Toronto Real Estate and Homes For Sale

Central Toronto Housing Market Sends Mixed Signals

Most of us are familiar with the most basic law of supply and demand which tells us that when supply goes up and demand goes down, prices can only travel in one direction … down! 
So much for economic theories! In central Toronto, three prime neighbourhoods recorded an increase in supply (homes for sale), a drop in demand (homes sold), but prices in all three areas still managed to climb!  

The Canadian Real Estate Association reported a decline of 13.1 per cent in sales in the first half of 2008, compared to the same period in 2007. The report also shows a jump of 9.1 per cent in the number of listings on the Multiple Listing Service, which is a record high from the first six months of last year.

Home sales were down across Canada by 20 percent with the exception of Newfoundland. While the decline in number of sales is similar in some of Toronto’s prime neighbourhoods, average sale prices continue their upward trend.

The largest price increase in these three neighbourhoods took place in Lawrence Park with a 19 per cent jump from April to July 2008, compared to the same period in 2007. Other areas such as Leaside showed a 7 per cent average sale price increase and Davisville Village recording a 5 percent.

All three areas experienced a decline in number of homes sold for the period April to July 2008 versus April to July 2007, with Leaside having the biggest drop of 28 percent.

Lawrence Park Home Sales

Davisville Village

Leaside

Red Flags to Watch Out for When Accepting Offers On the Sale of Your Home

Three weeks ago you put your home up for sale and things are going quite well. The home you are moving into has a flexible closing and you are looking forward to moving in.

Two different buyers have made an offer on your present home and there is a significant difference in the price you are being offered. The better offer is from a very nice couple who visited your home several times before deciding to go ahead.

You like their offer and would like to see them as the new owners of your home. Everything else about their offer is fine and they are not making any unreasonable requests. However they have one condition; they need to sell their home before making their offer to you firm and binding.

This type of scenario in not uncommon during a softening, or more normal real estate market.

What should you do?

Should you accept the lower offer since it has no conditions, or should you perhaps gamble and go for the better but “conditional-on-the-sale-of-the-buyers-home” offer. If the buyers are not able to sell their home in time, you run the risk of owning two homes. When you have to close on your new home you may not be able to afford to carry mortgage payments and taxes on both properties.

This is when your real estate agent’s experience can make a huge difference between success or hardship. If your agent has done her due diligence on your behalf, she should have at least checked out the following:

• Make sure the buyers home is already on the market
• Is the buyer’s asking price in line with market value? If the buyers are being overly ambitious in their price, it may take considerably longer than normal to have their home sold.
• Is the buyer’s home in demand in that area, or is it a one-of-a-kind that is going to require an equally unique buyer to want it?

If you are comfortable with the above picture and want to take the higher offer, you should still protect yourself with an “escape clause.”

What that means is that you accept the better offer and insert a condition preventing the buyers from holding you “hostage” until their home is sold. This “escape clause” states that you may continue to offer your home for sale to other buyers.

If in the meantime you receive an offer that you would like to accept, the first buyer will be notified and they will have to remove their condition and firm up their offer, or allow you to accept the latest offer you have received.

Which Renovations Give You the Best Return When Selling Your Home?

The majority of us tend to make major buying decisions, such as a home,  based on impulse and very little logic. Most home buyers will buy after “falling in love” with your house. Hardly a calculated, well thought out decision! As a seller, you want to capitalize on these buyer emotions.

Here is a rundown of the return you might expect to get for some of those renovations you have made.

The return you get will vary depending on whether you are selling during a sellers or a buyers market. Clearly you will get the highest returns when you sell at the height of a sellers market, such as the one we have had for several years.

What renovations should you do first?

A good question to ask yourself is… “What is the first renovation the buyer would like to do in this house as soon as she buys it?” If most buyers wouldn’t install a gym, do not install one. You are unlikely to see great return on such an investment when you go to sell.

Return on Home Improvement Investments

A word of caution!

A poorly done renovation will bring down the price of your home. The buyers are now facing the cost of ripping out that small bathroom and replacing it with a larger modern bathroom with all the bells and whistles.

What is a sure-fire test to find out what renovations will bring you the highest sale price when you are ready to sell?

The answer varies from neighbourhood to neighbourhood. If you are not sure what the typical buyer in your area wants, call a local real estate agent and ask what features are most important to buyers in your particular area. They are the experts since they talk with buyers daily.

Not comfortable talking with the local agent? Send me an email and I will be happy to answer your questions.

Announcing the Death of the For Sale by Owner (FSBO)

The more things change the more they remain the same, except when it comes to selling your home without an agent. When I first entered the real estate business I did not have many clients. My manager advised me to go out and meet “For Sale by Owners” (FSBO’s).

These were home owners trying to sell their homes on their own, and the manager told me they were a great source of prospects.

That was more than 26 years ago. Today I rarely see FSBO signs on lawns or their ads in the newspapers. The National Association of Realtors (NAR) in the US has been conducting surveys of home buyers and sellers, including FSBO’s, for over 50 years. Every year NAR sends an 8 page questionnaire to 150,000 consumers. Last year they received just under 10,000 responses.

This is what the survey found about FSBO’s.

• 12 % of sellers sold their home without the assistance of an agent.
• Among all sellers, 3% were FSBO sellers who knew the buyer.
• 92% of FSBO sellers sold a detached single-family home.
• For 9% of FSBO sellers, the most difficult task in selling their home was understanding and performing the necessary paperwork to complete the transaction, for 27% it was preparing the home for sale and for 9% the most difficult task was getting the price right.
• “The median home price for sellers who used an agent was $247,000; the median price for a FSBO-sold home was $187,200.”

When we look at the last bullet we see that even when the FSBO is successful, they net on average 24% less than real estate agents.

Clearly this would not be the case in every instance, but knowing these results I can only wonder why some home owners will still attempt to sell their homes without hiring a professional.

Looking at home buyers attitudes, the same survey found that:

• 91% of home buyers used the Internet to search for homes.
• 86% of home buyers used a real estate professional during their home search.

As a FSBO you do not have access to the MLS nor to all those agents who are working with buyers ready to buy a home such as yours. Today’s buyers rely almost entirely on the internet and they rarely call on newspaper ads or real estate signs.

So why do some sellers still try to sell their homes “For Sale by Owner”?

The most common answer I hear is, to save the agent’s commission. The truth is that when FSBO’s succeed in selling without an agent, they end up netting  significantly fewer dollars for their home, even after paying the agent’s fees.

I have not even touched on other issues such as home security and safety. Are you prepared to have anyone, who says the magic word “buyer”, into your house without knowing anything about them? Have you put away all your valuables? What will you do when two or three buyers show up at once? Will you let them all in and allow them to wander through your home on their own?

I could go on and on, but I will not. We are all free to make our own decisions.  This is one you should consider very carefully before setting out to “save that commission”.

I sincerely wish you good luck!

You Want to Buy a House in Toronto, May I See Your ID Please?

New Money Laundering Law Affects All Canadian Real Estate Buyers and Sellers

The next time you are involved in buying or selling real estate you may be surprised to have the real estate agent ask to see your ID.

In an effort to combat money laundering and terrorist financing, the Canadian government - through FINTRAC (Financial and Reports Analysis Centre of Canada) - has just introduced new legislation affecting all real estate transactions. The legislation applies to all individuals and Corporations.

Under this new law, the real estate industry must now keep on file the names of the individuals involved in the transaction, their address, date of birth, occupation or principal business, and the type of ID provided.

What type of personal identification do you have to show?
Your birth certificate, driver’s license, passport, record of landing, permanent resident card or other similar government-issued piece of identification. Provincial health cards are not accepted in Ontario, Manitoba or PEI.

Who does this legislation apply to?
Real estate brokers must now complete an Identification Record with each and every real estate sale at the time of the transaction.

When does this new legislation take effect?
As of June 23, 2008, all real estate brokers (sales representatives, agents) must keep a Receipt of Funds Record and identify the client who provided the funds.

What about my personal privacy?
The new legislation  now deems this type of information “necessary” for the purposes of identification.

What if there are no real estate agents involved?
In that case the full responsiblity of collecting this information is placed on the lawyers acting on behalf of the buyer and seller.

What are the Realtors’ responsibility regarding my private information?
Realtors are responsible for protecting all personal information collected from you as part of the FINTRAC Compliance Process against loss, theft, unauthorized access, disclosure or copying.

Non-compliance penalties by the real estate industry are quite serious, with up to five years in prison and fines up to $2 million for each offence.

Should You Wait for the Market to Bottom Out Before Buying a Home in Toronto?

A quick look at the headlines suggests that the Toronto housing market will continue to slow down. The question is whether waiting for the market to reach bottom is a smart idea. Here are four reasons to buy now and four reasons you may want to wait.

Four reasons you should buy now

1. If prices are relatively stable. If home prices in the neighbourhood where you want to live are steady and there is no significant drop, then the only risk you take by buying now is that you miss the bottom by a small percentage.

2. If you are planning to stay in the home you buy for several years. Unless the entire world’s economy goes into a tailspin, most economists agree that if you buy now you will come out ahead when the market rebounds.

3. If your current rent payment would equal a mortgage payment. If you are able to buy now, you will be building your own equity rather than paying your landlord’s mortgage through your rent payment.

4. If you have found the perfect home in the right neighbourhood. You have been looking long and hard and you realize it’s going to be difficult to find another house just like this one. Everything is to your liking including the schools, neighbours, etc. You also know that if the market were brisker you definitely would have a lot more competition from other buyers.

Four reasons you should not buy now

Read the rest of this article »

How to Get the Most for Your Home in a Slowing Toronto Real Estate Market - Part Three

Here are the last two most common errors that you must avoid, in order to get a higher price when selling your home in a softening real estate market.

•  Do not let your emotions gain control of you

The offer you have in front of you is quite good. You are almost there.  However, the buyers want those curtains that your spouse had custom made. This is not the time to lose the offer over “depreciated curtains”. Keep an eye on the big picture.

•  Failure to set the correct price

Nothing will turn your buyers off faster than your having an asking price far above the true market value. The internet has allowed both buyers and sellers to gain considerable knowledge about property values.

You would be making a huge mistake by saying … “they can make an offer”.  Most of us are simply too busy to play that type of game. By placing your asking price within 2 to 3 percent of your home’s true market value, you have infinitely better chances of receiving good realistic offers.

Today’s buyers are very different than they were 15 years ago before the arrival of the internet. Generally buyers are well informed  and are only looking at those listings that are priced correctly.

Save yourself, your agent and the buyers a lot of time. Today there are few unsuspecting, uninformed buyers.

How to Get the Most for Your Home in a Slowing Toronto Real Estate Market - Part Two

Here are two more common errors that you must avoid in order to get a higher price when selling your home in a softening real estate market.

• Not willing to make cosmetic improvements before selling

“Let the Buyer fix that.” The time to make cosmetics improvements is before you have had your home on the market for three months and have not received any offers. Buyers generally have a preconceived idea of the condition of the home they would like to buy.

The closer your home is to the buyer’s image, the more they will pay for your home. You must make every effort to meet their expectations and make your home look as “Martha Stewartish” as possible. Buyers will reward you handsomely for it.

Cosmetic improvements to your home are by far the best highest-return-investment you can make before selling. For example, if your home is in need of an entire coat of paint at a cost of $3,000, by having it painted you are very likely to receive $4000 to $12,000 dollars or more from the buyers.

Remember, we buy emotionally and proceed to justify our decision logically after we have bought.

• Taking complete control of the sale of your home

Would you tell your surgeon where to make the incision just before the operation? Would you advice your lawyer about the tactics she should use when she goes to court in your defense? You hired an agent because you believe she is knowledgeable, professional and capable of doing a better job than you would. Let your agent do her job and follow her advice. 

If you do not have complete confidence in your agent’s abilities, hire another agent. If you find that you are still unable to let go, you should first try the For Sale by Owner route. In most cases, after a few weeks you will be glad you have hired a professional to represent your interests.

Look for more great tips on Part Three.

How to Get the Most for Your Home in a Slowing Toronto Real Estate Market - Part One

A few days ago I got an email from a client who has been thinking of moving into a smaller house for several years. The family is all grown up and the house is too big and too much work.

Had my client sold her home a few months ago, she would have been able to sell at a much higher price when the market was brisker than it is today. But like so many of us, she thought she had plenty of time. Today she is facing a very different picture.

The home she wants to sell has come down in price while the smaller home she wants to move to has adjusted by a smaller amount.

Here are 7 strategies that you can apply in order to  get a  better than average price on the sale of your Toronto home. Making a mistake at this point can result in losing thousands of dollars.

These are the 7 most common errors home sellers make:

• Restricting the ability of buyers to see your home

Serious buyers act on impulse and will not wait to view your home if it’s not available when they want to view it.  Within reason, you must make your home available to view with short notice. Remember, we have had a sellers market for over 10 years.
The tables have turned and we are now in a more balanced market. Either we accommodate to their schedules or these buyers will simply move on and buy another house.

Caution - If at all possible, do not ask the buyers to comeback because “right now it’s not convenient”.

• “My home is the best on the block”

Your sense of pride is commendable, but you should not blind yourself to your home’s flaws and shortcomings. There are NO perfect homes and the buyers know this. Be prepared to accept some of the buyer’s comments without losing your head over it.

• Keep a poker face

You do not owe anyone an explanation as to why you are selling. This even includes your real estate agent. Don’t be caught off guard. Have a perfectly reasonably answer, such as ” it’s been great living in this house but we want something different “, ” now that we have grandchildren we would like to be closer to our children. “

By being open about it and disclosing your full reason for selling your home you may run the risk of having this information being used against you in the form of a lower offer.

Look for more great tips on Part Two.

Finding a Real Estate Bargain in a Changing Market in Toronto

Starting in the late 1990’s there have been few good real estate buys in most real estate areas. Inventories of homes for sale (listings) have been at record low numbers. And there have been large numbers of buyers willing to pay “almost” anything for their dream home.

Now in mid 2008 the picture is changing. Buyers have plenty of choice. Listing inventories are up and the number of sales has dipped by as much as 70 percent in some major real estate markets.

Bidding wars are fast becoming a thing of the past and buyers can feel confident they are not paying too much for their home.

However, having ample supply of homes to choose from does not mean that sellers are prepared to expect substantially lower prices. Having spent over 25 years in residential real estate sales, I have observed that most sellers do not have to sell. The key to getting a bargain is in finding a seller who has to sell.

Regardless of what is happening in the market, there are always personal situations that require that some home owners do have to sell or need to trade to a more affordable home.

So, how do you as a buyer go about spotting one of these real estate bargains?

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