The real estate market in Canada is facing a massive housing crisis, largely due to companies like Ourboro who allow investors to “piggyback” their cash investment on your mortgage qualification so they can bid more for the home against other buyers. This practice is detrimental to the real estate market and should not be allowed in Canada.
One of the issues with Ourboro is that it allows investors to use your mortgage qualification as a way of making money from the real estate market. Let’s say you have a downpayment of $200k and Ourboro gives you an additional $100k, then they own 50% of any appreciation that occurs in the next 10 years. If your property appreciates by $500k over this time period, Ourboro will take $250k along with their initial deposit. This makes it difficult for buyers to make any significant profit off their property if it doesn’t appreciate at least 2 times what they paid into it.
Another issue with this type of deal is that there are clauses put into certain agreements which allow brokers and agents to seek compensation even after an agreement has been terminated or expired. For instance, if a seller signs an agreement with one brokerage and then signs another agreement within 30 days after expiration with another brokerage, then the first broker may still be able to claim some commission on top of what was agreed upon in the new agreement between seller and second broker/agent. These kinds of clauses have been put into place in order for brokers/agents protect themselves from malicious intent on behalf of either buyer or seller trying to avoid paying commissions altogether by switching brokerages after listing period has expired or offering private sales outside third-party involvement altogether during listing period/expiry date window (30 days maximum).
Finally, since buying a house involves taking out large amounts of debt which significantly limits levered investment opportunities for years afterwards, many people have begun questioning why buying property is considered “the best investment” when only 1 out 20 people can afford purchasing one due largely inflating prices driven by demand rather than actual value growth? With interest rates staying high for long periods and markets slow to recover post COVID-19 pandemic there seems less incentive now than ever before when considering purchasing residential properties as investments as opposed other assets classes such as stocks or bonds where yields are often much higher without requiring large amounts debt attached them?
Overall its clear that companies like Ourboro are contributing significantly towards ongoing housing crisis we’re seeing
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Author Eliza Ng