I do believe there are some agents that are better suited to working with buyers than others. I think there are 3 main characteristics that make a great buyer agent. By evaluating these characteristics against agents you interview, it can provide some valuable insight as to what they will be like to work with.
A good buyer agent will be patient to work with and won’t try to sell you a home quickly and move on “to the next transaction”. I personally recommend looking at least 15 different properties in the same neighbourhood before even putting an offer. You really need to look at a lot of homes or condos to get a good idea of value, specific features you need in a home and the right location. Ask your agent how they work with buyers – that will give you a good indication of their patience level.
An agent needs to provide you with all the information you need to make an informed decision. In reality, a real estate agent’s opinion should not matter, rather they should give you the tools to make the decision yourself. Information such as:
sales history of the property,
why the sellers are selling,
when the sellers want to close,
how the sellers arrived at their list price,
what upgrades have been completed, and
the agent should provide recent comparable sales in the neighbourhood.
Does the agent genuinely care about your needs? This is often difficult to judge from the onset, but another question might be: do they display the qualities that are important to you in an agent? In other words, do they want to guide you through this process and make this a successful move for you? Ultimately, when you are buying a house or condo, it’s the agent’s responsibility to represent your interests and put together an offer with your terms, your conditions and your price. The agent may provide some guidance on these items, but ultimately it is your decision, not theirs.
During your home search, you’ve likely come across homes that are priced ridiculously high. I see it quite frequently, perhaps now more than ever. It continues to be a seller’s market and when my buyers come across one of these over-priced listings, they often assume that the sellers have become greedy and are trying to get a very high price for their home. I have a different theory altogether.
There are real estate agents that will tell sellers what they want to hear: their house is worth more than they think. They often do so with one purpose in mind - to put their For Sale sign on the front lawn. In real estate agent “speak” this is called “buying the listing”. A For Sale sign is great advertising for the real estate agent, and an effective way to promote their name. It also shows their clients that they are busy and active.
Ultimately having a For Sale sign on the front lawn for 3 or 4 months makes the agent look bad and brings negativity to the seller. I personally think this is a terrible way to do business. Stringing along a seller and giving them false hope is not a way to build a business in my opinion.
When I meet with prospective sellers, I always give them a range of what I think the house is worth based on current market conditions, not based on their needs or what they want to hear. While I am always sympathetic to everyone’s financial situation, I will give the sellers a realistic price for what the home will sell for, even if they don’t like what I am saying. I also find it equally important to give an honest assessment of what work needs to be completed to make the house more marketable to buyers. I might offer to show you other homes for sale that a potential buyer will look at in your price range to show you how your home should be priced.
Going back to the original question – why should you as a buyer try to avoid these sellers? Firstly, they have unrealistic expectations for the true value of their home and in fact these sellers may not truly be a seller and simply testing the market – which it makes it difficult for them accept an offer at the market value.
The rules of the marketing game change all the time. With the advent of the internet, email and social networking, the competition for your attention has never been greater. Marketers need to differentiate themselves from others or risk becoming irrelevant.
Think of what you’re doing to market your house, your product or your services. It needs to be different to capture the attention of others… how does your customer distinguish your product from all the others that you’re competing against? Think outside the box!
Not too long ago, I had the thought to try something different with one of my rental properties: re-rent the property using a high quality video tour.
The results were startling.
I’ve used professional videos with many of my client’s homes for sale and achieved great success… so why not use the same blueprint with my rental property?
In the end, I rented the property at a higher rental amount, my property rented significantly faster and I had to spend a lot less time marketing the property to qualified tenants.
For a property I plan to own for many years, I now have a high quality marketing video that I will be able to re-use every time I have a vacancy! Well worth the initial cost and effort in my opinion.
With my real estate brokerage, I’m also constantly looking to stay ahead of the marketing curve. One strategy I follow is to borrow marketing best practices from other industries and apply these to my real estate brokerage.
Today, I will leave you with this to think about… Have you considered borrowing marketing ideas from other industries and applying them to your business?
One of the most common questions I get from clients is how do I get more cash flow from my real estate investments in Toronto? Toronto is so expensive how do I invest in this market and not just break even every month?
If cash flow is what you’re looking for… you might want to invest a few minutes and read this post.
For those of you who do not know, amongst my real estate portfolio, I own two condos that I rent out, fully furnished, to what I call the “Bay Street executive”. My target market is the expat or the executive who is looking for a temporary place to call home (and does not want to live in a hotel room).
My experience to date has been fantastic and I’ve had some great tenants… Which include large multinational companies such as Kinross, Price Waterhouse, Scotiabank and Rogers Communications.
Actually, my best tenant is a national television celebrity and she loves living in the unit… so much so, she’s extended her lease three times already! She still lives in the unit and the best part is that her television studio is paying the rent!
Having rented my units out for more than the last year and a half, I thought it would be best to summarize what’s involved for you as an investor:
Increased cash flow: The “market rent” for a 1BR+Den unit is about $2,900 per month and a 2BR unit can fetch almost $4,000 a month. If your unit has a parking spot, that can add another $200-$300 in income each month.
To give you an idea what kind of cash flow that brings in for an investor today, it is about $550 a month (for a 1BR + Den) or over a $850 a month for a 2BR unit. (These awesome cash flow numbers are based on properties you can buy right now!).
Corporations are paying the rent (not individuals): Your rent is paid each month by a large Canadian or multinational corporations, making your rent that much more secure.
Demand for furnished units is high: I actually have a waiting list for my units and have had to turn people away. There simply isn’t enough supply of quality furnished units available downtown Toronto. To give you some perspective, one of my units is coming vacant this coming July and I already had a tenant commit to take the unit two months before it’s actually vacant.
Easy management: Managing my condo unit is easy now that I have built my team. Since my condos are less than 2 years old, I never get calls for broken toilets or things of that nature.
Last week was a real eye opener when I sat down with a client who was ready to dismiss the idea based on five false assumptions.
[Assumption #1] Executive tenants are hard to find: They actually aren’t – Toronto has the epicenter of corporate Canada and as I said before quality furnished units are in short supply. The team and relationships I’ve built has made locating these types of tenants surprisingly quite easy.
[Assumption #2] $4,000 a month rent isn’t realistic! (I’m going to let you in on a little secret - one of my 2BR units currently rents for $5,400 a month). Location and type of unit play a large role in the demand for furnished rentals, but you have to remember the market for these is less-price sensitive than other type of rentals. The corporation (your customer) want their top-end employees to be happy in their move to Toronto and often lifestyle is the more determining factor over price.
[Assumption #3] I need to buy a fancy million dollar condo: If you’re looking at buying a 2BR unit, you can find good units for $550k to $650k depending on location. You don’t need to buy at the Shangri-La to make this investment work, but you do need to buy in the right building and location. As a matter of fact, there are less than a dozen of condo buildings in all of Toronto where these furnished rentals will actually work.
[Assumption #4] Buying all the furniture myself takes a lot of time that I don’t have! Your time is very valuable and for those of you who don’t want to furnish the units yourself – I have a brilliant designer who will get your rental condo furnished efficiently!
[Assumption #5] This seems like a lot of work! Owning real estate is just like owning a business. The number one mistake I see real estate investors make is not treating their real estate like a business. If you set your business up correctly from the start, it doesn’t have to be a lot of work. Now that I have setup my systems properly I spend less than 1 hour per month on these two units combined.
I know what you’re thinking – this sounds wonderful, but there has to be some risk to this type of real estate investment? Yes, owning real estate carries it’s risk (whether that is buying a condo, duplex or apartment building) and you should always carefully weigh your risk and complete your due diligence.
As always, if you have questions or would like to find out more about these furnished rental opportunities feel free to email me and I’d be happy to share my experience with you.
I met with a prospective client, Janet who wanted to sell her cute bungalow just north of the Danforth. She was looking to move into the better school district just West of where they were. When I viewed her home, I asked her to point out many of the upgrades she had done since she bought it. As we sat down, I asked her to tell me a little more about her motivation to sell, as I wanted to get a better idea of the bigger picture.
Before asking me what I thought her home was worth, she said that she needed $450,000 to make the move. She must have seen my facial expression completely change as she asked me if that was realistic. I gave her a copy of the Home Selling Guide that I wrote and included in it was a list of recent sales. I pointed out that the range in her neighbourhood for a similar type of property was between $410k to $420k. No bungalow in her area has ever sold for more.
She kept going back to what she “needed” to sell for to make the move. I could tell she was getting very emotional. I felt like her dream-squasher, telling her the price was not realistic.
I said to Janet that the only people that would benefit by listing her home at $450,000 would be her competition.
“What do you mean – the competition?” She asked.
I explained that an average buyer views 12.4 homes in a particular neighbourhood before submitting an offer. If her house was priced outside the range of what it is worth, then it would make the other homes on the market more appealing and help those sell – not hers!
I invited Janet to view 3 homes for sale in her neighbourhood with me the following day to see what I was talking about. I asked her try to view these homes as a possible buyer and compare against her home priced at $450,000.
Janet was very quiet and didn’t say much during these viewings. Once we left the third home Janet turned to me and said: “My house won’t sell for $450,000. I can see that now.”
Janet agreed that it’s very important to know who you’re competing against. On the advice of her mortgage broker, Janet decided holding off on selling her house until the spring. By that time she’ll have full-time hours at work, which will help her qualify for the mortgage she needs to make the move.
I know Janet really appreciated the honest no b.s. advice that I gave her. My business is completely built on referrals and I will not make any unrealistic promises I can not keep.
I recently sat down with a real estate agent who’s new to the business and we were talking about negotiation strategies and some recent interactions I had with other agents. Before I delve into the topic further, I do have a confession to make: I love to negotiate... It’s one of my favorite parts of the business. Not to mention that I’ve had many interesting negotiating tales along the way (some of them shared on this blog!).
So, the question came up as to when do you start negotiating with the other party? I really believe you start negotiating when you have your first interaction with the buying or selling agent. If you start negotiating when the offer is just in front of you, it’s too late to start negotiating in my opinion. Allow me to explain.
Before I write up an offer, I’ll always have a conversation with the selling agent to get as much information I can about the property, the seller and their situation. I call this the “posturing conversation”. I have a set of questions that I always ask, and that gives me a good sense of what their motivation levels are like and what they would be looking for in an offer. Once I’ve had this conversation with the agent, I relay the information to my clients and give them my read on the situation. At that point, I listen for my client’s feedback on how they would like to proceed.
First impressions are critical in any negotiations. When I represent buyers, I don’t like to reveal anything about my clients until an offer is presented. The reason being, I only want to show our intentions when it is appropriate to do so. For instance, if we’re viewing an open house, I’ll tell my clients that they shouldn’t say anything during the viewing since the listing agent is always within an ear-shot of visitors. There is a possibility they may use what we say against us during a negotiation. The same applies if you’re the selling agent at an open house… what you reveal to potential buyers will have material impact on buyers perception and will ultimately be reflected in any offer that might come.
In any negotiation, there will be some “give and take”. In the end, you don’t want to “give” more than you have to. Be aware that the negotiations often begin before any offer is even drawn on paper.
I hope everyone enjoyed the last few weeks of summer! I recently had a coffee with a friend of mine who was thinking about opening up his own business. I told him about my first business venture and thought that the lessons I learned then were just as applicable to my real estate business today.
My first official foray into small business came at the ripe age of 13… when I sold hockey cards at a sports card convention. At the time, I got together with 3 of my buddies and we decided to rent a booth at a local community center for a 1 day convention. The cost to rent the booth was $40 and we agreed to split it 4 ways. It sounds strange to say this now, but back then the $10 investment to rent the booth seemed steep to each of us.
I remembered when we first arrived at the convention center to setup our display many of the other vendors came by to see what hockey cards “these kids” were selling. I distinctly remember this seasoned vendor came to our table and offering me ridiculously low prices on some of my cards. I politely said “no thanks, in no hurry to sell” and off he went mumbling some rude remark under his beard.
The doors opened to the public shortly thereafter and I made my first sale about 45 minutes later. Overall the day was a success and I had sold a couple of hundred dollars of inventory and easily covered the cost of the booth. I really enjoyed the experience and I knew that this wouldn’t be my last entrepreneurial venture.
So here are 5 lessons that I learned that day:
1. Don’t be afraid to take calculated risks: The old saying rings true: Nothing ventured, nothing gained. I remember doing a pros/cons list before signing up for the convention and after that I felt that a $10 investment was worth the risk. In hindsight, the experience I received from this 1-day venture was by far the most valuable asset I gained.
2. Know your market: As nerdy as this might sound, I made it a hobby of mine to memorize the “Beckett’s Hockey Card Price Guide Book” (it’s very similar to the stock tables found in newspapers today). At the end of the day, I knew the market value of my inventory inside out.
3. Be patient: If I accepted the first offer I got for any of my hockey cards that day, I probably would have made half of what I actually did. Being patient and knowing when to accept a good offer was key.
4. Be professional: That summer, my grandfather and I built a wooden display case for the purposes of this sports card show. It looked very professional and made it easy to prominently display my inventory to customers. I also think our potential customers might have taken us more seriously as well.
5. Love what you do: At the time, I loved hockey cards, so that was a great business for me to be involved in. Since that time I’ve been involved as an owner in a number of businesses, with my real estate brokerage being my latest which was opened almost 3 years ago (although I was a real estate salesperson for more than 3 years before that point). I really do love operating the real estate brokerage and without a doubt has been my favorite business to date. Probably because it is the most emotionally rewarding business I have ever been a part of.
It’s amazing… the lessons I learned that day are just as applicable today than they were back then. Hope you enjoyed reading this blog post as much as I did writing it!
I was recently part of a very interesting negotiation on an offer to purchase for a condo in the West-end of Toronto. I was representing the buyers in this particular transaction and the seller’s agent – Gino – requested that we negotiate the entire offer by SMS Text Messaging. No, I am not kidding.
This process was a very interesting experience and definitely eye opening – something that I wanted to share with you today.
Now, I consider myself a person who’s very comfortable with technology, yet I have never negotiated an offer this way. Call me old school, but I really feel that negotiations of any kind should be done in person or at the very least over the telephone.
There is an important “human” element to negotiations that gets lost when transmitting electronic messages on our mobile devices. As a matter of fact, depending on the circumstances, negotiating this way can potentially put you at a disadvantage with the other party. Let me explain.
So, when Gino the listing agent, asked me if I was “text-friendly” I had no idea he was asking me to negotiate this way. I originally requested to Gino that I meet him and his sellers in person so I can highlight the benefits of our offer, but Gino declined. I was stunned to tell you the truth, as I do think it hurt his clients more than it helped.
I had a good discussion with Gino earlier that day and got some very valuable information about why the sellers were selling and what their personal situation was. Interestingly, Gino said they received an offer last week that fell apart at the last minute and divulged all of the juicy details of the offer they were going to accept. I learned that the closing date was extremely important to them and what price they previously accepted. With this valuable information I spoke with my clients and gave them a good picture of the seller’s situation. We agreed to give them the closing they wanted and from a strategic perspective gave them our “best offer” we were prepared to give them, which coincidentally was several thousand less than they previously accepted.
So at Gino’s request I emailed the offer and waited for him to arrive at his seller’s home.
Not too long thereafter I got a text from Gino that read: “Reviewed the offer. Any movement on the price?”
“No, Gino. As I said before this is the best my clients are prepared to do right now.”
There was a pause. About 5 minutes later, I got another buzz on my phone. It’s Gino again. He asks: “How about the conditions, can we reduce the number of days to 3?”
I reply: “No, their bank has specifically requested 5 days condition period. Let’s stick to that.”
Gino comes back several minutes later and says: “About the price, it’s lower than my clients really want.”
I reply: “Ok. This is my clients best offer.”
At this point we offered $261,500 which is about $5,000 less than they previously accepted. A week has gone by and I know they need to close by the end of June and their window of getting this closing date is shrinking fast. Our offer was a good one and slightly below market value based on recent sales in the building.
Gino comes back at $264,000.
“Sorry Gino. That won’t work.” I quickly texted.
Another 10 minutes goes by and my phone buzzes again. “Ok, my clients are willing to do $262,000 – they really like the sound of that number.”
In my head I am thinking, what does the sound of a number have to do with anything?? Realizing that’s just an expression I reply: “Not going to work. As I said before this is our best offer. Your clients can take it as is or wait for another one”.
I knew there some risk that they could decline our offer and wait for another, but for $500.00 difference and understanding that we had their preferred closing date, they would be silly not to take our offer.
At this point, I don’t hear from Gino for a good 45 minutes. I check to see if my phone is still operational. Check. Full signal strength. Check. Battery at 80%. Check.
Not to long thereafter Gino texted: “We have a deal!”
I then spoke with my clients and they were thrilled about their new home. There were also somewhat surprised that they accepted our offer without any changes whatsoever.
The next day I called Gino to give him an update with how things are progressing on our end, and I asked him: “Out of curiosity, why did you want to negotiate the offer by SMS Text Message?” He replied, it’s more speedy and efficient. While that may be true to some extent, I told him that I would have preferred to meet the sellers in person and present our offer this way.
I couldn’t help but think that Gino didn’t do his clients any favours by negotiating this way. He knew virtually nothing about my clients (he never asked) and was more focused at getting the deal done quickly than negotiating a better offer for his clients. Very rarely is there no give-and-take in any contract. Granted, we were able to determine that the closing date was of utmost importance to them – and we gave them that. But still, I can’t help but wonder if the outcome would have been different if we didn’t negotiate by texting back and forth.
Technology makes it so easy to communicate with others quickly and efficiently, however I do think we rely on technology a little too much to the detriment of the human element. Sometimes the old fashioned way might actually be the better way.
It’s fair to say that if you’re buying a house in Toronto today, you are in all likelihood going to be entering into a multiple offer situation. There is just not enough “quality” inventory to satisfy demand… and that is the reality of Toronto real estate today.
Most buyers assume that the highest price always wins the bidding war. That might be true in many cases, however recently I was part of a very interesting negotiation in a multiple offer that demonstrated that price isn’t the only motivator for sellers… Here is what transpired.
I was working with a really nice couple Tom and Anna. They have two great kids, and wanted to move to a bigger house. Being in a good school district was important to them so we narrowed our search to a few select Toronto neighbourhoods. I showed them this nice four bedroom home, close to their school of choice and they instantly fell in love with the house. The problem was though, it was at the top end of their budget… and the house was priced for a bidding war. I could tell Tom and Anna were a little uncomfortable spending much more than the asking price, so later that night we sat down and put together a sound plan for our offer. I really wanted Tom and Anna to stay within their comfort zone and not get carried away with their offer price.
Fast forward to offer night, I was one of two competing offers. I called the listing agent ahead of time to get the rules and how the bidding process was going to work. The listing agent was well respected and a long time agent in the community and said that both offers would only have one shot to present their offer and the seller would choose the best offer.
Anytime I am in a multiple offer situation, I always want to be there in person to present the offer. I want to be able to look at the sellers in the eye and tell my client’s story, why they love the house and why they should accept our offer.
Deep down inside I knew there was a good chance the other offer had a higher price. So, when it was my turn to present our offer, I decided to highlight the “emotional” aspects our offer.
You see, the people who were selling this house… are my clients… only 20 years ago. You can tell from the photos on the wall, this has been their family home for many years with many happy family memories. This home is where their kids learned to ride their bikes, and had hours of fun playing basketball in the driveway… Their kids are now all grown up and out of the house. I can appreciate emotionally speaking, selling a home for the past twenty years might be a difficult one, so I was hoping my client’s story would resonate with them.
I proceeded to tell them how wonderful my clients were and how this would be their family home, just like theirs was for the past twenty years. Their kids are about the same age as theirs were when they moved in…
I could tell that my client’s story struck a cord with the sellers. They loved the idea that a “younger version” of them was buying the house. We proceeded to review our offer and I highlighted many of the positive features. When they looked at the price, I could also tell from their reaction that we were in second position. They wanted our offer so badly to be higher than the other one.
After reviewing the offer, they wanted a couple of minutes to discuss both offers and let us know their final decision. I waited in a separate meeting room, which felt like an eternity. Over twenty minutes go by and the listing agent comes into the meeting room to give me an update... She says: “They’re still mulling it over. They really like you and your clients. Although the other offer is quite a bit higher than yours.”
I was surprised they were taking this long to decide. That meant we still had a shot! I asked the agent if I could go back and say a few final words to the sellers (to help push our offer over the top). She said her sellers really wanted to discuss it privately.
Interestingly the listing agent added: “You’re good. The way you presented that offer was great. It seemed so genuine and sincere.” I replied: “Thank you, I appreciate that… it was genuine and sincere! I really meant everything I said in there.”
The listing agent’s phone buzzes and goes back to see her sellers.
Another 10 minutes go by and the listing agent comes to the meeting room where I am sitting and says: “Great offer. However the sellers are going to accept the other offer.”
My clients were disappointed they didn’t get this house. But, they did make their best offer and were ok with the outcome.
Later that day, I saw the sale price posted… the other offer was almost $30k above ours! I was shocked! I was shocked that the sellers were even considering our offer… $30k is a pretty big difference in my mind. Even though we didn’t get our offer accepted, it just goes to show you sometimes the intangibles can make a difference. Don’t always assume that price is the difference. As in this case, an important part of the decision is the emotional side of the equation. Sellers often have strong emotional ties to their home and knowing that someone feels the same way about their home as they do can go a long way.
So, you’re probably wondering what happened with Tom and Anna? Three weeks later, we found another great home and this time their offer was accepted!
Not too long ago, I had a really exciting phone call from a client of mine that I wanted to share with you. Before I share with you what the phone call was about, let me give you some background information first.
I have known Michael for about 15 years now. Ever since I‘ve known Michael, he’s always talked about the cottage he dreamed of owning. I remember he would have a very vivid picture of how his cottage would look like, where it would be, what lake it would be on and how fun his summers would be there.
Michael was always interested in how our real estate investments were doing and would love to pick my brain on the topic. I remember one day he called me over to his house so he can share his new “plan” with me. He saw that real estate investment would be the ideal tool to help him achieve his goal of owning a cottage. Being the analytical person that he his, he shared with me his plan to buy 2 rental properties with the idea that 10 years later he would be able to buy his dream cottage. I reviewed his numbers very carefully and his plan made a lot of sense. As property values go up, coupled with mortgage pay-down and positive cash flow – it would help build him the nest egg needed for his cottage. I asked him about his retirement plan, and working for a large multi-national, he was confident that his company pension and RRSPs would allow him for a comfortable retirement.
His goal was simple and straightforward: these two investment properties would be the tool needed to make his dream of owning a cottage a reality.
So, Michael bought his first investment property about 5 years ago, and then his second the following year. He bought two smaller triplexes in the Beaches area of Toronto. With each of my clients, I provide them with a comprehensive annual review of their real estate holdings to give them an idea how their real estate investments are performing. He loved these reports – each year Michael would see how much closer he was to reaching his goal. Shortly after he received his review from me last year he told me it was time to sell both of his rental properties and that he had what he needed to make the cottage purchase a reality.
I listed both properties for him and they both sold in less than 5 days and above the asking price… He was obviously thrilled! He joked and said that he would now upgrade to a 4 Bedroom cottage with a snazzy speedboat! Anyhow, I was very happy for him that things worked out so well.
Michael spent most of last summer and fall season looking for that perfect cottage. We’d touch base every now and again and he’d love to share stories of some of the places he’d seen – although nothing was quite what he was looking for.
But, very recently Michael called and shared the good news – he bought the perfect cottage. When he described it to me it was virtually identical to the one he described to me almost 15 years ago! It was perfect for him and his family and he was so excited to spend the upcoming summer there. At the end of the phone call, Michael had invited my wife and I to spend a weekend there this summer and celebrate reaching his goal. I was completely flattered by the invitation and I’m really looking forward to going up there this summer. I think only then it will truly hit home that was a part of helping Michael reach his goal.
So, I leave you with this thought: Do you have a specific goal with your real estate? If not perhaps spend a few minutes this week and write down what you want real estate to do for you.