David's thoughts on anything real estate related

As the old adage goes, I know when the market is correcting when listing agents start to call me back.

Over the last month I have had the opportunity to work very closely with a client searching for a condo in downtown Vancouver. His search was up to $1M. Over this time period I wrote three offers for him and we viewed over 50 properties.

There have been countless news headlines over the past 10 years about the market correcting, or even crashing (we know that the media loves hyperbole). It is one thing to read about it or hypothesize about it, and another thing to experience it first hand. 

This past month I had a front row view of seeing the market correct in real time. It was interesting to see how sellers and listing agents handled this change. 

Our search started out with listing agents setting a hard date for offers, sometimes with only a week from when the property was listed. This strategy has worked well in the past to create urgency and “bid up” the asking price. I have used it with my sellers in the past with great success, as you truly find the market value when there is some competition. 

In this past month I have seen this strategy start to backfire. Instead of 5 or 6 offers, sellers started to receive two offers and sometimes sell for under the listing price. Two offers, often with subject conditions, may not be enough to drive a price upwards in a softening market.

About half way through our search we started to see price reductions and the “offer date” strategy ceased to exist. Sellers started looking at offers “as they came.” My buyer was in the driver's seat at last!

My buyer ended up purchasing a home for about 10% to 12% less than he would have paid for it just 4 weeks ago. This is substantial on a $800,000 asking price.

It is so rewarding to work hard for a buyer in a falling market. Especially a client that recognizes your efforts and makes the process challenging but at the same time lots of fun. Nothing beats the feeling of negotiating a deal for a buyer and finding the perfect property at a great price. 

Let’s see what the future holds for Vancouver real estate. My feeling is that the market should continue to adjust downwards as interest rates rise and more housing hits the market.

If you are searching for hard working real estate don’t hesitate to call me anytime at 604-808-9796. You can learn more about me by following this link.

In a hot market, where pretty much everything sells immediately with multiple offers, real estate agents may become complacent when marketing and negotiating your home sale.

Seems easy enough - throw a few photos up on the internet, write up a quick description of the property and call it a day. Right? 

Wrong!

Realtors have their “marketing systems” and rarely take the opportunity to think outside the box. But what if there was a better way? A better way that leads to a higher selling price with the best terms for you, the seller.

Marketing a home may seem simple, but it’s not necessarily easy to get the best price, and it’s hard to prove that your Realtor has found the highest price. The simple part: create an emotional response with potential buyers by decluttering, staging, taking great photos and videos, and providing a floor plan with an online virtual tour. 

But what else can be done to really create value? The part that isn’t so “easy” to see?

This is where experience, a realtor's background and creative marketing make a difference. Older homes can sometimes be a challenge to sell at the highest price because that value may not be what is visible, but rather, what is possible. 

Over the last 15 years as a real estate agent and a previous real estate developer, I have had the privilege of helping many of my clients sell older homes. In one scenario, I was selling an older home on a pie-shaped building lot hemmed in by telephone pole supports. Most potential buyers had no idea how to build a new home here. It required many trips to the city’s planning department and close coordination with an architect to show prospective buyers what was possible. I literally had renderings drawn up! The exciting part was to sell the property and years later come back and see that the buyer had built the home that was conceptually the same as the one that I marketed! I felt like I really added value to both the seller and the new home buyer.

So what else can be done to get the highest price and best terms for your home? This is a tough one to quantify, but a realtor's negotiation style has a huge impact on the outcome of the sale of your home. Does your agent look for creative solutions when negotiating? To be creative means your agent is curious about what you AND the buyer truly wants. This involves knowing the right questions to ask you, the seller, as well as working closely with the buyer’s agent. A win / win negotiation style in my mind always supersedes a win / lose. 

The above are examples of the kind of creative marketing and negotiation techniques that not only sells a home, but sells it for more than if the property had been sold with traditional marketing and average communication.

The quick answer is it depends. Some Realtors rely on referrals and word of mouth while others invest heavily into marketing themselves. 

For myself I tried heavy marketing early in my career and found it to be very difficult to out-market the agents that had been in the business for decades. I still market my recent sales via direct mail (at a cost of around $250 per sale), but the majority of my listings and buyer clients come from referrals and word of mouth. 

My office overhead is around $800 per month. This covers my brokerage fee, insurance and board fees. 

Other monthly costs related to marketing include website hosting, my email campaign program and a company that I pay monthly for statistics (SnapStats). These costs amount to around $300 per month.

I also have ongoing education at around $500 per year. The real estate council and real estate board requires that all agents take a certain amount of professional courses every 2 years.

As I mentioned above, most realtors invest in marketing themselves.  I prefer to redirect these costs into each of my listings. For every listing whether it is valued at $500,000 or $5,000,000, I spend around $2,000 on brochures like this one, photography, videography, floor plan and 3D plan (Matterport). 

For every sale, whether it is a listing or a sale representing a buyer, my brokerage charges me a fee of around $350. 

Of course there are other costs just to get set up as an agent. A professional biography video (like this one) can cost up to $5,000 and to have your logo, branding and website designed can cost another $5,000. These costs can come up every 4 or 5 years to keep the marketing current. You will also have costs related to getting licensed. It will cost you around $1,000, assuming that you don't need to take a class and you are self taught. 

You will also need to buy / lease, insure, fuel and maintain a car. You see many real estate agents driving around in $100,000 cars. For myself I drive a Mini Cooper which is pretty economical.

David Eby, the attorney general for British Columbia, is proposing that local housing permit approvals be taken out of the hands of local governments.

Although there are many potential pitfalls with this idea, it is clear that the current housing approval process is no longer working. Currently it can take over a year for the City of Vancouver to approve a permit for a single family home. Larger housing developments can take anywhere from 3 to 5 years. 

With 55,000 people estimated to move to Greater Vancouver in 2022 we are continuously in catch up mode and this year we will be short around 10,000 homes.  This is great for those that already own a home, as it's an investment guaranteed to go up, if this gap can't be closed. 

The time it takes to approve a residential project adds cost to the development. Remember that developers finance the purchase of land. With the cost of land also on the rise, this component of the project can easily amount to 40% of the overall project cost. Developers must “carry” the cost to finance the land. The longer the approval takes the more it costs the developer.  This carry cost is passed directly on to the end buyer of the home(s). Imagine holding millions of dollars worth of land for 3-5 years while you wait to start construction. To me it is ridiculous. 

During the waiting period, the developer is also required to hire consultants to conduct “studies” (many of which are completely unnecessary). It is during this time that many, many community public information meetings are held. On top of all this the developer must negotiate with the city for public amenity packages (another huge fee paid to the city). The city uses these funds (sometimes very inefficiently) to fund the construction of public amenities that could most likely be built much more cost efficiently in the private sector. This “public amenity package” is on top of the Development Cost Charges (DCC’s) that were already in effect to fund infrastructure projects. 

After all this time and effort (remember the developer has been waiting up to 5 years at this point), there is no way to appeal zoning decisions made by the city to any authority. The entire process can be very opaque with many unknown costs along the way.

Bottom line is, if we are going to continue to embrace immigration, which is inevitable, to our beautiful city, we need more housing and we need a more efficient and flexible approval and permitting process. We need different forms of housing - not just more condos. We need housing for families, other than the now almost untouchable detached home.

What do you think would solve our housing crisis?

Have you ever wondered how the same real estate listing ends up on so many different websites? 

Realtors sign an agreement with their real estate board that allows their listings to be shared and propagated across the internet. This agreement also allows realtors to pull in other agents listings into their own personal website. Whether it is REW.ca, Realtor.ca or Zoocasa.com, they all pull information from the same source and get the information at the same time.

The next question becomes which is the best website to search for listings? This is a tough question to answer because there are so many different websites. Some websites give very little information about the property and some provide lots of information, but it is arranged in a confusing and convoluted way.

There are a few websites and companies out there that I believe give you the best information. Surprisingly they are not the most popular websites. Any real estate agent that is using My Real Page as a search engine (like myself at https://davidsetton.com/recip.html) is miles ahead of the game when it comes to both searching for properties and the presentation of properties when found. 

With My Real Page you get all the details including room dimensions, property taxes, floor area and lot area. You can even share and mark your favourites. Calculate the mortgage, view the map location, walkscore, and street view all from the listing. New listings that meet your own personal criteria will be sent to your email.

Buying a home in Vancouver is more challenging than it has ever been. There is limited inventory and homes are consistently selling with competing, multiple offers. Is the inherent value of living in Vancouver rising this rapidly, or is FOMO (fear of missing out) a factor?

To be a successful buyer, the offer cannot contain one subject condition. Remember, a subject condition is a safety-net clause in your legal offer to buy, that protects you in case anything comes up during the due diligence process. 

Still homes oftentimes sell for as much as 10 to 20% over the asking price. This is alarming to say the least.

In this type of market condition it is very difficult to advise your buyer client. The last thing I want as a real estate professional is to have my buyer overpay for a property or to buy a lemon. 

Here is the process I have been seeing with some of my clients:

1. 1 Make an offer on home

2. 2 Get outbid on price

3. 3 Make another offer on a home (only this time the market is even stronger)

4. 4 Get out bid AGAIN!

This “write an offer / get out bid” process can go on for 5 or six offers over a few months until they are finally successful in purchasing a home. It is not that the buyer is doing anything wrong either. 

Sometimes they honestly just reach the threshold and upper limit on what they can afford to pay and the bank is willing to lend. 

Other times they just don’t see the value past a certain point. I can hardly blame them. It is difficult to put a value on a home when values are escalating so quickly. 

The worst part is when a buyer misses out and gets outbid by $5,000 on a $700,000 or $800,000 condo. My heart breaks for them because the next time up to bat the market is even stronger with more competition and higher prices.

The frustration builds and builds for buyers in this type of market. Eventually, when they are finally successful with the “winning offer” (sounds ridiculous because are they really winning?) they are so beaten down by the process. 

So, what do you think? Is FOMO driving our market?

As a landlord, you may run into problems with your tenants.  Therefore, it’s important to know the BC laws around tenancy and eviction. 

The first kind of eviction you may be eligible to impose upon your tenant is a 10 day eviction.  You may provide your tenant with a notice of this kind if they do not pay rent on time, or in full. Upon receiving a 10 day eviction notice, your tenant has 5 days to pay.  If your tenant neglects to pay utility fees, you may impose a 10-day eviction notice, ONLY after giving them 30 days of written notice demanding payment. 

The next, and less urgent form of eviction notice is a 30 day notice.  You may provide your tenants with a notice of this kind for many reasons.  A few of the most common are as follows. 

• they are unreasonably disturbing you

• Repeatedly pay their rent late

• Seriously damage the property

• Have too many occupants - *I want to point out here that  if your tenancy agreement does NOT specify how people can live in the unit, you are entitled to impose an eviction notice if you feel as though your tenants have moved in an unreasonable number of roommates. 

If your tenant feels as though they have received a one month eviction notice unlawfully, they have 10 days to dispute the eviction.  

By the same token, if you feel as though your tenants are causing serious problems, you may ask the RTB for permission to evict individuals before the one-month notice is set to take effect - and you are NOT required to warn them.  If you decide to go down this route, you are required to provide your tenants with a notice of the hearing so they can prepare evidence for their defense. 

Moving along, you can provide your tenants with a two month eviction notice. According to sections 49 and 49.1 of the Residential Tenancy Act (RTA), you may impose a two month eviction notice if you or a close family member wants to occupy the rental unit, the unit was sold to the purchaser, or your tenant no longer qualifies. Your tenant has 15 days to dispute this notice. 

Finally, it may be the case that you impose an eviction of four months. This may be done if you decide to demolish the unit, convert the property to strata lots, convert the residential property into cooperative housing, convert the unit for use by a caretaker, manager, or superintendent of the residential property, or convert the unit to non-residential use. Your tenant is entitled to 30 days if they would like to apply for a dispute resolution hearing.