Well for the last few weeks us realtors have blamed the slow inventory roll out on the obvious---March Break!
March Break is done and the inventory isn't there...yet.
So buyers are scrambling to buy homes and tripping over each other.
I've seen some mind blowing sales of late in areas like Allenby and Yonge and Lawrence for example.
Homes are going for big bucks! Winning in multiples these days can get one sided. It's tipping towards the sellers side with the prices some homes are selling for.
I've said it in a previous blog...be careful if you're a buyer in this market. Yes, it is challenging to figure out market value sometimes and there is a range of values. But, paying beyond this range can create problems. The most obvious problem is the financing on the property. Some bank appraisals are coming in lower then the price the buyers pay for the house. The buyers are left to make up the shortfall.
Why the lack of inventory?
My best guess is that the tradeup is getting expensive.
Take a small family of 4. Suppose they live in a detached valued at 700k in a decent neighborhood. Now, they require a main floor family room, a 4th bedroom, an office as well as a rec rm in basement and a driveway for 2 cars. That very house in the same area they fell in love with may now be 1.2 million. After they net say 400k after remaining mortgage, they may have a downpayment saved up of 50k-100k and they require a 600k-700k to trade up. Some are prepared to do this...while others are not.
So if the 700k homes aren't opening up then the market stalls. All the while with low inventory what was 600k before is the new 700k!
So it's tough. But, the arguement remains that this is our new reality and people are typically better owning and building equity, all else being equal.
There is still nothing like owning a home. And when people today see what it costs to rent relative to interest rates on a purchase, it still makes sense to buy.
Here's the thing ...affordability and bubbles are measured by the rise in income relative to the rise in home prices. Over the last many years, they've risen in tandem which doesnt suggest an overheating or bubble. But..lack of inventory confuses everything!
Cheers-
Michael Gruenstein MBA CSC
http://www.TheSmithsBuyAHouse.com
mgruenstein@trebnet.com
Wednesday, March 30, 2011
Thursday, March 24, 2011
Buyer too smart for his own good! New campaign slogan "Buy Responsibly"
True Story:
A buyer of mine lets call him "Jack Bum" and me had been looking at homes together for the better part of 7 months. Let me give you a rundown of the value added "Jack Bum" received:
-mls listings on day 0
-non mls and exclusive listings thru my contact base (so he's seeing more product then just about any buyer out there)
-explained market value and pricing using 3 different methods so he could go into the market with as much confidence as possible. Homes are priced all over the map and selling all over the map
-lessons on strategies for setting up for offers and how to best position yourself in multiples
-countless hours of coaching
So...heading into month 8, this buyer decides to stop in at an Open house on his way home. He puts in an offer with the listing agent.
He buys the house. Feels guilty and doesnt want me to know.,
Finally I find out. I inquire as to which house.
Here's where we both lost out.
The particular house that he bought had been on the market for 2 years with 4 different agents. The house wasn't discussed as it was above his range.
This time around the house was still above his range but less so. The 4th agent dropped the price a tad. Jack Bum had no time to waste and put an end to our 7 month relationship for the big victory.
Punchline: House had been marketed for years. The owners were prepared to take much less then asking price but felt that in this kinda market maybe they'd find someone desperate enough to get into the area and they'd overpay. Jack Bum wins!!
I had to tell him that going around me probably didn't save him any money (many agents don't have that sizable reduction if they double end a deal, if any deduction).
Anyhow, I had to inform my client that if he thought he saved 10k, I could have saved him six figures b/c everybody in the industry who worked the area knew that these sellers were leaving town and needed to sell.
I lost a good client and my too smart client lost over 100k easily.
Moral: Don't be too smart and too desperate to get a house. "Buy Responsibly". This may be my new campaign slogan.
For more information, call or email,
Michael Gruenstein MBA CSC
http://www.TheSmithsBuyAHouse.com
http://www.mgruenstein.blogspot.com
mgruenstein@trebnet.com
A buyer of mine lets call him "Jack Bum" and me had been looking at homes together for the better part of 7 months. Let me give you a rundown of the value added "Jack Bum" received:
-mls listings on day 0
-non mls and exclusive listings thru my contact base (so he's seeing more product then just about any buyer out there)
-explained market value and pricing using 3 different methods so he could go into the market with as much confidence as possible. Homes are priced all over the map and selling all over the map
-lessons on strategies for setting up for offers and how to best position yourself in multiples
-countless hours of coaching
So...heading into month 8, this buyer decides to stop in at an Open house on his way home. He puts in an offer with the listing agent.
He buys the house. Feels guilty and doesnt want me to know.,
Finally I find out. I inquire as to which house.
Here's where we both lost out.
The particular house that he bought had been on the market for 2 years with 4 different agents. The house wasn't discussed as it was above his range.
This time around the house was still above his range but less so. The 4th agent dropped the price a tad. Jack Bum had no time to waste and put an end to our 7 month relationship for the big victory.
Punchline: House had been marketed for years. The owners were prepared to take much less then asking price but felt that in this kinda market maybe they'd find someone desperate enough to get into the area and they'd overpay. Jack Bum wins!!
I had to tell him that going around me probably didn't save him any money (many agents don't have that sizable reduction if they double end a deal, if any deduction).
Anyhow, I had to inform my client that if he thought he saved 10k, I could have saved him six figures b/c everybody in the industry who worked the area knew that these sellers were leaving town and needed to sell.
I lost a good client and my too smart client lost over 100k easily.
Moral: Don't be too smart and too desperate to get a house. "Buy Responsibly". This may be my new campaign slogan.
For more information, call or email,
Michael Gruenstein MBA CSC
http://www.TheSmithsBuyAHouse.com
http://www.mgruenstein.blogspot.com
mgruenstein@trebnet.com
Friday, March 18, 2011
Happy Hour--the realtor meets the disgruntled buyer over drinks
Two guys in their 30’s enter a Toronto Bar in the trendy distillery district. It’s happy hour. At least that’s what the clock is flashing. Mike, a 30 something Toronto born realtor sticks to his Friday single malt while Trent spices it up with a Caesar. It’s minutes from taking place. That is…the small talk that ends a work week. Mike’s business relies on his networking ability and though it’s been a tough week and he’d prefer to stick to the head down on the bar approach, that little voice inside him tells him he needs to reach out and follow the real estate mantra of “adding prospects to a database”.
So here it is. The moment: ”Hello, I’m Mike. Let me guess..Bloody Caesar? Either you’re not much of a drinker my friend or you’re going light as it’s been a pretty good week for you?”
“50% accurate Mike. I’m Trent and I’m not much of a drinker. If I were, I’d probably skip the food coloring of the Clamato and hit the vodka”.
“Talk to me. What’s got you down Trent”?
It’s nothing really. In the big picture it’s really nothing. Or maybe it is. Maybe it’s my future? I’ve been shopping for a house in this Toronto market for well over a year. I’ve been listening to the pundits and naysayers explain that we’re on the cusp of a 25% correction anytime now. Yet, the US continues to pump money out and hold interest rates low so something’s a miss. Even when the Canadian economy looks to keep rates low, corporate earnings, demand for commodities and a strong dollar seems to foster an environment that seems anything but corrective in nature. I just feel like I’m never buying a house in this market. To make matters worse, there’s almost no inventory to speak of, so when a house that shows well hits the market, there’s a backlog of buyers interested in it creating a multiple offer situation that ends up with a sold price well out of the reach of our budget. We were once 700k buyers so 649k homes were our game. Now it looks like we’re gonna have to somehow get excited by 599k list prices. A 599k house isn’t what we imagined buying. So I drink this Caesar wishing I was toasting a victory this week, instead we lost 2 more homes.”
“Trent, your story is being echoed across the city. And on top of your purchase price you now have stricter mortgage rules (which may be a good thing depending on how financially sound you are) and you have 2 land transfer taxes and increasing property taxes just around the corner when they’re reassessed in 2012 for the next 4 yr cycle.”
“Mike with all due respect, you’re kind of like the enemy. You must be having a good time Mike. Agents are digging this market, no?”
If you’re on the right side of the equation, it can be fun and financially rewarding. My business like many realtors is split between listing properties and filling buyer mandates. When I take a buyer to see the few listings available, the Buyer is already flash forwarding to just how much competition he will face on the date of offers. 70 plus cards are falling out of the bowl used to contain the agent’s cards who have showed the property. Sometimes were not even making it to the date of offers with some buyer really gunning for the house and attempting to squeeze the seller by looking at an offer prematurely, known as a “bully offer”. If the Seller likes it..the house never makes it to day 7.
“Look Trent, agents are not the most liked group out there. What the public doesn’t understand sometimes is that we can report to work every day and work an honest 30 days and not bring home a dollar. Every agent will tell you the story about the long time client who suddenly disappears and once they’re confident with the market they buy through the listing agent (usually a big mistake) or they invite their mother law in to finalize the deal and collect the commission. Being a realtor is not about collecting easy money. You’ve got to have thick skin and you have to learn to size up people to determine if they’re going to be loyal to you. So yes, listing property in today’s market is pretty straight forward depending on the area. Some still need a real push and clever marketing especially if priced at the absolute top of the range”. But working with buyers has become an exercise of hand holding and constant dialoguing convincing the buyer that you are the right fit; more inventory will come; you are using alternative methods to find a house for them; and proving over and over that your knowledge of the market is unmatched” Finally you have to look your buyer in the eyes and explain that though the house is asking 799k, it should sell for well above, perhaps as high as 920k depending on how low it was priced; the competition (in this market of late, little); the comps that have sold; and of course the number of offers that hit the day of. So in effect, you are the buyer agent whose traditional job it was to help your Buyer bid down the asking price, now bid up the purchase price. It’s a different role Trent, even in the last decade I’ve been working my tail end off to get Buyer’s into homes. The final twist…some buyers are simply overpaying for the property. Yes, they were preapproved based on their earning for a mortgage of x amount. But when they bring a firm offer and purchase, remember the bank has yet to appraise the property. About 1 week before close the bank will appraise and they may come back to you and say that the money you paid doesn’t align with the number the bank has appraised the house at. To save the deal the Buyer may need to come up with the 100k difference and raise their down payment. So knowing market values, and doing your homework may be more important now, than ever before.”
“Trent you want to own a house. I’d like to sell you a house. Fortunately I have patience; knowledge; proven strategies for negotiating deals and resources that should get you comfortable even before we start seeing homes. Bottom line…it’s getting harder for you the Buyer and it’s certainly not getting any easier for me the Agent. The way I see it…we can both sit in a boat being rocked by waves or we decide to grab the oars and move in the right direction. What do you say I buy you one more drink Trent? Such a pleasure to be quoted 22.00 for drinks and not have to pay one dime over. Wait…with so much demand for scotch, I suppose we could orchestrate a bidding war?
Michael Gruenstein is a GTA realtor. He recently had the pleasure of working with a first time buyer couple. The couple, John and Jill didn’t know it when they signed on, but they were about to have a heck of an experience. From multiple offers to understanding market values to home inspection limitations to title searches and the games that are played, this young couple were put through the ringer.
When the couple finally bought a house, they joked that their realtor should write a short story on their experience so others could learn alongside. Michael took it one step further and created a website that traced their experience from the initial interview to getting the keys on closing. The website and blogs (regularly updated) serve as superb resources for those entering the market for the first time or those buyers looking to downsize who have been out of the everchanging market and need a quick refresher course.
http://www.TheSmithsBuyAHouse.com and
http://www.mgruenstein.blogspot.com
So here it is. The moment: ”Hello, I’m Mike. Let me guess..Bloody Caesar? Either you’re not much of a drinker my friend or you’re going light as it’s been a pretty good week for you?”
“50% accurate Mike. I’m Trent and I’m not much of a drinker. If I were, I’d probably skip the food coloring of the Clamato and hit the vodka”.
“Talk to me. What’s got you down Trent”?
It’s nothing really. In the big picture it’s really nothing. Or maybe it is. Maybe it’s my future? I’ve been shopping for a house in this Toronto market for well over a year. I’ve been listening to the pundits and naysayers explain that we’re on the cusp of a 25% correction anytime now. Yet, the US continues to pump money out and hold interest rates low so something’s a miss. Even when the Canadian economy looks to keep rates low, corporate earnings, demand for commodities and a strong dollar seems to foster an environment that seems anything but corrective in nature. I just feel like I’m never buying a house in this market. To make matters worse, there’s almost no inventory to speak of, so when a house that shows well hits the market, there’s a backlog of buyers interested in it creating a multiple offer situation that ends up with a sold price well out of the reach of our budget. We were once 700k buyers so 649k homes were our game. Now it looks like we’re gonna have to somehow get excited by 599k list prices. A 599k house isn’t what we imagined buying. So I drink this Caesar wishing I was toasting a victory this week, instead we lost 2 more homes.”
“Trent, your story is being echoed across the city. And on top of your purchase price you now have stricter mortgage rules (which may be a good thing depending on how financially sound you are) and you have 2 land transfer taxes and increasing property taxes just around the corner when they’re reassessed in 2012 for the next 4 yr cycle.”
“Mike with all due respect, you’re kind of like the enemy. You must be having a good time Mike. Agents are digging this market, no?”
If you’re on the right side of the equation, it can be fun and financially rewarding. My business like many realtors is split between listing properties and filling buyer mandates. When I take a buyer to see the few listings available, the Buyer is already flash forwarding to just how much competition he will face on the date of offers. 70 plus cards are falling out of the bowl used to contain the agent’s cards who have showed the property. Sometimes were not even making it to the date of offers with some buyer really gunning for the house and attempting to squeeze the seller by looking at an offer prematurely, known as a “bully offer”. If the Seller likes it..the house never makes it to day 7.
“Look Trent, agents are not the most liked group out there. What the public doesn’t understand sometimes is that we can report to work every day and work an honest 30 days and not bring home a dollar. Every agent will tell you the story about the long time client who suddenly disappears and once they’re confident with the market they buy through the listing agent (usually a big mistake) or they invite their mother law in to finalize the deal and collect the commission. Being a realtor is not about collecting easy money. You’ve got to have thick skin and you have to learn to size up people to determine if they’re going to be loyal to you. So yes, listing property in today’s market is pretty straight forward depending on the area. Some still need a real push and clever marketing especially if priced at the absolute top of the range”. But working with buyers has become an exercise of hand holding and constant dialoguing convincing the buyer that you are the right fit; more inventory will come; you are using alternative methods to find a house for them; and proving over and over that your knowledge of the market is unmatched” Finally you have to look your buyer in the eyes and explain that though the house is asking 799k, it should sell for well above, perhaps as high as 920k depending on how low it was priced; the competition (in this market of late, little); the comps that have sold; and of course the number of offers that hit the day of. So in effect, you are the buyer agent whose traditional job it was to help your Buyer bid down the asking price, now bid up the purchase price. It’s a different role Trent, even in the last decade I’ve been working my tail end off to get Buyer’s into homes. The final twist…some buyers are simply overpaying for the property. Yes, they were preapproved based on their earning for a mortgage of x amount. But when they bring a firm offer and purchase, remember the bank has yet to appraise the property. About 1 week before close the bank will appraise and they may come back to you and say that the money you paid doesn’t align with the number the bank has appraised the house at. To save the deal the Buyer may need to come up with the 100k difference and raise their down payment. So knowing market values, and doing your homework may be more important now, than ever before.”
“Trent you want to own a house. I’d like to sell you a house. Fortunately I have patience; knowledge; proven strategies for negotiating deals and resources that should get you comfortable even before we start seeing homes. Bottom line…it’s getting harder for you the Buyer and it’s certainly not getting any easier for me the Agent. The way I see it…we can both sit in a boat being rocked by waves or we decide to grab the oars and move in the right direction. What do you say I buy you one more drink Trent? Such a pleasure to be quoted 22.00 for drinks and not have to pay one dime over. Wait…with so much demand for scotch, I suppose we could orchestrate a bidding war?
Michael Gruenstein is a GTA realtor. He recently had the pleasure of working with a first time buyer couple. The couple, John and Jill didn’t know it when they signed on, but they were about to have a heck of an experience. From multiple offers to understanding market values to home inspection limitations to title searches and the games that are played, this young couple were put through the ringer.
When the couple finally bought a house, they joked that their realtor should write a short story on their experience so others could learn alongside. Michael took it one step further and created a website that traced their experience from the initial interview to getting the keys on closing. The website and blogs (regularly updated) serve as superb resources for those entering the market for the first time or those buyers looking to downsize who have been out of the everchanging market and need a quick refresher course.
http://www.TheSmithsBuyAHouse.com and
http://www.mgruenstein.blogspot.com
Friday, March 11, 2011
Buyer's Beware....Don't rock the boat too hard and tip it.
Was that a catchy title? Maybe I'm getting better at this?
Here's the deal. We've talked about the lack of inventory primarily in the central Toronto core. It doesn't take an economist to understand that if prices are going up and interest rates are still at all time lows AND it's springtime AND there's a lot of buyers needing roofs over their heads....then there's going to be competition for good homes. Good homes may be defined as those near transportation or major arteries, with parking; decent layouts; updated (either by way of mechanics or by renos OR both).
So, I like many agents have experienced a number of multiple offers over the last few months. Always nice sitting with the Sellers on these nights. The Buyers duke it out until 2 are left standing. The 2 (or maybe 3) combat UFC style for the house with the ultimate winner crowned.
Here's where the "don't rock the boat" part comes in! Buyers may fall in love with a house, know they can afford it, be tired of losing and decide to go "all in" to win the house. So, they spend a "big buck". "Big bucks" may be okay if it's the "right" house for the buyer given their budget and their circumstances and assuming they've done their homework and then some. However we need to distinguish "big bucks" from "sky high dollars". The latter can be the "boat rocker". The latter can create an issue that both the Buyer and Seller (yes Seller too) may need to think about.
You see, if the Buyer is getting mortgage financing (especially if the Buyer isn't getting a conventional mortgage and is putting the house in the care of CMHC hands to be insured)...there will be an appraisal done. Now, if the bank disputes the value paid for the house, the Buyer may find themselves either shopping for other sources of financing OR figuring out quickly sometime near closing how to increase their downpayment to make up the difference they thought the bank was financing!
Appraisals are often finalized weeks before closing, so the Buyer and Seller often don't know until there's little time to correct. In some cases, little can be done and the deal doesn't close. Is this happening? It is.
I'm very adamant with my Buyers that they stay well within a reasonable range and encourage them to have open communication and cement a strong relation in this kind of market, with their banker/mortgage specialist.
So, Buyer's this should be good news to you. Get out there. Again, do your homework. Know your budget and have a good grip on market values and comps. If your agent can make you see where he/she is getting his/her valuations from and it makes sense to you---great. If you get the feeling your agent is looking to get paid and they're encouraging you all to quickly to put that "huge number" on the offer...ask yourself if this is the best move for you.
Happy March Break to those lucky enough to have time off. For the rest of you, it's a great time to give me a call and talk about the market.
Visit my website http://www.TheSmithsBuyAHouse.com
Best,
Michael Gruenstein MBA CSC
ReMax Realtron
416.271.2066
mgruenstein@trebnet.com
http://www.TheSmithsBuyAHouse.com
Here's the deal. We've talked about the lack of inventory primarily in the central Toronto core. It doesn't take an economist to understand that if prices are going up and interest rates are still at all time lows AND it's springtime AND there's a lot of buyers needing roofs over their heads....then there's going to be competition for good homes. Good homes may be defined as those near transportation or major arteries, with parking; decent layouts; updated (either by way of mechanics or by renos OR both).
So, I like many agents have experienced a number of multiple offers over the last few months. Always nice sitting with the Sellers on these nights. The Buyers duke it out until 2 are left standing. The 2 (or maybe 3) combat UFC style for the house with the ultimate winner crowned.
Here's where the "don't rock the boat" part comes in! Buyers may fall in love with a house, know they can afford it, be tired of losing and decide to go "all in" to win the house. So, they spend a "big buck". "Big bucks" may be okay if it's the "right" house for the buyer given their budget and their circumstances and assuming they've done their homework and then some. However we need to distinguish "big bucks" from "sky high dollars". The latter can be the "boat rocker". The latter can create an issue that both the Buyer and Seller (yes Seller too) may need to think about.
You see, if the Buyer is getting mortgage financing (especially if the Buyer isn't getting a conventional mortgage and is putting the house in the care of CMHC hands to be insured)...there will be an appraisal done. Now, if the bank disputes the value paid for the house, the Buyer may find themselves either shopping for other sources of financing OR figuring out quickly sometime near closing how to increase their downpayment to make up the difference they thought the bank was financing!
Appraisals are often finalized weeks before closing, so the Buyer and Seller often don't know until there's little time to correct. In some cases, little can be done and the deal doesn't close. Is this happening? It is.
I'm very adamant with my Buyers that they stay well within a reasonable range and encourage them to have open communication and cement a strong relation in this kind of market, with their banker/mortgage specialist.
So, Buyer's this should be good news to you. Get out there. Again, do your homework. Know your budget and have a good grip on market values and comps. If your agent can make you see where he/she is getting his/her valuations from and it makes sense to you---great. If you get the feeling your agent is looking to get paid and they're encouraging you all to quickly to put that "huge number" on the offer...ask yourself if this is the best move for you.
Happy March Break to those lucky enough to have time off. For the rest of you, it's a great time to give me a call and talk about the market.
Visit my website http://www.TheSmithsBuyAHouse.com
Best,
Michael Gruenstein MBA CSC
ReMax Realtron
416.271.2066
mgruenstein@trebnet.com
http://www.TheSmithsBuyAHouse.com
Tuesday, March 1, 2011
Multiple Offers...Are they good? Are they fair?
I'm not going to define "good" and "fair". I'm just going to mention that it's been my experience over the years that one party favors the practice and another can't stand it. Where it gets really interesting is when the party that favors it, turns into the party that wants it abolished.
When you sell your house...if your house shows well and is priced under market value or damn close (especially in a market with low inventory and low rates) you'll likely do quite well and be happy that you attempted an offer date. Why with some homes selling 100k or more above ask...it's gotta be great to be a seller with 13 offers on the table.
But wait...where did you stand in the realm of the offers submitted. Were you the victor? How much did you beat the second in line? Often this kind of thinking will make many buyers crazy. I've always told my buyers to somehow pretend that they're the only ones bidding on the house that night. It's a great house and we decide what fair market value for the property is based on the work we've put in. That way win or lose, most of the buyers feel like they put their best foot forward and didn't go in to lax or to bullishly.
With the practice of multiples all too common in this market, sellers are having a field day (again if they've priced well and show well).
But...these sellers will taste the other side when they become buyers, should they be buying in the similar market.
So...maybe it is fair and the shoe fits both feet so to speak?
The clear winners are those downsizing and putting money in the bank, but if youre young and moving up...you're at a good stage in life too!! Just not when you're buying a house in this market.....until you win.
Inventory should increase. The competition often helps level the playing field somewhat. Also with headlines in the media these days about household debt and rates to rise and new mortgage rules to hit soon, it's possible it'll be a kinder place for buyers. So keep learning the market and get a good agent. They do add value. Not sure they do. Visit my website @ http://www.TheSmithsBuyAHouse.com
best-
Michael Gruenstein MBA CSC
416.271.2066
mgruenstein@trebnet.com
When you sell your house...if your house shows well and is priced under market value or damn close (especially in a market with low inventory and low rates) you'll likely do quite well and be happy that you attempted an offer date. Why with some homes selling 100k or more above ask...it's gotta be great to be a seller with 13 offers on the table.
But wait...where did you stand in the realm of the offers submitted. Were you the victor? How much did you beat the second in line? Often this kind of thinking will make many buyers crazy. I've always told my buyers to somehow pretend that they're the only ones bidding on the house that night. It's a great house and we decide what fair market value for the property is based on the work we've put in. That way win or lose, most of the buyers feel like they put their best foot forward and didn't go in to lax or to bullishly.
With the practice of multiples all too common in this market, sellers are having a field day (again if they've priced well and show well).
But...these sellers will taste the other side when they become buyers, should they be buying in the similar market.
So...maybe it is fair and the shoe fits both feet so to speak?
The clear winners are those downsizing and putting money in the bank, but if youre young and moving up...you're at a good stage in life too!! Just not when you're buying a house in this market.....until you win.
Inventory should increase. The competition often helps level the playing field somewhat. Also with headlines in the media these days about household debt and rates to rise and new mortgage rules to hit soon, it's possible it'll be a kinder place for buyers. So keep learning the market and get a good agent. They do add value. Not sure they do. Visit my website @ http://www.TheSmithsBuyAHouse.com
best-
Michael Gruenstein MBA CSC
416.271.2066
mgruenstein@trebnet.com
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