OK so we are going to do something a little different....I mean it's my blog right? I can do that if I want!
You may have seen a few men in your community with a lip sweater housed just below their nose. The "mo" (Australian slang for mustache) is a sign of a gentleman. It is also how many men are raising funds in Movember for Men's health, specifically prostate cancer. Both Dave and I (PGWW Partners) are supporting this worthy cause with our lip caterpillars. To date as part of Team Waterloo we have raised over $7,000 locally and over $12,000,000. Now we have pledged that for each listing in Movember we are going to donate $5 to our fundraising campaign, but I think we can do more. This is where the golf comes in.
I am auctioning off a foursome of golf, including carts at Savannah Golf Links in Cambridge AND limo service to and from the course from Brentwood Livery. To bid on this AMAZING item you can comment on the blog, send me a note on twitter or Facebook (where you can also see the progression of my Mo). The final draw will be held at the Waterloo Region Movember wrap up held at Chicopee on Movember 28th.
If you don't get the golf package, or you just don't golf, you can always donate directly to my Mo here.
People are becoming more specific when searching on the internet. Search engine text strings are getting longer. People have a better understanding of what they want.
When people are searching for a house they generally want to weed out the houses that won't fit their requirements. The internet always listens. One of the complaints I often hear about searching for a home with an agent is even after telling them your needs or specifically your dislikes you end up in homes that are not what you are looking for.
As a seller you need to be sure that you put all the info available into your listing. I suggest this not only on your PropertyGuys.com listing but also on your MLS listing form available through our Ontario Flat Fee partner Harvey Real Estate. This way if people are searching on PropertyGuys.com or Realtor.ca they will get what they are looking for.
Handling things on your own makes sure you can do this without having to rely on someone else to check the box. Just like Ian points out!!
As we head into municipal elections across the province an important vote, one that will impact how people buy and sell homes, took place yesterday in St John's NL.
Nearly 100 of the real estate boards from across Canada voted to ratify the agreement between CREA and the Competition Bureau. Now as many have pointed out this vote hasn't really changed anything as far as rules go. What it has done is given plain language to the boards on what they can and cannot do in regards to "mere listings". Here is a quote from the media release:
The Commissioner and CREA have agreed that its rules as well as those of its members should not deny or discriminate against REALTORS® wishing to offer mere posting services. CREA does not believe that such rules exist today, but if they do, they must be repealed or Boards will lose their license to operate under the MLS® trademarks.
Now just to clarify this does not mean that John Q. Public can just upload their home for sale on www.realtor.ca. The system is still a closed, member to member system, as it should be. What it opens up is the ability for brokers to offer flat fee listings to people that just want to post a home for sale. This maintains that someone be held responsible for the information being entered into their system.
You may be asking yourself "If the realtors are going to make less money on listing homes for sale and private sellers won't offer the "standard" 2.5% commission how will the realtors pay for their Cadillacs?"
"we have ways of going around that" these guys are too much. Their sense of entitlement for your money is overwhelming. "Buyer Beware" takes on a whole new meaning.
Sometimes seeing things in black & white can change your perspective.
I have said it many times before. Your price (as it relates to your product) will be your biggest stumbling block in selling your house. So many people are lost in their home and don't realize that they are taking THAT with them. You are not selling your home. You are selling a house!!!
I have often joked the the difference between a house and a home is about $15,000. If you have even the slightest idea that you are house proud (do you think yours is worth more than your neighbours?) than I suggest you invest in some professional advice and get an appraiser in to give you the information you need to price your house correctly!
The last thing you want is the big $ sign and the little house...
I recently saw a video posted on my Facebook feed where a VP from Keller Williams (and best selling author) talks about why houses don't sell. Why some homes sit and others move. He explains a very basic principle, one that I have talked about many times here.
If you are priced too high for your market you won't sell.
He goes on to explain that if you are getting no showings it tells you you are OUT of the market. If you are getting showings AND offers than you are IN the market. If you are getting showings but no offers than you are in "No Man's Land". What he failed to mention is that the cost of your trusty Realtor is what has you stuck in "No Man's Land".
Drop your Realtor and join the IN crowd!
Here's the video (don't judge him for his lack of white board skills.
OK so I talk quite regularly about selling. A recent comment asked about sharing some knowledge for buyers.
The comment specifically was:
I know property guys have been really going well with sell your self but what about buying. Using an agent seems to be the only option and then that becomes a problem since they won't show private sales.
Let's first focus on the misconception that using an agent is your only option when buying. Stats show that 90% of people start their home search online, not with an agent. We find that buyers are more concerned with the homes than the sign on the lawn. They care which website it is on because they want to be able to get as much info as possible while doing their search. As pointed out by Levitt & Dubner in Freakonomics the hording on information on the public facing portal of the MLS (www.realtor.ca) forces you, the buyer, to have to call them. Information hording throws the balance of the power on their side. Sites like PropertyGuys.com work the opposite way. As a home seller you want to talk to qualified buyers, buyers that want to buy your home. To do this you have to give them all the information you can. Quality photos, virtual tours, Google maps (including street view), and all the information you can cram into a web page.
As for agents not bringing buyers to private sale homes, this is another misconception. I would estimate that 5 to 10% of the PropertyGuys.com homes sold here in the Waterloo Wellington area are sold to a buyer with an agent. We make sure to coach our clients on just how to deal with an agent assisted purchase. It is simply about knowing your bottom line and knowing your "agent" bottom line (bottom line divided by .975). This will allow you to account for the agent's 2.5% commission they "expect" for working with a buyer. When worked this way the seller is not paying for the agent they are simply allowing the buyer to pay for the agent as part of their purchase. Want to see how it works?
Private Home Seller Asking Price - $300,000 Private Home Seller Bottom Line - $290,000 Private Home Seller "Agent Bottom Line - $297,435.90
If a buyer comes in "sans agent" they have $10,000 in negotiating room. Buyers that choose to use an agent now have less negotiating room on the house,$2,564.10 to be exact. This means they are paying for their agent without having to cut a separate cheque. As a buyer are you keeping your eye on the dollars you are spending?
I have been knocking on a lot of doors lately. Last week I had the pleasure of talking to a gentleman about his listing with a C21 agent. As he answered the door and saw my PropertyGuys.com Beetle over my shoulder he was quick to blurt out "I already have an estate agent." He continued on in his proper British accent about how the agent was giving him a deal by lowering the price on the house he was purchasing because he had listed with her.
So in this case the house was listed for $459,900. That means that the commission the home seller was expecting to pay was $24,097.50 including GST. What I am trying to figure out is how is this agent going to reduce the purchase price of the house they are buying by nearly $25,000. Generally if an agent does both sides of a deal (working on behalf of both buyer and seller) they reduce their commission from 5% to 4%. Let's say this agent was feeling awfully generous this day or even more likely, motivated to move the property and adjusted her commissions to 2.5%. For her to reduce the price by $25,000 it would mean this couple was buying at least a $1,000,000 home. Seems like a bit of a stretch for an upgrade, but possible.
If you are shopping to buy a house and the one you want is listed with an agent keep in mind that if they offer to work both sides of the deal to reduce the price of your purchase, under the condition that you list with them, they are not doing you any favours.
If they want to do the world a favour, they would let you sell privately and then you could pass on some of your savings to people that could REALLY use it...
Get involved with Kiva and make a difference in the world.
Have you noticed that "Full Service" gas stations just aren't "Full Service" anymore?
In the days of the "Service Station" things were different. You went down and visited Joe for everything from lead gasoline, getting your points done or a tweak of your carburetor. This started to change as the technology changed. Carburetors were replaced by fuel pumps, points were replaced by distributor caps, and unleaded gas became the norm. The service station was replaced by the gas station but it was still full service. The attendant washed every customer's window, he asked to check everyone's oil, he topped up all fluids. Technology continued to change. The need of full service was replaced by "pay at the pump" and no one looks under the hood anymore....not even car owners! Sure they still have "full service" pumps at some stations...but you are paying 2-5 cents per liter more so you don't have to get out of the car and pump your gas...not really full service is it?
It would seem there are some parallels to the real estate industry here...
I don't care if you have your investments with a bank, an insurance company or an independent financial planner. Fact is, if your financial adviser is not discussing your choices of how to sell your home they are not working in your best interest.
Think about it. If you were to live in 4 houses in your life how much money could you waste on a real estate agent. Let's do the math, shall we.
Year 1 (Age 30) First Home - Modest townhouse selling for $225,000 Agent Commission 5% - $11,250 GST on Commission - $562.50 Total amount not invested - $11,812.50
Year 5 (Age 35) Second Home - Single detached selling for $300,000 Agent Commission 5% - $15,000 HST on Commission - $1,950 Total amount not invested - $16,950
Year 20 (Age 50) Third Home - Large family home selling for $450,000 Agent Commission 5% - $22,500 HST on Commission - $2,925 Total amount not invested - $25,425
Year 30 (Age 60) Fourth Home - Bungalow selling for $300,000 Agent Commission 5% - $15,000 HST on Commission - $1,950 Total amount not invested - $16,950
At 60 I hope that we are all ready to retire (if not before). All ready to buy a cottage on a lake in Northern Ontario and a condo in Palm Springs. So let's look at our investment profile....or more importantly what didn't end up in it. The total amount of commissions (including taxes) paid to real estate agents through your life was $71,137.50. That sure is a big number! But let's add in the aspect of lost interest into that figure over the 30 years and see what it is.
Using the Bank of Canada investment calculator over the 30 years at 6% interest the $11,812.50 from our townhouse would have been $67,844.99. The $16,950 from our second home would be $72,747.21 over 25 years. The $25,425 from our 3rd home would be $45,532.30 over the 10 years. Of course our $16,950 doesn't get invested because we just sold that place. So the total money not in our financial portfolio due to needlessly spending it on real estate agents is $203,074.50.
Well the votes were tabulated and the winners were honoured.
Jan 27th 2010 the PropertyGuys.com annual Revvy Awards were held in fabulous Las Vegas NV. As you can see from the picture above the awards had a groovy theme based on the swinging sixties with a little Austin Powers mojo.
Franchisees and associates from across the country gathered together to honour the best of the best. Here are the winners for 2010...
- Cathy Young Perseverance Award: Leanne Carter, Grey Bruce, ON - Associate of the Year: Tonya Brubacher, Waterloo Wellington, ON - Model Office Award: Rick Davies, Belleville-Quinte, ON - Most Listings Award: Donny and Tiffany Legere, Moncton, NB - Homey Marketing Award: Daina Hernden, Truro, NS - Private Sale Professional (PSP) Award: Linda Bernier, Timmins, ON - Rookie of the Year: Katherine Benoit, Norfolk- Haldimand and Niagra, ON - Top Performer (West): Simon A. Jones, Kootenays, BC - Top Performer (Central): Dave Waters and Mike Shanks, Waterloo Wellington, ON - Top Performer (East): Donny and Tiffany Legere, Moncton, NB - Franchisee of the Year: Donny and Tiffany Legere, Moncton, NB
Congratulations to all winners! I would like to give a few "shout outs" though. Fist to Leanne Carter of Grey Bruce. Leanne and her husband Perry were clients of mine in Cambridge a few years back. When I was in and sat down with them in their kitchen I couldn't help but notice over Leanne's right shoulder she had some "start your own business" books. I made mention that there were franchises available with PropertyGuys.com and to look into it. Well within days not only was their house sold but they were looking into purchasing the Grey Bruce franchise. Always great to see hard work honoured but it means more when you saw the spark that started the fire!
Last year our own Sue Machado was honoured with Associate of the Year award. 2010 has brought the return of the Associate of the Year award to Waterloo Wellington but this year Tonya Brubacher was honoured. If you have ever met Tonya you know her love for her clients is almost always shared with a hug. Here are a few testimonials from her clients:
"Absolutely a delight to deal with Tonya Brubacher. Professional, courteous , enthusiastic and knowledgeable. We would not hesitate to use PropertyGuys.com again as it was not stressful but loads of fun and we saved a bunch of money in not having to pay commissions." Peter and Heather Ternoway Elora, Ontario "Sold in about 2 weeks. PropertyGuys.com provided a friendly professional service, and saved us thousands. No wonder every other PropertyGuys sign has a SOLD sticker on. Thank you Tonya, professionals like you make the difference." Greg Boyajian Guelph, Ontario "The PG team have perfected what it takes to get you all the way through to 'SOLD.' Their professional acumen, knowledge, personal touch, and genuine interest in your success is unparalleled. Lifelong friends have been made in the PG process." Donna Maidmen Guelph, Ontario
It would seem that the common conception is that when we want to sell our house we plan on what we need or want for our house and then set our asking price accordingly.
Are we not putting the cart before the horse here?
So lets say you own a horse. Not just any horse. A big old handsome horse. A horse that the Budweiser Horses would be jealous of. The kinda horse that the lady horses would want to date. Here is the problem. You need to sell it. It would seem that your brother has a love of football and gambling and has racked up some bills. You got a call and if you don't raise $10,000 "Vinnie" is going to take your horse to the glue factory (if only it was that no good brother). In order to avoid the sticky situation looming you have decided it might be wise to sell your horse, parlaying it into enough cash to cover your delinquent brother's debt. So you put up the ad for your horse at $10,000 on Horsetopia.com and hope for the best.
Problem is that the only other "Budweiser" horse you can find is going for much less ($2,500). Now given this horse is a gelding and nowhere near the horse that yours is, a difference is expected but the $7,500 price gap is not working in your favour. Had you done your homework you would have found out that your horse's market value is only $5,000.
It would seem this situation is common place in the real estate market. How are you going to price your home? Let's hope you price it right...before your horse runs off to the circus...
The question comes up often. Most people fall into the purchase column because that is what we do, right. We go to school, get a job, rent an apartment, save up some money, buy a house, buy another one, maybe one or four more, then we rent again, move into a "home", then we die. Life in Canada.
So does it make sense to buy a home? Their are plenty of people on either side of this argument. On the purchase side their are countless realtors, mortgage brokers, bankers, etc. Against the home purchase plenty of economists and investment people. The loudest voice against purchase seems to be Garth Turner. He is far from shy about exposing people "talking out their ass" about purchasing.
Let's look at the basic math as it sits today to see if Garth is right. Here is a rental townhouse in the north end of Cambridge that is available for $1,350 per month. Cost to rent this home for the year would be $16,200. Lets look at this over the 25 years it would take to purchase a home because we know that you pay more interest at the front and less at the end. Assuming that rent will not go up (err on the side of caution) the cost of renting this home for 25 years would be $405,000. WOW. What would it cost you to purchase?
We recently had a comparable home in the same area sell. It sold for $240,000. Again erring on the side of caution let's assume your mortgage was at 6% over the 25 years (although it is 3.79% today I would think it will go up over the next 25 years). So calculating this with 5% down ($12,000) your mortgage would be $228,000. With monthly payments of $1,458.76 your annual costs are $17,505.12 (a little more than renting) and the total paid over the 25 years is $437,627.41. $32,627.41 more than rent, right? Wrong. You still have the equity in the home. When you take away the $240,000 in equity (again not looking at inflation) total cost of the home was $197,627.41.
The only other thing to consider is the $12,000 you put out as a deposit and the $100 or so a month you saved in the rent situation. Let's assume that money was invested to see if it evens out. Investing the $12,000 deposit plus $100 a month at 6% (equal to the mortgage amount to be fair) works out to $123,225.53. Subtract that from the cost of rent and your cost to rent was $281,774.47, or $84,147.06 more than buying a home over 25 years.
So I will leave it to you whether you will buy or rent. Whatever you do don't get pushed into anything you are not ready for. Specially if it seems like Dr. Suess is the one doing the pushing...
How do we figure out the last piece of the puzzle?
Last year turned out to be a fairly strong year for real estate (even after the doom and gloom of the "Next Great Depression"). With any good year there are still problems that exist. When we are sitting on a strong real estate market what inevitably happens is people get caught up in the dollars and feel their home is worth way more than what the market is willing to pay.
The stats for 2009 show KW had their second best year in home sales. But what do the rest of the numbers tell us? Let's have a look.
For the Waterloo Wellington area MLS sales in 2007 were 13,093 based on 19,573 listings. These means that 66.89% of the homes listed sold. 2/3 of all homes listed sold, a very strong year and a seller's market for sure. This means that as a seller you were in a stronger position than a buyer as decidedly more people were selling than not selling.
2008 showed a reverse of this seller's market. MLS sales for 2008 were 11,573 based on 20,292 listings. Less solds and more listings, not looking good. The List to Sell Ratio dropped to 57.03%. Still not a bad ratio but an adjustment of 10% year over year effects the market. This is a common occurrence after a strong market as more and more people jump in to "ride the wave" and get their piece. People see what their neighbour got and then proceed to ask more for their house (and this continues to perpetuate). As the market price pushes up buyers either become more cautious or they just can't afford the costs of ownership.
Which way did 2009 go? I still don't have the Dec numbers in but Jan-Nov show 11,325 MLS sales (sure to be above 2008) based on 18,811 listings (expected to be under 2008). So as it sits the List to Sell Ratio has increased vs. 2008 but is still well under 2007 at 60.20% (Jan - Nov).
So where does this leave us in 2010? What is the piece of the puzzle to keep a strong housing market? I believe that the increase in 2009 is directly related to the lowered mortgage rates we saw. If these rates continue through 2010 then we will see a slight increase over 2009 as the first few months of last year we were still getting our feet under us. If the rates move up with any swiftness we will see a quick spike as those approved under the lower rates will make rash buying decisions and then a stall in the market slowing sales.
All in all our 2010 looks like it should be OK. Could be worse, we could live in the US...
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