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The Feel Good Happy Real Estate Story of Marshall Eriksen and Lily Aldrin

A (relatively) true story

When I met Marshall and a 7-month pregnant Lily back in 2012, they lived in a 700 square foot condo in Dowisetrepla with their two-year-old son Marvin.  They had come to the realization that they would need something bigger than a 1+den as Lily had an Eriksen the size of a 15 pound turkey growing inside of her.

LilyPregant

On the verge the last minute, they asked for my help – sell the condo and buy a house to move into before the turkey-baby arrives in the midst of the city’s definite Seller’s Market. There were a few stipulations from the Mortgage Lender on top, the condo must be sold first. So, there is always the risk that they may be homeless if they don’t find a house before the closing date of the condo. Well, that’s a great idea for a sitcom right there, and not stressful at all.  Of course, this story has a few miraculous twists. The first one being that in Dowisetrepla (not exactly down wind of the sewage treatment plant, but maybe not the greatest neighbourhood the city has to offer) where condos might take 2-3 weeks to sell, we sold theirs in just 2 days, with 3 offers and $5,000 over asking made for a record breaking sale in the building.

Dowisetrepla

Yes, all the powers of the Greek Gods combined to help us win that night.

It was the next stage of our journey that kept me up every night.  What if Lily gives birth… and they are… homeless.

And we saw houses. Many houses. We even saw a house with a stove in bathroom, a “stoveinkerator” as Lily called it. It was a combination of a stove, oven, sink and refrigerator. Every house we saw sold for thousands of dollars over asking, but the house with the stoveinkerator sold for a hundred thousand dollars over asking.  Where many teams might have quit, Team Lilymarshmanna trekked on when alas, another miracle! Like placing a bet on a racehorse named Slowpoke, we took a chance on a home that had lingered on the market for half a year. Many teams may have come to the conclusion that something bad must have happened in this home for it not to sell in a definite Seller’s Market, like a gruesome murder-suicide or five generations of chain smokers. But nay! Looks do deceive! Slowpoke is the fastest horse in the Kentucky Derby! And this house was a clear winner. While Marshall and Lily rejoiced in song and dance, I was on the phone with the Sellers, two brothers, Barney and Ted. Barney was the Realtor and Ted was the architect-designer, and for a reason still unknown to this day, they managed to screw up the sale of a perfectly good property. 

The Broken Code

The two of them were in the flip and sell business, they were good at the flipping part, bad at the selling part. If I could out-negotiate a pair of half-wits (haha, because only half of them could do their job), then we were at the finish line of our house hunt. But all I remember from that evening was demanding over the phone they meet in half an hour or we take our offer and walk, then sitting in their office with their Mercedes key chains sparkling under the compact fluorescent light bulbs, and blinding me every time I glanced over there. Oh shoot, they drive fancy cars, if I were going to get these papers signed I would need the Greek Gods to come together again, in particular Caduceus, the Greek God of Negotiating. Under his guidance, the right words were exchanged and the papers were signed!

A week after the closing on their new house (yes, only one week), Lily and Marshall welcomed their second child, a baby girl they named Daisy. And they all lived happily ever after.

Well, life did throw them a curveball in 2014. Lily was an amateur painter and her lifelong dream was to sell art in Rome. When the opportunity to move to Rome and become an artist came about, they were on the first flight (or 31st flight) out. Does it get any happier than that? Why, yes. Yes it does! We can end the story with our last final miracle. The Seller’s Market only became more and more aggressive in the past couple of years. A market that brought so much grief and anxiety now brought us joy and delight. For sale sign on the lawn, Buyers lined up, the house sold for $100,000 more than it sold for two years ago! Team Lilymarshmanna rejoice again!

 MarshallLily

If this isn’t a feel good happy real estate story, then I don’t know what is.

 

Thank you Marshall, Lily, Marvin and Daisy for the good times… you know who you are 😉

 

Disclaimer: The preceding commentary is the opinion of Hanna MacDonald and does not represent the interests or opinions of Right at Home Realty Inc., Brokerage or the Toronto Real Estate Board. Therefore, Right at Home Realty will not be held responsible and/or liable for any of the opinions herein.

Should I buy a condo… or should I listen to the Mother-In-Law?

Originally written by Hanna MacDonald for The Hudsucker: http://thehudsucker.com/2013/06/17/guest-writer-hanna-stecewicz-should-i-buy-a-condo-or-not/

“My cousin’s roomate’s mother-in-law’s neighbor told me condos are a bad investment…”

So what do you want to do?

You can keep renting that too cramped, too run-down, cigarette smoke infused apartment with that annoying, yogurt-stealing, privacy-invading roommate Becky. Or, you can go ahead and do some research on condos. Your cousin’s roomate’s mother-in-law’s neighbor could be right… in some cases. You certainly don’t want to end up with a poor investment. Last thing you need is your cousin and the rest of the family giving you “the I told you so” for the next eight months.

Image Credit: http://cdn.someecards.com

Image Credit: http://cdn.someecards.com

You shouldn’t give up though. So you don’t have enough income to buy that sensible 3 bed, 2 bath semi on a tree-lined street, but that doesn’t mean you have to waste money on rent for the next five years.

You can certainly be proud to own a condo, if you know what to look for. The first thing I always tell my clients is the cliché, LOCATION, LOCATION, LOCATION. In every major city, there are good neighborhoods and there are bad neighborhoods.  If you’ve lived in the city for a few years, you’ll know from experience which parts of town to stay away from. This is common sense.

What takes a little bit more consideration? For one, areas are becoming over-saturated  In Toronto, new condo development has gone into overdrive and it’s common to find 15 condo towers in close proximity to each other. This is a problem. It’s the simple economic model of supply and demand. When you have an area where it’s common to find 100 listings for sale within a particular complex at any given time, it’s a case of oversupply. Not only will it be hard to sell the condo with so much competition, you won’t see the same rate of appreciation in value as you would in a less concentrated area.

And secondly, remember you’re (hypothetically) moving out of an apartment, so move away from a neighborhood with a high number of apartment buildings. Surrounding real estate impacts the value of your property. You know how they say “it’s not good to be the nicest house on the block?” That’s because if you’re surrounded by inferior real estate, it brings down the value of your own property. Vice versa is true. If you have the “ugliest house on the block”, then the nicer properties on the block bring up the value of your home. The same is true for condo buildings. It’s better to be surrounded by million dollar homes than low-rent apartment buildings.

In real estate, ratios are important. Focus on neighborhoods with a low concentration of condos, a high concentration of amenities (theaters, restaurants, parks, fitness centers, shops), surrounded by more expensive real estate.

Once you’ve narrowed down on the location, you should focus on buildings that offer differentiation. Differentiation is a marketing term: It is the process of distinguishing an offering from others, to make it more attractive to a particular target market. This involves differentiating it from competitors’ products.

Imagine your roommate Becky comes home with a brand new purse. It’s the same mass-produced purse that your friend Jen has. In fact, your sister has that purse too and you’re pretty sure you’ve seen Amanda carry it. Everyone seems to have this exact same purse. So you don’t really care that Becky has it too. If you were going to buy a purse, you’d buy one that nobody else has.

Photo Credit: http://urbantoronto.ca

Photo Credit: http://urbantoronto.ca

 The same goes for condos. If you buy a generic concrete and glass condo unit with the same floor plan and the same finishes as every other condo, it won’t be as desirable to a pool of future potential buyers than if you had loft with 13 foot ceilings or exposed brick walls, which is more rare.

When looking at condo buildings, age in important. You don’t want to buy a condo that’s too old or too young. A happy range in my opinion is 2-12 years. Pre-construction condos and new builds don’t have a reputation that you can rely on yet and older buildings require more maintenance.

Finally, after you’ve narrowed down on the location and you’ve narrowed down on the condo itself, you want to make sure the building has a good reputation. In Toronto, this stage is called due diligence and it happens when you make an offer. When an offer is made, it’s often made with conditions. One, the offer is conditional upon buyer arranging satisfactory financing and two, the offer is conditional upon the buyer’s lawyer reviewing and approving the status certificate.

I don’t expect anyone to know what a status certificate is. Although you should, especially if you’re making offers on condos. Consider every condo like a mini corporation run by a property management company and board of directors who are elected by the owners. Like corporations, every condo has financial statements that illustrate the condos financial stability. These statements highlight how much money is in the condo’s reserve fund, or bank account if you will, what the current maintenance fees are for the particular unit of interest, the budget for the current year, the forecasted expenses, and so on. Further, the status certificate will show whether or not there are any lawsuits, liens or special assessments against the condo. The last thing you want is to move into your new home and discover you owe the condo board $40,000 to go towards balcony repairs and a class action lawsuit because the glass falling off the balconies is killing pedestrians below and there isn’t enough money in the reserve to pay for it all.

Also, along with the status certificate is a boring 50+ page book on rules and by-laws. It’s good to read through this so you know what you can and cannot do. It would be a shame if you had to give away Feefee Puppy because 150 lb Mastiffs are prohibited inside the building.

If you do a bit of research, there is no reason why you have to listen to anyone when they say condos are a poor investment. I promise, you don’t need to participate in a bidding war against five over-caffeinated power-couples for that overvalued freehold house, and you don’t need to hide your yogurt from Becky anymore either. You can be happy owning a condo, and more importantly, you can be proud to tell your cousin how AWESOME your new condo is!

 

Disclaimer: The preceding commentary is the opinion of Hanna MacDonald and does not represent the interests or opinions of Right at Home Realty Inc., Brokerage or the Toronto Real Estate Board. Therefore, Right at Home Realty will not be held responsible and/or liable for any of the opinions herein.

It’s Not About The House

It's not about the house

At the end of April, I showed my client a condo townhouse at Don Mills and Lawrence. I grew up in a similar condo townhouse a block away, where my parents still live. I’ve seen the area change over the last decade. Where once there was a mall with outdated shops and senior citizens, there is now “Shops on Don Mills” with upscale restaurants and fashionistas. Over the last five years, I’ve been keeping up with the real estate values.

I supplied my client with the most recent sold data directly within this particular complex: condo townhouse A sold in October for $455,000, condo townhouse B sold for $429,000 in November, and there have not been any sales since.  There aren’t many of them, and they come in all states of repair. The one for sale was finished, and showed well. I suggested at $525,000, she might win if she went in firm, of course depending on how many Buyers would compete for it. It followed the formula for selling a house in the city. Price low, $479,000 in this case, clean it up, make it look pretty, open house Saturday and Sunday, take offers next week. 

The timing wasn’t right for my client to proceed, and even the situation wasn’t right, but of course I followed the events unfolding on offer night. My parents were curious; they wanted to know how this sale would impact their own investment one block over.

Offers started coming in days before the offer date, yet the Seller was not going to review any until the date that was set. By the end of offer night, there were 11 offers, at least. I texted my mother that it looks like it will be a record-breaking sale for our little condo complex. I guessed, at that point, that the condo townhouse would sell for closer to $550,000.

When it comes to real estate with a back yard, in Toronto, it’s a mess. Buyers are pushing themselves more every year.

The final sales price for this condo townhouse was $605,000. That is more than a record-breaking price. That is unreasonable. There is a $150,000 gap between this sale and the last highest sale in the fall. That is massive for our little condo complex. Thank goodness my client was absent from offer night. I wouldn’t have advised her to go that high; if we were involved, our participation wouldn’t have ended on a positive note.

There are people from many walks of life who will buy real estate this season. Some of them will afford what they purchase; others will stretch themselves to the point where it becomes risky. Outbidding every other buyer is difficult, but qualifying for the mortgage or keeping up with the monthly payments are more difficult. What happens if the appraisal only comes back at $525,000 and a Buyer now has to scramble and find another $80,000 to close on the property or risk breaching the contract and all the legal implications that follow? Buyers need to be careful. Buyers need to explore their options. That condo townhouse wasn’t the only option for my client.

Buyers can stay put, they can rent, live in condos, live in apartments, move outside the city, buy a fixer upper, renovate, buy in less popular neighbourhoods, they can forgo the parking spot, forgo the 2nd bathroom or the finished basement, or keep trying until they succeed. That condo townhouse doesn’t mean that every condo townhouse in that little condo complex is now worth $605,000. The next one may not have the right timing, may not have the same finishes, may not show as well, may not attract as many Buyers and may sell for $500,000.

What is important to me is to that my clients know they have options, and explore them. They should never put themselves in a dangerous position because of the pressure of the moment.

My parents immigrated from Poland. I grew up in a two-bedroom apartment and I shared a bedroom with my little sister. When I was 11, my parents bought a condo townhouse at Don Mills and Lawrence for $155,000. When my parents bought it, it wasn’t perfect or pretty.

Over time, they fixed it and reno’d it, planted a garden and furnished it well. It didn’t change overnight, just like the neighbourhood didn’t change overnight. When my parents purchased it, they didn’t know what the neighbourhood would become 15 years later, or that the value would reach $600,000. They purchased it because they could afford it, and what mattered to our family was the time we spent together. It didn’t matter to me that I had friends who lived in bigger homes, or newer homes, or Royal York for that matter. The house isn’t responsible for much of anything I am or have today.

It’s the people in my life that are responsible for my happiness. It’s not the house.

I will prepare my clients who want a backyard for what lies ahead for them, provide them with every ounce of research, and remind them on offer night, that’s it not about the house.

 

 

THE PRECEDING COMMENTARY IS THE OPINION OF HANNA MACDONALD AND DOES NOT REPRESENT THE INTERESTS OR OPINIONS OF RIGHT AT HOME REALTY INC., BROKERAGE OR THE TORONTO REAL ESTATE BOARD. THEREFORE, RIGHT AT HOME REALTY AND THE TORONTO REAL ESTATE BOARD WILL NOT BE HELD RESPONSIBLE AND/OR LIABLE FOR ANY OF THE OPINIONS HEREIN.

THE AUTHOR IS NOT LICENSED TO PRACTICE PSYCHOLOGY. THE RESEARCH FINDINGS REFERENCED IN THE COMMENTARY ARE USED TO MERELY UNDERSCORE THE AUTHOR’S OPINION AND OBSERVATIONS.

 

Rich Cousin Mildred and the Status Certificate

Uncle-Pennybags-surprised

Rich Cousin Mildred (Milly) Pennybags was the daughter of Rich Uncle Pennybags, aka Mr. Monopoly, the Real Estate Mogul who built an empire across the country.  Upon the morning of her 21st birthday, she gained access to her trust fund. Of course, she wanted to be just like her father, and she decided to invest in Real Estate as well.

As she was only 21 years old, she was naturally spontaneous and impulsive. She went on to Realtor.ca and booked an appointment with the Seller’s Realtor on the first million-dollar penthouse she saw, on the most posh street in town. That same evening, she gazed out from the Juliet balcony off the master bedroom. She saw herself following in the footsteps of her father. She must have it. And she must have it now. “I’ll take it!!!” she exclaimed.

She waived her $1,000,000 trust fund cheque at the Seller’s Realtor and demanded the Realtor draft up an offer immediately! No conditions!  Of course the Seller’s Agent was happy to oblige, his client the Seller had just received an unconditional offer for the full asking price.

That same night, the cash offer was accepted and Milly had a firm deal.

As closing day arrived, Milly received a set of keys. She grabbed her set of Louis Vuitton suitcases and a custom made Louis Vuitton hamster cage. She used her new fob to let herself into the lobby. As she walked across the marble floors, the concierge quickly stopped her. “Excuse me Mademoiselle, but you cannot bring that rat into the building”. “This is my darling pet hamster Penny, and of course I can, I am the new owner of penthouse 10!” “I’m afraid you are mistaken, it is against the condo bylaws to have any pets of any kind inside the building, have you not read the status certificate???”

Milly had no idea what a status certificate was.

“Oh, and this is an envelope for you from the Board of Directors”, finished the concierge. Milly opened envelope and read the letter.

  

April 25th, 2014

 

Ms. Mildred Pennybags

118 Plaza Ave, Penthouse 10

M5R 1H5

   

RE: OUTSTANDING MAINTENANCE FEES AND SPECIAL ASSESSMENT FEES

Dear Ms. Pennybags,

 

Welcome to The Plaza.

This is a notice that your outstanding balance of $37,800 is due immediately. Enclosed is a statement of account for your reference.

Please arrange payment of this account within the next 5 business days.

Your prompt attention to this matter would be greatly appreciated. If you have any queries regarding this account, please contact our office as soon as possible.

If payment has recently been made, please accept our thanks and ignore this notice.

 

Regards,

Donald Trump
Trump Residential Services Incorporated

 

It turns out that the Sellers had reneged on paying their maintenance fees for the last 9 months, at $1.60/square foot (yikes! That’s high) and a 750 square foot condo, the maintenance fees in the amount of $10,800 are in arrears. As the new owner, the responsibility of paying the outstanding fees is passed onto Milly. Further, the building is in debt. As the condo turned 20, the elevator began to malfunction, the balconies needed renovations and the underground garage was scheduled for an overhaul in the coming months. The reserve fund is insufficient to cover the cost of the repairs. The Board of Directors has a history of running a budget deficit and overleveraging. Now they have charged a special assessment fee to all the owners to replenish the condo reserve fund so they can begin the repairs, before they become a liability. The special assessment fee is $27,000.

There was Milly, keys in one hand, a shock-inducing letter in the other, while the squeeking hamster in his Louis Vuitton cage was being carried out by the concierge.

Poor Rich Cousin Mildred, if only someone could have warned her of her erroneous investing.

Real Estate should never be an impulsive decision. One must be diligent before making any Real Estate purchase, never mind such a luxurious one.

 

The moral of the story is this: do your due diligence.

 

One: Hire your own Realtor who will represent your best interests, not the Seller’s. When you have your own Buyer Realtor, you can count on a full review and comparison of similar condos sold. This way you have the information you need to properly negotiate the best deal.

Two: Include every necessary condition to ensure you protect yourself from surprises on closing day. The two standard conditions in a condo sale and financing and status certificate review.

The status certificate is easy to brush off, especially if it’s a brand new condo. While on the outside, the physical condo may be perfect, but problems may be lurking beneath the surface.

A status certificate describes who is on the condo board, the property management company, the amount of money in the reserve fund (which goes towards paying condo expenses), the history of the condo maintenance fees, the annual budget, special assessments, lawsuits, condo deficiencies or repairs, and condo rules and regulations. The status certificate must be reviewed by a Real Estate Lawyer, who will warn you of financial difficulties the condo and Sellers are having, and any strict and limiting rules, such as the no pets condo bylaw.

Only after the status certificate is approved by a Lawyer, and the Mortgage Broker delivers a financing commitment letter from a Mortgage Lender, is it safe to firm up your deal.

Rich Cousin Mildred thought she was making a wise decision by investing in Real Estate like her father. Unfortunately for her, there are consequences to making an uneducated decision. Not only will she have to cough up a very large, additional sum of money, she will have to give up her pet hamster if she wants to live at The Plaza.

Although this is a story and Rich Cousin Mildred is a fictional character, sometime Buyers end up in tough positions when they don’t have all the information. When it comes to Real Estate, take your time. Do your research, and not only will you be happy, you will be confident you made a knowledgeable decision.

 

 THE PRECEDING COMMENTARY IS THE OPINION OF HANNA MACDONALD AND DOES NOT REPRESENT THE INTERESTS OR OPINIONS OF RIGHT AT HOME REALTY INC., BROKERAGE OR THE TORONTO REAL ESTATE BOARD. THEREFORE, RIGHT AT HOME REALTY AND THE TORONTO REAL ESTATE BOARD WILL NOT BE HELD RESPONSIBLE AND/OR LIABLE FOR ANY OF THE OPINIONS HEREIN.

Hanna in the City (speech prepared for Toastmasters)

 

What do you think of when you see this logo?

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McDonalds – 1000 calorie big macs.

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Nike – Just do it.

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Disney – They lived happily ever after.

 

 

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Hanna in the City – Question mark.

 

Madame Toastmaster, Fellow Toastmasters and Welcomed Guests,

Let me tell you a story about Hanna in the City.

It all started at the yacht club one night. It was right after race night, all the sailors were sitting at one table having dinner together. It was then that one of them began badmouthing all Realtors. I let the conversation play out, trying to decide whether or not it was a good idea to confess that I, myself, was a Realtor. At the last minute, I chimed in “I’m a Realtor.” That ended the conversation quickly. An awkward silence followed.

Why were all Realtors grouped together into the same category? Why was the perception that they’re all salespeople cold-calling strangers and chasing commission cheques? Better yet, how can I succeed in this field and change the negative perception into a positive one?

I didn’t want to be that stereotypical Realtor. Dialing a random phone number, and asking anyone with a pulse if they were thinking about buying real estate in the next 1-3 months made me cringe. I’d rather work at McDonalds.

The exams for a Real Estate license are easy enough for a fifth grader to pass and there are 35,000 Realtors in the GTA. I needed to differentiate myself from the bad ones. Thankfully, I have a BBA with a major in Marketing. I also spent two years of my life working at an ad agency until I finally couldn’t take it anymore and quit spontaneously in pursuit of a happier life. 

However, I learned skills I still use today to promote my business in a good light. 

I was qualified to create my own brand but I still had to decide what kind of a person did I want to be for myself, and for my clients? I simply wanted to be myself, honest and genuine and I wanted to treat my clients the way I would like to be treated. I wanted to create an all around happy experience for my clients, and I figured out how to do that in two steps.

Step one:

Decide on who do I work for and why?

I narrowed in on a demographic: Young Urban Professionals. I narrowed that down. 25-35 year olds who work downtown and want to live downtown. I narrowed that down even more: My friends, and my friend’s friends.

Why work with my friends? Because I love my friends. My friends already know I want the best for them, so it makes it very easy for them to trust me.

Helping my friends find their dream home, not just a house, makes me happy. The old adage about happiness is true, do what you love and rest will work out for you.

It’s funny how that works. While it did take some time, my business developed into referrals only. Friends tell their friends, who become my friends, and so my business grows.

Step two:

Start with one client and treat them how you would like to be treated. You must work towards understanding them and what constitutes their happiness. Every single time they are with you, they know that you genuinely want what’s best for them.

In order to foster that genuine relationship I teach my client everything there is to know about real estate. Answer his questions before he even thinks to ask them. He will feel informed and have confidence in me.

Hanna in the City – A happy real estate over-educator

Back to the story about the sailor who hated Realtors.  About a year after the initial rant, that same sailor approached the newly minted Hanna in the City and referred one of his best friends to me. I must have broken out of that stereotypical mold. My brand had changed his perception.

Take a moment to think about your brand, your personal brand. Who is the person you want to be tomorrow? Start being that person today. Think three words that describe the person you want to be. Write them down:

Optimistic

Spontaneous

Imaginative

Every decision you make, ask yourself if it’s in line with those three words. Be those three words everyday, and you will become the person you want to be.

Just do it.

 

THE PRECEDING COMMENTARY IS THE OPINION OF HANNA MACDONALD AND DOES NOT REPRESENT THE INTERESTS OR OPINIONS OF RIGHT AT HOME REALTY INC., BROKERAGE OR THE TORONTO REAL ESTATE BOARD. THEREFORE, RIGHT AT HOME REALTY AND THE TORONTO REAL ESTATE BOARD WILL NOT BE HELD RESPONSIBLE AND/OR LIABLE FOR ANY OF THE OPINIONS HEREIN.

Will you accept this rose… er… mortgage?

Finding a Mortgage Professional is like finding a boyfriend (or girlfriend). You have to date a few to find “the one”. Whether you find someone online, or get set up by a mutual friend, you likely won’t commit right away. Maybe, your friend Rachel sets you up with Chandler the Mortgage Specialist, from TD bank on Tuesday and your other friend Monica sets you up with Joey the Mortgage Broker, from Dominion Lending Centres on Thursday. Both are charming, both are promising you the best mortgage and both want to be exclusive with you.

How do you tell them apart? If you thought a Mortgage Specialist and a Mortgage Broker/Agent were one and the same, they are not. They are opponents! And they are fighting for your love! Who will win your heart…er…business???

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A Mortgage Specialist is an employee (of TD bank, for example). If you walk into your local TD branch, and request a Mortgage approval or pre-approval, you will meet your Mortgage Specialist. The Mortgage Specialist will ask you to fill out an application and submit a few financial documents. Once the documents are collected, the Mortgage Specialist submits them to the underwriter. At the end of the process, if you are approved, you will end up with a TD Mortgage.  

If you and your whole family are long-term TD customers with a line of credit, credit cards, chequing and savings accounts, and a variety of other loans, then you may end up with preferential treatment and a favourable mortgage approval.

That’s fair, but what if you and TD are not in a committed relationship where each of you promises to be loyal to the other, in sickness and in health, through good times and through bad times. 

When it comes to mortgages, it doesn’t always pay to be monogamous. It doesn’t pay to be polyamorous either. You can allow three suitors to court you, but no more than three. I’ll get back to this point later.

What if BMO is offering a better rate than TD? What if RBC, CIBC, HSBC, ING, Manulife Bank, PC Financial, Scotiabank, National Bank, Industrial Alliance or Desjardins are offering a better rate?

What if First National, MCAP, Street Capital, Home Trust, Merix Financial, ICICI Bank, CMLS, MonCana Bank, Radius Financial, RMG Mortgages, AGF Trust, B2B Bank or Xceed are offering better rates?

What if you’ve never even heard of these Lenders?

A Mortgage Broker is not an employee of any one particular Lender, but more like a freelancer who works with hundreds of Lenders to find you the best rate. He works for a Brokerage (like Dominion Lending Centres, for example) and (usually) gets paid a commission directly from the Lender only after the deal is closed. A Mortgage Broker will closely evaluate your financial and credit history and advise you on what terms (open, convertible, closed, variable open, variable convertible, variable protected), which options and features (buydown of mortgage rate, assumable mortgages, accelerated payments, extend and blend, portable mortgages and skipping mortgage payments) are best for you. The main point of difference is that a Mortgage Broker/Agent can find you the lowest rate on any particular day, out of hundreds of Lenders.

It’s like going to the airport and buying a ticket directly from the Air Canada booth at whatever price they’re selling for that day, or buying your ticket from a travel agent, or a discount website, on which ever airline will get you there for the best possible deal.

You’re responsible for your own success. When you’re in the market for that perfect mate… er… mortgage, you have to present yourself in the best possible light. In the mortgage world, you are only as good as the documents you submit for approval (your credit report, employment letters, pay stubs, NOAs, downpayment verification).

Based on the quality of these documents, the Lender will classify you as an A, B or C Borrower. 

If your credit score is excellent, your income is verifiable and you have substantial savings for at least 20% (of the purchase price) deposit, then you’re an A Borrower and chances are you’ll get a favorable rate because the Lender will see you as a low risk Borrower.

Let’s say you’re an excellent catch, you don’t have to settle on working with the first Mortgage Professional you meet with. You can go on three mortgage dates, and then settle for the best one. Why limit the number of Mortgage Professionals you meet with? It’s because every time you apply for an approval or pre-approval by a Mortgage Professional, that professional will want to pull your credit report because it is part of the criteria they need to evaluate you and determine the most suitable Lender. If your credit report is pulled repeatedly in a short period of time, the credit score begins to decline. If you are a truly polyamorous Borrower and you simply must go on 5, 10 or more mortgage dates (I don’t judge), then it’s better to download your own credit report from Equifax.ca. Instruct the Mortgage Professionals to use the credit report you provide them with and assert that you do not authorize them to pull it on their own.

I, personally, prefer working with the Mortgage Broker from a Brokerage rather than the Mortgage Specialist from a bank. I can expect a closer relationship with a Mortgage Broker. I know I can call him on his cell phone at 11pm and he will answer. I know that when I need something from him, he doesn’t need to run it by his boss, his boss’ boss and the legal department and every other senior in the office. It also doesn’t take him 4-5 days to deliver. If he doesn’t find me the best deal, then he doesn’t get paid. If he finds a better rate later, he will tell me and revise my approval. His only job is to secure a mortgage for me. He won’t try to upsell, cross sell or promote other products. I know that he always keeps my best interest in mind, and he will fight for my love.

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When you find “the one”, you won’t want to let him go. If you haven’t found the one, keep looking. Even, if you think you found “the one”, but then you meet someone else, and decide that he’s “the NEW one”, it’s ok to dump “the OLD one”. It’s not the nicest thing to do, but hey, you have to do what’s right for you. Just make sure it’s not later than two weeks before your closing date because at that point the Mortgage Professional is sending the Mortgage Instructions to the Lawyers and the closing process is initiated. It’s the equivalent to standing at the alter, and the Officiant has asked you to repeat, “I take thee…”

 

THE PRECEDING COMMENTARY IS THE OPINION OF HANNA MACDONALD AND DOES NOT REPRESENT THE INTERESTS OR OPINIONS OF RIGHT AT HOME REALTY INC., BROKERAGE OR THE TORONTO REAL ESTATE BOARD. THEREFORE, RIGHT AT HOME REALTY AND THE TORONTO REAL ESTATE BOARD WILL NOT BE HELD RESPONSIBLE AND/OR LIABLE FOR ANY OF THE OPINIONS HEREIN.

Zoocasa?

Zoocasa sounds like a new Wildlife Centre. African Lion Safari meets Great Wolf Lodge, a place where you can ride a roller coaster and see a zebra at the same time.

Well if you’ve heard the ads on the radio, then you will know that Zoocasa is not a Wildlife Centre (but that would be cool). Zoocasa is in the Real Estate business. Owned by Rogers Communications Inc.

The commercials feature bizarre characters. Astrid and Anton are a sleek, model-couple who dress all in black and speak with a German accent.  

Zoocasa_DesignersPoster_1315px

Stan and Sheila are a timid, shaky couple who seem nervous and unsure about speaking to the camera. 

To view the Stan and Sheila advertising masterpiece (and I use this term sarcastically), click here: http://rain43.com/work-items/zoocasa/

If you can’t be bothered, it goes something like this:

 

Voice Narrator: “Stan and Sheila were shy about finding a real estate agent but Zoocasa helped them find a top performer that really knew the area.”

Sheila (in a quiet unconfident tone): “We love our agent.”

Stan (looks like he’s zoned out): “Yeah..”

Sheila cuts him off: “Oh, we’re out of time. Next time.”

Then the tagline appears: Search all homes. Find top agents. Get cash back.

 

Alright… I have a Bachelor degree in Business Administration with a concentration in Marketing. I also spent two years of my life working at an ad agency until I finally couldn’t take it anymore and quit to pursue a happier and more rewarding life.

Even with my background in business, marketing, and real estate, I STILL don’t understand what the point of Zoocasa is, and which demographic they are targeting. If their demographic is an average Real Estate Buyer, then why are they hiring actors who portray people in an insulting manner?

I think Zoocasa’s advertising is stupid. I don’t care for Zoocasa either.

Zoocasa is a Real Estate Brokerage with a search engine for properties listed in Canada, helping Buyers find Top Agents, and offering a cash rebate.

I think they are more of a lead generator for Realtors who can’t find clients on their own. In fact, I doubt they would be licensed as a Brokerage if it weren’t for the lawsuit between the Toronto Real Estate Board and the Competition Bureau, but that’s a story for another day.

Seriously. They don’t have a physical office and they don’t employ Realtors. What they do is accumulate the contact information of people who sign up, and then distribute that information to Realtors who work for other Brokerages (Re/Max, Royal LePage, Century 21, etc.).

If one of these leads turns out to be a serious one and it results in a sale, then Zoocasa takes a 35% cut of that Realtor’s commission. Of that 35%, they take 20% for themselves as profit and give 15% back to the lead as a cash rebate.

I do not think these are “actual” top Realtors, but maybe my definition of a top Realtor is not the same as Zoocasa’s definition.

A top Realtor, in my opinion, is one who is so good at what he does, that he or she doesn’t need to prospect, knock on doors, cold call, let alone give away 35% of their commission to a lead generating website to do one deal. I’m not saying there is anything wrong with cutting commissions, or giving back to the client. Sometimes it’s necessary. However, a top Realtor is skilled enough to negotiate a greater amount off the asking price, saving his client money from the top.

If a Realtor relies on a lead generator to earn a living, it’s likely because that Realtor doesn’t have their own clients, and/or their past clients don’t refer enough of their friends to that Realtor. Why not? Maybe it’s because the Realtor is not all that good at his job? Maybe that Realtor puts their own interests ahead of his clients? I don’t know… I’m just guessing here. If a Realtor can successfully keep their clients happy, then the Realtor will always end up with new business because his past clients will gladly refer new clients..

In my opinion, a top Realtor, is one that doesn’t chase clients, because clients come to him all on their own.

This is just what I believe. I want to be this kind of Realtor. This is why I personally would go out of my way, and make it my mission to make just one client so gosh-darn happy and confident at the end of the buying process. Maybe then my client will tell all of their friends about how awesome their Realtor is. That’s how business grows.

Let’s examine this tagline again: Search all homes. Find top agents. Get cash back.

I think Zoocasa is nothing more than a well designed website. Yes, you can search all homes. Yes, if you sign up and buy your house with one of their outsourced Realtors then you will get some cash back. However, I don’t necessarily think you will be working with a “top” Realtor and that might cost you in other ways.

In conclusion, don’t take me at my word if you don’t know me. Go out there, ask questions and find a top Realtor who can prove that they are a top Realtor. Talking to his past clients always helps.

 

Happy House Hunting!

 

THE PRECEDING COMMENTARY IS THE OPINION OF HANNA MACDONALD AND DOES NOT REPRESENT THE INTERESTS OR OPINIONS OF RIGHT AT HOME REALTY INC., BROKERAGE OR THE TORONTO REAL ESTATE BOARD. THEREFORE, RIGHT AT HOME REALTY AND THE TORONTO REAL ESTATE BOARD WILL NOT BE HELD RESPONSIBLE AND/OR LIABLE FOR ANY OF THE OPINIONS HEREIN.

The Tribulations of Trump Tower

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Toronto Life wrote an article earlier this year. The opening paragraph reads:

 “The Trump Tower, downtown’s tallest new condo-hotel, is a monument to excess. And, like its tycoon namesake, it’s surrounded by controversy: 38 investors are suing the hotel for millions.”

Uh oh, it sounds like Donald Trump is out deceiving the poor people of Toronto.

The story focuses on the troubles of one particular Torontonian Sarbjit Singh, who invested $869,000 in a unit at Trump Tower. For this type of investment, Singh needed to give the developer a 20% deposit along with a protracted copy of the Agreement of Purchase and Sale. That’s almost $175,000! This is definitely not an amount just casually sitting around in the bank account of an average Torontonian. To make this deal happen, Singh convinced his own parents of what a colossal opportunity this was. They took out a line of credit on their home for $150,000.

And then the inevitable happened; only it wasn’t inevitable to Singh.

The project was delayed. Apparently the job site was so small that the developer, Talon International, could only employ one crane. Is this a big deal? I don’t think so. The project would have been delayed if they used 12 cranes. That is how it is. Every pre-construction condo project is eventually delayed; nothing ever closes on time in Toronto.

What’s the problem here?

The article blames the change in the real estate climate. The value of the unit was predicted to increase, and then the recession happened. The property hadn’t even closed and was worth less than the $869,000 Singh had already agreed to pay. 

Does this mean Singh is entitled to renege on the contract and get his deposit back? I don’t think so!

In Toronto, there is a cooling period for any pre-construction purchase. Buyers have 10 days to take their documents to a lawyer for review. Should the lawyer find any issue with the development or the papers, the buyer can back out of the deal so long as it’s within those 10 days. It is up to the buyer to do their due diligence before committing to a binding agreement, especially when large sums of money are involved.

I’m not siding with Donald Trump either though. He has nothing to do with this. He isn’t the developer, he isn’t a shareholder, and the sales people were not his employees. He is not involved in this project whatsoever, other than allowing the use of his name on the building and lending his presence at the ribbon cutting ceremony.

I’m more inclined to hold the investors suing the developer responsible for the mess they are in. They are the ones legally obligated to close on a property they can’t afford, and cannot get financing for, because Mortgage Lenders do not give mortgages for properties that don’t pass appraisals. Not to mention properties that qualify as commercial rather than residential, have lower than forecasted occupancy rates and are cash flow negative.

Regardless of the state of the economy, there is no profit to be made in pre-construction. People are still dreaming about flipping condos like it’s 2005. There are increasing numbers of developers, charging outrageous  premiums on vague floor plans while models serve inexperienced buyers champagne to seduce them into signing a 50 page contract. For the last time, it is not cheaper to buy a pre-construction condo than it is to buy a re-sale condo anymore. 

Condo hotels, which in many cases are classified as commercial properties, are an even riskier investment than buying residential condo units. If these speculators, not investors, had done their research, they would have known this wasn’t a lucrative investment, recession or not. The sales team is hired by the developer to sell, sell, sell. They are not licensed Realtors and they do not care about you. Don’t believe what you read in those flashy brochures, hire a lawyer and do your own due diligence.

Now Trump Tower (or Talon International to be more precise), is in the midst of a lawsuit. Troubled investors are suing Talon and Talon is suing troubled investors. The accusations listed are misrepresentation, breach of contract, breach of the Ontario Securities Act, and even conspiracy.

Singh in particular was promised that even at the worst case scenario 55% occupancy rate, he would still make a profit.  Since the Trump Tower opened its doors, his unit is vacant more than half the time. In an effort to lure guests to rent out the suites, the hotel has dropped the price from $600 to $400 per night. The low occupancy rate coupled with high maintenance fees resulted in a huge loss for Singh, who claims he was losing $5,000 per month.

What is the conclusion here? While the outcome of the lawsuit remains unclear, this may be a precedent setting case that may impact the regulations surrounding such properties. However, we’ll have to wait for the battle to be over and see who is left standing. If I were to guess though, I’d say it’s likely that the lawyers will be the profiteers while the developer is left with a bleeding tower and the investors are bankrupt.

Being an educated investor is not the same thing as being a gambler. Singh gambled by investing money he could not afford to lose and by not doing his due diligence on the risks of pre-construction and condo hotel investing. You can’t take a chance on the market and hope for the best, prepare yourself and protect your investment by doing research so you know what to expect. If you dream of making money in real estate you must educate yourself first and this may mean passing on opportunities that sound too good to be true.

 

THE PRECEDING COMMENTARY IS THE OPINION OF HANNA MACDONALD AND DOES NOT REPRESENT THE INTERESTS OR OPINIONS OF RIGHT AT HOME REALTY INC., BROKERAGE OR THE TORONTO REAL ESTATE BOARD. THEREFORE, RIGHT AT HOME REALTY AND THE TORONTO REAL ESTATE BOARD WILL NOT BE HELD RESPONSIBLE AND/OR LIABLE FOR ANY OF THE OPINIONS HEREIN.

Extra Extra: Is the real estate market crashing? (Speech prepared for Toastmasters)

Extra

I came across an article in the Globe and Mail.  The headline read, “Clouds gather over Canadian Housing Market[1]”.

Wait, what?? What clouds??

What’s next, lightning, hail, tsunami?? Lake Ontario overflows and half the city is under water!! The housing market crashes as Torontonians evacuate!

Ok, Globe and Mail. It’s time to stop scaring my Buyers. These days I feel more like a psychologist than a real estate agent. I spend a lot of time reassuring stressed out, fearful clients.

Madame Toastmaster, Fellow Toastmasters, and Welcomed Guests,

Next time you see a headline like this, please take it with a grain of salt. Here are four reasons why:

1. Articles can be sensationalized.

Many writers use fear tactics to sell their articles.  A hard-hitting and controversial headline is attention grabbing and sells newspapers. Like Globe and Mail’s March headline that read “One word to describe Toronto’s real estate market: It starts with an F[2]”.

Toronto Life wrote the following line: “The house hunt has become a blood sport involving bully bids, bribery and a willingness to pay $100,000 over asking, without conditions, for the ugliest address on the street” [3].

Toronto Life, please don’t tell my Buyers that they’re going to end up bloody and swindled, the remorseful owners of an ugly house. I would never let this happen. I make sure my clients’ experience is PLEASANT. Ask any one of them.

2. Articles are sometimes published too late.

I don’t know how many articles I’ve read about a bidding war  for a specific address that occurred a season earlier.

3. Articles sometimes manipulate data.

You can make numbers say anything. There’s a lot of data out there, and when writers have a certain angle, they may omit certain numbers. If you read somewhere that the market has gone up by 6.5%, don’t just take that number at face value.  Does 6.5% mean sales are up, or does it mean prices are up. Is it for condo sales or for freehold sales? Is it for downtown Toronto or the GTA? Is it 6.5% more volume this month? Or 6.5% since the same time last year?

If I read that real estate sales have plummeted in July and August, I’m going to go crazy. It’s called seasonality and it happens every year.

4. Articles sometimes contain data from unreliable sources.

The only data my clients need to worry about is their own financial data and whether of not the can afford the monthly mortgage payments and maintenance fees, and property taxes.

For the record, the market is NOT crashing. To those of you who are wondering if and when the market will crash, I would suggest you stop speculating. In my opinion, speculating is like gambling. You don’t really know what you’re doing.

If you want to buy, then buy. If you don’t want to buy, then don’t buy. Just don’t fall victim to the Chicken Little Syndrome: The sky is falling, the sky is falling!  The sky is not falling and neither is the real estate market.

 

 

Disclaimer: The preceding commentary is the opinion of Hanna Stecewicz and does not represent the interests or opinions of Right at Home Realty Inc., Brokerage or the Toronto Real Estate Board. Therefore, Right at Home Realty will not be held responsible and/or liable for any of the opinions herein.

 

 

 



[1] http://www.theglobeandmail.com/report-on-business/economy/housing/clouds-gather-over-canadian-housing-market/article9812647/

[2]http://www.theglobeandmail.com/life/home-and-garden/real-estate/one-word-to-describe-torontos-real-estate-market-it-starts-with-an-f/article9759374/

[3] http://www.torontolife.com/daily/informer/features/2012/08/29/real-estate-bidding-wars/

The $20,000,000 Condo Fraud (Speech prepared for Toastmasters)

It’s the story that made newspaper headlines back in September.

A man by the name of Manzoor Khan stole 20 million dollars from condo owners across the city. 20 Million Dollars. That’s a massive figure. It’s hard to wrap your head around such a large sum

This man was the president and owner of Channel Property Managed and managed 9 different condominiums in Toronto.

He opened up fake bank accounts in the each of the condo’s names.

He authorized fake bylaws and falsified papers that authorized him to borrow millions of dollars from a lending institution.

He did this all without anyone noticing. Not the board of directors, not the condo owners, and not even the employees really knew what was going on.

It was months before anyone caught on to his scam. It was only when the property management company began to default on payments, that the lender issued a notice to the condo board. And that’s when the scheme unraveled. But by then it was too late, Khan had vanished.  Speculators claim that he had fled with the money to the Middle East.

Madame Toastmaster, Fellow Toastmasters, Welcomed Guests,

Now those condo owners are on the hook for 20 Million.

This could have happened to anyone. It could have been you.

What do you do when your condo board announces you owe a lender 20 Million? Some people have succumbed to depression. Some people have tried to sell only to realize their units have become unmarketable. The negative media attention and resulting stigma has destroyed their condo’s reputation and nobody wants to buy.

They’re losing money on their investment; their units are selling for significantly less than a year ago.

Some people worry that the maintenance fees will increase to the point they can no longer afford to pay, or worse, a special assessment will be issued against the condo owners and they’ll be forced to pay thousands of dollars up front.

The truth of the matter is, that no one really knows what the future holds for each of these condos. The owners have pooled together and filed a lawsuit against Khan and his property management company. The case has gone to the superior court, but it could be years before they see an outcome.

This cautionary tale is not meant to scare off condo owners or condo buyers. This is an unprecedented case.

Sometimes despite your best efforts, there isn’t anything you can do. There are bad people in this world. And whether it’s in real estate, banking, in the stock market, in business fraud exists.

But there is something you can do to reduce the risk: your due diligence.

Future condo buyers: make your condo offer conditional upon the your lawyer’s review of a current status certificate.

The status certificate is a disclosure document which describes the financial state of the condominium, including information about maintenance fees, the condo’s budget, the amount of money in the reserve fund, special assessments, lawsuits, the status of the building insurance, etc.

Be diligent. Sit down with your lawyer and go over the document line by line.

If there is anything in that document that indicates the condominium is unhealthy, your lawyer will let you know. And you can walk away from the deal, with your deposit back in full.

Current condo owners: join the condo board. You’ll learn more about condos than you ever thought possible. You’ll have influence over how your condo is run, and at the very least, you’ll know where your maintenance fees are going.

In the meantime, we need to wait and see how this lawsuit plays out. Will the court recover the $20 million? Will the lender have to take a loss? Will the condo owners have to pay? These questions still need to be answered.

I’m certain that when the court announces a verdict, we’ll be reading it in the newspaper the next day.

 

Disclaimer: The preceding commentary is the opinion of Hanna Stecewicz and does not represent the interests or opinions of Right at Home Realty Inc., Brokerage or the Toronto Real Estate Board. Therefore, Right at Home Realty will not be held responsible and/or liable for any of the opinions herein.