Can you spot the former grow-op?

What do you think?
Have a look at the following pics and decide which of them is a former grow-operation.

That was four different homes. Need more clues?
Ok, here are more pics from the same houses (in the same sequence of house, as the first lot).

If you picked house 1 - you were right!
If you picked house 2 - you were right!
If you picked house 3 - you were also right!
And if you picked house 4, yep, you were right. They were all former grow-ops!

Just by looking at the pictures, it's unlikely that you can tell.
And without the help of an experienced Realtor or professional home inspector, you the buyer might be unaware of what it is you're getting yourself into.

Now, the home may well indeed be completely re-mediated and back to a normal house, but wouldn't you want someone on your team who knows where and what to check to help address your concerns?

The above pics were from "declared" former grow-ops, where the listing Realtor declared it in the Broker's comments. By law, the listing Realtor is obligated to disclose this kind of information if it's shared with him/her. But what if the seller chose not to disclose this information to their own Realtor? That's why you really need a Realtor working on your behalf.

If you're the buyer and decide that you're going to deal directly with the seller's agent instead of getting your own agent to represent and protect your interests, thinking you're going to save a few bucks in a reduced commission, that decision could end up costing you far, far more in the long run.

Perils in the Current Real Estate Market

The real estate market has been and currently is changing. A rising market can be a little more forgiving if you over-price your house. But that's not the market that we face today. And often times, a falling market is only visible/recognizable once the statistics roll in.

What is my home worth in today's market?

 One of the most frequently heard questions in real estate is home owners wondering what their home is worth in today's market.

 

Renovations that Matter?

Just recently, I was asked about the possible improvement in resale value if the home owner replaced the windows. Actually, I was asked this very question twice in the last 3 months.

The bottom line is that you won't get your money back.

According to CMHC (Canada Mortgage and Housing), you can expect to recoup about 50-75% of the value of the windows through the sale of the property.
Do you want to see the expected returns on other various renovations?  Here's the link.

Rarely does anything provide a better return on your investment when selling a home, than fresh paint and de-cluttering.While they may not translate directly to a bottom line improvement ($$), they will likely decrease the time your home spends sitting on the market. De-cluttering makes your house look larger (and cleaner and better kept). And new paint is fresh and inviting. (and *essential* if the seller was smoker!). Shampooing the broadloom would be next on the list.
Ditto for cleaning the windows.

Dirty windows draw your eyes to the windows.
Clean windows draw your eyes to the view.

Let's say you're living in an older home and several items could use updating.
You choose the windows. And upgrade them.
And then list the house.
I bring a buyer's offer that's less than you want.

You tell me the windows are new(er).
I point to the furnace.
You fix or upgrade the furnace.
I point to the roof.
You fix or upgrade the roof.
I point to the [fill in the blank]......get the idea?

Basically, working for the Buyer, I'm going to point at whatever you *haven't* renovated/upgraded as a justification of my offer price.

And if you tell me they're top-rated "xyz windows", I'll tell you my Buyer had a bad experience with that brand. And they prefer "brand uvwx"

If you tell me the shingles are 100-year shingles, I'll tell you that my Buyer isn't going to live that long and doesn't see the value. (by the way, unless you're planning to live there for the duration, anything more than the standard-life shingle is money you won't get back - unless of course, the rest of the neighbourhood is Marley-roof, then you'd be wise to do likewise.)

On other items that are tied to people's tastes and opinions
- you put in new broadloom, they want hardwood.
- you put in modern, above-counter sinks, they want traditional
- you put in gas fireplace, they prefer wood-burning.

Don't do upgrades that can narrow the types of buyers that look at your house. You want your house to appeal to the broadest range of buyers possible. What they do to it afterwards, is their business!

Like I said - Fresh paint and de-clutter (and clean windows)!

The Days of "Anything Goes" Are Over

Unless you've been on Mars or abducted by aliens or marching in a "Leafs are going to win the Cup" parade, you're aware that the real estate market is changing, has been changing and looks to continue changing.

The monthly sales figure are trending downward and the sales-to-listing ratios clearly show the days of a Seller's market are pretty much a thing of the past. (these are very distinct, defined ranges in these ratios to give us the definition of a Seller's Market, Balanced Market and Buyer's Market - we don't just make these tags up and apply them whimsically).

In the heady past few years of selling homes, you could pretty much throw anything into the market and it would get gobbled up, often times, in a feeding frenzy of buyers. But now, Realtors are going to have to work a little bit harder in order to get their listings sold. There's more Seller competition for fewer Buyers.

As a result, I see us heading back towards the "polished apple" metaphor. When buyers come across two comparable properties, similarly priced, most often, they're going to choose the "most polished one".
It's been my experience that most Buyers buy up into the upper end of their mortgage bracket, leaving little money, if any (at least for the first several years) for major improvements. They're looking for homes that have all this stuff already done for them!

Note that even in the recent frenzied market, this was still the case, but wasn't that apparent because the plethora of buyers would have fewer homes to choose from and buy up the "less polished homes" right away, too!

Now, with more choices, Buyers can afford to take a bit more time and pick and choose through the selection.

And that brings me to the Realtor. In this new market, the Realtor has to roll up their sleeves and hopefully get more cooperation from the Seller in "polishing that apple".

Things like de-cluttering, cleaning, sprucing up and home staging are going to play more significant roles as differentiators in which houses sell first......or at all!

And the Realtors who are savvy enough to recognize this change, and work with their Sellers to apply some elbow grease to make it look like a "cut above" the competition, are the ones who are going to get top results.
Insist that your Realtor brings more to the table than just a "For Sale" sign for your lawn and a lockbox for your front door.

Avoid the "reverse bidding war"

For over 5-6 months now, I've been watching a hugely over-priced listing in an area that I work in, to help me determine if it's as hugely over priced as I thought it was, or whether I was mis-reading either the market, the neighbourhood, that house or any of the above combination.

Thus far, this house has been *reduced* by over $300,000 in the time it's been on the market - all by the same Realtor, by the way. (that doesn't make it a bargain - it was never worth that much!)

What happens when a house like that first hits the market is that other homeowners, who feel they have a comparable home or live in a comparable area expect you to price their house in a CMA (Comparable Market Analysis) in the similar range. But as I have to remind homeowners, it's not what a house lists for, it's what it sells for that matters. I can list ANY house for one million dollars but that doesn't make it worth that much! Until a buyer agrees *and* pays that amount, it's wishful thinking.

So what happens when a Seller deliberately goes "fishing" to hugely over-price their home in the hopes that they find someone who hasn't done their homework on surrounding prices and makes them an offer?
The house sits on the market.
And sits.
And becomes known in the business as a "stale listing".
Even Realtors don't show it because it's not in line with local comparables.
So finally the Sellers agree to a price reduction. But relative to how wildly out of range it is, it's still not realistically priced.
So the Sellers have wasted all this time on the market (but not *in* the market) with an unrealistically priced house.
In the meantime, the market itself has been changing. It's been turning more to a Buyer's market.

And then the real kick-in-the-teeth occurs.

Another house in the immediate neighbourhood comes on the market in direct competition!

There are few things worse than that to happen to a Seller.
Unless of course, that competing Seller happens to be *very* motivated.

So the first Seller had all this time on the market, in a decent Seller's market and squandered it.
And now direct competition to their own listing has appeared.

Could it get worse?
Sure.
Suppose the second Sellers are really motivated - I.e. they're splitting up and want a quick sale to divest their assets? Or suppose it's an estate sale and the executor is looking for a quick sale to wrap up the estate?
Now they're going to be lowering their price in the hopes of landing one of the fewer Buyers currently on the market.

Now if the first Seller gets more serious about selling, they're going to reduce their price to compete.
And now the reverse bidding war is on.
Two Sellers, trying to out-lower the price on their house, to attract that elusive buyer.

And when a Buyer appears with a savvy Buyer-Agent, they're going to notice what's been going on with the prices of these houses. And out comes the dreaded low-ball offers to see which Seller is hungrier.

So now, the original Seller is likely looking at selling their place for considerably less money than if they had
a) listed it realistically in the first place months ago,
b) with no local competition and
c) in what was a stronger market.

No one can predict which neighbours are planning to list or when.
No one can predict the changes in a market.
One has to consider ALL of the variables that affect housing prices when they list and it's up to a responsible, informed Realtor to help provide that information to their Sellers to help them get the best price for their house.

Why going the "extra mile" matters

Nowadays, it's become common practice in real estate transactions around the GTA (Greater Toronto Area) to simply fax an offer into the listing agent's office and wait for the results. I admit that on occasion, I've been guilty of doing that too. However, in the cases where the sellers request all offers by fax, you have no choice.

The other night, I was involved with a buyer, making an offer on a place and it required a good amount of driving. I could have saved a lot of time by faxing the offer to her, walking her through the signatures over the phone and then faxing it to the listing agent.

But here's why it can make a difference between winning and losing.
We were in competition with another offer, from another buyer-broker.
They chose to fax in their offer.

It turns out that both offers were very similar.
But we won! They chose us!
Why?
According to the seller's agent, since we presented in person, they chose to work with us and we hammered out the final few details and my client scored a gorgeous new home.
The deciding factor was that were there in person, and able to work out the final details then and there.

So driving those extra miles turned out to be the difference maker for my client.

Comparing Canadian vs. U.S. mortgage defaults

From an article from the Toronto Real Estate Board......

Who benefits from a rising or falling market?

There are 3 types of market in real estate - a seller's market, a buyer's market and a balanced market.
In a seller's market, demand exceed supply and often times buyers are willing to over-pay for a house, driving prices up.
In a buyer's market, supply exceeds demand and sellers compete for fewer buyers, driving prices down.
In a balanced market, supply and demand are roughly equal, and there's a healthy balance of buyers and sellers in the market place.

A seller's market is more advantageous to people who are buying down (price-wise) or people who are exiting the market (I.e.  moving to another geography or seniors moving into a retirement home or rental housing etc.).

And conversely, a buyer's market is more advantageous to people who are buying up (price-wise) or people who are first time buyers.

Let me explain.

In a seller's market, a seller is often times going to get a better price than normal, for the sale of your house.
In the case of someone buying down (I.e. "empty-nesters"), they're looking for a smaller, less expensive place as their next place to live.
 
For the purposes of this example, let's say in a seller's market, all houses are selling at a 10% premium compared to a normal, "balanced" market.
The Smiths live in a nice 4 bedroom home, which in a balanced market, is worth $500,000.
So a $500,000 home sells for $550,000 in this seller's market.

The Smiths are empty-nesters and want something smaller so they are buying down to a house normally priced at $300,000, and in this seller's market, sells for $330,000.
So the Smiths made an extra $50,000 on the sale of their home and paid an extra $30,000 on their new home. The net difference is $50,000 minus $30,000 equals a gain-in-pocket of $20,000.

Let's look at the buyer's market.
For the sake of discussion, let says all homes are selling at a discount of 10%.
If the Smiths were buying up in this market, they would sell their $500,000 at $450,000.
If they're buying up to a house normally priced at $750,000, they purchase it at $675,000.
So by buying up in a buyer's market, although the Smiths "lost" $50,000 on the sale of their house, they far more than made up for it by saving $75,000 on their new house purchase!
The net difference is they saved $75,000 on their new house price, despite losing $50,000 on their current house price, making a net gain in their favour of $25,000!

And if you were a first time buyer coming into the market in a buyer's market, in this example, you bought your new house at a 10% discount, right off the bat!

So in this changing market, if the signs continue to indicate a buyers market, for those of you wanting a little bit more house, this is clearly this time to do it.

Recent articles in the media

Handing down the family cottage - Not a simple case of inheritance. The government wants a piece.

Is a cottage a good investment? - Your best bet is to buy because *you* want to use it!

How about a cottage slice? - When a full exclusive cottage might be too much for you.


Parkwood Estate in Oshawa - Designed by the same group that designed the Royal Ontario Museum.


The Brickworks - Going forward

The bar has been raised - new rules put home ownership out of range of many

More listings = more choices - Good news for buyers!

Moving Mayhem!

Interesting article in today's Star about a police bust of a family of movers who were ripping people off.
Just like pretty much everything else these days, if it sounds too good to be true, it likely is just that. I always suggest to my clients that one of the best ways to select a moving company is to a) ask your friends for a referral - they'll know from experience and b) check for complaints registered with the Better Business Bureau.
A move in itself is stressful enough. Having your furniture held for ransom is more than anyone needs.

A neighbourhood for every budget

Yesterday, my wife Marg, and I went for a drive though some neighbourhoods in the west end for a change. Call it a hobby - we enjoy driving through different neighbourhoods as well as the open countryside.

Yesterday's destination was the Oakville area west of Ford Drive and south of Royal Windsor and the 403.
While browsing the TREB system for some noteworthy homes and areas, the following area caught my eye.
Why?

Because in that one area - denoted by the multiple push pins - there are 100 detached homes on the market, currently listed at $2 MILLION or higher!

I was pretty surprised to see that many homes in that price range on the market in one area.

That struck me as odd. But touring an area loaded with $2+ million dollar homes was still of interest so away we went. It was a perfect day for a drive - cloudy, with rain on and off, which made for light traffic.

When we got there, we drove up and down various streets, even parked and took a walk here and there on lake-front promenades to see the back sides of some of these gorgeous homes and their lake views.

Gorgeous homes. Gorgeous neighbourhoods.
So why do so many of them want out?
Well, only two reasons come to mind.
a) financial issues or
b) objection over the construction of the coming natural gas power plant which is slated to be built across from the Ford plant on Royal Windsor.

And from the large number of signs on resident lawns objecting to the gas power plant, I'm guessing that they're leaving because of the natural gas plant - although it's scheduled to be in operation less than 40% of the time because it's intended to provide additional power at times of peak demand only.

Just like the stock market, the best time to buy is when everyone else is selling.
And the best time to sell is when everyone else is buying.

So if you want to get a good deal on a house in the $2 million range, I'd be happy to show you any one of the 100+ homes for sale in that price range in eastern Oakville.

Apple "Mc-figures" it out!

This isn't real estate related, per se, but just an observation du jour.

I just read in the (online) "paper" about how some schools in the U.S. are giving iPads to students instead of text books. Talk about a "green" solution! No paper wasted printing all those text books that have a limited usefulness. No aching backs making kids carry all that extra weight around. And publishing costs should go down considerably. (wishful thinking?)

So you have to give Apple credit for figuring out what McDonald's has known for years. Create customers at the earliest age and you keep them for life.

You put that Apple brand in front of school kids and they're going to come to rely on that brand.  It becomes embedded in their minds from seeing it day after day in their text reader.
For what else? iPods, iPhones, laptops.......ebooks, downloading music, movies........

Just brilliant!

Buyers deserve the demographics

I scratch my head these days when I hear stories of buyers purchasing a home and then being surprised at either the income level or the demographics; that it's "not what we were looking for".

How can that be?

As a Realtor working in the GTA and province of Ontario, we have access to some pretty informative and detailed information just like that. And since it's available to all Ontario Realtors, I can only surmise that this issue/question arises is because other Realtors either don't know about these tools or can't be bothered to use them.

Neither one is an acceptable excuse in my opinion.
As a professional, it's up to you to learn and understand all of the tools that are available to you in your business, whatever business that may be. How else can you call yourself a "professional"?

And if you can't be bothered to use these additional tools to understand things like the demographics of the area in which you're selling a house, then you're not servicing your clients to the best of your abilities and also leaving yourself open to a lawsuit.

When you buy a house from me, you're going to learn at least the following information about your area, as compared to the the larger postal area as compared to the city overall:

• average income
• proportions of white vs. grey. vs. blue collar workers
• education breakdown
• top ethnicities
• top religions
• top langauges
• proportions of renters vs. owners

If you were buying an home and this information were readily available, wouldn't you want to be able to review it prior to making a purchase decision of this magnitude?

When choosing a Realtor to help you, dig a little deeper to find one that's willing to really roll up their sleeves to help you make a solid decision.

Q1 2010 was a record-breaker!

So the numbers are in and they indicate that for the Toronto Real Estate Board, Q1 2010 was a record breaker for total sales. March sales hit 10,430 transactions to push the Q1 total to 22,418 sales.  The average price of a home in the GTA in March was $434,696 but the increase is expected to slow over the remainder of the year as more listings come into the market, giving buyers more choices.

The sales were broken down across these major housing types

Detached homes: 47.6%
Condo apartments: 23.1%
Semi-detached: 11.9%
Condo townhouses: 8.0%
with the remaining 9.4% of sales accounting for sales of  Links, Row-Houses, Detached Condos and Co-op apartments

The highest sale price for a detached home in March goes to 45 Bayview Ridge, which sold for $12,825,000 (6+1 bedrooms, 10 bathrooms, 235x666ft lot with annual taxes of $76,045)
And the bargoon of March for a detached home goes to a home in Gamebridge, ON (near Beaverton) which sold for $45,000 (1 bedroom, 1 bath house on a 66x144ft lot with annual taxes of $1,400)

And 10,428 other sales in between!

Condominiums - know what you're buying!

There was an article in the papers recently that advised condo buyers to pay close attention to the condo rules of any particular condominium that they're interested in.

 

And it spurred me into this "there's even more to it" posting.

When you're buying a condo, you should be checking out that particular unit's location in the same way that you would a house's location. Where is the unit located within the building itself? Are you noise sensitive? Then you likely wouldn't want a unit that abuts the elevator shafts or the garbage chutes. You're going to hear those at all hours despite "house rules" on when people should use the garbage chute.

 

Take a walk through the underground parking garage and above ground lot, too. Take notice of what kinds of cars are parked there so you can get even a ballpark idea of the income levels of your neighbours.

 

If your unit is on the back side of the building, is it situated close to where the garbage truck will be coming to pick up the dumpster? If you works shifts or like sleeping in, that noise may be a concern for you.

 

Likewise, if you like sleeping in, if your bedroom is going to face the sunrise, maybe that's not right up your alley.

 

There's even more than this to consider, but I just wanted to put the bug in your ear.

 

It's important that when you're making a significant buying decision such as a real estate purchase, that you have a Realtor working in your corner and working towards YOUR best interests. We're not all the same.

Real estate topics in the news

Here are some links from recent media sites on real estate-related topics.


Are we over-spending on our homes?
http://www.theglobeandmail.com/report-on-business/many-struggle-to-afford-their-homes/article1516948/

The rate hike(s) begin
http://www.theglobeandmail.com/report-on-business/mortgage-rate-boost-signals-rock-bottom-era-is-over/article1516497/

Balancing your debt
http://www.theglobeandmail.com/globe-investor/personal-finance/home-cents/how-to-avoid-taking-on-too-much-mortgage-debt/article1471079/

Worthwhile read on buying a condo - they're not all the same, with respect to the condo rules and regulations. Knowing what you can and cannot do before you make an offer will save you a lot of headaches and grief down the road.
http://www.nationalpost.com/homes/story.html?id=2730383

Interest Rate Rise Coming

You can't really say that anyone who "predicted" the upcoming interest rate increase had foresight.
I mean, come on, they've been at historically record low levels for how long now? Did anyone really think they were going to go all they way to zero? They had only one direction in which to go! That's like someone "predicting" the stock market would drop while it was at record high levels. It's inevitable in both cases.

The historical average rate for interest has been around 7% so you can see that we've had it pretty darn good for quite awhile and now is the time to lock in your rates with a 5 year term.

In today's Star, they're calling for increases as needed to keep inflation in check.
Same thing in GlobeInvestorGold. 

So, thinking of waiting? Got better things to do?
Thinking of putting off the purchase of your next house?

What's it going to cost you?
Per $100,000 of mortgage,

• @ 3%, your monthly payment is about $473.25
• @ 4%, your monthly payment is about $526.00
• @ 7%, your monthly payment is about $700.42

Now granted, interest rates are highly unlikely to skyrocket over night, but it's definitely within reason to see rates rise to 7% within 5 years. So ask yourself, can your finances handle it if your mortgage payment almost doubles in 5 years?

Call me if you want to know of a few good mortgage brokers. Steven 905-831-9500
Lock in now and sleep well.

Restrictions for First-Time Buyers

As mentioned several times previously, here in my blog, the media is saying that Canada's Finance Minister Jim Flaherty is set to table new rules today with restrictions on mortgage restrictions/qualifications for first-time buyers.
Most likely, we can expect to say goodbye to amortizations over 35 years and purchases with less than 5% down.
See this article in The Star.
Also, in the Globe and Mail.
And in the Financial Post.

Wednesday, February 17, 2010
More details From The Star 
In the Financial Post, they're writing "Don't worry - the rules can still be bent" and that the "changes target reckless buyers"










 

Recent Real Estate in the News

Some interesting reads in the area of real estate.......

Ottawa weighs stricter mortgage rules - Globe & Mail

The Wealthy Barber on carrying debt - Globe & Mail

Article on suggested mortgage restrictions/limits hints that the restrictions would be better off aimed at "who" rather than "what"

Riding the low interest rates - The Star

Where have the listings gone?

While working on my regular mailings, I was providing a client with a comparison of the number of homes on the market this past January versus January 2009 and I was quite surprised by just how much of a difference exists between this year and last year. Here's an example:

In TREB district N03,
2009

• 232 homes on the market
• 25 sold
• average price $600,000
• average sale as a percent of list price: 94%

2010

• 93 homes on the market
• 36 sold
• average price $639,500
• average sale as a percent of list price: 100%

That means there were a whopping 60% fewer homes on the market in N03!
I know there's been an overall shortage of inventory across the GTA (on the order of 40% less, on average). So far, I have been unable to find any plausible reason to explain this, nor have I come across anything like that in TREB or in the media in general.

The smaller "inventory" means more buyer competition, hence the average house sold for LIST PRICE last month in N03!

Look at N06
2009

• 170 homes on the market
• 13 sold
• average price $464,596
• average sale as a percent of list price: 95%

2010

• 81 homes on the market - a 53% decrease in available inventory
• 21 sold
• average price $649,929 - that's a whopping 40% increase in average price!
• average sale as a percent of list price: 98%

 Stay tuned

Advertising in a changing world

As I twittered earlier today, it's a changing world with respect to TV ads. This link in the Toronto Star indicates that consumers are increasingly tuning out commercials.

Personally, I can attest to that because we often record our preferred shows and watch the recorded version so we can fast forward past the commercials. Some TV stations are just nuts with frequent commercials. Others string a seemingly huge number of them together. In an average hour-long TV show, 15-20 minutes is often credits & commercials.  Zzzzzzzoom right past it all!

Which leads me to my next point on printed ads. It's been my experience over the last several years that they too, are dying a slow death, especially real estate ads. People just aren't looking at 1x2" photos of houses in newspapers anymore. Statistically, over 80% first start looking at houses online! It's no mystery why. Larger photos, more photos, more details and dimensions etc.

And since high-speed Internet is widely available *and* current, consumers are looking at properties almost as soon as they hit the market, not on a printed-media publishing/distribution schedule. If you look at what's hot and current - it's products and/or technologies that have instant contact - text messaging, email, cell phones, Twitter and the web in general.

As a Realtor, for far less than the cost of a single ad printed and distributed in a newspaper to a specific geographical market, I can create a dedicated website for that house with unlimited photos, details and global access *and* have it online for TWELVE MONTHS!

If you're selling your house, which kind of market penetration/coverage would you rather have? And that's just one of numerous things I do to market a house.

I find that many Realtors simply do what they've always done to sell a house (or what older Realtors have always done) - despite the fact that marketing and advertising media is changing in a big way. Some don't even believe in websites!

When you're thinking of hiring a Realtor to look after your best interests, be sure to ask them enough questions so you can determine that what they'll be doing to sell your house will help maximize buyer interest and return the best possible price to you.