January 22, 2008
Toronto’s Hot Spot
The Toronto Real Estate Board’s district E01 is bounded by Danforth Avenue to the north, Lake Ontario to the south, the Don Valley Parkway to the west and Coxwell Avenue to the east. “In Beaches-Riverdale, there were 63 home sales in December 2007 versus 36 in December 2006 so that’s a 75 per cent increase,” said Maureen O’Neill, board president.
This figure was primarily fuelled by the sale of semi-detached homes, which are abundant in south Riverdale and Leslieville. “Semi sales are up by 58 per cent from December 2006 to December 2007 and attached row houses more than doubled in sales,” she said.
Without a doubt, the primary reason for the explosive number of transactions in the area is due to the City of Toronto’s new land transfer tax, which comes into effect February 1. The new Toronto tax almost doubles the fees for homeowners as the province already has its own land transfer tax in place.
“It’s that obscene new municipal land transfer tax. Our November and December market just revved right up because people want to save that tax,” O’Neill said.
E01 was already doing very well as many of the southern communities in the district are evolving from somewhat seedy working class neighbourhoods dominated by gas stations, auto body shops and dollar stores. Today, E01 is an area full of trendy “destination” communities that feature cool restaurants, cafes and coffee houses along their main streets.
O’Neill said that city living is also growing in appeal as home buyers have had enough of two-hour-long commutes and rising energy costs. “There’s even a DVD called The End of Suburbia. People want urban real estate,” said O’Neill, whose organization publishes monthly market reports and bimonthly news releases on Toronto real estate trends.
“Places like Leslieville are gaining great value but it’s still affordable.” The number of renters in E01 is also on the decline meaning that more people are buying homes and taking pride of ownership in their community.
“It’s an affordable area that’s still close to downtown compared to other neighbourhoods west of Yonge Street,” she said, admitting the cost of buying a home in the area is also on the rise. “It’s a really hot area and people are seeing the value of the neighbourhood.”
The neighbouring E02 district — The Beach — bounded by Danforth Avenue to the north, Lake Ontario to the south, Coxwell Avenue to the west and Victoria Park Avenue to the east - also has a very active real estate market. Last year, a biding war upped the price of one lakeside home by as much as $600,000 over the asking price. The Beach’s lively housing market has a positive effect on its community to the west.
December 16, 2007
Choosing a real estate agent
Here are some thoughts on choosing — or not — a real estate agent.
1. Identify an Agent who is first of all competent.
Before you even contact the agent, see what you can learn about your prospective Realtor. Realtors like to talk about you as a “prospect”. You might as well talk about them as “prospective agents”. Create a list of half a dozen Realtors, and then filter though that list. Can you get a good referral from a trusted friend or business associate? Add that name to your list. Check out the Internet web sites to see who is doing what in the area you are interested in. Be careful not to assume that a “Top Producer” can do the best job for you. Maybe. Maybe not. We’re looking for competence here, not volume and certainly not hype. Check out the Realtors resume, and find out what has he been doing all these years that will contribute to doing an extraordinary job for you. Frankly, someone who has been an auto-worker for 25 years and then gets a real estate license probably does not meet the competency standard. That person could do a great job for you on a single family purchase or sale, but you can still end up with some very serious and expensive battles because an offer was not drafted precisely. We never get away from the challenge that all Realtors have: when a Realtor drafts a contract, they are held to the standard of a lawyer.
Look at the prospective Realtor’s history. Does she/he have experience in anything related to real estate that can be helpful ? Was he a builder, contractor, plumber, inspector, loan officer or property manager? If not, it’s not the end of the world, if she has a lot of experience that can substitute. Remember, the goal is to find a Realtor who knows a lot more than you do about buying real estate, and who can keep you out of trouble in the process. You want someone you feel is competent and can do a great job for you.
2. Filter the competent ones with another qualification — honesty.
Some may think I’m kidding when I say find an honest Realtor. I’m not. Honesty in this context isn’t the simple childhood concept of not telling a lie. Today, our culture has extended the boundary of subtle misrepresentations far into dishonest territory, but it’s not considered dishonest by most standards. What isn’t said is often as much of a misrepresentation as what is said. So be on guard. Make sure you have enough discernment to recognize honesty, or lack thereof. And, by the way, there are a some less-than-honest agents out there.
3. Hire the Agent because the Agent meets your criteria, not just because the Agent works at a large franchise.
When you hire a Realtor, you hire the person, not some “branded” franchise or corporate atmosphere. It’s your Realtor who does the work, and if she can’t do it well, the rest of the Brokerage is not going to do it for her. Furthermore, if he delegates important responsibilities to a non-licensed person or a less experienced agent, what good did the image of the franchise accomplish for you. Maybe the opposite of personal attention. Ultimately, whether you get outstanding professional service depends on your Realtor, not the rest of the organization.
4. Know what to expect from your Agent, and what he/she expects of you.
If you have made a list of half a dozen prospective Realtors, filter through that list with further research, much of which can be done right on the Internet. You should personally interview the final contestants in person and in their office.
Once you have decided on a Realtor, tell her exactly what you expect of her, and ask her if she could do those things for you. Then ask her something that virtually no one asks their Realtor in the beginning, “What exactly do you expect of me?”
Conclusion
If you do these things, you minimize the chances of misunderstandings, you increase the probability of a successful relationship and a successful real estate transaction, and that means more money in your pocket and less stress. And as Martha would say, “That’s a good thing.”
December 15, 2007
Who pays real estate fees?
A good question that’s hard to answer. First, to determine who actually pays the real estate commissions — whether it’s sellers or buyers or both — we must first take a look at how real estate agents are paid and how they share cooperating commissions under the MLS system.
It usually works like this:
- Real estate agents work for a real estate brokerage.
- All fees paid to a real estate agent pass through the brokerage.
- Only a real estate brokerage can pay a real estate commission and sign a listing agreement with a seller.
- Division of commissions vary. New agents can receive as little as 30% to 40% of the total commission received by the brokerage. From that amount, other fees may be deducted such as advertising, sign rentals or office expenses. Top producing agents might receive 100% of all commissions received and pay the brokerage for operating espenses. Everybody else falls somewhere in between.
Listing Agents’ Fees
The most common type of listing agreement between sellers and their agent gives that agent’s brokerage the right to exclusively market the home. In return for bringing a buyer to the table, the seller agrees to pay a commission to the broker. Typically, this fee is represented as a percentage of the sales price and is shared between the listing brokerage and the brokerage who brings the buyer.
Co-operating Splits
Divisions of fees among brokerages is not always equal. For example, a seller could sign a listing agreement for 6% that stipulates the listing broker will receive 2% and the selling broker will receive 4%. So it’s not always a 50/50 split. In a buyer’s market particularly, sellers might want to consider asking the brokerage to give a larger percentage to the buyer’s agent. In a seller’s market, the buyer’s broker might receive less. There is no set formula.
Buyer Representation
Under a Buyer Representation arrangement, the named brokerage and agent represent the buyer. But fee paid to the brokerage is, most commonly, paid by the seller. Some buyer representation agreements contain clauses that will compensate the brokerage for the fee it is due less the amount paid by the seller. For example, a cooperating listing might offer to pay a broker 2.5% of the sales price, whereas the brokerage operates at fees of 3%. The difference of .5% could be paid by the buyer if the broker chooses not to waive that amount.
So who Really Pays the Commission?
It can be argued, rightfully so, that the buyer always pays the commission. Why? Because it’s typically part of the sales price. If the seller did not sign an agreement to pay a commission, the sales price might have been lowered. And therein lies the appeal of buying homes through unrepresented sellers because, given the same logic, those prices should reflect a net sales price without a commission. But those sellers haven’t quite figured this out yet which causes potential buyers of those listings to be consistently disappointed.
To help alleviate much of this confusion, don’t be astonished if over the next few years sellers and buyers each retain their own representation and pay separately for said representation.