Pricing It Right

by Darrin DeRoches September 4 - 10, 2014

I may repeat myself a few times in this article but one of the most important things to do is price it right. The market is moving fast and if your property sits too long no one will pay it any  attention. Pricing the property right the first time can make a huge difference in the final outcome.  I did a deal this week where the property was priced at $415,500. The property was on the market for over a month and we were pretty surprised when we viewed the property. It needed some work but you would have thought it would have had some action on it during the month. My clients were really interested in the property since it was on a great street and had all the must haves on their wish list. So they wanted to do an offer and we started to negotiate.     I spoke to the neighbour and he gave me all the background on the property and what he thought it was worth.  A few things he told me were just his opinion but some of the information was very valuable.  I went back to the office and did a history on the property and then discussed our game plan with my clients.  We knew the house needed some work and factored that into our offer and then pushed the agent to do an offer on Labour Day.  Most people are relaxing and getting ready for the school year but we were trying to buy a property before the market starts to heat up once again.  The property had been reduced by ten thousand but it still was not priced right.     The only reason no one had bought the property was it was over $400,000 dollars. If you look at the MLS site you can pick properties in increments and anyone looking for a house at $450,000 dollars would not consider this property since it is a $400,000 dollar house.  The people who can afford a $400,000 dollar house did not even see this property since it was priced at $405,000 and did not come up on their search.  Most real estate agents do not do searches over the approved amount for their clients since they may fall in love with them and then not be able to afford them.  The only real issue with this property was it was priced wrong.     We had spoken to the agent and knew another price drop was imminent and we did the deal fast so the house would not come on the market under $400,000 and draw attention. We brought an offer far under the asking and settled five thousand less than my clients were willing to pay.  If the sellers had priced the property originally at $399,900 they would have had more interest and sold it for a higher price faster. Knowing your market and doing your homework can be the difference in this real estate 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.

Where You Are Buying

by Darrin DeRoches August 28 - September 3, 2014

It amazes me that certain properties are getting a lot of interest and multiple offers on them even though you would not find one Hamiltonian putting an offer on them. Recently there have been a lot of posts on the internet to “expose” properties that have had murders, meth labs or deaths in them. These posts get their information from either police reports or newspaper reports and then they tag them as “undesirable” properties. The interesting part is not these deaths etc. but properties that look so amazing but are on less desirable streets or areas.     This week clients of mine got a great deal on an income property and were willing to go into competition to get it. There were over twenty viewings on the property but when it came to offer day – we were the only ones. The funny part was on the same street, a similar property went through the same thing a few weeks ago. The big question is why? The house needed no work. The area is prime for rentals and as I stood outside waiting for the sellers to sign back the offer I had three people stop and ask me the price, condition etc. Everyone was looking at the property but no one was offering? The simple answer is timing and vision. This area was a mess ten years ago and it is not only an up and coming area it is already there. There are new condos and townhouses being built and sold for top dollar but people from Hamilton still look at the area as old and undesirable. Out of Towners take a look and they see the downtown feel, walkability and great price for what you get. Hamiltonians look at it as old, no parking and overpriced for what you get. My clients will be making money the second they move in and in ten years people will be saying “I wish I’d bought in this area ten years ago!”     On the other hand, the same agent had multiple offers on another cool, Victorian property in an area that will be still rough and undervalued in ten years. If you were to look at both properties and invest your money –the one my clients bought will bring you more return today, tomorrow and definitely in ten years. The house may be smaller but the numbers don’t lie. You have to be aware of the area and be realistic in how the market will grow. Out of Towners were making offers on the other property and their agents just do not know the market. I would not go into Toronto and pick the next great neighbourhood and their agents are coming here without doing their homework.     Be aware of where you are buying and better yet, hire a local broker who knows the market and has a proven track record. Ask the right questions or you will end up in a cool house in a terrible neighbourhood. Remember the three most important words in real estate – location, location, location! 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

Huge Jump In July Market

by Darrin DeRoches August 14 - 20, 2014

The Hamilton–Burlington real estate market saw 1559 property sales during the month of July, which is a 21.5 percent increase over last year’s sales in July. The average sales price broke the $400 thousand mark to $409,538 for the month. The average days on market dropped from 42 days to 36 days. In a nutshell, this means that the market is moving fast and selling for top dollar!     If you look back at the market in recent years, July is typically a little slower and you do not see sales at this level let alone over a 20 percent increase.  At the beginning of the year I wrote that the average house sale will be over $400 grand and it took six months to do it.  At this rate we will have record sales by the end of the year at top prices. The local papers are starting to write about the “condo boom”, which seems a little late to the party but the proof will be in the sales of the units which will take time to prove such a change in our landscape.  If the condo builders keep prices in line then they can compete in this fast moving market when you realize a home is hitting over $400 grand and if they price them in high $200’s then they will sell.  Everything is relative to what the market is doing on a day to day basis.     This week two properties came up on Herkimer and one sold within hours and the other on the weekend.  Both of these properties were priced on the top end of the market and both had about 9 out of 10. Unfortunately they were not what my clients wanted and we will wait for more to hit the market, but August is usually a quiet time and properties are still selling fast and for top dollar. The problem is that not all of the market is moving as fast.  If you listed two homes in the east end on the same street they will sell but it will take some time and more effort. The market is hot in Hamilton but in certain areas it is scorching hot — like the west end.     Last week I had several inquiries on student homes, investment properties, homes in west end, cottages and properties in the east end.  As I said before, August is usually pretty quiet but these calls and listings are showing that the fourth quarter of the year is shaping up to be strong.  Listings are still the issue and quality properties will sell fast! So if you are thinking of selling, take the time to call us to get things ready for a scorching hot end of the year to the real estate market. Be prepared so you don’t get burned! 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.

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.