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Every day, something reminds me of how interesting (fascinating really...), and complex the real estate market can be. The items in this blog are from my day to day encounters with Buyers, Sellers, and other Realtors. As such they are not random, but they are also not presented or organized in a strict linear fashion.
These postings are largely general... if you are interested my comments and observations about the current, local market please write or call.
I'm pleased you've dropped by, I hope you find something here that provides some additional insight into the Real Estate Market. I appreciate comments, I welcome suggestions and I accept criticism without getting offended.
David Potter
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Inventory numbers are not sexy numbers,
or at least not the sexiest numbers in Real Estate but a good
argument could be made that current inventory statistics are the most
important guide available to you as a seller when you consider marketing
strategies.
A simple analysis looks at the number
of similar properties currently offered for sale and the best
estimate of how many properties in this group will sell in the next
30 days. If there are 60 similar homes and 20 are estimated to sell
in the next 30 days there is a three
month supply of inventory and, there is about a one in three
chance that your property will sell in the next thirty days.
Viewing your
property as an inventory item is the most powerful step that you can take as a seller.
* * * * *
The current
inventory of similar properties is your competition. You should
assume that those property owners are reading (or have already read)
this document - and your success and their success will depend on how
you utilize this information.
Something worth considering is that
most home owners underestimate the competition when they make
marketing decisions about selling their home. The good news is that
understanding this gives you a tremendous edge and greatly increases
your chances that you will celebrate your success.
The simple truth is that as a
homeowner, your success will be a direct result of establishing your
property as more attractive in one or more respects than the
competition.
* * * * *
When I discuss marketing
with a home owner, I like to start off with an age-old example that
has a big place in the modern world, the traditional auction. In any
traditional auction, it is clear that the value of any item, is a
direct function of the interest that potential buyers have for that
item. When a particular item only attracts one bidder, the seller
invariable receives less for the item than when there is more than
one interested bidder. This applies to eBay, estate, antique, art,
financial investments, and we see it clearly in hot Real Estate
Market.
In the context of the
Residential Real Estate Market, as a home owner, you will never
realize more value for your investment than you will when there is
more than one buyer actively trying to be the successful buyer.
EVERY DECISION that
you make with respect to the marketing of your property should
contribute to that goal!
I'm not suggesting you wait for multiple offers... even in average
Real Estate market conditions, where a property does not have more
than one offer, if a potential buyer is very interested
in a property, they start looking over their shoulder – hoping no
one buys it before they do. The clear effect is that buyers act
quicker, and are much less inclined to negotiate price aggressively.
* * * * *
Earlier I suggested that most sellers underestimate their
competition, most sellers also underestimate potential buyers.
Most buyers have actually viewed a dozen or more current
listings and a wide cross section of the market. In general,
buyers also appear much more interested in the most recent sales
information than most sellers, and are more likely to rely on that
information when considering a purchase.
Buyers, realize
that they are in competition with other buyers and want to get
the most value for their money.
Buyers almost always ask a Realtor to
provide recent sale information as evidence of current market value.
* * * * *
So the seller's checklist includes:
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Don't underestimate other sellers (the competition).
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Don't underestimate buyers.
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Make
ALL
marketing decisions with a goal to increase the attractiveness of
the property to buyers.
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A recent newsletter from a Residential Home Inspector offered a “HEADS UP!” for Realtors and home owners with what is effectively, a caution that when a property is offered for sale we not make an assumption that obtaining insurance on the home will be automatic for a new buyer.
This particular newsletter related specifically to changes some insurers (insurance companies) are making with respect to coverage of residential fuel oil tanks.
While your oil tank installation might meet existing building/environmental code it could still be refused coverage if, based on underwriting experience, the installation is viewed as presenting an unsatisfactory risk. As a homeowner you need to be aware that the same company that has your current coverage could require changes before providing coverage to a new buyer if, in the underwriter's view, the risk is unsatisfactory.
When this happens, the homeowner usually comes under pressure to arrange and/or cover the cost of bringing the property to an insurable condition. This pressure is is associated with the fact that because almost every buyer will be obtaining a mortgage, insurance is not an option. It's as simple as - No insurance, no mortgage!!!
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Please keep in mind that underwriting is a business practice which can vary from company to company.
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Recently some insurance companies have started to change their underwriting requirements relating to steel oil tanks, and are indicating that “14 gauge, single wall” steel tanks will not be acceptable for insurance purposes.
Beverly Barker of Cooperators Insurance in Cole Harbour (Nova Scotia) has offered the following as part of a guide to the underwriting approach Cooperators currently uses (Jan/2011):
Metal tanks – Thickness of the metal – Stamped on the tag or sticker on the tank. (Fibreglass tanks do not have to follow this standard)
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2.00 mm = 14 gauge – this is a very thin metal that is susceptible to breakdown. These are no longer being certified.
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2.3 mm and above = 12 gauge – this is a heavier metal and is more durable than a 14 gauge tank
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2.00 mm = Double Bottom tanks are acceptable but must be replaced sooner than 12 gauge tanks
Doug Weatley – Residential Home Inspector with HouseMaster Halifax offered this additional comment: “It should also be noted that metal oil storage tanks are typically delivered and installed with only the factory applied primer coat of paint. Failure to apply a coat of rust inhibiting paint can promote rust formation and shorten service life.”
Beverly's guide to oil tanks was not prepared or intended to replace any other forms of Oil Tank reference material. It does not include everything about tanks but instead references a few of the common areas of concern. As insurers they offer these concerns: “Not only are oil spills very costly, they are also very harmful to the environment and very disruptive to your life. We take oil tanks and oil tank installation very seriously and hope you will join us in our mission to prevent oil spill devastation at your home. ”
The “Oil Tank Tips” guide deals with nine specific points related to fuel oil tank installations from the perspective of an Insurance Company and in my view is invaluable for buyers and sellers. Here's how to reach Beverly with questions or to receive a copy of the guide:
Beverly Barker F.C.I.P.
Agent - The Co-operators - Cole Harbour
beverly_barker@cooperators.ca
902-469-0910 office
Doug Weatley can be reached at:
Doug Wheatley & Shawn Green
902-406-4663 cell 497-2437
doug.wheatley@housemaster.com
www.halifax.housemaster.com
The Province of Nova Scotia, Department of the Environment, regulates and publishes information relating to Oil Tanks, and Oil Tank Installations. Be sure to consult their website for the most current information currently located at:
http://www.gov.ns.ca/nse/petroleum/oiltanks.asp
- Feb. 2011 -
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I've joined a recently formed (Dec/2010) LinkedIn 'discussion group' titled "A Better Halifax"
Within this group, there are a series
of unique stories that reflect the paths that the individual
participants took to arrive, in this here and now, discussing “A Better Halifax”.
How the participants got 'here' is, at the same time, a collection of
conscious decisions, to emigrate to this country, to relocate to this
city, to return, or ...not to leave.
Some of these decisions were full of
deep and lasting regret at leaving family or friends or something
else that connected us to another land, sea, and sky. Some decisions
were full of relief to have escaped or avoided some deep physical or emotional
danger pit. And some were brimming with hope and joy, reunions,
the opportunity of a lifetime - perhaps of several lifetimes....
“Here” is also a state of mind. “A
Better Halifax” tugs at people in many different ways. In that
respect alone it is both functional and elegant. And 'better' offers
the kind of inclusivity that produces great outcomes – as I write
this, volunteers from every trade and profession, the full spectrum
of education and literacy - every walk of life as they say, are
contributing to the 2011 Canada Winter Games. Bring it on! Halifax is a great place to live! Go ahead, ask me why!
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Whether you are considering buying or
selling, current market activity (statistics) can be either your best
advantage or your worst enemy.
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As a buyer or seller, your
knowledge of current market activity will have a direct impact on
the decisions that determine the value you receive for your
investment.
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And further, as a seller,
your understanding of current market conditions as
they relate to your property will guide you in
important decisions. These decisions will impact
how long your property will take to sell
and can help reduce any inconvenience
you experience during the sale.
Part of being “Good with Numbers”
is possessing a mixture of curiosity about the benefits of statistics
and a large supply of skepticism about what a particular number (or numbers)
actually mean.
*******
Condominium sales represent a
particular and interesting segment of the real estate market because
trends are often more visible than within other housing types. This,
in large part is because of:
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the significant number of
differences that often exist between examples
of traditional property styles, even within the same neighbourhood –
a fact that most buyers will readily accept, and
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the number of similarities
that individual condo units frequently share with other condos.
These include age, location - transportation/distance to
work/school/play, and especially, features such as unit size and
layout, and original kitchen, bath & flooring finish.
*******
The 2010 condo sales could be viewed as
having strengthened noticeably in HRM as the year progressed as
suggested by the following table:
All Condo sales HRM
– 2010
Avg List Price Avg Sell Price Avg Market Time (Days)
Jan 1st to Dec. 31
$238,493 $231,350* 140
July 1st to Dec. 31 $244,448 $235,378 128
Oct. 1st to Dec. 31
$260,448 $249,427 134
While these numbers suggest the condo
market improved as the year progressed, I was curious about where
that strength lay... was it across all condo sales or in more
specific area(s)?
Let's take a closer look at narrower condo market
segments...
To begin I looked at the market segment
that included the average sale price. This turns out to be the
selling price range of $220-250,000 for the year which had an average
sale price of $232,558 which is a very close match to the
yearly average sale price noted above. Here comes the important data:
*******
Condo Sales - Sale Price
$220,000-250,000 HRM – 2010
(percentages are share of condo
market for the period)
Avg List Price Avg Sell Price
Avg Market Time
Jan 1st to Dec 31 (14%)
$238,377 $232,558* 117
Jul 1st to Dec 31 (17.5%)
$237,837 $232,584 104
Oct. 1st to Dec 31 (19.5%)
$236,902 $231,332 79
As you can see, sellers of
condos in this price range were not the beneficiaries of increasing
sale prices.
Selling prices did not
strengthen for this particular market segment as the year progressed!
On the plus side, this data does show a
dramatic reduction in the time to market a property - almost two
months less in the last quarter when compared to the overall condo
market. Usually the shorter market time would signal a stronger
market and rising prices, but this was not the case in this market
segment in 2010.
In fact, the only condo segment that
showed real price strength as the year progressed was the $375,000+
segment. Representing only 9% of the total condo sales and, including
units that sold for up to $1.5 million, this segment activity
actually distorts the activity associated with all other condo sales.
*******
Condo Sales - Sale Price
$375,000 (and over) HRM – 2010
(percentages are share of condo
market for the period)
Avg List Price Avg Sell Price
Avg Market Time
Jan 1st to Dec 31 (9%)
$532,340 $512,043 230
Jul 1st to Dec 31 (7%) $610,590 $576,555 327
Oct. 1st to Dec 31 (10%) $628,818 $597,273 185
The reduction in the market time in
this sub-market is clearly welcome by these condo sellers and
Realtors... but even as an average, that's still a very long time
to be looking for a buyer.
When someone asks me “How's the
Market?”, I try to offer a response that relates the
information on recent market activity to their home.
If you were to base your decision to
buy or sell on statistics that relate to the larger market you could
be very disappointed, frustrated, or experience outcomes that hurt
you financially. You should never be reluctant to ask how market
statistics relate to your specific property
needs and, you should always expect to get a clear answer.
Uncertainty
is an indication of a lack of information, make sure you have
information as good as the info I provide my clients.
For more statistical gems and to learn
more about how numbers can work for you, contact me directly ... .
And stayed tuned for more analysis of HRM's real estate sales and
inventory.
Copyright 2011 – David
L. Potter
Sutton Group Professional Realty
Halifax, NS. CA.
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That’s pretty simple... or at least seems pretty simple on the surface. However, in the world of Real Estate Sales, things are often much more complicated, or perhaps less obvious than we would all prefer.
In Nova Scotia, in any real estate transaction in which a licensed Realtor is involved, you are either:
- a client (the Realtor has a duty to serve your interests) or,
- a customer (think ‘giant retailer’ associate).
In dealing with a buyer customer, a Realtor cannot:
provide information relating to the sellers motivation to sell, or any other information the seller has provided, that the seller could consider to be confidential, offer advice with respect to price or other terms of an offer to purchase, offer advice relating to competing properties that could be seen as equal or better in any respect, disclose any other information that would harm or weaken the sellers position in negotiating the sale of their property.
If I were buying a property in community for which I do not hold a real estate license I would use a licensed Realtor and I would insist on a client type relationship.
I would only accept a customer relationship if I knew more about the property than both the seller and the seller’s agent combined, and, my lawyer was better at real estate than their lawyers. And even if that were the case, for negotiating purposes, I would likely have an interest in identifying a) comparable sales, b) other properties currently on the market and, in having assistance in interpreting that information.
—
The worst surprise would be to discover that you were actually a customer and that no one had pointed out the implications, or worse, gave you some reason to believe that you enjoyed some or all the benefits of a “ client” relationship.
The danger for a Realtor is that in answering a routine question for a buyer, they could establish the impression of an agency relationship with the buyer and in the process, breach their duty to a seller.
In Canada, most jurisdictions are emphasizing and focusing attention on specific disclosure of the relationship (Representative Capacity) and at the national level the industry has established standards with respect to
• when the disclosure is made,
• the completeness of the disclosure (to avoid misunderstanding), and
• what does, and does not, trigger the need for disclosure.
The national standard has offered the view that, “Essentially, the triggering event hinges on whether confidential information has or may be inadvertently shared.” It should be remembered that the nature of “confidential” is viewed from the perspective of the consumer who is the principal in an agency agreement, typically the seller (by virtue of a listing agreement) or the buyer (if a Buyer Agency agreement exists). In the event of a dispute the matter will be adjudicated by the courts or an industry regulatory body.
When I started in Real Estate in the 1980's it was a kinder, gentler time (or seems that way now... ;-) We were conscious of acting in the best interests of the seller but at the same time tried to practice "Do unto others, as you would have them do unto you."
For a time, (some years ago) the Real Estate Industry used “Limited Dual Agency” agreements in an attempt to resolve the problems associated with the competing interests of buyers and sellers. Limited Dual Agency was reviewed by the courts (2001) and “According to the Judge, the notion of dual agency was untenable, as there was no way that the agent could meet the obligations of representing competing interests.”
Now, the Real Estate industry in Nova Scotia has moved firmly towards a much better solution to meeting the requirements and competing interests of buyers and sellers.
The Buyer Agency Agreement is the key element in this solution!
The Buyer Agency Agreement acknowledges the client relationship, and details the duties and obligations the agent and buyer owe each other.
Remember that part about things being pretty simple?
What happens when two unrelated buyer clients who are using the same agent are also both potentially interested in the same property?
While this is more likely to occur in a strong real estate market, and with income properties or condominiums, it could occur for any buyer and might also find several purchasers working with the same agent in competition for the same property.
While the agency agreement that was signed first has some priority this is a question that you should put to your agent. The most important thing is for each buyer to know where they stand.
In the Halifax area of Nova Scotia call me at: (902) 877-7654 or contact me by email
© 2007-2010
David L. Potter
If you leave a comment, please indicate your City/State/Province
Thanks for visiting!
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Ouch! However, behind closed office doors, this is one of the axioms that managers and experienced agents use to console and explain the disappointment which most agents have experienced dealing with home buyers.
That disappointment has very basic roots, and although it can usually be avoided, it very often colours the experience of real estate agents - and may continue to colour the approach they use with prospective buyers for their entire career.
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Very early in my career I experienced one of those disappointments myself. I invested several days working to identify properties that matched the requirement of a couple who were relocating here, to the Halifax area. I met them at the airport, drove them to their hotel, picked them up later and we spent the day looking at homes that were a good match, in good condition, and offered good value.
I dropped them back at their hotel and they said they would discuss the homes we had seen and call me back after dinner.
I didn't hear back from them that evening and I was not able to reach them until the next afternoon when they informed me that they they had an accepted offer on another house.
You could say I was surprised... ;-)
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It turned out that they had gone to dinner with friends, and had a wonderful time. Their friends mentioned that there was a nice home for sale around the corner, their friends knew the owners and suggested they all take a walk over.... They liked it, they called the listing agent, they made an offer to purchase - and, by breakfast, they had an accepted offer.
The fact that the house was 15 miles from where they had originally wanted to buy was no longer an issue....
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Once my disappointment had diminished I realized two things:
1) we had started with a clear idea of what they would like to buy but they had changed their mind as their view of the community evolved. Their various concerns about commuting, etc. had been resolved.
Like most purchasers, they were exploring the market. They had used their original 'requirements' as a starting point... and had come to revise their requirements. Nearly 20 years later, the realization that they had not lied to me has been enormous. This still colors my approach to purchasers in the most positive way. And,
2) they knew how much work I had done and felt very bad that it had not worked out for me, but they were very happy for themselves.
I also came to appreciate the "pull" that family and friends can have. Now I ask, "Do you have friends or family living in this area? Where? And, would you like me to look for something suitable in that area?"
Changing our mind is something we all do. As a Realtor, my best role is to allow, even encourage those changes to take place, to facilitate your search. The best use of my experience and market knowledge is as leverage when considering the most sensible route for this specific journey, and to interpret and provide context for purchasers such as you. That exploration begins here.
© 2007
David L. Potter
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...what, (as a seller) should I do now? - (this post in a followup to Attention Sellers..!!!) Let me assume that your property has real competition in the marketplace. I believe that you and your Realtor should do everything possible to make your property the one that other sellers are trying to compete with. We're working to put the old shoe on someone else's foot. Let's eliminate the distractions. Starting with the big three: Dirt, mould, mildew, and odors will completely kill 80% of all potential sales. Another 19% will make you an offer that will insult you. The other 1% probably can't afford to buy your property. Tobacco smoke (including odor trapped in drapes, furniture and carpets), pet odours, food smells (including compost, and fermenting wine or beer), etc., etc., etc!!! Trash will reduce the potential selling price by 30-50%. Get rid of it - period, exclamation mark! Clutter will reduce the selling price by 15-25%. Sort it, pack it up, get it completely out of sight - not just moved to the garage or basement. Prospective buyers look in the closets, and the basement, and the garage, and often the attic... full closets make the house look/seem smaller. Even if it doesn't look bad to you, if your Realtor has mentioned any of these items, right now is the time to resolve them.
Next let's look at maintenance issues which represent another significant distraction. Your property could be in the best neighborhood, and be a perfect match for the buyer in all respects - but when they pull a curtain aside and find a cracked or broken window, they start wondering what else is wrong... and when they find three things they start to think about other properties. Deal with ANY maintenance issues that you possibly can. Although you are sure you could resolve all maintenance issues for $5,000.00, a purchaser will be less certain and will discount the value of your property by at least $15,000.00. Saying you will fix something doesn't really count for much - having it fixed does.
Modernization There is no question that you can increase the value of your property by modernizing and doing upgrades. In my experience the benefit depends upon: correcting any problems that exist, using materials,styles, colours that are in demand selecting the 'right' project...
Don't Ignore Problems - Simply re-doing a bathroom or kitchen will be a disappointment if problems relating to functionality are not resolved. Awkward locations for appliances/fixtures, doors, closets, or even windows will still detract from the property and may not give the property the desired appeal. Style - Redoing the property in your favourite colours can be equally disappointing. I would consider consulting at least three suppliers about colours and appropriate materials - AND visiting a good number of model homes/suites to see what the competition thinks is hot. The 'Right' Project - Generally speaking, Buyers expect a property to have a good roof, good windows, and appropriate electrical/plumbing/heating systems. While buyers place value on these types of projects, they expect them and most buyers don't tend to value these projects as highly as most sellers would hope. The right project for your property might be something entirely different. Check the local real estate advertising to see what features are being trumpeted. Talk to me... I am very interested in your observations in this area I would like to know what you've seen work (or not work). © 2007
David L. Potter
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Yesterday I spoke to one of the regular vendor's at the Sunday 'Flea Market'. He has his home on the market, he's getting very little activity, but he has a good relationship with his Realtor. He wants to sell (motivated) but not desperate (doesn't want to reduce the price unnecessarily). What can he (the seller) do to help? My suggestion is for him to talk to his Realtor and arrange to view the competition. Not just properties that are similar or in the same price range - but THE COMPETITION - the properties that his agent considers to be the most significant competition. If your property is not getting much activity... (usually measured in VIEWINGS) your agent should have a good sense of who you're competing with for the Buyer's attention. Realtors watch the new and sold listings, we talk to other agents, we're interested in the market. Now I wouldn't expect your agent to know what had been listed or sold in the last 24 hours but in most cases they should be able to offer a good summary of the competition at any time and be able to accommodate a request to view the real competition within a couple of days. What are you looking for? At minimum, you want to know what you can, should or need to do to move your property into the top three on the list. You might still have to wait for the other two to sell... but you should be seeing as much activity as the competition. If you think that the properties your agent shows are not really in competition with your property then it's time for a real heart to heart with your agent ...and don't expect to get the real results you want if you do all the talking. See: Mismatched Expectations Coming soon, "OK, I've seen the Competition..." © 2007
David L. Potter
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When a property owner only wants to talk about price, two things happen. First they let the Realtor off the hook with respect to all the other service issues, and second, they run a significant risk of placing their largest asset in the hands of someone who understands more about basic human psychology than real estate. Don't get me wrong, in seventeen years in Real Estate Sales price has almost always been the most important concern of the seller. The times when it hasn't have been when a) there was a requirement for the sale to be concluded in a short time period and b) occasionally when the property was part of an estate and the family wished the property to go to a young couple or some other purchaser who would appreciate the property the way they had themselves. If all you want to talk about is price, some agents will simply agree to the price you have in mind, or "overbid" their competitors. While this can happen in any market it is more common in a "hot" market because there is a good chance that if you wait a few months, the market will build into your price, or the agent expects that you will grow tired of waiting and they can convince you to reduce the price to a reasonable level. It always makes me shudder when I hear that a agent asked a seller how much they wanted and then listed the property a little higher, "To allow room to negotiate." Don't be a deer in the headlights. Make your best effort to find a Realtor who has built their business on all the important parts of Real Estate Practice - not just promising everyone the highest price and seeing who bites. Coming up, "What Can a Seller Do? © 2007
David L. Potter
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Just before Christmas I dropped in on an "Open House" another Agent/Company was holding. The agent is a very successful agent with several years experience who I know quite well. She is not only successful, she is a very good agent, an agent that I would choose to represent me if I had the requirement. When I asked how things were going she said "Good". Agents often remind me of fishermen..., "Not much today, try over there (...Way over there)". She went on to add that she was carring a few more listings that she would like. I thought about her comment this morning while burning off Christmas calories at the gym. The only reason. THE ONLY REASON an agent would say that is because the expectations of the property owner(s) and the agent are not in sync with the reality of the market. And the agent is not confident that the property owner is listening and trusts the agent well enough to do what needs to be done to sell the property. "What needs to be done" might be making the house show better, removing distractions, making some improvement, or a price reduction. Whatever it is you can be sure that agent raised the matter with the property owner, and the owner didn't hear the message - or heard it and said "No". Any good agent will raise the matter again. If you don't trust your agent get a new agent, if you do have that trust, my advice is act on your agent's advice. © 2007
David L. Potter Next, "A Deer in the Headlights"
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