Marnie Bennett: Being the Best in the Worst of Times

excerpt from Realtybiznews.com January 26th 2011.

by Al Twitty - 26 January 2011

In an economic situation that has every industry down, down, down, it’s invigorating to hear upbeat stories any time. Such a story exists for the down and out real estate broker. Ottowa real estate saleswoman Marnie Bennett is the hero of this positive piece on “how to sell property in a depression.” The No. 1 Broker Worldwide for Keller Williams Realty International in 2010 sold over 600 properties last year, beating out over 80,000 agents worldwide.

Now dubbed the “Queen of Condos” by some, Bennett employs some 30 people including her husband, her children, and several other family members at what amounts to one of 

Marnie Bennett sells two properties every day guys - two a day

Canada’s most successful realty firms. Bennett, now 57, was actually humbled a bit by the accolades over her successes: “Though there were challenges in 2010, we simply remained focused on our customers.”

Marnie got into condos via these wonderful properties

Bennett’s climb to her exalted position as condo monarch came about when she agreed to help with Terry Guilbault’s $60 million condominium development at 90 George St (pool image above). on the edge of the ByWard Market. About this time industry experts began to realize Ottawa’s potential as a condo market.

The image below from Marnie’s Facebook albums with Prime Minister Stephen Harper, and her son Taylor, indicate just how hard work and intelligence pay off.

In reading this story of Bennett’s successes, it’s fairly plain to see that focus on what works, hard work, and leadership is what brings home the bacon, good times or bad. Bennett recognized the market and has applied whatever momentum necessary to succeed. In this most recent case, in the worst economic times since whenever, has been marketing.

Marnie Bennett , son Taylor, and Prime Minister Stephen Harper - Bennett Facebook

The woman knows her business in all aspects for sure, but beside the Ottawa statistical advantages, presenting properties to the right people, the right way, and with ultimate credibility, this is how an agent gets to be the best in the world. If there is one chink in Bennett’s silver armor it is the landing page and navigation of her company’s website, I hate it (which is important cuz of my website guru status).

Along with all her other tasks Marnie Bennett also finds time to blog about the industry. In fact her network of websites and blogs is quite extensive. And it’s not every zillionaire real estate broker that has their own Blogger profile. Better with Bennett, Tailor Bennett’s blog, Ottawa Real Estate Pros, and several others compliment Bennett’s overall web footprint of Facebook, Twitter, YouTube Channel, and other digital engagements.

All in all, Bennett’s endeavors appear as a sort of digital and brick and mortar empire to me. Not many firms of any kind have such an integrated and connected approach. And maybe herein lies the lesson.

One of Marnie Bennett's tools, MyVirtualListings

This is a great success story, but with every great story there should be a moral too, don’t you think? Every day I hear not only real estate professionals, but professionals in all industries in fact, whine about how bad things are for them. Certainly, these times are tough for everyone – even here in Germany, in our business. But! (always pay attention to what comes after “but”). As a professional, the most important thing you can do today is – get off your duff and get busy.

Someone out there today needs your help, your expertise, and is willing to reward you for it. This lesson Marnie Bennett seems to be teaching every day (she sells a house every 12 hours – that’s two a day) – but more importantly the ultimate lesson is “Know what the hell you are doing.”

I leave you with another tool Bennett utilizes, one I found via her Tweets (that’s a Twitter message) linked to one of her properties – the tool is MyVirtualListings – it puts your client there –  click & watch via the image above, or the video below – compare to your 300 pixel online presentation. Congratulations Marnie, and thanks for the lesson of the year.

http://www.youtube.com/watch?v=e6L3UZb002Q&feature=player_embedded

Ciena Corp's Planned Addition of 353 New Jobs Positive for Home Prices in Kanata

Ciena Corp announced a planned $900M investment in their central labs at their Moodie Drive facility and creation of an additional 353 new jobs over the next 5 years.

The combined effect of the Ciena expansion and DND's planned consolidation in the old Nortel Complex on Moodie Drive, will be to attract as many as 3000 or 4000 new households to the immediate area over the next several years.

This additional demand will both increase demand for new construction and for resale homes in the area, as well as contribute to higher prices.

Calculating HST Payable and HST Rebates for Investors of New Construction Homes and Condos

In my previous blog, I described how the new HST Tax and HST Rebates are applied to new construction residential homes and condos in Ontario.

Unlike purchasing a property for personal use, where the builder applies for the HST rebates, in the case of purchases of new construction condo or residential units as investments, the Investor is responsible for paying the full HST amount payable on new construction condo or residence  at the time of closing and then applying for the HST rebates provided certain conditions are met.

To understand how HST and HST rebates are calculated, one first needs to review the Canada Revenue Agency terminology for the builder’s list price, being the price that the buyer set’s which includes all HST and HST rebates and the builder’s base price, which is the price used to calculate the total HST payable before any rebate calculations are undertaken.

In CRA terms, the List price or “stated price net of rebates (SPNR)” means the stated price for the housing net of any GST/HST new housing rebate and the Ontario new housing rebate credited by the builder.

As well, the Base Price or the "consideration" payable for the purchase of the housing is the amount to be paid for the housing before any calculation of the tax payable and housing rebate entitlements for the purchaser.

Where a stated price net of rebates is used, a calculation must first be made to determine the value of the consideration payable for the housing. The value of the consideration must be calculated before the tax payable can be determined. Similarly, the tax payable must be calculated before the amount of the rebates can be determined.

An additional consideration is that although the Provincial component of the HST rebate is fixed at 6% to a maximum of $24,000, the Federal component of the HST rebate is on a sliding scale, reducing to zero once the builder’s base price or “consideration” exceeds $450,000.

Using the Builder’s List Prices as a starting point, and specific CRA formula’s for each of the four value bands (being <$368,200, $368,200 to $424,850, $424,850 to $484,500, and >$484,500) it is possible to calculate how much HST is already included in the purchase price and what the federal and provincial HST rebate components will be.

However, these formulas can only be used if all of the following conditions are met:

•  the purchaser is buying a newly constructed or substantially renovated single unit residential complex or residential condominium unit from a builder, together with the related land;
•  the housing is situated in Ontario;
• HST at 13% applies to the sale;
•  the purchaser meets the conditions for claiming the Ontario new housing rebate; the builder pays or credits the Ontario new housing rebate and, where applicable, the GST/HST new housing rebate in respect of the federal part of the HST to the purchaser; and
• the builder and the purchaser have agreed to a stated price net of the Ontario new housing rebate and, where applicable, the GST/HST new housing rebate in respect of the federal part of the HST.

To calculate the additional HST payable upon close for an investment property, refer to the formulas and examples below.

In my next Blog I will discuss how investor's apply for and receive their HST rebates on investment properties.

Formula #1 for Properties Priced Under $368,200

Provided the Builder’s List Price or “Stated Price Net of Rebates (SPNR)” is not more that $368,200 (meaning that the consideration (i.e. builder’s purchase price) is not more than $350,000):

Base Price / Consideration = SPNR ÷ 1.052

Example 1

The stated builder’s list price net of rebates is $325,000 and all of the above conditions are satisfied. The “consideration” or builder’s base price would be calculated as:

Builder’s base price

= builder’s list price ÷ 1.052

= $325,000 ÷ 1.052

= $308,935.36  (indicating that $16,064.64 in HST is already included in the builder’s list price)

Once the Builder’s base price is determined the tax payable and the new housing rebates may be calculated.

Total HST payable

= builder’s base price x 13%

= $308,935.36 × 13%

= $40,161.60

Less GST/HST new housing rebate in respect of the federal part of the HST

= (builder’s base price x 5%) x 36%

= ($308,935.36 × 5%) x 36%

= $5,560.84

Less Ontario new housing rebate in respect of the provincial part of the HST

= (builder’s base price x 8%) x 75%

= ($308,935.36 × 8%) × 75%

= $18,536.12

For an investor, on closing they would be required to remit the $24,096.96 in additional HST and then apply for the rebate of that HST amount, a process which typically takes about 6 to 8 weeks and requires that the property be leased to a tenant for a minimum of one year.

Formula #2 for Properties Priced Between $368,200 and $424,850

If the Builder’s list price is more than $368,200 but not more than $424,850 (meaning that the base price is more than $350,000 but not more than $400,000), then:

The base price = (List price + $28,350) ÷ 1.133

Example 2

The stated price net of rebates is $410,000 and all of the above conditions are satisfied. The builder’s base price would be calculated as:

Builder’s base price

= ($410,000 + $28,350) ÷ 1.133

= $386,893.20 (indicating that $23,106.80 in HST is already included in the builder’s list price)

Once the consideration is determined the tax payable and the new housing rebates may be calculated.

Total HST payable

= $386,893.20 × 13%

= $50,296.12

GST/HST new housing rebate in respect of the federal part of the HST

= $6,300 × [($450,000 - $386,893.20)] ÷ $100,000

= $3,975.73

Ontario new housing rebate in respect of the provincial part of the HST

= ($386,893.20 × 8%) × 75%

= $23,213.59

Formula #3 for Properties Priced Between $424,850 and $484,500

If the Builder’s list price is more than is more than $424,850 and not more than $484,500 (meaning that the base price is more than $400,000 but not more than $450,000):

The base price = (Builder’s List price + $52,350) ÷ 1.193

Example 3

The stated price net of rebates is $460,000 and all of the above conditions are satisfied. The builder’s base price would be calculated as:

Builder’s base price

= ($460,000 + $52,350) ÷ 1.193

= $429,463.54 (indicating that $30,536.46 in HST is already included in the builder’s list price)

Once the consideration is determined the tax payable and the new housing rebates may be calculated.

Total HST payable

= $429,463.54 × 13%

= $55,830.26

GST/HST new housing rebate in respect of the federal part of the HST

= $6,300 × [($450,000 - $429,463.54)] ÷ $100,000

= $1,293.80

Ontario new housing rebate in respect of the provincial part of the HST

= ($429,463.54 × 8%) × 75%

= $24,000 (maximum provincial rebate)

Formula #4 for Properties Priced Over $484,500

If the Builder’s list price is more than is more than $484,500 (meaning that the base price is more than $450,000):

Builder’s base price = (Builder’s List price + $24,000) ÷ 1.13

Note: there is no rebate of the Federal proportion of the HST for houses, priced above $484,500.

Example 4

The stated price net of rebates is $700,000 and all of the above conditions are satisfied. . The builder’s base price would be calculated as:

Builder’s base price

= ($700,000 + $24,000) ÷ 1.13

= $640,707.96 (indicating that $59,292.04 in HST is already included in the builder’s list price)

Once the consideration is determined the tax payable and the new housing rebates may be calculated.

Total HST payable

= $640,707.96 × 13%

= $83,292.03

GST/HST new housing rebate in respect of the federal part of the HST

= $6,300 × [($450,000 - $640,707.96)] ÷ $100,000

= $0

Ontario new housing rebate

= ($640,707.96 × 8%) × 75%

= $24,000 (maximum provincial rebate)

Understanding how the HST Affects New Home Pricing

The introduction of HST to Ontario on July 1st 2010 has both increased consumer angst and confusion, particularly with regard to its application to housing. For the present, the HST is only applied to new construction or major renovations and is not applicable to the resale of existing homes.

That said, how the HST is applied is also somewhat confusing, so its necessary to take a step backwards and understand how the GST and PST were applied to new construction prior to July 1st 2010.

Since the introduction of the GST on January 1991 Canadian new home buyers have been paying GST and benefiting from a partial rebate of those GST charges for homes priced under $450,000. The Federal Government applied the GST on a sliding scale basis such that a portion of the GST charged would be rebated provided the total value of the new home being constructed or renovation being undertaken was less than $450,000. For housing priced above $450,000 the full GST rate was applied and there were no rebates.

For the average new home buyer, the impact of the GST was transparent, as it was the builder who applied for the GST rebates, and new home prices reflected the fact that the builder was crediting those rebates to the buyers.

Prior to July 1st 2010, the Provincial Sales tax (PST) was only applied to the materials purchased for the construction of a new home and the labour and profit components of the new home price were exempt from the PST.

The 13% HST is a blending of the old Provincial Sales Tax (8% PST) and the Federal Goods & Services Tax (5% GST). The biggest difference for the consumer is how and where the Provincial component of this Tax is applied, which includes many goods and services (including hydro, heating, postage, even commercial condominium fees) which were not previously taxed under the PST regimen.

In the case of new housing though the province has sought to soften the impact of HST pricing by providing a Provincial rebate, of 75% of the Provincial portion of the HST Tax to a maximum of $24,000. However unlike the Federal component which is reduced to zero, once the value exceeds $450,000, the Provincial rebate maximum of $24,000 is maintained (for the present at least) independent of the final new home price be that $500,000 or $5,000,000.

Every new home built today in Ontario has some HST built into the price, however the final price to the consumer or list price of the new home is determined based upon the builder's base price (i.e. cost to build plus profit margin) plus total HST payable (base price x 13%) minus the applicable HST rebates.

Typically on homes priced up to $450,000 the actual amount of HST built into the new home price ranges from about 5% to a maximum of 7%.  Above $450,000, since the rebate of the Federal portion of the HST is reduced to zero and the Provincial portion is capped at $24,000, the additional cost to the home buyer is $8,000 per $100,000 in additional builder base price.

For first time buyer's purchasing a Condo or Townhouse priced at $280,000, the HST proportion of that price is about $14,000 or about $5,000 more than pre-HST. While, an up-market buyer purchasing a $750,000 home would incur approximately $73,500 in HST expense, or about $37,500 more than incurred under the GST regimen.

The increases in new home purchase prices, attributable to the introduction of the HST in Ontario, has had a negative effect on new home sales in Ontario, however over time as consumers become accustomed to this tax, new home construction and sales will return to historic levels.