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Client Service Is For Clients

Using a buyer’s agent is not for everyone. Even though I constantly preach on this blog that having a buyer’s agent is absolutely necessary I recognize that not everyone agrees with me. Some buyers prefer to go directly through a seller’s agent, or in the case of new construction-directly through the developer. Everyone has their reasons for doing so, and that’s fine, but what I don’t understand is why some buyers feel they can have their cake and eat it too!

Quite routinely I get emails from buyers who have elected to ‘go it alone’ and buy condos directly from developer. They usually go something like this:

Hi! I really like your blog and what you have to say about the condo market. I just bought a condo at “XX” development but I don’t know if I made the right decision. Did I pay too much? Is this a good area? Are other projects better? Help!

So essentially they don’t want to hire me as their agent (at zero cost to them), but they want my expert advice and opinion on whether they made the right decision! Even better is when the buyer tells me they have their own agent, but yet they don’t care what they say, they want to know what I think!

I’ve been writing this blog about downtown condos for over 3 years now. I’m flattered that many people value what I have to say, but my client services including my advice, opinions, analysis, and access to the best developments in the city are for my clients only. Hiring me as your buyer’s agent will cost you nothing. Not hiring me as your buyer’s agent could cost you thousands.

Questions or comments? Think I’m being an arrogant jerk? Contact me or leave your feedback in the comments section.

5 Things Every Buyer Should Know about Model Suites

The model suite is built and designed to entice the senses and ignite the imagination. Developers know that they only have a few seconds to grab a potential buyer’s attention and make them feel like they want to move into the condo immediately. In order to achieve this result, developers have long been using several ‘tricks of the trade’ to make their model suites appear as appealing as possible. Here are 5 things every buyer should know about model suites before walking into any condo sales centre:

1. Ceiling Height. Often model suites are in loft or commercial space where the ceiling heights are far higher than what you will actually receive. Side note, The Berczy’s model suite has 8′ ceilings whereas the suites will have a minimum of 9′ ceilings – first time I’ve actually seen this!
2. Doors. Many model suites don’t have doors between rooms, this creates the illusion of more space.
3. Upgrades. Every model suite has some sort of upgrade. Counter tops, appliances, hardwood in the bedrooms, the type of hardwood used, bathroom tiles used, etc. Ask yourself why is this? It can only mean that the standard finishes will not effectively ’sell’ the building which means you will likely be paying more for your unit than you originally planned to! Quick tip: if a sales person can’t tell you exactly what is an upgrade and what isn’t an upgrade in the model suite – RUN the other way!
4. Custom wood work. I’m seeing this more and more in model suites – custom mill work on walls, built-in storage, built-in desks, etc. This is a design trend that developers are adopting in their model suites but remember, when you move it it’s nothing but concrete and drywall painted in “Egg Shell White”!
5. Furniture and Lighting. The furniture and light fixtures being used in most sales centres are top of the line, high-end pieces.  The average person would be shocked to hear how much money was spent on the furniture and lighting in a typical model suite. Look past the $10,000 couch and $2,500 chandelier and see if you still fall in love with the unit itself before signing on the dotted line.

If you are thinking about buying a pre-construction condo, educate yourself first and never register with a developer without representation. Questions or comments? Contact me.

The Market Has Peaked, So Now What?

So the market has peaked (probably). Now what do you do? Well, first thing to remember is that most people won’t realize the market has peaked for about 3 months so if you are reading this you are way ahead of the curve. Secondly we are not talking about a market crash, and quite possibly we may not even see prices start to fall till Q3 or Q4 of this year. Making predictions on exactly how much prices will rise or fall is fool’s game, so I won’t go there, but I could forsee a scenario with flat or slightly falling prices by the end of 2010. Depending on what your situation is, here are some quick thoughts moving forward:

For Buyers:

It’s already much better now than it was just 2 months ago. Inventory is up, some sellers are starting to get a grip on reality, and you actually have multiple properties to choose from. Things will continue to get better as inventory continues to rise along with interest rates which will increase supply and decrease demand at the same time. Don’t rush into anything. Now is not the time to pay higher for a property than the last guy did. Buy smart, buy for the long term.

For Sellers:

Understand that the market has changed. Price your property for what it is worth and don’t follow the “price it low for multiple offers” strategy. Remember that if you want to command top dollar in terms of selling price, your property must show better than all the other properties on the market – proper staging and marketing is vital. Better to list now than wait till Summer. There is still time to close before the HST kicks in July 1st. Want to talk about selling your condo? Contact me.

Investors:

Keep buying if the property makes sense and the neighbourhood has good long-term upside potential. Stop buying if you are hoping to flip for a quick profit or if you are over extended.

Questions or comments? Thinking about buying, selling, or investing and want the advice of a professional who understands the market? Contact me

HST Rush Is On

The long predicted rush to beat the HST seems to be in full effect. Developers who have nearly finished buildings are rushing to get their remaining inventory over $400K sold and closed (building registered) before June 30th. For example, Empire Communities has School House Lofts in the Annex – a boutique collection of high-end condominium residences, all priced over $629K, and they are trying to get these units sold and the building registered by June 30th. If they do not, they will either have to absorb a MASSIVE hit from the inclusion of the 8% extra HST, or they will have to raise prices on all units significantly.

On the resale side, buyers and sellers alike are trying to get their closings in before June 30th even though the impact will not be nearly as great as on the new build side. Let’s just say that all the real estate lawyers in the city will be VERY busy the last week of June and completely bored the first week of July!

Here’s what the actual impact of the HST will look like for both buyers and sellers of a typical $400K transaction

For Sellers, closing before July 1st will save you 8% on your real estate fees (assuming fees at 5%, that’s $1600). Legal fees on a typical sale will be about $1000 (HST would be $80 extra here).

For Buyers, closing before July 1st will save you 8% on your legal fees (assuming fees at $1500, that’s $120).

Other miscellaneous expenses to think about that will cost more come July 1st include home inspections and moving expenses.

Tip For Buyers: If you are buying a condo, check the status certificate to ensure that the budget includes an accounting for the HST and the impact it will have on the services the condo uses regularly. If the condo board has not planned for the increase, this is not a good sign!

Tip For Buyers and Sellers: Secure your lawyer early to handle your closing as many will be ‘booked up’ for the last week of June and may refuse you service.

Questions or comments? Feel free to contact me.

Buy to Sell in a Buyer’s Market

While the title of this post may sound confusing at first, the meaning is simple: whenever you buy a condo, make sure it is a unit that would be easy to sell again in the future – even in a strong buyer’s market. This is advice I always tell my clients, especially investor clients. May seem like common sense, but it is worth exploring a little further.

Besides a brief 6-month window between October 2008 through April 2009, the Toronto market has basically been a seller’s market for the better part of the last decade. Anything sells in a seller’s market, and hopefully when it comes time for you to sell you reap the benefits of a strong seller’s market, but what if you sell and the market is slow? What if there are 10 listings for every buyer, instead of the other way around? Make sure you buy smart and buy a condo that will be easy to sell and sell quickly even in a buyer’s market.

Some more tips to consider when thinking about selling in a buyer’s market:

1. Always buy a property that a wide range of buyers would be interested in.
2. Avoid one-of-a-kind units. Cookie cutter condos are not always a bad thing when it comes to investment!
3. Be wary of units with special features like terraces, multiple parking spots, customized kitchens etc. Not all buyers appreciate these features and therefore they will not be willing to pay extra for them.
4. When in doubt, buy the smaller of two units. Smaller=Cheaper=More potential buyers
5. Go as high as possible. The 25th floor will sell before the 2nd floor in a slow market.

In a hot market like we are in, it is easy to lose sight of the fundamentals of real estate investing. Buyer’s often ’settle’ for a property that does not meet the above criteria just to get into the market. Don’t settle and always think about what if you had to sell during a buyer’s market.

Questions about buying investment condos in Toronto? Contact me directly or leave a comment here.

Why No One is Buying Your Assignment

Around this time last year I predicted 2009 was going to be the year of the assignment. I was wrong. While assignments did begin to take a greater role in the overall Toronto condo market, they still have not gone ‘mainstream’. Quite frankly, this method of buying and selling real estate will probably never go mainstream, however, in 2010 it looks like assignments will be seen as a “Third Way” of buying condos in Toronto (the traditional two ways being pre-sale or resale).

People contact me just about every day and ask me about assignments - I want to buy an assignment! I want to sell my condo by assignment! The truth is, most people have no idea what is involved when buying and selling an assignment. When the Average Joe learns just a fraction of what there is to know about assignments, 95% of the time Average Joe ends up returning to the comparatively simple world of pre-sales and resales.

So for all the sellers of assignments, as well as those who may be thinking about buying a condo by assignment, I’d like to introduce to the the top-5 reasons why many assignment listings never sell:

1. No Market Exposure. You are not allowed to advertise assignments on the MLS. Many assignment listings don’t sell because no one knows about them!
2. Lawyers. Most lawyers hate assignment deals. They often look for reasons to kill the deal – and with assignments, you don’t have to look to hard.
3. Price. This is probably the #1 reason why many assignment listings don’t sell. You can’t price an assignment like a resale property. Investors buy assignments and investors don’t pay current market value for property!
4. Closing Day Too Far Away. Buying a pre-sale condo then trying to flip it a month later is a fool’s game. The unit must be at or very close to occupancy so that market value can be accurately predicted and the investor can safely determine if they are getting a deal.
5. Closing Costs. Did you get your closing costs capped by the developer when you first bought your condo? If not, there is no way to tell exactly what they might be. Buyers of assignments need some degree of certainty as to what closing costs they will incur, otherwise they will move on.

Bottom line, assignments are not for everyone, but for the right buyer and seller, working with a good Realtor and co-operative lawyers, they can be a fantastic way to transact in real estate. Questions about assignments? Contact me.

10 Days is a Long Time To Think

When you buy a new condo in Ontario, you have 10 days after you receive your copy of the executed agreement of purchase and sale and the condominium documents to rescind on your agreement if you choose to do so. This can be for any reason whatsoever, technically you do not even have to provide a reason. You are released from your obligations and your deposit cheque(s) are returned to you.

I think this law is valuable and necessary and that it does what it is supposed to do – protect buyers from doing something they will regret. Unfortunately, some people are thinkers, and thinkers often think too much.  A lot what-ifs and worst-case scenarios can play out in your mind over the course of 10-days and the initial joy and excitement of buying a condo can be replaced by anxiety and fear over future events that may or not occur.

Typical rescission rates for most new condos is about 20%. That means out of every 5 purchasers, 1 will change their mind during the 10 days and will return their unit. By contrast, conditional deals in the resale market go firm about 95% of the time.

In my own experience, buyers who rescind on their agreements tend to do so because of one reason: risk. They just don’t have the stomach for the risk involved in buying pre-construction – and there is a lot of it! This has led me to believe that some people just should not buy a pre-construction condo. They are not cut out for it, and they would be far better off looking at lower risk investment opportunities in the resale market.

Buying a pre-construction condo is a high-risk, high-reward scenario. If you tend to be a risk-averse person, understand the inherent risk involved and use the 10-day cooling off period to carefully consider whether you are comfortable proceeding.  Questions or comments? Contact me.

Pricing Starting to Favour Pre-Construction

Once upon a time in Toronto real estate, there was a rule  that investors followed religiously – you only buy a pre-construction condo if the price is lower than that of a comparable existing resale condo. If the price wasn’t lower than existing resale condos of similar quality in the immediate area, then it just didn’t make sense to buy. After all, why take on the risk of buying ‘from plans’ when you don’t know how long it will actually take to be delivered, what the final build quality will be like, and what additional surprise costs you may incur along the way.

When market really started to get hot sometime in mid-2007, and pre-construction condos became the thing everyone and their mom were investing in, this long-held rule was abandoned. Prices of pre-construction started to reach heights never seen in the resale market. $600 Per Square Foot was suddenly a normal rate for pre-builds, whereas resale prices were still hovering around $425 PSF.

Over the last six months, there has been a seismic shift in the resale market. Prices have escalated at about 2% per month since June 1. If you bought a condo on May 1st of this year anywhere downtown, it likely has appreciated about 12% in value. Congrats.

Prices have gone up so much and so quickly in the resale market that the value is now, incredibly, starting to once again favour pre-construction.  Resale prices in several of the ‘prime’ downtown buildings like College Park, The Hudson, The Met, 18 Yorkville, Mozo, are now routinely hitting the $550-$575 PSF range. One upper floor 1+den with parking unit at College Park recently sold for $660 PSF! With several pre-construction projects across the downtown still selling between $500-$550 PSF, it doesn’t take a genius to figure out where the best value for your investment dollar is and where it will be in the months ahead.

If you are interested in taking advantage of some hidden gems in the pre-construction market downtown, let’s talk.

Prepare to be Disappointed

I would love to paint a picture for my readers and clients that buying a new, pre-construction condo at a VIP sales event is a simple and straight-forward process where if you have money and are ready to spend it, you get exactly what you want when you want it. Unfortunately this is not always the case.

This past weekend I attended yet another one of these VIP broker-type sales events at one of the highest-profile condo projects downtown in the King and Spadina neighbourhood. Condos at this project are selling in the $800-1000 per square foot range. These are not low end condos.

My client wanted to buy a 1 bedroom unit for something around $500K. We lined up early, we knew exactly what we wanted, we even had our deposit cheque ready to be handed over. When the doors finally opened, we were told that there were no 1 bedrooms available (even though it was advertised that there would be). In fact, there were no units available unless we wanted to spend at least $750K.

Of course, I knew this would likely be the case beforehand and had prepared my client for this reality. But most people attending these “VIP sales events” have no clue what they are walking into.

My best advice to buyers is “prepare to be disappointed”. Even though you may know exactly what you want to buy and have the financial means to do so, you may go home empty handed. It’s the nature of these sales events. They are built around hype and anticipation. Once you are through the doors they know that given the chance, most people will buy just about anything

Questions or comments? Feel free to contact me or leave a comment below.

Protect Yourself: Never ‘Register’ With a Developer

When you enter into a new condo sales office, the first thing the pretty girl behind the desk will say to you is “Have you been here before? / Can I get you to sign in? / Have you registered with us yet?”.  Hmmm…you’ve got to ask yourself why they are so quick and in-your-face to get your personal information when you’ve only just walked through the doors. The reason is simple but most people are shocked to hear it.

When you sign-in/register with a developer, you are giving up your right to be independently represented on any future purchase at that condo development. You are effectively saying, I am not working with an Agent, and I give up my right to have an agent represent me in the future.

NEVER REGISTER OR SIGN-IN WITH A DEVELOPER!

Even if you have absolutely no intention of working with a Realtor, or if you think you have absolutely no intention of actually purchasing a suite at the development whose sales office you are entering, don’t give up your right to be represented! Remember that the sales people in the sales offices are working exclusively for the developer – they have ZERO obligation to you and your interests.

Remember, it costs you nothing to be represented by an exclusive buyer’s agent. The developer pays the fee on your behalf! Be smart, protect yourself and always leave yourself the option to be represented.

So what should you do?

1. Never give up your personal information on a sign-in or ‘registration’ forms. Tell them you are working with a Realtor/you have an agent.
2. If they press you to fill out the form anyway, put down your agent’s name and contact info. Better yet, give them your agent’s business card with your name on the back of it. (If you don’t have an agent, feel free to use my name and contact info.)
3. If they give you a hard time, or refuse your agent’s name as registration, you’ve got to ask yourself if this is a developer you want to buy from.

If you are thinking about buying a new condo, click here to hire me as your exclusive buyer’s agent.