Bidding Wars

by Darrin DeRoches August 21 - 27, 2014

All of a sudden there seems to be an epidemic of hold back offers in Hamilton. A hold back offer is when the sellers decide that they will not look at any offers until a certain date. They want the market to have a week or so to look at the property and then, on a certain date, send in offers. The real intention is to create a “bidding war” which makes buyers compete against each other. This works in some cases but it seems to backfire more often than not.     I have several clients that will not even look at properties if there is a hold back date. They do not want to be “duped” into a false sense of urgency and over pay for a property. These hold back dates are causing more harm to a property than good. It also gives clients a week to change their minds — over and over again.     I showed a great little cottage in the west end and we left feeling pretty good about the property but had four days until offers accepted. The night before it was time to make offers, my clients decided not to write an offer. They fell out of love with the property and if we could have made an offer the first day, I am sure we would have closed. The property hit all the boxes on their wish list but when you have time to think about it, you think “there might be better coming out”. I checked today on the property and it is still on the market. I guess all of the other buyers felt the same way.     On the other side of the spectrum, I see good agents putting up properties that sell within days for top dollar and everyone wins. The agent makes a quick sale. The sellers get it sold without weeks of showings and disruptions. The buyers are excited and pay the market value. Everyone wins. If you really think about it, are you selling a property or are you squeezing out every penny you can? A good agent will negotiate the best price with one buyer instead of multiple offers that may or may not close the deal.     The hold back does bear fruit in some instances but lately I have seen more failures than successes and agents are over using a tactic that can hurt a property’s sale and make them sit on the market and go stale. This time of the year is usually pretty slow for real estate, as everyone is on vacation and getting ready to go back to school. Often you can find a good property while everyone is too busy, and I have seen a listing that would work great for my clients, but then I saw a hold back. These properties should wait a couple of weeks for the market to pick back up and then it would work. We are going to wait to pass the date and then see if it is still on the market and scoop it up for a better price. Timing can be everything! V     Darrin DeRoches is a local real estate and mortgage broker. He can be reached to answer questions, comments or stories about real estate experiences through this weekly column at sold@uniquerealty.ca

Competing In Today's Market

by Darrin DeRoches August 7 - 13, 2014

If you want to sell your home for top dollar, you have to understand your market. Just because you hear the media saying it is a sellers’ market and Hamilton is having a boom in real estate does not mean your house will sell fast for top dollar. You have to understand your competition and beat them!     I recently did a home evaluation in the central part of Hamilton and once we did the walk through we discussed the renovations and possible price. The house needed paint and touch ups throughout and the seller was already doing the work. We discussed how they were going to finish the bathroom which was already under renovations. The final point was the kitchen which was in need of repair. The homeowner was going to try to match more recent renovations and do the paint, update hardware and simply “put lipstick on a pig”.     We sat down and looked at the comparables and came up with a price and a game plan. Some agents would have the sellers paint the entire home and put thousands of dollars into renovations when a simple cleaning and minor update would sell the property. This particular property had several homes for sale in the neighbourhood and all were recently renovated. We had to renovate the kitchen, do less painting and spend the time and money wisely as there is a limit to what the market will pay and you do not want to over improve the property. We saw the renovations that they had already done themselves and the quality was impressive so we discussed doing a total remodel of the kitchen by going to Ikea and slapping it together in two weeks. The kitchen was small and with new cupboards and counter it would only cost around $2500 dollars but the impression on perspective buyers would be priceless.     We convinced them to leave the upper floors with the paint that is there and spend the money and time on the kitchen. The house will then be ready to compete within its market with the other homes that have been on the market and are not selling. Everyone thinks houses are selling fast and for top dollar in Hamilton and in some areas that is true.     The last part of the game plan once the house is ready to hit the market is timing, price and commissions. I recently closed a condo that had its corporation collapse and no one else in the building has sold. We found a buyer and negotiated a deal and sold it. We have other agents calling us asking how we sold it and the answer is simple. We did our homework, presented the property properly, priced it right and offered the right commission. Five other units are sitting unsold, some are going power of sale and none of them are selling. Know your market! V     Darrin DeRoches is a local real estate and mortgage broker. He can be reached to answer questions, comments or stories about real estate experiences through this weekly column at sold@uniquerealty.ca.

The Value Of Pools

by Darrin DeRoches July 31 - August 6, 2014

The idea of adding a pool and spending close to $50,000 once it is installed and landscaped is based on emotions, not economics. This time of year we all wish we could come home to a pool and we dream of having one installed. I have been thinking about it year after year and every time I try to justify it, economics win out over emotions. If I spend $50,000 on a pool and landscaping will it increase the value of my house?     The pool is just part of your landscaping and if it is just sitting there in the backyard all by itself then it really does nothing to add to the value of your home. If it is part of a great landscaped entertainment backyard, then it helps to sell your home, especially in the summer and fall. The emotions of a pool and the part that it plays in the landscape of a great yard will increase the value of your house but nowhere close to the tune of the total investment. It comes in around 10 per cent of the value of the pool if it is incorporated in a great back yard. Everyone who buys a home with a pool falls in love with it until it costs them money and this emotion helps sell a home.     If you had two exact homes in a neighbourhood — which is very common these days — with new builds and one had a pool, which one would you buy? Think about a finished yard with a pool and a totally landscaped yard that is priced higher than the competitor without the pool. If you could afford to buy the one with a finished yard with pool, your emotions would take over as well as your imagination of summer fun. If the agent explained the owners spent an extra $50,000 on the pool and yard but are only asking and extra ten or twenty grand, you would perceive its value and buy the house with the pool. The reality is that you would pay more for the house with the pool and they would get closer to their asking price than the house without a pool. This does not make you money, since you spent the $50,000 on the yard, but if you spent the same money on the kitchen, would it bring you the same return? A kitchen would bring you maybe an extra ten grand in return but you cannot swim in your kitchen sink!     The bottom line is that paint and flooring are the only two improvements you get a full return on its investment when it comes to improving your property. A pool can bring you years of enjoyment and in the end it will help sell your home, not hurt it! V     Darrin DeRoches is a local real estate and mortgage broker. He can be reached to answer questions, comments or stories about real estate experiences through this weekly column at sold@uniquerealty.ca.

The Art Of Debt

by Darrin DeRoches July 24 - 30, 2014

This week I had client who wanted to offer on a house that just came out and was set up for competition. They would not accept offers until one week later, after the open house. We viewed the property and I tried to show them that the house was not worth the asking price. I saw a lot of work and the price did not reflect the scope of work and market value. We left the showing and I thought that they would not want to make an offer, but they went to the open house and figured they were up to the task of doing the work if we got it for the right price.     The day arrived for offers and I called the company to register our offer, and asked if there were any other offers coming in. They said that it was early and no other offers were registered. I called again a half hour before presentation time and still no other offers. This just proved to me that the house is not worth its asking price and no one else was going to make an offer. We wrote up our offer just about 5 per cent below asking and drove to the office to present it. We were the only ones there and we presented the offer and waited for their response. They did not counter our offer and decided to put the house back on the market for 5 per cent higher than it was for the last week.     This is where the Art of the deal comes in and before the agent could even explain the reason, I stepped in and explained it. The sellers are so far in debt that they figured if they created “competition”, they would get over asking and be able to sell. Obviously my clients will not pay over asking and putting it back on the market higher than asking is only going to make the property sit for a long time. The agents are only doing their job for their clients but who is going to pay over market value for a property that needs a lot of work?     It is not my clients, I or the seller’s agent’s job to pay the debts of the sellers. They convinced the bank to lend them money on the property and ran up their debt and credit cards to a point that they now want a certain price to clear all the debts. Problem is, the property is not worth it. The only solution for this type of deal is to talk with a debt councilor and clear enough of the debt so that you can then sell the property – pay off all of your debts and even walk away with some money. The strategy they are using will just create a ton of time wasted and no sale. I cannot get involved with their clients and make the deal come together but I have done this for clients of my own and everyone walks away with money in their pockets! V     Darrin DeRoches is a local real estate and mortgage broker. He can be reached to answer questions, comments or stories about real estate experiences through this weekly column at sold@uniquerealty.ca.

No Inventory In West End

by Darrin DeRoches July 17 - 23, 2014

I have clients who are looking to spend $400,000 dollars for a property in the west end and we are unable to find a suitable property. Ideally we would like an investment property and if not they would spend a little less and buy a single family. The inventory is so low and we have looked at everything that has hit the market, so we started to re–look at what is out there and it amazed me how out of whack some properties are priced.     This week an investment property dropped their price again to $399,000 so my clients got excited and figured it was a deal since it was originally priced around $490,000 months ago. We booked a viewing and were ready to make an offer before anyone else noticed the drop in price. Once we viewed the first unit we realized the property was in need of major repairs. On paper the property hit all the right boxes and it should have an income on $2400 a month and would work at the $399,000 price. Once we viewed the second unit it would take over $50,000 to update the property but its layout would still be an issue and it would be hard to rent the property at full value.     We moved on to another property that was listed last week and it was over our budget but we figured we could get the bank to go higher if the property was move-in ready. The listing did not mention anything about “as is” or “renovation” so again we were hopeful. Once we walked into the open house the agent immediately explained that the house needs about $50,000 in renovations. New furnace, kitchen, bath and the list went on. I was again amazed at how they could list a property that seems to be a little overpriced for the market but since inventory is low maybe they could get it. Now it needs over fifty grand which brings the house to at least $70,000 dollars higher than what we can afford, but in reality at least fifty thousand over what the market will pay.     I noticed that there were a lot of real estate cards on the mantle and asked the agent how the showing was going and he mentioned that there was an offer but that it was “low ball”. I had to bite my tongue since the amount of agents through the property tells me that they also believed the house was move in ready and the low ball offer was probably on the money.     This time of year the market slows down and what is left up for sale tends to be a project or overpriced. My clients are eager to buy and they will move fast to get a deal done but you have to step back and wait until the market starts to move again and enjoy the summer. A few good properties have come up and have sold quickly. We will keep on the ball and wait until the right one hits the market. I am pretty sure that the ones that are sitting on the market will still be there. V     Darrin DeRoches is a local real estate and mortgage broker. He can be reached to answer questions, comments or stories about real estate experiences through this weekly column at sold@uniquerealty.ca.