What Is the Real Value of a Real Estate Agent?

In a DIY, information-heavy culture, such as we currently find ourselves in, the critical element in a real estate agent’s dealings with clients rests on his/her ability to provide an impartial, fair, reputable and trustworthy service to the buying or selling process.

This is a core component of my business model. I stake my reputation on it.

Not so long ago, the value of hiring a professional real estate agent rested heavily on a consumer’s requirement for information and an agent’s ability to negotiate skillfully and to effectively market real property.  These days, info is everywhere and unstructured marketing can happen via a thumb swipe on social media. The only factor in the info/marketing/negotiation trifecta that can’t be easily reproduced in the DIY arena is negotiation skills.

When it comes to negotiation. some people come by it naturally, some don’t.

I excel at negotiation.  If you don’t believe me, ask my wife.  If you don’t believe her, ask my Mom.  Or, better yet, ask the thousands of clients I have helped over the years.

Negotiating skills aside, there is a New Kid on the Block when it comes to the true value of a Real Estate Agent.

People used to pay for information, marketing & negotiating skills but the new reality is that the value of a licensed real estate agent rests more & more on his/her ability to build a bridge between buyers & sellers by introducing consistent and reliable ethical components into the process of acquiring or disposing of real estate.

Real estate as an industry is changing.  Debate about who should regulate ethics abounds.

Some industry professionals are proponents of an ethical complaint resolution process that involves the local Board, along with oversight by a national governing body.  No matter how you look at it, this is a two-tiered complaint resolution process, which can be intimidating to individuals because we all intrinsically understand the complexities and red tape required when it becomes necessary to navigate multiple tiers of governance.

Industry specific enforcement of a Code of Ethics needs to be local.  This provides individual complainants with regional accessibility, a sense that the intricacies of local market conditions will be understood, confidence that sensitive issues can be dealt with face-to-face and a strong underlying concept that ethics are of immediate and intrinsic import to the local real estate industry.

When ethics are perceived to have been enforced from a higher body that is far removed from the complainant’s experience, there is a corresponding concept that ethics are being ENFORCED as opposed to being internally and organically EMBRACED. If our goal as real estate professionals is to enhance the industry, then we must not leave the public with the perception that our ethics are being imposed upon the industry.

It is ABSOLUTELY ESSENTIAL that individual complainants feel confident that ethics is woven into the industry from the ground up, rather than being regulated from the top down.

While it is essential that ethical conduct among real estate professionals be regulated and monitored, I believe that principled conduct is essentially personal in nature.

Earlier in this post I mentioned that, when it comes to negotiation, some people come by it naturally, some don’t. The same is true for ethics.

Sure, guidelines can be set, processes outlined, expectations monitored.  But, in the end, it takes a personal touch to ensure that specific individual real estate transactions are conducted with integrity and trust.

Real estate agents who uphold high standards will naturally rise to the top.

Cream rises to the top

Wondering About Weed?

Since October 17th, marijuana has been legal in Canada.  We are the 2nd* country on the planet to legalize pot and the only G7 country to do so.

Canadians can buy it, smoke it, eat it, grow it or weave baskets with it, as long as our source of choice is a government regulated distributor, and the purchaser is of the age of majority.**

Or we can grow our own, up to 4 plants per household, maxing out at 30 grams of product.

While pot has been used medicinally, recreationally and for textiles derived from hemp fiber for thousands of years, when it comes to real estate, Canadian homeowners and potential buyers are navigating uncharted waters.

If you are a seller, what do the cannabis rules mean for you?  As a buyer, what should you be aware of?

Realtors, mortgage professionals, insurers, inspectors and real estate lawyers are debating these questions on a daily basis. Theories and conjectures abound.  Many knowledgeable, experienced people have varied, even strongly conflicting, opinions.

But, the one thing we all agree on, is that the reality of cannabis legalization has yet to be sufficiently tested in the open market.

I, for one, don’t have a green thumb.  Even so, I suspect that many savvy horticulturists will harvest more than 30 grams from 4 plants.

7 wondering about weed

Healthy harvests or not, here are a couple of points to ponder:

As a buyer, is it in your best interest to request that a seller disclose if cannabis has been grown in the home?

As a seller, is it necessary to answer such a question if you are growing & enjoying within the letter of the law and the plants are out in the open, for anybody to see should they choose to look?

The ins & outs, ups & downs of the issue are varied.

If you are a seller, showing your home, how do you feel about the possibility that buyers may have access to your bountiful harvest?  Some buyers aren’t shy about sampling apples from the backyard tree, or saskatoons off the bushes in the alleyway.  Will these same buyers be eager to snip a ripe bud off your mature plant?  (Of course, buyer behavior comes down to capable realtors educating their clients but, in the end, there all kinds of skill sets managing all types of people.  In other words…things happen.)

From a seller’s perspective, you can be certain that the aesthetics of 4 healthy plants will appeal to some potential buyers but turn off others.  No plants, on the other hand, will mean the question of appeal (or not) does not come into play.

A frequent question from buyers is, “Will CMHC, Genworth or Canada Guaranty insure a property when the seller has voluntarily acknowledged ownership of 4 marijuana plants?”  For now, CMHC claims “Business as usual.”  Genworth and Canada Guaranty are evaluating on a case by case basis.

Sellers are expressing concerns that interested buyers will be turned down for high ratio mortgages if the three big insurers start to get nervous about cannabis in the home.  And, truth be told, since we are in uncharted territory, both sellers and buyers can expect that the playing field will change, then change again, as insurers test the market and hone policies accordingly.

Currently, very few lenders will advance a mortgage on a known, or stigmatized grow op.  If your 4 plants appear to be bigger, better, badder than your neighbor’s 4, can you prove that you truly only have 4?  Should you even have to back this up?  Will buyers shy away if they think that their lender could dig in their heels?

Home inspectors evaluate properties with healthy foliage all the time.  I have never seen an inspection fail because a seller has had four robust tomato plants thriving in the living room.  But, I have seen plenty of reports that red flag high moisture levels in the drywall or that put the kibosh on a deal when mold is evident. Generally, if you are growing plants in soil, moisture levels won’t skyrocket.  Hydroponic production could produce different results.

Concerned buyers who are wondering if they are looking at an actual grow-op rather than legal cannabis horticulture should be vigilant about unusual looking electrical work, evidence of mold, etc. If anything looks amiss, further investigation is warranted.

A thorough home inspection conducted by a qualified and knowledgeable individual is always of value.

Another possible point of contention is whether or not pot smoke from one unit will impact the salability or rental potential of an adjacent unit in a multi-unit complex.  For now, the majority of property managers and landlords maintain a ‘no smoke’ policy.  Yet, at the same time, we are legally permitted to smoke weed within the confines of our personal residences.  While nothing prevents condo boards or management companies from enacting their own rules for specific properties, logic suggests that it is only a matter of time before this is tested in the court system.

On your own property, the city currently treats cannabis smoke as if it were fire pit or cigarette smoke.  But, refine oil using an organic solvent and you have violated a federal law.  Explosions can happen when organic solvents come out to play.  If a big bang occurs, you may not have a home to sell.

Since we are only a few weeks into legalization, most of the risks outlined here are hypothetical.  Yet, it won’t be long before chat around the workplace water cooler features buyer’s, seller’s, investor’s and landlord’s individual experiences with how marijuana legalization has impacted individual transactions.

As always, the more you know going into any venture,  the more likely potential perils will be avoided.  Surrounding yourself with a knowledgeable and experienced team of industry experts is always the best play of the game.

*after Uruguay in 2013

**18 years old, in Alberta, for consumption.  Anybody can weave hemp, if they want to.

In Case You Missed It

The Bank of Canada hit us with another rate increase today.*  This was not a surprise to anybody, anywhere.

But, expecting something unpleasant to happen doesn’t make it hurt any less. From coast to coast, Canadians will buckle a little more under the burden of lines of credit, HELOCS, variable rate mortgages, etc.

Fact is, as rates rise, interest-only payments go up.  Likewise, combined interest plus principle payments suffer from the dreaded “Less for Me, More for Them” syndrome.**

The party won’t end here.

The Bank of Canada has made it very clear that additional rate increases are in our future.  How fast & furious these increases will occur remains to be seen.

An overriding target of 2% inflation is their reason for most of what they do.

6 aiming for 25

 

Sure, 2% inflation is a challenge if you are the BoC but many competing forces from various global and local economic & political factors are at play.  Mathematical calculations on government letterhead apparently make sense to some politicians even when the final numbers deliver a real-life punch in the face for individual Alberta families.

We already have a lot to deal with in this province.  Many, many people I work with on a daily basis continue to wrestle with the ugly fallout from the oil crises.

  • Young folks, graduating with the latest skills, face a bleak employment landscape.
  • Retirees trying to downsize are finding that buyers aren’t showing up.
  • Skilled workers with decades of employment history under their belts are signing up for contract and piece work.

Emerging from a period of historically low interest rates hurts.  The pain is inevitable.  We all expected it but we don’t have to like it.***  Adjustments will be required, personally and professionally.

The wisest course of action is to know your options.

If you are looking to get a handle on changing loan terms, interest rate trends and what it all means for you and yours, call me today. 

*Take a gander at the Band of Canada’s take on their latest interest rate play here:  https://www.bankofcanada.ca/2018/10/fad-press-release-2018-10-24
**Either at renewal date for fixed rate obligations or right away for variable rate loans of all types.  In other words, ouch. And, ouch. *@!%@@!*
***With the possible exception of non-indebted, fixed-income investors.  This sector of our population should be basking in rate increases.  The benefits, though, have not yet trickled down.

Glory Days

First, there was smoke from BC fires.  Then came snow.  

In a previous post, I mentioned that shoveling is enjoyable.  Minutes later, cold flakes fell.  After yanking my shovel from a dank, forgotten corner of the garage, scraping a half inch of ice off my windshield then fishtailing down the driveway, I came to face the harsh truth:

Snow in September is not acceptable.

Yeah, I realize it happens.  September, August, June…  Name a month -any month- and longtime Calgarians will describe how a birthday/picnic/wedding/family reunion was snowed out.

Personally, I could go on & on about snow blasting through my life in seasons that should, in a fair and balanced world, be green and bathed in sunshine.  For instance…

  • Pouring syrup on a  Stampede pancake breakfast while wearing mittens.
  • Launching snowballs into a sputtering fire in a campground (August Long, anybody?).
  • Stomping through six inches of slush in horizontal winds to take my wife out for dinner on our June anniversary.

Like I said, I could go on.

Or, we could let bygones be bygones.

Today, it’s more than midway through October.  September snows have been forgotten.

Hello sunshine, blue skies and colorful landscapes!

The better the weather, the more we want to get out there and explore.

As a real estate agent showing prospective listings to out of town buyers, I am always asked, “What is there to do around here?”

This ain’t no ordinary Cow Town.

You can peace out on our Peace Bridge, elevate your heart rate by walking up to 16 kms while suspended 15 feet above street level,* enjoy cocktails and appies in a rotating dining room that provides a superior view of the city and beyond.

Or, do what I did today and take a driving tour to Head Smashed in Buffalo Jump.

But, before I show you the glory that was my sunny, mid-October Thursday, I am compelled to circle back to a fundamental truth… this is a real estate blog and I am a real estate agent.

Try as I might, I cannot NOT mention that, if snow shoveling or yard & lawn maintenance ain’t your thing, then consider condo living.  We have a lot to offer in this city, from bachelor apartments, to skyrise penthouse suites, to pet-friendly townhouses…and everything in between, including conventional or bareland condominium ownership.

Now, for a few highlights from today…

While in Cow Town, do as cowboys do and saunter along Cowboy Trail.

 

  • Notice how kilometers and feet are referenced in the same sentence?  That’s Canadian, eh?

Splotchy Green Walls and Smelly Carpet

A Wish List is essential for any buyer.  Usually, it goes something like this:

  • Big kitchen.
  • Sunny backyard.
  • Double garage.
  • Close to work/school/favorite pub.

All good stuff!  A comprehensive outline, hitting the high points, acts as a road map for a well thought-out property search.  Maybe you’ll even find your dream home on our first showing!

“Wow, really??”  You ask.

“No, of course not,” I reply.

Although I have had buyers fall in love with a solid home with excellent resale value on the very first showing, it is not a frequent occurrence.  But, it does happen.

Chances are better that we will see anywhere from 5 to 35* homes.  Most buyers find The One before they have seen a baker’s dozen.  The average for this year, for my buyers, as I write this in October 2018, is 17.5 viewings.

In 2013, the average # of homes viewed by my buyers before realizing a successful close was 4.4 different listings.

Times change.  Buyers’ needs change.  The number of homes you will have to poke through will increase or decrease based on the subtle interplay between your personal requirements and market conditions.

When the market is scorching hot and choices are limited, people select their favorites quickly.  When economic forces slow to a crawl, inventory levels rise and buyers have more to choose from, so they look at more (and worry more) and come back for second or even third showings.

Often, they bring their Dads.

4 image captioned

If you bring your Dad, his Wish List will look like this:

  • No curling roof shingles.
  • No condensation.
  • No R Values below code.
  • No settling, no sloping, no cracking.
  • No water penetration.
  • Five minute drive from your favorite father’s home.**

“Wait a minute,” you exclaim. “Dad’s list is longer than my list!”

“Sure is,” I agree. “And, he says ‘no’ a lot.”

What you don’t see is equally as important (and in some cases more significant) than what you do see.  If it’s a toss up between a well-maintained home with less than appealing finishings and a property that looks & feels glorious but leaks, sags or buckles, pick the ugly one with the strong fundamentals.

Paint is cheap, foundation repair is not. Mature trees are wonderful but less so if you end up wrestling root growth out of your plumbing system.

What I am saying here is that I’ve got your and your Dad’s back.

I will find you a home that ticks all your boxes but we won’t lose sight of the structural underpinnings that catapult a home from a place you enjoy living in to a sound investment with future resale potential.***

It ain’t easy balancing wants and needs but it is definitely possible.

* Don’t worry, 35 showings is not the norm. I once worked with a young couple with specific home business requirements for their residence. Over a two year period, we saw 35 listings before nailing down the ideal home. So yes, it happens, occasionally.  But I repeat, it is absolutely not the norm.
** We will find a workaround.
*** POTENTIAL is the real estate industry’s favorite word.  Because of this, I almost don’t want to use it.  But, I absolutely have to because POTENTIAL is the underlying drive for all of our decisions, in real estate and in our lives.

Take Note:  if you are buying strictly for location. location, location, you are an investor and therefore, your rules of engagement may be different.

 

How Big is Your Pantry?

People are interesting.  When you market a home in a public sphere, you can expect responses you did not expect.

Original Property Description:

Spacious, sunny bungalow in an established neighborhood.  Open concept kitchen, with Miele appliances, central island breakfast bar, pantry, and double doors leading to a BBQ deck…

FROM:  xxxxBUYER————TO:  yyyyREALTOR

So, this pantry, what size is it?

FROM:  yyyyREALTOR————TO:  xxxxBUYER

It is a corner pantry, with shelves that measure 16 inches in depth and a standard door width opening.  Depth from farthest corner to door opening is 4 feet.

FROM:  xxxxBUYER————TO:  yyyyREALTOR

So, can I store large items in there?

FROM:  yyyyREALTOR————TO:  xxxxBUYER

Sure.  Costco sized bags of rice, flour and sugar.  Canned goods from the bulk store.  They will fit.

FROM:  xxxxBUYER————TO:  yyyyREALTOR

My winter tires?  Can I stack them in there?

FROM:  yyyyREALTOR————TO:  xxxxBUYER

OK.

brake hard brake early

 

The Showings Went Well Until the Cat Escaped

Documented Fact:  If you are selling, and therefore showing your home, somebody will leave your patio door open.

The truth is, showings are a pain in the butt.  Maybe, one day, if virtual reality and 3-D imaging move into the mainstream, prospective buyers will tour your home in their pajamas while lounging on their own beds, in their current homes.  You, the seller, will get the place showing ready once and only once before the virtual reality photo shoot, then you will gleefully sit back to wait for offers to roll in.

Until then, expect muddy footprints in your foyer.

If you have a weak constitution, better have a have a nip of something strong because I am here to tell you that chaos is synonymous with showing your home.

When you open your door to strangers, anything goes. A kid you have never met will jump on your bed.  An expecting Mom-to-be will use your washroom and be eternally grateful for the opportunity.  Random people, who should not care and truthfully don’t, will feel compelled to comment on why your refrigerator is stocked with pizza boxes instead of low fat, zero sugar, protein-enhanced yogurt.

Somebody will tangle the cord on your custom-fitted top-up, bottom-down window shades.

Right now, you are probably wondering if I even like buyers.

The answer is: AFFIRMATIVE

2 image

Buyers are the catalyst that triggers market momentum.  Cash flows from buyers to sellers, who then become buyers in the next tier of the market, which bumps those sellers into the buying market in the tier above, and so on, and so on…

So there you have it.  Showing your home is hard work.  You gotta clean it, pester your family to pick up after themselves, vacate at inconvenient times, then mop footprints and untangle drapery cords after is all said and done.

Pro Tip:  Pets are happiest if they aren’t present during showings.  It’s not always possible, but, if you can do it, arrange to have your furry friends removed from the home when prospective buyers are visiting.

And try not to stress too much.  Rest assured that the reason it feels like a lot of work to keep your home showing ready is because it really is.

If you want a smidgeon of insight into what it’s like to be a buyer, check out future posts.  There are two sides to every coin.