How much do houses usually go for?

[atorrin]

There is a house up for tender, closing at 3pm today, in London. Tender amount is just over $35,000. What would a place like that normally go for? London is home for me, I could easily go to the tax office this afternoon, but I just don't think I can compete bid-wise.

[link]

there were 9 tenders on the London house high bid was 105 th (crazy)small  boarded up insulbrick ,lot on redan st single bid 33th  ,clarence lot sold 50th 4 bids, 5 other properties either reeemed or no bids

[atorrin]

$105,000 for that house... hmmm. It looked like a tear down to me when I drove past late this afternoon (after not putting in a bid).

[link]

yes as a realtor i can not understand how you can justify that price as even to fix up you can not change the front windows or siding without a permit from the city as they have classed it as a class c heritage building although close to the university would make good student rental when fixed

[Dave2]

yes as a realtor i can not understand how you can justify that price as even to fix up you can not change the front windows or siding without a permit from the city as they have classed it as a class c heritage building although close to the university would make good student rental when fixed

There are  possibly two issues here:

I am very cautious about placing a value on tax sale buildings because of the cost of renovations.
There are earlier posts of mine on this subject.  The inability to inspect makes it very dangerous unless you buy at a steep discount.  

The other issue here is the one of heritage designation.  That can greatly increase your costs. We have a local case of a heritage house being fire damaged and the local coucil insisting that it be
repaired to the local standards even though that is more then the owner just justify from a local market real estate value.  Heritage renovations can be very expensive particularly that with a building older then 30 years as there is a real asbestos remediation risk.  

[atorrin]

Heritage designation is very interesting and something I had never considered. Can you tear down a heritage house? At some point you would think common sense has to come into play.

[Dave2]

Heritage designation is very interesting and something I had never considered. Can you tear down a heritage house? At some point you would think common sense has to come into play.

I am not an expert on Heritage.  All I do is once I see it I treat it like the real estate equivalent of the Black Death plague. 

As this is a family board I am not allowed to comment on my real opinion
on politicians and common sense.  Rob would ban me because of the language employed. 

[link]

to tear down you would need special approval and justifiy your reasons to do so if you are bored you can go to the city of london website and read up on the west woodfield designation it is a easy read of only 164 pages !!!! that is why you need to do a title search prior to biding as the by law is registered on title to the property fortunately I can do my own title searches and did not need to spend a lot of money to find this out,and thought I was generous at bidding half that amount ! it is not always a bad thing to leave with your deposit cheque

[Dave2]

and thought I was generous at bidding half that amount ! it is not always a bad thing to leave with your deposit cheque

Link:

Normally I can justify your bid level because it probably represents land value less a demolition cost allowance.    Its a reasonably safe way of bidding and covers most cases except likely tax sales that are prime candidates for environmental problems (e.g. former gas stations) or heritage where you are not allowed to demolish the structure.

(Its been a very long time since I went to Western so I am a little out of date for local land values.)

I do it the same way but usually lose because there are lots of people who do not do title search and get burned.  I have even bought properties with structures (in the country) where I have talked with the local fire chief about using it for fire fighting practices. (reduces demolition costs).

Theres a good chance someone goofed and may even realize their mistake and walk away from a $21,000 deposit.  I hope you are not the second place bidder.  

There is an increasing interest for properties with structures because you maybe can avoid HST and also maybe avoid development charges.(I have heard different stories on that latter one)  As this case shows it is not necessarily without its own set of risks.

[atorrin]

Ok - one more question. A real estate agent friend of mine asked me why the owners of this house would not just get a mortgage to pay off their back taxes. She looked it up for me and it looked like in 1984 it was willed to someone for $2. I had no answer for her...

[Dave2]

Ok - one more question. A real estate agent friend of mine asked me why the owners of this house would not just get a mortgage to pay off their back taxes. She looked it up for me and it looked like in 1984 it was willed to someone for $2. I had no answer for her...

1984 is 25 years ago.  they maybe dead or incapacitated.  I don't question why of tax sales as I have seen strange things including one that never have gone to tax sale but because of a bitter divorce one partner was going to ensure that the other got nothing.

[link]

Dave 2 is correct on the development charges as they are in the 22 th range (provided you rebuild in the the allowed time frame ussually 5yrs) however when it comes to hst it is hard to beat the tax man the only advantage would be if it was to be personal use property if you rebuild to resell you need to charge it on the sale anyway less rebates which I generally include hst, with the purchaser assigning the rebates back to me ,if you rebuild to rent you must self assess and remit without rebates .I learned that the hard way as years ago (GST DAYS) I build 8 3bedroom units to rent then at a latter date was audited and was handed a large bill from rev canada ! however taxes are still better than the only other sure thing in life

[Dave2]

Dave 2 is correct on the development charges as they are in the 22 th range (provided you rebuild in the the allowed time frame ussually 5yrs) however when it comes to hst it is hard to beat the tax man the only advantage would be if it was to be personal use property

At least London is (relatively) affordable in development charges.  In the GTA area they are much higher ranging up to I believe around $70,000 in Oakville.   Add in Land cost and HST and you are close to $300,000 before you put a spade in the ground.   

We have posted elsewhere about HST.  My dividing line is 2 or 3 lifetime sales and then revenue Canada considers you a pro.

[atorrin]

Ok - a related question.

We own a rental property that has a potentially severable lot. We have thought over the years about severing it and building something to sell. Or severing it and building something to rent. What costs would be involved if we were to do either of those things? Would we be better off just to sever and sell the lot?

[Dave2]

Ok - a related question.

We own a rental property that has a potentially severable lot. We have thought over the years about severing it and building something to sell. Or severing it and building something to rent. What costs would be involved if we were to do either of those things? Would we be better off just to sever and sell the lot?

Its the type of situation I can't necessarily give you a quick answer on because best strategy depends on the particulars in each individual case. E.g.  are we talking a rural or urban case.  

Regarding sever and sell as land or build a dwelling;  there are arguments for both cases.  Some depends on your personal financial situation.  You cannot get conventional bank financing in many cases until shell of building is up so you may tie up a lot of your capital assets in interim.

This has been a subject of some discussion among senior board members via private message which I am not certain if people are prepared to discuss in public because it involves private holdings.  

 Note however in 2 months the rules change for hiring of construction workers and every owners responsibility and as a result it may prevent the use of owners fto get involved in construction work. Specifically starting in January 2012 anyone in Ontario hiring a person/company to do construction work is responsible for ensuring they have WSIB coverage. If they don't the person doing the hiring can be held responsible.

Extracting from a WSIB website.

A principal who directly retains a contractor or subcontractor to perform construction work is legally required to obtain a WSIB certificate of clearance prior to commencement of the construction work and for the entire time the contractor or subcontractor is performing the work.
If a principal does not obtain a certificate of clearance for construction work, and construction work is performed for the principal, the principal may be prosecuted and subject to a penalty for not complying with their obligations under the Act, see 22-01-05, Offences and Penalties ? General and 22-01-08, Offences and Penalties - Employer.
The principal may also be liable for some or all of the contractor‟s or subcontractor‟s payment obligations to the WSIB, in respect of those contracts entered into between the principal and the contractor or subcontractor.

This is an involved area and probably is worthy of a discussion on its own merits.

This is probably of most concern to bigger players in this group particularly if the government tries make a couple of examples.