The Art Of The Deal

by Darrin DeRoches September 26 - October 2, 2013

In real estate the “art of the deal” can be the most important part when selling your home. There are tons of real estate agents out there who can write up a deal and then there are the ones who know how to structure a deal. In Hamilton — Burlington there are about 2500 agents at any given time. So your chance of getting the best agent or one of the best is kind of a crap shoot. Some people go with the agent who has the most advertising. They figure the agent must be the best if he constantly sells the most. Others go with a friend or family member. Again, any one of these can write up a deal but very few know how to structure a deal.     Last night I made a deal with an agent who had been in the business for over 20 years and I had never worked with her before so I did not know what to expect. First things first, she showed up and presented the deal in person. Secondly, the opening offer was reasonable and the clauses were pretty standard. Finally, she was likeable, talkative but still business minded. These three things seem standard to any agent but you would be surprised. In today’s world of real estate a lot of agents do not “present” their offer they just fax or email it in. This impression gives the seller very little to work with. We can ask all of the standard questions – are they pre–approved, first time buyer etc. but having the agent actually sitting across from the table, the answers and information they give you is invaluable. Sometimes the way that they say it or their reaction to a “tough question” gives you a lot more information than an email.     Negotiations start with the first phone call, first impressions and all the way through to the last word. Anyone can list their house on the internet and wait for someone to come with an offer but how you present the property and most importantly negotiate the deal — this is where you make your money. The agent presented a good deal and we were fifteen thousand apart and if we went the regular route of negotiations we would have ended up at $290,000 for the property. This is only the first step in making the sale because, again, anyone can make an offer and sign an agreement but it is more important that they can close the deal. The agent showing up and explaining their clients, time frame and all the little details help with the negotiations. My clients felt as though these buyers would not only pay a fair price but close the deal, so we could move forward. My client wanted to sell to move on with their life but also to get top dollar so price was just as important as time and hassle. We got $292,000 which is over their expectations but more importantly we have a deal that will close fast with no hassles. 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

James Street North

by Darrin DeRoches September 19 - 25, 2013

All eyes were on James Street North last week with the biggest event of the year in Hamilton – Supercrawl. For those who have not attended, it is a great opportunity to see your city in a different light. The first year I went I walked up and down the street and I noticed buildings and architecture I had never seen before. Now, I drive down James Street at least once a week and you probably do not see the street as I did when the festival was going on and everyone was having a great time. This past week I walked the street with investors from Toronto and showed them all the opportunities that the street has to offer when it comes to real estate.  We walked all the way down to Pier 4 and I had to point out all the investments, new restaurants, the future go station etc. They were impressed and felt it was like Rosedale area in Toronto from twenty plus years ago. A couple of properties “popped out” to them and they asked me to find out more information.     I already knew the prices and once I told them they were less impressed. A lot of prices are “aggressive” to put it nicely. I did the history on the properties and with using a comparative analysis I cannot justify the prices to the investors. Sure, the area is “hot” but what defines it? Price, return on investment, future investment? The area is doing amazingly in comparison “but anyone who is cool knows money does not buy you cool” – Fonzi. Money buys you what the property is worth today not what the future holds. So I took them up to the Durand neighbourhood to a property I believed was worth investing in with a good return and future improvements. They loved it and I had to do the reverse explanation of why has no one bought this property. Again, the price was aggressive but the neighbourhood can justify the price point. Doing a history on it we see the seller dropping the price over 10 per cent within months and it is finally price right. This area is also considered desirable and it has proven to be a great place to invest in with great returns over the years.     We are going to keep an eye on James Street to see if the prices come back down to reality and make a move on the property in Durand neighbourhood. You should take a second look at your city and it’s culture, architecture and artistry. The city looks amazing through the lens of how fast a street can move from nothing to becoming the jewel within the core. Artcrawl, Supercrawl and all those people who are rejuvenating the core from the Witton lofts to the storefront businesses are making it a great area to invest in. Be proud Hamilton. 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

Mortgage Rates Rising

by Darrin DeRoches September 5 - 11, 2013

Mortgage rates are slowing creeping up from historical lows. It has been more than three years since we saw any real movement in mortgage rates — so why now? Simply put, bonds yields rise and mortgage rates follow. This is happening because the United States is slowly recovering from their real estate catastrophe and they are taking their money out from Canadian markets where they put it for safe haven. This is the reason that we are being given. You will also hear about how our housing costs are cheap compared to other markets, the market is going to hit a bubble, things are slowing down etc. They will give you 101 reasons why it is rising but the rates have been low for a long time and the big banks are looking for any excuse to raise the rates. One bank did it and the others slowly followed. Last year a bank would raise the rates slightly and the other banks would offer a “deal” to steal some of their business. This year they are going to raise them up to secure themselves against the bond rates.     The next logical questions are how high will these rates go? Again, who really knows, we were all paying up to 6 per cent before the drop. It will take time to get there but it definitely will hit a strong 5 per cent next year. This will not affect anyone who just renewed but if you mortgage is coming due in the next 12 months you may want to look into an early renewal. A mortgage broker can figure out the costs of an “early renewal” and secure you a today’s rate. You most likely will be paying the mortgage over the next five years so if you can secure a lower rate today, the savings will really add up. No one can really predict the future but the rates are definitely going to rise over time. The bank rate will most likely follow this trend upwards and we will be paying higher mortgage rates for years to come. This adjustment will help the loonie become stronger which will only help if you invest in currency or take a vacation in the states.     The American economy is once again costing us money in the costs of our mortgages but it is supposed to strengthen our economy with jobs and maybe we will be able to afford these big houses we bought over the last five years. The other side of the coin is that the prices of our properties will settle and we will be able to get more house for our dollars. We have no control over the economy but we can negotiate the right mortgage to save ourselves money in our homes. If you need advice I can refer great mortgage brokers who can explain the savings to “break” or “renew” your mortgage to set you up before the rates get to high. 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.

Commercial Investment

by Darrin DeRoches August 22 - 28, 2013

Commercial investment in downtown Hamilton is continuing to grow. I spoke with a commercial lender today about a possible new mortgage for a downtown property and the bank was very open to lending. You hear everyone talking about making an investment in the core but when you get down to securing a mortgage things usually get tough. Most landlords were forced to go to “private lenders” and pay upwards of 18 per cent for a mortgage. A few years ago no major bank would lend for  purchasing downtown commercial properties and now they are asking for your business. The broker today said that he can get a four or five percent mortgage on a commercial property. I thought he made a mistake and asked him a second time and he said five per cent tops!     He also went on to talk about several properties that were sitting idle — waiting to develop — that are now moving forward. People are always asking why certain properties are sitting dormant and becoming eyesores in the core. The simple answer is because banks were not lending money to develope the properties. Things have been slowly changing and now they are talking about lending at five per cent. This is the reason why you will see changes happening fast and furious in the core. I have a property that is for lease and I get at least two calls per month with people inquiring about buying the property. I thought they were just “fishing around” but the banks are lending and people want to buy. This is just the first step in bringing buildings back to life. You now have to fill them with tenants, but they too are slowly starting to move back into the core. I just signed a five year lease with a company from Burlington that decided to move into Hamilton’s core to be part of the “shift” or “movement”. The cool factor is there but the architecture and community is what is really selling it. You cannot find “cool spaces” in the suburbs and the core is starting to shine.     The city has won awards and accolades about being the best place to invest in and we are starting to see the first wave of people moving into the core. The Witton Lofts are now being occupied and they turned out great. The “seedworks building” is coming on strong and several other buildings are slowly being redeveloped. It takes time, money and usually a lot of hard work but the “overnight success” of downtown is happening and we should stand up and take notice. Sure the big papers spout all this excitement about a “possible” casino and blah blah blah about any major company opening its doors in our downtown but we have to take real notice of all the development happening by our own citizens. This community is the reason everyone else is taking notice and let’s not overlook the great strides these people are making and shaping our downtown, not just the big guys and big money. 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.

Testing The Market

by Darrin DeRoches August 15 - 22, 2013

I have clients looking throughout the city at different types of homes – single family, new builds, commercial – and it seems there are a few properties listed way above market value. Some sellers are putting up their properties “just to see” if they can get the money they are asking. Some agents will list a property at any price just to get the listing and it seems to be happening a little more frequently. This week I took a client to a home that had just put up their sign and it was not even listed in the system yet. We knew that she wanted a certain area and we drove through it on the weekend and noticed the sign. The agent did not even have a lockbox on the house yet. First thing Monday morning we were the only people through the property. The client was excited about the house but I had misgivings.     The first problem was the price. This house sold two years ago for $190,000 dollars and now it was listed for $260,000. Maybe they did a total gut job and the house is worth every penny. The second red flag was that the seller was not going to accept offers until a week later. Agents do this to create a false sense of urgency and hope for a bidding war. If the property is worth it, this might work and they could get top dollar. This was an income property and the area and size of the property does warrant a price in the mid $200’s. We were the first ones in and if it was all renovated we would write up an offer for over asking and try to get the seller to agree before their so called offer date.     Bright and early Monday morning we got to the property. From the outside it looked exactly like the old pictures in the listing – maybe they did all the work to the interior. We opened the side door and there was newish laminate – maybe? We walked into the first room and with all certainty we realized it was a dump! The sellers did not spend one dollar on improvements. The old listing even stated the “new” laminate from two years ago. My client loved the area and the house still gave her a “good vibe” but I had to point out that it was overpriced by at least fifty thousand dollars. We agreed to sit and see if anyone would make an offer the following Monday and see if the seller would rethink their strategy.     The agent texted me for my feedback and I told him straight that it was fifty grand overpriced and that my client loved the area and would make a realistic offer in the low 200’s once the offer date comes and goes. His response was that his seller “wants to see the action”. It’s August which is slow and it’s overpriced by a mile so I would expect there will be little action. I will update you next week on what happened! 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.

Timing Is Everything by Darrin DeRoches August 8 - 14, 2013 In real estate timing may be the most important factor in a successful sale. Most people think you just list a house and it sells but there is a lot more too just throwing it up on the market. A good agent understands timing and it can make all the difference. A client just contacted me about selling her home and wants it on the market ASAP. She has been going through a long and drawn out separation and after a year of trying to make her partner realize the relationship is over it is time to sell the matrimonial home. She wants me to list it now while the iron is hot. Problem is it is August. This is the slowest time of the year and timing can make a huge difference on the bottom line.     You only get to enter the market once and the timing of this can make or break a sale. The first week on the market is crucial and you want to make a great first impression. The month of August is so busy for families with all the vacations and getting ready for the start of school — real estate is the last thing on their minds. Once everyone is settled in school and all the summer activities are over everyone starts to look towards the end of the year. This is when the market is hot and the perfect time to list your home. August is the slowest time of the year but September is then the hottest time of the year. I can easily list the property today as it is in a great area and it will sell but why not wait a month and list it in the hottest market. They will get top dollar in September and then she can find a property to downsize into once the market cools into October. The good old sell high and buy low scheme.     Timing also comes into play when selling your home in a hot market. Picking the right offer to work with can make or break your sale. In a typical sale the buyers will take five business days to do home inspections and get bank financing. These five days can be an eternity in a hot market. If they do not remove clauses and your property is forced to sit off the market you can lose your momentum. A good broker will know how to handle this type of situation and use it to their advantage. Your home can be the perfect property but if it goes on then off the market — potential buyers have moved on to the next one and it can very difficult to attract their attention again. If you are considering on buying or selling soon take the time to meet with a broker now. You should have a game plan in place, pictures taken; brochures printed and are prepared to list your property the right way at the right time. Need help figuring it out just give me a call or email. 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.

Fix Your Issues

by Darrin DeRoches August 1 - 7, 2013

If you are trying to sell your house and you keep hearing the same complaint – do something about it. Every home has something that does not work for potential buyers. It could be parking, paint color, price, carpets etc. Every home has some drawback to potential buyers and if you hear it more than once it is an issue.     I have a listing which has a cat smell and mold. The property is listed as a fixer upper and even priced accordingly but all the feedback comes back to two issues. An offer fell apart due to these issues and now showings are going well but the smell and mold are hurting the potential sale. I had a conversation with the sellers and they are starting to realize that with a little work and money they can easily fix these simple issues which will bring them a sale. The problem is that they are divorcing and neither party will take the initiative – yet.     The husband is starting to realize that he should take on the two issues and help me sell his house but time and money are an issue.  As a real estate broker you can only work with the hand that is dealt to you. So what can we do to get a deal done? I have to think outside of the box and adjust our marketing. I called in a favour and obtained a home inspection which clearly lays out all of the faults, mold, smells and defects of the property. I will send this report to all interested parties to ease their “what if” concerns and show them exactly the scope of the issues. Information can make or break a deal even if it is bad information. Full disclosure shows everyone what they are dealing with and we will also send them all the comparables in the neighbourhood to prove the true value of the home. We could go one step further and get quotes to fix all the problems but sometimes too much information can be detrimental. You have to let the buyer come to their own conclusions and if you lay it all out they may start to smell something is fishy (but really it is the cats).     People are constantly asking me to call them with a “fixer upper” and when you have such a “diamond in the rough” everyone starts making excuses. They try to find a reason why they are not willing to do the work. We tell them it will only cost 10 grand to fix everything then they say 20 grand is the price. You have to let the buyer believe they know best and if they fix the property they will be 10 grand ahead of the game. In time with an open and honest marketing plan the house will sell. Someone can finish the upgrades and have a great home in a great neighbourhood if they can just get over the smell – damn cats! 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.