Kids with huge mortgages:be happy. Debt-free parents: worry

[This blog. I'm sure I read that a post a year was all it took to get a huge readership. Turns out it was once a day. I'm going to try one more time to get closer to once-a-"something closer to a day than a year". What better way to restart than an attempt to scare the bejeebies out of some of you? ...]

This article recently appeared in the Globe "Is it the right time to sell..."

For the better part of a decade, Lee and I have been unhelpfully telling people that all we know is that we don't know, and that a real estate market correction, while inevitable, is a crapshoot in terms of the all-important "when?" and "how big?".

If you haven't heard the rant at all or recently, it goes like this: On any given day I can find a well-researched article in the Report On Business by a very smart respected expert that clearly proves the market is going to crash ... now.  And about 3 pages before or after is an equally well researched article by a very smart respected expert proving that everything is fine ... relax.

Six or seven years ago I would have advised caution; I was not totally stupid or totally disrespected and I did have some middling expertise, and I was totally wrong.

Our current thinking is that whatever happens, whenever it happens, will be fairly gentle -- maybe a flattening rather than an actual fall.  But I could be wrong again ... the most worrisome point being that a lot of those smart experts now agree with that theory.

So why is this latest article worthy of note?  It suggests the same story:  real estate goes up and down over time, but over time the overall direction is up. It suggests there has to be a correction and maybe soon, but if you hang on you'll be fine.

But the author touches on an interpretation that I haven't seen talked about much, and which somewhat counters a fear that is being talked about all the time.

Younger folk are taking on massive amounts of debt to get into what may be a too-hot market. Danger Danger Danger!  Well, so long as they can handle an increase in interest rates without losing the house they will be fine in a few years, maybe a decade.  Hang tough and let that price curve get back to its historic upward run.

Meanwhile their baby-boomer parents think life is golden.  They bought a house back in the day for what is now their credit card limit. Now it's worth one or two zillion dollars. Once the last kid leaves for the last time and retirement is imminent, they can cash in on the 4 bedroom detached, buy the nice two bedroom condo and live the good life on the equity that is now a huge gob of cash in their investment accounts.

Financial planning types occasionally scare the crap out of their clients by noting the massive difference that a bust/boom in the first few years of retirement can make to the whole rest of your life.  A 10 or 15% drop in the value of your finances in the first year or two can be hard or impossible to replace if you aren't careful.

The point: If the equity of your house is important to your retirement years, you might want to lock that in rather than just waiting until your hips hurt and you don't like the stairs anymore.

Think about it as a regular investment. If you invested half your savings in a stock (Apple or Blackberry, take your pick based on your optimistic/pessimistic tendencies) and it doubled in a few years and you were getting close to retirement, would you hang on to it or take some profits and diversify a bit?

If that home equity is just gravy to pay for an extra cruise each year, then continue as you were and move whenever you are ready.  But if it is key to your envisioned lifestyle, manage it as the important financial asset that it is.

UPDATE: And CBC hopped onto this issue, but with a bit of an emphasis on Halifax and some other markets that may have already peaked and a few senior owners having an "uh-oh" moment.

Scuzzy Real Estate Agents?

Used to be that Realtors® alternated with used car salespeople for the low rung on the trusted-profession ladder.  But I have felt for several years that our industry has become much better.  Far from perfect.  But a lot better.  This morning it occurred to me, as I was "enjoying" the latest story of professional sliminess on the news, that among the more recent stories of misbehaviour I hadn't heard real estate mentioned for quite some time.

We have a Bitcoin (whatever that is) broker going bankrupt because they misplaced $465 million.  A Scotiabank "financial advisor" promised a conservative investor (who was actually an undercover reporter) a 30-40% annual return.  Googling "lawer jokes" gets 26,500,000 results.  And I have it on good authority that when medical professionals get together for coffee or beer the top discussion is how, in a busy and crowded operating room, Dr. Doodnaught managed to perform his repulsive acts of sexual assault.

So be careful out there.  Not just in real estate, do your homework until you have real confidence that the professionals you hire are capable ... AND TRUSTWORTHY.

If it's too good to be true …

Here is a CBC article with an illustrative article about a real estate fraud. Note that variations are more common than one might think. Renters, buyers, sellers should all take care.  Everybody wants a great deal, but you also don't want to find out you just fell for a softened version of the Nigerian Prince.

"Fake real estate ads prey on buyer desire for home deal"

A less expensive version occurred recently on our turf.  A listing of ours, word for word, showed up on a site flogging homes in foreclosure that you could buy for half of market value.  The actual home was on MLS and debt-free. The tease is to get people to subscribe in order to get the addresses.

Know who you are dealing with. And if it's too good to be true ...

Not All Junk is necessarily Junk

Why do you get all that crap in your mailbox from agents?

Because, for a rep to be in your mind for that day when you actually need real estate service, they have to do things that help you think of them at that critical time. Some of the big teams handle that by putting something in your mailbox virtually every week.  It may annoy you at the time, but they do it because it works.  Luckily, most of us can't afford to do that even if we wanted to.

When Lee and I hand-deliver material (calendars in our neighbourhood, for example) I always pause at the signs on doors and mailboxes that read "No Junk Mail".  We would always respect people's wishes, but I would also never put something in your mailbox that I thought was junk.

Yes, our material often contains a percentage of self-promotion. I could argue that our shameless bumpff is useful information on area services and therefore not "junk".  But I won't, because that probably would be an argument and, for some, is exactly what they mean by "junk mail".

But we always have something else that we truly believe is good information.  There are the "Just Listed" cards.  We don't broadcast these far and wide, but try to focus them in the immediate area of the listing.  The idea is that people who like their neighbourhood are often keeping an eye out for friends or family who are interested in moving to the area.  At a minimum, almost everyone is interested in what is happening in their 'hood.

Our other mailings have been known to be newsletters, or coupons for a local cafe ... something of value.  Our recent approach has been to put a high-quality photograph of a local scene on the entire front of a postcard.  Typically we have bought the rights from local professional photographers.  People put them on their fridge, they frame them, they call and ask for more.

Here's the latest one:

You can see the rest here: www.leadingthewayhome.com/postcards.htm

Notice I haven't mentioned the standard card full of "Solds".  We don't do that and I've never fully understood it. I guess it shows that an agent has some experience and is intended to show that they are busy and successful. But you can say that in a sentence.

We just got one in our own mailbox that piqued my interest and inspired this post.  It caught my attention as a tri-fold brochure rather than the usual postcard. I can't get too snooty since the front cover was a lovely and interesting new listing (albeit a long way from my area, with no detail other than price and general neighbourhood).  But was also different because I didn't recognize the agent or the brokerage and yet it was loaded with 18 "solds".  Even after discounting the oddities that hailed an hour and a half drive from my community there were quite a few local addresses.

Since I was online anyway, I checked a couple of the addresses on MLS.  I sniffed on finding the first one was over 2 years old.  Well, he hadn't said "Just" sold.  But the second one dated from 2003!

Anyway, there you are.  A little story, why you get all that stuff, and why I believe that not all junk mail is junk.  Some of it is useful or valuable or entertaining ... at least "Junque"!

Remember the wisdom of George Carlin, who wondered why his s**t was stuff, but other people's stuff was s**t.

Zoocasa ... doesn't that mean Animal House?

OK that was nasty. Sorry, I just couldn't resist the wordplay.

Zoocasa just announced a rebate program for people who get an agent via their service.  Herewith my take on the deal, given the currently available information.

Sorry for the lack of graphics ... I wanted to get this one out quickly.

My usual plea: yes, I'm an agent and occasionally a bit of a cynic; but I try to be objective and open-minded and I try to keep up with changes that have, do, or will influence our industry.

This Zoocasa deal strikes me as less than ready for prime time.  These guys, in my opinion, actually have a bit of a track record for getting ahead of themselves.  When they first started up, we actually signed on.  The deal was that we would get exclusive advertising space when you searched a certain geographic area.  Their job was to get all or most brokers to sign on to share their listings so that Zoocasa would become the go-to site for listing searches, with all kinds of extra features.  Didn't really happen.

So now they are becoming a licensed brokerage so they can possibly get at more of the listings.  That may work. If all brokers and reps agree to share all their listings with this type of data scraper.  There is a trend this way, but it's not there yet.

And finally, the new exciting rebate program which promises, among other things, 15% rebate on your commission fees and a slate of "hand-picked" top tier agents that you can screen for local expertise language and more.

Oy.

Hand-picked.  I'm not sure how these initial bodies were selected, but I'll bet the farm that once this thing is fully launched, the first and primary criteria will be the agent's willingness to pay the Zoocasa fees for being listed in their roster.  The stated standards around experience, feedback, performance, etc will quickly default to something like "I don't see anything really awful here".  Prove me wrong, Zoocasa, but as an experienced rep I have seen many many organizations whose business is "providing leads".

One news article suggested they were starting with 200 agents with more to come.  I don't doubt there are more to come, but the site currently lists about 40 agents in total.

Their system for helping you choose screens for geography, language and type of home.  Other than a few new-construction specialists and maybe a few downtown condo specialists the "type" screen is meaningless.
Other sites, such as royallepage.ca will allow you to sort and screen agents on these and more criteria.

I tried entering a few streets in the Beach in Toronto (just east of downtown).  Of the 7 recommended agents that popped up for my Beach street, 3 didn't appear to be based even in the actual City of Toronto (2 were in Brampton!), one included the Beach in her areas of expertise -- along with Aurora and Newmarket, and only one of these top-tier agents had I actually heard of.

Personally, I think you would be way better off getting a few names from trusted local sources and interviewing for the agent that will work best with and for you.

Now, about the rebate.  Again personally, I think you should select the right agent and pay them market value to do a great job for you.  But if you want to negotiate a 7.5% discount, have at it.  Honestly, your odds are pretty good that you can get at least your second choice for that.

I know, the articles and Zoocasa say 15%.  But that is 15% of the listing broker's end, which is typically only half of the total commission. (The other half goes to the Broker who brings in the offer and represents the buyer).  Even the 7.5% is a little exaggerated since it isn't all cash. A chunk is coupons/giftcard things.

So on a $575,000 listing, if you go through Zoocasa's limited set of agent's you can reduce a typical commission from $28,750 (yes, I know it's a lot of money, but that's a story for another day), to $26,594 in cash and giftcards.  I know that's real money, but it doesn't seem like that huge a saving unless you can be sure it is also getting you the best advice, service, marketing, negotiation, follow-up, etc.

Since these agents don't work for Zoocasa (they are agents for the Brokers you've actually heard of), you might wisely wonder how they come up with the money to give back to you.  According to one article, they take it out of the 1/3 of the listing commission that they charge the agent for handing over your name!  That is presumably in addition to fees for signing on to the service.

Yup.  We start with a normal 5% listing agreement wherein you pay the Broker $14,375 for his efforts (remember, the other half goes to the buyer's brokerage), that agent forks over nearly $5,000 of that to Zoocasa, who then give you about $1876 and some cards.

My questions: Why did you need Zoocasa to find an agent, and why did the agent need to give away a third of their commission to find you?

There is nothing evil here, just another company trying a variation on the business model of getting paid for referrals.  But like almost anything of this nature, there are questions, issues, tradeoffs, and more.  Read past the "rebate" headline and make sure you go the route that will get you the best person, service and price.

Assignment: Rent vs Buy? Agree AND Disagree

I may have to go back to school.  I would love to take on Frank Tristiani's student assignment.

Rob Carrick, the Globe and Mail's personal finance columnist, has been on a bit of a run these days with several columns trying to get people to think more favourably about renting vs. buying.  His latest article (read it here) discusses a McMaster prof who runs his students through a comparison assignment every year.  Frank Tristiani, the prof, says "Over six years, no one has been able to substantiate buying as creating more wealth over the long term”.

His sample analysis involves buying vs. renting in Hamilton and leads to a renter being a half million bucks better off in 25 years.

That is a challenge.  First of all, some disclosure.  If you are reading this, you know I'm an agent.  So you are probably expecting some half-baked biased rant about buying always being better, especially right now ... call me and I'll help.  On the other hand, if you've read a couple of these, you know that isn't how we work.  More significantly, we rent! Wait. A Realtor who rents.  According to a couple of our competing agents when we made this move -- we must be retiring, in financial trouble, and/or have lost confidence in the market.  None of those are true.  The truth is the subject of a whole other discussion about life planning, some of which is covered elsewhere in this blog (starts right about here)

Back to the column.  Rob's article and Tristiani's assignment are great.  Tristiani is a finance guy who wants his students to apply some finance logic to what is a major financial decision.  Good idea.  And Rob himself points out a few of the arguable assumptions in the analysis -- like long term mortgage rates and investment returns.

But ...
I think there are a few huge "arguable assumptions" in Trisiani's sample analysis that Carrick did not mention or didn't give enough space.  If you are using the above link to read the article, be sure to click on the "infographic" mentioned on the left side.  This table was in the original article and you probably need it to follow along.  I've also included it at the bottom of this post.

• Carrick notes that the analysis applies to "renters with steely savings discipline".  I'll say. A bunch of the gain requires the renter to assiduously invest the difference in costs each month. I'd probably bet you the present value of that half million that you couldn't find me 3 people in Hamilton who could, would or have done that. Tristiani notes that owners aren't good savers either -- OK, so's your mother, but it doesn't really answer the issue.  The way I read it, this alone would account for all or most of the wealth difference over 25 years.
• Here's a little one.  I have no idea what research went into coming up with $1500/month (apparently with all utilities included) as the comparable to a $400,000 house.  Based on my Toronto experience, it seems low.
• A much bigger sleeper assumption on the rent is that rent will only go up at 1.5% per year over 25 years, despite the other assumption that inflation is 3% per year.  Since he also assumes that you make zero real capital gain on owning (house prices are also assumed to only rise with inflation) ... Never mind the rent vs. buy debate, whatever you do if you believe this: Don't buy an investment property.  I'm not convinced that landlords are going to eat half of their inflationary costs over 25 years just because they are nice people. 
• Here's another huge one. A quiet little assumption in there is that maintenance on a home comes to 4% of the value of the home per year.  Holy crap.  Either you bought a falling-down dump or you just like to tear your house apart and rebuild it every year or two.  He does include utilities and taxes in "maintenance", but I ran the numbers for our old house for the last 8 years and couldn't get it to 2%.  A quick google surf came up with estimates of 1% (before the utilities).  The Feds have a worksheet for you to do your own calculation  (you can play with it here) . This alone also would account for the wealth difference after 25 years

There could be more but I think that's enough to convince me (and maybe you) that the decision is not nearly this big and probably not even in this direction.

Both Carrick and Tristiani note that there are lifestyle and personal preference/value issues that are not covered by the analysis.  And I absolutely agree that you should do the numbers before you make the decision.

So don't just read the headline, skim the article and glance at the table. FIGURE IT OUT. Then decide, with the financial analysis as one of several major variables.

A final example, more an analogy, from my everyday job.  Imagine yourself looking at two good houses.  One is going to be a maintenance headache, at least for a while, but it has an absolutely gorgeous [fill in your blank].  We don't encourage people to buy the low-maintenance option and we certainly don't promote the one with the gorgeous whatchamacallit.  We do try to help you figure out how much you are paying for pretty or cool or functional or whatever-it-is.  Then decide.

[And finally... One reason that I keep falling off the wagon (the wagon which is this blog) is that I'm pretty sure the number of people who read it rounds to nada.  At least the ones who say so, or follow, or "like".  When I force friends and family to read them, they usually say nice things.  I think they migh not be lying, since there usually follows a decent and related discussion.  So, if this was even vaguely worthwhile, say so, tell someone, share, like, follow, something.  Thanks]

And really finally, as promised, here is the sample analysis that I just kind of dissed:

Great House ... Great New Price

Apologies to those who come here for real estate info without the accompanying flogging of specific homes.  I am about to flog a specific home.

We are just pulling out all the stops to get this property sold.  The bottom line issue is that this is a GREAT house that we can't seem to get anyone to come and look at.

One possible reason is that we (innocently) had the price too high.  Fixed that.

So here's the story.
[Or just ignore the pitch and head for the website with its virtual tour, feature sheet etc: www.LeadingTheWayHome.com/brooklawn ]

The owners moved to this house when their active boys made the previous house a little small.  Not only did they raise a couple of fine young men in this house, they renovated, improved, updated and maintained the thing to the ultimate degree with top-of-the-line everything.

It's a 3 bedroom home with a lovely upper level family room, a fully finished basement.  The features are endless, but I must point out the stunning chef's kitchen and the excellent landscaping that will re-appear with Springtime.

The location is south of Kingston Road at St.Clair.  The Bluffs and other parkland are steps away.  A bus comes to the corner.  A few minutes puts you on the highway to anywhere. Good schools are a walk away.

We underestimated two (or three) things.

"Yes, but ..." : Toronto Life edition, part 1 (of several, I suspect)

I'm back. Again.  Sorry about that.  As of the last post we were preparing to move.  Work busy-ness, the move and a pair of truly nasty summer colds put the blog on the black blurner for a while.

But as I was pondering the next post, along came the September 2012 issue of Toronto Life with the cover story "House Wars".  Under the headline ... "Too many buyers. Not enough houses. Extreme tales from the real estate market"

Weeeeellllll, this ought to be good for a whole string of posts.

Sure enough, here I go.  And I haven't even read the article yet.  The "Editor's Letter" lays out the tale of a couple who bought a house in 1972 and just sold it for over $1.4 million (and yeah, a whole bunch over list price).  Bandits.  Baby boomers cash in. Young'uns can't afford a cardboard box under the Gardiner.

I'm not saying these folks didn't do well.  They did.

But let's come at it a little differently and maybe suggest they did just that ... "well".  Not outrageously, or insanely. Just "well".

In the example, the buyers picked up a dump in a very untrendy neighbourhood.

So, their location means they took a risk.  Risk-takers deserve a little higher return when their risks work out (because they will get creamed when they don't).  Just keep that in mind.

And they have spent piles of cash restoring, renovating to bring the place up to snuff.  Without knowing what they did or when, I have just pretended they paid $50,000 in the first place.

Their annual rate of return on their investment: 8.5%.  That may still sound pretty awesome, but don't forget that this is an average and includes periods where inflation was double-digit (and mortgages were going at 18%).  One source I checked (actually I googled it and only checked one source that looked pretty credible) suggested a representative stock market purchase would have returned over 11% for that 40 year run.

Actually, that's a good idea. Let's take inflation out.  If I've done the math right, their "real" return after inflation now comes out to a little over 4%.

Finally, I note that the editor says the sale discussed will "play a big part in funding their retirement".  Probably true ... IF they rent or downsize or move to a lower-priced market (good deals in Welland these days).

I'm not suggesting the market hasn't been nerve-tingly hot.  For quite a few years, many wise folk have been wondering when it will slow, settle, correct, crash, whatever.  It hasn't done it yet. It may. It may not.  But I'll also bet that when I post this and head back to the actual article I'm going to find stories that are a whole lot less dramatic than their headlines (and our resulting emotions and outbursts) initially suggest.

Moving. We are. Are you? About movers...

We have heard an amazing array of mover stories over the years.  Some good.  Many not.  Our own advice has always been to get in-house estimates, never assume the estimate is the gospel with respect to what you will actually end up paying, and try very hard to determine what will REALLY happen if (when) there is a problem.

A caveat:  There are ads in the right hand column of this blog.  Since this post will have "movers" etc as tags/labels as well as other keywords, I'll bet you a buck that google drops an ad or two for "acme movers" et al in there.  We don't know who will be advertised and we have nothing to do with it.  Do not assume the ad is in any way a positive or negative endorsement from us.  Now, back to our post...

There are any number of legitimate reasons for variation from estimate to actual (you decide you will move the piano after all, or find a bunch of "little stuff" you forgot about, etc). However, there are any number of ways to lowball an estimate in order to get the deal, too.  Some classics include simply underestimating weight or the number and type of boxes required (where these are part of an estimate).


A reference is extremely important, but there is rarely a guarantee that you will get the same estimator and crew as the positive-experience referring person. 


A referral that may be even more valuable than "they did a great job" is one about how a company handled a damage claim.  A good mover will almost always do less damage than you would if you did it yourself (be honest!).  The key is how the company handles the problems.


The article below (after the "jump" or "read more" link) came to us from OREA (Ontario Real Estate Association) and we thought it good enough to pass on.  The comment about not taking the lowest estimate may seem self-serving.  Maybe it it, but it is also very true.


Do you have a great mover?  Or a tip?  Or a horror story that you can laugh at now (don't want you to relive the ones that still make you curl up in the corner and cry).

We're Moving! (part 13) SOLD!

So, here we are.  It's Wednesday evening and we have three offers. Enough competition that we should see proper market value, but not one of the feeding frenzies you read about in the papers.  With three, especially since one is being delivered and not presented, we can do it at the house where everyone is likely more comfortable.  One or two more and I probably would have moved it to a meeting room at our office.

As it turns out, a health issue means only one offer is actually being "presented".  This is unusual, even though more and more offers are just faxed or otherwise delivered.  There are special circumstances -- for example, an estate sale with the lawyer as executor -- where just sending in the offers makes sense.  There are also lots of not-so-good reasons for this happening, ranging from lazy to devious.  But most agents in most cases prefer to come to the presentation with their offer.  They can give some insight into their clients, answer questions and get a better sense of the sellers' situation and preferences.

We encourage our sellers to make the "rules" simple and clear and in writing.  By stating up front that we will take the best acceptable offer if it is at least $5,000 (equivalent) better than the next offer, we make it clear that we are not going to "game" anyone.  Our reputation -- and putting it in writing -- means that agents can more often bring their buyers' best offer right away.

The result should be the best chance for the buyer, the best price for the seller and less stress and running around (and theatrics) for all concerned.

In this case, our sellers -- us -- were easy sells for this approach.

So, if you haven't been through it, here's how this goes.

Assuming everybody shows up on time, the first agent comes in ... introductions ... can I get you some water, etc. ... blah, blah ... and hands the offer to the listing agent.

When that listing agent is one of us, we have already explained the process to our clients.  Said process begins by reading through the offer silently, making notes if one wishes.  Most importantly, do not either start whooping and dancing ... or make gagging sounds and insult the parentage of the bidders.

With the first offer, we will go through it pretty thoroughly -- even the standard clauses that will be in every offer.

We then find a little out about the potential buyers, clarify any issues, say thanks and send the agent away -- maybe to their car, maybe to the basement, not usually to eternal damnation.

[By the way, sitting in your car on a Sunday evening in mid-winter, waiting for the phone call saying you just "lost" may be the most common setting for agents questioning their career choices.]

With the buyers' agent gone, we can discuss the merits and issues of the offer.

Rinse and repeat.  It gets faster with subsequent offers as the standard stuff need not be reviewed and explained in the same detail.

Then it's done.  All the agents are stashed away and it's time for a decision.  This can be obvious, or obvious with a question (can you move your closing date a week later?).  Or it can be so close that the written rules mean you have to ask those poor agents to go back and see if their clients wish to improve -- everybody's evening gets a lot longer.

Or it can just be tough.  The classic would be one high offer that has a loose condition (say, home inspection) and a firm offer for less money.  How much is "firm" worth? (The answer: "a lot").

In our case, it was pretty straight forward.  All three offers were firm and in the range we expected.  One was higher.  A lovely couple (we met at the open house and a later showing) will be taking over our home and garden on June 14.

An amazing number of little details, signatures, initials and phone calls later, we had that odd feeling that comes with selling your home of 21 years, albeit successfully.  We, and the buyers' agent also had that exhilaration of a successful deal.

Two other agents had that unpleasant, but not uncommon these days, of not getting the deal and not getting the home that their clients wanted enough to bid on.

Saddest, are the two families who probably spent a lot of time stressing over what to offer for a house they must have liked and wanted and didn't get it.  In this market, those couples may "lose" several times before they get their home.  It is tougher than almost anyone can understand until they go through it.  A good trusted, empathetic supportive, agent is very important here.

One more phone call to Florida: "Honey, I sold the house", a celebratory dram, and off to bed.

As I begin to drift off, my eyes pop open as I think:  "Wait a minute.  Where the heck are we going to live?"

We're Moving! (part 12) We're listed...Less work, More stress

This post should close the gap between blog-writing and actual event by quite a bit.

Once the house is listed, the work level can actually drop quite a bit.  After all, the house is so freaking staged you CAN'T do anything in it even if you were allowed to.  To the extent that you are getting good showing, you can't even be IN the house.

This may not apply if you have 3 rugrats, a dog, two cats and a slob for a spouse.  In our case it's a bit hairy because my office is/was at home.  So yes, that was probably me and not some terrorist hacker sitting in a van with a laptop with some weird antenna thing attached to it.

Also, even if the physical work slows down, your mind gets pretty busy... Why isn't the phone ringing? ... What if we priced wrong? ... Please don't let it snow ... Why did the dishwasher just make that noise ... What if nobody comes? ... Why are we doing this? ... What if we can't find a place to live?

By the way, we are holding off offers until Wed. evening.  No doubt, holding off offers is designed to allow for a bidding war.  But in a hot market where things sell quickly, it also allows buyers to find out about the property, see it, and make a decision and plans before somebody jumps in and nabs it.

Friday
Alex from videolistings.ca shows up right on time as Gord is returning from delivering the paperwork to the office and does his usual efficient job.  We will find out tonight that it was also his usual gorgeous job.  He beautifully incorporated our seasonal garden pics and some local scenery into the house video. (I mentioned it before, but the old place really looks good: www.videolistings.ca/video/35anndale)

As he walks out the door, the agents start appearing for the Agent Open House.  While everything else we do helps, the major marketing tool is the tens of thousands of agents of the Toronto Real Estate Board who see the listing.  If you can make it convenient for them to physically see the house, better still.  And that is the Agent Open House.

The feedback is good, though we pick up a niggly little theme: "Great house, you'll do well, a little small for my people".  We believed we had factored this in.  The house is about three times the size that a good friend grew up in with his 5 siblings.  But that was then.  Young families looking for their second home in a perfect location are thinking dream home even if they are a little short of dream budget.  We'll get back to this little issue later.

We have showings Friday afternoon and evening.  Good start.

Saturday and Sunday

Public Open Houses both days.  Not a zoo, but busy and steady.  More than the usual number of clients WITH their agents -- as opposed to agents SENDING clients.  That should be positive.

We're Moving! (part 11) Gentlemen...Start Your Engines

Part 9 left us with less than 24 hours to get everything finished and ready and the listing up on the TREB site.  And Lee packing for a week in Florida.

We always tell clients how we need a few days lead time, once the house is 99% ready in order to get all the marketing materials designed, written, printed etc.  The clients always understand and then reality happens and we are taking pictures while they paint and Lee is up at midnight writing a listing while Gord stays up until after 1am working on the feature sheet, etc.

And now we've done it to ourselves.

But we get it done.

Listing hits the computer Thursday afternoon, with decent photos by Gord.

This means it should be uploaded to realtor.ca by Friday, Saturday latest.

Sign ordered.

Just Listed postcards get designed and uploaded to the printer Thursday afternoon.

The feature sheet, window sheet, open house datasheets, etc get done in the wee hours Thursday night.

VideoTour and agent open house are scheduled for Friday morning. (www.videolistings.ca/video/35anndale)

Public Open Houses scheduled/uploaded to various sites for Saturday and Sunday.

Custom website designed and published Friday. (not our best, but better than most IMHO ... www.LeadingTheWayHome.com/anndale)

Sign rider prepared, printed laminated (rider has a QR code and the website address)

Janine brings in her accents to complete the staging ... last load to the locker ...

etc.

Make that 3am. ... Bed is already made, so I sleep on the couch.

We're Moving! (part 10) You Want How Much for That Dump?

Given that we are going to list this thing in the next day or so and people generally like to know how much they should write the cheque for, perhaps we should settle on a price.

Given, further, that it's our own house and some bias could sneak in, we hauled in three of our trusted local colleagues for a group think and sanity check on our best efforts at market evaluation.

Their estimates landed pretty much on top of ours.  Market value homed in on a range from something over $850,000 to a about $885.  One had us over $900k for a while and one had us initially quite a bit lower, but came to the pack after a short discussion.

Two things.  First, note that even five really good experienced agents, in a non-competitive environment, giving their best shots produced a range of almost $40,000.  There is complexity, art and gut involved in the process as well as the system and science.

Second, market value is what you should expect to get once the dust has settled.  List price is a tactical decision to help you get there.

Right now, we remain in a hot sellers' market.  Some of what follows would be dramatically different if that were not the case.

A critical rule is "Don't price too high or you will be punished".
For whatever deep psychological reasons, buyers are resistant to offer lower prices on over-priced listings.  They just go elsewhere.  When they go elsewhere, the listing doesn't sell; when the listing doesn't sell, it gets stale; stale listings get forgotten...quickly. You don't want to be quickly forgotten.  Don't overprice.

When this happens you move quickly from dreaming of insane bidding wars to price reductions and praying for an offer.
So that seemingly clever approach:  "Let's try it at $xxx and if it doesn't go we can always reduce it later."?
Nice thought.  Doesn't work.  Don't do it.  You typically end up with less money and more time taking 45 minutes to make the bed and trying to find where you hid your toothbrush and toaster before the last showing.

We're Moving! (part 5A) Oh yeah, the Home Inspection

oops, forgot to have a little chat about the Home Inspection.

In this market, many sellers -- e.g. us -- would like to see and early "firm" offer.

Firm means without conditions.

A typical offer in a "normal" market will have one or both of these conditions: Financing and Inspection.
Both are what we call "loopholes you can drive a truck through".

We'll leave financing for now, but the issues aree very similar.

The standard wording of the Inspection clause gives the buyer a few days to arrange and conduct a home inspection with a licensed inspector and to receive a report to their satisfaction.  The intent of the condition is to identify significant maintenance and structural issues that the buyers were not aware of.

Unfortunately, if the "structural issue" is waking up in the middle of the night screaming "OMG ... What have we done?!?!?!", the clause can generally be used to get out of the deal.

We're Moving! (part 9) Timing is Everything

We are professionals.
We understand the market cycles.
Clarification: We know enough and are experienced enough to know what we don't know.  Which means we know that we don't know what is going to happen to the market in the next few years.  We think  it's just going to stabilize, maybe soften a bit, maybe not.  But the guys who think it's going to keep chugging may be right.  More worrisome, the guys who see a significant correction may be right too.

How Spring markets and Fall markets and the things in between work, that we know.
Location, location, location ... and timing.
Any house can be sold in any market.  But if you want the best price in the shortest time ... that is a different story.

The market in December is near-dead. Why? Because we are at our condo in Florida.  Wait.  Lee is telling me that we are in Florida because the market is dead in December.  Learn something every day.

July and August aren't so good either.  Why? Because the weather is good for golf and the cottage. Wait.  Lee is yelling at me again.

The so-called "Spring Market" doesn't exactly start in what a Canadian would consider Spring.  The actual closing dates of spring-market sales are Springier than the days the deals are agreed to.  In the recent hot market, Spring starts in January, and picks up speed in February and March.  Somewhere in June, the world decides it's summer and things slow down ... a bit ... usually.

As mentioned in (part 1), the Buyers show up first because the Sellers who decide at Christmas to sell, need some time to get ready (see parts 1 through 8!).  We know/knew all this but we still decided over Christmas and needed time to get ready.

One more thing about the Spring Market ... Spring Break is pretty dead.  But we still have a few weeks until ... What?  Spring Break starts in 10 days !!!!!!! Oh sh**.  Gotta go.  We have to get this listed tomorrow, materials, agent open house, public open houses, signs, website, oh sh**, oh sh**  ... sorry, gotta go ... LEEEEEEEEEEEEEEE !

[Lee doesn't answer.  She can't hear me. She's upstairs packing because she leaves for a week in Florida ... tonight!  Oh dear, oh dear, oh dear]

Globe Article may be "insider-out"

This morning's Globe (March 13, 2012) included a featured article on choosing a Realtor ( http://ow.ly/9D8Xk).  They pushed it pretty hard:  the top banner on the front page ("Pick the Right Real Estate Agent ... an inside look at the first - and most crucial - step in selling your home"); then an illustration and teaser taking up almost half of the front page of the Globe Life section ("Looking Beyond the Sign ... Don't get snowed by your agent...inside the industry ... what you need to know to make sure you get the best price..."); and finally the article itself.  This is going to attract some attention.

There are good points throughout the article but I feel that overall it is more "outsider" than "insider" and misrepresents a number of aspects of the overall process and the motivations of various players.  I'm not just sticking up for the industry here -- I'm afraid there are lots of reasons to be very careful when selecting a real estate agent.

But I would like to add some alternative, maybe deeper, perspective to a few of Fabrice Taylor's points.

[But first ... if you can't bear to read this whole ramble, at least scroll down or search for the "NO NO NO NO!" heading.  There is one suggestion in the Globe article that I strongly advise against.]

"Don't Hire A Friend" she says.  Often good advice, but perhaps a better idea is "Don't Hire an Agent Just Because They are a Friend".  Also, as the article suggests, it isn't even a friend: it's a friend's daughter who just got her license, or a cousin, or ...  Fabrice mentioned someone hiring a childhood friend who "pressed him for the listing".  Awkward.  But "pressing" implies quite a bit more than just offering your service and explaining what you can provide.  There are lots of "pressers" out there.  I wouldn't hire them, personally; I would be looking for a trusted consultant more than an aggressive salesman.  But different strokes ...

We have had friends go elsewhere because they are uncomfortable or worried about "doing business with friends".  It's disappointing, but we understand.  We have also done a lot of business with friends that was very successful.  Our relationship meant they knew they were getting an agent they could trust and who cared about them and the business.

Ms. Taylor's "takeaway tip" is right on: "Make your agent earn your business, whether you know him or not."

"A Quick Sale Benefits the Agent".  True in the short term.  And there is no doubt that quite a few agents have a pretty short term focus. To oversimplify, there are two basic kinds of agents:: those focused on the deal, and those focused on the client.

We're Moving! (part 8) That's real purty.

What a beautiful house we have.  We're pretty much ready to go.
Which again brings up the question: Why would we go?

Because (part 2) of this series is still true.  But the place looks great.  Some of the stuff is just us falling for the staging (see part 7), but a lot of it is getting all those things done that we planned to do ... for years.

We have shared the joke with many clients in the past: "It looks so nice we don't want to sell anymore."  Perhaps surprisingly, it has only actually happened once.  Unfortunately it was a case where we (Lee especially) were intimately involved in advising, supporting, calming and even doing -- Lee was off to Winners a couple of time to buy, for example, the perfect towel rack she had been trying to describe. A planned listing date had passed because the work wasn't quite done and the sellers were somewhat fried.  And then ... "We've changed our minds ... we love the place now that we've done all this and we can't bear to leave it until we enjoy it a while longer".

But we, despite our emotional state at this point, are ready.

So, for posterity, bragging and marketing it's time to capture our beautiful home .

Video tours and photos.
[A little history, a rant or two and all credit to Alex.]

Not so many years ago, there was a single photo attached to a given listing.  Even after MLS listings could be loaded electronically, the photo had to be sent to TREB, who took a day or so to add it to the listing.  So, the first day or so, the top left corner of the listing said "Photo Not Available".  One option to speed the process a touch was to use the TREB file photo of the property.  Unfortunately, sometimes the staff photo guy didn't seem to have stopped the car, let alone get out of it, to snap the shot.
You may have guessed that the Google StreetView vehicles and their technology did not arrive for quite a while.

A technology that did arrive was digital video and the video tour.  Treating potential buyers to a movie of the whole home on their computer was pretty snazzy and useful.  But time consuming and expensive -- the first vid tour companies showed up at the house with a high tech van and a crew!

Next came "efficiency".  A fisheye lens, tripod and motor allowed a single tech to stick the tripod in the middle of each room, start the motor, try to stay out of the frame, and stitch all the room pans together the next day.

Unfortunately, this technology made all the rooms look like bowls with bowed walls and seconds-long pans of blank wall before you got to the good stuff.

About the same time TREB caught up a bit and started allowing 9 photos to be attached to a listing.  By now, we could directly upload the photos at the same time as the listing itself.

So we stopped using video tours.  They not only distorted, but they disappointed buyers by making the places look bigger than reality.  We prefer to under-promise by a hair, and over-deliver by a lot.

But then came Alex Morias of  www.videolistings.ca.  He was more advanced in the technology, but he regressed appropriately in technique.  Armed with a video camera and a still camera, he took pans of the good stuff and key elements, put them together with stock footage, music and captions.  And it was beautiful.  An excellent representation of the property and a wonderful souvenir for buyers and sellers.  Turned around the same day!

So, with all that available, how is it possible that there are still listings that, for the first two days, still have "Photo Not Available" in the top left corner?!  It boggles the mind.  You can almost here the internet generation (of buyer and agent) clicking "next" and I think I can also here the memory of that listing clattering down a dusty corridor of the mind, to be never heard from again.

Here's what Alex did for us: www.videolistings.ca/video/35anndale.  Neat, eh?

Did you read the last blog post? (This one).  Then you know what to do.  Those "like" buttons are right here...

We're Moving! (part 7) Staging ... spawn of the devil

Before we start, a personal note to you.
Go to the end of the post and click on all the social media buttons (facebook, twitter, google+) for which you have accounts.  If you don't do that right now, you have to read the next paragraph.


Are you enjoying these? Make a comment and say so. Hate them? Make a comment and say so. Are you on facebook, twitter, google+?  There are handy little buttons at the end of each post.  Click on them whether you like this or not.  Why?  Because, as much fun as this is, it's also part of our business.  It also fits nicely with one of our basics:  When we do something with a marketing objective, we try to do it in a way that adds value.  For example, when we send out self-promoting postcards, we put a frameable photograph by a local artist on the front.  Same here.  This is supposed to be entertaining and informative ... and it's marketing.  If you "like" us, make comments, etc., we show up higher in searches, more people see us, read us, and occasionally call us for help with their real estate needs.  And I don't feel like I'm writing this thing into a void.
Thanks in anticipation.

Now back to our regular programming.
"Staging" is stupid, deceptive and drives me nuts.  We used a great stager and I know it helped sell our house. So, that about sums it up.

A little more detail ...
First, the rant.
Even before staging, there was the pretty kitchen syndrome.  Two similar houses. One with new and updated wiring, roof, furnace, plumbing, beautifully maintained; not a lot of kitchen/bath/decor upgrades but whatever had to be done was done and done well.  It has a "lived in" look as a result of raising a family and collecting a couple of decades of memories.

The other house has older systems and a bit of a musty smell in the basement, but the old carpets have been pulled and the floors stripped and urethaned, a few gallons of taupe applied, and a shiny new IKEA kitchen installed.

Guess which house sells first for more money.

Picking up on this syndrome, an entire "staging" industry developed.
Early on, we had the perfect house for staging.  A young and handy couple with a family spent every last penny doing an outstanding job of reno'ing a house in a good solid middle-of-the-road neighbourhood.  Unfortunately, the reno'd a little past the top end of the neighbourhood and all their money went to the reno and the kids.  We had toys and tools, but no furniture.  The house needed to be furnished and decorated in a manner befitting the budget of a buyer for this high quality renovated property.  Enter the stager and a van load of rented furniture, art, bedding, pillows, etc.  Perfect.

But then almost everybody started doing it.  Houses didn't just have to be clean and solid.  They had to be "decluttered" to the point of "unliveable".  And it worked.  The house that looked like magazine photo shoots of houses where no-one ever reads a magazine or uses a towel sold.  The house that looked like real people lived in it just sat there.

With time, we thought it might get better.  As people saw more and more staging and the media picked up on the trend, we thought clients were learn to see through staging and to see potential.
What happened? (go ahead, click)http://www.leadingthewayhome.com/Files/buzzer.wav
Instead it got worse.  Now we could show clients 5 houses.  4 might be staged, one not.  Previously, the 4 would sell first.  Suddenly it was hard to even get your clients to go through the unstaged one.

It went from a reward for the staged to being a penalty for the unstaged.  Buyers were even suspicious of why a seller wasn't staged.  It all reminds me of what has happened to hitchhiking.  In our youth, there were occasional hitching issues, but it was nonetheless quite common and positive.  Now, I won't pick anybody up -- "what kind of person would be hitching?", and I would never hitch -- "what kind of person would pick me up?"