Only homes that sell within a given month set the market for that given month. Over time, the market setting forms a trend and perception becomes a big factor in future market setting. Last month, July 2010, was a big month for setting both a declining market (-5.3% in SFH average price) and perception (the cat is out of the bag).
There are two simple types of sellers in the local Victoria market right now: those that WANT to sell and those that NEED to sell.
Let's take a look at these two types individually in an effort to better understand their positions.
I want to sell my home.
There's all kinds of reasons for wanting to sell a home: to return to renting, to buy something different, to move across town closer to work etc. But the underlying factor that differentiates a want to sell from a need to sell is financial circumstance. Financially speaking, the want to sell types do not need to sell. Nothing catastrophic will happen if the want to sell doesn't make a move. These people may tend to have a realistic outlook on their home's value, understand the market forces at work and are financially organized and patient enough to not make rash decisions in the sales process. The few buyers left in the market are likely being steered away from homes owned by these folks as the deals may be harder to negotiate/close. Simply put, the want to sells can, and very likely are, being picky in the process.
I need to sell my home.
I've lost my job. I'm getting divorced. I'm being transferred at work. When I bought my home a year ago I thought I could afford it, turns out I can't. My parent(s)/in-laws have passed on, I need to sell their home to get cash now. These folks may prove more emotional, less rational and more attached to their perception of their homes inflated value. But it won't matter. These homes may be more neglected, less appealing to a broader range of buyers and likely more difficult for agents to show (though they'll be forever dubbed as "good bones," "sweat equity options" and "fixer-uppers"). Simply put, the need to sells are home ownership situations undergoing various degrees of distress.
Need to sell homes will set the market.
Only homes that sell will set the market. Only need to sell homes have to be sold. These won't sell fast. Nor will they sell for the home owners' perceived market value. Over the coming months, stories of distressed sales, "haircuts" and "thank goodness we got out just in time" will creep into the public real estate mind.
On the way up, it was greed and the want to sells that set the market. On the way down, fear and the need to sells will drive market prices. Ultimately, the buyers will decide what fair market value is. There are few buyers and lots of homes. Even the buyers ignorant of the true state of the real estate market will be smelling blood. Low ball is the phrase of today. Below assessment will be the phrase of the near future.
This downward market setting is only getting started.
Monday market numbers, courtesy of Marko Juras, REALTOR®:
Net Unconditional Sales: August 1 - 9 = 78 August 2009 = 764 (total)
New Listings: August 1 - 9 = 240 August 2009 = 1,094 (total)
Active Listings: August 1 - 9 = 4,282 August 2009 = 3,509 (total)
82 comments:
Public belief that real estate is an ever-increasing investment is rapidly, tangibly shifting.
The real ride down starts now.
Just for clarification, the stats I reported for August are MTD - Month to Date. I would persume this is August 1st to now?
^fixed. thanks
The flip side of the sale coin is the buyer. In order for a sale to happen there needs to be a buyer. A buyer has two attributes: the ABILITY to purchase and the DESIRE to purchase.
ABILITY is based on many factors including current assets, outstanding loans, down payment, household income, credit history and the willingness of a lender to issue a loan. The rare, cash buyer is the only one not subject to these conditions. The recent changes to the mortgage rules for investors and home buyers has made a big dent in the ability to buy for many.
DESIRE is primarily driven by the wish to stop renting, lifestyle requirements, status, greed and pressure from peer and family groups. When prices are rising the desire to own ratchets up quickly and the decision is reinforced by friends, family, MSM, banks and realtors. When prices start falling greed changes to fear and the level of desire is diminished for most people. Many will nervously sit on the sidelines until they perceive that the bottom has been reached.
In April 2008 the market stalled and dove for many months. It took record low interest rates to get things going again. The ability to buy and the level of desire both increased. Now that we have stalled again it will be very hard to get another reversal. Demand was brought forward and the pool of buyers is very thin. Many on the sidelines do not have the ability or desire to buy under current conditions. As demand continues to wane prices will continue to fall and desire will become even less because few want to catch a falling knife.
Just the way I see it as I sit here renting and saving money every month.
HHV,
I have made several posts today and they have disappeared after a few minutes without a trace Whats up?
HHV,
I have an answer to my question. It appears that blogger is deleting any post that contains a hyperlink. Blogger has a bad software bug. I checked the last post too and anything I or anybody else posted with a hyperlink in the last day has vanished.
Why don't you try posting a comment with a link? In a few minutes it will be gone.
Skeptic, it appears you are right. Not sure what is happening.
Tried to post this earlier. Here it is without a clickable link.
Bill and David over at Royal LePage Coast Capital Realty had this to say about Victoria and Vancouver Island real estate.. tinyurl.com/2fsz8or
Real estate activity has slowed significantly in recent weeks as buyers step back from the table and wait for lower prices and improved economic conditions. Record inventory levels continue to exert downward pressure on home prices. We are already seeing price declines across the region. Interest rates are forecast to continue to increase even as the unemployment rate rose to 8% this morning.
Sellers must be aggressive with their pricing if they hope to attract buyers. Listing their properties slightly below market value should generate offers. Competition for a dwindling buyer pool is stiff. With the fall approaching, sellers have a limited window of opportunity to get it sold or hold until the spring of 2011. The media is full of stories indicating slowing market conditions.
These guys get it...
There has been a lot of chatter in the press about the effects of the HST on the real estate market. For resale housing the only HST you pay is on the realtor, lawyer and house inspector fees. The actual dwelling is not subject to HST only the dreaded property transfer tax (PTT). Some buyers may not know that resale housing is tax exempt but they are probably a small minority. Any agent, banker or mortgage broker will point this out quickly.
What may not be very well known is that only those buying a home as their primary principal residence (or for an immediate relative) are eligible for a GST or HST rebate. Investors pay the full 12% with no rebate. This is a 7% jump as of July 1st. So that new 400K rental condo just got 28K more expensive after July 1 (total HST bill of 48K).
But there is a double whammy to buying an investment condo. The CMHC mortgage rules have been changed and investors are now required to make a 20% down payment.
So that 400K condo is 448K after HST and with PTT added on it is 454K. An investor also needs to put down 90K in order to buy one.
Guess what will happen to all the new condos being built and marketed around Victoria that have historically been pitched to investors?
Test HHV
Quick note on comments:
It seems like Blogger has a bug and may be eating comments. Please keep trying to post.
If this continues, I may switch blogging platforms over to Wordpress. I don't think this will require you to create a new account.
from the TC today:
"Canada led in the global housing recovery in the first quarter of 2010, but moderating global growth, heightened financial market volatility and sluggish job creation have led to a "dramatic" slowdown in Canada, according to the Global Real Estate Trends report released Tuesday from Scotia Economics."
Read more: http://www.timescolonist.com/business/Canada+sees+dramatic+housing+slowdown/3380509/story.html#ixzz0wDhHqBg6
Seems like some realtors are bucking the party line and being straight with the public.
Nanaimo News - HST misconceptions persist in real estate market
Jim Stewart, president-elect of Vancouver Island Real Estate Board, said while consumer education is always beneficial, he doesn't believe the HST has caused the markets to cool on Vancouver Island.
"Consumers may not totally understand it yet, but at the same time I don't believe it is the reason for the slow down. The market is what it is and if there is credit available, people are going to buy if they're in the market."
HST applies only to the cost of new homes, not homes being resold. According to Stewart, new home sales account for around two per cent of purchases in the Nanaimo area.
"If you have the money or financing to build a new home, I don't think the HST is going to stop many people."
Stewart suggests tougher qualifying restrictions for first-time buyers has more of an impact than HST on house sales. Rising interest rates may also be a cause, he said, even though they are still close to historic lows.
HHV - If this comment with clickable link does not disappear the blogger bug is fixed/
July Housing Starts
OTTAWA, August 10, 2010 – The seasonally adjusted annual rate of housing starts was 189,200 units in July, according to Canada Mortgage and Housing Corporation (CMHC). The seasonally adjusted annual rate estimate of housing starts activity was revised up in June from 189,300 units to 192,300 units. This results in a month-over-month decrease of 1.6 per cent in July.
“Housing starts moved lower in July, largely due to a decrease in urban single starts and a reduction in rural starts,” said Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre. “Multiple starts partially offset this moderation.”
The seasonally adjusted annual rate of urban starts increased by 1.9 per cent to 169,300 units in July. Urban multiple starts increased by 13.4 per cent to 101,400 units, while single urban starts moved lower by 11.3 per cent to 67,900 units.
July’s seasonally adjusted annual rate of urban starts decreased 14.8 per cent in British Columbia, 2.6 per cent in Ontario, and 0.4 per cent in Quebec. Urban starts increased 37.7 per cent in the Atlantic Region and 14.4 per cent in the Prairie Region.
Rural starts were estimated at a seasonally adjusted annual rate of 19,900 units in July.
As Canada's national housing agency, CMHC draws on more than 60 years of experience to help Canadians access a variety of high quality, environmentally sustainable and affordable homes. CMHC also provides reliable, impartial and up-to-date housing market reports, analysis and knowledge to support and assist consumers and the housing industry in making vital decisions.
For more information, call 1-800-668-2642.
emphasis added
from
http://www.cmhc-schl.gc.ca/en/corp/nero/nere/2010/2010-08-10-0815.cfm
Not hyper-linking in case blogger eats it.
Every time we see a real estate forecast from CMHC, CREA or BCREA we know it will be revised a month later. The TC always parrots this stuff like it was gospel. But here is one journalist that has tracked their predictions and shown how useless they really are.
2010 & 2011 BC Housing Sales Forecast Revisions for BCREA, CREA, CMHC
You will notice these guys can't even predict one quarter ahead. That makes their forecasts for 2011 worthless.
Today's headlines will drive even more potential buyers to the sidelines..
Globe & Mail: Why real estate slowdown is ‘most dramatic' in Canada
Times Colonist: Canada sees ‘dramatic’ housing slowdown, global report says
Skeptic, what I find most interesting about the forecasts is that CMHC is the most bullish in terms of sales volume. It just demonstrates how far beyond the original mandate of "helping more Canadians to own homes" it has stepped.
HHV,
CMHC is about to change their slogan from "helping more Canadians to own homes" to ""helping more Canadians go deeper in debt".
A realtor dropped by and left a comment in HHV's last post (Blame)
Here is what Kevin Ramsay of Fair Realty ((alias "Sweetrealtor") had to say..
Always interesting to read the banter that goes on here.
After two months of lots of work and zero deals, I have five deals in the works in the past two weeks. I hope this is a sign that things are picking up and all the doomsday chatter here will just be Chicken Little clucks.
This reminds me of our last recession. Prices kept dropping and dropping - you could hardly give a property away. Those buyers who decided to purchase at greatly reduced prices were quickly rewarded with an upturn in the market. I think the buyers who choose to go into "wait and see" mode will regret it. This won't last forever! The market will recover.
---------------
Kevin - your recent good fortune does not reflect what is going on with the rest of the Victoria market. Yesterday VREB reported 78 sales in the August 1-9 period which is a disaster this time of the year.
Most of us would agree that those who buy at greatly reduced prices will be big winners. However those days are far in the future - we have only started to see the decline in prices. You said: "Prices kept dropping and dropping - you could hardly give a property away". That is when you want to buy not now.
A little advice. Please save that commission money from those recent sales. You could be in for a dry spell far worse than your last 2 months as we head into the slow fall and winter season.
Tony Joe seems to think the market is making a comeback after his busy weekend.
Tony on Facebook
Tim Ayres made an interesting comment on Tony's page. I wonder why he is so pleased to see 200 listings drop off the market? Those 200 people that didn't sell their property sure aren't happy. I guess realtors have a different way of looking at things..
Nice Condos for less than 80,000
If that realtor thinks the little dip in 2008 was an actual recession he is in for a wake up call. Like most folks who were still in diapers in '82 they don't understand that there is nothing that can be done to stop this monster now. If lower real estate prices equal doomsday, so be it.
I think we are entering a correction right now, but I really don't think it will be as big as people on this blog are hoping for, like >25%. Looking at a lot of titles (every listing now must have a title uploaded) right now in the Victoria core and the majority don't even have a mortgage registered. Combined that we some other factors, unless there is a total melt down across the country, >25% seems unlikely in my opinion.
None the less, 15-20% correction would be huge. There is the potential that after a correction prices remain flat for 5 to 10 years while inflation eats away, in that case having paid 15-20% too much will hurt for a lot of people.
Don't worry! I will put the commissions from the recent sales into my savings sock.
I have noticed activity picking up in all areas - viewings are up, multiple offers on my lowest priced listing, buyers seem interested again... But, just in case the sky is falling, I will hope for the best and prepare for the worst.
I guess I should have put "recession" in quotes on my last post as my tongue was planted firmly in my cheek. It's going to be an interesting month and I look forward to reading the dialogue here.
in the TC this morn:
"According to the Canada Mortgage and Housing Corporation, Victoria homebuilders have brought 1,310 new homes onto the market over the first seven months of this year, well ahead of the 393 they managed over the same period last year.
However, according to Statistics Canada's New Housing Price Index, the price homebuilders were asking for those homes dropped 3.5 per cent in June compared to June 2009 -- the largest decline of any metropolitan area in the country."
Read more: http://www.timescolonist.com/business/Activity+prices+down+Victoria+homebuilding/3384585/story.html#ixzz0wJ8uryzP
Welcome, sweetrealtor. Industry viewpoints add to the robustness of this blog.
Speaking of which, has one of the past realtor blogger Fflown the coop?
Why I don't trust REALTORS® when they say "I made X number of sales/listings/viewings, market activity is picking up":
1. The sales volume numbers/trend don't support your "evidence"
2. You're playing to the herd mentality and disrespecting potential buyers: "lead the sheep" is the mantra of saying "look, people are buying/shopping" essentially you're saying "you should be too" when you make these statements
3. We all have access to PCS accounts now to easily verify your statements during the month and the monthly data provided by VREB, see point 1 above
It's true that the market could be getting busier this week than the last two, for you. But this isolated example is not indicative of the market as a whole. Even though you say you're busier, I'm willing to bet there are three more REALTORS® who are less busy this week than they were two weeks ago.
This use of anecdotal "evidence" is akin to me picking a house that sold for less than assessment and translating that to all houses selling for less than assessment. It's simply not true.
Marko, i can't see how it will be less than a 25% nominal correction. You must be assuming reinflation? All indicators lately are pointing to a 'liquidity trap' Japanese-like decade of zero to negative inflation. Anyway, i'm sticking to 30-40% nominally by 2015 and then finally bottoming in 'real' terms somewhere between 2018-2023 after the majority of boomers capitulate for retirement purposes (at least on their more recreational-type properties)
Hey Kevin, Marko here, one of the RRTs....
Sales have picked up a bit looking at my Matrix, but we are still looking at probably 400 sales +/- for the month. Unless we get some million dollar sales, price for SFH will look bad, 550k as of this morning. Overall market is definitely weak.
Marko
Marko,
If what you're saying plays out I think it will have two effects:
1. The MSM will go crazy with their headlines using words like crash etc... after all, if SFH average drops to $550ish, that's a 16%ish drop in 2 months and a 12%ish month over month drop. That can't be spun as as good, so expect it to be hyped up as extremely bad.
2. It will draw out buyers. It's happening too quickly not to. Many would be buyers are probably sitting on fences waiting for a 10% drop. They'll view 16% as winning the f'n lottery and jump. But it won't be enough to save the market, despite all the industry hype that listings are down and sales volumes are up from the summer (which is normal in Sept-Oct anyway).
The reason why it won't be enough is because the product that buyers will be buying won't have dropped even close to 16%. It won't have dropped even 5%. The weighted averages reported by VREB are skewed by the high end - which isn't moving at all - which is why the average looks to be falling so drastically.
FTBers are out of this market. Investors are having a hard time buying in this market. The move-up buyers are quickly fading fast. The pool of buyer types has shrunk fast, hence the volatility of damage. The average price of homes hasn't really changed yet, it's only the reported average that is changing and that's because of $1M+ sales volume alone.
I'm kinda enjoying the fact that the VREB's bullsh&t way of reporting averages is coming back to bight them in the a$$.
Where's Double-Agent with his/her great graphs of the market subsets?
Was wondering if anyone could advise how I can get a PCS account without signing on with a realtor?
Thanks
"It's true that the market could be getting busier this week than the last two, for you. But this isolated example is not indicative of the market as a whole." -- never said it was, just said I was hopeful.
I have only had 1 sale on my pcs this last few days,and I wonder if it is a representation of the market. 2170 Wenman is assessed at $646K and sold for $66K under assessment. It is a solid looking 50s house at over 2700sqft on a 1/3 acre prime Arbutus area lot. It needs updating, but $580k is a new low for this area.
I firmly believe that we will see the same effect on Real Estate prices, as we have seen in the USA. They started in 2006 and blow out completely in 2008 (actually 2007 was similar in USA to what we saw in 2009 in Canada, prices increased rather than keep going down, as everybody thought they were getting an excellent deal, plus very low interest rates and no downpayment).
So we started in 2008, had the last Bull run in 2009 and 2010 is becoming the crash year, and it will take 2 to 4 years to reach the bottom , that is when we will see houses selling for as low as $ 100 K or less .
Unfortunately I do not longer live in Victoria but I will be glad to come back to collect my money .
@reasonfirst
I got mine here
http://www.pamwhyte.com/pcs_signup.html
She will send you a few emails at first but will give up after a week if you don't respond.
Shes not my realtor, it is not a recommendation or anything I've never even talked to her but its an easy way to get an account
Quantitative Easing 2
Stock market sputtering
Bond yields shrinking
Tighter mortgage rules
Crashing housing starts
Crashing sales volume
Dropping prices
Inflated inventory
I used the words "perfect storm" back in October 08 and was proven wrong by government intervention. There is far less support for bailouts and economic wizardry now than then.
Famous last works, maybe this time it's different?
Robert, you are right. I sense this time is different as we just can't allow the bubble to be propped up any more. If it was allowed to deflate a couple of years ago instead of being stimulated by all of the emergency measures, I think there would be far fewer families that would have faced financial ruin as compared to now.
Simply, the prices for houses here are unsustainable in today's market.
I do feel very badly for those good people caught up in this.
Does the gov't have more tricks up its sleeves? Likely. Will it make a difference? Likely not.
If you are one of the 4200 sellers in Victoria what do you think when you open the TC business section today?
TC Screenshot - click here
Now if you get the Globe and Mail or National Post you get really concerned..
G&M Screenshot
National Post Screenshot
Headlines are what stick in the reader's mind - they forget the details. Buyers will begin to realize that prices don't always go up. Once they believe that it will be hard to get them to buy at current prices.
Skeptic, the best part of those articles is they clearly point to overbuilding. It's clear in Victoria that developers overbuilt in 2010. They watched the strong market in the fall of 2009 and got sucked into starting projects early this year. We'll have over 1000 homes added to an already bloated inventory.
HHV said,
But it won't be enough to save the market, despite all the industry hype that listings are down and sales volumes are up from the summer (which is normal in Sept-Oct anyway).
This is only true in Easter Canada and the prairies where there is a burst of activity before winter. However in Victoria it is a myth perpetuated by the local real estate agents. You can see this in the graph below.
Monthly Sales - click here
Sales peak in late spring and follow a downward trend until January of the following year. Sales may plateau in Sept./Oct. but the number of sales is always lower than in the summer.
HHV said:
The average price of homes hasn't really changed yet, it's only the reported average that is changing and that's because of $1M+ sales volume alone.
I disagree with this comment as well. There have been numerous price reductions all over town and some houses have sold under assessment which hasn't happened very often since the last downturn.Here are some detailed stats to consider.
Detailed May Sales
Detailed June Sales
Detailed July Sales
The stats shown above break out the high end waterfront and acreage home sales. The residential category gives the average sales price of typical homes. Here are the stats from the reports above. In () is the overall average reported by VREB in their monthly news release.
May - 609K (646K)
June - 586K (649K)
July - 582K (615K)
From these stats we can observe two things. The high end property sales dramatically influence the overall average and the typical residential average has been falling for several months.
It is also interesting to see the MOI for the typical SFH. Listings peaked in June.
May - 4.36
June - 5.67
July - 5.26
I hope your readers find this stats analysis interesting. Sometimes stats can be a bit boring.
Double-Agent, stats are never boring (at least not for me), they are all I follow in terms of my opinions of the market. They tell it like it is when interpreted correctly, and your logical and accurate reporting of the stats is great. This market is falling apart, as it should, this is what needs to happen and this is what will continue to happen over the coming months and years. Glad to be back from holidays and see that everything is continuing as it should.
I wonder if markets with fewer mortgages registered fall harder than markets with many mortgages registered...
Reason being:
If I don't owe anything on my home and need to sell, then I don't face a bill for doing so, whereas if I do have a mortgage, I want to (need to) see at least the amount of the mortgage. I wonder if having a mortgage registered makes for a more reluctant seller. This might be particularly true in Canada in provinces that have recourse mortgages (ie. you can't just walk away from the debt like in the US).
Was wondering if anyone could advise how I can get a PCS account without signing on with a realtor?
Try here: http://www.dougporuchny.com/2397_home_finder.jsp
Double-Agent, always happy to be corrected by you. Thanks again for putting those details together in such an easy to understand way.
I wonder if markets with fewer mortgages registered fall harder than markets with many mortgages registered...
It's the other way around, because the cheaper the market is historically, the fewer houses are mortgaged at any given time. For example the East Coast has a far smaller % of mortgaged properties than Vancouver, Victoria, etc.
The big cities have more mortgaged properties not only because they are more expensive but because the population is more mobile compared to smaller towns where houses are more likely to passed down though families.
Double-Agent: thanks for the most interesting stats!
Wise Investor: That does look like a nice complex, however if you look further it says FROM $79,900 and shows four floor plans to choose from. The $80K USD will be the bachelor.
SweetRealtor: Gee the stock market down over 250 points on both sides of the border today reflecting a very disappointing economic down turn in the US.
On my pcs for 2bedroom condos so far this week there have been 12 new listings, 8 price changes and NO sales. This is for condo's in Vic,VicWest,Oak Bay, Esquimalt,Most of Saanich East and some of Saanich west including gorge/tillicum.
For SFH min 2 beds 2 baths so far this week (same areas) 12 new listings, 10 Price Changes and just three sales.
Ya, things are looking good.
You know what they say at ING..."Save Your Money"
Welcome back Think....hope you had a great holiday.
Double Agent: Thanks once again for your terrific posts and for all the effort that you put into producing those stats for us. I always enjoy the "artwork".
I like to keep tabs on the Saanich (East, West & Central) area because it is popular with first time buyers. Here is my analysis of the single family homes in the 400-625K price range.
Total listings - 180
No price reductions - 97
One or more price reductions - 83
New listings this week - 8
Price reductions this week - 7
Off market this week - 2
Total pending sales this week - 4
Things seem to have slowed down a bit.
Hi, I like to lurk around here as well as on Garth Turner's blog. Well I have been talking about real estate cooling so much that my friend thinks I know something. I don't!! But he has decided to sell, not thanks to my advice, but because he is tired of dealing with our archaic strata council! He wants me to help him interview prospective Victoria real estate agents.
I have warned him that I have no clue, but he would still like my help. Oh dear. So I was wondering, what sort of questions should he be asking the Realtors(tm)?
Your help is much appreciated!!
Jsan,
I just helped a relative sell a house and we got ripped off by the listing agent. He did next to nothing, jerked us around and got half the commission. The buyer's agent is the one that does all the work. The listing agent just needs to take top notch pictures and write up a good description of the property. All that can be done in an afternoon.
Here are my suggestions:
- Use a discount realtor to list (negotiate rate) but pay full commission to the buyers agent. The buyers agent should get 3% on 1st 100K and 1.5% on the balance. If you don't pay full pop to the buyers agents they may pass on showing your property.
- Tell the listing agent you don't want the listing to appear on MLS until the writeup and photos are ready to go. Nothing worse than seeing a new listing appear in PCS or on realtor.ca with nothing but the price and room dimensions.
- Be prepared to be your own negotiator and never ever tell the listing agent your bottom line. These guys can't keep a confidence even though they are legally bound to do so.
- Interview 3 or more agents in order to get what you feel is a reasonable estimate of market value. Don't go for the top price. Some agents will give you a high estimate and then tell you to reduce 2 weeks later. Chasing the market down is a sure fired way to get less money.
- Most properties are sold via the PCS/MLS service. Newspaper and real estate flyer advertising may be a waste of money. Some agents don't bother to advertise anymore and don't have much in the way of expenses to list your house. See commission comment earlier.
- Never go for an open house. Very few people buy after seeing an open house. Most agents use them to prospect for clients . And there have been reports of theft. Do you really want people looking through your closets when they have not been pre-qualified to buy.
The number one mistake sellers make in a buyers market is overpricing the property. Sitting there for weeks with one or more price reductions is not the way to go. Price it just under market value and you have a much better chance of getting it sold quickly for close to what you want.
Make sure the place has been decluttered and is spotless before every showing. Rent a storage locker if necessary to get rid of extra stuff. If the place doesn't show well consider staging it with rented furniture.
Just my perspective. I am sure you will get more ideas from other posters.
Skeptic wrote up an AWESOME answer to your question, as a Realtor I can't say that I can add anything, everything is spot on!!
My website is www.jurashomes.com, take a look, and let me know if you/your friend are interested.
I would interview more agents personally, maybe 5? but that is up to you.
Marko
Cameron Muir, chief comedian at BCREA, states the obvious in a news release issued today.
Home Buyers in the Drivers Seat
The British Columbia Real Estate Association (BCREA) reports that Multiple Listing Service® (MLS®) residential sales in the province declined 42 per cent to 5,784 units in July compared to the same month last year. On a seasonally adjusted basis, MLS® residential unit sales in the province declined 19 per cent in July from June 2010. The average MLS® residential price climbed 6 per cent to $491,832 in July compared to the same month last year.
“A relatively large number of homes for sale have created the most favourable supply conditions for home buyers in more than a year,” said Cameron Muir,
Article in the Atlantic: How Much House Can I Afford
So... 6 or 7 times income for a house isn't prudent I guess?
If I were looking for a listing agent.
I would cruise the neighborhood and look at the real estate signs to see who are actively selling in your area.
I might try selling the property myself, with homesellers or some outfit like them. I might have it appraised first to see where the value lays and may or may not show the potential buyers the report (depending on the report). I might also have my own building inspection done, to see if there are any potential problems. And chose to repair the problems or adjust the price accordingly. Again, I may or may not show the potential buyer the report. I might also try one or two open houses (while I have privately listed the home to hear the feedback of potential buyers)
I would list the property at 2 to 3 percent over market value as shown in the appraisal report or what I think the property is worth.
If a prospective buyer is using an agent, I would agree to a finders fee of 1.5% of the purchase price if it is a full price offer.
If the property has not sold in 3 weeks, I might then use an agent.
A discount or full service listing agent is a tough one. It depends on my confidence in real estate and the property. If I am confident, I would use a discount listing agent. If I am timid, I would use a full service agent.
From what I have seen in the past, discount listing agents get slightly less, than full service brokers. However, the difference in commission negates any benefit to either.
Great response from Skeptic.
One other piece of advise is if possible find an agent with experience selling in your condo complex and knows the issues that are in the strata minutes. These agents will often have contacts in the strata council and at the property managers office to get questions answered.
But by far most important is price. Price just below market. I didn't do it in the down market of 2008 on my condo in Vancouver and it cost me at least 40K tax free cash.
The Financial Post ran a story on the weekend about a couple in Alberta buying two properties with no clue that prices could go down.
The photo of them looks like dear caught in the headlights. Why do people make such poor financial decisions and then tell their story in the national news and look foolish ? I just don't get it...
After one of the longest bull runs in Canada's housing history, everyone from real estate agents and mortgage brokers to consumers should get set for a reality check
"These agents will often have contacts in the strata council and at the property managers office to get questions answered."
It is all online, with the owner's authorization I can pull up minutes, financial statements, bylaws, annual general meetings, rules, regulations, building envelope info, etc. for any strata in Victoria in a matter of 2 minutes.
Obviously an agent who has sold in a complex before will hopefully know a little more, but I wouldn't peg it as essential.
Ironic that a strong La Nina is forming over the Pacific. This winter's cold rainy weather will mirror sellers moods quite well.
http://www.cpc.ncep.noaa.gov/products/analysis_monitoring/enso_advisory/ensodisc.html
http://www.cpc.ncep.noaa.gov/products/predictions/long_range/seasonal.php?lead=6
Jsan; Again I would advise the same as skeptic. It is extremely difficult to sell a condo at this time unless the price is bang on. Make sure you do de-clutter and remember the kitchen and baths must be immaculate.
If there is another condo(s) in your building now up for sale---take a look at it (them) and be realistic in your price comparisons. i.e. does yours have a dining room window and the others don't? In which direction does it face? Who gets the most light? Compare any upgrades & appliances etc. If yours is the "best" one considering the above, ask say $500.00 more. You may have put more money into yours (his), than the other condo(s), but forget about that part because you won't be getting any more to speak of but at least you know yours will be the better deal and it will sell over the others.
I would then really consider giving your listing to one of those realtor's whom has another there for sale. This way if he gets a call from a prospective buyer, he will most likely get them to view your suite as well as they are already going to be there.
Alexandrahere said:
I would then really consider giving your listing to one of those realtor's whom has another there for sale. This way if he gets a call from a prospective buyer, he will most likely get them to view your suite as well as they are already going to be there.
This is how we got shafted on the last deal. We picked an agent who had sales in the area. But he didn't bring a buyer to the table. Double ending a sale is rare for most agents. Almost always it is another agent that brings a buyer to the table.
The listing agent does next to nothing to sell your property. Photos, description and MLS listing - that's it. Why pay them a big commission? As I said before use a discount broker to list but pay the buyers agent full commission ($3000 + 1.5% over 100K).
BTW - The full service listing agent will make all kinds of claims about clients in their pocket, negotiating skills, getting top price and advertising. These will all vapourize once you sign the listing agreement.
skeptic: Ya I know for the most part it isn't the listing agent that sells the property. What I said was when he gets a call (from either a buyer or a buyers agent), to show a suite in the bldg., he will encourage that agent to show his other listing(s), at the same time. (Any advantage is better than none)
I agree on the discount broker stuff, however if you don't pay the buyers agent the full commission, believe me, he will do everything in his power to avoid showing that listing.....after all he can find you something just as good if not better where he will get the full commission.
The best thing you can do when getting an agent is to get one that agrees to advertise everywhere and one who hires a real professional photographer that will photograph your suite to its best advantage. Buyers make up their minds in an instant if they want to view your suite just by looking at those photo's....if your suite is what they really want, and the photo's don't reflect this accurately, then you have just lost a prospective purchaser.
Thank you so much for your input! The plot thickens, my friend wants the same realtor to also help him buy a new property. I have given him my advice - better rent for a while, wait for prices to drop more etc. but unfortunately as you know, people have to make their own decisions. So he has his heart set on selling and buying. I also advised him to price aggressively, but he said one realtor who he spoke to on the phone last night, had "experience in this neighbourbhood" and was sure she could get him a high price. Sigh. Well I have been watching MLS in our neighbourhood and a property next door of similar quality sat on the market for months, dropping in price bit by bit, til it vanished. Hmm.
If your friend wants to buy I offer 70% commission cash back.
I.E. your friend buys a place for $400,000 the commission based on 3%+1.5% is $7,500; therefore, I rebate $5,250 to your friend.
However, personally I would not hire the same Realtor for both purposes, or at least don't let the Realtor know your intentions.
The last thing you want is your friend making an emotional offer on another place subject to the sale of his, subsequently pressured to sell his own price for a lower price. In this situation one Realtor has a lot of money at stake (commission on the sale (possibly double-end) and on the purchase).
Jsan said:
The plot thickens, my friend wants the same realtor to also help him buy a new property.
This is the worst thing your friend can do when picking an agent. The agent will do what it takes in order to get the second commission. This includes multiple price reductions and/or accepting low offers. Then the pressure will be on to buy because your friend will have a deadline to get another place.
I hope your friend doesn't end up doing the following:
- Starting off high and chasing the market down with price reductions.
- Accepting a lowball
- Looking at new places while the existing one is up for sale.. This often leads to making an offer before the existing property is sold. Nothing worse than having two properties and bridge financing in a declining market.
- Letting the realtor do the negotiating because they are stressed out.
Jsan sounds like you better wash your hands of this and not give any more advice. Your friend is not listening and will be looking for someone to blame when this goes off the rails.
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It's too late to back-out now. I have agreed to come over (next door) and meet the prospective realtors with him tomorrow and next week. Oh well. I have forwarded all your advice to him, including your offer Marko. Thank you again.
The BCREA report issued today had an interesting graph in it. And they say prices won't drop...
BC - Months of Inventory
..
Hilarious, I live in James Bay and just heard one of those kabuki cab's outside. The driver said to the guy in the back "our real estate is totally safe, we didn't give out mortgages like penny candy like you guys"(I assume the passenger was american)
They say when a cab driver starts talking about an investment its time to get out...how about a kabuki cab?
Marko, do you have a website that my friend can look at and give you a call on?
Amen to professional photography! I insist on it, even though I actually take good photos. It still amazes me how poorly some houses are portrayed on MLS. Do we really need pictures of stairways and bathroom sinks?
There are several options for commission strategy also. You can ask for a discount! - from any realtor... Your responses will vary from realtor to realtor and brokerage to brokerage. I offer listing discounts and the buying agent commission is usually the same (3%1st100K&1.5%balance) but, if the property is 600K+, I can usually get away with trimming the buying agent commission somewhat. Nothing is set in stone and it is all negotiable as far as I'm concerned.
Hey Kevin,
The problem I have with professional photography is the really poor resolution on MLS.ca, you pay for professional photos only for them to look like crap.
Jsan,
To answer your question -> www.jurashomes.com
Professional pics, the other side of the story.....
Bloody deceiving to prospective buyers! I've looked at plenty of properties that in "real life" look nothing like the photos.
Nothing like wasting an afternoon going out looking at 3 properties then being disappointed, no pissed off after you see the real thing.
As a marketing tool, sure I guess but I think a real savvy buyer looks past fancy dressed up photos and staged properties. Problem is the majority of buyers are far from savvy!
In this market they are going to need all the help they can get selling
Wow, I feel like I need a shower. Met two kids today, 4 years experience, I will not divulge their names as Victoria is a small town. Setting aside the fact that they called thirty minutes earlier saying they were in the neighborhood and "could they drop by?" (my friend said "NO"), were then late, dressed for the pub and texted throughout the meeting... they talked happily about vulturing a prospective buyer. They then tried to reassure my friend - they would never do that to HIM.
Admitted that the market had cooled, but then said "it's interesting" and they have never seen this before(I thought, well of course not, given you started up in the golden years of 2006 or so). But then they contradicted themselves again by saying that nothing has actually changed in terms of sales for 2 bedroom and 2 bathroom remediated condos in Victoria over the last two years. Prices are stable. But be prepared for 90 days for it to sell, worst case scenario. But nothing has really changed. (???)
The brains when pressed further said he thinks the Western countries are economically screwed and that we have only bought ourselves a temporary reprieve (Ah, he almost won me over there!! And his eyes sparkled temporarily). So I immediately asked whether my friend should sell now and wait to buy perhaps next year, if this is the case. He said, well you should sell now for sure, but you can get some great bargains this fall etc. Oh well.
You know, I never get to meet people like this in real life. I felt an irrepressible urge to giggle several times - their eyes were dead, the fidgeting, the fast talk!? I've surrounded myself with genuine people both privately and professionally, that this was an incredible experience! These kids seemed so full of their own invincibility. Wow.
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