A wave of buyer remorse is forming across some of the heated property markets after housing prices started falling and sales slowed over the past two months.
The country saw a 25.7% drop in home sales last year and a 3.8% drop in home prices between March and April, the average home price, according to the Canadian Real Estate Association. last month was $741,517.
Such numbers have led some sellers to dig into lawsuits to make sure deals go through, and other buyers to worry about the value of pre-sale properties they bought years ago but not yet owned.
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“With today’s property prices, there’s really no choice but to go all in and if you go all out, and then suddenly you realize that maybe you’ve made a bad bet and there’s a way out. for that bet, you,” said Mark Morris, a real estate attorney in Toronto.
In recent weeks, he has seen nine cases where buyers wanted to back out of a transaction but on Monday alone were approached by three sellers who wanted to use legitimate channels to stop buyers from walking away. .
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“Buyers are looking at the current crisis and in the best of times they feel they are paying too much, but now they have objective evidence that they did so because the market has kicked in. plunging and falling and really showing no signs of slowing down,” Morris said.
“Many of those buyers are faced with the choice of moving forward or climbing and walking.”
Phil Soper, CEO of Royal LePage, said: “People will “panic” every time the market turns and discover what they can do with the deals they’ve signed, but very few quit. because it is hard to get out of such trades.
He thinks the exception to this pattern comes in 2020, when the COVID-19 pandemic broke out and those wanting to exit the trade had too many unknowns on their side.
Most buyers trying to close a deal this year won’t succeed because there’s no legal way out, but such circumstances aren’t realistic for sellers either, Morris said.
“Are sellers really willing to go after buyers without properties? Did the seller really go through three years in court only to find that they had a verdict that couldn’t be pursued? ‘ he considered.
“Are they really willing to spend the money to pursue this to the ends of the earth if they can sell it back? Maybe not.”
In the event that the buyer has deposited funds in the seller’s escrow account, the funds can only be released upon a court action, closing of the transaction, or general agreement not to pursue the sale, Morris said. He sees the buyer agreeing to give money to the seller, if the seller agrees to close the transaction.
If a deal ends, brokers can sue for their lost commissions but not many explore this path as “it’s not a good look” to take legal action against. customers, who may still turn to you when they fail to try to sell their home. Morris said.
While Tirajeh Mazaheri has not yet seen legal action in Vancouver, Coldwell Banker’s agent Prestige Realty has seen buyer remorse and anxiety grow among investors who purchased pre-construction homes a few years ago. years but still don’t own them.
“A lot of them are thinking, ‘Can the market correct this or keep up with the price I paid and can I get this money back if I want to sell in a year? he said.
Buyers in pre-build sales were ahead of the game, but later buyers would have to wait longer to break even or make a profit, she said.
Although worries are high, Mazaheri and Soper agree that the market will recover and that homes remain a valuable investment.
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