The Big 0%

Hurry up it is today only!!!

So you listed your home privately. Congratulations, it was probably a big step for you.

If you are like most of the people we see you have not ventured into the arena of Private Sale before. You had looked around the internet, checked out a few different sites, weighed the merits of private vs. MLS, then measured the merits of a few different companies and then finally decided on the one that offered you the biggest bang for your buck. Maybe it was the one with the most experience or the most listings locally. Either way you made your choice based on VALUE.

Your home was then listed on the internet with professional photos, virtual tours, plenty of details. It makes MLS pale in comparison (trust me I've seen some bad photos and virtual tours on MLS).

You are getting some phone calls, doing some showings, hosting some open houses. All things you were expecting to do. But then the craziest call comes in. Some agent calls you and says he wants to list your home for free. Yeah right, free. Anything you had ever heard about agents was all about money, money, money. Why the heck would an agent list your home for free?

If an agent is going to list your home for free there is going to be something in it for him. Here are some of the common situations our clients have run into.

It all comes clear when she states that in order to do this you have to do your new mortgage with them. They are also mortgage brokers. That they are going to get paid from a lender (bank) and that you will only be required to pay the 2.5% commission for the buyer's agent. Hmm, so who exactly is this agent working for?

Another instance we have seen is where an agent comes in and says he will list your home on MLS for a flat fee of $695 (+ or - $100). You can continue to do sell privately. Issue is that the agent's contact info is what goes on MLS so any interested buyers are going to call him, not you. He then shows up with an interested buyer and says he needs 2.5% to facilitate the deal. Hmm, so he gets paid up front and then still collects a commission.

What about this one. "I will list your house on MLS I just want to do Open Houses so I can get some new clients". OK so his whole objective of YOUR open house it not to sell your house but to get some listings that he can get paid on. Seems to me that if an agent is this desperate to get in your door they may not be too good at what they do. There are plenty of successful agents that have built a reputation of service over the years. Do you think they did it by spending every Saturday and Sunday in a non-paying client's home trying to get other people locked into contracts?

Don't be fooled by smoke and mirrors. Best case scenario for you is that you still end up spending 2.5% of your $300,000 house or $7,500 for something you can easily do yourself. I am not saying that you won't have to work a little for your $7,500. We all expect to work for our money, don't we?

Let's figure it out by the hour. At $100 and hour this works out to 75 hours of work. While you are slaving away for the man at your job for just under 2 weeks (hopefully you are making $100 an hour) you could have been selling your home. At a more reasonable $20 an hour you can afford to put 375 hours into the sale of your home. Based on a 40 hour work week that works out to just over 9 full work weeks. Would you expect that an agent is worth $20 an hour (just over $40,000 a year)? Would you think that you will get 9 - 40 hour work weeks for the sale of your home? And that is only if you get one of these "deals". Double it if they are your traditional 5% listings.

Here is a broker in NYC that is looking at a different value model for his agency


M

What is Real Estate?

When some one says to you "I'm in Real Estate" what exactly do they mean?

I own a house. Am I not in Real Estate?

Whether you live in Cambridge, Guelph, Kitchener or Waterloo you are lucky enough to be living in an area that is predicted to to be sitting on top of the worst of this pending storm. So your mutual funds are down 20%, your stocks in the tech and auto sector are not worth too much these days, but that little nest egg you have been slowly building on over the last 10-15-25 years is now prime. The market is at an all time high and you are ready to cash in and downsize. Are you not in Real Estate?

What about you, the guy that owns a few properties around the University. You're in Real Estate, right? I mean you have actually been earning a profit over the years. Sure there has been the odd kegger that got out of hand and some set backs in the "maintenance" of the property but they are all paid off and awaiting liquidation so you can buy that ever so cheap Florida condo on the beach. Sounds like Real Estate to me.

You're a lawyer. You have many clients that have relied upon your expertise in their transaction to ensure everything went just right. Every once in a while it didn't go according to Hoyle, but you got it straightened out, as always. No doubt, that's Real Estate!

I can go on. Stagers, appraisers, home inspectors, movers, duct cleaners, framers, electricians, appliance sales people, real estate agents, furniture sales people and of course Private Sale Professionals. There are many people that rely on Real Estate for something in life. The Real Estate industry is far reaching. Don't think that your decision to move or not move is changing just your life. When you make that decision you set the economic ball rolling. It is your hands that hold the economic house of cards.

We are not in the same boat as our friends to the south, or at least Mr.Harper keeps saying so. Watching a video like this sure makes me think that a slow down in our market here in Guelph or KW or Cambridge seems like small potatoes.

If you are looking at downsizing your home or selling off one of those rental properties, be sharp with your pencil and pay attention to what the market tells you. You don't have to sell, you don't have to give it away, just watch your costs!.

M

Fly in a Think Tank

Like Superman when you wear glasses you are incognito.

As a private home seller I had the luxury to sit in a marketing study this week-end. I sat around a table with other like minded sellers. We were there to look at the new advertising campaigns of the real estate industry and their focus on howrealtorshelp.ca.

We looked at two campaigns and six separate commercials. All were working on using humour and exaggeration to make their point.

The first campaign was entitled "Realtors know what you don't" and focused on 3 situations.

1. A lady is seen thrashing paperwork around her desk. She "comically" picks up a potted tree and whacks papers off her desk. A voice over says "Sandy has just spent the last 5 1/2 hours trying to figure out the the details of the offer. There are many terms that Sandy just doesn't know. Terms like "in propria persona" which means acting on her own behalf. The voice over says "Find out how a Realtor can help you. Visit howrealtorshelp.ca to find out more."


2. A man is seen jumping up and down "comically" on his bed. He is dressed in nothing but Bart Simpson boxer shorts and one sock. He is throwing a temper tantrum. A voice over says "Brad seems a little upset. And he should. When he bought the house he didn't use a Realtor that would have told him the flight to Spain flew 850m over his pillow every 47 minutes". The voice over says "Find out how a Realtor can help you. Visit howrealtorshelp.ca to find out more."


3. A man is seen in his house coat running threw his a garden knocking the tops off the flowers with an inflatable pink guitar. A voice over says "John is a little upset. He didn't realize that for what he just sold his house for he could have bought a Tahitian Mud hut. Neither did his wife, but she does now." The voice over says "Find out how a Realtor can help you. Visit howrealtorshelp.ca to find out more."

The second campaign was geared towards getting bad advice. There were 3 commercials here as well:

1. Outside of "Dunky Do's" donut shop. A voice over says "Do you know what Land Transfer Tax is? Let's ask Angie down at the local donut shop" they cut into a friendly woman that talks like she has know you her whole life "You see Land Transfer Tax is when you have something in your backyard that you want to transfer to your new house. I live in a condo so I don't have to pay for land transfer, I pay condo transfer tax." The voice over says "When you need professional advice look to a professional. Visit howrealtorshelp.ca to find out more."


2. Outside of "Wailing Ed's" Pub. A voice over says "Do you know what closing costs are? Lets ask Brian, local bar man." They cut to a late 30's barman that talks like he has know you his whole life "You see the closing costs are what you owe when you close the door of the house you are leaving and open the door of the one you are moving to. You don't pay until you open the new door. You can avoid them by climbing in the window. That's how you stick it to the man." The voice over says "When you need professional advice look to a professional. Visit howrealtorshelp.ca to find out more."

I really wish I could remember the 3rd one but by this time all I heard was Charlie Brown's teacher. I do remember that it was a hair dresser telling us some overly exaggerated obviously wrong advice. You see the Realtors have been using this same message for a while now. You may recall seeing the commercials with the mother-in-law showing the young couple a home or the one with a young couple coming to the door to see a home and the home owner is waxing his chest.

Here I am sitting at a table with 5 people. Male and female, young and old, single and married. All here for one reason. We all chose to sell properties privately. The lady conducting the event was rather surprised at how much the group didn't like these ads. Hmm let me think about this. Am I going to be drawn to an ad the tells me I'm stupid?

I know my thoughts, but what are yours? Am I missing something? Are these ads hitting the mark? Would you decide to call a Realtor based on these ads? What would it take to call a Realtor?

I look forward to your comments.

Economy Starts With Real Estate?

OK so let's examine this.

I read a blog with an interesting point of view the other day. Most of the points seem very valid to me. Our economy is driven by many things. It is my belief that it all starts at spending. There is no doubt that the purchase of a home catapults one into a spending spree.

I have a friend that recently purchased a home and they have spent thousands in changes and upgrades in the few months they have been there. With many more projects planned on the 80 year old house they are economy drivers in their small community. My wife and I are looking at purchasing a home closer to my son's school. In the homes we are looking at there is work to be done. New kitchen here, detached garage there. We are recession busters!!!

Where this previous blog looses me is the innuendo that real estate agents are the ones driving the economy. If all of the real estate agents were to disappear off the face of the earth does that mean our world would end as we know it? People would not be able to buy or sell another property? That without these precious soles that the great unwashed would not know how to proceed with the transaction? It would be like cats and dogs living together, mass hysteria!



Why should I spend 10% of my hard earned equity to pay for them to go to school when I could use it to send my son to school? As a home seller I know that by keeping as much of the equity I have in my home as opposed to floundering 10% to an agent I can stimulate the economy in either one of two ways. I can afford a more expensive house (or one with more potential and fix it up) or the other side is have a smaller mortgage going forward which will allow me more expendable cash or savings. Just think now when you look at your mortgage what an extra $10,000 off of that would do for you long term. Now I am not saying that you can take $10,000 off your mortgage but you sure can avoid adding it on.

That leaves me with one question. How much will you add on your mortgage before the day comes when Felix moves in with Marmaduke?

Culturally Iconic?

The Popemobile is something everyone knows in any context.


In real estate there are some that we all know. The hot air balloon, the gold jacket of the 70's and 80's but nothing has stepped up and lead a revolution. Where is the real estate Che Guevara to lead the revolution? Where is the Real Estate Cultural Icon that stands for change?

"Just like the golden arches represent fast food, we believe this round sign will be the ICON for the private sale industry."
Ken LeBlanc, President
PropertyGuys.com National Conference
February 12, 2008

Today the journey towards icon is well under way. With franchises across the country and round signs in hundreds of communities from coast to coast PropertyGuys.com is getting noticed. With well over 400 of them in Waterloo Wellington and surrounding areas it is hard to go house hunting and not see a round sign. The agents have taken notice. Directly marketing against private sale and specifically the round sign. When the top producers start setting their sights on the round sign, you know it is making an impact.

Looking at other areas of the country things are progressing just as well. When editorial cartoonist Pat Jollimore decided to focus on the federal governments decision to sell off crown assets the round sign icon was obviously emblazoned deep with in her subconscious mind.



NOTE - Due to request from the cartoonist the original has been removed. I have replaced with my own interpretation of the situation.

Published in the Halifax ChronicleHerald Sat Nov 15th

Next time you see a round sign, remember just what it stands for.

Sell Your House. Pay Yourself.

Are Your Feet Dirty?

Even if you wipe them off you can be sure there is still some stuck in between your toes.

This week-end was the first significant snow fall of the season and I thought talking about sand between your toes might take your mind off all the cold to come.

Thinking about better times sure makes us feel better. No matter how hard we think it will not change the reality.

Truth is real estate values have escalated dramatically over the past 20 years. Truth is the traditional way things have been done have added to that increase. Think about it. If a house has been sold 4 times in the last 20 years, each time agents charged 5% on that house, how much of the increased value of that house is because the home owner selling it had to make up for the portion he was paying out?

Here we are now with average houses pushing the $300,000 mark here in Waterloo Wellington and people are finding it difficult to get mortgages. Truth is the whole sub-prime fiasco came from the fact that house prices had gotten so out of control that people could not afford the standard 5% down 25 year amortization program. The lenders started increasing the amortization period and lowering the minimum deposit. Even that was not enough.

Truth is, as a home seller in today's market, if you decide to give up 5% of the selling value of your home it works out to be a much bigger chunk of your equity. If you are lucky enough to have paid off half your mortgage you are giving up 10% of your equity ($300,000 -50% = $150,000, $300,000 x 5% = $15,000, $15,000 is 10% of $150,000).

If we are heading into a recession then why would you hand over 10% of your equity? People have just lost thousands in equity in the stock market and mutual fund arena and it makes the news daily. People throw away 10% of there equity in their house daily and it doesn't even show up on the radar.


Maybe it's not our toes in the sand after all?

M

Real Estate Statistics for October

At least Rick Astley is there for you.

I was going to throw a bunch of stats at you and show you the grim outlook. You can see that anywhere. We're different here.

There is no doubt that solds are down, listings are up and the inventory of houses available is swelling as we approach the traditional high tide. Now what? It is important to keep your head about you. If you are purchasing another home, know where your budgets lye and hold hard and fast on the bottom line.

Problem is that your spouse REALLY wants the house with the conditional offer in on it. How will you be able to purchase that house if you can't get yours sold in a buyers market? Ever consider letting your offer go and coming in with a new offer? I mean here we are in a buyers market and you have an offer in that was made when we all had a better outlook.

Take control of the market and continue to sell your house. The market will tell you what it will accept as a selling price for your house. Once you have an offer presented you generally have 48 hours to accept it. Adjust your budget, taking into account the new selling price, figure what you can now afford for the house you want and make a new offer. A firm offer in a slow market heading into the winter should have some negotiating power. Give them 24 hours to accept. If they accept, you accept.

That new house needs to know that you're never going to give it up so don't let it down

2009 Will Be.......

A time for Buyers and Sellers to meet.


Canada Mortgage and Housing Corporation (CMHC) just released their 2009 projections for KW and Guelph. They are predicting a drop of 6% in solds in KW and 7% in Guelph over the projected 2008 numbers. Interestingly they are also showing a slight increase in new listings, 1% in both markets. This shows a move towards a balanced market.

Where are you planning on living in 2009, Buyers Rd. or Sellers Ln.?

If you are living on Buyers Rd. I have good news for you. The market is moving in your favour and that usually means that prices will stabilize or drop, depending on how steep the fall is. If it falls to where the CMHC predicts then it will more than likely just be a stabilizing of the market.

Are you looking at moving on to Sellers Ln.? Don't worry I have good news for you too! The savvy home seller will know that in order to sell in an equalized market they need to be aware of their local market and be sharp with their pencil. You see the average home seller will not want to see or hear about market equalization. They will say things like "That guy across the street got this much last summer." and "No way am I giving my house away." You are a progressive thinker and you know that in order to get a leg up on that guy you need to offer a better value to the market that is not buying at the same rate as last year.

The intersection of Buyers Rd. and Sellers Ln. is a busy place to be. Value is the traffic light that gets you through safely. With out value this intersection can be costly. Sitting and waiting on Sellers Ln. with no one stopping along Buyers Rd. is a frustrating circumstance.

Value comes in many forms. Increase in product like adding in new flooring or appliances is a way to add value. Another option is to decrease price. I have spent my whole business career telling people not to sell on price. Selling on price is not a winning situation because it usually means you are sacrificing profits to do so. If you are looking at decreasing your price you need to be sure to decrease your costs as well. In looking at the costs of selling, the biggest factor that you can adjust is the costs of marketing your home.

Before you start on your journey down Sellers Ln. make sure that you will not get stuck at the intersection waiting on traffic to stop.

I've Seen A Sign!

Sometimes signs show up at just the right time.

I want to tell you a little story. On Good Friday of 2007 at around 9am I was putting up a sign on a client's lawn. My timing was perfect. You see an agent just happened to drive by the home with some clients a short while after. He choose not to show them, or even acknowledge for that matter, the PropertyGuys.com listing. They had been looking for sometime in the area for something just like this home. The buyers in the back seat could not help but notice it. They made note.

Shortly after lunch that day an offer was agreed upon and the home was tentatively sold to the couple from the back seat. The real odd part was that the agent that choose not to show the home had already been in the home. He had prepared a market evaluation to try and list the property a few weeks before. Unfortunately for the agent, the home sellers felt that he under valued their property at $295,000. They were right. These buyers paid $304,000 and there was no commission paid. A net difference of $24,200 based upon a 5% commission rate. Not bad for 3.5 hours on the market.

The for sale sign has been around for many years. They are used for many objects from homes to cars to boats to junk at a garage sale. When you are selling your home you should seriously consider what the sign will do for you. It is your beacon, your lighthouse if you will. Advising any and all the location of the port. That is it's first objective, but there are more. It will also serve as the first point of information for a ship venturing into your port. How to reach the harbour master (Phone Number). Where they can go to get more details on docking instructions (Website). Lastly, it needs to instill comfort in the captain of the ship.

You can do all this by having a professional sign with all of the important details to ensure that buyers are going to want to dock in your port. Include your main contact number, preferably local, the website where they can get more details, and ensure it is presented professionally.

One little thing not to over look. Does your sign look like every other sign? Seems a little square, no? In a sea of squares and rectangles how will you stand out?

On With The Show!

TH-TH-TH-THA-THA-THA-THAT'S ALL FOLKS!!

Showing a home is not something one does everyday, unless you happen to be a rather busy real estate agent.

When you are out shopping for a home the ideal walk through of a home is when you get to go through and discuss the good, the bad, and the pink shag, to properly weigh out the merits of making an offer on the property.

Have you ever gone to see a home and had the person showing the home shadow your every move? Ask you questions like "What do you think of the colour of this room?" Say something like "This is MY favorite room in the house". The last thing you want is to be pushed into something you don't want.

As a home seller you really need to allow the potential buyer to experience the home free from outside opinion. Point out some key features, yes. Direct them to look at something they could miss, of course. Walk them through every room and then give them a 20 minute video of you walking through the house in great detail to watch at home..... uh no (I had a client do that).

When a potential buyer is sizing up the home, offer them space, offer them light, offer them freedom.

That's all folks!