Real Estate Blog of Steve Dickie, Broker

Here we are well on our way into December – into what we call the winter market.  If you live in an area like I do, real estate is very seasonal.  If I look at my town specifically, the number of sales that happen in December are usually in the 1 to 2 range whereas in August it’s more likely 5 to 8.  If I open up the search to a broader area to get some higher sample numbers, the ratios are about the same; the best month is about 3 to 4 times better than the worst month.

Part of this has to do with the fact that there is a lot of cottage business in this area, and people just don’t look at waterfront property in January.  Another factor is that even for full time houses, you can’t get a good idea of what the grounds/yard is like in the winter.

There’s also the notion that it’s just not as nice to move in the winter.  I don’t know about you, but I’d rather be doing heaving lifting in January than I would in July, but that’s just me.  There’s the other factor that if you drop a box of dishes in the deep snow, it’s not as likely to break as if it had been on the bare ground!  No?  You’re not buying that one eh.

Whatever the reasons are, things just about grind to a halt for December and January.  I think the Christmas season deters half the people and New Year’s hangovers deter the rest.

However, one interesting tidbit of information comes out of all this.  People still move in the winter.  Who are they and why are they doing it?  Here’s my theory.  At any point in time, there’s a certain group of people who have to move.  It might be a job change or a financial need or some other driver, but if they’re starting their search in January, they must have a good reason.  Presumably, they are out there all year long, we just don’t notice them in the summer.  However, it just goes to show you that a lot – up to 75% – of real estate transactions are “optional”, at least at the time they happen.  Most people don’t have to move when they do.

If you are one of the lucky ones who have their home listed in the winter, take heart.  The competition is lower and the buyers out there looking are more serious than the summertime buyers.  Remember, they have to move too.  In the winter, there are some tips that will help set your house apart from the competition.

Winter Selling Tips

1. Make sure the snow is cleared, the walk is sanded/salted and everything outside looks as neat and tidy as it can.  There isn’t grass to cut, but a well cleared drive and walk can look just as attractive as a nice lawn and gardens.  And if you have a pet, and it’s getting into spring, and the snow is starting to melt – clean up the piles in the back yard.
2. Keep it warm inside for showings.  If you have a programmable thermostat that cools the house down during the day when you’re not there, disable it for showing days.  When people come in out of the cold to see their new house, the want it warm and inviting.  If it’s an evening showing and you’re just stepping out for an hour or so, make sure the gas fireplace is on if you have one.
3. Particularly in the winter, if you’re having an evening showing, make sure all the lights are on, including the outside lights.  Don’t make the showing REALTOR® go fumbling around in the dark trying to find your light switches.
4. Keep the For Sale sign cleared out so people driving by can see that your house is for sale.
5. Encourage your agent to take winter pictures of your property.  Those pics they took back in the summer with all the green may look great, but they advertise the fact that your property has been on the market for months.

Winter Buying Tips

1. Take a look for icicles.  Winter is a great time to see what the roof insulation is like.  I’ve seen some houses with icicles reaching from the second floor down to the ground.  Not a good sign.  A certain amount of ice is normal.  When it’s just below freezing and the sun gets on the roof, the snow is going to melt and icicles are going to form.  That’s normal.  However large icicles indicate that a lot of heat is escaping from the house and melting the snow.  That’s bad.
2. When you’re inside the house, check for condensation around the windows.  If there’s a lot, the humidity could be too high in the house and that could lead to mold.
3. Put you hand in front of a receptacle and see if you can feel cold air pouring in.  If so, the vapour barrier is likely ripped or non-existent.
4. Pay close attention as you walk through the house to see if you find it drafty.  The home should feel comfortably warm.  If one room is hot and others are cool, there could be a heat circulation issue.
5. And just a note on the practical side – get some boots that you slip on and off easily.  Having a ton of laces to tie and untie every time you go through a house is a pain.

Real estate in the winter can be fun if you’re prepared.  And if your REALTOR® doesn’t offer to go through the drive-thru and pick you up a hot beverage, give them a piece of your mind.

Enjoy and keep warm.

Steve

Royal LePage announces new mobile site with GPS support and local info.  Release info as follows…

No need to download an app, just go to www.royallepage.ca on your smart phone and you will automatically be directed to the mobile site and you can start to use it right away.

Steve

Recently a news story aired on CBC talking about a situation where a new home owner was faced with at $50,000 repair bill for water damage after a leak occurred in the basement of his home.  He had recently purchased the home and the seller had stated that there were no known water issues.  However, it turns out that the previous owner did have a leak problem in the basement but had it repaired.

Now the law in B.C. states that if you’ve had a problem repaired, you don’t have a problem anymore and therefore don’t have to disclose it.  The logic here is that over the life of a house, lots of problems will occur and subsequently be repaired.  That’s just the normal flow of events.  Assuming that things have been repaired properly, it shouldn’t indicate that there are any current problems with the home and therefore, don’t need to be disclosed.

In this case, the buyer is upset because the leak occurred again and he’s stuck with the bill.  I’d be frustrated too.

However, who’s at fault here.    If we assume that the seller hired a qualified trades person to do the repair, he’d have every right to believe the problem had been fixed once and for all and therefore, didn’t need to disclose anything.   Ditto for the REALTOR® involved.  However, the CBC report makes it out to sound like the seller and REALTOR® are shady and tried to pull a fast one.  Well sure, that might be the case, but it’s not likely.

Maybe the law needs to change to require home owners to maintain a log of the history of all problems with a house (which of course would have to pass from owner to owner through the years).  We all know that’s not going to happen – and who would put any stock in it anyway.

No, the reality here is that sometimes these things happen.  Things break in houses and normally you can’t predict them.  That may sound harsh, but it’s the risk of home ownership.

Now enter Bob Aaron, a lawyer from Toronto who gives the advice that people should always have a home inspection done by an inspector who has infra-red technology since it can find some of these defects.  Good grief Bob.  Do you know how many inspectors have this technology?  Not many.  And it’s often prohibitively expensive.  I heard one report that a single picture from an infra-red camera was an additional $75.00 to the buyer.  And that assumes that they know in advance where to take the picture.  I’m sorry, but I don’t think this is useful advice.

So yes, get a home inspection so that you have a general understanding of the condition of the house.  And be aware that every – yes every house, has issues.  Dealing with those issues, and all the new ones that will crop up during your ownership of the property, is part of owning a house.  And when you fix the issues you find, make sure you fix them well because eventually you’re going to sell that house to someone else.

Steve

Another great example of why you not only shouldn’t believe everything you see on television, you almost shouldn’t believe anything you see on the “news”.  This isn’t the first time I’ve been on the “inside” of an industry that gets a scathing report on some “investigative journalism” show.  Years ago there was a segment, on a what I thought was a well respected news show, about the insurance company where I worked at the time – I honestly can’t even remember now what the controversy was, but being someone who worked on the inside, I could see the gross errors and pretty much outright lies in the report.  The hour long interview with the president of the company was condensed down to about a minute of snipets that put him in a very bad light and didn’t reveal any of the background.

Now we have a Global News 16×9 report on the state of the relationship between For Sale By Owner (FSBO) companies and the REALTOR® community.  Fascinating piece of “journalism”.  When you watch it, pay attention to amount of air time that the president of the Toronto Real Estate Board (TREB) gets.

TREB has developed a point by point rebuttal of the things mentioned in the report, and while the rebuttal is correct in its statements, it is lacking in one respect.  It fails to acknowledge that many of the points made in the Global report have a basis in fact. 

What you say?  Steve is agreeing with Global?  No, not by a long shot.  What they have done is focused on the worst of the worst and suggested that the whole industry is that way.  Obviously every industry has its share of unprofessional members – people who don’t follow the rules and give the rest of the people who are actually trying to do a good, honest job a bad name.  Are there agents out there who won’t show FSBO properties?  Of course there are – but not many.  People are people.  Are there bank clerks scamming money, doctors taking kickbacks from drug companies, accountants doing shady practices or lawyers participating in mortgage fraud?  Yes on all accounts.  That doesn’t mean their industries are corrupt or evil, it just means that those people are.

Some of what the Global report states is just plain false.  There’s no secret area on the MLS® system, at least not in my board.  Yes there are some pieces of information that are not disclosed until such time as an offer is on the table.  Things like the property owner name and contact information, but this is dictated to us by Privacy laws.  Information that is pertinent to the property is fully disclosed, in fact, it’s the law that is must be.

The truth of the FSBO topic is this:  In any industry you can either do it yourself or hire a professional.  Home renovation, car repair, tax preparation, legal advice, even medicine for that matter, all offer that choice, as does real estate.  Those people who feel competent to do the work themselves can sometimes save themselves a lot of money by DIY’ing things.  I do the bulk of my home renovations myself because I’ve had a fair amount of experience with it (it also takes me years to complete anything, but that’s another story).  However, when I switched my oil furnace out for a gas model, I hired a professional.  I could have tried it myself, but I probably wouldn’t be sitting here to tell the tale. 

DIY real estate is more akin to selling your car privately.  Sellers who are comfortable with the process are happy to do it and buyers who know cars and know what to look for are happy to engage in a private sale as well.  I personally would never buy a car privately because I don’t know much about cars beyond how to fill up the tank.  As complicated as cars are, houses are more so and much more expensive.  The legal ramifications of purchasing property can be very complex.  That’s why the vast majority of buyers (yes, the people you want to sell your house to) would prefer to work through a trained and licensed real estate professional than buy privately.  And that’s the crux of it.  Real estate sales people and brokers are highly trained and looking out for the best interests of their clients.  In a private sale, nobody is doing that.  We know what questions to ask and what things should be sending up red flags.  That’s what you’re paying the commission for.

And as for the “huge” size of commissions, in my local area, an average total commission on a sale of a house might be around $8,250.  (5% of $165,000).  Holy smoke you say.  Well I sat down as I was writing this and came up with an estimate of the hours involved in a real estate transaction and the expenses required.  Of course it varies wildly based on the complexity of the transaction, but when I took a typical listing in my area along with a typical passage of events to get the house sold, I came up with an hourly rate of about $70.00.  That’s more than my roofer charged me to put a new roof on my cottage, but less than the flooring guy charged to tile and carpet the office.  And that figure doesn’t take into ongoing expenses like mandatory education, licence fees, insurance and the like.  Put in that context, I don’t feel the commission amount is “huge” by any standard.  And trust me, on the individual level, the amount of money that finally filters into my bank account after brokerage fees and commission splits is only a fraction of the total amount.

I have no gripes with someone trying to sell their house on their own.  I have a gripe with people saying that the real estate industry is greedy and superfluous.  The vast majority of REALTORS® offer a valuable service and work hard for the money.  Oh, and by the way, if you do run into a REALTOR® who you think has broken the rules, talk to their broker or contact the Real Estate Council of Ontario and report them.  I don’t want them working in the industry any more than you do.

Steve

Or as I prefer to call it, Marketing for Drips.

I received yet another email in my inbox today trying to convince me to sign up to a drip marketing campaign. It included phrases like ”incorporates a set-it-and-forget-it style contact system” and “Your clients will receive valuable information that positions you as their real estate expert”.  Maybe it’s just me but I don’t see how I can be considered to be a “real estate expert” if all I do is “set-it-and-forget-it”. 

My suspicion is that the bulk of people who use this kind of marketing seldom actually read the pre-canned material that is being sent off to their clients.

Whatever happened to people actually doing the work to create something of value out of their own head.  Now obviously sometimes I come across information from another source that I think is great and I want to pass it on to my clients.  Assuming the permissions are in place, I think that’s great.  But that’s different than having another company prepare canned articles that get sent out under my name. 

I guarantee you that anything you receive from me has either been written by me or has been thoroughly reviewed and recommended by me.

I was reading an article on PropertyWire the other day and was reminded of how differently real estate works in various countries around the world.  In some countries such as Holland, there is no buyer agency; Buyers have to go to the listing brokerage to buy a house.  In the U.K. the level of service is much lower, but so is the commission.  Deals are often done just by a phone call and nothing gets put on paper or signed until weeks after – resulting in things falling apart much more easily.

Here in Ontario, Canada we enjoy (ok, enjoy might be a strong word) um… benefit from, a strong model of agency.  It lays out specifically who is working for who and what the duties are.

The next time you get involved in a real estate transaction in Ontario, one of the first things you should see is a 1 page document called “Working With a REALTOR®”.  I usually introduce it as defining the interactions between REALTORS® and REALPEOPLE.  Nyuk, nyuk, nyuk… is thing on?

Essentially there are 3 1/2  kinds of relationships that can exist.

Seller Representation

This is the typical situation where I, as a Broker, lists a property for sale.  I do all the homework, measure things, take pictures, give advice on staging, etc. and finally prepare a Listing Agreement that is a contract (called a “Listing Agreement”) between my brokerage and the seller and spells out how the whole thing works.  The key part of this is that I am legally “representing” the seller, I (my brokerage actually) am their “agent”.  I act as if I’m them and look out for their best interests.

Buyer Representation

This has been around for awhile, but most of the public doesn’t really have a grasp of it.  Essentially it’s the flip side of Seller Representation.  Just as I have a written contract with a seller when I list a property, I now have a written contract with a Buyer when we go searching for properties.  Mysteriously enough, it’s called a “Buyer’s Representation Agreement”.  It contractually obligates me and my brokerage to legally represent the Buyer in their search for a property.  Just like any contract, it has time frames and other things that define exactly who does what for who.  And just like a Listing Agreement says that the Seller has to work through the REALTOR® even if someone offers them a private offer, the Buyers Representation Agreement states that the Buyer must work through the REALTOR® to buy a property during the timeframe of the contract.  It makes sure that the REALTOR® is working with the Buyer and the Buyer is working with the REALTOR®.  Without one of these in place, you can call up the listing REALTOR® and book a showing to see the house, but make no mistake about it, they are working for the Seller, not you.  They’re obligated to be truthful to you and provide accurate information, but they can’t advise you or give you the benefit of their experience and market knowledge.  Your Buyer’s Representative can and must.  If you are out looking for a property and you haven’t signed up a REALTOR® yet to work on your behalf, get cracking.

Multiple Representation

This is the 1/2 part of the 3 1/2 I mentioned earlier.  Both Seller and Buyer Representation may happen at the same time (or 2 Buyers, or 4 Buyers, or a Buyer a Priest and a Rabbi… no, that’s something different).  The most common occurrence of this is when I’m working with a Buyer (with a Buyer Representation Agreement in place) and they want to see one of my listings (or any other listing from my brokerage for that matter).  Now who’s working for whom?  Obviously the Buyer’s best interests and the Seller’s best interests are not likely to be the same.  When this happens, there are special rules that come into play.  Firstly, both Buyer and Seller have to agree that it’s ok – generally, if they both trust the brokerage to do the right things, this isn’t an issue.  Secondly any information about the Buyer or Seller (not about the property, but about the people) that the REALTOR® may know has to be kept secret.  For instance, if I know that the Seller will come down to $240,000 from the asking price of $269,000, I can’t tell my Buyer that.  What I can do is make sure that all parties are treated fairly and honestly.  If I know that attic is infested with bats even though they weren’t obvious when we saw the property in February, I have to tell my Buyers because that is a material fact about the property that could affect the Buyer’s decision.

Multiple Representation can also happen in a multiple offer situation where 2 or more Buyers working with REALTORS® in the same brokerage (or the same REALTOR®) find themselves in competing offers on the same house.  Same rules apply, but in this case, it’s the multiple Buyer’s that have to be treated fairly and agree to the situation.

Customer Service

This situation exists when one party is involved in a transaction, but doesn’t want full representation.  This can happen in all sorts of situations such a private sale where I have a Buyer under contract but the Seller isn’t working with a REALTOR® (if you’re one of those sellers, call me .  People having Customer Service can be assured that everything is accurate and legal, but again, they won’t have the benefit of the REALTORS® advice or experience to guide them indecision making.

Clear as mud?  As always, if you have questions, comment here or contact me directly.

First let’s get some stats out of the way.  In my real estate board (www.ragbos.com), it’s pretty typical for the average sale price to list price ratio to be around 95%.  That means that, assuming a property is priced right for the market, the buyer will end up paying around 95% of the asking price.  Now of course that varies slightly from year to year and certainly from house to house, but it’s a good number to keep in mind.

There’s also another thing that comes into play when negotiations go back and forth.  Quite often the final settlement ends up being the half way point between a buyer’s offer and the sellers asking price.  Not always at first, but perhaps after a few negotiations have gone on.  So for a $200,000 listed home, the buyer may submit an offer of $185,000 actually in anticipation that the seller may settle for the half way point of $192,500.  Not always of course, but it’s very common.  The phrase “we’ll split the difference” comes up all the time.

As such, if I think a property is properly priced for the market, I will sometimes suggest a starting offer of 90% of the asking price, anticipating that the final price is going to be the 95% value.

Now this is where the low-ball stuff comes into play.  I consider any offer below 90% of the asking price to be a low-ball.  Essentially, the buyers are telling the sellers that they are way out of line with the pricing on their home and the piece of garbage isn’t worth a penny over…  ok, that’s a bit strong, but that’s the way it comes across to some sellers.  Their typical reaction is quite emotional (in a negative way) and they either a) reject the offer out of hand or b) sign back at a value very close to the asking price.  In either scenario, they’re now mad.  And isn’t that just what you want the person on the other end of your negotiations to be, particularly since they are living in the house you want to buy?  Not likely.  Assuming negotiations continue, the sellers are likely to be uncooperative and lack motivation to leave the house in ship shape when they move out.

If the property really is over priced for the market, then maybe a low-ball is appropriate, but it should be accompanied with some hard evidence to support that claim (comparable sales or a deficiency report for instance).  However, if the asking price of the house is reasonable, it’s been my experience that a fair offer (over 90% of the asking price) shows respect and good will to the sellers and they in return are much more willing to negotiate and deliver to the buyer a home that is in good condition.  Actually, it’s not uncommon for the sellers to offer their phone number to the buyer in case they have any questions after the sale.

Well the numbers are in (again) and just like it felt, the market was soft again in September.  Prices actually came down a little.  Fortunately, we here in Grey/Bruce don’t experience the wild swings that some of the major centres do, but it’s still not good to see prices slide.  For people who are in their house for the long haul, it doesn’t make much difference – over a period of many years, the prices always go up.  However, for anybody who bought 1 – 3 years ago and need to sell, it’s not good news.  Follow this link for the official break down of September’s stats.  http://www.ragbos.ca/Statistics/RAGBOS%20Stats%20Release%20-%20Sept%202011%20(4pgs).pdf. 

The good news is for first time home buyers since prices have come down a little bit, there’s a ton of inventory out there (it’s a buyers market) and interest rates are still at rock bottom.

If you have any questions about this, just let me know.

Royal LePage RCR Realty Brokerage

We’ve moved into our wonderful new digs at 588 Berford St. in Wiarton. Much better location and much better facility. Drop by for a visit sometime.

I’m pleased to announce that I’ve done a significant upgrade to the Listing page of this site.  Now all the Royal LePage RCR Realty Brokerage listings for my service area (north of Owen Sound) show on the list and on the location map.  Additionally, a lot more information and pictures are available for the listings.  Visitors to the site can also weed out the listings they don’t want to see by using price restrictions and property types. 

Hopefully, all this will make the site more informative.  Of course, even though I can only display Royal LePage RCR Realty Brokerage listings on my site, I’m certainly available to help buyers find any property on the market, regardless of who has it listed.  Give me a shout if you have any questions.