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Picking a Buyer Agent

Typically Buyers don’t pick buyer agents.   The majority of the time the Buyer agent tries to “pick” a client and this happens either through an online inquiry, phone inquiry or open house, etc. On occasion a Buyer will be referred to an agent and still fewer cases a buyer goes actively looking for a buyer agent themselves.

The value the buyer agent brings to a Buyer, generally speaking, is as follows:

  • Buyer agents make it easy for Buyers to look at multiple homes and keep their identity private rather than having to contact multiple sellers or seller agents. Which generally means the agent needs to be available.
  • The Buyer agent makes it easy to write an offer on a property and this can be the difference between missing out on a great property or securing a property with a more favorable contract. Which again means the agent needs to be available.
  • They give advice and have a fiduciary duty regarding contractual subjects and conditions on any one property.  In this respect Buyer agents give Buyers assurance backed up with actual liability insurance usually up to $3 million dollars.
  • They give advice about general market conditions as well as specific advice down to a single segment and single property, ideally speaking, helping the buyer ultimately find the right property for them so that the buyer can have the best chance of building wealth.
  • The buyer agent can connect the Buyer with reputable sub contractors, mortgage specialists, and home inspectors to help ensure that the home buying process goes as smoothly as possible with little or no stress.

The first two points are probably the most important practical values a buyer agent can bring to the table and these two points also require the least amount of knowledge/experience.  Just by doing these two points, a lot of Buyers appreciate the services of the agent.   Just these two points can mean the difference between securing a great property or getting stuck with a not so great property or renting. These are the passive things an agent can help a Buyer with.

The last three points generally require more knowledge and experience to do well.  The agent becomes more of an advisor than a passive observer.  These points require more of an active approach.  Where the agent tries to actively ask questions that can help them better understand the needs of a Buyer and actively tries to match their needs with the right property. Outside of being available, typically the biggest difference between one agent and another one has to do with these last three points.

Picking the right agent can save you a lot of time and be the difference  finding an excellent property you want to hold on to and build wealth or buying a property that could literally cost more money than it is worth and lead to financial trouble.

Are you in the market to buy a property in the next 6 months or do you know someone that is? Contact me today and I will help you find the property that meets your needs and keep you in the “loop” in the meantime.

 

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Picking a Real Estate Agent to Sell Your Home

Not a lot of thought is usually given by Sellers to determine which real estate agent to use when selling a home.  There are a lot of agents out there to choose from and so usually Sellers rely on a referral from someone they know, use someone they have used in the past or pick an agent that has listings in the area already.

The tricky thing is good and bad real estate agents can sell real estate and as a result both types of agents have people that will refer them and (somewhat shockingly) both types of agents can have a lot of listings.

Why can bad real estate agents still sell real estate? What is the difference between a good and bad real estate agent?

Not a lot of people try to sell their property themselves despite the costs of using a real estate agent. Most people decide to use a real estate agent to sell their home for the same reasons they use a mechanic to fix their automobile or a lawyer to deal with a legal matter. Like any important matter that needs to get done right most people will naturally go with a professional for the best results possible particularly when they are dealing with their largest asset, their home.

It is possible to sell your property yourself but selling your property yourself usually results in less than ideal results – even from a monetary position.  What you save in commission is what you usually lose in sale price and you can exposure yourself to added risk and waste your time. You can kind of equate selling your property yourself to hiring a bad real estate agent. The results can vary widely.

As you probably know already, real estate agents tend to help you with the following:

  • Get a good price for your property.
  • Keep you at arms length from potential buyers so that you can maintain your privacy.
  • Provide you with a fiduciary duty to limit your liability of getting into any sort of crippling legal lawsuits and generally work in your best interest.
  • Be available to answer questions and screen potential buyers to help make sure they are qualified to buy and not just wasting time.
  • Give you insight on current market conditions and provide real estate advice when needed.
  • And finally Make sure your property stands out.

Every consumer is different but after years of experience I would guess that this would be kind of the order of importance for the typical Seller.  Surprisingly, marketing and real estate advice are typically not a top concern for most consumers when it comes to picking an agent.  This is why when you look at properties as a Buyer you can see pictures of listings, and descriptions of properties that are poorly done.  A good number of Sellers leave all the details of  selling their home to the real estate agent and don’t bother to check work or even really care about it. Here is an example of an advertisement for a home in Kamloops back in 1999:Kamloops Real Estate

Despite the picture and the write up this house sold for 96.4% of asking in 4 days. Most people would probably think those are some really good results, and statistically they are. But this is an example of why those numbers don’t really mean much when picking an agent.

If taking good pictures/offering great marketing isn’t that important then what value can a real estate agent offer?

The Value of a Good Real Estate Agent

The real estate industry is big business. For example, in Kamloops with just a population of about 85,000 on average there is about $70 million dollars of transactions per month. Like any successful business having a good management team is critical to being as efficient and productive as possible.  A good management team can affect production quite significantly and even be the difference between a successful business and a bankrupt business.

Real estate agents collectively are like the managers of the real estate industry and for their services they charge Sellers a commission usually no more than 4%.  In return, Sellers hopefully get a good management team that consistently makes production improve by more than 5% to offset this cost. I say management team because when you hire one agent you are indirectly hiring all agents, even agents that don’t even work in the same city sometimes represent clients that will buy your house, it is not a recommended practice. More on this in a different post.

Typically, sellers rely on referrals or superficial metrics like how many listings an agent has or has sold at any one time when determining which real estate agent/brokerage to hire.  Agents who are busy get even busier because of these factors working in their favor.

Good managers not only have good people skills, work hard, and are honest but they also tend to be always looking at ways to make things more efficient, informative and transparent.

When you are seeking a real estate agent keep these managerial skills in mind because they should be at the heart of any good real estate agents business. Surprisingly, better people and information management skills rather than better marketing skills tend to lead to a better selling experience.  When a property doesn’t sell or sells for less than it should it usually means the property was poorly managed not poorly marketed.

 

 

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Finding Downpayments for a Rental Property

In a Buyer’s market where prices are coming down more people are thinking about buying rental properties.  If you are one of those people you will be one of the elite!  In fact only about 4 percent of Canadians decide to buy rental properties as part of their investment portfolio.

One of the herdles that investors have to get over to begin buying rental properties is finding down payments!  Here are 7 options for you to consider to get those funds:

  • 1. Liquid Assets

You can sell off some stocks, sell your car, your coin collection, or rare doll collection etc.

  • 2. Real Estate equity

Properties tend to appreciate over time you can now take up to 85 percent (as of March 2011) of your equity out of one of your other properties! You usually have two options take out a mortgage for the full amount of equity (usually at lower interest rate or get a line of credit (LOC) for the amount.  By getting a LOC you don’t have to borrow the full equity amount. You bank might offer a ‘re-advanceable mortgage/LOC’ combination where every time you make a principal and interest payment on your mortgage, the amount of principal that is reduced in the mortgage is automatically available to you on your LOC.

  • 3. High-ratio insured Mortgages

Put less money down on a property. This is a very difficult option in the present market conditions, as described below:

Up until 2006 The Canada  Mortgage and Housing Corporation (CMHC) was the  only mortgage insurer who would insure rental properties. AIG United Guaranty entered this market in late 2006 and targeted the residential market coming up with 90% financing for investment properties.  As well GE Financial entered the market and matched any service AIG would offer. Then in August of 2007 a rumbling from a hedge fund in France led to an avalanche called the “sub-prime crisis.” As a result GE and AIG both withdrew from the market of residential rental properties in Canada even though Canada was relatively impervious to the sub-prime crisis.

In April 2010 bowing to the concerns that the Canadian housing market had not only recovered from the recession, but was in fact getting overheated once again, the government stepped in and annouced further changes. They simply eliminated any CMHC-insured high-ratio mortgages for real estate investors with less than 20% down.

  • 4. Sub-prime Mortgages

Not many people understand sub-prime mortgages.  Sub-prime mortgages are lent out when the person or the property is ‘sub-prime’.  In Canada the number of sub-prime mortgages represented less than 5% of the mortgage market where as in the US sub-prime mortgages represented up to 25%. Sub-prime mortgages came about to service the individuals who had a hard time proving their income (for example the self-employed).

Ever since the sub-prime crisis virtually no lendersare active in this market. The few that remain will go up to 85% but that changes every month depending on market conditions.

  • 5. Private Money

When every option is exausted to get cheaper conventional money look at private money. Private money is not for everyone.  Private money is best used on a short term basis. Suppose you find an ideal property but the current owner has the rent well below market value, but you have to wait a year to increase the rent. At present the CMHC will only grant you a first mortgage for up 55% of purchase price based on the current DCR calculations.  If you are very confident in the market and value of the property private money might be a great short-term solution. Financing for flips might also be a good option.

Don’t confuse private with a zero-down option.  Just because the money comes from a private source and not a bank doesn’t mean that the lender doesn’t worry about risk. Some private lenders worry more about security than the banks.

  • 6. Vendor take-back mortgage

In the case where the market favors the buyer vendors might be willing to do a vendor take back mortgage (VTB). VTB’s are essentially a second mortgage that is arranged by the vendor. Say for example, you wanted to buy a property but didn’t have 20% to put down you could approach the seller and ask them if they would ‘take back’ or grant you a portion of the down payment say 10%.  There is currently no Canadian bank that will allow the VTB to be as high as 20%.  Banks typcally only allow up to 10% of the mortgage to be VTB on rental properties.

  • 7. Joint Venture partners

A joint venture partnership (JV) can be structured many ways but the most popular is when one partner does all the leg work while the other provides the cash. Both parties would be on the title and therefore responsible for the mortgage. The JV can be for whatever percentage you negotiate.

I hope you have found this information informative.  Finding a good rental property includes using a good Realtor.  Please contact me if you are considering buying rental property in my area!

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How Marketing Homes has Changed – Kamloops Real Estate – Efficiency in the Selling Process

As the old saying goes…”Times change.”  That is never more true than with the real estate business.  Back before there was internet marketing running ads in the newspaper for your home became a vital part of the selling process. Newspaper ads were vital in getting the word out that a property was for sale.  Buyers were far less sophisticated and at the mercy of the local information that was available to them and that information was limited to their individual agent or brokerage that they were dealing with at the time.  Buying a home back then could be a lot harder and depended greatly on brokerages to give out information.

Since the internet age the marketing of a well known product, like a house, has been dramatically streamlined and made easier. The internet has allowed organizations to easily gather information and sort it so that it can be easily viewed and analyzed.  Everyone knows that if they want information on a certain topic they can “google it” and answers to their questions will magically appear before their eyes.   As real estate professionals in Canada we enter listings into a large data base following strict guidelines that keeps track for past sales, expires, and active listings.  We even made it easier for Buyers looking for homes to find them, no website is required, just an email account. In fact, properties that meet a Buyer’s criteria can get emailed to them directly as soon as they hit the market or change in price.

Before the internet it was not hard to see where the value was in using a brokerage to sell your house. Today the value of real estate agents have shifted to analysis of the data that is now available and analysis of the buying processes itself. Today, just like in any established industry, the value of a good real estate agent is all about making the home buying process more efficient.  There are a lot more options out there for the average buyer and a lot of potential risk they might run into. Prices of homes have dramatically gone up and there is an expectation of transparency from the public to insure that confidence remains as high as possible.  It is now the real estate agents job to insure that Buyers are treated with VIP treatment and guided to make the right choice(s) when it comes their home purchase.  Every buyer has their own needs that is based on their particular personality and lifestyle. As a sophisticated real estate agent I know it is in everyone’s long term interest that they find a house that best meets their needs so that financial freedom and not hardship can be had through real estate ownership.

Interested in finding more information on the Kamloops real estate market?

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Why did your property not Sell? – Two important Factors

Have you been trying to sell your property with no luck? You are not alone every month there are about 300 listings in the Kamloops area that come off the market without selling. Here are two important factors that surprisingly get over looked or ignored.

First, price is a huge factor on whether or not you get an offer from a potential buyer because buyers always want to see value in what they are buying. When you are trying to determine the right price for your house the best way for you to know that number is by knowing what comparable houses have sold for recently. You should never really take an appraisers evaluation or even real estate agents valuations to heart unless particular comparable houses back it up. The market is dynamic so you should get updates on those houses to see where the market is going. The market can change after just one sale or even before a sale happens. These market changes occur for a number of reasons but they can be monitored to a certain extent with inside industry information. Real Estate agents earn their pay by converting as many potential buyers into actual buyers and by limiting unnecessary risks. As a general rule of thumb, in the real estate business poor real estate agents perform 5%‐15% worse than a good real estate expert.

Secondly, when a buyer is trying to buy something outside of their disposable income it becomes a huge decision for them, a life changing event. Whenever I deal with a buyer I always sit them down and ask them about their particular needs and wants. I use this time with them to educate them about the market conditions just so they know what to expect before we even start going to view houses. The information they give me and information I provide them greatly increases the speed and likelihood they will make an offer on a house I show them because I am going to do a very good job of identifying their needs. I will just show them properties that meet their needs then I will gain a commitment from them. If I don’t go over their needs then it is likely I will be running around town with them looking at so many properties everyone’s head will start to hurt, and a top quality sale will be hard to come by. Buyers are free agents they have no commitments– they can be in the market one week and out of the market the next so it is important to get them to commit sooner rather than later and address their needs to help insure every sale is a win/win situation, for both the seller and the buyer.

If you are thinking about selling in the Kamloops area contact me for a no obligation real estate consultation.  I want you to make the most amount of money for your property.

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Should You list your Property during the Winter?

There is a myth that listing your property during the winter months is a bad idea.   In reality if you are hoping to sell your property there is no bad time to list your property, especially in a Buyer’s market where you could potentially lose out on that elusive perfect buyer.  The Buyer that loves your house just the way it is and therefore is more likely to pay you a premium dollar.

In fact, a lot of sophisticated Sellers prefer to list their property in the winter.  During the winter months there will be less people “just looking” at houses which means that you will tend to get fewer viewings but is that truely a bad thing?  The buyers who are looking in the winter are usually more serious – they are typically out-of-towners who NEED to find a house in a short amount of time or another Kamloopsian who JUST sold their property and NEED to find a place of their own quickly as well!  Both types of buyers are just hoping to buy a property for fair market value and want to do it as quickly as possible so they don’t end up homeless or stuck in a long term rental.  Fair market value has a lot to do with what has sold recently (in the last couple of months) and usually has little to do with what is currently active on the market.

If you are considering Selling our house in the Kamloops area feel free to contact me for a free real estate consultation to determine if the market conditions are right for you to make that move you are thinking about.

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Ask A Real Estate Expert: Should Sellers be present during a Property Showing?

So should Sellers be present during a property showing?  Sellers could answer any of the questions that the Buyer might have, and that would be good, right? In actual reality it is bad, believe it or not. The only question that the Buyer wants to know while looking at a property for the first time is if they can see themselves living there.   If the Sellers is present during the showing, or even if the Seller’s pictures are everywhere, that makes it harder for the Buyer to picture themselves in that house.

I have had experiences where the Sellers have been present during the viewing of their home.  They answered all of the Buyers questions and end up talking too much. In the end the Seller walks away thinking the Buyers are really interested in the property and the Buyers walk away thinking the Sellers really love THEIR house. Unfortunately the Buyers are looking for their own home.

If you are thinking of buying or selling kamloops real estate check out this great website.  I am a Kamloops real estate agent, or Kamloops Realtor and would like to learn about your real estate needs.

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Ask A Real Estate Expert: What affect has the proposed mine had on Kamloops Real Estate?

The proposed AJAX is a hot topic in Kamloops. Everyone in town knows about it and everyone moving to town does too. On one side there are high paying jobs and an influx of tax dollars that could go towards better infrastructure and social programs for the city and on the other side there are legitimate environmental concerns. The project is currently going through a BC environmental review process.  I get asked a lot about what affect the proposed AJAX mine has had on the current real estate market. So I took a look at the sales of areas of Kamloops that would potentially be affected the most, areas closest to the proposed mine operation, Aberdeen and Pineview Valley. Looking at the sales figures for these areas over the last five years. You can see despite the increase in public awareness of the proposed mine there has been no noticeable decrease in sales for these areas. In terms of sale prices there is still a noticeable premium for houses in these areas.  For example, the average new home construction price of an Aberdeen home is about $40-$60k more than comparable new homes in Bachelor Heights and Juniper heights. What is also interesting is the Kamloops market is hot right now.  There are only limited number of lots available but there are no lots available in Aberdeen.  They are sold out. Why aren’t sales and land values decreasing with all this talk about the proposed mine? There can be a number of different reasons, but when it comes buying homes we have all heard location is really important. I have had clients tell me they would love to live in the country, have more land and enjoy the fresh air out there. But most don’t want to live far from their work, favourite grocery store and other amenities.

There seems to be a trend where desirable aspects of an area such as proximity to work, amenities and quality of schools can outweigh potential challenges associated with industrial and commercial realities. At least they have in the past.

Kamloops has been referred to as a working town in the interior of BC. Because it is constantly compared with more tourism friendly cities like Vernon and Kelowna which have geographically advantages that Kamloops just doesn’t have.

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Ask an Expert. What should you be looking for when hiring a real estate agent?

Managing all of the details surrounding the sale of your home is one of the most important factors in getting the best results. One aspect of the managing process includes the advertising strategies a Realtor(R) implements for your property. Conveying the value of your home and targeting your ideal buyer is crucial. Your agent should take high quality pictures and advertise using a variety of mediums, such as websites, direct email, and other digital marketing mediums.

Another significant aspect of the managing process is concerned with dealing with people. In real estate, establishing good relationships with buyers is key as this enables an agent to investigate buyers’ needs to match them up with an appropriate property. This process leads to the best results which is a win/win situation where the seller sells their unique property to a buyer who appreciates the value.

Andrew Thompson a Kamloops real estate expert
Andrew Thompson is a real estate expert.
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