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
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