The Times They Are A-Changin’

We all know Real Estate has attracted much attention over the past two years.  Because of this the government has effected (through the Real Estate Council of BC) some  fairly substantial changes in the way you will be interacting with your local Realtors ®. 

Starting June 15th a new level of disclosure requirements will be mandatory when working with consumers in Real Estate.   These changes deal specifically with changes to agency rules and disclosure requirements under the Real Estate Services Act.

As an example,  the exact amount of commission your real estate professional’s brokerage would receive if you accept a given offer will now be shown as opposed to a percentage of the selling price (now shown at the time of listing the property), how that payment would be split, and any other payment the real estate professional would receive or would expect to receive.

Agency will now be laid out in far more specific terms as will the risks of being unrepresented in a Real Estate transaction.

Make sure your Real Estate professional is well versed in these new forms and can explain them.   A toll free number will accompany each of these forms should you wish to contact the Council directly.

It is important to remember most Realtors® really are interested in serving their Community and welcome any change that helps you understand how we carry out our responsibility to you, the Consumer.

A Few Bad Apples….

I would like to say I take great offence to the allegations in the media regarding the recent conduct of real estate agents and, vicariously, their brokers. Unfortunately, this is not the case.

This month I will have been a licensed Realtor® for 30 years. Real estate transactions have become more and more complex with the legal implications daunting. A real estate agent’s role is to guide their principal through these transactions with the knowledge and integrity it takes to ensure a positive outcome. Should the unforeseen occur it is our responsibility and obligation to minimize or alleviate the risk to that principal. Our reputation is based on the trust placed in us.

What is most disheartening, and frankly embarrassing, is the conduct of a relatively small number of agents within this industry who do not feel it important to uphold those values. We who practice diligently do take offence at the conduct of those who disregard the best interests of their clients. Sellers deserve and are entitled to representation that will achieve the best price possible on the open market – not one effected through a private, clandestine negotiation.

I stand behind the many colleagues who exemplify what our trademark Realtor® represents. To the rest, I would suggest you remember whom you work for.

Multiple Offers

Alright. You have found the perfect house/townhouse/condo … you… and eight or ten other Buyers. In today’s market in Vancouver you have probably spent more time scrutinizing a pair of shoes on sale than you have looking over your potential new home. If you’re lucky you will have had time to squeeze in an inspection prior to offer presentation. A ‘loose end’ like financing or inspection is cause for pause from a Seller. Should that Seller risk taking an offer $20K over ask with a financing clause – or should they hedge their bets and accept perhaps a lesser offer knowing it will be a firm deal when everyone walks away from the negotiating table?

A multiple offer situation is stressful for all parties. When handled correctly by skilled Realtors® it can be far less so. If you are a Buyer, your Realtor® will walk you through the steps leading up to offer presentation and tell you what will happen and when it will happen. You will know how many other offers will be presented but you will NEVER know for how much each offer is written. This is when the nail biting starts. How much do you pay? The answer is actually quite simple – not easy – but simple. The answer is you pay exactly how much you are comfortable spending. You notice I did not say to pay how much you can afford, quite a different thing as some people are not willing to ‘max out’ their financial situation. Keep the emotion at bay as much as possible. It is far too easy to get caught up in a ‘bidding war’ – when winning becomes more important than the outcome.

I tell my Buyers when they ask how much should they pay (and they always ask) that they should pay up to the point where if another Buyer gets the property for $1000 over what they have offered the response from my Buyers should be “Good for them.”

The important thing to remember is to be well prepared before you send your Realtor® to the negotiating table. Know what you can afford and get that financing in place!! If you are purchasing a condo or townhouse get all strata documentation, if it is available, before you write. Get your inspection out of the way before you write. Have the property scanned for an oil tank before you write (another subject, another time.) Be super smart and have a bank draft prepared for the deposit before you write.

All of the above will move you to the front of the line as long as your offer is worthy of consideration. Remember, in a multiple offer situation you have one chance to make it happen. Give it your best shot.

Transitions Part II – Get Moving!

Alright! You’ve committed to the change you are about to initiate. “How do I make the right choice?”

Write it down! Make a new list – this is your wish list. Which considerations are most important to you when you define your lifestyle? This is list to go over carefully…if you plan to start a family, how long of a ‘fit’ is the property you are contemplating? Can the (projected) 4 of you really survive in 8oo square feet? Perhaps surprisingly, the answer can be “yes” if other criteria mesh well. Maybe you are leaving a relationship and splitting custody; can older children find a place of their own within the home to entertain friends? If you are downsizing, how long will 3 levels be workable?®

Be realistic! If you are looking for the outstanding view property, move-in condition for under $1.5M in Point Grey – come back to Earth. Yes, I am exaggerating but time and again I see Buyers (especially first time Buyers) turn away from a good deal due to unrealistic expectations.

Be brave! A caveat here – only forge ahead if you are working with a Realtor®. Your Realtor® is not only a wealth of information about what is on the market but also a source that can save you time and – more importantly, money. Full time Realtors® know the inside details on a property that can be the difference between making the wrong or right decision.

Which brings us to Price! How much should you pay? Will the Seller accept your offer? That all depends…the price you offer a Seller can be based on a number of different criteria such as how long the property has been on the market, market conditions (expect to pay list price or over if it is a Sellers’ market with very little product to choose from), what other similar properties have sold for, etc. Your Realtor® is an invaluable source – take advantage!

Due diligence is a must. With a Strata property, at least 2 years of minutes, any engineering/Depreciation reports (see August post “Strata Fees: How High is too High?”), and financials are just some of the items needing careful scrutiny. With a detached home, make sure you have researched as to whether or not an oil tank is on the property. Any offer should be written with an inspection clause!! Your Realtor® will discuss with you how long you need to carry out this research and will write the contract with a date by which you need to have completed your groundwork. After this date, your contract is firm and binding. Congratulations! You are on your way to becoming a homeowner!!

Transitions – Part I – Making the Decision

Leaving a spouse? Buying your first house/condo? Whatever the transition, your first decision is the resolve to make it happen. The rest unfolds one step at a time. Here are a few guidelines to get you moving in the right direction.

1. Who else is involved in the decision? Who else will be impacted by your decision – kids, friends, relatives, significant other…last, but certainly not least, pets?? If your decision involves leaving a spouse, the corresponding emotional upheaval can be disastrous. Make a list of people who impact your life and those whose lives you impact. Can you uproot your children to a new neighbourhood? Does it make financial sense to move now or wait until you will be downsizing as opposed to moving laterally?

2. What will the fallout be from your decision? Where are your activities centered? Is your work in close proximity to where you live now? Are you prepared to commute? If your decision involves downsizing, can you live communally in a strata environment?

3. Where are you prepared to go? Will you give up proximity to the downtown core for space? Is a ‘neighbourhood feel’ important? Are you someone who worries about feeling safe? Is access to transit a priority?

Once you have answered these questions you will begin to formulate an idea of where you are headed.

An important consideration: if you are leaving a relationship, the necessity to understand why you are making the decision intensifies. Take the time you need and ask questions!!

Know Before You Buy

Vancouver is enjoying the reputation as being one of the most liveable cities in the world. A byproduct of this is our density is increasing at a phenomenal rate. For a variety of reasons more people are choosing an urban lifestyle (ie: condo living) than ever before. As a REALTOR ®, I watch with interest how these prospective Buyers face an unfamiliar enemy – strata, or maintenance fees, as they are also known.

Individual Owners are responsible for those expenses associated with their particular unit. Strata ‘fees’ are those costs associated with maintaining the building or complex as a whole. I find many Owners new to strata life have an unrealistic picture of the actual cost of maintaining a building and have historically been faced with unplanned for and costly asessments to pay for building upgrades and/or repairs.

Significant changes to the Strata Property Act over the past few years have resulted in a mandatory requirement for Strata Corporations to acquire a Depreciation Report which, in turn, will automatically be made available to a Buyer when purchasing a strata unit. A Depreciation Report is a visual, 30 year asessment of all systems pertaining to the complex and the corresponding cost of maintaining/replacing those systems over that period. This report is updated every 3 years. It is important to note the report is derived from a visual inspection only and one of the recommendations may be for a more detailed qualitative assessment on a particular system. The report offers the Strata Corporation three different funding models to deal with upcoming expenses.

The Idea behind these Depreciation Reports is to better equip the Strata Corporation as a whole to fund the maintenance of the various systems in a complex, ideally, with few or no special assessments. How to come up with a comprehensive plan that will be agreeable to the majority of Owners? Whatever the plan of action, one thing is certain; Vancouver’s maintenance fees are on the rise. We are currently at an average of approximately $.40/sq.ft., although it is not uncommon to see fees dip below $.30/sq.ft.

It is common for newer developments to postpone their Depreciation Reports (to do so, this must be done by a 3/4 vote at the Annual General Meeting every year.) The reationale is that the complex still falls under the 2-5-10 warranty. Personally, I would like to see the day come when it is mandatory for Developers to provide a Depreciation Report in much the same way they are bound to have the Buyer review the Disclosure Statement before the purchase of a “pre-sale.”

On a last note, while this requlation is new to us, our neighbours to the East have long been familiar with Depreciation Reports. While the next few years may prove tumultuous for Vancouver strata Owners, I believe the outcome will be positive.