Author Archives: Jacob Olson

PROPERTYWIRE.CA FORECAST FOR THE CANADIAN PROPERTY INDUSTRY IN 2011

PropertyWire,Ca’s journalist, Heather Wright, has conducted exclusive interviews with Phil Soper, President of Royal LePage, Robert Hogue, Senior Economist with RBC and Jeffrey Schwartz, Executive Director of Consolidated Credit Counseling Services of Canada. Read their predictions for the 2011 Housing Market in Canada here:

Balance and stability, two words that recently seemed foreign and unlikely, at least in reference to the Canadian Housing Industry. Now that the economic downturn is fading in our rear view mirror, Canadians are beginning to rebuild their financial situations- and are finding themselves in new territory- in an economy that holds some muted promise, if not cautious optimism. Financial wounds are healing, but frail.

What is noteworthy though, is that it is not just the economy that has changed. Canadians and the Real Estate and Mortgage industries are also different post recession; in terms of economic expectations, consumer confidence and attitudes towards debt, from both a consumer, lending institution and policy maker standpoint.

Looking forward to 2011, with conservative promises of growth, expectations for price appreciation brought back to earth, and aggressive mortgage provisions being rolled out, how is buying and selling a house in this country different than it was pre-recession? How have Canadians and our government’s attitudes changed toward debt and spending?  What regions will expect growth in their market this year, and why?   And how does this impact professionals in the Real Estate and Mortgage industries?

According to many, there will be modest growth through 2011. Robert Hogue, Senior Economist with the Royal Bank of Canada agrees, telling PropertyWire.Ca; “As an upwards force, we expect economic recovery to continue and generate more jobs- so that means more income available to households. Overall, we think that those forces on the housing market will be mostly offsetting—if anything, it might be a little more on the upside.  We are expecting a very slight increase over the year, taking into account some volatility, around the trend- modest increase in resales in Canada. Probably around 1% or less.”

Royal Lepage also predicts good things in the pipeline for the housing industry, adjusting their 2011 forecast at the eleventh hour to reflect the positive trends they saw towards the end of 2010. Phil Soper, President of Royal LePage, told PropertyWire.Ca; “The change in our forecast from Q3 2010 to Q1 2011 was driven almost entirely by a combination of the global economy and prospect of continued inexpensive mortgage funding. Both improved from Q3 2010 to the end of 2010. That allowed us to take a more optimistic view with transaction levels and their impact on home prices in the next year.”

Soper believes that this positive trend for the housing market will spread across the country; “In general,   the entire country is getting a lift from improved economic conditions. Employment levels, just general government revenues and corporate profits are rising right across the country. As a result, everywhere in Canada will see an improvement.  That said, we don’t believe that the improvement will be entirely equal. We believe that, for example in Alberta, the housing slump that pre-dates the global recession is finally going to see some light at the end of the tunnel. Our forecast for Alberta is based upon those handsome corporate profits in the energy sector spreading to other sectors and that translating to increased hiring and the classic labour shortages and net migration that causes a housing shortage that puts upward pressure both on prices and unit sales- more people want to get in and sell their properties.”

Value = Stability

The challenge for Real Estate and Mortgage professionals may very well be changing clients’ perceptions and expectations in the new economic order.  The concept of value has changed perhaps as well and homebuyers will need to shed their hopes of price appreciation that shot up unmanageably pre-recession.

The new reality, as the housing market returns to stability, is that slow and steady will be the order of the day, and people will have to be satisfied will more gradual movement in price appreciation.  Says Soper; “Post- recession, the level of general price appreciation for the next few years will be less than people previously expected.  Inflation is low, and real price increases are going to be in the low single digits. We will see a prolonged period where we see price appreciation on average (and there will be exceptions) of 5% or less vs. home appreciation that was more in the 2000’s. That lower house appreciation will bring with it a calmer housing market, because the rapid increase in housing prices brings about a number of unexpected and unwanted  side impacts like runs on prices, bidding wars. I see less of that in the coming years.”

There is no question that there are fundamental  elements present in Canada that will drive the housing industry forwards and upward over time- and this is perhaps the root of the cautious optimism being expressed by many, when predictions are being made for the coming year and beyond.

Soper says; “All things being equal we should expect housing sales activity to increase over time in Canada. We’ve got one of the most enviable immigration  records in the developed world.  Household formation is fairly healthy in Canada. We should see a gradual improvement and expansion of the housing market overall.”

Interest Rates, Will They Or Won’t They?

There is no question that this sustained period of low interest rates that Canadians have enjoyed recently has encouraged spending and returned vitality to a sagging economy. But there are many fears that we have gone too far in the other direction.
Household debt is surging in Canada, to levels that are causing alarm bells to sound all the way to Parliament Hill, where fears of a U.S .style collapse of the housing market. Coupled with the knowledge that a rise in interest rates is an eventual certainty, these alarm bells launched policymakers into action to cut this swell of debt.

Adopting this slow and steady economic mantra for 2011, Jim Flaherty, Minister of Finance, has put forth lending restrictions for both mortgages and home equity lines of credits. What this move reflects is not just how the Government views debt- but is also a commentary on how Canadians and lending institutions view debt.  It is the fiscal equivalent of binge eating at every opportunity during the holidays, and recognizing the error in excess, seizing the New Year to get back in shape.
Flaherty’s moves have been well received by many, mostly from a messaging standpoint, as it seems that the actual impact that they will have on the economy, lending and in turn, on the housing market itself will be negligible.

Spend Yes- Just Not Too Much

Jeffrey Schwartz, Executive Director of Consolidated Credit Counseling Services of Canada, applauds the changes, telling PropertyWire.Ca;  “They are trying to prevent Canadians from going further and further into debt, especially as it relates to their mortgages. They want to make sure that Canadians take on about as much mortgage as they can handle and not push that envelope too much. Some of the changes will lead to that. Do they have a huge over arching impact? Probably not.  But I think from the perception standpoint, the government is encouraging people not to take on more than they can handle.”

And in fact, it seems that despite the swell in consumer debt, Canadians are not only listening, but are responding to the message. Commenting an a recently released report from RBC that examines attitudes and financial priorities for the younger generations (18-34), which indicates that that group is focusing on paying down current debt and saving for home ownership instead of saving for retirement, Schwartz said; “An argument can be made on both sides of that, but I think it is an excellent idea when someone in that generation is saying ‘you know what, let’ pay down our debt, because it is too high.’ That signals to me that maybe some of the messages are getting through.”

What material impact will these changes have on the industry? Very little as it turns out. Hogue told PropertyWire.Ca; “Of course, Flaherty’s announcement Monday put a bit more downward pressure on the market. We think it is going to hit first-time buyers more. But generally, the forces at play right now are mostly offsetting.”

Similarly, Soper feels that the changes will not drag the housing market significantly; “The changes are tweaks; they should not have a material impact on their own in terms of slowing or removing a significant number of transactions from the 2011 forecast. The change just wasn’t that dramatic.”

“Policy makers are less worried about indebtedness that is tied to real property. They believe forecasters like us, who say that the real property in Canada will either not decline at all, or at least not very significantly.  It is highly unlikely that property values in Canada will suffer large declines. Most trading areas in Canada, price values will continue to appreciate, as the beneficial factors such as an improving job picture, increasing wages and salaries will strengthen the housing market at the same time, eroding affordability that will play out in the natural cycle of expansion and back off periods that will play itself out.”

Even the real fears of rising interest rates may not have the doom and gloom effect that many are predicting for mortgage holders.

The Canadian Association of Accredited Mortgage Professionals recently released a report which examined the effects of a possible interest rate rise on homeowners who took out mortgages in 2010. Says Hogue: “Higher interest rates would put just a minority of recent mortgage holders in trouble. Their comment was that the lending practices of the last year have been prudent. Debt levels have gone up for a number of reasons, but not because financial institutions in Canada have loosened up their lending standards too much.  If anything, over the last two years, they have tightened them- part of which was mandated federally.”

Confident Consumer

There are many indications too that consumer confidence and the willingness to spend is on its’ way up, and that unemployment- albeit slightly, is on its’ way down.

There are some that fear that looming interest rate hikes and Flaherty’s new mortgage and HELOC restrictions could stall an economy that is just revving up, but the numbers seem to indicate that will not be the case.

Hogue is encouraged by what they’ve seen recently; “As a reflection of the overall economic performance in Canada, we expect it to trend slightly higher. The unemployment rate, which is probably a good indicator of confidence, is going to trend down modestly through the year. That is seen as the positive prop to confidence going forward. We are expecting by the end of next year in Canada, unemployment rate to be at 7.4%, which is not that much lower than it is now- but certainly is heading in a direction that should be reflected positively on confidence.”

So then, it seems like 2011 will not be a year of fireworks and frenetic pace in the housing industry; rather it will be a slow, steady climb back to higher ground- which is more appropriate really, for a country that has been trying to find its’ feet again.

Hogue says; “We are on path towards a more stable and sustainable housing market in Canada. The 2000’s have seen very strong growth. 2008 was a wild ride. Now I think we are in a new part of the cycle which is going to be more sustainable and stable.”

DRAWING THE LINE BETWEEN TRADITIONAL MARKETING VERSUS WEB-BASED: WHICH IS MOST SUCCESSFUL?

In the fight for marketing might, those leading the charge within the housing professions are the ones who seem to at least dabble in and, in some cases depend heavily on, social media and web-based marketing services.

In a recent PropertyWire.ca survey, the majority of respondents indicated they are using a combination of print and social media, but on closer inspection real estate and mortgage professionals seem to prefer marketing their services online for a variety of reasons.

Check out this article

The Results Are In! The PropertyWire.Ca Survey “Successful Habits Of Canadian Realtors”

The results of the PropertyWire.Ca reader survey, Successful Habits Of Canadian Realtors are in!…

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Hamilton realtor Rob Morrow is convinced that social media and internet promotion is the answer despite having combined both print and online marketing in the past. Today, the only time you’ll see him using print media is for open houses.

“Internet marketing is much cheaper and has more immediate results,” says Morrow, who also edits www.HamiltonHomeReview.com, an online real estate publication. “I can test promotions simultaneously and control changes instantaneously. None of this is possible in print because of the production delay. That same delay makes print obsolete for younger buyers as immediacy is paramount. Only the internet, controlled by the agent, can provide that type of instant, accurate information on an ongoing basis.”

Morrow like the internet’s wide reach, its relatively low cost and the fact that you can track your success.

“I embrace internet marketing because it is the future of real estate,” he says. “All our competitors are based on the internet (private sale companies) and the strongest brokerages have a strong internet presence.  It is the primary way to gain new business. Over 80 per cent of my clients come from internet calls to action.”

Vancouver’s Mike Stewart prefers Web-based marketing because it’s completely trackable, unlike print. And it’s way cheaper, he says, adding that he can build a website for $1500, which is the same cost as three print mail-outs. Furthermore, his success rate on print is next to nothing at maybe one per cent compared to the response he gets from a website.

The only time he uses print-based marketing is for very specific clients, which comprise about 10 per cent of his marketing and media budget.

“Print marketing is a small component of a holistic marketing strategy,” says Stewart, an avid web and video blogger. “With traditional print marketing, I’m wasting 50 per cent of my money whereas with online marketing I’m wasting 25 per cent, but that doesn’t bother me because with 75 per cent of it I can track.”

Toronto Century 21 real estate sales rep Laurin Jeffrey says 99 per cent of her promotion is done via the internet, though she’s tried a few mailers and print ads in the past. Her self-described “killer” website attracts a ton of visitors in combination with a blog and the use of social media sites such as Facebook, Twitter and LinkedIn.

Jeffrey’s web-based marketing strategy is pretty much sewn up so she may be considering expanding into the print world next year. Since she designs all of the online marketing, she enjoys the low or no cost involved. Jeffrey says she’s not so sure she could stomach that if she went with print marketing.

“Print costs money, money that I am not sure is worth spending,” says Jeffrey, who used to work in web design and online marketing before she got into real estate. “We have found in the past that we tend to get one extra deal per year with printed ads, making enough money to pay for the ad costs. Mind you, we have never had a concerted advertising effort over a long time, with multiple avenues.”

On a ROI basis, Internet marketing dollars have proven the most effective, says Rob Johnstone, a Calgary realtor. The analytics of each website is measured for traffic, click throughs, return visitors and how long a web visitor spends on a page in addition to which pages they view. The real deal, though, is with listing inquiries and sellers requesting evaluations.

“Of course, the reality is that web buyers and sellers are generally not as high-quality of a prospect as a prospect that calls after seeing a sign or print ad. We generate more leads for our sellers but have to sift through them to find the truly motivated people. Therefore, follow up is critical.”

Mississauga realtor Marjorie Canales uses a combination of print and Web-based marketing, although she finds she’s leaning more toward the latter lately. Because Canales’ business is focused on a niche market as opposed to a mass market, she leverages social media, direct mail to her existing client base, blogging, and other web-based mediums.

To measure the ROI of her web-based marketing, she uses Google analytics and other tools. For print items, she will try to follow up personally with a phone call or email.

“In the end, it all comes down to conversion,” Canales says. “How many of those potential customers are actually turning into a client. However, establishing engaging connections even with those prospects on my mailing list that may not be ready now but will be in the future is also important for me. This is Tribe Building 101.”

Vancouver realtor Sam Wyatt focuses his attention on a monthly email market update to existing contacts, daily calls to existing contacts and clients, his website, social media and blogging. He uses little to no traditional print advertisements. He, too, is not interested in marketing to a wide audience, but rather a quality audience that can provide repeat business and referrals.

“I measure my success by the number of contacts I make a day with my contacts new and old,” says Wyatt. “Marketing is simply letting people know who I am, what I can do for them and where they can find me.  I think it is as natural for a business person to market themselves as it is to breathe air or eat breakfast.”

Nanaimo mortgage expert Adam Hawryluk also finds a combination of print and online marketing best suits his practice. Because Hawryluk’s brand is one of educator, he tends to walk the line between teaching realtors, first-time home buyers, and potential clients in general about the ABCs of financing.

“It’s sometimes hard to monetize the success of the strategy,” he adds, “so it is important to be continuously re-evaluating it. Marketing is a very important pillar to the success of a business, so even though the monetary and time investment can sometimes feel unrealized, it should not be ignored.”

For Leslie Penney, vice president of business development with APlus Mortgage Group in St. John’s, diversification is the best way to spend your marketing dollars.  That way, he says, you can hit different demographics. To determine the success of your marketing you need to look at two areas.

“First, is your goal to get deals in the door?,” he asks. “Or is your goal to build brand recognition? The key is to ask any new clients where they heard of you. That way you can determine where your results are coming from. If you’re looking at it from a brand recognition stance, it’s much harder to determine your results. The client may have just renewed and might not walk into your office for another five years, but if you continue to plug away with advertising and marketing you stay top-of-mind for any potential clients.”

What kind of marketing do you prefer? Are you leaning toward web-based marketing or are you more of a traditional type? How effective has either of these been for you?

IS SERVING THE LENDING AND HOUSE-BUYING NEEDS OF CLIENTS A CASE OF DUELLING DUTIES?

In our hyper-competitive work-a-day world, the higher and more prestigious your degree, the more courses and designations you’ve mastered, the better references you’ve acquired all works toward spinning your resume into an effective and sought-after calling card.

Realtors, too, are increasingly expanding their skill set so it’s not surprising that many are looking to offer mortgages to their clients as well.

Check out this article

The Results Are In! The PropertyWire.Ca Survey “Successful Habits Of Canadian Realtors”

The results of the PropertyWire.Ca reader survey, Successful Habits Of Canadian Realtors are in!…

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In the recent PropertyWire.ca survey, 10% of real estate agents said they also offered their clients their skills as a mortgage professional. In Canada, that adds up to about 10,000 of you who not only buy and sell real estate, but also arrange financing.

The survey also revealed that 3% of you are currently going through the provincial licensing exams in an effort to add mortgage broker to your business card.

Not surprisingly, there are conflicting schools of thought on this trend toward cross-qualifications or dual-related careers.

Michael Tepper, a real estate broker and principal mortgage broker with Nadlan Realty Ltd. in Toronto, thinks it’s a good idea for realtors to also have their mortgage broker designation. Tepper has been offering clients both services since 2008.

“It’s good because you can offer a turnkey solution for clients,” he says. “There’s no conflict of interest as l long as you put everything on the table and the clients know what you’re doing.”

But Dartmouth mortgage broker Joe Devison thinks the potential for a conflict of interest is far too great when money is the motivation. The former realtor believes that an arm’s length division should exist between the two professions.

As for the argument for full disclosure, Devison says that’s highly subjective and full disclosure to one person can be quite something different to another.

He points to the recent case that occurred in Yarmouth, NS when 11 persons were arrested earlier this year in connection with a mortgage fraud scheme that totalled more than $6-million. Often, says Devison, with mortgage fraud there’s evidence of collusion among realtors, mortgage brokers, appraisers and lawyers. When one person is acting as both realtor and mortgage professional there’s less separation within the process and more potential for corruption.

Devison doesn’t see the point in realtors getting into the lending practice as most real estate firms already have in-house financing available.

“When you really look at it, they just want more money in their pocket,” he says. “It’s one step further and it gives them a lot of control and too much power. What do most people do with too much power? They abuse it.”

As a veteran in the mortgage industry since 2001 and a former banker for several years, Mississauga’s Angela Wong-Liao is fairly clear about where she wants to put up her boundaries.

“I don’t think a realtor should be a mortgage broker,” says Wong-Liao who also operates www.moneylady.ca. “The problem is it encourages the realtor to do something that’s not ethical.”

But over and above the conflict-of-interest concern, Wong-Liao questions how one individual can successfully become skilled at, execute and stay on top of two different professions.

“You can’t really service your clients properly by doing two things,” she says. “I only do mortgages and I have a hard time keeping up with one thing. What kind of service level can a client expect from someone practicing two professions? It’s too diversified. And you know what they say about that – You’re a jack of trades and you’re good at none.”

Devison agrees. In today’s vigilant world, where a real estate transaction can be fairly complicated and mortgage financing equally complex it’s difficult to keep up with changes in both industries, he says.

“To be a real estate agent or mortgage broker is full time and trying to marry the two and keep up with both is nearly impossible,” Devison says. “Let’s say you decide to get into the legal side of the transaction but that’s for a lawyer to do. You try to do both and you end up burning the candle at both ends and at end of the day someone gets burned.”

But David O’Gorman, a real estate instructor and a veteran mortgage broker with 30 years under his belt, calls the argument against operating dual practices “a crock.”

“There are eight people licensed as medical doctors and lawyers in the province of Ontario and tell me why they can’t be qualified as both?” he says. “If you comply with the laws in both jobs then why can’t you practice them?”

“I have no problem whatsoever as long as they disclose it. If you do both jobs and you do both well it’s all good. There are opportunities for lots of conflicts of interest as long as you disclose, then boogie on.”

The implication is that mortgage brokerage is a difficult business, he says, adding that if you have a strong foundation of understanding real property, real estate law, appraisal and marketing, as taught to real estate agents and brokers, there isn’t much of a stretch to be competent in mortgage brokerage. It’s just a separate licensing process.

Generally, people want to protect their turf, he says, but it is a fact that real estate brokers have been mortgage brokers since 1960 when the mortgage brokerage industry was first regulated by the province.

“Neither real estate nor mortgage brokers require the lengthy educational process of medical doctors or lawyers,” he says. “If a medical doctor can also be licensed as a lawyer once they meet the requirements of the Law Society, why can’t a real estate broker also be licensed as mortgage broker?”

Tell us about your experience. Do you work in both areas or are you considering doing so? Why? And if not, why not?

EXPLORING THE VALUE OF A STRONG WEB PRESENCE TO YOUR REAL ESTATE BUSINESS

When it comes to electronic marketing in Real Estate,specifically when it comes to your website, success comes from being on the cutting edge, leading the competition, or watching business pass you by.

Check out this article

The Results Are In! The PropertyWire.Ca Survey “Successful Habits Of Canadian Realtors”

The results of the PropertyWire.Ca reader survey, Successful Habits Of Canadian Realtors are in!…

 

According to the results from the recent Propertywire.ca survey, an overwhelming number of Realtors are using websites as a major component of their marketing strategy.

The numbers speak for themselves, says Stafford Scarlett, Business Development Manager with Jumptools Inc: “According to the 2009 National Association of REALTORS® Profile of Home Buyers and Sellers, 90% of all homebuyers used the Internet as an information source.   If you are not findable, your clients are going to find someone else.”

“In addition, 68% of all buyers and 64% of sellers interviewed only one REALTOR® before engaging them. If you’re not online, your chance of being that one is greatly reduced. In addition, many consumers interpret an absence of a web presence as a sign that you’re not a serious player.”

Make Sure Your Voice Connects

It’s not enough these days to simply have an online presence.  The presence has to be impacting, visually rich and compelling.  Details must not only re-enforce brand, they have to contribute to an overall perception of a Realtor’s dimension, likeability, personality and abilities. Not only that, a website must be part of an overall marketing strategy, where messaging is consistent with print and other marketing materials.  You must know who you are, and in every point of contact- whether it is virtual or otherwise, must be consistent and compelling.

Scarlett agrees. No matter how a brand or a Realtor is packaged, the end goal is the same- to initiate contact and start the business ball rolling: “A professional website should do one critical thing: prompt the viewer to contact the Realtor. Clients will make this decision if they are confident you can find them a home or sell their home.”

While a website should certainly reflect the personal touch of a Realtor, there are certain questions that you need to ask when looking to include a website as part of your marketing strategy, as James Lau, Founder & President of HomeKey Inc. says: “There are a lot of options when it comes to website design, and it can be very confusing. There are several key considerations: Does your website look professional and reflect your brand well? How your website looks is critically important; otherwise, your prospects will perceive you as unprofessional and be turned off immediately.”

“Does your website allow you to post new content easily? You should have a website that is backed by a solid content management system, like WordPress, so that you can frequently blog and add content to showcase your expertise. This is also very important to raise your Google search rankings.”

“Does your website allow you to properly showcase your listings? Photos, videos, virtual tours, Google maps integration are all very helpful in showcasing your listings. Not only will this help you sell your listings faster, it also shows prospects that you would work hard to sell their homes too!”

“Are your prospects finding you online through major search engines? I am sure you have heard of SEO (search engine optimization), which is another big topic. But in order to have good SEO, your site needs to have the right keywords and metadata around its contents, so make sure whoever you are working with is familiar with SEO.”

Websites have a Place in Referral Based Business

Although some might argue that most of their business is sourced from referrals, which is often the case in relationship-based business, the website is still an essential tool.  Even when it is not centre stage, it is an important supporting piece, as Lau explains: “Over the past several years, a realtor’s website has really become the central point of a Realtor’s overall marketing strategy. A lot of people think that their website is not very important because they get most of their business through referrals. That’s a big mistake.”

“Even when one of your past clients refer you, the first thing your new lead does is most likely to check out your website. If you don’t have a professional-looking website that can show how you differentiate from the pack, your chance of getting the new client greatly diminishes.”

Technology Must-Haves

The beauty of a website is that it lends dimension in a way that print materials cannot. It props up and promotes confidence and trust in ability. To really get all that the medium has to offer, and to take full advantage of the conversational nature that a website presents, many Realtors are using social media extensively on their sites, as well as written blogs and video blogs. A good value-add to help enrich experience for prospective clients, as well as aiding as a property sales tool, is to incorporate digital floor plans (See recent Propertywire.ca article http://www.propertywire.ca/features/features/sales-and-marketing/1217-how-to-enhance-visual-experience-and-add-value-to-your-service.html)

Lorena Romano, Sales Representative with Royal LePage West Realty Group, Brokerage agrees that the main purpose of a website should be to help people pick you out, and form an opinion, and she relies heavily on social media to provide prospective clients with the information they need to choose her: “It is important to show on your website that you are easily reachable. By this I mean, having a link to all social media accounts that a Realtor is apart of.  Whether it is Facebook, Twitter, LinkedIn or blogs.”

“I find that people are more interested in knowing who you are, and want to be educated first before hiring you.  My goal is to demonstrate that I provide value and a lot of real estate insight.  If my online presence can demonstrate my value, than I have ultimately achieved my goal.”

It is also important for Realtors to have a website that incorporates industry specific technology, that will assist in driving results back. Having an online presence is not enough. The presence has to be strategic, both in marketing and in its’ operational ability, as Nick Gewarges, Sales Representative, Right At Home Realty Inc., Brokerage suggests: “Realtors should stay away from generic, pre-packaged website designs.  They may look great, but they don’t offer the tools necessary to succeed in our business.  Instead a Realtor should have a website specifically designed and maintained for Real Estate professionals that have the following essential technologies: Automatic listings technology which capture MLS and broker listings directly on a Realtors site, Prospecting systems and databases which provide organized control and maintenance of clients and prospects, E-Marketing and Email campaign technology used to directly send out marketing materials on a scheduled basis, mortgage calculator, and more.”

Leads to Follow

As Scarlett suggests, a website is not just a way to capture leads-it is one of the most effective ways, as long as you have the tools to capitalize on the leads captured from web listings: “Leads from listings are the highest-quality leads since they tell you something about what a buyer is looking for, so ensure that your website makes it easy to feature your listings and those of your office and provides a simple way for consumers to contact you for details. Look for a website tool that allows you to add lead capture forms to any page on your site.

Remember that systematic follow-up on leads is the most important factor in converting them from passive inquiries to clients/deals. So look for a tool that provides integrated lead and contact management along with your website.”

A Job to Delegate

While there is no question of the tremendous importance of having a website in Real Estate, there is also value in having an expert design a site for you, both from cost-effective and time-effective standpoints.

Scarlett says that in the business of relationships, time needs to spent on that- working on the relationships: “Your time is better spent establishing and maintaining personal relationships, which is the core of building a long-term referral base. A website is simply a marketing tool, albeit a critical one. You make money when you are not sitting at your computer; when you are calling prospects, showing buyers homes that meet their needs, or making a great presentation to get a listing. Not sitting at your desk fiddling with a website. Let someone else take care of that so you can concentrate on the people.”

At the end of the day, the real impact on marketing strategy and on business comes down to what you do with the tools you have. Theory only works in the boardroom- it is implementation that hits your bottom line.

Gewarges underscores this fact: “What I do with these tools is up to me.  It is important not to lose site of the fact that a website requires daily involvement from the Realtor.  It’s not enough to have lead generation tools or marketing campaigns without strategically selecting who will be marketed to, what the message will be, and how it will be delivered”.

“On the other side of the spectrum, the results of that campaign must be properly reviewed and audited.  If a Realtor runs the same marketing campaign over and over again (automated via website technology), with little or no results each time, and then maybe it’s time to change the message.  Therefore, it’s up to us to keep track of website marketing and lead generation results, and tweak when necessary.”

FIRST-TIME HOME BUYERS: THE GOOD, THE BAD, THE UGLY

Buying your first home comes with a very long list of daunting fears, threats and what-ifs and an equal amount of heartening rewards, benefits and opportunities.

Check out this article

The Results Are In! The PropertyWire.Ca Survey “Successful Habits Of Canadian Realtors”

The results of the PropertyWire.Ca reader survey, Successful Habits Of Canadian Realtors are in!…

Read More

Knowing what your clients are going through is one thing, but truly understanding their apprehensions and anxieties is how you’ll stand out in their mind. Remember, a genuinely empathetic realtor is one whose name is recommended time and again.

 

Much of what the first-time buyer experiences, stems from their lack of knowledge and understanding, say Realtors. Yes, they know they’d like a house or a condo, but they understand little about mortgages, condo fees or perhaps sales commissions. As a real estate or mortgage professional, you’re handling a big learning curve with these buyers so you need to be patient and thoughtful.

“First time homebuyers often are not that educated on the process of buying a home and often turn to family, usually parents for advice,” says Crystal Tost, an agent with Remax Realty Professionals in Calgary. “While parents are good advice givers they too are not always knowledgeable on real estate matters.”

For agents who commonly deal with first time buyers, that’s a typical scenario. To circumvent parents’ lack of knowledge, clients could study their local market online. But Tost recommends interviewing a number of agents and finding one that really suits your needs. “Often I hear about clients that used their parents’ agent, but they have nothing in common with the younger client,” she says. “It’s wise to find your own agent that you feel comfortable with.”

Saskatoon’s Kari Calder of Century 21 Fusion agrees.

“I’ve had more than one dad come along who has killed deals on purchases because they think the prices are too high for what you get. They are stuck in the ‘old Saskatchewan’ and unfortunately would rather see their kids waste $10,000-plus a year in rent than building equity.”

For Brampton broker Arlene Samuel, who with her realtor father Edison Samuel offers free seminars for first-time buyers at Remax Real Estate Centre, first-time home buyers have insufficient know-how when it comes to closing costs and home inspections. She finds they tend to hyper-focus on getting their money together for the down payment and they tend to forget the one to two per cent of the price of the property (or roughly $5000) needed to close the deal.

Not only do first timers have no idea where to start, says Durham and York region realtor Tara Rosen, they also don’t know that going from bank to bank will pull up their credit bureau and that hurts their credit if pulled too often. But with a mortgage broker, they can shop around at different banks with no ill effects.

Rosen highly recommends getting pre-approval first as it saves a lot of stress. However, it’s no surefire recipe for success as she has seen pre-approved buyers be turned down from CMHC if they’re putting down less than 20 per cent.

“Getting qualified is a lot harder this year, than it has been in previous years,” Rosen says. “They have really become stricter.”

Buyers need to snap to it when it comes to understanding their credit score. Clients might receive pre-approval for a mortgage amount and then three months later they purchase a new truck or rack up their credit cards so that their chances of being approved for a home are much reduced.

“Usually, I would recommend people pay off any loans because you’ll have more to put on the down payment,” says Samuel. “Or clean up your bad or sliding credit, wait two or three months and then proceed.”

Many of the clients Samuel sees are under the false assumption that they need to have 20 per cent for their down payment instead of five. That misconception is one thing she and her father address in their seminars.

Tost agrees that affordability is a huge challenge in the market place across Canada especially for first-time buyers. “What you could buy 10 years ago for $200,000 is now $400,000 so finding the best place for your money can be challenging,” she says. “You will want to also find the best location and investment possible since this is your first place.”

Sometimes buyers are pre-approved for a certain amount but they soon realize what they want and where they want their first home is not affordable, says Rosen. “However, I can usually recommend other areas that they would qualify for and let them know, their first home is usually a five-year plan.”

Calder says this advice is especially true for her older first-time buyers, who need to be reminded that their first place is a starting point and that it takes time to work up to their dream home.

“I have several young buyers who have been hesitant about purchasing but once they did they have never regretted it,” says Calder. “I let them know that I was one of those buyers a few years ago so it helps them to know that it is normal to feel scared, excited, stressed, and ecstatic all at the same time.”

Naturally, there are a good numbers of pluses with becoming a first-time buyer, the most commonly mentioned one centres on the financial aspect of building your wealth through real estate. As a first-timer, no longer are you beholden to your landlord, helping him pay off his mortgage and being cash-strapped at the end of the month.

Calder points out that her clients that started out in their early twenties will be in very good financial position by their thirties because longevity is on their side.

Another great benefit, adds Calder, is the opportunity as a first-timer to advance your home status.

“I have many buyers who start in condos and then work their way up to houses and finally to their dream home but they would not be able to get their dream home if they didn’t start small.”

Rosen recommends the CMHC-approved Purchase Plus Improvements program, which helps qualified home buyers pay for home improvements immediately after taking possession, with one manageable mortgage and a low down payment. So if the home needs $10,000 in upgrades, a contractor comes in and does a quote on the work, which is submitted to the financial institute and is rolled into their mortgage. On closing, the lawyer holds that money so the contractor can be paid.

“This is a win-win for all,” Rosen explains. “The contractor knows for sure he will be paid but more importantly the buyer will have the work done and not worry about where they will get the extra money and that the contractor won’t get paid until the work is done so they will do it as quickly as possible and with good workmanship.”

Other opportunities unique to the first-time home buyer include being able to use their RRSP savings without penalty as a down payment on a house and receiving a rebate of up to $2,000 on their land transfer tax.

“It helps a lot of first time home buyers with closing costs,” says Samuel, “because you can use that money for movers or paying property taxes.”

No doubt about it, first-time home buyers are a unique market. What has your experience taught you? Do you have any funny, eye-opening stories to share? What are the positives and negatives of dealing with this group? Share your experiences.

HOW TO HELP YOUR CLIENTS PICK THE RIGHT NEIGHBOURHOOD

How well do you know the neighbourhoods in which you ply your trade?

Check out this article

The Results Are In! The PropertyWire.Ca Survey “Successful Habits Of Canadian Realtors”

The results of the PropertyWire.Ca reader survey, Successful Habits Of Canadian Realtors are in!…

There’s a big irony that goes with up-and-coming neighbourhoods and in a city with many neighbourhoods, Toronto realtor John Pasalis has seen it time and time again.

“There’s a huge emphasis on neighbourhoods,” says the president of Realosophy Realty, “but what I find is I get a lot of buyers interested in up- and- coming neighbourhoods until you show it to them. A lot of times, they’re thinking cool, young, and hip and then they see it. ”

Up-and-comers or those neighbourhoods on the cusp of being the next hot real estate market often start out as ugly, rundown districts bereft of the badges of gentrification such as young families and thriving commercial activity. Some are former industrial areas. The homeless or people living on the fringe reside there.  Others are just old, outdated and untended neighborhoods that could use an injection of charm and vitality.

Six years ago, that was what clients thought of about Leslieville, Toronto’s  east-end neighbourhood now known for vintage furniture shops, film studios and cafes. The then-derelict neighbourhood needed more than a little TLC. Today, Leslieville real estate prices have reached those of Riverdale and the Beaches.

At about the same time, Toronto realtor Steve Arruda began suggesting his clients look to Starbucks as a barometer for a neighbourhood’s upward evolution. Because the coffee giant does its research and has a good track record, he encouraged clients to consider investing in neighbourhoods in which a Starbucks was soon to open or had just opened.

“It’s the latte factor,” says Arruda, who owns Urbanopolis.com, a full-service realtor affiliated with Century 21. “If you see a Starbucks opening, it’s a catalyst for something happening soon. Starbucks don’t open at Jane and Finch. They open in neighbourhoods that are on the verge of something trendy happening.”

The benefit to either moving into or investing in a neighbourhood on the rise is that if you get in early enough there’s money, sometimes substantial money, to be made.

Those who are drawn to emerging neighbourhoods tend to be more creative and artistic types, says Pasalis. These people are often on a restricted budget and are trying to get into a neighbourhood so that they can put their stamp on it.

“The people who buy very early have the most to gain,” he says. “Neighbourhoods don’t appreciate at the same rate as across the whole city. Up-and-coming neighbourhoods typically double the appreciation rate of the city as a whole. So if a city house is appreciating at five per cent, the up and coming would be 10 to 12 per cent.”

So how do you determine the gold mines from the duds? The key, says Pasalis, is doing your homework and knowing what signs to look for. Here are his top three tips:

The first step is to pick a neighbourhood that will gentrify in five to eight years. To do that, look for the early signs of improvement such as people moving into the side streets, fixing up their homes, and adding curb appeal.  Once that happens, it’s often followed by the neighbourhood’s commercial district, where you’ll see lively looking cafes and shops starting to open.

Established neighbourhoods that have already gone through gentrification often bound emerging neighbourhoods, he says. In the case of Leslieville, Riverdale, the Danforth and the Beaches, all well-established areas, flank the neighbourhood.

The second pointer Pasalis offers is that the houses in the neighbourhood must have some redeeming features. Curb appeal is critical. Victorian era homes are a good example of this. Their charm will appeal to younger buyers who often fuel the improvements in an emerging neighbourhood.

“The types of neighbourhoods that don’t appeal are older rundown houses that are completely different in style from one to the next,” says Pasalis. “That’s where one home is built in the forties and one in the eighties and they’re not in very good condition, maybe the aluminum siding is falling off.  Even if an old Victorian is rundown, you can see the potential, whereas in a neighbourhood where all the houses are rundown, it’s less likely that that neighbourhood will change very soon.”

The third factor in trying to determine a neighbourhood ripe for improvement is to keep an eye on urban areas near main arteries that are close to transit.

Realosophy’s website (www.realosophy.com) offers dozens of very useful and free GTA neighbourhood profiles with a breakdown on schools, house pricing, restaurants and shops, how walkable a neighbourhood is, where the nearest Starbuck’s is and demographics on everything from average household income and languages spoken to the number of families with and without kids.

www.hoodreports.com offers similar information for real estate professionals willing to pay $299 for a one-year license. The fee means you can access information that helps define a neighbourhood based on such demographics as crime rates, schools, EQAO test results, ethnicities, closest transit, population density of the neighbourhood, the marital status of its residents, median incomes, types of dwellings and the age distribution of its population.

“One of the ROIs we demonstrated is that the time you spend looking for information requires lots of energy and effort,” says website co-owner Amit Garthani.“To do that for each client is a lot of work.”

Garthani and his partner Ovi Comes started Hood Reports in February, 2010.

What realtor Glenn Perdue,who works for Remax Realty Specialists in Mississauga, likes about www.hoodreports.com is that it breaks down all sorts of statistical information based on the address he enters into the software. “If a client wants information on a specific house, I can pull up local schools and crime stats. A lot of people will ask if there are a lot of robberies in area. This shows it up front. It’s helpful and inexpensive.”

Perdue says the program is easy to use and the information can be emailed to clients even before they’re taken on a showing.

Information like this can fulfill consumers’ growing need to be well informed and educated before making a decision to buy. Once a client is armed with the report, their decision to buy or not to buy is generally reinforced.

“The(se types of reports) reports (don’t) scare people away from purchasing a specific home. I think the more information the public has, though, the better position they’re in to make decisions.”

Gary Singh, a sale rep at Kingsbury, says many of his clients are interested in learning about a neighbourhood’s schools. Their second concern, though, seems to centre on what ethnicities comprise the neighbourhood in which they are looking.

What information do you collect when researching a neighbourhood? What do you find your clients are asking about today that they didn’t seem too concerned with a few years ago? What do you look for in a neighbourhood that is emerging in popularity? And what tools have you used to get this information to your clients?

PropertyWire.Ca did not recieve any payment for this story.

GROW OPS CAN KNOCK ON REAL ESTATE’S DOOR

Whether you sell real estate, invest in it or just buy it for pleasure, you’d be hard-pressed to not have heard about that class of criminal who hides out in the anonymity of residential or industrial neighbourhoods producing multi-million-dollar marijuana crops and chemical drug operations.

Drug lords get rich, addicts get high and the negative repercussions for society carry on. Once these illegal operations are uncovered or abandoned, they fall to the hands of housing professionals, many of whom are left in the awkward, risky and potentially dangerous position of selling, appraising, financing or inspecting a former grow op.

“I get a lot of calls,” says Re/Max Dynasty sales rep Tom Sachdeva, who is considered something of an expert on grow houses. “It’s not an easy field to be in. A regular house takes a week to sell and these properties take a month.”

While he will not disclose how many grow-op real estate deals he’s been involved in, Sachdeva said his Markham real estate office currently has two such listings. While these properties will likely never shake the stigma of being illegal grow houses or chemical drug labs, there is a definite advantage to buying them, says Sachdeva, and that has to do with the fact that they sell for 20 to 25 per cent below market value.

Your average homebuyer may have difficulty securing a former grow op, though. Mortgages are difficult to obtain on these properties and insurance can be difficult to assume as well. Sachdeva has seen buyers with 50 per cent down be refused a mortgage.

Sachdeva warns that former grow houses can be difficult to spot especially if its illegal drug production was some years in the past. Although a major overhaul is generally in order after a grow op is shut down, many are given only a superficial cosmetic touch-up before being put on the market.

If you suspect a house may be an undisclosed former grow op, Sachdeva recommends having the home inspected and, in some instances, having the dwelling’s structure checked by a professional engineer.

Here are some signs to look for:

•    Mould in corners where the walls and ceilings meet.

•    Unusual number of roof vents or signs of roof vents.

•    Fresh paint on window frames to cover damage caused by the high levels of humidity.

•    Painted concrete floors in the basement with circular marks where pots once stood.

•    Evidence of tampering with the electric meter (damaged or broken seals) or the ground around it.

•    Unusual or modified wiring on the exterior of the house.

•    Brownish stains on the underside of beams or arches that bleed down a wall.

•    Concrete masonry patches, or alterations on the inside of the garage.

•    Patterns of screw holes on the walls.

•    Fireplace alterations.

•    Denting on front doors (from police ramming the door).

The prevalence of these grow houses and chemical drug labs are hard to measure. According to police reports, CREA estimated in 2004 that there were 50,000 grow operations across the country. Given the age of that number, it has likely increased, perhaps significantly.

In 2010, for example, 248 grow ops were uncovered mainly in the inner suburbs of Toronto by police. That’s a hike of 77% more over 2008, when police busted 140.

Regardless, they are an unpleasant fact of life these days with plenty of negative consequences. Because these operations involve significant alterations to the structure and electrical system, this can compromise the building’s structural integrity and pose fire and safety hazards.

Perhaps one of the worst consequences of owning a former grow op is the opportunity for mould growth. Because marijuana plants are heated by grow lights and watered regularly to make them grow bigger and faster, this produces abnormally high levels of humidity which settles in the house’s cooler spots  such as the gap behind the drywall just inside of the outer walls of the home.  Mould flourishes in this environment and can become toxic to future habitation.  The only way to ascertain how serious it is would be to take all the interior walls off and inspect the area within the gap.

According to the Canadian Home Inspection Corporation, the cost to remediate a former grow-op is between $60,000 to $80,000.

Many housing professionals are hindered by the lack of a central registry, which is considered crucial to protecting homebuyers from the potential health and safety hazards of properties formerly used to manufacturer illegal drugs. While some police departments such as Toronto and London have posted the addresses of grow houses, the practice is not consistent.

The Ontario Real Estate Association (OREA) supports a private members bill introduced by MPP Lisa MacLeod last fall that would establish a registry for marijuana grow operations and clandestine drug laboratories.

“Grow-ops are major problem for homebuyers…and we have been urging the Ontario government to establish a registry to protect consumers for almost ten years,” said OREA president Barb Sukkau. “We will continue to urge the government to protect homebuyers by setting up a registry to deal with this issue.”

The Association of Saskatchewan REALTORS is pushing its department of justice for a provincial registry as well.

“We think it’s a positive step,” says Bill Madder, executive vice president of the association. “We can’t just say all of these houses are bad so you should never buy them. We need to be aware of the concerns and let them make their own inspections and investigations.”

While REALTORS® are obligated by law to disclose to potential homebuyers if a home has been used as a grow operation or a drug lab, the registry raises the thorny issue of privacy violation.

But perhaps more dramatic is a recent B.C. ruling in which a landlord was stripped of the houses he owned by a provincial court after renting them to tenants who later turned them into grow ops.

The February decision was the first decided under B.C.’s new Civil Forfeiture Act. The Act permits the seizure of property that is either proceeds of unlawful activity or an instrument of unlawful activity. Ontario’s equivalent law is called the Civil Remedies Act so this, too, could also happen in Ontario.

Have you had experience in working with these kinds of homes? Please share them with us using our comments section below.

HOW TO MANAGE OTHER PROFESSIONALS, WHEN THEY ARE UNPROFESSIONAL

You try your best. You make a commitment every day to excellence, and to stunning your client base by overachieving on their expectations.  You plan and strategize your business down to each detail, each point plotted on your individual road to success.

Sometimes, however, certain variables are introduced into your daily practice, and these variables are completely unpredictable (and in some cases unaccountable), because they are of the human kind! 

To make matters more difficult, they claim to be professionals, sharing your space within your industry- threatening to derail your own hard work- or in some cases, really damage the industry by tarring others with the same brush. Like it or not, the nature of your industry requires regular interaction with other professionals. To try to keep things running smoothly, there are regulations and codes put into place- both written and unwritten.  Despite best efforts though, sometime these suggested practices and codes of conduct are sidestepped, or disregarded.

How do you keep your cool- and keep business going and client relationships strong? Common sense and common courtesy should be the guiding rule, but in talking to several members of our Propertywire.ca community, often this is not the case. The consequences from bad practices are far-reaching; from professional annoyance, to serious impact on the sales process, the image of the industries, and bottom lines.

So, what can you do when others just dont have your high standards? Although you may feel like closing yourself in the proverbial closet and screaming, professional etiquette prevents you from doing so.  And besides, your clients are counting on you

Bad Apples

It can be a PR nightmare in client centric business, for some to participate in bad practices. Many of these bad practices result in a negative consumer perspective, and run the risk of making you look either unprofessional or even unethical.  You can do all the marketing you want, but what speaks loudest to your brand integrity when your feet hit the pavement, is your behaviour- and, unfortunately, you are not always judged singularly by your own behaviour.

Early Bird no Longer Gets the Worm

You always want to keep things fair and even- especially when there are clients involved. Markham Realtor, Rusty Topan, Broker, Re/Max West Realty, has concerns with the listings process negatively impacting a buyer’s experience- and putting forth a sense of inequality. Keeping in mind too, the intensely emotional nature of buying a home, it makes it difficult to support a client emotionally when a practice seems destined to create anxiety.

“There is a tendency that seems to have become the norm to state on the listing when offers will be presented/viewed.  Almost every well-staged, accurately priced listing is set up from the get go to be a multiple offer situation.  It’s all fine and dandy for the seller and the seller’s agent, but the buyers are getting discouraged and the anticipation and excitement for the buying process is turned into anxiety and worry.  I hate seeing the look on the face of the new buyer who finds out that he/she can’t attach even reasonable conditions to their offer, and has to commit to more then the house they fell in love with was originally listed at.  It’s turning the offer process into a cat-and-mouse game, and it has removed any concept of ‘the early bird getting the worm’.”

Respect My Time: When Structure Meets Chaos

The Real Estate and Mortgage professions require heavy time commitment and, at times, crazy hours. That is not to say that you can’t set a schedule- and furthermore that you shouldn’t expect other professionals to respect it.  Professional enthusiasm, and aggressive business practices can, at times, step over boundaries.

Steven Fudge , Sales Representative, Bosley R.E. Ltd.  says, “It’s very easy for a busy Realtor who works all hours to think that other Realtors live a similar hectic pace. When this happens, it’s easy to inconvenience others who have a more structured life/work balance.”

“For example, some Realtors will leave me a voicemail late at night requesting appointments that aren’t possible to coordinate, either because they require a minimum 24 hours notice for tenants, or it’s outside the times stipulated clearly on the listing. These errors would be quickly clarified had they called my appointment desks during operating hours, so the ensuing trail of telephone calls can be irksome. I also raise my eyebrows when Realtors page me on a Sunday to provide ‘feedback on a showing’. That sort of call isn’t necessary to place on a weekend, is it?”

Work/Life balance takes a time commitment in and of itself to achieve, even if others are trying to knock you off kilter.  Fudge’s solution is easy. He sets the example himself.

“As a courtesy to others, I try conduct as much of my business with other Realtors during the more conventional hours of 9-5pm Monday through Friday even though I, and the rest of us, invariably work much longer hours. However, I recognize this isn’t always possible so I try to be easy-going about it.”

Common Courtesy as a Guide

It really just comes down to common courtesy, professional or otherwise- and being reliable.

Karen Filice, Broker of Record/Owner, Cirrius Realty Inc., Brokerage is succinct in her beliefs as to how Realtors should conduct themselves. She says, “Standard practice (should be to) make an appointment, show up for the appointment within the time allotted, and leave a card.”

Filice is well aware of how the scenarios play out, but believes that the Realtor has to take responsibility on behalf of the seller anticipating the showing. “What happens, a client doesn’t like the house and they drive by with the showing Realtor.  What should happen, the Realtor should stop, knock on the door, tell the home owner the client has changed their mind about seeing the house, or leave a card in the door to say they were there, but client declined to view.”

Not only does not doing this strain the relationship between client and Realtor, in a business of networking and referrals, one must be constantly mindful that what comes around goes around- especially in the professional arena.

Filice also, has a simple solution: “When a client calls to say: There is no card, they didn’t show up, the lights were left on, the door unlocked, I put a call through to the showing individual and remind them of what they should be doing.  I also apologise for my colleagues to my client.”

Title Search

 

One of the benefits of being in the business for a long time is learning from other’s mistakes, and learning how to avoid problems through due diligence. Says Filice, “It should be common practice to do a title search on listing – which I do on both listing and sale.”

“Many realtors do not do this.  Recently I had an offer on a property and noticed that the total debt showing on title would not equal the purchase price (or the asking price for that matter).  I drew up the offer, but as a courtesy, called the listing sales rep and told him what I found.  He asked me to forward him the title search.  I told him he should have done his job (he was a friend and I gave him a hard time) and in the end sent him the title search…In this case, the offer was delayed two days, by which time two other offers were registered and we lost the buy.  But the sellers were safe.“

Don’t Judge this Book by its Cover.

The Mortgage Industry sees many of the same problems, says Leslie Penney, Vice President – Business Development Mortgage Alliance/ APlus Mortgage Group.  What he suggests though, is that amongst professionals, don’t judge a book by its cover. It is off-putting, to say the least, to make unfounded assumptions on someone’s abilities without taking the time to determine if the assumptions are valid or not. Furthermore, it is not fair to promote this stance to the client.

“One thing I experienced in the beginning was a bit of flack from some veterans of the business. At times there would be suggestions to clients that the new guys don’t know what they’re doing because they haven’t gotten the experience or that maybe they won’t be in the business six months or a year down the road. That may be an unfair call if the competition doesn’t know the background of the person they are referring to. The person may be a new mortgage broker, but they may have a background in lending, etc. “

And, as Penney suggests, this isn’t limited to other mortgage brokers- but happens with other players in the marketplace at times too.

“Banks sometimes use this approach when competing with brokers for clients. The whole bricks-and-mortar approach with being in business for such a long time is much the same as the veteran brokers. The person at the bank that the client is talking to probably hasn’t been at mortgages as long nor do they focus on just selling mortgage products, but they sell based on the premise of the large logo behind their desks.”

He suggests that the solution here is marketing, and promotion of your own abilities. Of course, too, the best advertisement for your abilities is a job well done, so another solution to combat this is to over deliver on client expectations, and then to ask for a referral.

Managing other people’s behaviour in a professional environment is no easy task.  Frustration can often replace professional composure.  As with most situations, ‘you attract more flies with honey than you do vinegar.’ Keep in mind that every move you make is perceived and processed by the client, and in some cases your best strategy is to offer solutions- and to keep your cool.

As Fudge puts it, “After twenty years of working in the industry, I’ve seen time and time again that being patient and professional to other Realtors will ultimately serve you well.”

VACANT POSSESSION: THE “TIMING”

This is a simple question and sometimes gives rise to significant problems. The general advice given by lawyers traditionally has been that vacant possession must be given by the “actual time of closing”.

The problem is that people just don’t leave. They are often in the process of moving out, but they’re not quite out. An experienced purchaser will know this, and leave a day’s grace, so that there will be no conflict.

Commercially, this is never a problem, but residentially, it is a constant, continuous, every month issue across the city. Everyone seems to want to move on the 15th or the last day of the month. There’s no real reason for this, other than it has become common practice. Movers are busy, banks are busy, lawyers are busy; so why pick these days?

Really, the only individual who needs to move in on one of these days would be a tenant who has vacated their premises. Other than those tenants, everyone else can choose their dates; only they don’t. Someone, usually their real estate agent chooses the date for them.

This means that a lot of people are “mobile” on the same day of the month. They leave one place and have to be in another by the end of the same day.

The well organized vendor loads up and vacates early in the day. By the time his purchaser arrives, the house is vacant and there is no problem. The disorganized vendor, however, leaves a lot of matters to the very last moment. He’s just not ready to move out early. He hasn’t quite packed, he orders his movers to arrive in the early afternoon, and by 9 or 10 o’clock at night they leave.

Now, that’s probably fine in most cases. The purchaser arrives a little later, unloads, and pays his movers overtime, since they have been ready to unload for hours. Typically, he is just upset, pays the extra money, but within a day or two the excitement of moving into the new house occupies his thoughts and he soon forgets the “moving in” issues.

However, not all the time is the law, just for “cocktail conversation”. From time to time, people get sufficiently upset, that they sue. So, what can you do about this? When does the vendor have to be out of the house? If the vendor is still there after closing, can you rescind the transaction? Can you sue for damages?

Let’s have a look at the standard form agreement in use in Ontario:

“2. COMPLETION DATE: This agreement shall be completed by no later than 6:00 pm on the 4th day of July 20xx. Upon completion, vacant possession of the property shall be given to the Buyer unless otherwise provided for in this Agreement.”

So, there’s a time and a date and in the second sentence there are consequences. The purchaser basically has until 6:00 pm to complete the deal. The electronic registration system is still open, and deals for that day can be completed up until then. After that, with a few phone calls, keys are released and the vendor and purchaser are notified. The “move-in” could take place after that. The risk to the purchaser is that by now his movers have been sitting in a local pub since 2:00 pm and they are now on time and a half.

You should note that from a legal perspective, there is nothing in the agreement which obligates the purchaser to close the deal any earlier than 6:00 pm.

The next matter to consider, is the early closing. Even though the deal could have been delayed until 6:00 pm, it was in fact closed at 2:00 pm. Now, we have to look at the obligations which arise under the second sentence. The consequence is that “upon completion” and that means 2:00 pm, “vacant possession shall be given”. There is a further statement that says “….. unless otherwise provided….”. Usually, this would mean that vacant possession was not intended at all. The property was occupied by a tenant, and the purchaser agreed to assume the tenant. Therefore, the premises were not going to be vacant, they were going to be occupied by a tenant, immediately before, at the time of, upon closing and after closing.

There are essentially two quick legal issues:

1) can the purchaser refuse to close if the premises have not been vacated at the time of closing?

To this question the answer is “no”. The Ontario Court of Appeal ruled in Cooper v. Mysak (1986) 54 O.R. (2d) 346 that it was indeed a breach of contract, but only a fundamental breach of contract would entitle the purchaser to decline to proceed and rescind the contract.

2) if the vendor is still occupying the premises after closing, can the purchaser sue for damages?

To this question the answer is “yes”. Although it is only a Small Claims Court decision, the trial Judge followed the reasoning of the Court of Appeal, and concluded that even though it was not a fundamental breach, it was certainly a simple breach, and a simple breach of contract entitles the purchaser to damages. So, the purchaser was awarded his additional moving costs that were incurred by reason of the vendor’s breach of contract. A claim for inconvenience and hotel expenses were not covered in the Judgment. See Foord v. Smith (1993) 33 R.P.R. 279.

The legal result of the two decisions:

• Failure to close by 6:00 pm is a simple breach of contract, provided vacant possession can be given later that day

• Failure to close by 6:00 pm is a fundamental breach of contract, provided vacant possession cannot be given later that day

• A vendor must vacate by no later than 11:59 pm on the day of closing

• Failure to vacate by the actual closing time is a simple breach of contract

• Failure to vacate by 6:00 pm is a simple breach provided the transaction closes that day

• A purchaser can rescind the agreement for a fundamental breach

• A purchaser cannot rescind the agreement for a simple breach of contract but is entitled to claim damages

What Changes would you want if you were a Purchaser?

All in all, if you’re a purchaser and you have paid your money over at 2:00 pm and you don’t get your house until midnight, that’s not good. So, what could you do to make things a little better? Consider the following:

• A provision making the closing an earlier time in the day, and specifying that failure to complete by such time is a fundamental breach of the contract

• A provision specifying a certain hourly payment to you by the vendor if you don’t have possession by a particular time of day

What Changes would you want if you were a Vendor?

Not every purchaser needs to be in the house on the day of closing. The mere fact that you need the purchaser’s money to close your purchase, doesn’t mean that you have to part with possession.

The basic rule of thumb for a vendor should be to arrange interim financing, even just for a day. Borrow the closing funds needed for your purchase from your bank. You pledge the funds arriving from your sale as security for repayment of the loan. The direction concerning the payment of the funds is all the security you provide. Now, you can close at 9:00 am. You probably only need the funds for a day, or perhaps 3 days if it’s a long weekend. This cost is very small compared the aggravation you save. So, some good advice: separate the two deals. Don’t make them dependent; make them independent of each other.

When you come back to the terms of the agreement, why not alter some of the standard terms and consider the following:

• A provision that the purchaser must close by 1:00 pm on the day of closing

• A provision that failure to close by 1:00 pm constitutes a fundamental breach by the purchaser

• A provision that failure to close by 1:00 pm constitutes a simple breach and entitles the vendor to damages of $100 per hour (or part thereof until closed)

• A provision that failure to close by 1:00 pm constitutes a simple breach and entitles the vendor to damages of $100 per hour (or part thereof until vacant)

• A provision that failure to close by 1:00 pm constitutes a simple breach and entitles the vendor to liquidated damages in the amount of $1,000

• A provision that failure to close by 1:00 pm constitutes a fundamental breach and entitles the vendor to rescind the transaction

• A provision that you are entitled to remain in the premises until 9:30 pm notwithstanding the actual time of closing

Amendments to the Standard Agreement

Right now, the standard form agreement says completion and possession are simultaneous. Why? No particular reason! Why not have two times, one for completion and one for possession? This could be undertaken easily. Just have a look at the provision that stated “unless otherwise provided. So, provide otherwise!

Another issue to consider, which appears not to have been raised in the litigation in either case is the timing of closing selected by the lawyers.

Traditionally, law firms just go about their own business and close the deals when it suits them. Now, if the vendor can stay until 6:00 pm without a problem, why would their own lawyer close at 1:00 pm, therefore placing their own client in technical breach of contract? At the very least, they should consult their client to determine when they will be out. Now, they probably need the closing funds for the vendor’s purchase of another property, that’s the problem. But, if that were not an issue, the vendor’s lawyer should confirm in writing that “notwithstanding the earlier time of closing to suit the purchaser’s convenience, possession will not be provided until the latest contractually agreed upon time, namely 6:00 pm.

If you are about to enter into an agreement to buy or sell residential property; consider agreeing both about:

1) the time for closing, and

2) the time for possession.

Brian Madigan LL.B., Broker is an author and commentator on real estate matters, if you are interested in residential or commercial properties in Mississauga, Toronto or the GTA, you may contact him through Royal LePage Innovators Realty, Brokerage

WHY HAVE A HOME INSPECTION?

Offers of purchase and sale on a home are often contingent on a satisfactory home inspection. The translation: the buyers have a period of time to hire a qualified home inspector to do just that: inspect the property top to bottom and inside and out.

This is a practice I highly recommend as the inspector is working for the buyer, not the seller, or the agents. Upon reviewing the results, the buyers can either confirm their intention to complete the purchase, negotiate repairs or compensation for identified deficiencies, or, in some instances, walk away.

I will strongly suggest that you seek out someone who is certified with a recognized professional association, such as the National Association of Home Inspectors or NAHI (U.S.) and the Canadian

Association of Home & Property Inspectors (CAHPI).  I also strongly suggest that you choose a home inspector who has several years of experience inspecting the type of property you’re considering buying.

And, of course, ask for references as they can be golden.  Do not look at just the rate they charge. It is of the utmost importance that you look at the skill, knowledge and experience they bring to the table.

This can be critical when it comes to your final decision and should be paramount when choosing your inspector. Inspection by a competent, certified inspector may be your last line of defence against undiscovered potential costs and or hazards in the home…Do not take the shortcut here. You owe it to yourself and your family to get this step in the purchasing process exactly right.