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I look at so many houses, condos and the like. I see so many ideas, both old and new, for decorating homes, making them more livable, functional or durable. But when I was stumbling through the depths of the internet one night not long ago, I came across this product that still managed to excite me. I see so much potential for creative people, office workers, people with kids and basically anyone who doesn’t want to clutter the house with little bits of paper that are intended as a temporary holding place for their ideas.
The creators of this product claim that it’s able to turn any surface into a white board and that you can leave marks there indefinitely without staining the wall.
Apparently, this “Location, location, location.” quote is originally attributed to a fellow by the name of William Dillard. This was his response to the question of how he made his fortune in what was recently considered the third largest chain of department stores in the U.S. He started with $3,000 of profit from selling his first location and passed away in 2002 with a fortune of $8.7 billion. Should we take what this man has to say about business seriously? Absolutely!
Except… it’s not real estate investing advice per se. If you’re opening a retail business of some kind, “Location, location location.” definitely is a huge concern, but when buying a home or most kinds of investment properties, this is just one of various very important factors. I’m not exactly sure how this got twisted into real estate advice that is repeated ad nauseum by media outlets and ironically by the odd Realtor who puts it in a listing to emphasize one that property’s finer points. (Listings are ads after all.)
Sure, you can buy a place as a holding property because the location is such that the density is increasing in the area, there is clearly some gentrification going on and it is the last place in the area with a really good view. But there are other factors that are at least as important. Is the particular property worth the money they’re asking for it? Will it need a lot of expensive things fixed/maintained over the next few years? What if you find out that there is an old buried oil tank on the property, that it has a lot of faulty wiring, or extensive mould problems throughout?
Now here’s the kicker, what if you can barely afford the property and you find out that any of the serious issues above are true? Are you still going to buy the property because it has a great location? That’s flirting with bankruptcy in my eyes.
There’s no need to reduce real estate to a single snappy saying. The broader principles aren’t that complex (keep sifting through this blog and they will become clear in time) but the specifics that apply to each transaction are in fact super complex which is why we have Realtors, Lawyers, Mortgage Brokers, CMHC, Insurers and Home Inspectors involved with nearly every transaction. Ask us professionals for information that will help you with the decisions you make. Making big decisions that are based on a generally misused proverb… is likely to end badly.
I spent part of yesterday evening cruising the web, much like you probably were when you first came across this blog. I had a peek at the website for CBC news in British Columbia before popping off to bed and I found this.
When I’m in work mode, the numbers and stats and locations and condition of places are all whizzing around in my consciousness in a whirlwind of business calculation. This peice of information really resonated with me last night because I was not in that mode and because I was not looking for real estate information at the time. I didn’t see anything I didn’t already know about, but this open mindset made me see this familiar information with clarity. What a difference in a short distance.
I can literally see Vancouver from my doorstep, yet when it comes to real estate prices it may as well be another country. Things are roughly twice the price there. Sure, there is more economic, cultural and social activity there. It’s a city after all. But there are also the social ills, the cost of living, the noise and the long commutes. That’s life in the city.
Here in my medium sized town (a little over 100,000 people in the district) I am always still discovering new stores, restaurants, people, parks and activities. At the same time it’s small enough for me to run into people I know once in a while should I head out in public. I like feeling like part of a community but also being anonymous when I want to be. I can drive everywhere I need to withing twenty minutes too.
Should I crave some city life, downtown Vancouver is just twenty minutes away by float plane from our own downtown. Or, if I should choose to save some money or take my car with me to the city, there are two ferries to choose from as well.
On the other hand, wilderness is just as easy to get to as well.
I once spent ten years on the road travelling all over North America and Japan, and a bit of Europe. No more. I’m done. I’m staying here in the area I grew up in. It’s funny how we sometimes have to give up what we have in order to appreciate it. An affordable medium between both city and wilderness.
I’m starting a new series for the blog. It will be about the “Myths of Real Estate”.
I am choosing this topic first not because it is the one that I see people hurting themselves with the most, but rather because it is the one that will simply not go away. The most common question people ask me is after all “How’s the market?”.
My hypothesis of why the notion of good markets and bad markets is so firmly entrenched in the public mind is simply because we live in a world where most often people hear about real estate from media outlets or as part of some other sort of “news”. News by definition needs something new to talk about. The fundamentals of real estate change slowly if at all. So, what they hear about most often is not necessarily the most important stuff to understand, it’s just the stuff that has changed lately. Pump it full of drama and it’s ready for public consumption.
I explain my views on this is detail in the series “When To Buy And Sell.” (Go to the oldest post in this section to start.) Having said all this I want to make it clear that I am not suggesting that what the market is doing will have no effect on you or your financial well being. I am saying that this is secondary to your financial standing as well as some other factors in most cases. One can pick these things apart and dissect it into a million peices. I do that a bit in the series mentioned above, and a lot more in my daily working life. In the end, it always comes back to the above for me.
So what is this viewpoint I have for homeowners you may ask? (Or maybe you’re just asking “Why don’t you get to the point already?”) Well, the short of is quite simple. What you can afford is more important than what the real estate market is doing. You have to remember that all the dramas about ups and downs are short term and that in the long term values rise. This simple truth is what makes real estate such a good investment for both homeowners and professional investors. It requires patience though.
When you can understand and appreciate the statement “There are no good markets or bad markets. I all depends on what cards you are holding.” then you are starting to hear where I am coming from. If it still sounds like a Zen koan (riddle) to you, then you need to keep reading.
I found an interesting article in the Globe and Mail last week. I was just about to put up the previous post about my website for free connections to Chinese speaking Realtors across Canada, when I came across the article. I tend to cut and paste a lot of worthwhile articles into this blog, but in this case there are quite a lot of graphics and etc. to bungle up my wordpress so I’m providing you with a quote from the article to whet your appetite and then a link to see the whole thing.
“It’s a startling finding, one that is reinforced by respondents’ overwhelmingly positive attitudes about Canada’s welcoming and tolerant treatment of newcomers. The results bode well for Canada’s efforts to attract highly educated immigrants as the global search for talent heats up in coming years.”
I have just launched a new website where I will connect Chinese speaking who are looking for real estate services anywhere in Canada with Realtors who can give them service in that language. www.jianada-fangdichan.com
For your information I am and have been offering real estate services here in Nanaimo in Mandarin via the aid of my assistant who is from Beijing. I already have a network of Chinese Speaking Realtors across the country who are ready to do business.
Here is a screenshot of the homepage and a link to it.
This is a (mostly) serious blog about real estate in the Nanaimo area. That doesn’t mean that my dissemination of information has to be all dry and dull.
Here is a video where Seth Green actually makes some really important points about starter homes, ultimately he’s talking about keeping it within your means. As I’ve said before, this is the number one thing with buying real estate as it will go up in the long term, but in the short term you MUST be able to pay for it.
By the way, houses like the one he’s showing off (small but pretty new or at least recently and thoroughly updated) would probably be somewhere between $260k and $280k here in Nanaimo depending on location. But if it were me, I’d go for the place that’s a bit more and has a suite that I can rent out and have tenants pay a good chunk of the mortgage for me. One day, when I am in a better financial position I’ll stop renting out the suite and expand my own living area to include the whole house.
This is the fifth and final part of my story of “The House That Wouldn’t Sell”. I’ll give you spoiler and tell you that they do actually sell their home here, but unbeknownst to them they have actually cost themselves money. I explain this in detail after the story.
This story is based on an amalgamation of some of the most common errors made by people hoping to sell their home which ultimately are detrimental to their efforts. Please read from the beginning of part one in order to understand the context of the following passage.
The listing eventually expired and Roger and Shirley finally bit the bullet and they decided to pay full commission for the sale of the property. It had been six months since they first listed their home and they were sick of the whole thing. They weren‘t sure why it didn’t work with the discount Realtor, but they figured it was because that Realtor didn’t work very hard. (Which wasn’t quite the case.)
They listed the home with the big name Realtor who had clearly forgotten a lot of the details from the time they met to discuss the listing but he acted like they were old friends anyway. The Realtor could sense their frustration and suggested $309,000 for the property and the Pilkingtons agreed quite easily.
The Realtor truthfully (this time) said that this was a competitive price for this property. The first and most honest Realtor would have told them that this was because the market value had gone up since they had first decided to sell. He would have also said that the price would be even higher if they hadn’t messed around and left it on the market so long at an unrealistic price so that it now has a stigma. Most buyers who know it has been on the market so long think it hasn’t sold because there’s something wrong with it. But this was not mentioned by the big name Realtor.
Sure enough, a couple of days after it is listed the big name Realtor brings some buyers to the home. He keeps doing this every week or so and only a couple of times do any other Realtors come with their buyers. After about a month they get a call from the Realtor and he tells them that he has someone who wants to make an offer. He shows them the contract and some paperwork which is apparently “just a formality” or “no big deal” which allows him to represent both sides of the sale. The sale is negotiated and they finally sell their home for $302,000.
Was there perhaps a reason why they could have negotiated harder? Who knows. We do know that the Realtor was making twice the money off of this sale than he would by selling the home to buyers that weren’t his own though.
They feel that although they did not make what they originally hoped to, they were happy with their Realtor and would recommend him to their friends. After all, he did what they and their previous Realtor could not.
THE END
Moral of the story: Had they listened to the most honest Realtor, they would have probably been able to sell the home in about 4-6 weeks with a fraction of the time and effort. They would also have gotten a better price for the market at the time. Although they eventually listed it for more than the most honest Realtor had originally suggested, he would have suggested a higher price had he walked in at the time of the final listing. That is, he would have if they hadn’t taken it down the route they already had. Why? Because there is a stigma that is created around a property that sits on the market for quite some time. Many buyers are quick to dismiss a property like this because they fear that something may be wrong with it and that others know something bad about it that they don’t. However, should they decide to make an offer on such a property, the offers will be lower because they feel there is no competition for the property so they feel no need to try hard to get it. Therefore, the offers made tend to be less serious as do the overall negotiations coming from they buyer’s side.
In the 7 months or so it took them to sell the property, property values went up 5% so their property which was valued at essentially 300k would have gone up to 315k. The properties they were looking at buying afterwards had gone from 400k to 420k. So, using the numbers from the story but simplfiying the math slighly for the sake of illustration, they would have had to pay 100k more for the next place had they listed it at the right price with the most honest Realtor from the beginning. Now they will have to pay 111k more for that kind of place. They have cost themselves $11,000 because they thought they could outsmart the system and save money. And remember, this sort of situation is not something I have just seen a few times. It’s actually quite common. The details are different each time but the overall pattern is the same.
The irony is that this sort of thing seems to happen to intelligent people more than not so intelligent people. People who know they’re smart are more likely to try a hand at outsmarting the system. And yes, sometimes it does work but speaking as a professional who has seen all sorts of people use all sorts of approaches… it’s a rare thing. When you consider how much money is on the line, it’s just not worth it.
The reality of lawsuits that are more likely to come up as a result of trying to cut corners were not mentioned in this story mainly because they are complex to explain. Each sale is different and there are hundreds, if not thousands of things to watch out for. Helping you stay away from them is a big part of what a good Realtor does.
Ultimately, Roger and Shirley thought they could outsmart and beat the system. In the end, the system outsmart and beat them and whether the buyer has gotten themselves a pretty good deal. The real estate system we use is after all a system that has evolved over centuries and not something some people just made up one day. It has and will continue to change, but at any time it exists the way it does because it is the best way for so many people to do what they need to do. Chances are, that if you want to do a real estate transaction that this system will work well for you if you use it properly. An honest hard working Realtor is your best ally and guide to this complex and ever changing system. That’s what we’re here for. You may just see us have you sign some papers, take some photos and put up a sign but I promise you that this is just the tip of the iceberg.
Here is part four of my series which features a fictional account of a couple who have trouble selling their home. It is based on an amalgamation of some of the most common errors made by people hoping to sell their home which ultimately are detrimental to their efforts. Please read from the beginning of part one in order to understand the context of the following passage.
After these two mishaps and three months of working hard to peddle their home to the masses with no (happy) results while trying to keep it spotless and presentable on top of both working full time, Roger and Shirley decided that it was time to hire a professional. After all, who knows what other unanticipated problems lie between them and a successful sale.
The discount Realtor, the third one if you were counting, came and took some photos and had the Pilkingtons fill out some paperwork. In a few days they saw the listing on the realtor.ca website and it looked pretty good. They felt much better now that they had someone to guide them through the process.
What no one told them is that paying half the commission for the real estate services means that half as much money is paid to the buyer’s agent BEFORE deductions and other business costs. At the end of the various deductions to the company, taxes and expenses most Realtors would be working for about the same as minimum wage or maybe less were they to sell this property to their Buyers. The Buyer’s agent has three choices: Work their stressful job with unpredictable hours for nearly free, refuse to show the property (and risk losing the client) or tell the buyer that they will have to kick in the extra comission in order to make the sale a part of the sustainable business model for that Realtor (and risk losing the client).
It never occured to Roger and Shirley that having the sign up and the listing on the internet would draw buyers to their Realtor. Nor did it occur to them that it would be a more sustainable business plan for that Realtor to sell other Realtor’s listing for full commission and leave up the for sale sign and listing of the Pilkington’s property in hopes of attracting more of such business.
Again days turned into weeks and weeks turned into months. A few showings happened here and there but there was no serious interest.
Here is part three of my
series which features a fictional account of a couple who have trouble
selling their home. It is based on an amalgamation of some of the most
common errors made by people hoping to sell their home which ultimately
are detrimental to their efforts. Please read from the beginning of part one in order
to understand the context of the following passage.
Roger and Shirley had some discussions amongst
themselves and with their neighbours who once bought and sold a
house. Roger also spoke to his uncle who once bought a house. Shirley
decided to speak to her co-worker who watched the news a lot and pays
particular attention to the real estate news. She claimed to have once
sold a house herself in about two weeks without the help of a Realtor
and thus [apparently] saving lots of money.
After all this chatting with people who
they figured would be good sources of info, they reached a decision.
They would sell it as a “for sale by owner”. After all,
there are so many websites out there where they only charge you a few
hundred dollars to put your listing on it and they tell you [with dubious accuracy] how to
make a contract and how to price your home right. Unfortunately for
the Pilkingtons as well as Shirley’s co-worker, none of them knew
that the person who bought her previous home was someone who made a
living by scanning the ‘for sale by owners’ for bargains and knew
right away that the home they eventually bought was greatly underpriced as soon as they saw
it.
It was decided that the sale price
would be $325,000. They figured that after all, the neighbour’s house
sold for $309,000 last year and prices have gone up a bit plus their
home has so many details that are nicer than the neighbours. They had
discussed among themselves that they would certainly be willing to
look at lower offers and negotiate, they just figured that a higher
starting price point would command a higher starting point for
negotiations. They were so excited at the prospect of saving this
money on commission. This way they could put more money into their
next home! Roger and Shirley were enjoying looking at all the real
estate listings to give them an idea of what the next home would be
like. Would it have an ocean view? A big yard? A jacuzzi jet soaker
tub in the ensuite? Granite counter tops?
The for sale by owner sign went up as did the listing on the for sale by owner website. On weekends, so did the open house sign.
On the website you could
see how many people were looking at their house online. Every day the
number went up so they were sure that someone would call any day. And
they eventually did. Everytime someone called about the house or came to see it
they were so excited they couldn’t sit still. Shirley would often focus on thinking positive thoughts about what was coming and Roger would spend lots of time in the yard putting new flowers or some such thing in to make the home more attractive. Before the buyers
came they did everything they possibly could to make the home
appealing. They baked pies before the Buyers showed up to make it
smell nice and they kept the home super tidy. They had all the lights
on and they greeted the buyers at the door and gave them a full tour
emphasizing the aspects which they were most proud of.
Days turned into weeks and weeks turned
into months. Then one day, someone who had come and looked at the place said
“I want to make an offer.” Roger and Shirley’s hearts both
jumped. They talked it over with the Buyer over the phone and after a
couple of incidents of “I’ll think about it.” they came to
a price which both parties could agree to. $315,000. It was less than
they had hoped for but it would have to do. It was getting late in
the evening so it was agreed that the buyers would come over the next
morning at eleven to sign the contract that they had spent so much
time and effort preparing.
After a poor night’s sleep for all
involved due to excitement, the next morning came and went. By noon,
Roger had tried calling the Buyer four or five times and only got
voicemail. He was starting to think this was an example of the
“buyer’s remorse ” he had always heard about. After a
couple of days of no contact and thus no contract, it was obvious
that this was the case.
Roger and Shirley were a bit in the dumps for a couple of days and generally tried to avoid pushing the blame on the other or getting wrapped up in thought about what they wish they had done differently when handling that person. Regardless, they pressed forward as they felt that there must be others out there who are interested as well. After all, it only takes one buyer to make it all happen.
The listing stayed up as a ‘for sale by
owner’ for a few more weeks before another offer came in from another
Buyer. This time they had learned from their previous mishap and got
it signed right away. “Whew!” Shirley said looking at the
signed contract in her hands “I guess we’re over the hump now!”
The buyer’s best friend who is a construction guy came and did an
“inspection” of the property with the buyer, the signed documents
were taken to a lawyer and to a bank. Everything seemed to be moving
smoothly until one day a sheepish and short phone call came from the
Buyer saying that they couldn’t qualify for the mortgage. They were
obviously really upset because they felt that their new job made the
payments easy to make but the “stupid bank” didn’t agree.
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