January 30, 2014
What the Real Estate Industry In Toronto Really Looks Like
The Toronto Real Estate Board (TREB) currently has over 38,000 agents trading in real estate. While this number is even shocking to those of us in the industry, even more shocking is how little in the way of real estate trades the majority of these agents do. The diagram above is both a warning to consumers and what I personally feel is a clear indication that for so many licensed agents, trading in real estate is a hobby, or part time endeavor that has the effect of lowering the standards and professionalism of our industry.
When 30% of licensed agents aren’t involved in a real estate deal and nearly another 40% of agents are only involved with 1 to 4 trades a year, this combined segment represents 70% of the real estate industry, or approximately 27,000 agents! Personally I feel this is not only bad for the industry, but bad for the consumer!!
I've always believed that the barrier to entry to a career in real estate is to low. Just about anyone who can show a piece of I.D, scrape together a couple thousand dollars and pass some very basic courses (don’t worry, if they fail the exam they can take it over multiple times) and presto, they're unleashed upon the public with the expectation and the promise of being able to help an unsuspecting consumer navigate one of the largest financial transactions of their life.
So why does it matter that 27,000 agents only do 0 - 4 deals a year? With such limited involvement actually trading in real estate, how can these agents actually develop the skills, knowledge and experience to effectively represent and protect their clients best interests. The Ontario Real Estate Association, which is responsible for licensing agents, continues to pump them out and there are now companies that require almost no investment from an agent trading under the brokerage banner. It's feasible for someone to keep their real estate license, pursue another job and wait for someone needing the services of a realtor to fall into their lap! The problem here is that these moonlighting agents are not likely to be keeping up with the market nor developing the skill set to effectively represent their clients.
An even more cynical perspective to consider is that for these moonlighting agents who receive little to no income from being licensed, when the prospect of being paid for simply being a realtor in name comes along, whose best interest do you think they’re going to be acting in? Are they going to be willing to tell a client they should walk away from a deal because it no longer makes sense or it’s the right thing to do?
I've painted some broad strokes here but I continually come across agents whose level of incompetence is astounding when the stakes for their client and mine are so high! It's for this reason I work with the industry leader in Toronto, Re/Max Hallmark Realty. New agents aren't unleashed upon the world without extensive training and both them and experienced agents have access to a vast network of expertise and training that is unparalleled in the industry. Being a professional realtor means committing to it as a full time career, continually developing your skills, staying on top of the market as well as changes in the industry, legal issues, and ensuring you're always able to protect your client’s best interests.
The take away from this is that consumers have to do their due diligence when it comes to hiring an agent. If you're going to work with someone for the biggest transaction of your life then your level of comfort with their skills and ability should be reflected in your process to hire them. At the end of the day, a skilled agent will be able to find you the home you want, make sure you're making wise decisions, stick handle any issues that arise, and protect you when the other side is falling short!
January 27, 2014
Understand How Credit Scoring Works and How it Can Impact Your Ability to Get a Mortgage
When it comes to applying for a mortgage having a good credit rating is one of the key factors in being approved. Putting other variables aside (i.e. income), having a good credit rating will enable you to access the best mortgage rates. With a poor rating your bank will want to charge you a higher interest rate and as a result your cost to borrow and monthly payments go up!
Investing some time to improve your credit rating and maintain a good one, can go a long way in saving you money over the long term. Credit scoring works by looking at five main categories based on your past activity and credit habits. Each category has a different weight/importance in the overall determination. The five categories and their associated weights are:
1. Payment History – 35%: This category is given the most weight as the lender is looking at your past history and patterns of payment, with more weight being given to more recent history. If you’ve consistently been late with payments or missed a payment this will affect your score negatively. Likewise, consistently making your payments on time will build your score. If this has been a problem for you then start working on making payments when due and your credit rating will improve over time.
2. Credit Balance – 30% - Here lenders are looking to see how much of your available credit you are actually using. It’s better to have a few credit cards with low balances than one or two cards where you’re at or close to the limit. It’s suggested you try and use use only 35% of a card's available credit. Remember the bank is looking to see that you can use credit responsibly and not spend it all just because it’s available….priority one for them is ensuring that you’ll be able to make your mortgage payments over the long term!
3. Credit History – 15%: Generally the longer you’ve had access to credit and your accounts have been maintained in good standing, the better your credit score.
4. Credit Inquiries – 10%: Credit inquiries have a minimal to no impact on your actual score, however having a number of credit inquiries in a short period of time can indicate that you’re shopping around for credit which may result in you being deemed a higher risk, especially if you have a limited credit history. If you’re shopping around for a mortgage with different lenders try to do this within a two week period as these inquiries will usually be combined and treated as a single one.
5. Types of Credit – 10%: Lenders will look at your mix of loans, credit accounts vs retail accounts, etc. If you have a number of the buy-now-pay later type “cards” i.e. the future shop or the brick, this can indicate to the bank a future risk if this is your preferred method of paying for things.
If you're thinking of getting a mortgage or doing any type of financial planning, it's a good idea to review your credit report to make sure it's accurate as well as where you currently stand in terms of your credit score. If you keep the five items above in mind and use your credit accordingly, you'll be able to improve your rating or ensure you keep a good one.
To order a free copy of your credit score contact either Equifax or Transunion Canada:
Equifax - 1-800-465-7166
January 27, 2014
"Five Great Ideas Toronto Never Built"
Toronto's had some great plans and projects on the books that never came to fruition. The Toronto Star has profiled five of these projects which makes for an interesting read and what could have been. Funny enough one of the ideas is the Downtown Relief Line which first came up in 1910! http://bit.ly/1f778A8
January 25, 2014
A Few of My Favorite Things...From the Interior Design Show
Check out some of these great ideas and products featured at this year's Interior Design Show!
Yesterday was a fun day at the interior design show imagining how I could incorporate some of the great ideas and products being showcased into my house (if I had an unlimited budget of course). In case you can't make it, here's a list of some of my favorite things and links to the companies websites should you want to explore yourself:
1. The RSA Solo40 - This was an amazingly spacious and functional 480 sf house built by Altius RSA Rapid System Architecture. The Solo40 a pre-fabricated home that can be used as a primary residence, vacation home, studio, or accessory property. If you had the space in your backyard (and the City let you), you could have it plunked down and voila, instant rental property. A lot of condo developers could take a page out of this company's floor plan design when it comes to creating an efficient and practical layout! http://sustain.ca/models-pricing/solo-40/
2. Pre-engineered Brick Panels - I've seen the faux brick walls used in properties before, but what really caught my attention was Century Architexture Inc's use of a painted/aged brick and vintage painted sign to create a very authentic looking loft/industrial warehouse feel. The wall itself becomes a piece of art. If you currently live in a soft loft or condo, and wanted to differentiate your unit from others, or create a more authentic loft feel, consider doing something like this to make your place stand out. Something like this would also look very cool in your kitchen! www.ReDiscoverBrick.com
3.Walls of Windows - There were a number of window and door companies featured at the show, but two in particular stood out for me, www.GlassWalls.ca and www.BigFootDoor.com. I love floor to ceiling window walls that slide open to create a seamless transition between indoor and outdoor spaces. The reality is I live in a typical Toronto victorian so there's no hope of ever being able to add these to my house, but there's definately a lot of them in the dream house I'm building in my head
4. Concrete - One of the highlights for me was seeing a wall consisting of concrete panels with an imprint of the map of the wold. The company, Dekko Concrete (not to be confused with Deco Labels...eh hmm), does a number of different concrete products including fireplace mantels, outdoor firepits, architecutral features and cladding, all in a range of colours. For some cool ideas on how you can use concrete to add a different texture to your home, check out their website at www.dekko.ca
5. Wood Burning Fireplaces - In most of the houses I lived in as a kid (we moved alot!) we always had a wood burning fireplace. This is something else I can't seem to figure out where I could put in my house though I really want one! The company Stûv America had some very sleak fireplace designs that opened up the possibility for maybe being able to accomodate one when spaces is limited. Their rotating wood burning stoves were neat and had a very small footprint so they can be accomodated in smaller spaces. www.stuvamerica.com/en
6. Reclaimed Wood: Whether it's a feature wall, furniture, art, flooring, or even a kitchen, reclaimed wood is finding its way into our homes (and especially bars and restaurants). Maybe it's because we live in Canada that we're drawn to peices made from reclaimed wood with their weathered look from our harsh climate that inastricably links us to the outdoors or maybe it's just because they're really cool to look at and add a distinctive ambiance. Anazao Inc (anazao means: To live again - recover life, to be restored to a correct life, of one which returns to a better moral state, to revive, regain strength and vigour) was the only company featuring this product and by the look of their website, you probably don't need to go anywhere else to find what you're looking for when it comes to reclaimed wood! www.anazao.ca
January 21, 2014
Creative Home Buying Strategies
Worried about never being able to afford a home in Toronto? Check out some of these buying strategies that can help get you on the property ladder without being house rich and cash poor!
The CBC recently aired a segment on the increasing price of Canadian real estate and how home buyers are employing creative buying strategies to afford a home in Canada's most expensive markets. Other than profiling a developer in Vancouver that is building homes with mortgage helper basement apartments, there wasn't much more offered in the way of "creative buying strategies". So in addition to what the CBC report mentioned, here's a few ideas worth considering when buying in an expensive real estate market:
1. The Basement Apartment: Having a rentable basement apartment is one of the best ways to help with the expenses of home ownership. Whether you decide to have a tenant or not, having the option is golden, especially once interest rates start to rise and you want to have extra room in your monthly budget. If a house doesn't have a basement apartment, then look for a home with the potential for one. This would include having a separate entrance and good ceiling height. If it already has a bathroom this would be a bonus. If there's no separate entrance, then be aware that the cost to excavate and put one in could be around $5000+.
2. Get a Friend: One trend I've noticed more and more of is joint purchases between friends and siblings. Buying a duplex, splitting the costs and sharing the house between two units gives each person their own private living space and someone to share expenses with. The condo version of this would be to buy a unit with at least two bedrooms and if you're not purchasing with someone else, rent out the second bedroom to subsidize your costs.
3. Buy Small(er): When thinking about the type of home you want, think about how much space you really need. A larger house will tend to be more expensive (location aside) and have higher maintenance and utility costs, while a smaller home is more likely to come with smaller bills
4. Get in Before Everyone Else Does: Identify neighbourhoods that are on the verge of a renaissance (sorry...I really wanted to use that word). These are the areas where you'll get more bang for your buck, and when you go to sell and the neighbourhood has emerged, you stand to have a nice chunk of cash to move up on the property ladder with.
5. Buy with the Future in Mind: On average people move every 5 - 7 years. Who knows what the price of a home will be then, so consider buying a home that would allow you to build an extension or increase the liveable square footage and give you the room you'll need in the future. Harder to do with a condo, so consider looking at older buildings which tend to have a better price per/square foot where you can get a bigger unit for a cheaper price.
If you have any creative ideas for affording a home in Toronto, share them in the comments below
January 18, 2014
"Why Real Estate Contracts Must Be Properly Accepted"...AKA "Why You Need to Hire a Competent Agent!"
You'd think all real estate agents would know that to protect their client's best interests they need a properly executed Agreement of Purchase and Sale. Unfortunately not the case. If you're looking to buy or sell a home read this to learn the importance of doing your due diligence when hiring an agent!
In his recent Toronto Star Article, Mark Weisleder, a respected real estate lawyer, details a case in which a contract was negotiated between a buyer and seller who ended up in court because the deal couldn't close on the scheduled day as a tenant had refused to move out. The buyers sued the sellers for failing to close and provide vacant possession.
What is actually remarkable about this case is the judge found that a valid contract (Agreement of Purchase and Sale) never existed!! While negotiating the offer and transmitting it back and forth the agents had failed to include the signature/acceptance page and have it signed by their clients. Instead they allowed a verbal acceptance of the contract. When the signature page was finally added, it was almost 3 weeks past the offers valid time frame.
If there had been a valid contract, the judge was prepared to award the buyers damages, as a result they got nothing. Mark concludes the article with some important lessons learned, but fundamentally this article is about ensuring that you are working with a professional and competent Realtor.
It is a fundamental responsibility and a requirement under then Real Estate and Business Brokers Act, 2002 Code of Ethics that Realtors must provide their clients with "Conscientious and Competent Service, protect a client's Best Interests, and provide Written and Legible Agreements". The most basic of these is ensuring your client has a valid contract for the purchase or sale of their home. It is not a client's responsibility to ensure the right pages are signed and the timelines for ensuring a valid contract are adhered to, it's the responsibility of the agent they've hired!
A negotiated and accepted agreement of purchase and sale is the culmination of all our work as Realtors when helping a client to find a property to purchase or sell their home. Dropping the ball when it comes to ensuring the successful execution of a real estate contract which fulfills the very reason for which a Realtor is hired, is not acceptable!
So for the public, the lessons from this case are:
- Not all agents are created equal, do your due diligence and make sure you're hiring a professional.
- Ask the question of your agent, "if you're negotiating with someone that "doesn't know what they're doing", how will you ensure my interests are protected?"
- Ensure your agent has gone through the contracts you've been asked to sign and explains what each clause means and their implications.
To read the full article on this case, check out: http://bit.ly/19KVDAV
January 16, 2014
Is the Spring Market Here Already?
In such a competitive housing market, looking for any advantage, including freezing weather, to find a home and avoid multiple, or at least fewer competitive offers, is a good idea, but it looks like others are catching on!
Check out this article in the Globe & Mail: http://bit.ly/19y24qT
January 2, 2014
Happy New Year
Best Wishes for a Happy and Healthy 2014!!
January 2, 2014
Some Tips to Being Happier in 2014
If you’re like most people you’ve been planning your New Year’s resolutions. Typical resolutions revolve around lifestyle, health improvements, personal and work goals or ambitions. One of the things we hope for, whether directly or indirectly, as a by-product of our efforts is to be happier. We have a tendency to think that if we achieve our New Year’s resolutions (or any goal for that matter), we’ll be happier. Well just in case you fall short of your resolutions, there’s no reason you still can’t be happier in 2014 and that’s where this great article I read in “Outside” magazine comes in. Not one of the magazines I typically read, but the catchy cover title drew me in, “What Makes us Happy. Play More. Get Dirty. Eat Shrimp. 37 Simple Habits that will Change Your Life.” What I liked about the article is most of the suggestions are simple and based on scientific research. Below are some of the ideas I really liked and have resolved to make a part of my 2014!
Get Dirty: No really, get dirty. Apparently working in soil has a positive effect on our mood because we’re exposed to “cheerful germs.” If you’re not a gardiner or don’t have your own patch of dirt to play in, you can still be exposed to these happy germs by taking a walk in the great outdoors.
Make Every Day Saturday: I really liked this one. As the article states, we’re “happier on the weekends.” The reason for this is we have a greater sense of freedom on the weekend and the ability to make choices (I’d say it peaks on Saturday and dwindles as Sunday comes to an end). The “happiness” we experience on the weekend (and in general) can be enhanced by spending it with people we care about. One of the ways to get this feeling on a more regular basis is to schedule a couple of hours away from home during the week with no plans and do something spontaneous to give yourself that “TGIF buzz.”
Crank the Tunes: Listening to music you like has a chemical impact on your brain with the greatest effect happening “just before and during favorite parts of a song.” If you’ve got songs you associate with happy times in your life, create a playlist and start listening!
Drink Up (Water that is…but don’t worry the article talks about the benefits of moderate drinking): Dehydration has a negative impact on your mood. Drinking more water is good for you for so many reasons, but if it can put you in a better mood as well, why not?
Go Screenless: We all know we need to do this but here’s some interesting research the articles talks about:
- an increased use of “Facebook meant less sense of wellbeing”
- the happiest people watch less than an hour of tv a day (based on National Geographic’s True Happiness Test Survey)
- unplugging completely at least one night a week helped a group of consultants function better as a team and be more productive in a shorter period of time.
Give Your Time: We all like that feeling of doing something nice for someone or going out of our way to help a stranger. Well, do more of it and make that feeling something consistent in your life by volunteering. “Volunteers live longer, are less depressed and have enhanced feelings of well-being.”
Get High on Chocolate: A study found that depressed people tend to consume more chocolate. The question is why? The answer: chocolate can act as a relaxant and tranquilizer, even the “smell of chocolate can slow down brain waves” to help you feel calmer. If you’re trying to stay away from this sweet goodness (I always have a hard time resisting a Dairy Milk at a checkout line), consider getting some coco beans and having them in a jar to enjoy that chocolaty smell! I once took clients to see a house where the owner had sprinkled coco beans near the front door so as soon as you walked up to the house you smelt chocolate. My clients bought the house so maybe that had something to do with them liking the place…
For more tips and details on things that can improve your sense of happiness, check out the full article here: http://ow.ly/sdyPB. By implementing more than one of these ideas you’ll have an overall enhanced benefit from your incremental efforts and hopefully be happier in 2014! Good luck.
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