“While Muslims agree that riba is prohibited, there is disagreement over what it is. It is often used as an Islamic term for interestcharged on loans, and this belief – that there is a consensus among Muslims that interest is riba – is the basis of a $2 trillion Islamic bankingindustry. However not all scholars equated riba with all forms of interest, and among those who do there is also disagreement over whether it is a major sin and against sharia(Islamic law), or simply discouraged (makruh)”
- Wikipedia definition of Riba
Today I woke up and planned to spend the day riding bikes at Glenmore Reservoir with my daughter after she competed her mandatory Chinese schooling in Chinatown. However, those plans went quickly out the window when 1) I woke up and discovered that she was too sick to attend Chinese school and 2) I went on to Facebook and just happened to see a posting by a fellow realtor about a talk happening later in the afternoon titled, “Free Seminar: Buying your home the Halal way”. As a realtor who also wears the hat of a Cross Cultural consultant (www.xculturalconsulting.com), I was incredibly curious to find out more, and so I set about organizing the rest of my morning and afternoon to attend.
As per the online poster that I downloaded, “Muslims are not allowed to participate in riba/interest; but to buy a house with cash is usually very difficult for the average person…Learn how you can become a homeowner, while still being true to the Islamic faith”. After reading this brief intro, of course, I had a million questions. I will try to explain what all of this is about in this week’s blog post. I will first qualify this blog post by saying that I am not Muslim, nor do I have much of a grasp of the Quran teachings and readings. I decided to attend this seminar to learn more professionally and personally, as I will most definitely meet this community at some point, either as a real estate agent or a cross cultural consultant.
Riba, or referred to as interest, is to be avoided at any cost. Muslims should be adhering to Sharia Law and avoid getting themselves into a financial (or business or trade or consumer or purchase) situation that has he or she paying interest as calculated by a percentage. The Quran contains several passages that state that to be involved in riba is equal to declaring war on Peace Be Upon Him (PBUH) Allah. This is serious. But what is this riba exactly? It is basically the ‘rent’ that is paid on the borrowing of money, and is forbidden in the Islamic faith. Whereas paying rent on a tangible item, such as a house, is acceptable. Profit exists but must be made in an acceptable way, as laid out in the holy Quran. Let’s take the analogy of eating Halal, which is a term that refers to how food is slaughtered and prepared that adheres to Islamic Halal laws. The Jews have a similar concept, that food must be slaughtered and prepared to Kosher laws. In terms of riba, then, we can say that business or trade is conducted, and profit is made, but it is HOW the profit is made that is the issue here with riba and Islamic beliefs. Muslims and Jews might process their food differently, but at the end of the day, they all eat; Similarly, we can say that financial transactions are incited and profits are made, just in a different way than what we are used to in a Judaeo-Christian culture.
The best and easiest way to avoid riba, or avoid paying interest, is to pay cash for consumer goods. For example, one would pay hard cash for a new car or new shoes or a new bike. This makes sense, but how about a house? Houses haven’t been anywhere close to the cost of a car for over 30 years...not easy for someone to pay half a million dollars for a home. So, what does one do in Canada to avoid riba but become a home owner?
I learned today that Muslims in Calgary (and the rest of Canada and the US) can have an option to only being able to pay cash for a house, thanks to a company that has been in existence since about 2008 in North America. Mr. Shoeb M. Sharieff, President of the non-profit organization Ijara Community Development Corp, explained in detail for two hours how this works. Very interesting, to be sure, but if not a bit complicated to the uninitiated ear. For starters, the home purchasing process is almost the same as if dealing with a home buyer working with a standard bank in Canada or an independent mortgage broker. The big difference is that the Muslim buyer who wants to avoid riba and uphold Sharia law in his or her personal life, will either pay cash or obtain pre-approval from a company such as ijarausa.com. This kind of financial institute sets up a trust account that acts as a middle entity to deal with the interest, so relieving the Muslim buyer from entering a financial transaction that involves paying riba. Furthermore, a Muslim family wanting to buy a home and only has $250 000 saved, which won’t buy you much in Calgary, can work with a company like this to leverage borrowing to purchase a home double or triple what they have as cash savings. This is very interesting and worth while news, as many Muslims who want to avoid riba would be limited by what their cash savings amounted to.
Today I gained valuable cultural awareness of a community that exists in Calgary and as a real estate professional obtained the basic understanding of a useful service that I can suggest to a future client, should I come across a Muslim home buyer who is limited by his cash holdings. I am very glad I attended this event today.
Thank you for your time reading this post and if you have further questions or need more information about this blog content, please contact Mr. Sharieff, firstname.lastname@example.org or visit their website www.ijaracdc.com.
Of course, if you require a free home evaluation, please contact Karen Patterson Real Estate, email@example.com. Thank you!
My mother, Elizabeth, sitting in front of the King Ranch Homestead, Millarville, AB ca. 1941
"It is not easy to be a pioneer - but oh, it is facinating! I would not trade one moment, even the worst moment, for all the riches in the world"
- Elizabeth Blackwell, British but notably the first woman to receive a medical degree in the US.
Dower Consent comes up in many real estate transactions here in Alberta. I thought I would write a quick 'nutshell' explanation of what it is and include some important points to know when dealing with Dower in a real estate transaction. I strongly suggest that if this blog post does not fully answer your questions or you still need more information, that you speak directly with your lawyer, as he will know best and have the legal authority to properly guide you.
To begin with, theDower Actexists in Alberta in order to give the married spouse who is not on title certain rights to the homestead. Historically, the Dower Act came about as a response to protecting the rights of a dependent spouse on the working bread winner spouse. For instance, a pioneering man and his wife who set up a ranch or home in the countryside, she as a stay at home wife would be dependent on her husband's ranching business for survival. The Dower Act outlines the rights and protects the married spouse at time of sale, as she has the right to give permission to her husband to sell the marital home.
Today, however, Dower can apply to any home sale transaction where there is only one person's name on the title, regardless of occupation and gender. The Dower Consent question will come up usually at time of listing a property, and your trusted realtor should ask the following questions of you:
1. Are you legally married? NB: also includes separated but not yet legally divorced couples, but DOES NOT apply to common law living relationships;
2. Have you or your spouse resided on the property at any time since your marriage?
If you answer yes to these two questions, and there is only person's name on the title, then the spouse whose name is not on the title will need to arrange to have a Dower Consent form signed and will have to sign the Exclusive Seller Representation Agreement in order to have the property listed for sale in Alberta.
The Dower Consent form must be signed and submitted prior to listing, as it should accompany the other listing paperwork. Additionally, you can arrange to have this form signed either by a lawyer or by a notary public (such as at an Alberta registry in Calgary). The lawyer does not have to draft a special form, the form from the Alberta Real Estate Association that your real estate agent will supply you with is perfect for this process.
Again, if you require more information, please contact your lawyer.
Thank you for your time and contact me today if you require a FREEhome evaluation!
"Owning a home is a keystone of wealth ... both financial affluence and emotional security"
- Suze Orman, Author/Financial Advisor and Motivational Speaker, US
Starting this month, I am going to write a quick blog about the market and include what Cliff Stevenson of the Calgary Real Estate Board (CREB) publishes in the way of a monthly video. The next one will come in early November and will feature the October housing stats. I feel that this video captures the essence of the market in a real, easy to understand way.
The message for September highlights two things: one is that detached housing sales are steady and showing quite a different market characteristic than they were a few months ago, especially when compared to other styles. Even though we can blanket the city as a 'buyer's market', however, there are pockets of seller's markets throughout the city, just really depends on the style, location and price point of what you are looking for.
Moreover, the market for most of 2016 has been unpredictable, as a result of the wonky economy that has characterized much of Alberta in 2015 and 2016, not to mention the wild fires in Fort McMurray back in May. These factors are all related, and have had an ifluence on our housing market, to be sure.
I hope everyone reading this has had a good Thanksgiving celebration with friends and family, and that we can be thankful for all that we do have in our lives. Regardless of what is going on in the financial world around you and your family, take the time to enjoy each others's company and enjoy a delicious home cooked meal together.
Please contact me directly should you require a free home evaluation - regardless of size, style or location - with absolutely no obligation.
Thank you for your time and feel free to share this message to anyone you know who might benefit.
"Real estate cannot be lost or stolen, nor can it be taken away. Purchased with common sense, paid for in full, and managed with reasonable care, it's the safest investment in the world" - Franklin D. Roosevelt
Not really news at this point, but we are definitely still in a buyer’s market across the city of Calgary, let a lone the province. I will speak of only Calgary as that is where I conduct my real estate practice, although I am licensed for all of Alberta. Just to review, a buyer’s market is characterized by the following:
High level of supply (inventory of homes to buy) with a low(er) level of demand (less buyers making offers);
Absorption rate: number of months it would take to sell off every property starting today if no new properties came on to market;
Seller might have to list at a lower price than during a seller’s market when absorption rate is high;
Buyers can be picky and choosy;
Buyers can / will wait for the right one;
Buyers have the negotiation power;
Buyers less likely to engage in multiple offer situations
What this can mean, depending on who you speak to, is that it is a great time to purchase properties, but not the best time to sell. So, if someone has the means to purchase an investment property or two, now would be a good time to do it. (I would strongly suggest first talking to your personal accountant/mortgage broker/bank before running out and adding stock to your property portfolio).
Perhaps you are a landlord looking to expand his/her rental property portfolio or would like to take advantage of the buyer’s market and start a property investment portfolio. With interest rates so low, it is a good time and lots to choose from, somewhat of a smorgasbord to choose from in terms of inventory, style selection, price point, locations, etc. However, property investors looking for new rentals should know that the high end corporate executive rental market has fallen off, it isn’t anywhere close to what it was in 2012-2014, or even 2015. Many landlords in Calgary have had to take a hit of 20-30% or so from rents asked 18 months earlier. Sure, the corporate market will pick up, however, when that happens we aren’t sure. You can go onto www.rentfaster.ca and see how many homes are for rent in a particular style or community.
Taking the balanced route is a good way to purchase in this market, especially as there is no real forecasted recovery in sight until end of 2017 or into 2018. Spread the risk in the mid level, where you capture the largest resale buyer audience and the rental market. Kind of like playing a swift game of Monopoly = you don’t want to just end up with Park Avenue and Boardwalk, you want to spread the risk. Too expensive to maintain, where as other properties on the board are easier to maintain, and still reap rewards. Investing in the city during this market condition, or any market, isn’t much different. Let’s take a closer look at some useful calculation tools.
Loan to Value Ratio:
A ratio comparison between the value of your loan and the value of your home. To determine your LTV, your lender will divide your loan amount by the lesser of the home's appraised value or purchase price. For example: Buyer puts down $75 000 on a $500 000 home; LTV ratio would be 85% required loan to complete the purchase. The higher the LTV, the more risk involved for the lender.
The bank could ask for a home appraisal be conducted to assess the value of the home prior to providing financing. For more information or to calculate your LTV, contact your mortgage broker or banker.
The Capitalization Rate:
The capitalization rate, also known as the cap rate, is useful in evaluating and assessing a real estate investment. It is the rate of return on a real estate investment property based on the income that the property is expected to generate. The capitalization rate is used to estimate the investor's potential return on his or her investment.
I hope that this article has been of help, and has armed you with some food for thought regarding how to make the most of your investments in our present market conditions. Feel free to contact me directly if you have any further questions or need more information, or would like a free home evaluation.
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For your Calgary real estate needs, you can search listings at your own convenience, browse reports, and read up on real estate info right here on my website. When you are ready to see a listing in person, or have questions, please contact me! As a local Calgary realtor, I can recommend the best options to suit your needs.
Data supplied by CREB®’s MLS ® System. CREB® is the owner of the copyright in its MLS® System. The Listing data is deemed reliable but is not guaranteed accurate by CREB®.
The trademarks MLS®, Multiple Listing Service® and the associated logos are owned by The Canadian Real Estate Association (CREA) and identify the quality of services provided by real estate professionals who are members of CREA. Used under license.
The trademarks REALTOR®, REALTORS®, and the REALTOR® logo are controlled by The Canadian Real Estate Association (CREA) and identify real estate professionals who are members of CREA. Used under license.