Being an enthusiastic thrifter of CDs, books, and phones, I spend a lot of time on Facebook marketplace looking for good deals.
There is a default message you can click to send a quick message to a seller asking if the item is still available. “Hi. Is this still available?”
A lot of sellers get annoyed with it because they get a bunch of these messages, and after the seller replies, they get no response.
When I hit that default message, I always followup with another message right away asking where I can pick up the item and if there is flexibility with the price (if I feel it is over priced).
The same sort of thing happens when I list a house for sale and it hits the public side of the MLS (realtor.ca).
I get a bunch of emails like this:
General inquiry for 35 MAIN AVE, Toronto, Ontario M7G3V5, #V8398866 – it’s the equivalent of the default Facebook Marketplace message.
A simple click and it’s sent.
The default message is always the same,
Message from Makayla:
I would appreciate more information about 35 MAIN AVE, Toronto, Ontario M7G3V5.
and so is my response,
Hi Makayla, what information are you looking for?
Most of my replies go unanswered. Some just want to know about open houses, others would like me to take them through it because their agent isn’t available.
Ya, OK.
This morning, I was surprised with this message:
Message from Holly:
I would appreciate more information about 35 MAIN AVE, Toronto, Ontario M7G3V5.
Which had this note underneath:
Hi Mike,
Could you please inquire with the owners if they are willing to rent to own?
Holly
My goodness, Holly, why didn’t I think to ask the homeowners if they would consider a rent-to-own option from the beginning?
Because people want to sell their houses when they list it for sale.
Most sellers need the proceeds of the sale to be able to afford their next house.
I have a sneaky suspicion of where Holly came from; she either read a book like Rich Dad, Poor Dad or went to a Scott McGivilray seminar (or similar) where they have these programs and options to be able to find cash flowing properties, or home buying alternatives, like using other people’s money to buy homes.
There’s a sucker born every minute, or so I’ve been told.
If you’ve never heard of this scheme, rent-to-own is a home buying arrangement that lets people initially rent a home with the possibility of purchasing it later. This rarely effective option is for those who want to own a home but have yet to save enough money for a down payment.
In other words, they can’t afford to buy a home in the traditional way through a mortgage lender like a bank.
The Liberal government website says, that in a typical rent-to-own scenario, a buyer commits to renting a property for a specified period of time, during which they have the option to buy the home at a predetermined price before the lease expires. This setup allows tenants time to build up funds for a down payment.
The agreement is set between the landlord and the tenant, with the understanding that as time progresses, the down payment accumulates, enabling the tenant to purchase the home from the landlord eventually. The key to these agreements includes a clearly defined option to buy at the end of the lease term and a set timeline for exercising this option.
How Does Rent To Own Work
Rent-to-own lets you use part of your monthly rent to save for buying a home later. It locks in the home’s price upfront to help you plan your finances.
But what if the property value changes before the set date? More on that later.
Like renting normally, you pay a set amount each month for a set time. But with rent-to-own, some of that money eventually goes towards owning the home.
There are two options:
1. **Lease-option agreement**: You can decide not to buy the home at the end of your lease with no extra fees.
2. **Lease-purchase agreement**: You agree to buy the home at the end of your lease. There may be penalties if you change your mind or can’t get a mortgage.
The agreement spells out how long you’ll rent, the rent amount, money set aside for the down payment, when you can move in, the home’s price, and when the contract ends. It’s important to have a lawyer review everything so you know what to expect.
Here’s a simple example:
– **Agreed Purchase Price**: $390,000
– **Option to Purchase Deposit**: $9,750 (due when you move in)
– **Amount Owed After 3 Years**: $380,250
– **5% Down Payment Needed**: $19,012.50
– **Monthly Rent**: $1,500
– **Extra Money Saved for Down Payment**: $600/month
– **Total Saved for Down Payment in 3 Years**: $21,600
– **Remaining Money After 5% Down**: $2,587.50
In this example, after renting for three years, you’d save $21,600 towards the down payment. After putting down 5% ($19,012.50), you’d have $2,587.50 left, which could be used for other costs. This shows how rent-to-own works and why it’s important to plan ahead.
Pros of rent-to-own:
Rent-to-own is designed to help Canadians enter the real estate market more easily. If you’re thinking about this option, here are some reasons why it can be beneficial:
1. **Build your savings**: Renters can save directly and through rent credits towards the home purchase. This allows time to address financial issues and achieve savings goals.
2. **Live in your future home**: Rent-to-own lets you live in the home you plan to buy, fostering a sense of pride and allowing time to assess the community and living conditions.
Cons of rent-to-own:
However, like any home buying process, there are cons to consider. Here are some potential risks:
1. **Property restrictions**: Some leases may restrict property modifications or features during the rental period.
2. **Property value fluctuations**: If the property’s value drops during the lease, you might still need to pay the agreed-upon purchase price. Understanding the agreement’s terms regarding appreciation is crucial.
3. **Missed payments**: Missing payments could jeopardize the agreement, possibly resulting in the loss of accumulated down payments or other penalties.
You see, Holly, there is much more to consider with your little plan to rent-to-own a home.
A hell of a lot more than simply asking the sellers if they would consider this option.
I get it; everyone wants a bad guy to blame all their problems on.
For people who think they’re entitled to own a home yet have complained about home prices in Toronto, even when they could have bought a house in 2006 in the East End, Leslieville, and the Junction for $500,000, they blame everyone from banks to all levels of government, and especially us dickhead realtors for inflating the price of a home in Toronto.
Then, some people hate their agents after they fail to buy a house after several attempts, lumping all agents in the same boat as greedy, keeping them from being able to buy a house.
Sure, some blame should be put on the agent they chose to represent them, but not the homeowner’s agent.
The seller’s agent is there for one purpose: to get the best deal possible for the home sellers.
Period.
It’s one thing to decide to use the agent that appears in your social feeds doing dances and home tours where they waive you into each room in fast motion.
A better idea is to choose an agent with experience analyzing the price range of what a home will sell for so your time isn’t wasted on homes you could never afford.
Here’s an example of a recent listing of mine. I had ten competing offers on a vacant house in Pickering, listed for $699,000. My evaluation suggested it would sell in the $820,000 to $840,00 range. Seven of the nine agents expected me to give them the “price expectations” of my seller.
In other words, they were clueless about determining the price range at which the house would sell.
One agent asked me if I would advise her on the side after offers were submitted. She had two separate buyers with offers.
No conflict of interest there, huh?
I’ve always suspected this happens between agents from certain unreputable brokerages, including some of the big-name brokerages you’ve heard of.
But that’s another post for another day.
My answer to the agents who asked about price expectations was always the same: the seller is looking for the best offer.
I gave them my seller’s preferred closing date, June 24th or sooner.
Why would I tell any agent what the seller was expecting? My “job” is to get the most favourable terms and selling price possible for my client.
If I gave agents the expected price, how many would pay more? Why would they? I’ve tipped my hand.
I think this is all an echo of the past decade of a red-hot seller’s market, during which buyer agents would submit an offer, say, $200,000 more than the asking price, only to find that the house sold for $330,000 more than the asking price.
It could also be that because they have never experienced a truly balanced market, they’ve never had to evaluate a house and likely have never had the option to negotiate a price lower than the asking price when there was an opportunity.
When I first got into the industry in 2004, I would submit offers of $40,000 less than the asking price, riddled with conditions and clauses that would get laughed at by selling agents today, a deposit of $5,000. I would give the seller 3 days irrevocably because the house had already been on the market for three months.
Those were the days. Selling 3,500 square foot homes in Aurora for $600,000.
Let’s look at how this offer night went, and please pay attention to the closing dates. I’ll explain later.
Agent one:
Offer price: $750,001
Deposit: $15,000
Closing date: July 11
Conditions: none
Agent two:
Offer price: $777,900
Deposit: $40,000
Closing date: July 4
Conditions: none
Agent three:
Offer price: $770,000
Deposit: $45,000
Closing date: June 27
Conditions: home inspection and insurance
Agent four (This agent had offers for two buyers):
Buyer one:
Offer price: $770,786
Deposit: $45,000
Closing date: June 26
Conditions: none
Buyer two:
Offer price: $785,786
Deposit: $40,000
Closing date: June 25
Conditions: none
Agent five:
Offer price: $800,000
Deposit: $50,000
Closing date: June 27
Conditions: none
Agent six:
Offer price: $808,000
Deposit: $35,000
Closing date: June 20
Conditions: none
Agent seven:
Offer price: $670,000
Deposit: $60,000
Closing date: July 19
Conditions: home inspection and insurance
Agent eight:
Offer price: $779,000
Deposit: $30,000
Closing date: July 9
Conditions: none
Agent nine:
Offer price: $850,000
Deposit: $50,000
Closing date: June 21
Conditions: none
The choice is obvious: who wins here?
Take the 850, get it signed immediately, and we’re done.
I’ve done my job and made my client a boatload of money, right?
That’s what an inexperienced agent would have done. What’s the saying, “A bird in hand is worth two in the bush,” or something?
Here’s where my experience with negotiations comes into play.
I set Agent Nine’s offer aside.
I called agents five and six. They are within my estimated selling price range, and experience tells me with the size of their deposit, they likely have left money off the table and have room to improve. I let them know where they stand regarding offer strength.
The other agent’s offers were either too far away on price to work with or, if you look at their closing dates, were too far past what I had told them the preferred closing date was.
See what I mean about choosing your agent? Did the agents not tell their clients about the closing date, or did they simply not pay attention?
I called and thanked them for their offers, but we will be working with another offer.
Agent Four insists on having an opportunity to improve her offers. I told her she was too far off and we’d already decided.
If, by chance, one of those offers (or both) comes back and is higher than Agent Nine’s, then they will both be given one final opportunity to improve.
As it happens, Agent Five improved their offer price to $860,000 (Agent Six came up to $828,000), so both Agent Nine and Five were given a final opportunity to give their final and best offer.
They were once again reminded that closing before June 25 was important.
Agent Five returned with $875,100, and Agent Nine with $871,000.
Which offer did the seller end up working with and why?
Recall earlier when I said to pay attention to the closing date. A certain tax being threatened (“we’re only asking the top 1% to pay their fair share.. “) would cost a lot more in tax than $4,100.
Agent Five’s clients were livid—how can we have the highest offer and not get the house? When I reminded them that the closing date was important and ended up being the determining factor, they said their mortgage agent wouldn’t allow them to close sooner than 30 days because it would require them to resubmit paperwork, which made no sense to me.
Then, they promised me, hand to God, that if we accept their offer, they will 100% be able to close on June 24 once the offer has been approved by the mortgage underwriter.
I told them I appreciated their promise, but if they can’t move the closing date now, there is a good chance they won’t be able to do it later, and we didn’t want to take that risk.
Do her agents hold my client’s decision against me? Do they now think I’m the bad guy for not accepting their offer? It was always my client’s decision, not mine, but I’ll be the blame in their eyes.
What about the other people who submitted offers?
Do they see the final selling price and blame their agent for not giving them a realistic selling range?
Am I the asshole agent for “inflating” the final selling price?
Is my seller to blame for accepting the highest price (even if it wasn’t)?
Do you see how some people blame others for their inability to buy a home?
Condo living can be fantastic, but it may not be for everyone. In this post, I’ll throughly explain how to buy a condo for the first time.
Points to consider before you buy a condo for the first time
You want to live in an urban setting
Most condos are located in cities or close-in suburbs.
You don’t need your car
Limited parking and the need to walk to your unit with groceries may be factors.
You’re not handy
Condo management takes care of exterior maintenance, so you won’t have to worry about it.
You loathe yard work
Condos typically don’t require yard maintenance; any green space is maintained by the association.
You love being around people
Condo living offers frequent interactions with neighbors and community events.
You like getting in your extra steps
Taking out the trash and retrieving mail may involve a bit of walking.
You don’t want to be house-poor
Condos are generally less expensive than single-family homes, though there are additional fees.
You don’t mind rules
Condo associations have rules, addressing issues like fees, parking, pets, and remodeling.
You travel a lot
Condos are a good option for frequent travelers who don’t want to worry about home maintenance.
You don’t have pets
Some condos allow pets, but there may be restrictions on breeds and sizes.
The Bottom Line:
Condo living can be a great option, especially for those who want a more affordable housing choice, appreciate community living, and prefer not to deal with extensive maintenance tasks.
Types of Condo Buildings
When you begin searching for your ideal condo, you’ll discover various types of condo buildings available. Here are the main ones you’ll find in our area:
High-rise:
Tall buildings with at least seven stories (or more, depending on local definitions).
Always equipped with an elevator.
Mid-rise:
Multi-story buildings, typically between four and seven stories, with an elevator.
Condo townhouses:
Multi-level structures in rows, sharing common walls.
Detached-condos:
Standalone units that do not share any walls.
Choosing the right type may seem overwhelming, but the info below can help you weigh the pros and cons of each:
If you have a baby, a walk-up may not be ideal.
If you walk your dog frequently, you might want to avoid high-rises.
For privacy lovers, a townhouse or detached condo could be preferable.
Once you’ve narrowed down your preferred type, consider the location within the building or community:
Do you want to be near the elevator?
Is walking up to your unit from the lobby important?
Do you prefer proximity to amenities like the pool or fitness center?
How far are you willing to walk to retrieve your mail?
The Bottom Line
Before diving into your search and buy a condo for the first time, educate yourself on the various types and their suitability for your lifestyle. With an experienced Realtor by your side, you’ll confidently find the perfect condo and community.
Different Types of Condos
Understanding the differences between condos, townhouses, and co-ops is crucial when house hunting, as it can impact certian things such as home renovations and updates, rules, monthly fees, and ownership structure.
Condos
Owners own the interior walls of their unit.
Common spaces are collectively owned by all unit owners.
Monthly fees cover property maintenance.
Unit size influences fees and voting power.
Customization is possible, but check condo documents for restrictions.
Townhouses
Owners own the home and land (fee simple ownership).
Responsible for all exterior maintenance, including the roof.
Some may be part of an HOA with aesthetic rules.
Lower HOA fees compared to condos, paid monthly, quarterly, or yearly.
Co-Ops
Ownership is like buying shares in a corporation.
The co-op corporation owns the building and land.
Buyers purchase shares and are assigned the right to occupy a specific unit.
Fees are higher, covering property taxes, maintenance, and the underlying mortgage.
Strict rules on renting and pets; higher down payments often required.
Co-op boards vet potential owners, involving information submission and interviews.
Prices may be lower than condos, but they can be harder to sell.
Some lenders may not offer loans for co-ops; approval is needed.
In summary, condos offer shared ownership of common spaces, townhouses provide more independence with exterior responsibilities, and co-ops involve buying shares in a corporation with strict rules.
If you have questions about buying any of these property types, feel free to reach out to me. I’m more than happy and answer your questions and assist you in navigating the condo search and buying process.
Moving From a Condo to a House
Considering the move from condo living to a single-family home? Here’s what you need to know, broken down into the upsides and downsides:
The Upsides
Privacy
No more shared walls or elevator small talk.
More Space
Enjoy separation between bedrooms and living areas.
More Storage
Attics, basements, sheds, and more for additional storage.
More Time
Skip waiting for elevators and walking down halls.
No More Condo Fees
While homeownership has costs, say goodbye to monthly condo fees.
No More Rules
Freedom from condo restrictions – get a bigger dog, play music late.
Decorate as You Please
Personalize your space without restrictions.
A Yard
Plant a garden or landscape as you wish, and no mandatory walks for your pet.
Your Mail Comes to You
No more trips to the mailroom; your mail comes directly to your home.
The Downsides
Hefty Initial Expenses
Furnishing new rooms, buying tools like lawnmowers, shovels, etc.
Higher Maintenance Costs
Exterior maintenance, like roof and windows, becomes your responsibility.
Higher Utility Costs
More square footage means higher heating and cooling bills, and new bills for water, cable, trash, gym membership, etc.
More Maintenance
Lawn care, snow shoveling, gutter cleaning, and more responsibilities.
Remembering the Trash
No more convenient chutes; you need to take trash cans to the curb.
The Bottom Line
Moving from a condo to a house comes with pros and cons. Assess when you’re ready for more space, privacy, and additional responsibilities. The decision depends on your preferences and readiness for the changes homeownership brings.
Want to talk it through? Let me know! I’m always happy to chat about your real estate goals and what makes the most sense for you.
Thinking about buying a condo in Toronto or the Greater Toronto Area? Here are some easy-to-understand tips to help you navigate the process and buy a condo for the first time:
Taking out the Trash
Know the trash disposal process in advance—whether there’s a chute, basement location, or an outside area. Small detail, big impact.
The Washer and Dryer
Check if the unit has a washer/dryer. If not, find out about common laundry options. Having one in the unit can impact resale value.
Location of the Unit
Consider proximity to the trash chute, laundry, and elevator. Walking distance within the building can vary, so think about your preferences.
Outdoor Space
Check for patios, balconies, or common outdoor areas. Be aware of any usage restrictions or if you need outdoor space for your lifestyle.
Close Quarters
Condo living means close neighbors. Assess if you’re comfortable with shared walls and hallways. Spend time near the building to gauge the community vibe.
The Fine Print
Review condo documents within three days of being under contract. Look for rules, regulations, finances, and what’s included. Consider deal-breakers upfront.
The Rules and Regs
Check condo documents for pet policies, renting restrictions, and other rules. Decide if they align with your preferences.
The Condo Fee
Brace for condo fees; they vary. Consider building history, fee increases, and included utilities. Higher fees might indicate good reserve funds.
The Amenities
Decide on must-have amenities. Avoid paying for services you won’t use. Older or smaller buildings may have limited amenities.
The Condo Management
Review the annual budget, reserve fund, and check if the building is professionally managed. Review recent association meeting minutes for insights.
Your Responsibilities
Clarify your responsibility for the unit—know where it begins. This is crucial for addressing leaks or damages promptly.
The Bottom Line
Condo living can be fantastic, but understanding fees, amenities, rules, and responsibilities is crucial. Follow the tips above to make an informed decision and enjoy your condo life.
Buying a Condo as an Investment
When considering buying an investment condo, there are crucial factors to keep in mind. Beyond just rental income, you need to consider financing requirements, rental restrictions, and management issues. To make an informed decision, take a closer look at the special considerations and expenses involved in this process.
Special Considerations
Condo Building, Association, and Neighborhood
Evaluate the strength of condo management and finances.
Review condo association rules, especially the presence of a “rental cap.”
Research the neighborhood’s demand for rentals, local employment opportunities, and competition in the rental market.
Financing
Most lenders require a 20-35 percent down payment for investment property loans.
Lender approval of the condo association is essential.
Lenders typically avoid financing condos facing litigation.
Long-Term Investment
Considering the above, plan on holding the condo for at least five years.
Calculating Return
Expenses
Regular expenses: taxes, insurance, association fees, and possibly a mortgage payment.
Intermittent expenses: repairs, special assessments, vacancies, property management fees, and advertising costs.
Income
Monthly rent is the primary source of return.
Consider annual appreciation, noting that condos appreciate more slowly than single-family homes.
Yield Calculation
Divide the potential annual rent by the purchase price to calculate yield.
If the expected monthly rent is at least one percent of the purchase price, it’s considered a wise investment.
Example: A $300,000 condo should rent for $3,000 per month.
The Bottom Line
Buying an investment condo can be financially sound with proper research and realistic expectations. Scrutinize the condo association, rules, and the local rental market before making any investment decisions.
Making an Offer on a Condo
Making an offer on a condo involves unique considerations compared to a house. For a smoother process, here are four essential things to know:
Status Certificate and Condominium Documents
Once your offer to buy a condo is accepted, you have ten days to receive the status certificate and condominium documents.
These documents, provided by the condo association, contain vital information about the condo’s formation, operation, rules, and finances.
The review period allows you to identify dealbreakers and back out if necessary.
Review Period
During the review, focus on current bylaws, rules, payment schedules, any unpaid assessments, litigation records, and the association’s annual report.
The condional period (two to five calendar days) lets you cancel the contract if you find anything in the status certificate that would make you not want to buy the condo.
Insurance Issues
Lenders and lawyers will recommend that you take title insurance. Some lawyers will just include it in their fees.
Ensure no outstanding condo fees and confirm adequate building insurance.
Provide proof of content insurance for your interior possessions since the condo building insurance does not cover your personal belongings.
Condo Fees
Condo fees cover insurance, maintenance, and often include various services like landscaping, water, and trash removal.
Understand what amenities and utilities are covered to adjust your budget accordingly.
Special Assessments – Buyer Beware
Special assessments are fees for unexpected repairs or improvements not in the operating budget.
Owners collectively bear the cost, so be cautious about potential steep assessments for shared space issues, especially in small condo buildings.
The Bottom Line
Condo offers differ from single-family homes due to complex rules and shared spaces. Thoroughly read all documentation from the association and do your homework to make an informed decision.
The Status Certificate and Condominium Documents
What to Look For
Once you’ve signed a contract for a condo, you have three days to review the condominium documents, known as the status certificate. If there’s anything you find unacceptable during this period, you can void the contract, and your deposit is refunded.
While reviewing the entire packet may seem overwhelming, focus on three key areas for a thorough understanding.
The Rules
Carefully examine the condo association’s rules and restrictions.
Check for allowances or restrictions on pets, grills, rental policies, and alterations to your unit.
Ensure you can live with all the rules, and watch out for potential dealbreakers.
The Budget/Reserve Fund
Scrutinize this section to understand the association’s financial health.
Assess if there’s sufficient savings in the reserve fund for major repairs like roads, roofs, and elevators.
Inadequate funds may lead to special assessments, an additional cost beyond your monthly condo fees.
The Minutes
Read the association’s meeting minutes for valuable insights into the community.
Look for ongoing discussions on repairs, complaints, or other relevant matters.
The Bottom Line
Contact the condo association for clarification on any concerns or questions.
Keep in mind that condo staff may be available only during business hours.
Choose an experienced Realtor to guide you through the process, ensuring you stay on track and providing negotiation options if issues arise during the review period.
Condo Moving Made Easy: Tips for a Smooth Transition
Moving into a condo requires careful planning due to unique challenges like parking restrictions and additional fees. To streamline the process, follow these top tips for moving into a condo.
First Things First
Contact the condo manager early to determine your move-in date and time.
Note the allotted hours for moves, as exceeding them may require a larger moving crew.
Inquire about booking elevators specifically designated for moves and check if there’s a loading dock.
If parking is limited, ask about reserving a spot for the moving truck.
Expect Some Costs
Be prepared for a refundable “damage deposit” to cover potential building damage during the move.
Some condos charge a non-refundable “moving fee” for elevator padding and on-site staff during the move.
Additional fees may apply for reprogramming your buzzer, updating building directories, and mailbox information.
Clean Up
Remove moving debris promptly from common areas, following building guidelines.
Flatten boxes, secure them with twine, and dispose of them in designated bins.
Utilities
Confirm which utilities you must set up and which the building manages.
Inquire about meter readings if necessary.
Arrange for cable, internet, and telephone installation close to your move-in date.
Reprogram your buzzer early to allow access for utility workers and services.
The Bottom Line
Moving into a condo involves extra considerations, so start by connecting with the condo manager to gather essential information. Relay this information to your mover to ensure a smooth transition into your new home.
Final Thoughts on How To Buy a Condo
Condo living is always either a lifestyle choice or a budget choice. As houses continue to be more and more expensive, “regular” homeownership is out of reach for many home buyers, especiall first time home buyes.
The tips and advice I’ve thoroughly layed out for you in this long and detailed post will help you see red flags when buying a condo, and is based on everything I’ve learned by helping many people buy great condos since I began my real estate career in 2004.
You Better Be Able To Justify Low Balling Offers on Houses Before Making One
Where to even start with a topic like lowball offers?
Last night (a Sunday), around 10:30, I received an unexpected offer on one of my listings.
The house is a 3 bedroom, 3 washroom backsplit. It has a wide 110 by 86 foot lot. It’s not a corner lot but sits on a gradual bend in the road.
It has a pool, separate side entrance with an inlaw suite in the basement. The kitchen is updated with granite countertops, stainless steel appliances and a kitchen island with a breakfast bar.
It’s a nicely kept house in perfectly good condition. You could just move in without having to do anything, really.
The backyard is privately fenced with horizontal fence boards giving it a modern landscaped feel. There is a nice big tree adding to the privacy and it faces west so it is nice and sunny almost the entire day.
The roof had new shingles put on in 2022, so no need to worry about a roof for a long time.
When I meet with owners to discuss the price range of their home, I always look at the following:
What have similar homes sold for over the past year
How many days, on average, similar homes took to sell
What the average property taxes were
What the condition of the house is compared to the sold properties
Property taxes usually translate well in telling me I’m using good comparable homes, and the average days to sell is a good gauge once the property is on the market as to whether or not we have the right price.
The most important part is what the price range is of similar homes in similar condition. Comparing apples to oranges is no bueno, but so is comparing crab apples to honey crisps
My analysis, which consists of taking all of the data into consideration along with my experience and intuition, I came to the conclusion the market value of the house was $1,185,000 to a maximum of $1,250,000.
The owners did ask about setting a low listing price of $1,099,000 to attract more buyers. I told them that I don’t believe this was the market for that tactic.
We decided that a fair market listing price would be $1,198,000.
Now, back to the lowball offer. The offer came in at $1,050,000.
Yes, $148,000 less than the asking price.
I didn’t know the offer came in. It was 10:30 on a Sunday. I was watching Parasite.
There was no phone call to discuss an offer. Not even a text to say “Hey, I’m submitting an offer.”
I always call an agent Before I submit an offer on a home. I ask about what closing date the sellers are looking for, whether or not they’ve had any other offers previously, and if so, why it didn’t go together, and price expectations even if there is no hold back on offers (an offer date).
The reason I ask about price expectation is to find out what the sellers want to be sure it’s even worthwhile to put the offer together. Sometimes, even if the house has been on the market for a couple of weeks.
Plus, if through my research I find that the house is overpriced, I want to know if the agent feels the same and would be open to looking at an offer that is significantly lower than the asking price.
It has happened before.
Anyway, this agent, who is actually the broker of record, which is scary to think she’s teaching this sort of practice to her agents, simply sent the offer unannounced.
Legally, I have to present all offers to the sellers even though I know they’ll say no.
I called the sellers and in an uplifting tone of voice told them they got an offer. Then in a monotone voice, told them it was crap.
As expected, when I told them the price, they were pissed. I told them I wouldn’t have bothered you with this crap if I didn’t have to. The sellers have to decide to reject, I can’t do that for them.
I gave the sellers their options which were to simply let it expire at noon without a response, or to send them a counter offer with their price expectations, which would be an effort in futility being this far apart in price, or to send the buyers Form 109.
Form 109 is an offer acknowledgement form. It proves the offer was presented and optionally allows the seller to say “bite me, asshole. You’ve insulted me with your price.” I always tone it down and just say the terms were unacceptable.
In this case, the sellers are experienced and instructed me to just let the offer expire without telling the buyer and agent anything.
Fast forward to 2:30 Monday afternoon, 2 and a half hours after her buyer’s offer expired, the agent called me to ask about the offer.
“It’s dead” was my reply.
That seemed to spark a fireworks display and she decided to go up one side of me and down the other. She was arguing how it’s a buyers market, and the sellers would be smart to take this offer because all other offers will be lower.
“A buyer’s market?” I questioned her. “So there are more houses on the market than there are buyers?”
I also asked her for the contact info of her fortune teller who could predict what the future offers would be like.
She didn’t like those questions and switched tactics telling me that in her 9 years in the business, this is the most favourable market she’s seen for buyers.
“Too bad you weren’t around in 2008, like I was. Then you would have seen a better market for buyers” I told her.
That put her in her place. She knew she wasn’t dealing with an agent that didn’t know what they were talking about.
She came up with another story about her client not even wanting a pool to justify the price. I simply asked why she would be showing a house with a pool to a buyer that wasn’t interested in pools.
“Because there isn’t much on the market to show her.” She told me.
“But you said it’s a buyer’s market.” I reminded her.
She was done and she knew it.
She tried a couple of other bullshit lines like winter will slow the market and we don’t know where interest rates will go in October.
Now I went the offensive and pointed out a comparable house that had single pane windows, no pool or landscaping, a lot that was riddled with easements and boundary restrictions that sold the day before for $1,100,000, another that was bigger than my listing, but dated listed for $1,230,000, then rattled off 3 inferior homes that she could buy for the insulting price she offered for my clients home.
West Rouge, where I live, and Centennial are the two areas I concentrate on and know best and there’s no way this broker of record from Thornhill could even try to argue with me.
In the end, she tucked her tail between her legs and gave me the defeated line of “well, if the sellers change their mind, let me know and I’ll bring the offer back.”
There’s a better chance of me reading War and Peace in a day than that happening.
Timing is everything. But trying to perfectly time a moving object is really hard.
The Toronto real estate market is a moving object, and for months, some would-be home buyers sat on the fence because they decided the media knew better than real estate professionals about the best time to buy a place to call home.
Granted, I wouldn’t trust most real estate professionals either. Some are in it to make a quick buck, and some have their real estate license but are clueless about real estate.
But the true professionals who actually treat this position as a profession and have a vested interest in doing what’s best for their clients, as well as keeping an outstanding reputation get lumped in with all the others.
To those of you on the side of not trusting real estate agents and relying on the media to tell you what to do with real estate, you missed a great buying opportunity over the past several months.
I saw a similar thing happen in 2008 and suggested that if you were on the fence because prices were too high at the beginning of 2022, a 20% decrease in home prices should be taken advantage of.
Instead, you used media fear and hype about high interest rates as yet another excuse not to buy a home.
To those of you who can afford to buy a property and chose not to take advantage of the market, you deserve it.
Now you can continue to blame everything else about why you still don’t own.
You’ll blame real estate investors, agents, banks, the government, and other homebuyers for paying stupid prices.
But here’s the thing, you were trying to time the bottom of the market and that is impossible.
What you should have been doing instead was focusing on the prices compared to the year before. And if you were observant, you would be a homeowner right now.
But you read a blog post or watched the doom and gloom on the news about people who now wouldn’t be able to close on their preconstruction condo and thought you’d be buying a house at 50% of what it was.
In other words, you let your feelings and fears get wrapped up in what the world is saying right now. If the timing for you is bad and the market timing is bad that does not invalidate a lifetime of real estate ownership.
Those are different things.
No matter what the real estate market has thrown at people over the years, the long-term positive aspects of homeownership far outway the short-term downturns.
The average boom cycle of the real estate market is a lot longer than a bust. See below:
The long-term benefits of homeownership far outway the dips.
So instead of trying to time the market, spend time owning IN the market.
Whether you are a A Case of Cold Feet: How to Handle the First Time Homebuyer or an experienced homeowner, buying a new home is always stressful. Here’s a handy checklist of six things you can do up front to make the process a lot easier. Before you start packing, here’s what you need to do.
Prepare a budget. You need a clear picture of your family’s finances before you even think about calling a Realtor or applying for a mortgage. List all your monthly fixed expenses, such as car payments, current rent or mortgage, utilities, school tuition, and loan payments. Add categories for other expenses such as food and entertainment.
List your debts. If you have existing credit card debts, student loans or other debts that require regular monthly payments, get them down in black and white, so you know exactly how much you owe. Figure out your debt ratio. There are plenty of online calculators that will do this for you. You need to know two ratios. Your housing debt expenses (including taxes and insurance) as a percentage of your gross monthly income should be 25-28%. Your installment debt ratio (credit cards and other consumer debt) should be around 10-15%. Your total debt to income ratio should not be more than 40%.
Get pre-approved. #1 and 2 above are important because you want to get pre-approved for a loan before you start shopping. This is an important safeguard, to keep you from falling in love with something you can’t afford or can’t get a mortgage for. Be sure you understand the Mortgage Pre-Approval – Don’t Overlook The Importance. Getting pre-qualified means that you give a lender your overall financial picture, including your debt, income and assets. The lender evaluates this information and gives you a ballpark figure of the mortgage amount for which you could qualify. Pre-qualification can be done over the phone or on the Internet, usually at no cost.Pre-approved, on the other hand, means that a lender evaluates your debt ratios, your credit report, and your overall ability to repay a loan and says, “Yes, I would loan this buyer X number of dollars to buy a home.”
Make a list. Before you begin working with a Realtor, you need to make a two-column list of needs vs. wants. Be sure you know the difference! You need three bedrooms. You want a swimming pool. You need to be very upfront with your Realtor about exactly what constitutes a deal-breaker in your purchasing process. If more than one person is involved in making the final decision, be sure that you are more or less in agreement about needs and wants. If one spouse wants a short commute and the other has visions of a country estate, you could have a problem. Resolve these issues ahead of time.
Find a Realtor. Once you’ve done your homework, it’s time to start looking. You want to find a Realtor who represents you and puts your interests first. The best way to find a Realtor is to ask friends and family for recommendations. However, if you are new to the area and don’t know anyone, you may need to visit several firms and interview several Realtors. Chemistry is important. You need to look for someone who is committed to meeting your needs and who knows the area and price range you’re looking in.
Ask the right questions. When you are talking to prospective Realtors, don’t be afraid to ask probing questions. And expect to get frank, straightforward answers. Here are a few to get you started:
How long have you been in real estate?
Do you represent both buyers and sellers?
How many buyers are you currently working with? How many sellers?
How many homes did you sell last year?
How familiar are you with the neighborhoods we are considering?
Buying a home could wellbe the single most important decision you will ever make, both financially and emotionally. However, if you do your homework and prepare thoughtfully for the process, it can also be a fun and rewarding experience. Happy hunting!
I was writing a very detailed email to one of my clients because she is the type to want to know everything and have it explained in uncertain details.
While rereading it, I thought that this would be good to have for all of my clients. Then I thought, heck, make it available for everyone!
So after patting myself on the back for a job well done, here is my advice to make sure you’re prepared to make an offer on a property that you’re really excited to buy.
Since it’s been a few weeks that we’ve been out looking at condos and getting more familiar with areas, it’s only a matter of time before a condo comes up that you’re going to love.
Let this be a guide for you to get everything in order to put in an offer on a property now, rather than have you scrambling last minute which could delay being able to offer and missing out on a great place.
Have your deposit money ready in your account
The definition of a deal is giving something in order to get something. You won’t get the condo as soon as your offer is accepted, so your deposit money is essentially a promissory note.
You’re telling the seller, “I promise to buy your condo on the date we agreed upon, and to show you that I will buy it that day, keep this deposit money in trust until then so you know I won’t back out of the deal.”
Having your money ready is good in 2 situations. Once an offer is accepted, the deposit will be due within 24 hours. If your money is tied up in investments or something else and you don’t give the deposit within 24 hours, the deal is dead (void).
The other situation where having your deposit money ready is if you find yourself in a multiple offer situation. If you have your deposit cheque ready to go on the night of the offer, it shows the seller that you’re serious and ready to put together the deal that night.
I’ve seen buyers get cold feet and not go through with a deal after they slept on it and decide they want out of the agreement. That can get messy legally with a breach of contract, and by having your deposit the sellers have that peace of mind.
Oh, before I forget, your deposit cheque should be either a bank draft or a money order and must be made payable to the seller’s brokerage, ie: Re/Max Big Balloon Realty Inc.
Closing Date
I mentioned the closing date above because it can make or break a deal especially if you’re in a multiple-offer situation.
I’ll be responsible to find out what the seller prefers in terms of a closing date. In multiple offers, if you can give the seller what they want, it makes your offer that much better.
When not in multiple offers, there can be some flexibility in the closing time. Being open and working towards a mutually agreeable closing date shows that you’re negotiating in good faith.
Obviously, if there is a closing date that you or the seller can’t work with, then you simply pull the offer off the table and move on to the next condo.
Lawyer Up
All offers have to be reviewed and finalized by a lawyer in order to transfer the ownership to the new owner, you.
To that end, have a lawyer in mind before you even get to the point of an offer, especially when it’s a condo because the condominium documents, better known as a status certificate, need to be looked at by your lawyer to make sure the building is in good financial standing.
Issues like special assessments, lawsuits against the building, and steep increases in maintenance fees can all be found in the documentation by your lawyer and that can save you from a financial pitfall.
Oftentimes, the status certificate will be made available to you in anticipation of multiple offers on a set offer day.
If your lawyer can review the status certificate before the offer date and give you their approval, it puts you in an advantageous position because you won’t have a condition in your offer for a lawyer to review the documents.
I have a lawyer that will review condo documents free of charge but you will have to sign an agreement that you will work with him to put the deal together.
Since you have a mortgage preapproval, you’re ahead there as well.
Again, if you’re in multiple offers, you can remove the condition of financing to improve your odds of winning.
An offer without a condition on financing, even if lower than one with a financing condition is, or should be looked at as stronger since there isn’t the chance that a mortgage won’t get approved.
There you have it, everything I’ve learned over the years that put you in a great position to successfully offer and win on a property.
Here’s the Legal Blah, Blah Blah About a Buyer Representation Agreement Translated
When you sign a buyer representation agreement, we are joining forces … legally. I’m to represent you, protect you in offers, and ensure I have your best interests in mind. You’ve afforded me this honour so I can feed my family and keep up my reputation.
Here’s Why Representation Benefits You
help you properly assess a property to make an informed decision on an offer price
prepare an offer that positions you as strongly as possible
set you up to have the best possible offer in a multiple-offer situation (without overpaying)
inform you of any known detriments, or defects in the property that I’m aware of
you’ll know if a seller is desperate to sell or, what price they’ll accept
sellers will never know your motivation or your financial position
Here’s What Representation Does for Me (With Some of Your Help)
it lets listing agents know that you’re working with me
you’ll let me know if an agent advises you that you can place an offer through them even after you’ve told them that I represent you
you won’t go behind my back and offer on properties through the listing agent
again, helping you to buy a home allows me to feed and clothe my family
Here’s Why…
We’ve established a representation agreement where you’ve hired me legally to represent you and your best interest. We can still work together if you don’t sign the attached buyer representation agreement but, those benefits above won’t apply because, by law, I’m essentially a cashier at a store just ringing through a product rather than providing professional advice and guidance.
Are You Responsible for Commission?
No. And, yes. Sorry to have to bring this up again but, you’ve promised to work with me. If you decide to buy directly through the listing agent (who has no responsibility to work in your best interests), you can be liable to reimburse the commission that benefits the seller and seller’s agent.
Whether you are a A Case of Cold Feet: How to Handle the First Time Homebuyer or an experienced homeowner, buying a new home is always stressful. Here’s a handy checklist of six things you can do up front to make the process a lot easier. Before you start packing, here’s what you need to do.
Prepare a budget. You need a clear picture of your family’s finances before you even think about calling a Realtor or applying for a mortgage. List all your monthly fixed expenses, such as car payments, current rent or mortgage, utilities, school tuition, and loan payments. Add categories for other expenses such as food and entertainment.
List your debts. If you have existing credit card debts, student loans or other debts that require regular monthly payments, get them down in black and white, so you know exactly how much you owe. Figure out your debt ratio. There are plenty of online calculators that will do this for you. You need to know two ratios. Your housing debt expenses (including taxes and insurance) as a percentage of your gross monthly income should be 25-28%. Your installment debt ratio (credit cards and other consumer debt) should be around 10-15%. Your total debt to income ratio should not be more than 40%.
Get pre-approved. #1 and 2 above are important because you want to get pre-approved for a loan before you start shopping. This is an important safeguard, to keep you from falling in love with something you can’t afford or can’t get a mortgage for. Be sure you understand the Mortgage Pre-Approval – Don’t Overlook The Importance. Getting pre-qualified means that you give a lender your overall financial picture, including your debt, income and assets. The lender evaluates this information and gives you a ballpark figure of the mortgage amount for which you could qualify. Pre-qualification can be done over the phone or on the Internet, usually at no cost.Pre-approved, on the other hand, means that a lender evaluates your debt ratios, your credit report, and your overall ability to repay a loan and says, “Yes, I would loan this buyer X number of dollars to buy a home.”
Make a list. Before you begin working with a Realtor, you need to make a two-column list of needs vs. wants. Be sure you know the difference! You need three bedrooms. You want a swimming pool. You need to be very upfront with your Realtor about exactly what constitutes a deal-breaker in your purchasing process. If more than one person is involved in making the final decision, be sure that you are more or less in agreement about needs and wants. If one spouse wants a short commute and the other has visions of a country estate, you could have a problem. Resolve these issues ahead of time.
Find a Realtor. Once you’ve done your homework, it’s time to start looking. You want to find a Realtor who represents you and puts your interests first. The best way to find a Realtor is to ask friends and family for recommendations. However, if you are new to the area and don’t know anyone, you may need to visit several firms and interview several Realtors. Chemistry is important. You need to look for someone who is committed to meeting your needs and who knows the area and price range you’re looking in.
Ask the right questions. When you are talking to prospective Realtors, don’t be afraid to ask probing questions. And expect to get frank, straightforward answers. Here are a few to get you started:
How long have you been in real estate?
Do you represent both buyers and sellers?
How many buyers are you currently working with? How many sellers?
How many homes did you sell last year?
How familiar are you with the neighborhoods we are considering?
Buying a home could wellbe the single most important decision you will ever make, both financially and emotionally. However, if you do your homework and prepare thoughtfully for the process, it can also be a fun and rewarding experience. Happy hunting!
