sa国际传媒淧urchasers are looking at the existing crisis, and in the best of times, they feel they overpaid, but now they have objective proof that theysa国际传媒檝e done so because markets have started to pummel and fall and really shows no signs of slowing down,sa国际传媒� said Morris.
sa国际传媒淢any of those buyers are faced with the option of moving forward or upping and walking.sa国际传媒�
People get sa国际传媒渟pookedsa国际传媒� every time the market turns and explore what they can do about deals they signed, but few end up walking away because itsa国际传媒檚 hard to get out of such transactions, said Phil Soper, CEO of Royal LePage.
He thinks the exception to this pattern came in 2020, when the COVID-19 pandemic broke out and people wanting out of transactions had so many unknowns on their side.
Most buyers trying to end a deal this year wonsa国际传媒檛 be successful because there is no legal way out, but such cases are also impractical for sellers, Morris said.
sa国际传媒淚s a seller really willing to pursue a buyer that has no assets? Is the seller really going to go through three years of courts only to find that they have a judgment that cansa国际传媒檛 be pursued?sa国际传媒� he pondered. sa国际传媒淎re they really ready to put up the amount of money that it will take to pursue this to the ends of the earth if theysa国际传媒檙e ableto resell? Perhaps not.sa国际传媒�
In cases where the buyer has put money into a sellersa国际传媒檚 trust account, that money can only be released with a court action, the closing of the deal or a mutual agreement not to pursue the sale, said Morris. Hesa国际传媒檚 seen buyers agree to give the seller the money, if the seller mutually agrees to end the deal.
If a deal ends, brokers can sue for their lost commission but not many explore this avenue because itsa国际传媒檚 sa国际传媒渘ot a good looksa国际传媒� to take legal action against a client, who might still turn to you when they try to sell the home from the failed transaction again, said Morris.
While Tirajeh Mazaheri hasnsa国际传媒檛 seen legal action in Vancouver, the Coldwell Banker Prestige Realty agent has seen buyersa国际传媒檚 remorse and worry crop up among investors who purchased pre-construction homes a few years ago but have yet to take possession of them.
sa国际传媒淎 lot of those people are thinking, sa国际传媒業s the market going to be able to justify this price or keep up with the price I paid and can I get this money back if I want to sell in a year?sa国际传媒� she said.
The people who purchased in early rounds of pre-construction sales for a building are already ahead of the curve, but those who bought later will have to wait longer to break even or make a profit, she said.
Even though worry is at a high, Mazaheri and Soper agree the markets do rebound and homes are still a valuable investment.
sa国际传媒淎nyone who bought a home in 2021 in this country, if they bought anywhere near market price, their home is going to be worth more in 2021,sa国际传媒� said Soper.
sa国际传媒淲ill it be worth more one year from now? Thatsa国际传媒檚 harder to predict sa国际传媒� but even a year from now the likelihood of that home being worth less than it is today is smaller.sa国际传媒�
sa国际传媒擳ara Deschamps, The Canadian Press
