Toronto: 72 offers on a home, sells at 195% of List Price?

From www.thestar.com

Hot Real Estate markets often bring out creative gimmicks.  In the Yonge and Lawrence area, a property expected to sell in the $1.1M range was listed for sale at $699,900.  72 offers were presented, with the successful bidder paying $1,366,000 or 195% of list price.  Obviously a good result for the Seller.

It goes without saying there were 71 unhappy buyers in this situation.  I suspect there would have been many offers close to the list price of $699,900. 

The unfortunate by-product of this particular bidding process are the poor buyers in the $700,000 price range who thought they had the chance of purchasing in a $1M+ neighbourhood.  The fact is, the house would never have sold below $1M so their participation in the bidding war simply fed the upward push of the eventual sale price.

We have experienced such situations before while acting for buyers.  In addition to the agony of defeat in the offer process, it often brings false expectations of similar properties becoming available or, worse, a new desire to purchase in a higher price range than possible.

At the end of the day, this Listing Agent here did his job for the seller and the result is indisputable.   Sadly, it angers many other consumers and does not shed a positive light on the Real Estate industry.

VICTORIA REALTORS® COOK UP $10,000 DONATION FOR THE MUSTARD SEED FAMILY CENTRE

N E W S  R E L E A S E

May 15, 2013

For Immediate Release

VICTORIA REALTORS® COOK UP $10,000 DONATION FOR THE MUSTARD SEED FAMILY CENTRE

The Mustard Seed Family Centre received a boost today from the Victoria Real Estate Board (VREB) who donated $10,000 and named the Family Centre as VREB’s Charity of the Year. REALTORS^® arrived onsite with a dozen slow cookers filled with nutritious family meals and cookbooks of the recipes used ­– one for each program participant to take home.

After the cheque presentation, a shared meal with staff and participants gave volunteers the opportunity to discuss other ways to help the Family Centre.

“Part of our community relations program is to volunteer in ways that provide value to organizations,” said Carol Crabb, VREB Past-President.  “When we notified the Mustard Seed Family Centre that we had chosen them, we asked how we could help. Diane Pearson, the program coordinator, said she wanted to secure a Crockpot^® for each person in the group to help them cook nutritious, budget-conscious meals for their busy families.”

Earlier this year, the VREB issued a call for proposals to local organizations that contribute to the well being of the Greater Victoria community. The successful proponent would receive $10,000 for a specific new project or initiative, as well as volunteerism and fundraising for the balance of the year.

“The Mustard Seed is helping families build an inventory of skills to help them succeed in life,” said Andrew Plank, VREB Community Relations Chair. “I’m so pleased that VREB is able to help in our small way, and look forward to helping support the families by other means.”

“We are truly grateful to the Victoria Real Estate Board for the generous donation and volunteer commitment to the Mustard Seed,” says Jackie Cox-Ziegler, Director of Administration for the Mustard Seed . “This is wonderful opportunity to work together to improve the lives of families living in poverty in Victoria.”

The Mustard Seed has been helping people living in poverty since 1975. The programs and services of the Mustard Seed are 100% community funded. They include Vancouver Island’s largest food bank, counseling, advocacy and outreach services, a drop-in centre, a coffee shop, clothing bank, haircuts, nursing and chapel, a Family Centre with life skills programs, and an addictions recovery program at Hope Farms Healing Centre. The Mustard Seed relies on approximately 40 volunteers per day to serve those in need.

The Victoria Real Estate Board has been the non-profit association of REALTORS® in Greater Victoria and the Southern Gulf Islands for 92 years. VREB provides information to consumers and government, local regulation to over 1,200 Members, and manages the Multiple Listing Service (MLS®) system for the use of its Members. VREB works throughout the region to help build healthy, sustainable communities according to its Quality of Life Principles.

– 30 –

Contact:

Maggie Kerr-Southin                                      Christine Gleed

Communications Manager                             Mouthpiece Communications (for the Mustard Seed)

Victoria Real Estate Board                             T: 250.857.7517

T: 250.920.4652                                              E: christine@mouthpiece.ca

C: 250.516.5596

E: mkerrsouthin@vreb.org

Maggie Kerr-Southin APR, Manager, Communications, Victoria Real Estate Board
3035 Nanaimo Street, Victoria BC V8T 4W2 - Direct Phone: 250.920.4652 - www.vreb.org

Real Estate Requests for Proposals (RFPs): an imperfect process

The  Home Seller process of selecting a Real Estate Agent is flawed.

Let's start by disclosing what the best tried and true method of picking a great Agent is: get a recommendation from a close friend or family member who has had a great experience with a particular Agent.  No rating system can determine how an Agent handles problem solving or, most importantly, what the chemistry is like during the complicated process of selling your most valuable asset.  Nothing speaks volumes more than a glowing testimonial or recommendation from a friend or family member.

Do-it-Yourself books commonly direct Home Sellers to interview 3 or more Agents and picking the one based on these 3 common criteria:
-marketing plan
-highest listing price estimate
-lowest commission

For those of you who do purchasing for Government Agencies, this sounds a lot like your typical "Request for Proposal".  Whether its a shipbuilding or bridge construction project, a mass furniture purchase or renovation job, people and committees are well accustomed to making selections in this manner.

It's actually a good process for committees or Boards, who purposely distance themselves emotionally and personally for the greater good of their organization, avoiding any conflicts of interest or other troublesome scenarios.

The problem for a homeowner is that the sale of their home is indeed an emotional and personal matter.

Sellers need to understand that there is a vast range of skills possessed (or not possessed) by Agents and that by using only the criteria listed above, chances for failure are extremely high.  In today's market, only 40% of listings taken actually sell so Sellers need every tool and skill necessary if they really do want to succeed. 

Highly successful, productive and reputable Agents not only earn more for their services (they are in higher demand) but they are able to demonstrate why they are well compensated and how the commission dollars get spent in innovative marketing plans.  They are also very realistic on pricing and would rather decline on a seller's listing than price beyond market reality as doing so only sets themselves and the seller up for failure.

I once read that during blast-off, one of the earliest NASA Astronauts had a momentary panic when he realized he was riding aboard a massive bomb- built by the lowest bidders!  Save yourself the panic and invest in an Agent with the right chemistry who can justify their cost and can use recent success stories to substantiate their claims! 

I saved a life today. It's really much easier than you might think.

I can literally say I saved a life today.  But 100+ other individuals did as well, having visited the Victoria Clinic of Canadian Blood Services.

I started giving blood 5 years ago, when a relative was diagnosed with hemachromatosis:  an excess of iron in the bloodstream.  This is genetic commonly passed down on the male side of the family.  The good news is a relatively easy remedy:  bloodletting.  My Doctor suggested donating blood, to deal with this possible condition (turned out that I do not have it) and also to contribute to the local blood supply.

Since that first visit, I have been back 32 more times and often with groups.  My Lodge of Odd Fellows brings a group of 5 or so every 2 months, usually capped with liquid replenishment at the local pub.  Today, I joined my friend and fellow Real Estate Board Past President Dennis Fimrite, who gave his 125th donation- to compliment his dad, Rod, who had given 175 times before recently dealing with cancer which makes him no longer eligible to donate.

175 (or 125) is an incredible number when you consider that one can only donate whole blood every 56 days.  That means Rod has been donated for at least 27 years and Dennis 19- provided they kept to the strict 56 day period.

Since starting to donate at the clinic, I have also become a volunteer once a month and am also on the Speaker's Bureau, where I give an educational presentation on the need for blood.  Here are some of the key points discussed:
-British Columbia uses more blood than it generates.  Per capita, we are the weakest Province in the country for donations.  In fact, BC imports blood from other Provinces just to keep up with demand.  We need to get better at this.
-whole blood only has a shelf life of about 35 days, although because of demand it is generally used within 5 days.
-blood can't be frozen, although the plasma can be separated and kept for a time.
-we do not possess the technology to replicate blood.
-the need for blood is high:  In emergencies, cancer patients can require 5 units,  internal bleeding 8 units, a car accident 50 units (!?!)
-ongoing treatment for cancer patients can require 5 units of blood weekly

You may think that blood is readily available.  Could you imagine this very possible scenario:  a technician in an Emergency Room opens the fridge, only to find there is not enough blood to restore life to a trauma victim.  That person could require the 50 units mentioned above, which would have to come from 50 different donors within the month- all needing to be the matching blood type.

Blood for transfusions can drastically improve someone's health also.  Or keep loved ones with you just a little longer.  When my dad was ill, transfusions gave him extra energy and provided us several extra precious days with him.  We had wonderful conversations and moments I will never forget.  We knew transfusions could not cure him but both times he received blood, I was proud of my own commitment to donate, knowing that someone else's family might benefit from my donation in a similar way.

To me, donating is a social experience.  I enjoy going with a group of friends, visiting and catching up.  Sometimes we make a fun wager on who will donate fastest (I owe Dennis $5 bucks today- his 5:50 beat my 7:00!).  Sitting around the table afterward with cookies and juice with further chatting is another bonus.

All this within a 60 minute visit every 2 months in a great atmosphere with people I know.  And I saved someone's life.

Please consider donating today.  If you haven't given before, it's easy and can be fun!  Call 1-888-TO DONATE

Victoria Real Estate just isn't what it used to be

As expected of a longtime Real Estate Agent, every day someone asks me "What's happening in the Real Estate market?".  The doom and gloom in the media seems to have died down, as reductions in transaction numbers and softening prices are no longer "hot news".

Here's my typical response today:  The market isn't white hot any longer.  Sales are still happening- to the tune of over 10 sales per day in the Capital Region- and prices are remaining surprisingly stable.  What the market feels like to me is about 15 years ago.  The sales numbers are relatively similar (prices, naturally are quite different) but most importantly, the "tempo" is similar.

Agents who have been licensed for 10 years or less have a different experience of the marketplace.  The local market started its upward trend in 2002, with prices doubling at 2007.  Sales numbers were exploding and the market was crazy!  During that time, an Agent's biggest frustration was finding property for their client or clients.  Most had sold their home quickly and at strong dollars but consequently had to rush to act on new inventory that was coming up.  Multiple offers were common, with buyers often losing out on several before finding success.

When 2008 rolled around, things started to change.  Properties were staying on market for longer and expiries or unsold properties were outnumbering successful sales.  Then the crash happened of late 2008/early 2009.  Prices tumbled and virtually everything stalled.  From an Agent's perspective, it was very interesting observing the specific areas which dried up and those which continued to remain strong.  A testament to which locations weather the storms better than others.

Then 2010 arrived:  sales numbers did not catch up to prior months but strangely, sales prices increased and the all time peak of average house prices were seen in the last quarter of that year at around $640,000.

Fast forward to today:  unsold properties outnumber sold properties so the success rate is less than 50%.  Properties take longer to sell, with far fewer showings than in recent markets.  Open houses are quieter and inquiries on print or sign calls has dropped to nearly nil.  But sales continue.  Properties priced well in the market still sell, often within the first 2 weeks on market.  Multiple offers are still seen, again on properties which are deemed to be "hot buys".  There are just fewer lookers out there and less activity.  Just like 15 years ago.

Many owners now are at the point where they could not sell today for what they purchased at back in 2008-2011.  In fact, prices now are inline with the 2006/2007 market.  What is in store?  Optimistically, we feel prices will remain stable in coming years.  For those waiting until the market picks up again, that wait might be as long as 5 years from now.

We'll still see sales in Victoria, though.  People move because their lives are improved in some way by a change in residence:  growing family, downsizing, relocation, etc.  And they'll still move, regardless of what the current market is doing or what the numbers are!

 Call or email me for more discussion on this topic or to chat about Real Estate in general.
Visit my YouTube channel, where you'll find weekly sales updates and resources including over 30 short Educational videos for buyers and sellers.

Found your dream home? You may be in trouble if your house isn't sold first...

Last week, I met a family who had fallen in love with a property we have for sale in an upmarket area.  It offered them space, quality, schools, and more- all in a waterfront subdivision of similar houses.  After their second visit, they decided they wanted to buy it.

Problem is, their house isn't sold (it's not even on the market) and they don't have the capability to arrange contingent financing.  Actually, they didn't think they had a problem since no one in past had really explained the pitfalls of their predicament.  It then dawned on me that consumers believe this is the way transactions occur, so here are some pointers on why it's a poor solution:

Making an offer "subject to the sale of my house" is a fix-all no doubt created in past for those who are hesitant to sell first for fear of being homeless.  "What happens if my house sells and I can't find something else..." is the usual concern.

Even worse is a soft market.  The seller knows what the market is like:  they are in it!  For a buyer to make a Subject To offer, they are really saying "I'll beat you to the finish line".  But there's an old saying:  "when the tide goes out, all the boats go with it", meaning the probability of success is equal.

Here are the pitfalls of "Subject to Sale" offers:
1.  The seller is in no way obligated to accept such an offer
2.  If they did, rest assured there will be little or no negotiation room.  It's a weak offer, so the seller will expect full pop when granting you that luxury
3.  Subject to Sale offers always have a "Time Clause" attached, basically a right of first refusal.  The home remains on the market and when another buyer is found who is able to purchase with cash, you will be forced to decide within a specified time frame whether you'll fully commit or back off.
4.  You will be required to remove all other conditions (financing, building inspection, review of title and other documents) within the usual timeframe of 1-2 weeks, meaning you will be spending $500-$1000 in research with the likely possibility your house will not sell.
5.  As time goes on and the dream house remains unsold, you will start wondering about it's value in the marketplace.  If you have already agreed upon a higher sale price, the seller will hold tight waiting for your sale- knowing they did better than the market dictated.  And, if successful, you have paid more!

In every transaction, there is a buyer and there is a seller.  Subject to Sale is a benefit for the buyer, in theory allowing them to buy without having sold first.  Think of this from the seller's perspective, though:  why would a seller put their house on "hold" when there is a higher probability of an unencumbered cash buyer waiting in the wings?  If they did accept such an offer, the seller will lose potential buyers- better qualified buyers- who will not want to proceed knowing there is a chance that they will not be able to buy the house because of the prior commitment.  You should note that many Agents will not show their Buyers homes with Subject to Sale offers in place since they would not want their client to get their heart set on the home, only to have the first party follow through.

From an Agent's standpoint, Subject To offers are imperfect because the risk level is high.  Basically, the Agent conducts all of the tasks as in a conventional transaction (assisting the buyer perform due diligence- reviewing title, Municipal files, arranging appraisal and building inspection) with a high probability that the sale will not proceed.  This could be a solid 8-20 hours of hard work squandered on an unsuccessful sale, not to mention the eventual emotional counseling for the disappointed client.

There are no formal records on the success rate of Subject To offers since only the eventual sales are recorded on the MLS system- it is never known how many unsuccessful offers existed prior to the sale.  Based on conversations with other Agents in the past 20+ years, I would doubt if the success rate is as high as 30%.   This is likely the reason seasoned Agents or top performing experts advise against them.

The Subject To is a terribly weak offer.  It's actually not even a contract- it is an "option".  Basically, "I will buy your house if I can sell mine".  Whim and Fancy, as it's known- it has the same merit as "Subject to me winning the lottery", especially in softer markets.

What's the solution?  If you are seeking a relatively common home (ie. traditional styling, size, features) and your Agent can demonstrate such homes enter the market regularly (it is easy to pull up such listings in MLS history), you are well advised to get your home on the market first and gauge interest.  You'll either know in days how marketable the house is and the Agent will get a sense of whether it will happen.  Just be sure to negotiate a longer Possession Date when the offer comes thru, giving you time to find your next home.

When you find that home, you'll know exactly how much money you have to spend.  You are also in a position of WANTING to buy a home instead of HAVING to buy a home- a big difference.  Best of all, you will significantly overpower any other suitors who are encumbered with a property to sell.  For Sellers, "Surety" trumps cash every single time.

About the people I met last week:  They have a phenomenal home in a good area but are massively overbuilt.  In another area, the home would be $900,000-$1,000,000 but they are currently surrounded by $500,000-$600,000 homes.  They want $850,000 to be able to move to the dream home and the likely value of their home is closer to $725,000.  They don't want to sell first for fear of being homeless, want more than market value for their home and will likely attempt to lowball the dream home.  And they will only make their offer Subject To.

Sadly, the dream home won't go to those folks.  Just today, an interested party viewed it and are preparing an offer- they do not have a house to sell and do not require a mortgage.  These people will end up owning the other folks' dream home.

Call or email me for more discussion on this topic or to chat about Real Estate in general.
Visit my YouTube channel, where you'll find weekly sales updates and resources including over 30 short Educational videos for buyers and sellers.

Tony Joe is a third generation Victorian and has practiced Real Estate since 1991.
He has been awarded the Victoria Real Estate Board's "Special Gold" and "President's" awards for consistent top performance and remains in the Top 10% of Victoria Agents.
Internationally, he has received the coveted RE/MAX "Lifetime Achievement" award and was recipient of the RE/MAX Western Canada "Special Service" award in 2009 for service in the industry.
Tony served as a Director of the Victoria Real Estate Board for 3 terms and was President and Spokesperson for the Association in 2008.
He remains a busy Agent with his team of 4 specialists while also volunteering on the community Boards of the Victoria Hospice Foundation, Anawim House, Victoria Dragonboat Festival and the Chinatown Night Markets.
Currently he is a sought-after sales trainer and instructor for the British Columbia Real Estate Association.
Tony resides in spectacular Oak Bay with his partner Susan, 2 kids, 2 dogs and his Star Trek collection.

Calgary vs. Victoria Real Estate review

I just spent 2 weeks visiting friends in Calgary.  While there, I reviewed the Real Estate market in what is widely regarded one of the Nation's strongest markets and a thriving economy.  How does Victoria compare in sheer Real Estate sales numbers?  See below- first, let's review the July 2012 local stats to date.


Victoria Real Estate sales statistics, July 30 Month-to-Date

MTD July 2012

Sales                         481

Listings                     1114

Inventory                  4939

July 2011

Sales                         523

Listings                     1374

Inventory                  5094

At best, we'll closely match the sales number of July 2011.  A very interesting result to the month considering how strong it started off.  Let's also remember that the market started improving about this time last year so very soon comparing stats to 12 months ago will be of little value.  We expect the numbers for the rest of the year to match 2011 figures.  Stats which cause pondering are the total inventory which for once may finish below July 2011 and also the fact that new listing numbers are on the decline.

Calgary vs. Victoria Real Estate Review

Several years ago, I attended a spring Real Estate conference in Calgary which seemingly had very few local attendees. The reason was the market was white hot, with properties selling the moment they were listed and Agents scrambling to serve their clients.  Multiple offers were the norm and prices rising daily.  

Fast forward to today.  Every Canadian market saw correction in 2008/2009 with virtually all property values now slightly below the peak of 2007/2008.  In the case of Calgary, the average price for a single family home is around $480,000 or about 5% below the 2007 peak.  In Victoria, the average single family home is now $606,000 or 3.4% below the peak of 2010.  

Peak of 2010?  Most presume prices peaked in Victoria before the 2008/2009 crash but prices did indeed rise afterward and have adjusted little.  Strange town, our little Victoria!

As a native Victorian, I appreciate all of the amenities a city like Calgary has to offer.  Great food (fresh oysters 1000km from shore, anyone?), shopping and entertainment are just a start.  As a parent, I also marvel at available family recreation including rec centres, sports, lakes and skiing not far away.  With a Metro population of 1.2 million vs Victoria's 340,000 it's easy to see that the town has a vast audience to serve.

While in Calgary, we typically stay in a suburb called McKenzie Towne- about 20 minutes from downtown in moderate traffic (an hour during rush hour!).  It's a lovely place with a fine mix of detached homes, town homes and condos and serviced by its own sizeable Town square with Sobey's supermarket, banks, churches, restaurants & pubs, and so much more plus walkways and easy proximity to 130th which has requisite box stores such as Home Depot, Rona, London Drugs and Sport Chek.  To me, it's a fine example of what Westshore should be and likely will be once Victoria's transit issues are addressed.

Calgary area Real Estate statistics are very intriguing.  Take a look below, compared with Victoria:

Calgary June 2012

Sales                        2200

Listings                     3312

Inventory                  5712

Victoria June 2012

Sales                         637

Listings                     1449

Inventory                  5189

Some observations:

• With over 3 times Victoria's population, it makes sense that Calgary generally has just over 3 times the number of monthly sales
• The number of new Calgary sales relative to new listings is low:  a ratio of roughly 1:1.5 versus Victoria's 1:2.3. There is much more "churn" in Calgary's market.
• Most alarmingly, Victoria's total inventory level is very high relative to Calgary's- in fact, it is not far off a city triple it's size!  There is an 8 month supply of Victoria listings (total inventory divided by sales in the month) versus Calgary's 2.6 month supply.

Other observations:

• Calgary sales are currently about 16% above last year yet prices are up only about 4%
• Even with Victoria's massive oversupply of properties, prices remain stable with a minuscule 0.34% drop in its 6 month average

You are likely asking yourself:  With such an oversupply in inventory, why haven't Victoria prices tumbled?

The reality is, many of Victoria's current listings will not sell just based on sheer numbers.  While sales continue, it is just a clear indicator that most properties are priced beyond what the local market will support.  Whether these are sellers simply speculating, Agents who take listings just for something to post or a combination of both, the reality is that many current listings need not be on the market.  Even when compared to Calgary, a strong but by no means "white hot" market, the number of Victoria listings should be closer to 2000, not 5100.

In comparison, the number of monthly sales relative to population is appropriate.  This is especially impressive when considering Calgary is a growth town with increasing population and many economic attractions.

I've said this countless times before:  Victoria has a diverse economic makeup.  We are not a "One Industry" town, rather one which benefits from net migration as a result of :

-Government

-Tourism

-Military

-Lifestyle (weather, anyone?)

-Education

-Technology

Those who are waiting for significant price drops will be disappointed.  If you are in the market for a home, do yourself a favour and buy now while inventory is high so you can move in sooner and enjoy home ownership!