Monday, May 9, 2011

Old, but good, news...

Friday's Globe and Mail had a string of interesting, even useful, real estate articles.
"Well, of course they did", you say, "Friday is the day they publish their real estate section."
Except these better articles were all in the Report on Business section. It was so full of juicy items it took me a few days to get around to writing this up.
With the wee summaries and links below, I quickly maxed out the character limit for Facebook and Twitter ... so you get a blog post.  To wit (not to Tweet)...

"Rule changes make mortgages a moving target".  Opens with a statement that all the new rule tweaks make "it harder for many Canadians to get a mortgage".  Followed by a bunch of reasons why the new changes and restrictions are a bad idea.  Towards the end of the article we get stuff more along our thinking: that the new rules help ensure that "the goal and dream of owning a home is balanced with the ability to repay..."  A broker suggests the changes affect decisions for 10-15% of buyers.  If he is right, I suggest that the new changes probably influenced 90% of those people to make better decisions.  In other words, there are very very few people out there who have really good reasons for a 95% mortgage amortized over 35-40 years.

"How to play the low interest-rate game". Pretty solid advice on how to take advantage of the current low interest rates without losing your mind and taking inappropriate risk. My favourite quote (though I admit there are exceptions) "If you can afford to put down only 5 per cent, you can't afford the house".

"The $600,000 question".  What do you get for $600k in various parts of the country.  If you are just one happy puppy on some acreage in the boonies you can get a lot of house.  If you want to step outside and stroll to every imagineable cultural, recreational, and commercial attraction, think smaller.

"The long, slow flip". Cindy Wennerstrom's business is "flipping" homes but she takes an interesting middle ground between the fast buy-reno-flip and the long term investment property approaches.  She argues that her approach has risk and tax advantages.

If any of those sound interesting beyond my precis, follow the links and enjoy.  Comments also most welcome.  Please.  Somebody.  Comment. On something   :-)

Saturday, May 7, 2011

How Many Houses Do You Sell in a Year?

[Part of a series on how NOT to select a rep.]

When we are being interviewed by a potential client and this question is asked, our first response is "none".  That is because we don't "sell" houses.  Our clients sell/buy.  We help.

But the question is often asked on the premise that the more you sell, the better you are and the more you can do.  Sales are results, so more sales equals better results, right?

We think not.  Certainly, an agent must have a number of successful transactions per year to be considered "successful" ... and to pay bills and eat. But beyond some point, more sales may mean poorer, or at least different, performance and service levels.

There are only so many days in a year and hours in a day. We limit the number of active clients we will take on at any one time (to 10, though a constant 10 would have us lowering the number in a hurry!).  If we assist in the sale of a home a week during the high seasons, we are happy and not really looking for any more business (maybe less).

Why? Because we want to have a life while providing top service.  And because we decided we want to be fully involved throughout the process with our clients.

That is not saying we are the best (that's a story for a different place and time).  It's just our opinion that a number higher than that requires either reduced service or a different business model.

The reduced service is pretty obvious and unpleasant. The point to be emphasized again: More is not continuously better.

The different service model can work well, but you need to understand what it means.  Typically it means a small -- or not so small -- "firm" of professionals and service staff who, to a greater or lesser extent, specialize.  The "names" of the firm typically do the signing up -- listings or buyers.  For a listing, much day to day contact will be with a staff person.  If it's a buyer, or a seller who is also buying, a "buyer agent" may be assigned to that effort.

It's fundamentally the same model as a consulting, accounting, or advertising firm.  In those businesses, you only see the senior partners between signing and cheque-collecting when there is a big, BIG problem!  It works great with a well-managed firm with good training and a steady supply of young keen fresh meat!

I'm rambling.  The point is that that is how an agent "sells" 200 houses a year. They don't. [First, to be repetitive, an agent doesn't sell anything ... except maybe themselves].  A mini-brokerage, firm, team, whatever manages the sale of those homes.

To choose between someone involved in 20 sales or 200 or 300 sales, you need to decide on what kind of model you want and who you want to be working with.  The specific number of sales itself is not relevant.

Previously in this series of posts:
  • The introduction to this series is here
  • The chat about the not-validity of evaluating an agent by the ratio of sale price to listing price (You know the drill: "SOLD OVER ASKING!!") is here.
  • How about the guy with the lowest "average-days-on-market"? Debunked here

Sunday, May 1, 2011

Best Answer Ever (Grow Op Edition)

The other day we presented a (successful) offer on a fine home owned by a lovely senior couple.  A fairly standard clause in these strange times has the owner warranting that they have never used the property as a marijuana growing operation.

The listing agent properly noted the clause and asked them to confirm that they could so warrant.

Said the grandfatherly owner: "Well, I've pulled on a few, but I never grew it."