Andre Smit's Real Estate Round-up
Tuesday Mar 14th, 2023
So, the Bank of Canada, has now finally stopped increasing interest rates, in order to give the economy a chance to absorb the numerous past rate increases. The market is keenly anticipating the next interest rate decision in April. The smart money is on another hold decision. However, some economists are even becoming more optimistic for a slight decrease by the end of the year!
This pause by the bank, has definitely brought some buyers back into the market. With the number of listings currently at a historical low for this time of the year, I believe that sellers now have a 4-6 week window, in which to maximize their returns on their investment, before the slightly firmer prices result in a flood of pent up listings in the Spring. I have personally started seeing multiple offers again in the last 2 weeks!
This is evidenced by the actual sales to new listings ratio, which was just in balanced market territory at 40% in January, edging closer to a sellers' market of 57% in February, 2023. Remember that if the ratio is above 60%, then it indicates a sellers' market and below 40% indicates a buyers' market.
According to the Toronto Real Estate Board, (the largest in Canada), compared to February last year, total new listings were down by 41%, while total actual physical sales were down by 47%! This resulted in the average price for all homes, decreasing by 18% from the same month, the year before. The average days that listings spent on the market, before selling, has increased from 9 days to 22 days, or by 144%, for the same period.
The total number of sales of detached homes decreased by 47% from February, 2022, while the number of total new listings, decreased by 45% for the same period. This resulted in the average price decreasing by 20% compared to a year ago. The average number of days that these homes spent on the market before selling, increased by 163% to 21 days from a year ago.
Total physical sales of condo apartments were 47% down for the same period, while the average price for condo apartments, decreased by 12% year on year, and new listings were down by 27%. They are now taking 145% longer to sell at 27 days on average, than a year ago.
Now, more than ever, it will be extremely important to work with a dedicated and focused, caring realtor, either as a buyer or a seller.
This month, I want to highlight, why you should work with such a realtor.
Realtors are professionally trained and insured, real estate specialists, who have to conform to a very strict code of conduct, and a very comprehensive piece of legislation called the Real Estate & Business Brokers Act, all to ensure that you the client are protected and given the best service possible.
Selling your home
Realtors start off by determining a fair market price for your property. DIY sellers often overprice their properties to start off with, and then waste valuable time waiting for interested parties to show up, before having to reluctantly reduce the price. Bargain hunters often search for DIY sellers, in order to make low ball offers to them. Their theory is that by selling your property yourself, you are saving the sales commission, and therefore you can significantly lower your price.
Once an agent has agreed a marketing price and commission with the seller, we will suggest some quick fixes in order to show the home in the best possible light. These may involve the services of a handyman, in order to fix such irritating issues, such as leaking faucets, broken latches, wall chips and broken light fixtures. We may also make some staging suggestions, such as deep cleaning certain areas, de-cluttering, painting, furniture re-organizing and de-personalizing living areas. These issues are often ignored by the DIY set. We certainly do not want to give potential buyers any excuse to make low ball offers!
In our MLS listing, we would offer an incentive commission to all other realtors, to market the property to their buyers. DIY sellers do not do this and often naively, expect buyer's agents to work for free or at a substantially lower commission. They therefore practically exclude a huge part of the potential market.
We also arrange for professional photographs to be taken of your home, to portray it in the best possible light, and to produce informative and supportive video presentations. These pictures are used in all our online and other media advertising, as well as to produce tasteful brochures for all potential buyers to take home with them, after visiting your home.
We also keep you updated on the results of all our various marketing methods, so as to make any changes, as required. Professionally run, open houses, both for realtors and the general public, are a solid way to showcase your home. The DIY set tend to ignore this route.
As a DIY seller, you have to be available 24/7, to receive potential buyers who want to see your home. This is very challenging and stressful, in order to try and screen the tire kickers and potential criminals, from wasting your time. Realtors handle this situation for you, and control entry into your home through the key lock box system, and by vetting their buyer clients, to ensure that they are serious buyers, often with mortgage pre-approval.
Once written offers are received, emotions tend to run high, especially if a multiple offer situation arises. This is when you will require the cool head of an experienced negotiator on your side, to guide you through this land-mine invested area, in order to accept the best possible offer. DIY sellers tend to accept the highest offer, without fully evaluating the total offer, in terms of all conditions. Supportive objectivity from your trusted realtor, is priceless during this stressful time.
The work does not end once an offer has been accepted. The realtors have to follow up with financial institutions, home inspectors, co-operating realtors, contractors and lawyers, in order to ensure that the deal is finalized. DIY sellers often delegate these responsibilities to their lawyers, in exchange for hefty fees. It is my goal to make the selling experience as seamless and painless as possible, for my clients.
Buying a home
Realtors first determine what value of mortgage you would qualify for. Then we would jointly determine your home requirements. The next step would be to define an area of search, based on lifestyle, schooling needs, affordability and public transport / road network infrastructure requirements.
Then we would line up potential homes to visit, which fulfill most of the determined criteria. DIY buyers tend to move from show house to show house, not really knowing what they can afford and what they really require. This can lead to a very expensive and time consuming mistake!
Once we have composed a short list of appropriate properties, we will fully discuss them with you, show them to you at your convenience, and make our recommendations regarding any potential offers.
Once we have your agreement, we will handle the negotiating process on your behalf, in order to secure the home of your choice at the best possible price, based on a current market analysis and price parameters set by you. The DIY buyer does not have this information at his / her disposal, and often ends up paying top dollar for the property. The intense emotions associated with making the largest buy decision of your life, often take their toll on the DIY buyer.
Once the deal is signed, the realtor, follows up with all parties, to ensure that the deal is finalized within the time frame specified in the purchase and sale agreement. All this, normally costs the buyer nothing, as the seller, pays the buyer's realtor commission.
While it is certainly possible to go it alone, there are many hidden costs and many time absorbing events, that have to be allowed for, as detailed above. Working with a good realtor, just makes so much sense on so many levels!
Smit's Tip of the Month: Windows may begin to show condensation between glass panes over the winter months. This is an indication that the seal is damaged, and you may wish to replace the window over the summer months. The seal acts as insulation and helps to minimize heat loss.
Check your roof for spots where snow has melted faster. This indicates areas of possible heat loss. By adding insulation in your attic, and sealing around vents, you will help minimize energy loss.
If you, your family or friends have any questions regarding real estate, or indeed, require the services of a great realtor, please contact me, at anytime on 416-898-2852.
Until next month,
Stay warm and safe, out there!
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