Following my initial blog entryin October discussing the basics as to why it typically takes a few business days following possession date for a seller to receive their sale proceeds, I thought at this point it would be prudent to now calm all of those current and prospective sellers who read my post and felt that this is a raw deal for them (hopefully my last post did not incite seller riots); before I can finish explaining the entire selling process to my seller clients, they have been known to quip:  “If the buyer gets to move in on the possession date without me having my sale money, what do I get out of this?”  The answer:  Interest.

Clause 4.1 of the Saskatchewan Real Estate Commission’s standard form “Residential Contract of Purchase and Sale” used by Saskatoon’s Realtors states the following:

The Buyer agrees to pay to the Seller interest at the Bank of Canada Overnight Rate Target at the Completion Date plus 4% per annum, on any portion of the Purchase Price, less mortgages or other encumbrances assumed, not received by the Seller, his/her solicitors or his/her Brokerage as at the Completion Day, until monies are received by the Seller or his/her solicitor….

Thus, this clause creates a contractual obligation on the part of the buyer to pay interest to the seller.  As it provides, part of the interest rate is static (four percent) while part of the interest rate is dynamic, fluctuating in accordance with the bank of Canada Overnight interest rate (which is currently one percent).  If anyone is struggling to come up with what the total current interest rate is, you may borrow my calculator once I am done double checking my arithmetic. :)

As a matter of practicality, in order to ensure that the buyer will actually pay the interest to the seller, most lawyers acting for a buyer will collect about ten days of interest up front from them (along with the rest of their down payment and closing costs) on the outstanding mortgage amount.  Following registration at Land Titles, the buyer’s lawyer will send the mortgage proceeds to the seller’s lawyer along with the extra interest that has accrued thereon.  Any residual interest money that was collected by the buyer’s lawyer and not paid to the seller will be reimbursed to the buyer.

Ideally, each and every buyer and/or seller that comes to see me is well versed with the particulars of the contract that they have signed to buy/sell their property.  This is not always the case, however, most clients understand and appreciate why interest must be paid following a good explanation of ‘the process.’

Please feel free to provide your comments and/or questions.

Mike Derbowka
306-477-7227

Officials from the federal and provincial governments joined in at a sod turning ceremony today to officially launch the $14 million Columbian Place, a 75-unit apartment building to be constructed on 20th Street West, between Avenue N and Avenue O in Pleasant Hill. When completed, it will open 40 two-bedroom units and 35 one-bedroom homes.

The building is will be an “affordable housing” project built with senior residents in mind. It’s expected to be completed as early as the spring of 2012.

Both levels of government contributed to funding the project run by the Knights of Columbus and K.C. Charities.

The installation of ninety solar panels that will be used as a supplemental heating source for the public indoor pool at the Lawson Heights Civic Centre in Saskatoon began today. They’re expected to be operational by mid-December and will provide roughly twenty-five percent of the energy required to heat the pool at the civic facility.

Partial funding for the project was provided by the Provincial and Federal governments with the balance paid through a loan to Saskatoon that will be retired over eleven years using money saved through reduced energy consumption. The new panels also reduce greenhouse gas emissions by roughly 111 tonnes per year.

Once the Lawson Heights project is complete, the city of Saskatoon plans to begin a similar project at the Harry Bailey Aquatic Centre. The installation of ninety solar panels that will be used as a supplemental heating source for the public indoor pool at the Lawson Heights Civic Centre in Saskatoon began today. They’re expected to be operational by mid-December and will provide roughly twenty-five percent of the energy required to heat the pool at the civic facility.

Partial funding for the project was provided by the Provincial and Federal governments with the balance paid through a loan to Saskatoon that will be retired over eleven years using money saved through reduced energy consumption. The new panels also reduce greenhouse gas emissions by roughly 111 tonnes per year.

Once the Lawson Heights project is complete, the city of Saskatoon plans to begin a similar project at the Harry Bailey Aquatic Centre.

Saskatoon developer Gary Gaudet is planning an “estate-style” residential development that would see the Greenbryre Golf & Country Clubreduced to a nine-hole course to make way for 143 half-acre lots that are practically at the city’s southeast edge.

While the plan still needs a stamp of approval from the RM of Corman Park, it’s expected to be forthcoming. The RM recently changed a bylaw that prohibited residential and commercial developments within 1.6 kilometers of Saskatoon city limits.

According to Gaudet, “close to 500 people have expressed an interest in buying a lot” so he’s feeling pretty confident that there’s a market for the parcels which have not yet been priced but are expected to be “around $250,000.”

More on this story from the Star Phoenix here.

I’m always happy to answer your Saskatoon real estate questions.  All of my contact info is here. Please feel free to call or email.

Our Saskatoon home search tool offers MLS® listings represented by all real estate brands, presented with more detail than you’ll find anywhere else. Check it out here.

Norm Fisher
Royal LePage Vidorra

On November 1, the Saskatoon Region Association of Realtors reported October 2010 results for the entire residential category of Saskatoon real estate including single-family homes, condominiums, semi-detached properties, duplexes, mobile homes and vacant lots. Unit sales totaled 262 across all of these property types, a decline of roughly thirteen percent compared to the same month last yearwhen 309 residential property sales were completed. The average selling price came in at $293,929 last month for a year-over year gain of $19,050 (seven percent). This post will provide a closer look at how single-family detached homes (houses) and condominiums did in comparison to the entire residential category.

After showing a modest month-over-month increase in September, sales of houses returned to a more typical seasonal downward trend. The total units sold in October came in at 181, down from 206 the month before and lower than the 196 sold in October of 2009.

Listing inventory also eased, sliding lower from 766 in September to fall below 700 for the first time since Marchand closing October with 697 Saskatoon houses displaying an active status. Still, total months of inventory increased by .2 months when compared to September to finish the first month of the final quarter of 2010 with a 3.9 month supply, up from 2.8 months at this time last year.

House sale numbers in all price categories above $200,000 managed to hold their own on a year-over-year basis. All of the declines in unit sales of single-family homes could be counted in the $200,000 or lower price ranges. In spite of this change, which likely skews prices higher, the average selling price of a Saskatoon house fell lower on a month-over-month basis, slipping to $317,544 from nearly $340,000 the month before, but managed to maintain very small gains over October of 2009 when the average sale price was $312,938. The median sale price tumbled to $300,000 from $323,000 the month before to finish just four thousand dollars ahead of last October’s number. The three-month average inched up over the one-month period to $332,855 maintaining big gains on the same month in 2009 when it was just $307,106.

Saskatoon condo sales took a pretty nasty turn in October falling to just 67 units, a decline of 23 from the previous month and down from 103 units in October of 2009 to record a 35% year-over-year drop. The average number of days to sell those units increased 50% compared to last October at 62.

The total inventory of active condo listings slid nearly ten percent from the previous month to close October at 393. The corresponding decline in unit sales pushed months of available inventory substantially higher to 5.9. That’s a full month higher than it was at the close of the previous month and nearly double what it was at the close of October 2009 when there was a 3.1-month supply.

Similar trends that were discussed earlier in the overview of the decline in house sales are at play with condos. Year-over-year, thirty-one of the thirty-six-unit drop came out of the “up to $200,000” ranges. When a third of the sales are lost and nearly all of them are at the low end, prices will naturally be skewed higher. The average selling price of a Saskatoon condo slipped almost five thousand dollars from September to $246,275 by the end of October. On a year-over-year basis it managed to register a huge (17.5%) gain, up from $209,614 for the same month last year. The near absence of condo sales below $100,000 mark caused the median sale price to spike higher, gaining more than 20% on the year to close at $240,000. The three-month average also pushed higher by five thousand dollars on the month, picking up almost $24K on a year-over-year basis.

/I’m always happy to answer your Saskatoon real estate questions.  All of my contact info is here. Please feel free to call or email.

Norm Fisher
Royal LePage Vidorra

The Saskatoon Region Association of REALTORS® (SRAR) released the residential real estate statistics for October of 2010today, accompanied by this release.

As forecast, the unit sale numbers for the month declined by 15% with 262 properties being sold compared to 309 properties selling in October 2009.  Year to date, unit sales are down 8% with 3,088 homes having sold compared to 3,356 homes having sold by this time in 2009.

Click the image for a larger version of the graph.

The average selling price in October was $293,929, up 7% from the same month last year when it was $274,879. For the first time in a while, the $250,000 to $275,000 entry-level price range experienced the greatest sales activity. Year to date, the $300,000 to $350,000 range still has dominant sales activity.

Click the image for a larger version of the graph.

REALTORS® listed 455 homes during the month, up 3% from October 2009 when 441 homes were placed on the market. Year to date, listing numbers are up 3% with 6,081 properties being offered for sale. Consumers had 1,219 homes to select from at the end of October.

Click the image for a larger version of the graph.

Sales activity in the smaller communities around Saskatoon (Martensville, Warman, Dundurn, etc.) remained very steady with 77 units selling. That number was down 14% from October 2009 when 90 units sold. The average selling price for the month was down 3% from the same month last year to $243,353 while the year to date average selling price in these areas is up 1% to $255,409. Listing numbers were down 4% with 190 properties being placed on the market compared to 198 in October 2009.

Sales activity is expected to remain steady for the remainder of the year. Interest rates remain attractive and job creation continues at a reasonable pace. Existing home sales may continue to soften slightly given steady growth in the new home sector, which impacts existing home sales and averages.

I’m always happy to answer your Saskatoon real estate questions.  All of my contact info is here. Please feel free to call or email.

Norm Fisher
Royal LePage Vidorra