So, by now we've all heard about the groundbreaking changes to the way organized Real Estate functions in Canada. There have been many media reports on these fundamental changes, some have been accurate, and some have, of course, been extremely sensationalist - guess which stories get talked about more frequently?
I'm going to try to break down the changes into every-day terms, so that my clients, prospects, and colleagues can have a decent grasp on THE FACTS, and what this means for them. I will do my best not to editorialize this Blog post - try to keep it fact based as much as I can!! Keep in mind, these changes are all very new to all of us, even those of us involved in the Real Estate business, as we have been kept in the dark until very recently, due to the ongoing settlement between CREA and the Competition Bureau.
First off, let me dispel a common misconception. Individual Sellers are NOT now able to post their listing on the MLS® system. MLS® remains a member to member system. www.realtor.ca is the public portal to view listings that have been posted on the Member to Member MLS® system. This has not changed.
What HAS changed is the minimum service that can be offered by a Real Estate Salesperson or Broker.
Previously, if you chose to LIST your house with a Real Estate Salesperson on the MLS® system, an Agency/Representation agreement was mandatory. In short, this meant that by hiring a Realtor to list your home, you had no choice but to pay for a full service, including filling out listing documents, photographing, organizing showings, qualifying buyers, hosting open houses for agents and for the public, and negotiating offers to purchase your house. This Representation agreement comes with fiduciary duties to the seller, which comes with its own set of responsibilities and consequences for improper behaviour. (It is important to note that many Realtors have a different idea of what "full service" actually means, but that's a different topic altogether).
What this settlement includes is a removal of the AGENCY PILLAR in the 3 pillars of the MLS® system. This is where the misconceptions about "public listing on MLS®" comes from.
In short, Sellers now have the option of OPTING OUT of the Representation portion of our "Standard" listing forms. Sellers wishing to utilize the MLS® must still use a licensed Real Estate Salesperson to put their listing on the system, however, they may retain the right to handle many services on their own. They can handle all of their own showings, they are free to qualify their own buyers, host their own open houses, take their own pictures, market their own property, negotiate their own offers, and basically perform any of the duties that a Full Service Real Estate Salesperson would traditionally have handled. It is important to also note that in order to satisfy the requirements of MLS®, all listed properties must include a "C/B" (Co-broker commission amount). This is what a Buyer Representative will be paid to negotiate a successful purchase on behalf of their Buyer client. The settlement does not specify what amount this C/B needs to be. That is up to the seller.
The tricky portion of this new settlement is that the Realtor who takes a "mere listing" may have waived his or her fiduciary duties to the seller, however they remain responsible for the accuracy of the information on the MLS® listing. It remains to be seen whether problems arising out of a mere listing will result in litigation being brought against the Listing Agent (ie, will opting-out of Representation ACTUALLY relieve the listing agent of any responsibility should something go wrong).
I liken this to "slippery when wet" signs on the floor at mcDonalds. They can put out the signs, but if someone falls and breaks a hip and dies, can you predict who may lose the pending lawsuit?
One non-negotiable aspect of these changes is the fact that sellers wishing to have a "mere listing" on MLS® will not be able to post their contact information directly on the MLS® itself. Links can be provided to external sites containing names and contact information, but this direct seller information will not be posted directly on the MLS® public site. As mentioned above, MLS® remains a Member to Member service.
Another common misconception is that the system has been changed so that sellers can now post their house on MLS® for a Flat Fee. Sellers always have been free to negotiate whatever listing agreement they chose, and as such this has ALWAYS been the case. Commission can be either a percentage of sale price, or a flat fee. This has not changed. As mentioned previously, this agent was not able to opt out of the Representation portion of the Listing Agreement, as this would have been contrary to the Rules of the MLS®.
As previously mentioned, this is all relatively new to me, and to every Real Estate Salesperson and Broker in Canada. If this has caused any confusion, or if you have questions about this settlement, please don't hesitate to ask - I will do my best to answer in an honest, objective manner!
I'm sure I will have more to say about this in the coming days and weeks, but I think that covers the changes on a really basic level.
Ben Sage, Sales Representative. http://www.bensage.com http://www.oxfordcountyhomes.ca Re/Max a-b Realty Ltd., Brokerage. 519-536-7535. 521 Dundas St., Woodstock, ON
Thursday, November 4, 2010
Monday, November 1, 2010
This is a test post! Ignore me!
Just testing Facebook "like" feature. Ignore this post!
Ben Sage, Sales Representative. http://www.bensage.com http://www.oxfordcountyhomes.ca Re/Max a-b Realty Ltd., Brokerage. 519-536-7535. 521 Dundas St., Woodstock, ON
Ben Sage, Sales Representative. http://www.bensage.com http://www.oxfordcountyhomes.ca Re/Max a-b Realty Ltd., Brokerage. 519-536-7535. 521 Dundas St., Woodstock, ON
Saturday, October 30, 2010
Housing Demand Perks Up
*Article courtesy of Heather Degraaf @ Scotiabank
Contact Heather for all your mortgage needs. 519-535-7890
Housing Demand Perks Up
After a seasonally uncharacteristic spring and summer slump, Canadian home sales appear to be stabilizing at a new lower, but more sustainable level. National MLS sales volumes increased 3% m/m in September, building on a similar gain in August. Sales activity is still down almost 20% y/y but the decline is accentuated by las August's record monthly sales pace. Two-thirds of local markets reported higher sales last month.
The moderate pickup in housing demand is being aided by lower borrowing costs. While policy tightening by the Bank of Canada has led to a modest backup in variable mortgage rates, fixed rates have come down across the maturity spectrum in recent months, mirroring the drop in bond yields. We expect interest rates will stay lower for longer, underpinning steady housing demand through the fall, contingent on at least a modest pace of job growth.
With new listings edging up only marginally last month, the new-listings-to-sales ratio edged down to 2.0. Meanwhile, the month's supply of active listings fell for a third consecutive month to 6.6. Both metrics suggest a more balanced national market. Sellers (and builders) in Canada remain highly responsive to underlying market conditions. Unlike in the United States, Canadian foreclosure rates are low and not a significant source of downward price pressure. New construction too is gradually moderating. As would be expected given generally balanced conditions, average prices are essentially flat (+0.2% m/m and -0.2% y/y). Prices were overbid last fall as buyers outnumbered sellers, but have fallen back to more reasonable levels.
While ultra-low interest rates remain highly supportive for the interest-sensitive housing market, moderate economic growth and hiring, debt-leery households and high home prices will keep many buyers on the sidelines for now. Look for a flattish fall national market from a sales and pricing perspective.
Ben Sage, Sales Representative. http://www.bensage.com http://www.oxfordcountyhomes.ca Re/Max a-b Realty Ltd., Brokerage. 519-536-7535. 521 Dundas St., Woodstock, ON
Contact Heather for all your mortgage needs. 519-535-7890
Housing Demand Perks Up
After a seasonally uncharacteristic spring and summer slump, Canadian home sales appear to be stabilizing at a new lower, but more sustainable level. National MLS sales volumes increased 3% m/m in September, building on a similar gain in August. Sales activity is still down almost 20% y/y but the decline is accentuated by las August's record monthly sales pace. Two-thirds of local markets reported higher sales last month.
The moderate pickup in housing demand is being aided by lower borrowing costs. While policy tightening by the Bank of Canada has led to a modest backup in variable mortgage rates, fixed rates have come down across the maturity spectrum in recent months, mirroring the drop in bond yields. We expect interest rates will stay lower for longer, underpinning steady housing demand through the fall, contingent on at least a modest pace of job growth.
With new listings edging up only marginally last month, the new-listings-to-sales ratio edged down to 2.0. Meanwhile, the month's supply of active listings fell for a third consecutive month to 6.6. Both metrics suggest a more balanced national market. Sellers (and builders) in Canada remain highly responsive to underlying market conditions. Unlike in the United States, Canadian foreclosure rates are low and not a significant source of downward price pressure. New construction too is gradually moderating. As would be expected given generally balanced conditions, average prices are essentially flat (+0.2% m/m and -0.2% y/y). Prices were overbid last fall as buyers outnumbered sellers, but have fallen back to more reasonable levels.
While ultra-low interest rates remain highly supportive for the interest-sensitive housing market, moderate economic growth and hiring, debt-leery households and high home prices will keep many buyers on the sidelines for now. Look for a flattish fall national market from a sales and pricing perspective.
Ben Sage, Sales Representative. http://www.bensage.com http://www.oxfordcountyhomes.ca Re/Max a-b Realty Ltd., Brokerage. 519-536-7535. 521 Dundas St., Woodstock, ON
Thursday, October 21, 2010
Woodstock cracks top 100 cities for Growth and Entrepreneurship.
The Canadian Federation of Independent Business has just released a report outlining the top 100 Canadian Cities for Entrepreneurial growth. The report utilizes many different factors to achieve ranking, such as presence, growth, health, and policy environment for small businesses.
Congratulations to Woodstock for cracking the top 100 - #97! Only 4 places behind Toronto, the economic engine of the country!
For more details, check the full report, here.
Ben Sage, Sales Representative. http://www.bensage.com http://www.oxfordcountyhomes.ca Re/Max a-b Realty Ltd., Brokerage. 519-536-7535. 521 Dundas St., Woodstock, ON
Congratulations to Woodstock for cracking the top 100 - #97! Only 4 places behind Toronto, the economic engine of the country!
For more details, check the full report, here.
Ben Sage, Sales Representative. http://www.bensage.com http://www.oxfordcountyhomes.ca Re/Max a-b Realty Ltd., Brokerage. 519-536-7535. 521 Dundas St., Woodstock, ON
Friday, August 6, 2010
Globe: Mortgage breakage costs: let’s stop the nonsense
I found this article interesting and very relevant. Check it out!
Original Article
Have you ever wondered why the banks list posted mortgage rates that are ridiculously high?
One reason is that it could result in you paying $10,000 or more in extra penalties should you ever break your mortgage with them.
Here is the scenario:
Many people have, at one time or another, looked at breaking their mortgage in order to get a better rate.
With interest rates dropping to historic lows, it is more and more common for homeowners to think about the benefits of breaking their mortgage, paying a penalty, and locking in to a new lower rate mortgage.
Traditionally, the mortgage penalty on fixed rates is either 3 months interest OR something called the Interest Rate Differential (IRD) – whichever is higher. On a closed, variable rate mortgage, it is usually simply 3 months interest.
While the 3 months interest is pretty easy to understand, the IRD is a little mysterious. For help on this, I went to TD Bank's mortgage website. RBC has a similar section.
They both show the following formula:
Step 1: (A) The current interest rate under your Mortgage expressed as a decimal (for example, 6.75% = .0675)
Step 2: (B) The current interest rate that we can now charge for a mortgage term offered by us with the term closest to your remaining term. The interest rate will be our posted interest rate for the term minus the most recent discount you received
Step 3: (C) A - B = C, which is the difference between your current interest rate and the interest rate in B above (write C as a decimal)
Step 4: (D) Amount you want to prepay
Step 5: (E) Number of months for the remaining term of your Mortgage
Step 6: (F) (C x D x E) ÷ 12 = F, F is your estimated Interest Rate Differential Amount
Let’s say you have a mortgage at 4.75%, and it comes due in 2 years, and it has a current principal owing of $400,000. TD’s current 2 year posted rate is 4.1%. Let’s say that you were offered a 0.5% discount off the 2 year rate. The math would work as follows:
.0475 (A) – .0385 (B) = .009 (C)
.009 (C) * $400,000 (D) * 24 (E) / 12 = $7,200 (F)
While $7,200 seems like a lot of money, if you can lock in a 5 year mortgage today at 4%, you are benefiting from 2 years of a 4% interest rate instead of 4.75%, but you are also guaranteeing three additional years at 4%, when it is quite likely that in two years, a 5 year fixed mortgage rate will be a lot higher.
Here comes the evil part.
At many big banks, they don’t use your existing 4.75% rate. What they do is take the posted rate at the time you took out your mortgage. This is a rate that has no relevance to you, as you never paid it. In fact, it likely isn’t listed anywhere on your mortgage contract. Remember the ridiculously high mortgage rate we talked about at the beginning of this article? Now you see what it can be used for.
If we take the same IRD formula, but replace the actual rate of 4.75% with a posted rate of 6.25%, the IRD becomes:
.0625 (A) – .0385 (B) = .024 (C)
.024 (C) * $400,000 (D) * 24 (E) / 12 = $19,200 (F)
Because of this sleight of hand, you would now owe the bank an additional $12,000!
If you try and fight the calculation, you will likely face a long line of staff who don’t understand the calculation themselves. A few months of complaining through the right channels might get you your money back.
In the March budget, the federal government said it would “bring forward regulations” to standardize the calculation and disclosure of mortgage pre-payment penalties. (This applies to federally regulated lenders.) We are still waiting.
This is exactly the type of situation where a good financial advisor can help you avoid or manage. The situation on IRD calculations as it currently stands with the big banks is rotten to the core.
_____
Nice eh?
Ben Sage, Sales Representative. http://www.bensage.com http://www.oxfordcountyhomes.ca Re/Max a-b Realty Ltd., Brokerage. 519-536-7535. 521 Dundas St., Woodstock, ON
Original Article
Have you ever wondered why the banks list posted mortgage rates that are ridiculously high?
One reason is that it could result in you paying $10,000 or more in extra penalties should you ever break your mortgage with them.
Here is the scenario:
Many people have, at one time or another, looked at breaking their mortgage in order to get a better rate.
With interest rates dropping to historic lows, it is more and more common for homeowners to think about the benefits of breaking their mortgage, paying a penalty, and locking in to a new lower rate mortgage.
Traditionally, the mortgage penalty on fixed rates is either 3 months interest OR something called the Interest Rate Differential (IRD) – whichever is higher. On a closed, variable rate mortgage, it is usually simply 3 months interest.
While the 3 months interest is pretty easy to understand, the IRD is a little mysterious. For help on this, I went to TD Bank's mortgage website. RBC has a similar section.
They both show the following formula:
Step 1: (A) The current interest rate under your Mortgage expressed as a decimal (for example, 6.75% = .0675)
Step 2: (B) The current interest rate that we can now charge for a mortgage term offered by us with the term closest to your remaining term. The interest rate will be our posted interest rate for the term minus the most recent discount you received
Step 3: (C) A - B = C, which is the difference between your current interest rate and the interest rate in B above (write C as a decimal)
Step 4: (D) Amount you want to prepay
Step 5: (E) Number of months for the remaining term of your Mortgage
Step 6: (F) (C x D x E) ÷ 12 = F, F is your estimated Interest Rate Differential Amount
Let’s say you have a mortgage at 4.75%, and it comes due in 2 years, and it has a current principal owing of $400,000. TD’s current 2 year posted rate is 4.1%. Let’s say that you were offered a 0.5% discount off the 2 year rate. The math would work as follows:
.0475 (A) – .0385 (B) = .009 (C)
.009 (C) * $400,000 (D) * 24 (E) / 12 = $7,200 (F)
While $7,200 seems like a lot of money, if you can lock in a 5 year mortgage today at 4%, you are benefiting from 2 years of a 4% interest rate instead of 4.75%, but you are also guaranteeing three additional years at 4%, when it is quite likely that in two years, a 5 year fixed mortgage rate will be a lot higher.
Here comes the evil part.
At many big banks, they don’t use your existing 4.75% rate. What they do is take the posted rate at the time you took out your mortgage. This is a rate that has no relevance to you, as you never paid it. In fact, it likely isn’t listed anywhere on your mortgage contract. Remember the ridiculously high mortgage rate we talked about at the beginning of this article? Now you see what it can be used for.
If we take the same IRD formula, but replace the actual rate of 4.75% with a posted rate of 6.25%, the IRD becomes:
.0625 (A) – .0385 (B) = .024 (C)
.024 (C) * $400,000 (D) * 24 (E) / 12 = $19,200 (F)
Because of this sleight of hand, you would now owe the bank an additional $12,000!
If you try and fight the calculation, you will likely face a long line of staff who don’t understand the calculation themselves. A few months of complaining through the right channels might get you your money back.
In the March budget, the federal government said it would “bring forward regulations” to standardize the calculation and disclosure of mortgage pre-payment penalties. (This applies to federally regulated lenders.) We are still waiting.
This is exactly the type of situation where a good financial advisor can help you avoid or manage. The situation on IRD calculations as it currently stands with the big banks is rotten to the core.
_____
Nice eh?
Ben Sage, Sales Representative. http://www.bensage.com http://www.oxfordcountyhomes.ca Re/Max a-b Realty Ltd., Brokerage. 519-536-7535. 521 Dundas St., Woodstock, ON
Wednesday, August 4, 2010
Chicken Little and Media...
If you're anything like me, you're a compulsive news reader. I have a love-hate relationship with news-media. I feel it is very important to be in touch with the world around me, as it impacts my business on a day-to-day basis, as well as shaping the future of my marketing avenues, and business planning, however, it can be very difficult to overcome the overwhelming, and CONSTANT negativity in the news.
At this time I am in a position, thanks to some wonderful Realtors and Industry analysts, to repeat a prediction that I encountered recently. Brace yourself for it - THERE WILL BE NEGATIVE MEDIA regarding the Real Estate market, very shortly. Yes, I know, this is a shocking revelation!
My goal today is to soften the impact of this sensationalist media by preparing you. By arming you with the facts.
Most of this content is "borrowed" from a gentleman named Doug Hannan, who is a Broker/Manager for RE/MAX West on Bloor st in Toronto (Another universe in Real Estate land, but nevertheless, seemingly the sole focus of real estate media in Ontario).
Doug obviously follows the Toronto Real Estate Market very closely. He has noted that in the month of July. TREB's (Toronto Real Estate Board) sales numbers were slightly lower than expected. He also noted that inventory had dropped a proportional amount, indicating balance in the market. Sales for the month were 6,566 units, down 1,900 from June of the same year (a typical seasonal drop - Vacation time!!). New listings this month are down 3,000 units to 21,096. It is to be noted that RE/MAX Realtors have been predicting a decrease in inventory since late 2009.
Where the media sensationalists will galvanize, is in the Year over Year numbers. It stands to reason that a July 2009 vs. July 2010 drop in sales of 35% would yield some alarm bells, but I am predicting that the media will have a decidedly un-elephant-like memory. They will fail to note (as they have previously failed to note) that July of 2009 was an absolutely ABNORMAL month, even in an extremely hot year. July 2009 Sales set a record at 9,967 sales (up 28% from July 2008). Benchmarking against the best July of ALL TIME is an unfair method of assessing the health of our market. The media won't mention this, save for a tiny disclaimer at the end of their "Real Estate Bubble is HERE, the sky is falling, depreciation is just around the corner, thousands to be left over-leveraged on inflated prices" reports.
The Sky is not falling, friends. Balance and sustainable growth will be the cornerstone of the immediate Real Estate market.
Thanks Doug - for the insight!
To Reach Doug Hannan of Re/Max West, try this:
doug.hannan@sympatico.ca
Thanks for reading!
Ben Sage, Sales Representative. http://www.bensage.com http://www.oxfordcountyhomes.ca Re/Max a-b Realty Ltd., Brokerage. 519-536-7535. 521 Dundas St., Woodstock, ON
At this time I am in a position, thanks to some wonderful Realtors and Industry analysts, to repeat a prediction that I encountered recently. Brace yourself for it - THERE WILL BE NEGATIVE MEDIA regarding the Real Estate market, very shortly. Yes, I know, this is a shocking revelation!
My goal today is to soften the impact of this sensationalist media by preparing you. By arming you with the facts.
Most of this content is "borrowed" from a gentleman named Doug Hannan, who is a Broker/Manager for RE/MAX West on Bloor st in Toronto (Another universe in Real Estate land, but nevertheless, seemingly the sole focus of real estate media in Ontario).
Doug obviously follows the Toronto Real Estate Market very closely. He has noted that in the month of July. TREB's (Toronto Real Estate Board) sales numbers were slightly lower than expected. He also noted that inventory had dropped a proportional amount, indicating balance in the market. Sales for the month were 6,566 units, down 1,900 from June of the same year (a typical seasonal drop - Vacation time!!). New listings this month are down 3,000 units to 21,096. It is to be noted that RE/MAX Realtors have been predicting a decrease in inventory since late 2009.
Where the media sensationalists will galvanize, is in the Year over Year numbers. It stands to reason that a July 2009 vs. July 2010 drop in sales of 35% would yield some alarm bells, but I am predicting that the media will have a decidedly un-elephant-like memory. They will fail to note (as they have previously failed to note) that July of 2009 was an absolutely ABNORMAL month, even in an extremely hot year. July 2009 Sales set a record at 9,967 sales (up 28% from July 2008). Benchmarking against the best July of ALL TIME is an unfair method of assessing the health of our market. The media won't mention this, save for a tiny disclaimer at the end of their "Real Estate Bubble is HERE, the sky is falling, depreciation is just around the corner, thousands to be left over-leveraged on inflated prices" reports.
The Sky is not falling, friends. Balance and sustainable growth will be the cornerstone of the immediate Real Estate market.
Thanks Doug - for the insight!
To Reach Doug Hannan of Re/Max West, try this:
doug.hannan@sympatico.ca
Thanks for reading!
Ben Sage, Sales Representative. http://www.bensage.com http://www.oxfordcountyhomes.ca Re/Max a-b Realty Ltd., Brokerage. 519-536-7535. 521 Dundas St., Woodstock, ON
Saturday, July 3, 2010
Reason #67 to use a Realtor to list
... Happy Canada Day weekend everyone... As a point of interest, I've been trying to find information about a home for sale in Otterville for 27 minutes and counting.
The home is posted for sale on www.propertyguys.com, and the site hasn't managed to be able to handle my search request yet... It appears to not understand what "otterville, Ontario" means.
Don't put a potential buyer through this!!!
When you hire me to list your home, you won't simply get a listing on Realtor.ca. I put your listing information in so many places, even if Realtor.ca happens to be down, a quick google search (or my trusty personal website) will get you more information than you can possibly imagine.
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