Larry Kich - Broker » Blog

HOME SELLING GUIDE

larkich — Fri, 16 Apr 2021 14:04:27 +0000

MARKET CONDITIONS – OVERVIEW

The Real Estate Market is fluid and therefore changes periodically, sometimes cyclically, and sometimes seasonally. It is helpful to understand how market conditions can affect your position as a buyer.

MARKET CONDITIONS

CHARACTERISTICS

IMPLICATIONS

Buyer’s Market:
The supply of homes on the market exceeds demand.

High inventory of homes. Few buyers compared to availability. Homes on the market for longer period. Prices tend to adjust downward.

More time to look for a home. More negotiating leverage.

Seller’s Market:
The number of buyers seeking homes exceeds the supply or number of homes on the market.

Smaller inventory of homes. Many buyers. Homes sell quickly. Prices usually tend to increase.

May have to pay more. Make decisions quickly. Conditional offers may be rejected; e.g. sale of property.

Balanced Market:
The number of homes on the market is equal to the demand or number of buyers seeking homes.

Demand equals supply. Sellers accept reasonable offers. Homes sell within an acceptable period of time. Prices generally stable.

More relaxed atmosphere. Reasonable number of homes to choose from.

PRICING THE PROPERTY

Probably the single most important decision to be made when listing a property is determining the right asking or list price for the property. Once a realistic list price is achieved, the property will be marketed and promoted to attract potential buyers.

BENEFITS OF PRICING WISELY

The property usually sells faster than if over-priced because it is exposed to more qualified buyers.
The home doesn’t suffer from a loss of “marketability”.
The closer to market value the pricing, the higher the probability for offers.
A well-priced property can attract higher interest, and potential for competing offers.

SETTING THE PRICE

It is important to price the subject property at market value. When setting a price for the property, the listing level must strike a balance between the seller’s need to achieve the best-possible return, and the buyer’s need to get good value. With many years of experience, a professional Real Estate Salesperson can help in setting a price that will accomplish both objectives.

The market value of the subject property is determined in exactly the same way as any other commodity – what a buyer is willing to pay for it in today’s market. Despite the price paid originally, or the value of any

improvements that have been completed; the value is determined by market forces.

Buyers look at about a dozen properties on average before making an offer on a property. As a result, they

have a good overview of the market and will compare your property against the competition. If it’s not in line

with similar properties that are available, buyers won’t consider it good value for money.

DETERMINING A HOME’S VALUE

Ultimately, the market determines the true value of a property. The following list of factors need to be considered when comparing the subject property with similar properties, in order to establish a competitive list price:

Location
Size
Style
Condition
Features
Updates & upgrades
Community amenities
Neighborhood

FACTORS INFLUENCING OVERPRICING

Extensive renovations/hidden costs
Desire to buy in a higher-end area
Original cost of the home was too high
Lack of reliable market information
Built-in “bargaining room”
Perceived emotional value.

IMPACT OF OVERPRICING

Not uncommonly, Sellers can be lured by the temptation that if they price their home high, initially, they can lower the asking price later. Experience shows that when a home is priced too high, it experiences little market activity (showings & online hits). Gradually, the price will come down to market value – by that time, however, it has been for sale too long, and some buyers will be wary and thereby dismiss the property.

The thinking that interested buyers “can always make an offer” is faulty – if a property is over-priced, potential buyers looking for a lower price range will likely never see the property. Those buyers who can possibly afford a home at the higher asking price will soon recognize that they can get better value elsewhere.

THE IMPORTANCE OF EARLY ACTIVITY

The moment a property gets listed on the market, there tends to be a flurry of activity surrounding it – agent viewings, clients showings, and online viewings. This is a key time for gauging interest and assessing buying potential. In the event that the home is over-priced, it doesn’t take very long for interested parties to lose their initial interest. Second showings, or absence of, are a telling sign of serious or dissipating interest. By the time the price is reduced on the listing, a majority of prospective buyers will be lost.

MARKETING PLAN

A property (home) is an extremely important personal asset – it is quite complex to market, and therefore requires a well-organized process to facilitate. Example:

MARKETING PLAN

Pre-Marketing:

Property/area inspection & preliminary assessment
Client Objective(s)/ Market Realities
Market Research: activity evaluation – current [ Subject property vs market audit: valuation
Subject/comparators – reconciliation/triage & SWOT Analysis
CMA (Comparative Market Analysis)
Listing proposal/Listing agreement
Details & logistics re The Listing
Setting Expectations & review processes

Marketing Plan:

Staging (int & ext)/preparation/ listing
Photography/Virtual Tour
MLS/GDAR exposure / Outside Boards
Internet: MLS / RLP Website / Realtor Website / Social Media
Agent viewing/marketing/networking
Signage
Advertising & Target Marketing
Client showings
Public Open House

Service:

Regular activity reports
Market activity updates
Qualifying buyers
Communication with buyers’ agent(s)
Manage documents flow
Negotiate/navigate offer(s) process
Post-sale follow-up

ELEMENTS OF AN OFFER

Price

Depending on local market conditions, your opinion of value, competing interest in the property, and the market information supplied by your Realtor, the price offered may be different from the Seller’s asking price.

Deposit

The deposit is a measure of good faith, and will be applied against the purchase of the home when the sale closes. Your Realtor can advise you on the appropriate amount, if not specified in the listing.

Terms

Includes the total price offered and the financing details. You may arrange your own financing, or ask to assume the Seller’s mortgage, if attractive enough.

Conditions

These might include clauses to protect you, such as “subject to buyer obtaining suitable financing”, or “subject to a home inspection”, or “subject to buyer selling their property”.

Inclusions and Exclusions

These might include appliances and certain fixtures or decorative items such as window coverings or mirrors, TVs and TV wall mount brackets, etc.

Closing or Possession Date

In general, the day that title to the property is legally transferred and the transaction of funds is finalized, unless otherwise stated.

Resale Housing Market Forecast – April 2021 (BLOG)

larkich — Tue, 06 Apr 2021 12:42:19 +0000

The Canadian Real Estate Association (CREA) has updated its forecast for home sales activity via the Multiple Listing Service® (MLS®) Systems of Canadian real estate boards and associations.

Current trends and the outlook for housing market fundamentals suggest activity will remain strong through 2021, resulting in a record number of sales. That said, activity is forecast to begin returning to more typical levels over time. 2022 is expected to see fewer MLS® transactions compared to 2021, while remaining above all other years on record.

Over the past several years, record levels of international immigration (not including 2020), low interest rates, and an increasingly middle-aged Millennial cohort have all fueled strong household formation and housing demand in Canada. Recall that prior to COVID-19, the number of available listings nationally was already at a 14-year low and the national number of months of inventory on the eve of the lockdowns had fallen to below four months (seller’s market territory). COVID-19 has only served to supercharge trends that were already present.

The pandemic has changed the relationship that many people have with housing. For many, home has been everything over the last year. It has resulted in an increased desire for a place of one’s own, for more spacious properties and bigger yards. At the same time, the calculus around home’s proximity to work, typically one of the biggest factors in choosing where to live, has changed considerably this year, and probably to some extent forever. As a result, strong first-time home buying activity is teaming up with a surge in existing owners choosing to pull up stakes and move in recent months.

Add in record-low mortgage carrying costs and you have a recipe for record, or at least historically strong, levels of MLS® activity in all parts of the country. The flip side of that coin are people for whom the pandemic has been a reason not to engage in the housing market over the last year, particularly on the supply side. Inventories are down across Canada, more so than ever before, while at the same time demand is setting almost unbelievable monthly records. This dynamic is playing out on the price side in the form of rising prices everywhere. This in turn, may be pulling even more demand forward from the future as buyers feel increased urgency to lock in current prices at record low mortgage rates.

Economic activity has been stronger than expected over the winter months. While mortgage interest rates declined throughout 2020 and are still near all-time lows, inflationary fears have surfaced to start 2021. That said, at this point the Bank of Canada is signaling that it wishes to keep interest rates low over the remainder of 2021 and through 2022. Additionally, mass vaccination of the population is not far off, which will trigger a reopening of the hard-to-distance sectors of the economy that have struggled most with the virus, and a re-acceleration on the immigration front as well.

The national average home price is forecast to rise by 16.5% on an annual basis to just over $665,000 in 2021. This reflects the current unprecedented imbalance of supply and demand, currently at less than 2 months of inventory nationally to begin 2021. Conditions are now favouring sellers to some extent in virtually all local markets. The vast majority of Ontario markets are now into weeks of inventory. As with the annual sales figures, CREA believes this average price forecast to be well on the conservative side, in relation to current monthly data.

On a monthly and quarterly basis, sales are forecast to begin trending down towards more typical levels through the latter half of 2021 and into 2022. Limited supply and higher prices are expected to tap the brakes on activity in 2022 compared to 2021, although increased churn in resale markets resulting from the COVID-related shake-up to so many people’s lives will likely continue to boost activity above what was normal before COVID-19. Indeed, it is possible that many of the moves associated with changes related to increased remote work won’t play out until a little further down the road when we have more certainty about what the future will look like post-COVID.

National home sales are forecast to fall by 12.6% to around 614,000 units in 2022. This easing trend is expected to play out across Canada as higher prices and a lack of available supply impacts all areas of the country, as previously pent-up demand in exhausted, and as the urgency to purchase a home base to ride out the pandemic fades along with the virus itself.

The national average price is forecast to edge up by just 2.1% $679,000 in 2022 as the current demand-supply imbalance unwinds.

Real Estate Market Update – Larry Kich (March 21)

larkich — Thu, 11 Mar 2021 13:36:23 +0000

Back in April 2020, Covid-19 was taking root in our country and was beginning to affect, as well as, tragically, take many lives. At that time, it was expected that the housing market for re-sales in 2020 would continue to grow, with prices appreciating at, or around, 4-6% annually. The fly in the ointment at the time that forecast was rendered was the uncertainty, and thus the inability to confidently account for the Covid-19 effect. Having the advantage of hindsight and being able to analyze the previous months’ data, we are now at least able to explain what has unfolded throughout most of 2020, and to look ahead to 2021.

Statistics recently released by the Canadian Real Estate Association (CREA) show national home sales continued running at historically strong levels through October 2020. Actual (not seasonally adjusted) sales activity posted a 32.1% y-o-y gain in October. It was a new record for that month by a margin of more than 14,000 transactions. For the fourth straight month, sales activity was up in almost all Canadian housing markets compared to the same month in 2019. Many Canadian housing markets continue to see historically strong levels of activity – over and above what would have been required to make up for the very quiet spring market this year (CREA).

“For anyone waiting for the Canadian home market to begin to settle down following this past summer’s surprisingly strong recovery, they’re going to have to wait a little longer. It was evident that the same trends we’ve been seeing since July – record sales and record prices amid tight overall supply – was once again the story in October,” said Shaun Cathcart, CREA’s Senior Economist. “As we’ve moved through the last few months of headline-grabbing data, we’ve seen sales activity for the year-to-date not just catch up with last year, which was surprising enough, but at this point, activity in 2020 has a real shot at setting an annual record.”

Many reasons have been suggested for why this is when many traditional drivers of the market; economic growth, employment and confidence in particular, are currently so weak. Something worth considering is how many households are choosing to pull up stakes and move as a result of COVID-19 and all the associated changes to our lives. We could be seeing a lot of moves, or churn in the market, that would not have happened in a non-COVID world.

Housing demand exceeded expectations in the second half of 2020. The supply of homes available for sale failed to keep pace, driving home prices higher and pushing unmet buyer demand into the new year See EXHIBIT 1 for a summary of market conditions and their consequent implications for sellers and buyers. According to the Royal LePage Market Survey Forecast, the aggregate price of a home in Canada is set to rise 5.5% year-over-year to $746,100 in 2021, with the median price of a two-storey detached house projected to increase 6.0 per cent to $890,100.

MARKET CONDITIONS

Buyer’s Market:
The supply of homes on the market exceeds demand.

Seller’s Market:
The number of buyers seeking homes exceeds the supply or number of homes on the market.

Balanced Market:
The number of homes on the market is equal to the demand or number of buyers seeking homes.

CHARACTERISTICS

High inventory of homes. Few buyers compared to availability. Homes on the market for longer period. Prices tend to adjust downward.

Smaller inventory of homes. Many buyers. Homes sell quickly. Prices usually tend to increase.

Demand equals supply. Sellers accept reasonable offers. Homes sell within an acceptable period of time. Prices generally stable.

IMPLICATIONS

More time to look for a home. More negotiating leverage for the buyer.

May have to pay more. Make decisions quickly. Conditional offers may be rejected; e.g. sale of property, finance, inspection.

More relaxed atmosphere. Reasonable number of homes to choose from.

*The Real Estate Market is fluid and changes periodically, sometimes cyclically, sometimes seasonally. It is helpful to understand how market conditions can affect one’s position as a seller or buyer.

“The leading indicators analyzed, point to a market that favours property sellers in the all-important spring of 2021,” said Phil Soper, president and CEO, Royal LePage. Across the country, a large number of hopeful buyers, intent on improving their housing situation were not able to find the home they were looking for this year, as the inventory of properties for sale came nowhere close to meeting the surging demand. With policy makers all but promising record lows, industry supportive interest rates to continue, we do not see this imbalance improving in the new year. The upward pressure on home prices will very likely continue. There was a clear shift towards larger properties and single-family dwellings in 2020, as families repurposed homes to become their office, school classroom, gymnasium and restaurant during the pandemic. The trend is expected to moderate as life returns to normal in the months ahead.

Mega-trends that predate the pandemic are pushing home prices higher in secondary markets outside of our largest cities. Corporate Canada’s pandemic-driven move to work-from-home operations has simply accelerated relocation patterns already underway. The huge baby-boomer demographic began post-children migration to suburban and recreational-style communities in the middle of the last decade, and material numbers of the equally populous millennial generation have been exiting city centre condos in search of space as they began families. The trend of high demand outside of urban centres will slowly ease as listings in city centres become more competitive against growing prices in suburban and exurban markets.

The concern regarding the impact of potential mortgage defaults related to mortgage deferrals during the summer of 2020 has eased significantly, as many Canadians who deferred payments have begun repayment. According to CMHC, as of September 30, 2020, the organization’s entire insured book of business has 5 per cent of loans with a payment deferral in place; a decline from approximately 8 per cent in August.
The first half of 2021 will be something of an economic and social tug-o-war between advancing medical science and surging housing demand. The real estate brokerage industry has developed protocols that allow us to safely sell property during the pandemic, yet some would-be sellers will remain cautious and not list their properties while high levels of COVID-19 transmission remain the norm, restricting available housing supply.

How To Pick The Right Realtor To Sell Your Home

larkich — Tue, 23 Feb 2021 19:01:07 +0000

How To Pick The Right Realtor To Sell Your Home

Selling your home is one of the most exciting, and stressful things one can do! A great realtor will not only make selling your home fast and easier but will help you sell your home for more.

Thankfully finding qualified realtors is easier than ever. With a quick search, you can find hundreds of realtors in your area who could sell your home. But how do you pick the right realtor to sell your home? A great realtor will have the experience, a unique marketing strategy, and make it seamless for you to sell your home as soon as possible.

Learn more about how to find the right realtor to sell your home below!

Experience

When looking for a realtor to sell your home you will want one with experience in your local market, and selling homes similar to yours. Selling homes can be a complicated process, but working with a realtor who has experience in the type of homes you are selling will make the process easier.

Every type of home has its own nuances and customer market. You will want a realtor with experience in your local market and the type of home you are selling so they know the proper way to highlight and attract potential buyers.

A quick look at their sold home portfolio can help you determine if they have experience selling your type of home. Make sure to look at how long they have been selling homes in your market as well. This will tell you how experienced your realtor is in your area!

Realtors with experience may be able to sell your home faster and for more by having a deeper understanding of potential homebuyers, and pitfalls in the sales process.

Referrals and Reviews

Realtors love referrals, and for good reason. According to Zillow research, more than one in five sellers find their agent because of a referral. A referral is a sure-fire way to know that this person offers superior service.

That’s why when you are looking to sell your home, ask your friends and family for recommendations. Your friends and family will want to make sure you get the possible service, so a trusted referral can go a long way.

If you can’t get referrals from friends or family, reviews are a great way to find a realtor to sell your home. You can see the good, the bad, and the ugly, of local realtors in your area. Reviews are extremely useful tools to help you identify a great agent as you can see how they handle their clients, on either end of a transaction.

Additionally, reviews and referrals will show the expertise and professionalism of a realtor. Good reviews will show how well they handle their clients and their properties. This sneak peek can tell you if they have the expertise, and ability to sell your home!

Interview Your Realtor

Before you sign with a realtor, you should always interview a potential realtor. Selling your home can be a long and stressful process, but if you choose the right realtor can be a quick and easy process.

When you interview and meet with your realtor you want to have a complete picture of what selling your home will look like. Ask about previous experience, clients, and the ins and out of how THEY sell a home.

Some questions you should ask a potential realtor are:

How long have you been selling in this real estate market?
Do you work with sellers or buyers more?
How many active clients do you have at a time?
What’s the best way to contact you?
How will you market my home?
How often will you update me?
Can you give me references?

These questions will help you know how a realtor works, and how they plan to sell; your home. Having a seller-agent relationship is important as you want to make sure your communication skills are on point.

You can clearly set expectations of how your home will be sold and know you are picking the right realtor for your property.

Next Steps

After you have interviewed potential realtors for your home, it’s important to set clear expectations for how you want to sell your home. Therefore you should meet with your realtor and discuss the best marketing for your home.

When you meet make sure you discuss the following:

Discuss Why You Are Selling
Selling And Marketing Strategy
Cover Important Details and Paperwork

You should always clear about why you are looking to sell, and what your ideal time frame is. This will help your realtor to determine how aggressive your selling strategy should be to get the offer that best collides with your expectations.

Your realtors should provide important paperwork and have a plan for how to sell your home. Professional photographs of your home make it easy for you to market your home digitally. Some realtors will offer open houses, so make sure to discuss your comfort level in how they market your home.

Your realtor will also make sure to set clear expectations on how to sell your home and come to decisions on the right list price, and the length of the contract if your home isn’t sold in a certain length of time.

Summary

When selling, it’s critical to know how to pick the right realtor to sell your home. Your realtor should be an expert in selling homes like yours in your area, and make it easy and sell your home with minimal hassle. Finding the right realtor requires a bit of groundwork, which can pay off if it removes frustration and makes it easier to sell. That is why you should do the following to find the right realtor to sell your home.

How To Pick The Right Realtor To Sell Your Home

Experience:Make sure you choose a realtor with experience in your market and sell your type of homes. These realtors will have better insights on what the market is looking for and the best strategies for selling in your area.
Referrals and Reviews: Always ask for a referral or review when you are looking to sell your home. Friends and family can offer a unique insight on how a realtor operates, and how they perform that can tell you if they would be the right fit for selling your home.
Interview Your Realtor:When you have a few realtors in mind to sell your home, take the chance to interview them! This interview should cover their experience in selling in your area, how they plan to market, and the best ways to communicate with them. You can see if you and your realtor are a match made in heaven, or if they might not be a good fit.
Next Steps: Once you have decided on the right realtor to sell your home, have another meeting to go over the final details of selling your home. This includes signing a listing contract, how they will market your home, and an ideal listing price.

About the Author: Catherine Way graduated from Michigan State University with a Bachelor’s in Advertising. A freelance content marketer for industries such as photography, mortgage, and real estate. She has written for Silver Doctors, The Paper Source, Active Rain, and Progressing Income. She enjoys creative outlets like writing, designing, dancing, and modeling. She currently writes and makes content for Prime Plus Mortgages: Real Estate Note Investing