TrueCondos.com – The Best Source for Toronto Condos

Top-5 Things to Know about Buyer’s Remorse

So you bought your significant other a sweater the week before Christmas to give as a gift on December 25th. Then while you were out at the same store this week you noticed that same sweater is now 50% less than what you paid for it! This is a perfect time of year to talk about buyer’s remorse!

Here are the top-5 things every buyer, seller, or investor should know about buyer’s remorse:

1. Everyone gets it. It does not matter if you are buying your first property for $200K, or your 10th property for $2M, everyone experiences buyer’s remorse when purchasing real estate. It’s a perfectly normal emotional state to be in, so if you are feeling it, relax! You’re normal.
2. It comes in waves. Buyer’s remorse usually isn’t just a one-time feeling the morning after you signed an agreement of purchase and sale. It comes in waves and hits you at different times and with different negative thoughts.
3. It goes away. Yes, it goes away in almost 100% of all cases! When buying for yourself, the simple act of moving into a property and making it your home is the most effective antidote to buyer’s remorse. When buying for investment, as time passes by and the property appreciates or the cash flow starts to come in, soon you will be looking for your next investment property to purchase.
4. Seller’s get it too! Yes, you are not alone in this weird mental state known as buyer’s remorse. You are thinking you bought the wrong property, or you are worried you overpaid for it, while the seller is worried they sold it to the wrong person or they didn’t get enough for it. Seller’s are not immune to this feeling, and the sheer amount of money involved in most real estate deals makes everyone involved lose a little sleep from time to time.
5. It’s almost always irrational and emotionally based. Buyer’s remorse is an instinctual process our minds take us through as a means of self-preservation when we make large (or sometimes very small) purchases. But almost always the thoughts our minds have are irrational and we try to illicit an internal emotional response to solidify the purchase as ‘good’.

The best advice I have for my buyer clients who are going through the ups and downs of buyer’s remorse is to trust their initial gut feeling. In my experience, your initial gut feel for a property (once you have been educated on the market in general and are ready to make a decision) is the most accurate measure of how you really feel about a property. As much as we try to rationalize the buying and selling of real estate, it will always be an emotional process to some extent! Questions or comments? Contact me or leave a comment below.

It’s Christmas Time For Resale Buyers

Resale buyers, now is the time to get out there and shop for bargains. Historically, there is no better time to be a buyer than in December (and January to a lesser extent). This is when the market activity is usually at its lowest point of the year, and for sellers who missed out on the busy fall market, the clock continues to tick.

Many of the properties that are on the market in December were listed back in the height of the fall market – October, and some go back to September. These sellers are often just waiting for an offer, any offer, and often properties sell for much less in December than they would have in October, or than they will in February.

Every year I preach this message to all my resale buyers, however, most buyers are just too busy this month to think about real estate. December is a month full of Holiday/Christmas parties and social gatherings, and most people just go into ‘survival’ mode, waiting for the month to be over so they can return to regular life. But for those who do understand the opportunity, and are ready to ‘hit the streets’ and scour the MLS for properties, they can save thousands.

Ready to go bargain shopping? Contact me to start your condo search today.

It’s All Just Politics, Baby

I’ve been to two different ‘VIP Agent’ type selling events in the past week  and I have been once again reminded that buying condos in this town can be a bit of a shell game. The lineups for these events are now at late 2007 levels all over the city. People are camping out for days, and literally clawing over each other for units. Agents are clamoring to get their clients’ the best units before they all sell out.

Here are 2 recent examples that should serve as reality checks to anyone left who still thinks that the process of buying in a brand new development is (or should be) ‘FAIR’:

1. I waited in line all day for an event where there was supposed to be approximately 75 units priced around $200-$250K, and an additional 150 units priced above $250K. I was #27 in line, so I thought I stood a very good chance of getting a unit in that range for my client. Turns out that in actuality I was probably #57 or even higher as large number of at least 30 agents and their clients just showed up at the start time and by-passed the lineup completely (this was obviously pre-arranged ahead of time). When we finally were brought inside, they were virtually sold out of all units under $250K!
2. Because of my reputation as one of the top agents downtown, I was granted a ‘priority number’ for a VIP sales event several days ahead of the actual event (regular agents were forced to wait outside for hours/days). Even though I was #3 in line, when we were invited into the sales area to buy, we saw there were several people already signing deals and low and behold, all the units we wanted to buy were already sold! Surprise!

In the final analysis, the words of a Realtor acquaintance of mine who managed to get to the front of the line (in example #1) without waiting while I froze my butt off outside sums up the current state of the VIP-buying Toronto Condo Market when he said, “It’s all just politics.” It’s a game of who knows who, who owes a favour to whom, and who knows how to work the ‘back channels’ the best.

Think twice before you believe any Realtor who claims to have ‘VIP’ access to every project in town. It’s simply not possible. Even a top agent like myself (top 1% of all agents for condos sales, member of various ‘Platinum/VIP’ Agent Clubs) cannot promise EVERY buyer first access to EVERY development. No matter how ‘VIP’ you think you are, there is always someone more VIP than you!

My advice for those looking to buy at these VIP events: choose an agent you trust, and who has a solid track record of sales. Choose someone who will put your best interests first, who understands how the game is played, and will use every resource available to get you as far to the front of the line as possible. Above all: Never.Give.Up.

Questions or comments? Contact me.

What Your Lawyer Will Say

So you just bought a pre-construction condo. Well, you haven’t actually bought anything yet, you’ve just signed the paperwork, dropped off a deposit cheque, and your 10-day cooling off period has begun. You hired a good buyer’s agent to represent you, therefore you already know that it is imperative to have a lawyer review your agreement of purchase and sale during the 10 days (if your agent didn’t tell you this, ask yourself why). Here is what you can expect he or she will most likely talk to you about:

• Capped Closing Costs. If you don’t have caps in place for things like development levies and hydro/gas hook-ups, your closing costs could theoretically be in the tens of thousands (not including land transfer taxes and legal fees). The number one thing your lawyer will recommend is having a good cap on these costs. What constitutes a ‘good cap’ is always up for debate. 5 years ago, caps were in the $1-2K range. Now developers are pushing things up into the $8-9K range. Most lawyers push for something in the $2K range for levies, $1K for utility hook ups, but frankly, most lawyers are out of touch with what is normal for pre-construction contracts in 2010.
• “Nickel and Dime” charges. Developers are notorious for trying to sneak in charges for all sorts of things related to the purchase. They can be very creative. Your lawyer will probably point out some of them and recommend you ask them to be waived. Most builders will say no.
• Square Footage. You will get a copy of your floor plan in your agreement but 90% of the time the square footage and dimensions are not listed. Your lawyer will point out that you may get a unit that is 600 sq ft instead of 700 and there is nothing you can do about it! In one sense they are right: there is no protection in the Ontario New Home Warranty Act (provincial legislation) for consumers on this issue. There is a bulletin that Tarion put out in 1989 stating that the size of unit should not be off by more than 2%, but this is just a guideline (not written in law). In reality, variances are usually negligible, but if there was a major discrepancy, it would be a legal issue that you would have pursue through the courts. One option would be to have an amendment added to the agreement that explicitly states variance will be in accordance with the Tarion Bulletin, however, be prepared that most builders will not agree to this. Proceed with caution and understand this is part of the risk of buying pre-construction.
• Rent During Occupancy. Make sure you tell your lawyer if you are planning on using the property as your principal residence or as investment. If investment, they will probably tell you the contract says you cannot rent during the occupancy period. You may want to request a clause which allows you to do this.
• HST Rebate. There is an HST rebate (formerly GST rebate) for end-user buyers that is built into the purchase price of condos in Ontario. If you are not planning on living in the unit, you might have to pay this amount back to the developer on closing. You may apply to the government to receive the exact same rebate given back to you after final closing. Your lawyer should advise you of this reality of buying for investment.
• Assignment. If your lawyer is really sharp, and he or she knows you are buying for investment, he or she will recommend you get an assignment clause that allows you sell prior to occupancy.

There may be other issues that come up like mistakes in the contract or inaccuracies that will need to be changed, but most of the time these contracts are 95% the same from one to the next. Questions or comments? Please contact me.

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.