Q - Real estate agents say that it is the market that dictates price and not the agent. Agents simply assess the market situation through a Comparative Market Analysis (CMA). Is this a valid statement?
A - In most circumstances this statement is valid. However, there are situations where the real estate agent can play a more significant role in suggesting a list price.
For example, in a closed community such as a condo building, townhouse complex or mobile home park, a well-established real estate agent in such a community can affect pricing. By pricing the property too low in anticipation of a quick sale, that sale becomes a barometer for other listings and sales. As a result, if the agent continues such a process, over time property values can go down in that closed community even though elsewhere that may not be the case.
Often when a different agent enters the closed community and sees an abnormally low sale price, the agent makes some inquiries to determine the reason for such a low price. It could be a distress sale or there may be some other valid reason for the quick sale and, under these circumstances, it is not a legitimate property to include in a CMA because it was not affected by market conditions. If there are no unusual circumstances attributable to the low sale price, then the agent and the seller should be suspicious as to why the sale price was unusually low and possibly discount this information in establishing a listing price for the seller's property.
Ultimately, an agent who is solely representing the seller, has a responsibility to work on behalf of the seller and obtain the best possible price for his client. In a closed community (condo and town house complexes as well as mobile home parks), the seller should be extra vigilant in reviewing the market information to ensure proper pricing. In fact, the seller should request more complete information and, where possible, also review the market information from other similar closed communities.
Saturday, May 26, 2012
Thursday, May 17, 2012
Seller Picks Listing Price
Q - I'm listing my house for sale and my real estate agent has prepared a CMA (Comparative Market Analysis) and has suggested a listing price. I don't agree with the listing price. Do you have any suggestions?
A - One of the problems with a real estate agent suggesting a list price is that the seller doesn't know how it was derived and, therefore, doesn't have confidence in the suggested price.
I use two steps for a CMA. The first step consists of reviewing the market. To that end, I use some basic criteria such as number of bedrooms, square footage, lot size, location and so on. Entering this information into the MLS System, for current listings, will provide me with a number of properties with varying prices. I generally print these out - there may be 10-30 properties. I select approximately 3 that are similar to my client's home.
I use the same process for homes that have recently sold and sometimes also for homes that have not sold.
The second step is to lay out these MLS print outs for the seller for current properties, those which have recently sold and perhaps those that have not sold so that the seller can see the context of these selected properties. We review each category and I point out my selections. We discuss the price range and the seller can then assess these selections and see where they fit within a larger context, i.e 10-30 properties.
Showing the seller the context of my selections brings clarity to the seller. Realizing that these choices were not arbitrary selections nor were they biased selections, the seller begins to build confidence in the price range.
When the seller is satisfied with the selections and the price range, I ask the seller to select the price for the home. The seller can determine whether he wishes to be near the top or bottom of the price range or somewhere in the middle. After a few moments, there is generally a smile and a list price.
The biggest advantage of this kind of process is that the seller takes ownership of the asking price. He has seen how it is built, understands it and was a participant in the price selection.
If the market changes and a price reduction/increase is appropriate, the real estate agent has the full cooperation of the seller.
A - One of the problems with a real estate agent suggesting a list price is that the seller doesn't know how it was derived and, therefore, doesn't have confidence in the suggested price.
I use two steps for a CMA. The first step consists of reviewing the market. To that end, I use some basic criteria such as number of bedrooms, square footage, lot size, location and so on. Entering this information into the MLS System, for current listings, will provide me with a number of properties with varying prices. I generally print these out - there may be 10-30 properties. I select approximately 3 that are similar to my client's home.
I use the same process for homes that have recently sold and sometimes also for homes that have not sold.
The second step is to lay out these MLS print outs for the seller for current properties, those which have recently sold and perhaps those that have not sold so that the seller can see the context of these selected properties. We review each category and I point out my selections. We discuss the price range and the seller can then assess these selections and see where they fit within a larger context, i.e 10-30 properties.
Showing the seller the context of my selections brings clarity to the seller. Realizing that these choices were not arbitrary selections nor were they biased selections, the seller begins to build confidence in the price range.
When the seller is satisfied with the selections and the price range, I ask the seller to select the price for the home. The seller can determine whether he wishes to be near the top or bottom of the price range or somewhere in the middle. After a few moments, there is generally a smile and a list price.
The biggest advantage of this kind of process is that the seller takes ownership of the asking price. He has seen how it is built, understands it and was a participant in the price selection.
If the market changes and a price reduction/increase is appropriate, the real estate agent has the full cooperation of the seller.
Thursday, May 10, 2012
Responses to Offer
Q - I have my home listed for sale. When I receive an offer, what options do I have in responding to the offer?
A - When you receive an offer, you have three choices:
- Accept
- Counter
- Reject
If the offer is within your expectations in terms of price, conditions and timing, you may wish to accept it as written.
If there are elements of the offer that are absolutely unacceptable, you may wish to make a counter offer and adjust those elements so that they are more acceptable to you. However, you must keep in mind that as soon as you make a change in the contract, it is like a new contract. The other party has the same choices - accept, counter or reject.
I rarely suggest rejecting an offer because that closes the door to any further negotiations. Sometimes offers begin with the buyer and seller very far apart but when parties negotiate in good faith, this can often bring about an offer acceptable to both parties.
If your real estate agent is only representing you (and not in a dual agency situation) he/she can spell out your options and the consequences BUT you are the decision maker.
A - When you receive an offer, you have three choices:
- Accept
- Counter
- Reject
If the offer is within your expectations in terms of price, conditions and timing, you may wish to accept it as written.
If there are elements of the offer that are absolutely unacceptable, you may wish to make a counter offer and adjust those elements so that they are more acceptable to you. However, you must keep in mind that as soon as you make a change in the contract, it is like a new contract. The other party has the same choices - accept, counter or reject.
I rarely suggest rejecting an offer because that closes the door to any further negotiations. Sometimes offers begin with the buyer and seller very far apart but when parties negotiate in good faith, this can often bring about an offer acceptable to both parties.
If your real estate agent is only representing you (and not in a dual agency situation) he/she can spell out your options and the consequences BUT you are the decision maker.
Monday, April 30, 2012
Home Value Retention Characteristics
Q - What characteristics should a home have in order for it to have the best resale value several years down the road?
A - Location is always an essential element. Is the home in a neighbourhood that is growing, declining or stable? A declining neighbourhood will impact the value of you home negatively over time. A home that is situated on a quiet street or cul-de-sac would be best. Avoid homes on busy streets and corners.
A three-bedroom home is better than a two bedroom. If you are purchasing a four-bedroom home make certain that there are three bedrooms on one level. Buyers with young families don't want their very young children sleeping on a different level.
A home with at least two baths is more saleable than one bath. An en-suite in the master bedroom, another 4-piece as well as another 2-piece is ideal.
A garage is a plus and also provides additional storage.
A - Location is always an essential element. Is the home in a neighbourhood that is growing, declining or stable? A declining neighbourhood will impact the value of you home negatively over time. A home that is situated on a quiet street or cul-de-sac would be best. Avoid homes on busy streets and corners.
A three-bedroom home is better than a two bedroom. If you are purchasing a four-bedroom home make certain that there are three bedrooms on one level. Buyers with young families don't want their very young children sleeping on a different level.
A home with at least two baths is more saleable than one bath. An en-suite in the master bedroom, another 4-piece as well as another 2-piece is ideal.
A garage is a plus and also provides additional storage.
Tuesday, April 24, 2012
Square Footage
Q - What is included in the square footage of a listed home? Balcony? Garage? Unfinished basement?
A - Essentially the square footage should include only those areas which are liveable. The criteria for 'liveable' means that the room is heated, has windows and often, it also means, that it's insulated.
A balcony does not fit this criteria even though it may be enclosed. Similarly, a garage doesn't fit the criteria either even though there are garages which have been rudimentarily converted to 'living' space.
As for an unfinished basement, it is unfinished even though there may be furnishings in that area and it may well be set up to accommodate a household member. Nevertheless, it should not be counted in the finished square footage.
In order, to relate the extent of the space available in a house, some listings allow for a category of 'unfinished' square footage or it can be included in the comments of the listing. This conveys the information that there is potential to enlarge the living space of the home at some future date.
It is, nevertheless, inappropriate to include the balcony or the garage in the 'unfinished' square footage. Garages and balconies should continue to be described as such.
Measuring a home accurately is an art. Many real estate agents provide square footage information but it tends to be an approximate partly due to the manner of measurement and also because these figures are rounded off to the nearest foot. If you have certain furnishings that require a particular fit, bring along your own tape measure to be sure that the home can adequately accommodate your needs.
A - Essentially the square footage should include only those areas which are liveable. The criteria for 'liveable' means that the room is heated, has windows and often, it also means, that it's insulated.
A balcony does not fit this criteria even though it may be enclosed. Similarly, a garage doesn't fit the criteria either even though there are garages which have been rudimentarily converted to 'living' space.
As for an unfinished basement, it is unfinished even though there may be furnishings in that area and it may well be set up to accommodate a household member. Nevertheless, it should not be counted in the finished square footage.
In order, to relate the extent of the space available in a house, some listings allow for a category of 'unfinished' square footage or it can be included in the comments of the listing. This conveys the information that there is potential to enlarge the living space of the home at some future date.
It is, nevertheless, inappropriate to include the balcony or the garage in the 'unfinished' square footage. Garages and balconies should continue to be described as such.
Measuring a home accurately is an art. Many real estate agents provide square footage information but it tends to be an approximate partly due to the manner of measurement and also because these figures are rounded off to the nearest foot. If you have certain furnishings that require a particular fit, bring along your own tape measure to be sure that the home can adequately accommodate your needs.
Sunday, April 8, 2012
Real Estate Process of Buying and Selling
Q - I am preparing to sell my home this spring. I would like to read up on the in's and out's of the real estate process ( in Canada) before I place my home on the market. Where can I get this kind of information?
A - There is a book on the market that covers all the bases. It is entitled: 'The Real Estate Process: Pros Discuss Buying and Selling Your Home.' It contains information from 4 professionals that you may encounter during the real estate process - real estate agent - lawyer - home inspector - home stager.
Each professional wrote the section pertaining to their expertise. I authored the real estate section and edited the book. It is available on Amazon or through my website.
The book includes the following sections:
First - What does the real estate agent do for you and how does this work? It is a step by step explanation. It covers areas such as -- What happens when you call a real estate agent? How are appointments set up? How are showings handled? Are Open Houses useful? Are they safe? What should be taken into account when doing Open Houses? What is included in an offer? What clauses are important? How does the real estate agent get paid? It also discusses some financing options and provides explanation of mortgage terms.
Second - The legal process is more of a mystery than it should be. A lawyer walks you through what is involved both when you are selling real estate or buying. It is a thorough explanation and provides a greater understanding of your legal implications as well as how your property gets registered. Among the topics are: charges on title both removable and not removable, purchase tax or land transfer tax, survey certificate, title insurance, mortgage disclosure statement, statutory declarations, statement of adjustments and much more.
Third - Is it necessary to get a home inspection? What does a home inspector really do? Equally important is to understand what the home inspector does not do. Is a home inspection a guarantee of some kind? Can anyone do a home inspection? How does the home inspector interact with the real estate agent, the buyer and the owner. What are some of the myths and misconceptions about home inspections.
Fourth - If you are selling, you may wish to consider getting assistance from a home stager. When potential buyers come to view your home, it is vital to make a good first impression. You have only one opportunity to make a good impression! You want your home to be memorable both from the outside and the inside. A home stager has the skills to make your home look its best.
The real estate process has become more complex over the years and the consumer is not sufficiently aware of this process. This prompted me to put together this book with key professionals contributing their expertise. I am certain this book will enlighten you and give you confidence when you enter the real estate market.
A - There is a book on the market that covers all the bases. It is entitled: 'The Real Estate Process: Pros Discuss Buying and Selling Your Home.' It contains information from 4 professionals that you may encounter during the real estate process - real estate agent - lawyer - home inspector - home stager.
Each professional wrote the section pertaining to their expertise. I authored the real estate section and edited the book. It is available on Amazon or through my website.
The book includes the following sections:
First - What does the real estate agent do for you and how does this work? It is a step by step explanation. It covers areas such as -- What happens when you call a real estate agent? How are appointments set up? How are showings handled? Are Open Houses useful? Are they safe? What should be taken into account when doing Open Houses? What is included in an offer? What clauses are important? How does the real estate agent get paid? It also discusses some financing options and provides explanation of mortgage terms.
Second - The legal process is more of a mystery than it should be. A lawyer walks you through what is involved both when you are selling real estate or buying. It is a thorough explanation and provides a greater understanding of your legal implications as well as how your property gets registered. Among the topics are: charges on title both removable and not removable, purchase tax or land transfer tax, survey certificate, title insurance, mortgage disclosure statement, statutory declarations, statement of adjustments and much more.
Third - Is it necessary to get a home inspection? What does a home inspector really do? Equally important is to understand what the home inspector does not do. Is a home inspection a guarantee of some kind? Can anyone do a home inspection? How does the home inspector interact with the real estate agent, the buyer and the owner. What are some of the myths and misconceptions about home inspections.
Fourth - If you are selling, you may wish to consider getting assistance from a home stager. When potential buyers come to view your home, it is vital to make a good first impression. You have only one opportunity to make a good impression! You want your home to be memorable both from the outside and the inside. A home stager has the skills to make your home look its best.
The real estate process has become more complex over the years and the consumer is not sufficiently aware of this process. This prompted me to put together this book with key professionals contributing their expertise. I am certain this book will enlighten you and give you confidence when you enter the real estate market.
Saturday, March 31, 2012
REALTOR vs Real Estate Agent
Q - I often hear the term Realtor. Is there any difference between the term Realtor and real estate agent?
A - Yes, technically there is a difference but practically not so much.
The terms REALTOR, MLS, Multiple Listing Service and the associated logos are trademarks owned by The Canadian Real Estate Association (CREA). These trademarks are intended to identify the quality of services provided by real estate professionals who are members of CREA. This membership allows members to have access to the most complete and powerful listing service - the MLS System which is also financially supported by the membership.
It does not follow that all real estate agents are REALTORS. If they do not belong to a real estate board that is a member of CREA, they are simply real estate agents and not REALTORS. As such, they do not have access to the MLS Services.
In the United States, the comparable association is called The National Association of Realtors (NAR) and operates in a similar manner. NAR also has other well known designations which they sponsor.
There have been some challenges in both countries regarding this kind of exclusivity held by CREA and NAR. The issues have not yet been totally resolved and continue to be addressed in courts of law. Both CREA and NAR are highly involved in lobbying their respective governments on behalf of their agents and brokers.
A - Yes, technically there is a difference but practically not so much.
The terms REALTOR, MLS, Multiple Listing Service and the associated logos are trademarks owned by The Canadian Real Estate Association (CREA). These trademarks are intended to identify the quality of services provided by real estate professionals who are members of CREA. This membership allows members to have access to the most complete and powerful listing service - the MLS System which is also financially supported by the membership.
It does not follow that all real estate agents are REALTORS. If they do not belong to a real estate board that is a member of CREA, they are simply real estate agents and not REALTORS. As such, they do not have access to the MLS Services.
In the United States, the comparable association is called The National Association of Realtors (NAR) and operates in a similar manner. NAR also has other well known designations which they sponsor.
There have been some challenges in both countries regarding this kind of exclusivity held by CREA and NAR. The issues have not yet been totally resolved and continue to be addressed in courts of law. Both CREA and NAR are highly involved in lobbying their respective governments on behalf of their agents and brokers.
Sunday, March 25, 2012
Market Conditions
Q - I often hear the terms 'buyer's market' and 'seller's market'. What are the implications of these conditions?
A - Market conditions change over time and it is important for buyers and sellers to be aware of the market conditions when they are either buying or selling real estate.
Let me begin with a balanced market. This means that the demand for homes is about equal to the supply of homes. Put another way, the number of homes on the market is approximately equal to the number of buyers. In such a market, homes sell within a reasonable time. Depending on the area, this could be somewhere between 30 to 60 days. Buyers have a reasonable number of homes to choose from. In these circumstances, prices are stable and sellers tend to accept reasonable offers.
A buyer's market means that there are far more homes on the market than there are buyers - supply exceeds demand. In such a market, this increased availability of homes compared to the number of buyers translates into longer selling period. Homes stay on the market longer and prices tend to drop. This enables buyers to take their time in searching for a property. It also gives buyers more negotiating power.
A seller's market means that there are more buyers looking for homes than there are homes -- demand exceeds supply. In this kind of market, homes sell quickly -- sometimes it may only take a few days and the selling period can be as short as a few hours. Buyers have to make quick decisions or they may loose that particular home. Also, buyers may have to pay above the listed price if there are others interested in the same property. Sellers might choose to only accept offers without any conditions.
Being aware of market conditions helps sellers and buyers with their buying or selling strategies.
A - Market conditions change over time and it is important for buyers and sellers to be aware of the market conditions when they are either buying or selling real estate.
Let me begin with a balanced market. This means that the demand for homes is about equal to the supply of homes. Put another way, the number of homes on the market is approximately equal to the number of buyers. In such a market, homes sell within a reasonable time. Depending on the area, this could be somewhere between 30 to 60 days. Buyers have a reasonable number of homes to choose from. In these circumstances, prices are stable and sellers tend to accept reasonable offers.
A buyer's market means that there are far more homes on the market than there are buyers - supply exceeds demand. In such a market, this increased availability of homes compared to the number of buyers translates into longer selling period. Homes stay on the market longer and prices tend to drop. This enables buyers to take their time in searching for a property. It also gives buyers more negotiating power.
A seller's market means that there are more buyers looking for homes than there are homes -- demand exceeds supply. In this kind of market, homes sell quickly -- sometimes it may only take a few days and the selling period can be as short as a few hours. Buyers have to make quick decisions or they may loose that particular home. Also, buyers may have to pay above the listed price if there are others interested in the same property. Sellers might choose to only accept offers without any conditions.
Being aware of market conditions helps sellers and buyers with their buying or selling strategies.
Thursday, March 8, 2012
Property Disclosure Statement
Q - I just purchased a home and had to sign the Property Disclosure Statement completed by the Seller. Does that mean the home is guaranteed?
A - In Canada, it is a common practice, when a seller lists his property, to complete a Property Disclosure Statement (PDS). The form includes a variety of questions about the property which the seller must honestly answer to the best of his knowledge. There must be full disclosure about the property. This does not imply any kind of guarantee.
The buyer should use this information as a basis to make further inquiries. He should not rely solely on the PDS. It is recommended that he hire a Home Inspector before finalizing the contract.
The PDS is subject to the buyer's approval and forms part of the contract. It is wise to make all property inquiries and do a home inspection before signing the PDS.
A - In Canada, it is a common practice, when a seller lists his property, to complete a Property Disclosure Statement (PDS). The form includes a variety of questions about the property which the seller must honestly answer to the best of his knowledge. There must be full disclosure about the property. This does not imply any kind of guarantee.
The buyer should use this information as a basis to make further inquiries. He should not rely solely on the PDS. It is recommended that he hire a Home Inspector before finalizing the contract.
The PDS is subject to the buyer's approval and forms part of the contract. It is wise to make all property inquiries and do a home inspection before signing the PDS.
Tuesday, February 28, 2012
Does the Buyer Pay the Real Estate Agent's Fee?
Q - I'm ready to buy a home. Do I have to pay the real estate agent?
A - In most instances, the buyer's real estate agent gets paid from the proceeds of the transaction.
The listing agent's Brokerage has a listing contract with the seller that specifies the dollar amount or percentage of the selling price that will be paid to the brokerage upon completion of the transaction. Out of that, the contract stipulates the dollar amount or percentage of the selling price that will be shared with the selling real estate agent's Brokerage.
The respective agents also have agreements with their Brokerages as to what percentage they will receive for their services. These fee agreements vary within a real estate company and among real estate companies.
So, if the home is on the multiple listing service, you are not likely to have to pay anything extra as your agent will be paid out of the transaction.
There are, however, situations where the buyer pays the agent either in part or the full fee. These are situations where a contract is drawn up between the selling agent's brokerage and you.
Sunday, February 19, 2012
Do Open Houses Sell Homes?
Q - Do Open Houses really sell homes? My real estate agent suggested doing an Open House.
A - For the past 8 years, the Victoria Real Estate Board in BC, Canada, has been surveying how buyers find the homes they have purchased. Throughout all the years, Open Houses have accounted for about 2%. So how do buyers find their homes? The majority find their homes through their real estate agent, next are internet sites - the major one being Realtor.ca, and thirdly, the real estate lawn sign. Open Houses are at the bottom of the list with classified ads.
It is very important to be aware of this since Open Houses pose a risk in terms of the security of the owner's possessions and the safety of the real estate agent. We no longer pick up strangers in our cars but we continue to allow strangers to wander through our homes during an Open House.
There really isn't much of a chance of selling your home through an Open House. When asked, most real estate agents admit this fact. So why do real estate agents do Open Houses? It is an opportunity to meet new buyers, who might be turned into clients, and it ensures the seller that the agent is working on selling the home.
There are some exceptions. When a builder is developing a project and establishes a show suite in which Open Houses take place, these Open Houses provide an opportunity for potential buyers of new construction to be able to preview designs and quality inherent in the project.
Thursday, February 9, 2012
Large franchise or local real estate firm?
Q - Should I list my home with a large real estate franchise or a smaller local real estate firm?
A - This is a frequent question. Large franchises do a great deal of advertising promoting themselves. The consumer often sees this in a positive light and presumes that such a firm will provide a substantial marketing program for their clients. That may or may not be so.
Real estate agents are independent contractors and are considered self-employed. It is the real estate agent, not the real estate firm, who plans and pays for all the advertising and marketing of your property. So discuss the marketing of your property with agents of your choice regardless of the size of the firm.
Franchises often indicate that, because of their size and their many locations, they are more likely to have referrals for new buyers from their offices across the country. This can also be said of smaller companies because they network with other companies across the country.
Speak to 2 or 3 real estate agents from different companies and find out first hand what kind of marketing they will do for you. Make a list of question beforehand to be sure you cover all your questions. This will help you make the right decision.
Saturday, January 28, 2012
Best Selection of Properties for Sale
Q - I want to purchase a home. What is the best real estate website to view residential properties for sale? There are so many. Help!
A - You are so right! There are numerous websites which list residential properties for sale. All real estate companies seem to have their own websites, such as Royal LePage, Remax, Century 21 and many many others. Most real estate agents also have their own websites. You have to remember that a real estate company and their real estate agents only display their own listed properties. On the Royal Lepage website, for instance, you only see properties which the company's real estate agents have listed. Similarly, Remax displays their listings as does Century 21 and others.
If you only go to one company's site, you are limiting your choices. To go to websites of numerous real estate companies is somewhat overwhelming. Your best answer is to go to a Multiple Listing site to search for properties. Realtor.ca will provide you with all properties listed in Canada while Realtor.com will display the US properties.
Not to short change the real estate companies, many of them actually provide a link to Realtor.ca or Realtor.com on their websites -- i.e. the MLS (Multiple Listing System).
The above refers to properties listed by real estate agents. There are sellers who choose to sell their properties themselves as opposed to listing with a real estate company. To view such properties you would have to check out sites such as FSBO.ca and other such sites where sellers can post their properties. However, not all For Sale by Owners list their properties on a website. Many simply have a For Sale Sign on their lawn.
The above refers to properties listed by real estate agents. There are sellers who choose to sell their properties themselves as opposed to listing with a real estate company. To view such properties you would have to check out sites such as FSBO.ca and other such sites where sellers can post their properties. However, not all For Sale by Owners list their properties on a website. Many simply have a For Sale Sign on their lawn.
To make the best possible purchasing decision, you should select a property among all those available not just among those listed by a particular franchise.
Sunday, January 22, 2012
Appraisal vs Assessment
Q - Does my property assessment reflect the value of my home?
A - Your property assessment is utilized to calculate your property taxes. It should not be used as an indicator of property values.
Depending on the province, assessments reflect various time periods. In British Columbia, property assessments reflect prices as of July 1st of the previous year. Also, year-to-year adjustments are based on a formula and not by property inspections. In Ontario, for instance, they use the same base year to calculate taxes for four consecutive years.
The market is dynamic and moves at various speeds depending on economic conditions. A property assessment is static and used for different lengths of time and, therefore, is not a good measure of property value.
A property appraisal, on the other hand, is done by actually inspecting the property. The appraiser examines the property in the context of the market and places a value on that specific property. The appraised value is only valid for that point in time. The older the appraisal, the less accurate it becomes because the market is dynamic in nature. A year-old appraisal no longer reflects the true value of a property. In a very fast moving market, a two-month appraisal may also be inaccurate.
For residential properties, real estate agents are able to do a Comparative Market Analysis to arrive at a selling price that would be competitive in the market place. For a more in depth analysis of your property, a professional appraisal can be enlisted.
Friday, January 13, 2012
Agent's Pay Day
Q - Before we wrote the offer for our home, we had to sign a document about how much money the agent was going to receive. We didn't get a copy of it but could you tell us more about it?
A - What you are referring to is called a "Disclosure of Remuneration". This document was introduced a few years ago so that the buyer would be aware if the brokerage or the agent has any vested interest in the transaction. All money and gifts/rewards which may be received are to be disclosed on this document.
For example, the document spells out in percentage or actual dollars the compensation the brokerage will earn on completion of the transaction. This document also requires the disclosure of any rewards or gifts which the brokerage/agent may receive for referring the buyer to a particular service. Sometimes mortgage companies, inspection companies and other service providers provide rewards for referrals from real estate agents. The buyer is entitled to this information.
Such full disclosure enables the buyer to see all compensation/rewards that the brokerage/agent may receive and from whom. The buyer then has a full picture of the surrounding elements of the transaction.
It is appropriate to provide a client with copies of all documents which have been signed during the buying process. If you have not received them -- ask for them.
Wednesday, December 28, 2011
Representation by One Lawyer
Q- The buyer and I have chosen the same lawyer to complete our real estate transaction. Could this be a problem?
A - It is not a recommended practice in most of Canada (except for Quebec) but it does happen from time to time.
If the real estate transaction goes smoothly, there are normally no issues. However, if a problem surfaces with the transaction, the lawyer cannot represent both of you adequately. In that situation, the lawyer will act to represent one of the parties and ask the other to get different representation.
In the meantime, if the lawyer is comfortable representing both buyer and seller, both of you will have to sign a document acknowledging that there are some limitations to such a representation. You may wish to have the lawyer explain more fully what that would mean in your situation.
A - It is not a recommended practice in most of Canada (except for Quebec) but it does happen from time to time.
If the real estate transaction goes smoothly, there are normally no issues. However, if a problem surfaces with the transaction, the lawyer cannot represent both of you adequately. In that situation, the lawyer will act to represent one of the parties and ask the other to get different representation.
In the meantime, if the lawyer is comfortable representing both buyer and seller, both of you will have to sign a document acknowledging that there are some limitations to such a representation. You may wish to have the lawyer explain more fully what that would mean in your situation.
Saturday, December 17, 2011
Selling Price
Q - I'm placing my home on the market and trying to establish the selling/list price. I interviewed 3 real estate agents and they provided their recommendations - one of them was $10,000 higher than the other two. Who should I believe?
A -The selling price of a home is a function of the real estate market. A real estate agent can't influence the selling price anymore than a stockbroker can dictate the price of a stock. Agents arrive at a list/selling price recommendation by analyzing similar properties that have recently sold under normal market conditions in the same location.
If the agents left you their Comparative Market Analysis for your information, review the information carefully. They should have selected homes that are similar to yours, in the same location and they should be very recent sales. A $10,000 dollar variation seems large. Perhaps the criteria for home selections was not followed diligently.
Remember that the price at which you list your home is YOUR decision. If your price is too high, your home could be overlooked and if you price to low, you could lose money. Pricing at market value should be your goal. Obtain more clarification if necessary. It is important to be on target.
A -The selling price of a home is a function of the real estate market. A real estate agent can't influence the selling price anymore than a stockbroker can dictate the price of a stock. Agents arrive at a list/selling price recommendation by analyzing similar properties that have recently sold under normal market conditions in the same location.
If the agents left you their Comparative Market Analysis for your information, review the information carefully. They should have selected homes that are similar to yours, in the same location and they should be very recent sales. A $10,000 dollar variation seems large. Perhaps the criteria for home selections was not followed diligently.
Remember that the price at which you list your home is YOUR decision. If your price is too high, your home could be overlooked and if you price to low, you could lose money. Pricing at market value should be your goal. Obtain more clarification if necessary. It is important to be on target.
Monday, December 12, 2011
Best Time to Sell
Q - What is the best time to place my home on the market? Is it worth placing my home on the market during the Christmas/New Year season?
A - If you want to sell -- make certain your property is on the market regardless of time of year. There are buyers all year round.
Traditionally, sellers like to place their property on the market starting in the Spring. The weather is better, the lawns look nicer and flowers are blooming. These are all reasons that help the property look attractive. The fact of the matter is that during this time sellers have the greatest amount of competition and buyers have the greatest choices. It is often a buyer's market.
Generally speaking, there are fewer homes for sale during the Christmas and New Year holidays because sellers perceive that few people are house shopping and so they decide to focus on the holiday season. BUT circumstances don't always allow people the luxury of scheduling the purchase of a home and could find themselves house shopping when everyone else is gift shopping. These buyers are usually serious buyers. Often their complaint is that there is not enough choice! This time of the year is often a seller's market and a serious seller should take advantage of this opportunity.
A - If you want to sell -- make certain your property is on the market regardless of time of year. There are buyers all year round.
Traditionally, sellers like to place their property on the market starting in the Spring. The weather is better, the lawns look nicer and flowers are blooming. These are all reasons that help the property look attractive. The fact of the matter is that during this time sellers have the greatest amount of competition and buyers have the greatest choices. It is often a buyer's market.
Generally speaking, there are fewer homes for sale during the Christmas and New Year holidays because sellers perceive that few people are house shopping and so they decide to focus on the holiday season. BUT circumstances don't always allow people the luxury of scheduling the purchase of a home and could find themselves house shopping when everyone else is gift shopping. These buyers are usually serious buyers. Often their complaint is that there is not enough choice! This time of the year is often a seller's market and a serious seller should take advantage of this opportunity.
Tuesday, November 29, 2011
Builder Incentives
Q - When a builder offers a cash back of $25,000 on the purchase of a condo, is that really a good opportunity for me as a buyer? It is promoted as "living free" for a year.
A - Let's say the condo costs $350,000 and you get $25,000 cash back, you are paying mortgage interest on the full $350,000 minus your downpayment. That is not 'living free'. It may sound enticing but there is a financial cost to this cash back. A price reduction in the amount of the cash back would be much better.
In order to assess your situation in greater detail, go to your bank or mortgage broker with the pertinent information and they will be able to provide you with the specific calculations regarding interest rates, payments, your affordability and the actual cost to you regarding such a cash back.
A - Let's say the condo costs $350,000 and you get $25,000 cash back, you are paying mortgage interest on the full $350,000 minus your downpayment. That is not 'living free'. It may sound enticing but there is a financial cost to this cash back. A price reduction in the amount of the cash back would be much better.
In order to assess your situation in greater detail, go to your bank or mortgage broker with the pertinent information and they will be able to provide you with the specific calculations regarding interest rates, payments, your affordability and the actual cost to you regarding such a cash back.
Monday, November 21, 2011
Amount of Time for Seller to Review Offer
Q - How much time should I, the buyer, give the seller to review my offer?
A - If it is a single family residential home, it depends on how quickly the market is moving and how accessible the seller might be.
If the market is moving very quickly and the property has many showings in a very brief time, a short review period is appropriate and desireable so that there is less chance of a second offer coming into play. If the seller is easily accessible, 2-3 hours is ample. Sometimes even less time is given in a highly active market. Such a process works for the benefit of the buyer.
In such a situation, if you were to provide the seller with a day or two, the chances are that another offer or two might be presented. This would certainly benefit the seller but not the buyer with the first offer. A multiple offer situation always favors the seller and can result in an offer above the asking price.
A - If it is a single family residential home, it depends on how quickly the market is moving and how accessible the seller might be.
If the market is moving very quickly and the property has many showings in a very brief time, a short review period is appropriate and desireable so that there is less chance of a second offer coming into play. If the seller is easily accessible, 2-3 hours is ample. Sometimes even less time is given in a highly active market. Such a process works for the benefit of the buyer.
In such a situation, if you were to provide the seller with a day or two, the chances are that another offer or two might be presented. This would certainly benefit the seller but not the buyer with the first offer. A multiple offer situation always favors the seller and can result in an offer above the asking price.
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