Monthly Archives: November 2007

Assumable Mortgages Quiz

Posted on November 14, 2007 | 1 Comment

How much do you know about assumable mortgages? Take the quiz to find out! Highlight the empty space below the question to view the answer. No cheating ;)

Note: All information is based on assumable mortgages in the Province of Alberta. Other provinces have different laws, regulations, & guidelines

Question # 1 : All mortgages are assumable in Alberta.

Answer: False. The old presumption that all “ordinary” mortgages are automatically assumable in Alberta is no longer valid due to a growing mortgage fraud problem.

Question # 2: A seller is released from liability on an insured high ratio mortgage once the buyer makes 12 consecutive payments (1 year)

Answer: False. This is a common misconception. The only true protection that can be provided to the seller is a “release letter” issued by the lender (ie. bank) upon the buyer qualifying for the mortgage. Of course, most buyers assume mortgages because they are not able to qualify for a new one. Because of amendments made to the Law of Property Act, and in effect August 1, 2004, all insured mortgages funded after that date create personal liability for any individual registered as the owner of the property at any point in time during the life of the mortgage.

Question # 3: All corporate mortgagors are ALWAYS liable for a deficiency on the mortgage

Answer: True. Properties registered in corporate names are liable.

Question # 4: There is an ongoing risk for sellers allowing a conventional mortgage (mortgages not exceeding 80% of the price of the home) to be assumed.

Answer: False. In Alberta, there is no PERSONAL liability by individuals on conventional mortgages to be assumed.

Question # 5: There is an ongoing risk for sellers allowing a high-ratio mortgage (mortgages exceeding 80% of the price of the home) to be assumed.

Answer: True. Sellers allowing their high ratio mortgages to be assumed, where the lender has secured high ratio insurance by Genworth Financial Canada (GE Capital) or CMHC, can be held liable.

While CMHC does have a policy that they will generally not chase a prior owner in case of a deficiency on a mortgage, this is not an assured thing. In addition, GE Capital has not declared a similar policy to date.

There are many misconceptions regarding assumable mortgages. If you are thinking about selling your home and letting someone assume the mortgage, please be aware of the risks and ask your mortgage specialist, real estate lawyer, or bank representative before taking any action.

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Posted in Calgary Real Estate Discussion

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Buyers: Use a Buyer’s Agent or go directly to the Listing Agent?

Posted on November 11, 2007 | Leave a comment

There are varying opinions as to whether it’s in the buyer’s best interest to contact the listing agent directly, or use a buyer’s agent instead. Here are some of the more prevalent thoughts:

I would go directly to the Listing Agent because:

  • It might be possible to get a reduction in their commission since they are handling both sides of the deal. However, this is really dependant on the Agent – they might not want to do both sides of the deal and only get paid for one.
  • They might be more familiar with the property and be able to answer questions quickly.

I would NOT go directly to the Listing Agent because:

  • They are representing the seller. They will not (should not) disclose information such as the lowest price the seller will accept, motivation for selling, etc.
  • Their job is the get the highest price for their client. They have no responsibility toward the buyer.
  • They want the sale. They will be biased about their listing because it is their job to sell *that* particular home for their client.

I would use a Buyer’s Agent because:

  • They represent you and only you, and will negotiate terms and conditions to benefit you.
  • You’ll have someone searching for homes matching your criteria. Once they are familiar with your needs and wants, they’ll be able to preview homes for you to save you time and only show homes that might be possible matches for you.
  • They might be able to do find why the sellers are selling, whether they’re motivated, how low a price they would be willing to accept, etc.
  • They want a sale too, however it is their job to find the BEST matching property for you.

If you have any other thoughts, please share!

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Posted in Calgary Real Estate Discussion

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Open Discussion on Calgary Real Estate

Posted on November 10, 2007 | 15 Comments

What an interesting year it has been thus far – we’ve seen it all! From multiple bid scenarios this Spring, to sellers drastically cutting prices this Fall. Calgary reached record high average prices this summer. MLS listings keep on increasing, when historically they’d start to dwindle off in the final months of the year.

I’d love to hear everyone’s opinions. All viewpoints (bearish & bullish) are welcome – let’s just keep the discussion respectful :)

I’ll continue to update the MLS Daily Stats at FindCalgary.ca – so everyone can have a transparent view of what’s really going on in Calgary without having to wait for the month end results.

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Posted in Calgary Real Estate Discussion