COVID-19 has turned the real estate scene into a buyer’s market – at least for now.
Since the pandemic took hold, we have had to say goodbye to many aspects of normal life, which for Torontonian home sellers used to include the enticing prospect of bidding wars and over-asking offers.
According to a recent Canadian Press report, Toronto home sales and listings plunged by well over 60 per cent compared with the same time last year. And while house prices don’t appear to have been hit as hard, a prolonged plateau could feel like a downer for sellers more used to watching the value of their property soar from year to year.
But those buyers with the financial flexibility to complete a transaction in the current climate may want to hurry, since the trends could be only temporary. A recent study by RBC predicts the real estate market lull will last about as long as the emergency surrounding COVID-19. Following a brief downturn, the bank is currently projecting a 40-per-cent surge in home resales across Canada over the course of 2021.
The economic upheaval that has come with the coronavirus has already put a number of previously agreed deals in jeopardy as newly furloughed or unemployed buyers realized they were overstretched.
Those purchasers responsible for the collapse of a deal – whatever by choice or not – can expect to forfeit their deposit, and may even be on the hook for any shortfall if the seller finds a new willing buyer at a lower price.
The only way either side can back out of an Agreement of Purchase and Sale (APS) is if the possibility is accounted for in the contract itself. And while it remains a risky business, the current pandemic has strengthened the bargaining power of prospective homebuyers looking to give themselves a little more wiggle room.
Although most APSs start from an essentially identical template, parties to a particular deal should remember that they are not limited to that same old set of standard terms found in the typical contract.
Since COVID-19 struck, I’ve seen all kinds of clauses built into contracts, allowing for delays to closing caused by anything from technological hitches to physical ailments. The possibilities are endless, so buyers may also be able to negotiate clauses providing for a postponement if they or a close family member contract the virus, as long as the seller agrees.
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