Welcome to the RE/MAX Waters Advantage! Orangeville Real Estate Blog

House Prices

Compare countries' house-price data over time


A client of mine forwarded this very cool interactive flash-based chart from The Economist. It shows the house price index, actual house price movement for several countries over the past 20 years. I have embedded the actual flash chart in above. Click ‘Continue Reading’ to try it.)

It is interesting to see how Canada’s house prices stack up against other countries over the last 20 years. The same old story holds true: since 1990, Canadian real estate has been very boring. Appreciating at very modest but steady rates compare to the huge ups and downs of several other countries. Our downturn we experienced last year was nothing compared to other countries. This is disappointing news to the doomsayers who fervently believe we are constantly heading for a massive market ‘correction’.

Do Not Pick a Crappy Realtor!

In my previous post I talked about pricing and what not to do!  In this post I talk about how not to pick a crappy Realtor.

My next most important consideration is  "Do not pick a crappy Realtor!" Picking a poor Real Estate agent and proper pricing in many cases go hand in hand.

There is a dirty little practice in Real Estate known as "buying a listing" that many Realtors employ as part of their business practice.

You see in many cases when a seller is interviewing multiple agents, a lesser skilled agent resorts to telling a seller what they want to hear in order to get the listing.

We all want to believe our homes are better than Mr. & Mrs. Jone's home that just sold down the street. This is just human nature at it's finest. A poor Realtor knows this and uses it to their advantage.

With a long term contract in hand and not much activity on your home, the Realtor starts to beat you over the head to reduce your price.

Folks, the Real Estate data never lies but some Realtors do! Avoid falling into this trap at all costs. Being tied to this kind of agent is the pits. You may be able to drop your price but you signed a contract and will be stuck with this agent until the contract expires.

Here's a Funny video about buying a home with one of these crappy realtors.

How to avoid this situation is everyone's question.  My best advise is the following.

Look for a Realtor that is more like an educator/teacher ( I call them consultants) and not a sales person.  This kind of person is someone that holds workshops for people selling or buying their homes.  Reaching out to someone like this is sometimes a challenge but you can tell the difference in SECONDS!

Being pushed into something and helped are very different, don't let it happen to you. 

If you need real estate help you can reach me at  or call me at 519-942-8700 or by email [email protected]

David Waters

Why Your Orangeville Home Expired! Part 1

As a Realtor I'm able to get on the Realtor.ca (MLS system) everyday and see countless homes that have "expired".  And I see lots of them.....

I believe the number one reason why any home expires and does not sell is because of an improper price. Unfortunately, this is the hardest obstacle in Real Estate to overcome.

In today's challenging Real Estate market, the price that is set on your Orangeville home can be more  than 65% of the marketing. What do I mean by that? Simply, if you come on the market at the wrong price, the best Realtor in the country with the most sophisticated marketing will not be able to get the job done.

There is no easy way to say this but here it goes.

Pick the wrong price and you will be doomed to languish on the market.

All the marketing and advertising will be wasted along with a lot of time and money.

Time, as in "time on market", is one of the most important Real Estate statistics. This is the one piece of data that every buyer asks for when viewing a home. In fact I can't ever remember a buyer not asking me "David how long has this home been on the market?" Every buyer wants to know this because if the home has been on the market for a long time, the buyer feels like there will be more room to negotiate. It is just human nature. Buyers also may feel there could be something wrong with the home when it has been on the market for an extended period of time.

The way the Realtor.ca system works in Ontario allows a Realtor to re-listing a home to set the days on market back to zero. This is a common practice on Realtor.ca and really messes with the Statistics.

I welcome a change that would  make market statistics actually valid and not allow a Realtor to deceive the public by manipulating market data.

As far as negotiating, Sellers are in the drivers seat in some markets.

Handling of Multiple Offers..And What To Do About Them!

Lately I've been dealing with lots of Multiple offers while working for my buyers and all I can say is that the market is being driven by emotion.  Here are a few tips on how to deal with multiple offers....

The handling of multiple offers can be a tricky subject in Real Estate. Let's just say they are every buyer's agents nightmare and something that most listing agents look forward to. I say most because some Realtors try to avoid controversy at all costs and a multiple offer situation can sometimes get contentious.

Before getting into the art of handling multiple offers lets 1st discuss some basic parameters of an offer in general. In Ontario all offers whether verbal or written MUST be presented to the seller.

 It is not at the listing brokers discretion to determine what is or isn't worth the sellers time to listen to. No matter how ridiculous an offer sounds, it is not up to the listing agent to be the judge of the offer. It is a violation of the code of ethics to withhold any offers whether verbal or written.

According to the Real Estate code of ethics, Realtors shall submit offers and counter offers objectively and as quick as possible.

There are a few different scenario's in which a multiple offer situation could arise. You could have multiple offers come in around the same time in a given day in which case all of the offers should be presented to the seller at the same time or you could be in the middle of negotiations with a buyer and suddenly find out you are getting one or more additional offers.

In the 1st scenario the listing agent should be informing the buyers agents that there are multiple offers being presented to the seller. The buyer's agents at this point should be instructing their buyer clients to think about what their best offer on the property could potentially be.

One point that should be made clear is that a listing agent is not allowed to reveal the terms of a buyers offer to another buyer or their agent. The code of ethics requires that real estate agents treat prospective buyers honestly and fairly.

A Realtor who reveals the terms and conditions of a competing offer to one buyer gives that buyer an obvious advantage over the others which breaches the duty of fairness owed to the other buyers. 

In most circumstances it would be in the sellers best interest to instruct their listing agent to ask all parties to come in with their "best offer".

The seller stands to benefit greatly as none of the buyers has any idea what the other offers are. If the buyers want the home they will be forced to step up to the plate and possibly pay more than they originally expected to.

Once the seller has received all the offers, it is to them how they would like to proceed. It is possible that the seller could do one of the following:

• Reject all of the offers. Maybe the price isn't high enough or the closing date does not work. It is up to the sellers discretion on what is acceptable or not.
• Reject one of the offers and work with the others. Maybe this buyers financing was too risky no matter how good all the other terms are. In this scenario the seller could make a counter-offer to one of the other offers.
• Accept one of the offers and reject the others. This is the most common scenario because in most multiple offer situations the seller ends up getting the terms they desire.

The second scenario in which you have already been negotiating an offer and additional offer/offers come in needs a lot more care from the sellers/listing agent, as this is a scenario where emotions can create major problems.

Let me 1st state emphatically that there does NOT necessarily need to be any special treatment given to the 1st offer. After all, as a sellers agent it is your fiduciary responsibility to get your seller client the best terms and conditions.

Is it possible that the buyers agent is going to have steam coming out of his or her ears when this scenario comes up?

It sure is and you better plan for it. There are plenty of Realtors that don't know any better and will give a sellers agent an earful.  You need to stand your ground and calmly remind the other agent what your job entails as a listing broker.

The code of ethics is very clear on this issue. "When acting as listing brokers, Realtors shall continue to submit to the seller all offers and counter offers until closing or until execution of the contract unless the seller has waived this obligation in writing."

The goal as a listing agent should always be to get the sellers the best terms and conditions. Is it frustrating to be in this situation as a buyer's agent...you bet it is!! Rules are rules though and this is how the Real Estate game is played.

Multiple offers are always a sellers best friend so to speak. In most circumstances a seller is going to walk away with more than if the multiple offer situation did not exist. The seller will most likely be in the drivers seat if minor issues come up with inspections as well. The buyer may fear the seller jumping to one of the other buyers who lost out if they raise too many issues.

Looking at the multiple offer situation from a buyer's agents point of view should be to find out exactly what the seller is expecting for terms and conditions. It should not be assumed that PRICE is going to be the only deciding factor. Maybe the closing date or the amount of money the buyer is financing is just as important to the seller.

Over the years I have been involved with many multiple offers where the seller did not choose the highest bid. An example on a few occasions has been one of the parties being more flexible with extending a closing date so the kids could finish school. As a buyers agent you should never loose site of what could be important to the seller.

 Besides increasing the price here are a few examples of what the buyer could do to make their offer more attractive.

1. Shorten the time to get inspections done or in some market places, have the inspection done prior to submitting an offer.
   
2. Shorten the mortgage contingency date or remove it all together if the buyer is 100% certain they will get approved, get the Commitment from the Leander before you go in with an offer.
   
3. Increase the deposit over the normal standard for the area, 5% is on average a good start.
   

A few other thoughts about multiple offer scenarios....Make sure you document everything! As a Ontario Realtor, I have learned that being involved in a multiple offer situation can be a highly emotional event.

Buyers and their agents can get really ticked off when they are not the winning bid. It is wise to have your basis covered in the event someone accuses you of a wrong doing!

One last rule and I don't know why you would want to do this but it is not required that you inform other agents of the fact there is more than one offer on a property.

In fact it is at the SELLER'S sole discretion and choice whether this disclosure takes place. When the seller does give authorization, Realtors shall also disclose whether offers were obtained by the listing agent, another agent in the same company, or a cooperating broker.

Frankly I love getting multiple offers! I know when this occurs my seller clients are real happy and my list price to sale price ratio has gone up but when I'm the buying agent you need to have nerves of steel!

David

Interest rates aren’t going up any time soon.....

I just received some news on the mortgage rates in Canada.  My good friend Alexis Drake  of  Mortgagebrokers.com was kind enough to share this with me.

Interest rates aren’t going up any time soon, but when they do the rise will be rapid, mortgage industry experts say.

Because of this, mortgage lenders and brokers have a responsibility to help homebuyers assess their capacity to make higher monthly payments, and to constantly evaluate their chances for default.

“There should be some prudence and there should be counselling by mortgage brokers to ensure people do leave a little wiggle room,” Ivan Wahl, chairman and CEO of Xceed Mortgage Corp., said at an industry conference yesterday.

Wahl praised Interest rates for preventing the housing meltdown that has decimated the American economy, but said mortgage lenders have a responsibility to self-regulate.

The Canadian and American housing markets fared very differently during the recession. While the financial crisis in the U.S. was caused in large part by subprime mortgages, strict regulations helped the Canadian economy avoid a similar meltdown.

However, even mortgage lenders weren’t expecting the Canadian housing market to fare as well as it has.

“The last half of ’09 is better than anybody expected,” said John Webster, president and CEO of Scotia Mortgage Corp.

“We were looking at a nuclear winter ... ( for new mortgages), a 30 to 35 per cent drop, and that hasn’t happened,” agreed Stephen Smith, chairman and president of First National Financial.

thanks for keeping me and my subscribers up to date as to what's going on!

David
 

How To Invest In Real Estate

Ok, so Owning property isn't always easy, but there are plenty of perks. To Find out how to buy in let's take a look at the basics.

Buying real estate is about more than just finding a place to call home. Investing in real estate has become increasingly popular over the last fifty years and has become a common investment vehicle. Although the real estate market has plenty of opportunities for making big gains, buying and owning real estate is a lot more complicated than investing in stocks and bonds. In this article, we'll go beyond buying a home and introduce you to real estate as an investment.

Basic Rental Properties
This is an investment as old as the practice of landownership. A person will buy a property and rent it out to a tenant. The owner, the landlord, is responsible for paying the mortgage, taxes and costs of maintaining the property. Ideally, the landlord charges enough rent to cover all of the aforementioned costs. A landlord may also charge more in order to produce a monthly profit, but the most common strategy is to be patient and only charge enough rent to cover expenses until the mortgage has been paid, at which time the majority of the rent becomes profit. Furthermore, the property may also have appreciated in value over the course of the mortgage (according to the U.S. Census Bureau, real estate has consistently increased in value since 1940), leaving the landlord with a more valuable asset. (To learn more, read Paying Off Your Mortgage and Understanding Your Mortgage.) 

There are, of course, blemishes on the face of what seems like an ideal investment. You can end up with a bad tenant who damages the property or, worse still, end up having no tenant at all. This leaves you with a negative monthly cash flow, meaning that you might have to scramble to cover your mortgage payments. There is also the matter of finding the right property - you will want to pick an area where vacancy rates are low (due to demand) and choose a place that people will want to rent.

Perhaps the biggest difference between a rental property and other investments is the amount time and work you have to devote to maintaining your investment. When you buy a stock, it simply sits in your brokerage account and (hopefully) increases in value. If you invest in a rental property, there are many responsibilities that come along with being a landlord. When the furnace stops working in the middle of the night, it's you who gets the phone call. If you don't mind handyman work, this may not bother you; otherwise, a professional property manager would be glad to take the problem off your hands - for a price, of course. (For further reading, see Tips For The Prospective Landlord.)

Real Estate Investment Groups
Real estate investment groups are sort of like small mutual funds for rental properties. If you want to own a rental property, but don't want the hassle of being a landlord, a real estate investment group may be the solution for you. A company will buy or build a set of apartment blocks or condos and then allow investors to buy them through the company (thus joining the group). A single investor can own one or multiple units (self-contained living space), but the company operating the investment group collectively manages all the units - taking care of maintenance, advertising vacant units and interviewing tenants. In exchange for this management, the company takes a percentage of the monthly rent.

There are several versions of investment groups, but in the standard version, the lease is in the investor's name and all of the units pool a portion of the rent to guard against occasional vacancies, meaning that you will receive enough to pay the mortgage even if your unit is empty. The quality of an investment group depends entirely on the company offering it. In theory, it is a safe way to get into real estate investment, but groups are vulnerable to the same fees that haunt the mutual fund industry. Once again, research is the key.

Real Estate Trading
This is the wild side of real estate investment. Like the day traders who are leagues away from a buy-and-hold investor, the real estate traders are an entirely different breed from the buy-and-rent landlords. Real estate traders buy properties with the intention of holding them for a short period of time (often no more than three to four months), whereupon they hope to sell them for a profit. This technique is also called flipping properties and is based on buying properties that are either significantly undervalued or are in a very hot market.

Pure property flippers will not put any money into a house for improvements - the investment has to have the intrinsic value to turn a profit without alteration or they won't consider it. Flipping in this manner is a short-term cash investment. If a property flipper gets caught in a situation where he or she can't unload a property, it can be devastating because these investors generally don't keep enough ready cash to pay the mortgage on a property for the long term. This can lead to continued losses for a real estate trader who is unable to offload the property in a bad market.

A second class of property flipper also exists. These investors make their money by buying reasonably priced properties and adding value by renovating them. This can be a longer-term investment depending on the extent of the improvements. The limiting feature of this investment is that it is time intensive and often only allows investors to take on one property at a time.

REITs
Real estate has been around since our cave-dwelling ancestors started chasing strangers out of their space, so it's not surprising that Wall Street has found a way to turn real estate into a publicly-traded instrument. A real estate investment trust (REIT) is created when a corporation (or trust) uses investors' money to purchase and operate income properties. REITs are bought and sold on the major exchanges just like any other stock. A corporation must pay out 90% of its taxable profits in the form of dividends to keep its status as an REIT. By doing this, REITs avoid paying corporate income tax, whereas a regular company would be taxed its profits and then have to decide whether or not to distribute its after-tax profits as dividends.

Much like regular dividend-paying stocks, REITs are a solid investment for stock market investors that want regular income. In comparison to the aforementioned types of real estate investment, REITs allow investors into non-residential investments (malls, office buildings, etc.) and are highly liquid - in other words, you won't need a realtor to help you cash out your investment. (For further reading, check out What Are REITs?, Basic Valuation Of A Real Estate Investment Trust (REIT) and The REIT Way.)

Leverage
With the exception of REITs, investing in real estate gives an investor one tool that is not available to stock market investors: leverage. If you want to buy a stock, you have to pay the full value of the stock at the time you place the buy order. Even if you are buying on margin, the amount you can borrow is still much less than with real estate. Most "conventional" mortgages require 25% down. However, depending on where you live, there are many types of mortgages that require as little as 5%. This means that you can control the whole property and the equity it holds by only paying a fraction of the total value. Of course, your mortgage will eventually pay the total value of the house at the time you purchased it, but you control it the minute the papers are signed.

This is what emboldens real estate flippers and landlords alike. They can take out a second mortgage on their homes and put down payments on two or three other properties. Whether they rent these out so that tenants pay the mortgage or they wait for an opportunity to sell for a profit, they control these assets despite having only paid for a small part of the total value. (For more on taking out a second mortgage, read The Home-Equity Loan: What It Is And How It Works and Home-Equity Loans: The Costs.)

Conclusion
We have looked at several types of real estate investment. However, as you might have guessed, we have only scratched the surface. Within these examples there are countless variations of real estate investments. As with any investment, there is much potential with real estate, but this does not mean that it is an assured gain. As with any investment, make careful choices and weigh out the costs and benefits of your actions before diving in.

Andrew Beattie, The Globe & Mail, 10/28/2009