Year-To-Date Upper End Home Sales by Area

As per my prior post, upper end home sales across southern Georgian Bay have remained very robust throughout 2014.  To the end of October, MLS® sales for homes and condominiums priced above $750,000 total 66 units to the end of October compared to 47 in the first ten months of 2013 an increase of 40%.

  The bulk of these upper end MLS® sales (63 units) reside in the municipalities of Clearview, Collingwood, Grey Highlands, Municipality of Meaford, the Blue Mountains and Wasaga Beach.  Approximately 38% of these sales are in the Blue Mountains driven by Buyer's desires to be close to the private ski and golf clubs they belong to.

  Inventory of upper end homes remains relatively high.  As of this posting there are 179 active MLS® listings priced above $750,000 which represents about 27 months of inventory.  Over $1 million there are now 98 active MLS® listings.  This is the first time the number of MLS® listings over $1 million has dropped below 100 properties in quite some time.  With 27 MLS® sales year-to-date to the end of October, there remains a three year inventory of MLS® listed properties over $1 million.

  As with other price ranges, correctly pricing an upper end home correctly to attract a Buyer(s) is very important perhaps even more so.  Upper end Buyers are very savvy.  Many have built their own homes in the past.  They know what they want and they know the costs associated with building.  If they don't see both the quality and value in the property listed for sale then securing a Buyer at the price being asked is highly unlikely if at all.

  If you have an upper end property you are thinking of selling or if you are in the market to purchase one, please visit the luxury home page of my personal real estate website to see how my experience in this segment of the market can benefit you. 

Luxury Home Sales Remain Strong in 2014

  With less than two months remaining in 2014, Southern Georgian Bay area real estate is poised for another record year in terms of total MLS® sales activity. 

  MLS® sales through the first ten months of 2014 total $597 million, an increase of 8% over the first 10 months of 2013.  Total MLS® sales volume for all of 2013 totaled just under $625 million, this was the first time MLS® sales had past the $600 million mark and we appeared destined to surpass that amount for 2014.

  To a large degree, the sale of luxury, high-end properties continues to have an impact on total dollar sales in the area as the increase in MLS® dollar volume typically outpaces the annual increase in the number of properties sold.  Year-to-date through the end of October we have seen 82 MLS® sales above $700,000.  As per the accompanying chart, MLS® sales above $1.5 million are running dead even with 2013 with nine sales reported.  Where we are seeing a significant increase in activity is in the $800,000 to $1 million price range.  Year-to-date there have been 32 sales in this price range, double the number from one year ago. MLS® sales between $1 and $1.5 million have also continued to perform very well with 18 sales year-to-date reflecting a 38% increase over the same period last year.  

  The trend among luxury home Buyers leans towards buying smaller in terms of the size of the dwelling but it must have the best of everything including, finishes, technology and energy efficiency.  This chart would seem to reflect this given the level of sales activity we are seeing in smaller well appointed properties in and around the $1 million mark.

  In my next post I will summarize luxury home sales and listing activity in the various municipalities around our area.  

Luxury Home Sales Up 68% to the End of June

 The upper end home market across southern Georgian Bay continues to show a strong demand in with year-to-date sales to the end of June up 68% from one year ago.

  For the purpose of statistical reference, luxury properties in our market are those priced over $750,000.  To the end of June there have been 33 MLS® sales reported for single family homes and condominiums in the $750,000 and up price ranges.  By comparison, during the first six months of 2013 MLS® sales above $750,000 totaled 19 properties.

  Since my last posting on this subject at the end of May, the number of active MLS® listings for properties priced above $750,000, has increased from 180 to 190 properties.  Based on the current rate of sales which is tracking at 64 for the year, there currently exists a three year inventory of available properties in this upper end price category.  Compared to properties under $750,000, where essentially one out of every three properties listed sells, the rate of absorption for properties priced above $750,000 is about half that and the higher the price the more that ratio changes. 

  Year-to-date there have been 14 MLS® sales reported over $1 million whereas there are currently 100 active MLS® listings.  That’s a 3.5 year supply of inventory which gives you a good idea as to how long it can take to sell a home of this magnitude.

  As per the accompanying graph, the Blue Mountains is where the majority of our market’s upper end real estate is located. For the most part, buyer’s in this segment of the market want to be situated close to Blue Mountain and or the area’s private ski and gold clubs.  

Luxury Home and Condo Sales Remain Strong in 2014

Following the lackluster real estate market of the first quarter, activity has started to come back reflecting a higher level of sales typically associated with the arrival of spring. Periods such as what we experienced through this past winter where demand softened this year due to the harsh winter, typically serve to create a pent-up demand and this time was no exception.

MLS® sales reported by the Southern Georgian Bay Association of REALTORS® during May reflected an 11% increase in unit sales for the month versus May 2013 while dollar volume for the month was up 14%.  While stronger sales through both April and May have helped to lessen the impact of the weak sales activity we experienced January through March, MLS® unit sales are still trailing behind 2013 particularly for single family homes.

  The upper end of the market which we define as any homes or condominiums, priced over $750,000 has remained very bullish in 2014.  As per the accompanying graph, sales though the end of May for properties over $750,000 total 27 units.  Baring any downtown in the market we are on track to handily exceed last year’s sales of 58 properties.

  Upper end homes and condominiums is one segment of the local market where there is always an abundance of available inventory.  As per the accompanying graph, there are currently 180 active MLS® listings priced above $750,000.  Based on the current pace of sales in 2014, the current level of available inventory reflects a 2.8 year supply.  If we move up to the $1 million plus range, year-to-date there have been 10 sales whereas there are currently 98 active MLS® listings over $1 million.  This translates into a 4 year inventory of homes for sale over $1 million. 

  I am always amazed when I see a contractor building a $1 million plus home on speculation ie: they are building it merely to sell.  This is in my opinion is a very risky move.  First is the obvious issue of over-supply.  With 4 years of available inventory for homes over $1 million, you are really rolling the dice so-to-speak when you are custom building a million dollar plus property strictly for resale.  It could takes months even years to find a buyer. Secondary to that but of perhaps even greater importance is the matter of clientele.  In my experience the numerous buyers that I have been fortunate enough to work with for upper end properties are very specific in what they want.  Many have been thorough the custom home building process.  They have very specific tastes and desires and more importantly they can afford it.  More often than not, they would just as soon build their own home to the standard they want and we have no shortage of available vacant land for them to fulfill that desire.  Based on their prior building experience these people are also very knowledgeable on costs.  In my next post I will speak more on the matter of luxury home pricing. 

2013 Was Another Good Year For the Wealthy

Based on various article and reports I have read in recent weeks, 2013 was another good year for wealthy individuals. This no doubt stems from a variety of reasons. The global economy continues to improve following the last recession, gains are being realized in the stock market and most importantly, many wealthy clients or individuals I have met, work smart and work hard.

The following is a summary of the key indicators that reflects the ongoing growth talking place in the wealthy demographic segment. 

• The world’s club of ultrawealthy individuals, or those with $30 million or more in net assets, added about 5,000 new members last year. Over the last decade, the ranks of the über-rich have swelled by 59 percent, and the register of billionaires climbed 80 percent, to 1,682.

• The world’s 0.1 percenters had a pretty good year; three-quarters said their assets had increased. Only 4 percent said they wound up worth less.

• By 2023, China is expected to have 322 billionaires, more than Britain, Russia, France and Switzerland combined.

Lastly and of good news for the real estate market,

• Looking for someplace to park their wealth, the world’s rich still prefer property.

  Here in the southern Georgian Bay region we continue to modest growth in the luxury property market.  This area has yet to reach the point where we are regarded as a globally recognized destination to invest in luxury real estate and I suspect it will be years before we are.  Nonetheless, every year there is an increasingly greater number of wealthy individual looking to invest in our market.

  As of this writing, there are 108 properties listed for sale on the local multiple listing service.  As mentioned in prior posts, that represents roughly 4 years of inventory in this price segment of the market.  Selling a property in the $1 million plus segment takes time and most importantly it's all about price.  Wealthy Buyers are smart.  They know what they want and they know value.  Many have had the experience of building or extensively renovating homes and they know the costs associated with construction. When viewing your property if they do not see an asking price that is a least equal to the bare minimum replacement cost, they will simply move on.    

  If your property has been listed for an extensively long period of time with no offers and or very few showings perhaps you need to ask yourself and your REALTOR® what's wrong?

The Sale is Dead - What Happens to the Deposit?

 Buyers and Sellers entering into a real estate Agreement of Purchase and Sale are usually at opposite ends of the spectrum on a number of issues the most important of which is money.  Obviously the purchase price is the biggest hurtle to agree on, secondary to that, deposits can sometimes be a thorny issue as well.

  Contrary to what you may believe, an Agreement of Purchase and Sale is a binding contract even if there is “zero” monies paid as a deposit.  A contract is made based on considerations being made.  In real estate, the considerations made in an Agreement of Purchase and Sale includes the Seller transferring the title to the property to the Buyer.  It may also require the Seller to include specific items ie: the appliances and other things that are specified in the Agreement.  Similarly the Buyer agrees to pay the Seller the agreed to purchase price on a specific date etc.  All of these items are essentially promises that are being made by both parties in the terms of the contract.  What makes the contract binding is not the deposit but the fact that the Agreement is signed “under seal.”  As you will note on most real estate forms, signatures are make next to a small black seal and the Agreement is noted as being SIGNED, SEALED and DELIVERED…..

  Virtually all Agreements of Purchase and Sale do however include a deposit the mount of which can vary.  There is no specified or accepted deposit amount ie: 10% of the purchase price etc.  The deposit is a further show of good faith by the Buyer.  The amount of the deposit is not only based on price but also the length of the closing date is an important factor as well.  If a Buyer purchases a property with a long closing date ie: 6 months with say a $2,000 deposit, there is not much of a deterrent for them to not complete the Agreement if all they have at risk monetarily is $2,000.

  Most real estate transactions today have “conditions” that for the most part need to be satisfied by the Buyer.  These can include the sale of the Buyer’s current home, securing a mortgage to complete their purchase, obtaining a satisfactory home inspection report and so on.  Conditions are typically worded such that if they have not been either satisfied or waived by the Buyer by a set date and time, “…the offer shall become null and void and the deposit shall be returned to the Buyer in full without deduction.”  Seldom are deposits “non-refundable” unless specified as such which is rare.  Sellers are as a rule not eligible to keep the Buyer’s deposit even when the Seller feels the Buyer has reneged on the terms of the Agreement. 

  Deposits are for the most part held in the trust account of the real estate Brokerage representing the Seller(s).  So what happens with the deposit when an Agreement of Purchase and Sale becomes null and void or should a conflict arise between a Seller(s) and Buyer(s) and the Agreement is not completed?

  Real estate Brokerages can release a Buyer’s deposit one of two ways.  When an Agreement is aborted, the Seller and Buyer sign a “Mutual Release.”  This releases both parties from the contract, the Brokerage holding the deposit refunds it to the Buyer(s) and life come goes.  If either the Seller or Buyer refuses to sign a Mutual Release it may be an indication that one of the two parties is going to litigate in an attempt to make the Agreement enforceable.  Should that be the case, the only way in which a Brokerage can release a deposit to the Buyer is via a Court Order.  

  If you are a Seller, you want a sufficient enough of a deposit so as to feel comfortable that the Buyer is committed.  A relatively large deposit potentially signifies that the Buyer(s) have the financial ability to complete the transaction.  As a Buyer, you naturally may want to cough up as small a deposit as possible as most deposits are held on non-interest bearing trust accounts.  This means that if your money is sitting in a real estate Brokerage’s trust account for several months, it is not earning you any interest.  As a Buyer, providing a larger deposit shows you are serious and depending on the Seller it may give you more leverage with respect to negotiating the price, closing date and other terms that you want.

  I hope you find this information helpful and I encourage your comments.

Luxury Home Sales Start 2014 With a Whimper

As was reported in my regular blog, area real estate sales in the first quarter of 2014 have gotten off to a somewhat slow start.  This winter's excessive snowfall and abnormally cold temperatures have had a profound impact on our ability to show properties and in many cases weekend road closures prevented would-be buyers from making it up here even when showing appointments had been booked.

As with the mainstream segment of our market, the upper-end price ranges or luxury home market has felt a softening of sales in the first quarter of 2014 versus 2013 with one notable exception.  Sales in the $700,000 to $800,000 range from January 1st to March 31st are five times higher than the same period last year with 10 MLS® sales having been reported in this segment compared to just 2 one year ago.  At the present time, there are 46 properties listed for sale between $700,000 and $800,000 or roughly 13 months worth of inventory.  Conversely, there are 89 active listings for homes and condominiums price above $1 million which represents 4.4 years of inventory based on the current rate of sales.

  Typically, first quarter sales in the upper price segments of our market are very strong.  I have always attributed this to the timing of year-end bonuses paid to senior executives or business owners having had a good year and thus affording them to make a large discretionary purchase as a reward.  There is seemingly no sound economic reasons to explain the weaker luxury home sales during the first quarter or 2014.  Interest rates remain low although many of these purchases are cash anyway. Consumer confidence is up and real estate remains an attractive investment for most.  

  I suspect the arrival of warmer weather will trigger an upturn in market activity overall and this will spill over into the upper end market segments as well.

Are Luxury Home Open Houses Effective

Over the past several years I have had the privilege of listing and selling some noteworthy luxury properties in the area ranging in price from $1 to $2.75 million.  Through those sales I gained some great experience working in this exclusive and extremely small segment of the market.  Further, through attending the National Association of REALTORS® conference in the U.S. I have met and kept in contact with two of the top luxury home REALTORS® in the U.S. and I have read both their books dealing with the luxury home segment.  This has and continues to give me additional insight into the luxury home market which along with my own experience I will share via this blog.

  Many sellers and REALTORS® for that matter question the value of Open Houses.  I can honestly say that in over 13 years of practicing real estate, I have never sold a home through an Open House.  I have however met many people to whom I sold another property to at some later point in time.  Properly utilized, Open Houses have always served as a great way to meet people and gain potential clients.  Every once in a while, a house will sell through an open house but it’s rare.  Times however change and the validity of holding an Open House even for an expensive luxury home should not be discounted or casually dismissed.

  

  As I have stated before, technology and primarily the Internet has had a profound impact on all manner of businesses and real estate is no exception.  Many buyers spend weeks if not months searching for properties online.  Buyers have often viewed countless listings and gathered an abundance of information before they ever talk to a REALTOR® much less step inside the front door of a home listed for sale.  An open house, properly executed even for expensive properties can serve to bridge the gap between a prospective buyer sleuthing around online versus physically getting into a property and meeting a REALTOR® with whom they can develop a relationship.

 

  Much of the real estate market here on southern Georgian Bay has traditionally been made up of secondary properties.  While some potential Buyers in this market may be moving up from a lesser property to one of greater size and value, many of these buyers currently do not reside here nor are they ultimately familiar with the market.  I often find that a great number of attendees at Open Houses ask more market related questions than they do about the property they are in.  As a REALTOR®, this creates an excellent opportunity to demonstrate your expertise, thus potentially gaining their trust as a client. 

  What’s changed in recent times however with respect to Open Houses is this. On an increasing basis however, I learn by asking questions of my Open House attendees that they have seen and have been watching the listing online.  They have never called or emailed me to inquire further but as soon as they learn of an Open House being held, they are there.  The Open House is a non-threatening way to get inside for a first-hand look without feeling pressure by contacting a salesperson.

  In my next post I will touch on the various ways in which a luxury home Open House can be organized and executed in order to generate the best results.   

Winter's Cold Grips Our Local Real Estate Market

Our adverse winter weather is continuing to have an impact on local real estate sales and while activity improved significantly in February, year-to-date sales remain well behind last year.

Sales reported through the MLS® system of the Southern Georgian Bay Association of REALTORS® in February reflected a 3% decrease from one year ago with 122 properties selling during the month compared to 126 last year.  February’s dollar volume however was up 11% due to an increase in higher price home sales.  Sales in several price ranges between $500,000 and $1 million posted significant gains over last year leading to the higher dollars among 

lower unit sales.

  Year-to-date MLS® unit sales for the first two months of the year are down 14% with 205 properties changing hands compared to 239 in 2013.  MLS® dollar sales for the year of $65.9 million are down 9% year to date.  Sales activity in 2014 is also lagging behind the first two months of 2012 with MLS® unit and dollar sales down 5% and 7% respectively.

With the exception of Grey Highlands which is showing an increase of 67% in MLS® units sales year-to-date, every other area municipality are lagging behind 2013 and weather appears to be the culprit.  Severely cold temperatures, excessive snowfall and road closures have resulted in cancelled property showings leading to less activity and reduced sales overall.  On a year-to-date basis, single family home and condominium unit sales are both down 19% from one year ago.  Conversely, we have seen some renewed interest from Buyers looking for vacant land as lot sales are up 38% this year with 22 MLS® sales reported compared to 16 after the first two months of 2013.     

  As in prior months, we continue to see a reduction in the number of new listings coming to market and expired listings are also down as well.  The monthly listings-to-sales ratio for February reflects a somewhat balanced market, and while with only being two months into the year this is not reflected in the year-to-date results, I anticipate that overall, stable market conditions will prevail through the balance of 2014.  Within certain areas and price ranges there will be exceptions.  As of this posting there are 102 active listings on our local MLS® system for properties priced above $1 million.  Based on the rate of sales for properties of this value, that represents approximately 48 months worth of available inventory.  With this amount of housing stock, sellers of properties priced above $1 million can expect much longer days-on-market and pricing expectations may have to be tempered.

Whether you are buying or selling, I am well versed in all aspects of our market so as to effectively assist you.  Please do not hesitate to contact me for a confidential no obligation discussion about your particular real estate circumstance.    

Canada's Most Expensive Properties Currently Available

While the southern Georgian Bay region is increasingly becoming home to some pretty spectacular properties, we still lag behind other parts of Canada in terms of luxury real estate and values.

  The Huffington Post has just published a slide show of some of the most expensive residential properties currently listed for sale across Canada.

 Perhaps we are not that far away from seeing multi-million dollar homes 
of this magnitude in our market as well.

How Is Our Local Luxury Home Market Different?

The Canadian luxury home market is reported to be surging ahead significantly in many markets across the country.  According to a recent article in the HuffingtonPost, sales above $1.5 million in Toronto were up 18% in 2013 while sales over $2 million in Vancouver increased 38%.  Given the high cost of just a moderate home in these two cities, $1.5 and $2 million may not be good benchmarks to track luxury home sales activity.  I have seen some pretty ramshackle homes in places like the Beaches of Toronto going for $800,000.

 As previously mentioned herein, 2013 was a good year for luxury home sales in the southern Georgian Bayarea especially above $1.5 million.  I think this indicates to some degree, similarity with Toronto (GTA) for example where $750,000 to $1 million doesn’t necessarily buy you anything really special so you’ve got to get up over $1 million or higher in order to truly buy something luxurious with the features and quality of workmanship that belies what Buyers in this niche are looking for. The big differences I have noted between the local luxury home market and that of say of the GTA lies in a couple of distinct areas.

  First appears to be the amount of available inventory.  ReMax has released a report which says 1,908 properties over $1.5 million sold in the GTA last year with 1,000 luxury properties currently listed.  If these numbers are correct then the GTA has little more than 6 months worth of available inventory.  As of this posting we have 105 listings on the Southern Georgian Bay Association of REALTORS® MLS® system which represents 48 months of available inventory in a market segment that is somewhat fickle. The total value of the current local housing inventory over $1 million is $181.9 million so again that is 5 years of inventory. 

  

  Secondly, the 26 sales in our area last year represented $36.3 million or roughly 5.8% of total sales volume yet in terms of units, 26 sales in less than 2% of total single family homes sold.  By comparison, the ReMax report indicated that luxury home sales in Oakville last year were 5% of units sold double that of our local market.  In terms of dollars, Oakville’s luxury home sales amounted to 16% of total dollars sold or three times what we experienced here.

  What does all this mean?   Luxury home sellers in southern Georgian Bay need to understand that this is a much smaller market segment that places like Toronto, Oakville and other urban centres.  As such, they can expect a much longer days-on-market here locally than luxury property sellers in the aforementioned cities.  Secondly, the luxury home market here has at any given time, a much higher level of available inventory for sale.  This again will result in much longer days on market but also makes the whole issue of pricing your property much more important.  

  If you are looking to buy or have a luxury property in this market area to sell, I would be delighted to discuss and share my knowledge with you in confidence.

Pricing Your Luxury Property To Sell

So you’ve decided to sell your home, condo or perhaps it’s a vacant lot.  As per my prior post, the #1 reason that properties sell or fail to attract a buyer is PRICE.  Sure, we can debate the matter location, condition and the desirability of the neighbourhood etc. but at the end of the day these are all factors relative to price.

  No matter how well maintained and up-to-date your home is or the fact it is in a great location, price is ultimately the most significant factor in securing a Buyer.  Today’s Buyers are forever fearful of over-paying.  Further, the Internet has enabled Buyers and Sellers to become very knowledgeable and informed.  Via their online searching and comparative shopping, they get a good sense of values. They know which properties have been listed for an extended periods of time and they determine by looking at photos and virtual tours which ones are physically worth going to view. 

 I would hazard to guess that when most Sellers decide to sell and contact a REALTOR®, the scenario unfolds like this.  The REALTOR® arrives at the property with little if any information to review with Mr. and Mrs. Seller other than perhaps a couple of MLS® data sheets for some other sales in the area.  They take a tour of the home with the Sellers then sit down to discuss price.  The REALTOR® will have a price in mind that they have arrived at based on the comparable MLS® sales they may have printed off in conjunction with their just completed tour.  Mr. and Mrs. Seller will also have a price in mind.  The Seller’s price will be based on the following:

• What they paid for the property plus any money they have since put into it.
• What they feel the home would cost to replace if you were to build it today.
• What they need to get out of the home in order to move on to the next home they wish to purchase.
• What their neighbours have told them their property is worth.  This price is usually high as the neighbour is selfishly protecting their own interests and  the perceived value or their property.

  The fact is, none of the above matters and is of little consequence to a Buyer(s).  The property is ultimately worth what a willing Buyer is prepared to pay.  For the most part, the most they are willing to pay is an amount equivalent to what other comparable homes in the area have sold for.  The REALTORS® job is to analyze the market, look at what has sold, what hasn't and also take a look at what is currently listed for sale as that is what the Seller(s) will be competing with.

  In order to effectively do the necessary legwork to establish price, as a Market Value Appraiser I prefer the two stage listing approach.  The first visit is to gather information about the subject property which can then be used to compare it to other recent sales in the area.  Differences in lot size, location, the size of the house, number of bathrooms, features, finishes and other criteria all need to be reviewed, with dollar adjustments made for the many differences that are bound to exist.  Only then can you arrive at a realistic selling and listing price.  In some instances and this is especially true with higher end homes, they may be no good comparables.  Nonetheless, conclusions can and still be drawn in order to arrive at a realistic price that will resonate with Buyers.  This entire process takes some research and skill.  It’s not a matter of pulling a number out the air so-to-speak or simply listing it for what the Sellers want.  Doing so will probably result in the property being listed for an inordinately long length of time coupled with the need for multiple price reductions in order to secure a sale.  When this scenario unfolds, the property may in all likelihood, sell for less money than it would have if priced correctly at the start.

  If you are interviewing a REALTOR® with the intent of listing your property for sale, the onus is on the REALTOR® to provide you with the following information:

• A summary of other properties in the area that have sold?
• How do they compare to yours in terms of location, size, condition & features etc?       
•  How long did it take for these properties to sell?
•  What was the listing versus sale prices for these properties?
•  What other area properties are currently for sale that you will be competing  with?

  There are other questions to ask as well but I think you get my point.  Selling your property is more than having a REALTOR® walk through and throwing out a price with nothing to substantiate it.  Doing so will inevitably result in an unduly lengthy days on market, the need for multiple price increases and in the end, a sale price lower than what you mind have attained early on had the property been priced so as to be in the market versus just on the market.

  Pricing a luxury or higher-end home is often a much different matter than what I have described above.  Finding a comparable sale(s) to a $1 or $2 million plus property can be a challenge. If you are the owner(s) of a luxury, high end property I will in the next post on my luxury home blog  “Southern Georgian Bay CarriageTrade Homes” talk about the process used to arrive at an appropriate price for that distinctive one-of-a-kind property.

  One closing comment.  Everyday I see REALTOR® ads offering "FREE Home Evaluations."  With about 100,000 REALTORS® in Canada there are tens of thousands of "FREE Home Evaluations" being offered.  As a seller, insist on obtaining one that is done thoroughly and professionally utilizing some of the guidelines I have explained above.

Why Is My Luxury Home Not Selling?

We are now almost one and a half months into the new year.  Despite the relentlessly cold weather we have been having, spring will indeed come and with it, an upturn in the real estate market as traditionally happens once the better weather arrives.  

  As previously reported, 2013 was the best year in six years in terms of the number of properties sold through our local MLS® system.  Further, it was also a “record” year in terms of dollars sold with almost $625 million in properties changing hands via MLS® sales in our market area.  Luxury home sales in the area were also strong last year with 26 properties selling over $1 million.  With all this positive news, some sellers are probably asking themselves; “Why is my house (or condo) not selling?”  

  Earlier this week I completed an update course in order to renew my MVA (Market Value Appraiser) designation.  This designation must be renewed every two years and it requires taking some additional courses relative to appraisal in order to do so.  The course I completed was titled “Pricing to Sell” and it reinforced some of the various appraisal methods and steps taken in order to accurately value a property.  As I worked my way through the materials it really struck me that a large percentage of REALTORS® are not aware of and or do not follow the necessary steps to establish accurate property valuations.   

  The #1 reason that properties do not sell is PRICE. I know this may seem like I am over simplifying things but let’s look at the follow scenarios:

1 - The home make simply be just over priced.

2 - The home may be priced too high for the neighbourhood.  Having the most    

      expensive home in the area is not a good thing.

3 - The house may be dated and in need of renovation and upgrades.

4 - The house may be situated in an area that for some reason has become 

      undesirable ie: increased traffic or it has been re-zoned so as to allow 

      commercial uses etc.
5 - There is a lot of housing inventory on the market to compete with.

6 - Market conditions have changed, perhaps interest rates have gone up or the 

      economy has slowed down.

  Every one of these six reasons is in some way tied to price.  The first two are obvious, but what about the other?  If a home is dated and in need of some renovations, the price needs to reflect that.  It needs to be priced in such a way that if the buyer is in fact interested in the property, they will want to purchase it at a price that will allow them to undertake and finance the required.  Some buyers may just simply not want to get into a "project" and there is little you can do about that.  

  As for items #4 and #5, if a home is situated in an area where the land use and zoning have changed or say a new highway went in, you may need to price it lower in order to attract a buyer.  If there is an abundance of inventory listed for sale as there now is, you may have to lower the price to attract a buyer.  As of this post there are 104 properties listed for sale over $1 million.  If the economy has slowed or interest rates have increased etc. then again the price may have to be adjusted to account for those factors again in order to attract a buyer.  One way or another all of these reasons tie back to the issue of price.

 At the end of the day, maybe you made a bad choice in the REALTOR®  you selected to list and market your property.  That too may relate back to price.  Did they prepare a comprehensive evaluation which they reviewed with you to arrive at the current market value of your home?  Many times they don't instead just throwing out a price at which to list the property without doing any research or worse, they listed it at a price dictated by the seller.

 As we approach spring and head into the prime selling season, I am going to spend some time talking about price as it is the most crucial component in getting your home or other property SOLD!  In my next post I will review several ways in which a property evaluation can be prepared in order to arrive at a realistic market price.  There is a difference between having your property "on the market" versus "in the market" and my desire is to show you how you arrive at the latter.  Stay tuned.....

The Luxury Segment Is The Main Driver For Economic Growth

From time to time we have all heard and probably lamented over the old sayings “…. the rich get richer” or “the haves versus the have-nots.” Due to sweeping economic changes like reductions in the North American manufacturing sector etc., the middle class appears to indeed be shrinking.  If anyone doubts this trend, the New York Times just ran an interesting article attesting to this and while it speaks to the U.S. let’s face it, we are pretty much cut from the same cloth here in Canada.

  One only needs to look at our own local economy which has changed dramatically in recent years with many of our manufacturers closing their doors only to have those higher paying jobs replaced by minimum wage retail or service sector employment.  Not surprising we are not alone in this situation as across Canada and the U.S. those businesses that cater to “middle-of-the-road” consumers ie: retailers such as Sears are struggling while high end stores like Saks Fifth Avenueand Neiman Marcus are flourishing and for the first time, are moving into Canada staking their claim of the growing high end retail sector in this country.  

  As further reported in the New York Times article, General Electric is experiencing a significant growth in sales of its Cafe´ upper end appliance line.  Whether or not they actually cook is irrelevant.  Affluent Buyers or those building a luxury property obviously want and are prepared to pay for high-end appliances with features like double ovens, hot water dispensers and more.  This fact relates back to my prior post wherein I stated luxury properties need to have the requisite amenities such as these in order to both attract a high net work buyer as well as to substantial your asking price.  I have found that among affluent Buyers, quality has now become more important than quality.  A 6,000 or 7,000 square foot home with middle of the road features, finishes and amenities will not command the same level of interest as a 4,000 square foot residence that has been superbly finished and contains the latest in high tech features.  
How does your home stack up?  

Announcing My Live Play - Georgian Bay APP

I have commented from time to time in prior posts about how much technology has changed not just our daily lives.  It has also had a profound impact on entire industries and professions including the role of REALTORS®.

  Smartphone and mobile device usage has grown significantly over the past couple of years.  It’s not just our kid’s texting that has increased mobile device usage.  CBC News reported back in July of last year that Smartphone usage by Canadian adults had increased 33% from the prior year.  With this in mind, I am very pleased and excited to announce the launch of my own real estate APP, Live Play – Georgian Bay which I believe is the first such APP for our area. 

   

  Available for iPhone, iPad and Android devices as well as HTML for Blackberry and similar platforms,  Live Play – Georgian Bay is aimed at providing consumers with current and relevant information that will assist them with their real estate buying and selling needs.  Our role as REALTORS® has changed, much of it driven by technology but also by the changing demands of today’s consumer.  As professionals, consumers expect and need their REALTOR® to readily provide a degree of information, knowledge and service with respect to real estate that is consistent with the degree of expertise they receive from their lawyer or accountant.

  More than just an MLS® search tool, I have developed Live Play – Georgian Bay in such a manner as to give users access to an abundance of information via their Smarthphone or mobile device including my quarterly Georgian Triangle Real Estate News and Condo Communique newsletters, blog posts, open house notices, access to Royal LePAGE TV help videos and more.  I have endeavoured to develop an APP that will both engage and inform my clients and users.  My intent is to build an online community, a place where users can share photos of their new or perhaps dream home, their latest home renovation project or to simply ask questions or post comments.    

  While I believe my APP is the first of its kind in the area, it will not remain static or stale.  I will continue to refine its features in tandem with today’s ever changing technology and in accordance with what people want.  As REALTORS® we must demonstrate our knowledge and willingness to assist consumers without expecting anything in immediate return.  With my APP and other initiatives such as this blog, I not only want to keep my current and past clients informed about our local real estate market but I hope my efforts will provide a degree knowledge and service to others, earning their respect, trust and perhaps future real estate business in the years ahead.

 Please click on this link to download the correct APP for your respective device.  After exploring its use I would love to hear your feedback and do not hesitate to mention other features you would like to see. 

Dealing With the Home Inspection Part 2

When dealing with the terms of an Agreement of Purchase and Sale, Sellers and Buyers often face-off over issues that me be identified as the result of the Buyer’s home inspection, which can jeopardize not only the negotiation process but the very sale itself

  Just like humans, every home will have its own personality if you will.  Certain characteristics and yes issues that may or may not constitute a “fault” and a reason for a Buyer to either abort the purchase, or solicit a price reduction.   Just as Sellers need to address the appearance of their home from a cosmetic standpoint when listing their home for sale, attention should also be paid to maintenance issues that have been neglected.  Does the roof need to be repaired or replaced?  Is there evidence of water leaks such as stains in the ceiling?  Are plumbing faucets leaking, have some windows lost their seals and are fogged up.  These are all factors that (a) represent how well a home has been maintained and (b) are  items that a good home inspector will identify and flag in a report along with some issues that may not be readily visible to the casual observer.

Depending on the property, Sellers may be well advised to have their own home inspection done prior to listing.  This is not meant to take the place of a Buyer’s home inspection but it will serve top identify items that should be addressed prior to listing the home for sale and eventually haggling with a Buyer over.

  From my experience, most Buyers are reasonable.  Buyers looking at a century old farmhouse will for the most part be prepared to deal with a host of things that a home inspector may find.  That is part of owning an old house.  Someone buying a newer home however may not be so tolerant.  Regular maintenance of small items that have been neglected will probably not be questioned by a Buyer as most of these will be duly noted when the Buyer views the property.  Personally, I do not feel that a Buyer should be looking to amend a price to repair items that were clearly visible when they viewed the property that is simply a Buyer trying to take advantage of someone.   It is the larger unforeseen items that are uncovered via a home inspection that will no doubt raise concerns and perhaps bring about a change of heart with the Buyer.  Is there inadequate insulation in the attic?  Is their aluminum or in the case of older homes, knob and tube wiring present?  Galvanized pipe in older homes is another issue that is of concern?  Is the furnace and or air conditioner, or the swimming pools liner on their last legs?  These are just a small sample of what a home inspection might uncover that could impact a Buyer’s decision to move forward with their purchase of a specific property.

  As a REALTOR®, I may handle the situation differently if I am representing the interests of a Buyer versus a Seller.  The following are some of the options available to Buyers and Sellers in terms of how to negotiate dealing with issues that may arise from a home inspection. 

• -          First, the Buyer may simply not fulfill or waive their home inspection condition by the required date.  As such the deal becomes null and void and the buyer’s deposit is returned to them.
• -          Second, the Buyer requests (in writing) that in exchange for the Seller fixing the items at the Sellers expense prior to the closing date, the Buyer will remove their condition and firm up the purchase.
• -           Third, the Buyer can ask to have the previously agreed to price amended ie: reduced in order that they do the needed repairs at their own expense after closing.  This price reduction can be done up front or it may be done as a credit to the Buyer on closing.
  

 Sometimes a Seller may dig in their heels and insist that they will do nothing to remedy a problem that may have been identified in a home inspection.  That is most likely not the most prudent position to take.   Being unwilling to fix a problem or consenting to a price adjustment may result in losing the sale and they will only have to face the same issue with the next Buyer that comes along.

  As always, my best advice to Sellers is to get your home in top shape before you list it for sale.  In the event your home needs something like a new roof, furnace or other such item and the funds are simply not available that’s okay.  Your REALTOR® can price the property accordingly which should take the item off the table when it comes time to negotiate with a Buyer as the issue has theoretically at least already been dealt with via the price.

  For additional information about home inspections, see my Home Cents Help Tip “The Importance of a Home InspectionBefore Buying.”

Dealing With The Home Inspection Condition

One of the often contentious issues regarding the sale of a property is the attainment of a satisfactory home inspection report.  This aspect of selling a home or condo need not be the confrontational situation that it sometimes turns out to be and sometimes it’s not the property but rather the REALTORS® and or the home inspector that is to blame.

  Most Agreements of Purchase and Sale threes days will contain a home inspection condition which has been inserted on behalf of the Buyer.  What does this condition stipulate?  The condition is worded as such that the offer is “conditional” upon the Buyer obtaining a home inspection report that is satisfactory to the Buyer in the Buyer’s sole and absolute discretion.   Failing this, the offer can become null and void and the Buyer’s deposit is returned in full to the Buyer without deduction.  In the event issues with the home are uncovered during an inspection, there are several remedies which can be made so as to keep the Agreement alive.

  Sometimes when representing a Buyer where we have completed a home inspection, the Seller’s REALTOR® will call me asking, “..did the house pass the home inspection?”  A home inspection is not a test.  There is no passing or failing.  A home inspection is simply a report detailing as best as the inspector can following a visual inspection, the condition of the property at that point in time.  No home is perfect not even new or ultra expensive ones.  One home inspector that I use and respect, often does inspections on homes in new subdivisions.  Time and again he has found the same issues in most if not all homes built by a particular builder.  It’s not necessarily a fault or even a building code violation, it’s just a repetitive characteristic found in these homes or condos that may pose a problem down the road or may detract from the energy efficiency of the property etc.

  Just as a home inspection is not meant to be a test, it’s also not meant to be a ways and means of driving down a previously agreed to price.  Often Sellers approach the home inspection condition with fear and trepidation and that need not be the case.  Again when home inspections create problems, it’s often the REALTOR® or the home inspector that is to blame. In my next post I will cover what Sellers can do in preparation for the inevitable home inspection and some of the available options that Buyers and Sellers have when addressing items of concern that has arisen during the home inspection process.

Just Out - The Latest Issue of My Georgian Triangle Real Estate News

Further to my last post, luxury home sales in the southern Georgian Bay area during 2013 remained strong yet as we start 2014, there remains a significant level of available inventory over the $1 million mark.  

The latest issue of my Georgian Triangle Real Estate News summarizing the entire local real estate market for 2013 now available to 
download.

Luxury Home Sales Above $1.5 Million Double in 2013

Despite dire predictions from various media sources regarding Canada’s real estate market being on the verge of a major correction, sales across the country in 2013 remained very robust.  

  Here is the southern Georgian Bay area, MLS® sales in 2013 totaled $624.5 million, up 9% from 2012 and a new all time high.  MLS® single family home sales in terms of units sold were up 4% while 
condominium sales increased 6% during 2013. 

  The upper end of the market reflected the same positive growth with luxury homes very much in demand especially those priced over $1.5 million.  Sales over $1 million totaled 31 properties up from 26 sales in 2012.  MLS® unit sales between $1 and $1.5 million were actually 1 less than the prior year with 21 sales reported versus 22 in 2012.  Meanwhile, sales above the $1.5 million threshold more than doubled with 10 MLS® sales reported compared to just 4 in 2012. 

  The accompanying charts illustrates the five year trend for MLS® sales in our area from 2009 to 2013.  On this chart I have also included the number of current MLS® listings in the area over $1 million.  Based on the rate of sales for $1 million+ properties that we experienced in 2013, there is currently a 48 month inventory of properties priced at $1 million or more in our marketplace.       

  Successfully attracting a buyer for properties in this segment of the market is very  much dependent on price.  Potential buyers for luxury, high-end properties are perhaps the savviest of consumers.  Obviously there is an abundance of resale inventory for them to choose from.  If you are contemplating either selling or purchasing a high-end, luxury home in our area during 2014, please feel free to contact me for a candid, confidential and no obligation discussion about your needs or plans and put my expertise to work for you.  Happy New Year!