My Comox Valley Real Estate blog was hosted on wordpress.com until June 2012. Read my blogs published in 2011 and early 2012. My 2012 blogs and some 2011 blogs (starting from 17 Nov 2011) are presented here for ease of reference by my visitors.
Comox Valley Real Estate Gems Posted on May 27, 2012
So far this year the Comox Valley real estate market remains a buyer’s market. Oddly, however, many buyers are non committal, and some sellers are not armed with the information they need to effectively sell their homes. Over the past week there were 50 new listings, 61 price reductions, and 32 sales in the Comox Valley. The total number of active listings today stands at 1394.
So why are buyers hesitant to buy? One can only guess the number of reasons. I have heard this phenomena blamed on everything from the weather to the forecasts of doom and gloom to come in Canada’s housing market. How accurately have these types of forecasts been in the past? How well can we forecast the weather? The accuracies of these two types of forecast are often similar. Of course, when forecasts vary as widely as they current do, someone will be right. But how do we know who is right before hand? We generally don’t.
Perhaps buyers should base their decisions on more factual and tangible things. Fact 1: interest rates are as low as they have been in the past 60 years. Fact 2: there is a good selection of homes on the market. Fact 3: the Comox Valley continues to be a desirable area in which to live, work and play. Beyond these basic facts, personal circumstances are also important. People who are thinking of buying will, of course, have a reason to do so. For most of us finances play a part so getting financially pre-approved makes sense. If you have a reason to buy and the money to buy, would it not make sense to take advantage of the currently favorable market conditions in the Comox Valley?
Selling in the Comox Valley today has different considerations. If you are thinking of selling, get to know the current market. A competent real estate agent that you can trust can help you do this. While there are a number of elements that must be considered when developing a strategy and plan to sell your home, location, preparation, presentation and price are some of the most basic ones. As well, each home will generally have some unique considerations. Ask the agent to explain the market to you as well as the strategy and plan to sell your home within the context of the current market. If the agent cannot or does not do this, how effective do you think they will be?
Let’s turn briefly to the topic of selecting a real estate agent. Real estate agents come and go. Some agents have considerable life experience and some do not. Some agents are well educated, trained, and experienced in marketing and some are not. Some agents fully understand the difference between a client and customer and some do not. Some agents understand the difference between being a professional agent and a sales person and some do not. The bottom line is that all real estate agents are not the same. Nor all agents motivated by the same things. Some, unfortunately, are motivated purely by making money and getting as many listings as they can to do so. I met a few of these when I was a real estate client. How will you choose your agent? Will you interview several? Will you simply choose the first one that comes along? Will you choose one that is your “friend”? What is often said about mixing business and friends? Does the professional competence and the integrity of the agent matter to you? Why does any of this matter? When everything goes right in a real estate transaction, the differences may not be as obvious as when they go wrong.
Now let’s turn back to your home. As a seller, consider your location. The location of your home is where it is and unless is it a mobile home it cannot be changed, but understanding the advantages and disadvantages of its location will help you develop a strategy and plan to sell it. There are advantages and disadvantages to every location. For example, last week 28 of the 32 homes that sold in the Comox Valley were sold in urban areas. This makes sense since most of the people in our valley live in urban areas. Location circumstances are also important. For example, if your home is a $600,000 home located in the middle of an area of $200,000 homes, the market value of your home will not generally be the same as it would be when located in the middle of homes of comparable size, features and price. A number of different things have a bearing on pricing strategies. Would you not want to know what these are for your circumstances?
Preparing your home to sell and then presenting it effectively are important considerations, especially when there is a lot of competition. This should be done through the eyes of the buyer and not through your eyes as the seller.
Price is almost always an important consideration. Market price is generally the best metric towards which to turn to determine your asking price and with which to adjust your asking price over time. Market price is based on the current market and it changes with the market. This concept is not understood as well as it should be. I have worked with buyers who believe that selling prices should be well less than list prices in a buyer’s market. List prices should not be used as a metric. Some sellers list at or near market prices while others choose to list well above market prices for a variety of reasons such as: I have too much in my home to sell at that price; I paid more for my home than that (bought in a different market): It cost me more to build than that (the purchase price of a new home may not reflect the market price of the home); I just want to test the market, etc. While some of these “reasons” can be understood, they generally carry no weight with a buyer when asking prices are well above market prices. Consider, for example, two similar homes in similar locations and in similar condition with a market value of $450,000. One is priced at $440,000 and the other is priced at $525,000. Which one do you think buyers will believe represents the best value?
There are, of course, many other things to consider when selling your home in today’s Comox Valley real estate market. Contact me and I will be pleased to discuss these with you along with a strategy and plan to sell your home in this buyer’s market.
Comox Valley Real Estate – What is in a word? Posted on May 13, 2012
Working with clients in the Comox Valley real estate market is rewarding when people realize their real estate goals – whether it be as a first time home buyer or as a retiree looking to settle down in a great location without the stress of a former job or city. Each person’s understanding of the real estate industry, and the real estate process that applies to buying or selling a home is different. Some very experienced people may have limited knowledge of real estate while some inexperienced people may have acquired a fairly good understanding. Understanding what they know (or think they know) is a good first step.
Words are the building blocks of language and communication. Words, and the meaning that they convey, are important to facilitate effective communication, and to convey intended understanding. Words are especially important in real estate given the highly regulated nature of the industry and the significant number of laws that have been created to regulate the industry. It is important to understand what is meant by the words contained in law in order to understand the various laws and regulations that concern real estate.
Lexical, or dictionary, definitions are often too vague to be useful when precision is important to facilitate understanding of an issue. Think about how many time you have encountered the following: the same word used to mean several different things, and several different words used to mean the same thing. Often, we need to make small or subtle distinctions between words with the same lexical definition to ensure what we are trying to communicate is what we intended to communicate. Many years ago I was provided a clear definition of communication as follows: message transmitted; message received; and message understood as intended. While the first two parts are normally easy to effect, the third can cause problems in business.
The word property is used in real estate many times. Some dictionaries state that property is “that which a person owns“. However, there is a problem with this definition in terms of real estate. The British Columbia Real Estate Services Act states that real property is defined as real estate. Real estate includes land, and whatever is affixed, growing upon, and erected upon the land. So what is the problem? When we buy real property as individuals in Canada, we do not own the property. The only owner of the land is the Crown (meaning the federal and provincial governments). So the lexical definition of property does not apply to real property. Unfortunately, many people understand and use the lexical definition of property and apply it to real property in their everyday language.
When we buy real property (real estate), we buy interests in real property. Our interests and those of others are expressed in a document called the land title. This document discusses registered owners but it does not use this expression relative to the land itself. Instead, a title will refer to the registered owner in fee simple. The title also discusses charges and the register owner of charges. The Land Title Act defines a charge as meaning an estate or interest in land less that the fee simple. This Act includes an encumbrance in the definition it provides for charge. An encumbrance is defined as a judgement, mortgage, lien, debt or other claim. As a registered owner of a fee simple estate (also referred to as a freehold estate) we possess the largest bundle of rights relative to the real property apart from those related to Crown ownership. Clearly, however, the Crown and others may also have rights or interests in the real property that we possess.
The discussion of real property ownership is confusing enough without having to consider what is commonly referred to as co-ownership. Co-ownership in the context of real property does not mean ownership. It merely refers to possession of the land by two or more people. The forms of co-ownership are expressed as either joint tenancy or tenancy in common. Tenancy is defined in the dictionary as possession or occupancy of land. So here the dictionary is more helpful. Even though we discuss co-ownership, what we actually mean is co-tenancy because we possess but do not own the real property. Each form of tenancy has different rights associated with it. For example, joint tenants will have the right of survivorship relative to an undivided interest in the entire real property that they possess together. In contrast tenants in common will have interests in a portion of the real property that they can leave to beneficiaries.
By now, it should be clear that it is very important to understand the meaning of the words we use to describe and discuss real property. While we may commonly use words such as ownership in our everyday lexicon, we often use such words incorrectly relative to the legal understanding of real property. Saying one thing and meaning something else and saying something that is incorrect can both result in problems when it comes to legal interpretation and understanding.
Our knowledge and understanding of real property issues can be enhanced greatly by reading all of the laws that apply to real property. A competent real estate agent should be able to help you improve your understanding of real estate and provide you with advice on real estate matters. When you need legal advice on real estate matters seek such advice from a lawyer. Real estate agents are not either licensed or qualified to provide legal advice but they should be able to help you identify when you need such advice.
If you are looking for a greater understanding of real estate and the real estate process contact me, Brett Cairns, before you buy or sell your next Comox Valley home. The more you understand, the more comfortable you should feel going through the process. This, in turn, should help you acquire peace of mind when buying or selling your home.
Comox Valley Real Estate – For Sale By Owner Posted on April 28, 2012
For Sale by Owner is a phrase in real estate that is synonymous with a desire of some homeowners to sell their homes without having to pay a commission to a real estate agent. At first thought, this may seem like a sensible thing to do. Why pay someone else to provide you with a service when you can do it yourself? After all, some people repair their own cars, and in doing so, avoid having to pay a mechanic to do so. But, is there a difference when it comes to the services provided by a professional? Do you go to a lawyer for legal advice and do you go to a doctor for medical advice or do you do to the internet so that you can avoid paying for these services when you need them? When you have the time, knowledge and skills to do something yourself, why not? In terms of real estate, what happens when the “sale” goes wrong and the buyer sues the seller? Why did the founder and former CEO of ForSalebyOwner.com (Colby Sambrotto) turn to a licensed real estate broker in 2011 to sell his home when he was unable to sell his own home? Does a good, competent, real estate agent provide value in the home selling process? Perhaps they do.
The Comox Valley Real Estate market is currently a Buyer’s Market. As of the end of March, total inventory was up about 4.4% over last year, but sales were down about 10%. Single family home inventory was up about 1%, but sales were down about 22%. Through most of April, new listings continue to significantly outpace sales. For many homes it is not whether or not they will sell close to their asking price, it is whether or not they will sell at all. In some price ranges and circumstances last year, fewer than 10% of homes sold. If you need to sell your home in this type of market, would you not want to increase your probability of doing so? If a real estate agent lists your home but does not sell it, you pay them nothing so they take all of the risk. If it does sell, you pay a commission on the sale. Is it better to have sold and have paid a commission or not to have sold? Only you can answer this question. This type of market can be difficult for sellers unless their homes are prepared, presented and priced within a strategy and plan appropriate to the market. A competent real estate agent should be able to provide this kind of advice to a seller. The challenge is to find such an agent knowing that real estate agents are not all the same nor do they bring the same levels of education, training and experience to their profession.
So, if you are thinking of selling your home yourself, ask yourself the following questions:
Do I have a good appreciation of the laws that apply to real estate transactions in British Columbia including those related to property disclosure and representation?
Do I know when to seek legal and other professional advice when issues come up for which I do not have the knowledge and expertise to deal with?
Do I know how to write a legally enforceable contract that will stand up in court if things go wrong?
Do I have access to all of the clauses and conditions that I may need to use to respond to an offer?
To whom do I turn for advice when I receive an offer containing a clause or condition that I do not understand?
There are at least 10 other fundamental questions I would ask myself if I were considering the sale of my own home. By the way, as a real estate agent, I would not sell my own home. Beyond the basic questions mentioned and alluded to above, what about other questions such as those on preparation, presentation and price? Do you understand the elements of each? In terms of price, will you base your list price on what you want or need or will you base it on market value? Do you know how to estimate market value? Do you understand pricing strategies to be effective in this kind of market? Do you understand how to respond effectively if the market changes?
If you live in the Comox Valley and are thinking about selling your home yourself, contact me and I will be pleased to meet with you and provide you with a list of 15 questions that you should ask yourself. As well, I would be pleased, without any obligation on your part, to discuss with you what I can offer you, in terms of a strategy and plan to market your home. By investing a bit of time with me, you may just find that you receive valuable information that you do not already have.
Comox Valley Real Estate – Buy, Sell, or Hold? Posted 16 Apr 2012
A fairly common question in real estate is whether or not it is a good time to buy or sell. Less common is a consistent answer to this question. Why is that? Probably because it is a very difficult question for people who are not either the buyer or seller to answer with any degree of certainty. Let’s explore why this is.
The question of certainty itself is interesting. I have come to realize that only three things are really certain. First, as humans, we all have a definite lifespan. Second, uncertainty is often a certainty of life. Third, change is almost certain in life. When placed in a real estate context, real estate markets do change, but predictions about future market conditions are rarely certain.
It is common to think of a specific real estate market as either a buyer’s market, a seller’s market, or a neutral market. While some may argue that the difference lies in quantitative aspects such as the number of months of total inventory, one would be hard pressed to find a precise definition or general agreement on a specific definition on any of these descriptions. I prefer to think of these markets this way:
Buyer’s market – listings (supply) exceed sales (demand) on a sustained basis and inventory is larger than normal and increasing.
Seller’s market – sales (demand) exceed listings (supply) on a sustained basis and inventory is smaller than normal and shrinking.
Neutral market – listings (supply) and sales (demand) are comparable and inventory is about normal
Each of these types of market presents challenges to either buyers or sellers. Generally, buyers are looking for location, features in a home and value. Generally, sellers are looking for top dollar for their home when they sell.
The Present
In a buyer’s market, sales will be more challenging. For example, the Comox Valley real estate market is currently a buyer’s market. The Comox Valley real estate market started off the month of January with a higher number of new listings than last year (up 38%) and sales were up 13%. This initial activity has slowed and overall market activity to the end of March is comparable to last year but sales are lagging listings. The number of new listings this year is almost identical to last year (329:328) but total inventory is up about 4.4% (1356:1298). Overall sales are down about 10% and the median price of sales is down very slightly ($282,000:282,500). Single family home statistics follow: New listings down about 8% (155:168), median price down about 7% ($348,000:323,000), Single family home sales down about 22% (54:69) and total inventory up just over 1% (491:485). Placing these short term statistics into perspective, overall sales at the end of 2011 were down nearly 30% from the peak in 2007.
The Opportunity
While many people may conclude that this means it is a good time to buy but not to sell, this is not necessarily the case. Yes, this type of market generally represents a good time to buy. However, this type of market may also represent an opportunity for sellers. Having said this, sellers need to pay close attention to preparation, presentation and price in this kind of market. These three elements are important to potential buyers for them to conclude that the home represents value in this type of market. The goal of sellers should be to realize a sale at close to market price and these elements may determine whether or not the home sells at all.
Market price is mostly determined by the type of market and what buyers are willing to pay. If a seller lists too high they may not get showings. Listing even a bit above market price may get showings but may not get offers. First and foremost, sellers should look objectively at their home through the eyes of the buyer. When sellers are emotionally attached to a home or if they have invested a lot of money in a home, their perspective on what a home is worth may not be consistent with the perspectives of potential buyers who have a lot to choose from. It is very important for a seller to list at or even slightly below market price in a buyer’s market. For a full explanation of why this is important, I would be pleased to discuss this with potential clients along with the strategies and plans that are appropriate to this type of market.
People can often look at the world in one of two ways – the glass is half empty or the glass is half full. Those who see the glass as half empty may have a more pessimistic view of a buyer’s market as a seller. Those who see the glass as half full may see opportunities that others do not. Having said this, the optimism necessary to see these opportunities must be tempered and not “rose colored”. I prefer to be cautiously optimistic about the opportunities for a seller in a buyer’s market. To take full advantage of a buyer’s market as a seller, one should think and plan strategically, and execute tactically. Making a sale is a strategic consideration, while price is more of a tactical one. As the saying goes, it may be better to make a sale and make a bit less money than not make a sale at all (especially if the cost of maintaining the home for another year or more is significant). This is similar to the old adage that a bird in the hand is better than two in the bush.
The Future
Having discussed current market conditions, how can future market conditions be forecast? Generally, except for people who claim to be Clairvoyant, people forecast future events and conditions based on an assessment of past conditions and trends. As stated earlier, real estate market conditions are typically cyclical. The challenge is; however, to accurately predict the length of a specific cycle. Predictions and forecasts related to real estate markets are generally no more accurate than weather forecasts or predictions about the stock market. With many different predictions and forecasts, history always has a tendency to show that someone was right, but afterwards and not before. So where does this take us with respect to the Comox Valley real estate market?
The Way Ahead
What is known is that the current market is a buyer’s market. What is certain about the future is that the market will change, but how quickly and to what type of market is only an educated guess based on past cycles and trends. My sense continues to be that 2012 will be a “settling” year with some recovery but little substantial change absent some significant unforeseen event or influence. This market offers some very good opportunities for buyers given the large inventory. It also offers some opportunities for sellers who have their homes appropriately prepared, presented, and priced within the context of a strategy and plan appropriate to their home and this market.
Thinking of buying or selling Comox Valley real estate, contact me today and let’s get started on meeting your real estate needs.
Comox Valley Real Estate – 10 myths about agents Posted on April 8, 2012
Over the years I have heard a number of sayings about real estate agents. Based on my experiences as a real estate client, a number of them seemed reasonable to me at the time. As a real estate agent I continue to hear things about real estate agents. Some are true and some are not. In this blog, I will discuss a number of popular myths. For the purpose of this blog I use the term brokerage and agency interchangeably. Real estate agents are licensed through a specific brokerage in order to conduct business.
Myth 1 – Real Estate agents receive a salary. While working as the “duty agent” in my Comox Valley real estate office, I have heard this from people a number of times. Some thought because I was working in the real estate agency office that I was paid a salary by the office. While there may be some exceptions, real estate agents generally work on commission basis. If they do not complete a sale (either as a buyer’s agent or as a seller’s agent), they do not get paid.
Myth 2 – Real estate agents receive a large commission on each sale. This is an area of the real estate business I did not fully understand as a client probably because it was never explained to me. The real estate commission is generally paid by the seller. However, when the seller does not offer a commission or one that is inadequate for services rendered by a buyer’s agent, a buyer may be asked to pay some of the commission. Let’s assume the commission is paid by the seller. A real estate commission paid by a seller is divided amongst the buying and selling agencies. This is generally done on a 50:50 basis but not always. Each agency then takes a share of their part of the commission and the remaining part goes to the agent. The agent then must deduct any referral fees paid, expenses, and like everyone else the taxes (income, and HST/GST/PST as applicable). What the agent takes home can be considerably less than the total commission paid by the seller.
Myth 3 – Real estate agents do not have many expenses. I have hear this myth many times in the past year. The reality is, for most agents, that real estate expenses can often be considerable. Typical expenses include the purchase of: licensing course and exam, travel expenses to and from the exam, post-licensing course, agency orientation course (s), Canadian Real Estate Association fees, provincial association fees, local real estate board fees, agency training courses, computer and peripherals, photocopier/fax/printer, financial calculator, camera and video camera with editing software, mobile phone and other devices such as a laptop and tablet, sign brackets and signs (yes these are paid for by the agent), lock boxes and lock box keys, websites, office supplies, etc. Ongoing costs include ongoing license renewal fees, personal marketing (this can be a very large expense), property marketing and advertising (this can also be a large expense), National agency dues, Region agency dues, CREA annual dues, provincial and local dues, website fees, MLS access fees (to maintain and access the MLS data that is provided to clients), continuing education courses, ongoing hardware and software fees, office supplies, agency and deal fees, fees to search for titles and other documents such as strata documents, auto expenses (driving clients around), etc. Real estate is a very expensive business and it is not uncommon for an agent to have 40 to 50 thousand dollars in expenses each year. Some top producing agents have expenses that are in the hundreds of thousands of dollars range. In many agencies, the agents pay for everything including charges each time they photocopy a piece of paper.
Myth 4 – Real Estate agents make lots of money. Some top producing agents do but they also have considerable expenses. Most don’t.
Myth 5 – All Real Estate agents charge the same rate in a specific area. The Competition Act is Canada’s principle competition and federal legislation. It applies throughout the country to all economic sectors, including real estate. Price fixing agreements, market allocation/division agreements and supply/output restriction agreements are against the law. Commissions and other aspects of price are determined and established independently by brokerages.
Myth 6 – All Real Estate agents are all the same. Real estate agents are NOT all the same. While they all must meet a minimum standard to become licensed and they must complete minimum continuing education requirements to maintain their licenses, real estate agents are as different as the individuals themselves. Each have different characters and levels of competence. What motivates one agent does not necessarily motive another. One agent may have substantial life experience while another may be fresh out of high school. This should not be a surprise to people. Think about your own industry. Are all of your colleagues or co-workers the same?
Myth 7 – Real Estate agents working in the same brokerage are part of a team. Generally, it is accurate to think of real estate agents working through the same agency as independent contractors and competitors. They each are sole proprietors of their own business (or they may have an independently registered Personal Real Estate Corporation) and their success or failure in business is their responsibility alone. No other members of the same agency are generating business for them. They must do this by themselves unless they have formed some kind of business team or partnership.
Myth 8 – Real estate is a loosely regulated industry. Real estate is a highly regulated industry, and Realtors are real estate agents who are members of the Canadian Real Estate Association and they are also required to follow the Canadian Real Estate Association’s code of ethics and standards of business practice. Unfortunately, like just about every other industry, some people either do not follow the rules or they try to “bend” them to suit themselves. When real estate agents do this, there are mechanisms in place that could result in fines and disciplinary action taken against real estate agents by their governing bodies. In some situations, real estate agents can face civil and even criminal prosecution when they do not follow the rules.
Myth 9 – Real Estate agents all provide the same type and level of service. The real estate industry, like more than 70% of the industries in Canada is a service-based industry. Real estate agents are paid for the professional services that they provide. While real estate agents are all educated and trained to a basic level of service, the type, and level of service that each provides can be very different. Just because two agents are working for the same agency does not mean that they provide the same type and level of service. While discount and full-service brokerages both exist, it is important to read the fine print in any and all contracts. You may be surprised at what you are getting for the price. Even within the same brokerage you will find agents who provide different types and levels of service. You will also find agents who work part time and full time. What is meant by full time to one real estate agent is not necessarily the same for another. When considering the hiring of a real estate agent who will represent you and your interest, ask them to explain their services and approach to you. You may be surprised just how different they are.
Myth 10 – Your interests will be better served by a top producing agent. This is a very common myth worth discussing. Top producing agents achieve this distinction by completing lots of sales. But what kind of character do they have? Is integrity the foundation of their character? Can they be trusted? What motivates them? Are they motivated merely by making money? Are they motivated by providing outstanding service to clients? Do they give to charity? Do they do so for the right reasons? How busy is too busy? At a certain level, anyone can become too busy. While there is not exact dividing line, top producers I have talked to say that they found when they had more than 10 buyers and 10 sellers on the go at any one time, they could not provide the same level of personalized service as when they had less than this number. One way to find out is to see how quickly they reply to your individual inputs on an ongoing basis. While only you can answer this question when it comes to who you want to represent you, it has been my experience that labels do not matter much. What matters most to me is the character, competence, and motivation of the person.
If you are thinking about buying or selling a home or property in the Comox Valley, contact me to discuss how I can go Above & Beyond for you to meet your real estate needs.
Comox Valley Real Estate – Statistics and Circumstances Posted on March 14, 2012
How many times have you come across a statistic that was used out of context, or one that was used without any context? In this day and age, statistics are used just about everywhere to bolster arguments, for marketing, and to add credibility to a wide range of topics. Unfortunately, they are often used without any discussion of the circumstances within which they are relevant and applicable. In this Comox Valley Real Estate blog, I will discuss a number of hypothetical examples to make a point about statistics and their use in real estate.
Example One. A home (Home B) is newly listed on the market and it sells in just over a week. The listing agent uses this sale as an example of a home that sold quickly in a buyer’s market. If this is all we knew about the sale would the statistic be impressive? Could we conclude anything about the real estate agent and that agent’s ability to sell homes? What if there was another similar home (Home A) on the market prior to Home B being listed? What if Home A had an accepted but conditional offer on it before Home B was listed? What if the offer on Home A fell through and the person whose offer had fallen through was advised of Home B being newly on the market by the listing agent of Home A? What if this person then purchased Home B? Would this set of circumstances change any perceptions about what might otherwise have been concluded about the listing agent of Home B?
Example Two. A home (Home X) was on the market for several months without selling. The owner of Home X decided to list with a different real estate agent. This new agent sold the home in less than a week. Impressive? What if the second agent convinced the owner to drop the price to a level lower than that offered through the first agent? What if the second agent already had a buyer that was serious about buying this home before the second agent obtained the listing? What if the second agent did not inform the owner that they had a serious buyer? Would this set of circumstances change any perceptions about the ability of the agent to sell homes?
Example Three. Agents F and G obtain new business based mainly on referrals from others. Would it be reasonable to conclude that they are both fairly successful agents? What if Agent F obtains referrals from others based on the high level of service provided? What if Agent G obtains referrals from others that were being compensated for the referrals? Would this set of circumstances change any perceptions about either agent?
Example Four. Agent R lists a home for 4 months and it does not sell. During that period of time, this agent convinces the seller to drop the price twice. This agent convinces the seller to re-list the home (through a new listing) for 3 months at a further reduced price and it does not sell. This agent once again convinces the seller to re-list the home (through a new listing) for another month and it finally sells. The statistics associated with this “new” listing show that the home sold in a month. Agent S lists a similar home at a price comparable to the lowest price of the other home and it sells in two months. Can any conclusions be drawn about either agent? What do we know about the property? What if the home sold by Agent S backed on a busy noisy street while the home sold by Agent R was located in a quiet neighbourhood?
Example Five. Ten homes sold in 2010 for an average price of 300,000. In 2011, ten homes sold for an average price of $310,000. What conclusions can be drawn? Perhaps that the average price of homes increased by 3.33 percent from 2010 to 2011? What if in 2010 nine of the homes sold for $290,000 and one sold for $390,000? What if in 2011 nine of the homes sold for $250,000 and one sold for $850,000. While the first conclusion about the average price would be mathematically correct, would it be meaningful?
Example Six. Consider the headline in the newspaper that states “Waterfront home sales up 50% in region Z compared to last month.” A pretty impressive statistic! What if in an average month 6 waterfront homes typically sold but last month only two sold? This month 3 sold and therefore there was a 50% increase over the previous month. Is the statistic as impressive?
Example Seven. Agent E lists 10 homes and 2 of them sell. Agent F lists 3 homes and 2 of them sell. What conclusions can be drawn? What do we know about the circumstances?
Why do I pose all of these questions on these hypothetical examples? The reason is this: Before any conclusions are drawn from real estate statistics, it is essential that the circumstances from which the statistics are being drawn are known. Avoid the temptation to come to any conclusions based on assumptions or perceptions. Statistics can be very misleading when they are applied or interpreted incorrectly. Know the facts, understand the circumstances, and only then draw conclusions when the statistics are both relevant and meaningful.
I follow and analyze the Comox Valley real estate market closely. Should you wish to know more about it, and how certain statistics may or may not apply to your circumstances, contact me and set up an appointment to see me.
Comox Valley Real Estate – The Agent and Client Team Posted on February 27, 2012.
Over the years I have heard a number of comments about the effectiveness (or not) of real estate agents. As a Comox Valley real estate agent, I continue to hear these types of comments made of others. Based on personal experience over 18 moves I can vividly recall one who was outstanding, three that were horrible, and a number that were somewhere in between and forgettable. But what made the effective ones effective and the ones that were not, not?
Before diving into explore this question, let me make one point up front. The real estate process involves an agent and a client. This agent – client relationship involves at least two people (more if there is more than one client involved in the transaction) and it takes effort by both parties to foster an effective relationship and to ultimately realize success.
Clearly, the real estate agent must do much of the work in the relationship but the agent’s efforts are not always enough for success. Following are some examples of why this is the case.
First, consider someone who wants to sell their home. Hopefully this person interviewed several different real estate agents before making a decision on hiring one as their agent. While all real estate agents must meet minimum standards to become and stay licensed, minimum is a key word. Not all real estate agents are alike nor do all possess the same capabilities. Let’s say the seller in this example did this and subsequently decided to hire one based on how each agent presented themselves and what they presented to the seller in terms of a strategy and plan to sell the seller’s home.
During a listing presentation to a potential seller, the real estate agent may have provided the seller with advice in a number of areas. One area that is always topical is the suggested list (or asking) price of the home. As a seller, are you open to this advice? Are you inclined to accept this advice if the real estate agent has thoroughly and competently made their case on why the suggested price is being recommended? If the answer to either question is no, what do you know that the agent does not? Have you shared this information with them? Have you discussed the differences in price? How this point of contention is addressed by both parties is important because it may affect the relationship as it develops during the real estate selling process.
All relationships are built on trust and trust must be earned. A real estate agent cannot do their jobs effectively if they are not given accurate and complete information. Similarly, a real estate agent should be telling clients what they need to hear and not merely what they think the client wants to hear. Unfortunately this is not always the case. Some agents will take a listing at a price that the client wants to believe will sell even though it is way above market value just to get the listing. When a price is recommended, an expectation is generally created. The recommended price should be as close to market as possible or deviations taken with the seller’s full knowledge of the potential consequences.
From the seller’s perspective, most sellers want to obtain the best price they can for their home – understandably so. From the agent’s perspective, most agents should want to have a reasonable opportunity to sell the home because of the time, effort and money they will spend on marketing the home. If the list price is way above the market, the home may not get any viewings, let alone any offers. If the list price is too low, the seller may not realize the best price that they can in a specific market. There are, of course, many different factors that come into play when establishing a pricing strategy and a list price. Your agent should present these to you as a seller before you agree to a specific price.
After establishing a list price and agreeing to the terms and conditions in the listing contract, the agent should have provided the seller with information and other advice concerning the marketing of the home. For example, the agent may have given advice on preparation and presentation. As a seller, are you open to such advice? Are you inclined to follow such advice if you are given a good reason for it? Do you understand the ramifications of not following such advice? Were the reasons explained to you? Did they make sense? Under some circumstances, sellers risk greatly minimizing the chances of selling their home when they are given advice related to the effective overall marketing of their home if they choose to ignore it.
Second, consider someone who wants to buy a new home. When a buyer first meets with a real estate agent, the real estate agent may ask a number of questions. As a real estate buyer will you answer the questions to the best of your ability or will you selectively do so? If you choose not to provide information to the agent will you let them know and why?
Real estate agents have both legal and moral obligations to protect the interests of their clients. If a buyer is not truthful or is incomplete with respect to the information that they provide the real estate agent they are working with, how reasonable is it to expect that the agent will be able to provide the best possible advice to the client? This does not mean that all things should be divulged to an agent. For example, when I negotiate for a client I do not want to know their top or bottom line because I do not want that to adversely affect the advice that I give on price. By not knowing I believe that I can give far more objective advice to my client.
Clearly, it is impossible to do more than scratch the surface on a topic such as this. The main takeaway is that agents and clients must work together during the real estate process. Through many years of life and professional experience, I have learned that much more can be accomplished by teams of people working together than by individuals working apart. If you are looking to buy or sell Comox Valley real estate and wish to discuss how I can help you with your real estate needs, contact me. I would be pleased to meet with you and show you the strategy and plan that I apply to the real estate process for buyers and sellers.
Comox Valley Real Estate Insights – Spring 2012 Posted on February 12, 2012
Now that we have just over a month of experience in the Comox Valley real estate market for 2012, it is time to discuss where we are and where we might be going. The first month of this year saw an increase in listings from Dec 2011. A bit surprising was the percentage increase in Jan 2012 from a year ago. Listings were up about 28%. This is good news for buyers. There is more choice for buyers. While listings were up significantly, sales did not keep pace with the increase. However, sales were up about 13%. This is fairly normal and it will take a bit of time to see if overall sales will keep pace with the number of new listings. February and March will be important months to establish a trend.
To place this discussion in a broader context, let’s also take a look at total inventory in the Comox Valley. At the end of January, our total inventory of Comox Valley homes stood at 1146. This was up about 7.5% from where it was a year ago at that time. The average sale price of homes in the valley in January 2012 was down about 2% compared to a year ago and the days to sell was up about 3% compared to a year ago. As I mentioned above, the next two months will be important to establish real estate trends for 2012.
The Canadian Real Estate Association (CREA) reported an increase in the Conference Board of Canada’s index of consumer confidence in 2012. CREA also reported an increase in the Statistics Canada seasonally adjusted total employment rate with the highest increases reported in Alberta and British Columbia, offsetting job losses in Ontario. While this does not bode well for Ontario and other parts of Eastern Canada, it is a good sign for us out West. Provincially, the British Columbia Real Estate Association is forecasting a 2% increase in sales for our province in 2012 and a 2.7% increase in 2013. By next year we will be above the 15-year average level for sales in BC. While these numbers still are well below the peak we saw in 2007 (currently down about 30% in sales from the peak), the signs are encouraging and moving in the right direction. Slow growth is much better than the no growth in sales we have experienced over the past three years.
On 8 Feb 2012, the Canada Mortgage and Housing Corporation reported an increase in January’s seasonally adjusted annual rate of urban starts by 28% in British Columbia. This stands in stark contrast to the decreases of about 35% in Atlantic Canada and Quebec. Here again, preliminary news for BC in 2012 is positive. The starts means jobs and jobs mean people can afford to make purchases. If this trend continues, BC will once again lead the way.
So what does this preliminary information mean for us. As I mentioned in my end of year blog last year, I am optimistic that we will see a leveling in our real estate market this year and we may see an improvement as the year progresses if world events in the news (such as the European Union problems) are effectively addressed. The increase in listings, consumer confidence and new housing starts are all positive signs. The small increases in days to sell and the small decrease in prices are counteracting forces but the data is too small to yet establish any trend for 2012. Remember that the interest rates in Canada remain at or near all time lows. While we start of the year in a buyer’s market, there are opportunities for sellers. Timing, pricing, and marketing are among the important factors for sellers to realize success in this market.
I understand that the choice of a Comox Valley real estate agent is a personal and important decision because it involves your most important and expensive investment – your home. I also understand that trust is important in a client – agent relationship and I will work hard to earn yours. I follow the market closely and know it well. I also follow external factors that have the potential to affect our local market.
Anyone considering buying or selling a home or property in the Comox Valley real estate market in 2012 is encouraged to contact me to discuss your specific needs, what this market means in your specific circumstances, and to discuss some of the unique advantages I can offer my clients.
Ask for my personal brochure and aim high for peace of mind when making decisions about your home or property. I look forward to meeting you and working with you in 2012. Looking forward to a good year. According to the Chinese Zodiac, 2012 is the Year of the Dragon which signifies success and happiness. Wishing you happiness and success in business and the Comox Valley real estate market in 2012.
The Value of Comox Valley Real Estate Posted on January 23, 2012
As someone who travels a lot locally, I had the opportunity to travel to the southern US in early January. In doing so, the trip south reinforced for me the value of Comox Valley real estate and living in the Comox Valley on Vancouver Island.
I left the Comox Valley on a partly cloudy day and drove down highway 19 to the ferry in Nanaimo, enjoying the scenic ocean and mountain views along the way. There were very few cars on the highway and the weather was good. I took the ferry to Tsawwassen and had breakfast on the ferry while sitting at the front so that I could enjoy the scenery along the way. This part of the trip was mostly sunny and tranquil. A couple of seaplanes flew by in front of the ferry, and there were a few boats of various types enjoying the flat calm water. This was a great way to start the day.
Shortly after arriving at Tsawwassen, I was on highway 99 driving south. About 10 minutes later approaching Surrey I was in heavy rain and traffic. Each time I drive into or near Vancouver I remember just how much I dislike heavy traffic and the impatient drivers that form part of it. A short while later, the border crossing was seamless and soon thereafter I was on highway 5 heading south. The traffic along highway 5 to Seattle was steady, and it rained on and off. By early afternoon I had passed through Seattle, Tacoma, and Olympia. While not rush hour, the highway traffic was busy enough that the drive was not relaxing. Wouldn’t it be nice if all city drivers were courteous? Some drivers bordered on reckless – driving while texting or with a phone stuck to the side of their head and speeding, changing lanes rapidly with no signal, and leaving little room for the car they just cut off.<
Approaching Oregon it started to rain fairly heavily and the rain continued throughout most of the state. The scenery was varied – farmland and flat for a while and then hilly for a period of time before arriving at Grants Pass. By evening I was in northern California. After a few hours of hilly terrain through mountain passes I was driving through Sacramento. Not much to see at night but the lights of the city. A short while later, I stopped for the night.
The next day the weather was clear and the sun was out. Unfortunately, there was not much to see but very boring scenery along I5. Everything was dry, brown, and dead looking. I stopped for gas a few hours north of Los Angeles and discovered that gas stations in California required you to enter your zip code after entering your credit card to pay for gas. As a Canadian I did not have a zip code so I had to go into the station to put a deposit on my card, go out to pump the gas, and then go back in to get my change. So much for service. Speaking of service, when I went back in to get my change at this gas station I waited at the counter while the cashier checked here lottery tickets. She completely ignored the fact that I was standing there and I had to announce myself to get here attention. Service was non existent at this gas station. To make matters worse the bathrooms were disgustingly dirty.
A few hours later I was in Los Angeles. Soon I was on I10 heading east and in 14 lanes of heavy traffic. “Crazies” is the only apt term for many of the drivers. Speeding, swerving in and out of traffic, cutting other drivers off, tailgating, and distracted drivers were all common sights on this highway. Defensive driving took on a significantly increased importance on this highway. Several miles along the highway there was a huge cloud of white smoke on the other side of the highway where an 18-wheeler had to slam on the brakes to avoid hitting a sports car that had cut him off and then braked to avoid hitting the cars in front. There was more action that in most amusement parks. The difference was that this action was dangerous.<
Soon I was headed out into the desert and driving past Palm Springs and Desert Springs. Not much to see but desert, scrub brush, and sand for miles. The scenery remained pretty much the same until I arrived at Phoenix several hours later.
Driving through Phoenix, Tucson, Las Cruces and El Paso was fairly unremarkable. Phoenix gave me the impression of a newer, well maintained, and inviting city but the other three cities gave me the impression of ones that were a bit run down. Entering Texas, I passed through a couple of towns where cattle farms were located and the smell was terrible. The scenery was not much better – see the photo below.
On the return trip I crossed the desert via I40 further to the north. There, the scenery was a bit different with snow still visible in the areas that surrounded the highway. Snow had fallen the day before. Yes, there was snow in the desert.
On the trip home I managed to avoid rush hour in most cities except Olympia. There I got stuck in afternoon rush hour – bumper to bumper traffic for what seemed like an eternity. Having completed this trip, I returned home to once again fully appreciate where I live – the Comox Valley. We are truly blessed to live here in this temperate climate that is surrounded by beautiful scenery, and populated by good people. While some may like the hustle and bustle of city life, I much prefer the more laid back lifestyle of our valley.
Should you wish to learn more about our valley and what makes it special, visit my website at www.brettcairns.ca/COMMUNITIES. Should you wish to know more about our real estate market, contact me and I will be pleased to discuss it with you.
Comox Valley Real Estate – 2012 Posted on January 2, 2012
Happy New Year everyone and welcome to my first Comox Valley real estate blog of 2012. In case you were away over the holiday season and missed it, I reviewed what happened in real estate in Canada, and the Comox Valley, in my blogs dated 28 November 2011 and 20 Dec 2011. A takeaway from these blogs is that sales in the Comox Valley real estate market were down nearly 30% from 2007. To gain an appreciation of what happened over the past two years, visit the home page of my website www.brettcairns.ca and scroll down to the section on real estate market statistics where you will find four charts. While the market was up and down over the past two years based mainly on cyclical patterns, the overall trend was slightly down.
So much for 2011 and prior. What about 2012 and beyond? As of 2 Jan 2012 some economists are downgrading their 2012 Canadian outlook based on the overall global economic situation. Concerns over Europe’s sovereign situation and a euro-zone recession are the main factors. Financial stress in the US and UK is also a concern. The good news out of all of this, however, is that Canada’s financial credibility remains high and central banks understand the need to keep interest rates low.
Clearly the world financial situation is of concern to investors. Having said this, it is important to keep in mind that real estate markets are local. For example, while some parts of Vancouver were quite hot in 2011, this activity did not spill over into the Comox Valley. While the financial markets around the world will continue to be of interest to the news media, investors and financial institutions in 2012, for most of us, our lives will continue to go on. People will continue to retire in 2012 and they will be looking for a place to do so. People will continue to change jobs in 2012 and the Comox Valley will continue to offer opportunities.
The attractiveness of the Comox Valley will remain. Our valley offers one of the most temperate climates in Canada, scenic beauty all around us, great friendly people, and an abundance of recreational activities to choose from. Construction is continuing and stores and restaurants are being built. Assuming that local bureaucracies are willing to tackle issues such as the need to renew and expand our infrastructure (water, sewer and roads) to effectively support projected growth, our valley should remain attractive to people looking for the lifestyle that our valley offers.
Once again, it is important to remember that real estate is local. When prospective buyers see value in an area, their interest will generate sales. We all have a role to play in how our valley is recognized and regarded by those who do not live here. We are aided by prestigious publications like Conde Nast Traveller when Vancouver Island and some of what is has to offer is recognized for product and service excellence. Location is an extremely important element of real estate. The Comox Valley is a great location and place to live.
Our valley also offers great variety in the type of homes – single family urban, rural, farm, lakefront, waterfront, condos, duplexes, patio, manufactured, and others. People who come here have tremendous choice on where they will live and the type of home that they will buy. This presents opportunities for both buyers and sellers but buying and selling strategies will need to be appropriate to be effective in the type of market that we will experience in 2012.
Barring some unforeseen influence, the Comox Valley real estate market should level off in 2012 and we may see some recovery towards the mid to later part of the year. While the global economic situation could generate a negative effect on us, what our valley offers to people should generate a balancing positive effect. If you are thinking of buying or selling real estate in the Comox Valley in 2012, contact me today and ask for more detailed information on the opportunities that lay ahead in 2012. Be prepared for these opportunities by planning ahead and asking how I can help you with your Comox Valley real estate needs in 2012.
Comox Valley Real Estate – 2011 in Review posted on December 20, 2011
With just over a week until the end of 2011 and less than a week until Christmas, it is time to review what happened in 2011 in British Columbia and the Comox Valley real estate market. Let’s, then, go back to the first of the year.
From the British Columbia Real Estate Association in 2011:
13 Jan 11 – BCREA reports that 2010 sales declined 12% to 74,760 units and that 2010 prices rose 8.5% to $505,178 (Title of the report was record home prices for 2010)
14 Feb 11 – BCREA reported that January residential sales were down 10 percent compared to January of the previous year.
14 Mar 11 – BCREA reported that February residential sales were up 8 percent compared to February of the previous year and commented that the surge in consumer demand in Metro Vancouver continues to propel the provincial stats higher.
18 Apr 11 – BCREA reported that March residential sales were up 11.5% compared to March of 2010 and commented that surging demand in Vancouver was overshadowing more moderate demand in other regions.
12 May 11 – BCREA reported that April residential sales declined 14% compared to April of 2010.
15 Jun 11 – BCREA reported that May residential sales were down 1% compared to May of 2010.
14 Jul 11 – BCREA reported that June residential sales were up 2.4% compared to June of 2010.
11 Aug 11 – BCREA reported that July residential sales were up 12.9% compared to July of 2010.
14 Sept 11 – BCREA reported that Aug residential sales were up 16.4% compared to August 2010.
14 Oct 11 – BCREA reported that September residential sales were up 8.8% compared to September 2010.
8 Nov 11 – BCREA revised it residential sales forecast to increase to 77,000 units in 2011 and 80,000 in 2012.
14 Dec 11 – BCREA reported that November residential sales remained relatively unchanged from November 2010.
Based on the above statistics, it should be clear that monthly residential MLS sales in British Columbia were up and down each month compared to the same month in the previous year. For the province, total 2011 sales were up about 3% from 2010, but they were still down about 14% when compared to the 10-year average (87,600 units), down 25% compared to 2007 (102,831) and down nearly 28% compared to the peak in 2005 (106,290).
For the Comox Valley, sales were down nearly 30% from 2007. As well, time to sell rose steadily over the past three years in a number of categories.
Looking forward, what will happen in 2012? First, interest rates are forecast to stay low in 2012. Second, modest sales increases are forecast for 2012. Whether you are thinking of buying or selling in 2012 in the Comox Valley real estate market, there will be opportunities for buyers and sellers who are prepared for the market that they will enter. Contact me and I will be pleased to help you realize success in our real estate market.
Comox Valley Real Estate – Wrapup 2011 and Look Ahead Posted on November 28, 2011
With less than a month until Christmas, many people will soon start to prepare for the festive season. Therefore, I believe that it is useful to provide a recap now of what happened in the Comox Valley Real Estate market this year. I will also provide my sense on the upcoming year, from a real estate perspective.
Before discussing what happened this year, let’s briefly recap what led us to the current real estate market environment. As you may recall, U.S. housing prices peaked in early 2006. This peak was followed by increased foreclosure rates in 2006 and 2007, and sharp declines in prices. The 2007 sub-prime mortgage crisis had its roots in falling home prices, and it was one of the first indicators of a larger financial crisis in the U.S. in 2008 that led to, among other things, unprecedented intervention by the U.S. Government. At the time, the International Monetary Fund called the US predicament the “largest financial shock since the Great Depression.” In December 2008, the Standard and Poor’s Case – Shiller home price index reported its largest U.S. housing price drop in history. According to a recent U.S. Census Report, the number of U.S. homeowners that moved between March 2010 and March 2011 was at an all time low. Many homeowners currently either cannot sell or don’t want to sell given the drop in home prices.
Global concerns over the U.S. situation in 2008 led to a tightening of credit around the world. While Canada’s economy did better than many countries, it too, felt the impact of the global economic slowdown. By the summer of 2011, the world was starting to feel the impact of other concerns related to the Greek Debt crisis, and the financial stability of the European Union.
Within Canada, overall homes sales peaked in 2007. For the subsequent four years, the total number of home sales was near or below the ten year average as shown in this chart prepared by, and used in this blog with permission from the Canadian Real Estate Association.
Within BC, British Columbia Real Estate Association MLS ® residential statistics show that sales actually peaked in 2005 at 106,290. In 2007, sales were down about 3% from this peak to 102,831. However, residential sales dropped by 31% in 2008 to 68,923 (down 35% from the peak in 2005). Sales rebounded to 85,028 in 2009, and then dropped to 74,640 in 2010. In 2011, sales are expected to finish at about 77,000. This is still 25% below 2007 and nearly 28% below the 2005 peak.
Let’s now take a look at the Comox Valley. In 2007, Vancouver Island Real Estate Board statistics showed that there were a total 1054 single family homes sold. This number dropped 30% to 734 in 2008, was up slightly to 770 in 2009, and then down slightly to 724. Year-to-date in 2011 (through Oct) is 635. The total in 2011 should come in slightly above last year but still nearly 30% below the 2007 total. When we look at the combined total number of single family homes, condos, patio homes, townhomes and duplexes, the statistics are similar. In 2001 there were 1645 sold compared to 1113 in 2008 (a 32% drop), 1053 in 2009, and 1005 in 2010.
There are specific neighbourhoods and price ranges where the statistics are even more telling. Based on the preceding statistics, it should be clear that the 2008 financial crisis took its toll on the Comox Valley real estate market (either directly or indirectly). Given the number of homes that I saw come on the Comox Valley real estate market each week in 2011, I got a sense that some sellers were not aware of the dramatic change in the market from 2007 to 2008 and how these changes are still being felt in 2011 to date. Some homes were priced to sell, yet others were listed above (and in some instances well above) the market.
Other statistics are revealing. In December 2007, the average time to sell a single family home was 47 days. This figure rose from an average of 61 in 2007 to 73 in 2008 to 84 year-to-date. There were a number of months this year where this statistic exceeded 100 days. Another statistic that is noteworthy is the supply of homes on the market. In Dec 2007 there was about a 6.8 months supply. This figure rose dramatically to 10.6 in Dec 08 (expected given the dramatic drop in sales), it then sat at about 6.9 in Dec 09 and rose to 8 in Dec 10. During the summer months this figure has steadily risen from 4.7 in Jul 08, to 5.1 in Jul 08 to 5.7 in Jul 10 to about 6.6 in Jul 11.
Clearly, there are exceptions to the picture painted by these general statistics, but the overall trends should be clear. The market up to 2007 was significantly different than the market of today. Compared to then, the number of sales is down significantly, the time to sell is up, and the supply is up. Other conclusions could be drawn from sell to list ratios and list to sell prices but these types of analysis are best left to specific situations.
What, then, about the future? This is the “million dollar” question. There are currently conflicting views from economists across the country as well as those in the US about what the future will bring.
As a real estate professional who works in, and follows the Comox Valley real Estate Market closely, my sense is that 2012 will not be all that much different from 2011 given a financial climate that is comparable to that which exists today. For buyers, the Bank of Canada’s overnight interest rate is expected to remain low into early 2012, but it is also expected to start rising as 2012 unfolds. When it does, mortgage interest rates will rise making home buying more expensive. The Comox Valley real estate market should remain favourable to buyers in early 2012.
What about sellers? Some parts of the Comox Valley real estate market will remain challenging to sellers as 2012 unfolds. Having said this, there are a number of things that can be done to help sellers in this kind of market. Price, preparation, presentation, and marketing will all be important elements. There are many other things that are important considerations as well that I cover when I present options to sellers.
Whether you are considering buying or selling in the Comox Valley real estate market, as a seasoned professional, I can help you. Contact me today to get the most out of your next home purchase or sale in the Comox Valley and for peace of mind in this highly competitive real estate market.
Comox Valley Real Estate and the Law Posted on November 17, 2011
As I have mentioned in previous blogs, real estate is a highly regulated industry in British Columbia. There are a significant number of laws that have the potential to come into play when buying or selling a home in the Comox Valley Real Estate market.
As I have also mentioned on many occasions, real estate agents do not give legal advice. Seek such advice from a lawyer. Having said this, competent real estate agents should keep up-to-date on the laws that have the potential to affect the purchase or sale of a home so that they know when to recommend that a buyer or seller seek legal and/or other professional advice. Let’s take a very brief look at some of the laws that a buyer or seller may encounter. If you are interested in getting a sense of some of the additional laws that may affect a real estate transaction, visit the Real Estate Laws and Regulations section of my website.
The Real Estate Services Act governs the sale of real estate in British Columbia. It aims to ensure that people who offer real estate services meet minimum established competency requirements to obtain a license. This act also establishes standards of conduct for those who become licensed. The Real Estate Council of British Columbia is established by this act to administer the act.
The Law of Agency concerns the relationship between a person who acts on behalf of another person and that person. In real estate, a real estate brokerage, through their real estate agents, acts on behalf of their client. While the working day-to-day relationship is between the real estate agent and the client, BC Law recognizes the brokerage as the agent of the client. This agency relationship is described in detail in the British Columbia Real Estate Association in its pamphlet “Working with a REALTOR ®”
The Law and Equity Act is a BC Act that establishes the principle that the rules of equity (fairness) prevail when conflicting with common law (court-based, judge-made law). Section 59 of this law discusses the enforceability of a contact respecting land (or a disposition of land). This section says that, in most cases, contracts dealing with real estate must be in writing to be enforceable.
The Law of Contract comprises those general legal principles that apply to the formation and enforcement of all contracts. Real estate agents are expected to write valid, enforceable contracts that contain an offer, acceptance, consideration, legal intention, capacity, legal object, and genuine consent. When contacts are ineffectual, they fall into the categories of being void, illegal, voidable, and unenforceable. It is important to understand the law of contract because it establishes requirements such as the need for vendors to disclose defects, contaminated property and defects in title.
The federal Proceeds of Crime (Money Laundering) and Terrorist Financing Act, among other things, establishes record keeping and client identification requirements for financial services providers and other persons engaged in businesses, or professions. There are specific elements of this act that apply to real estate. For example, real estate agents are required to identify and document the identity of people before these people engage in real estate transactions. For those that have purchased or sold a home in BC recently you will likely remember having to show your real estate agent some form of identification such as your drivers license, and seeing the agent copy down this information onto a form called “Individual Identification Information Record” produced by the Canadian Real Estate Association (CREA).
The Personal Information Protection Act regulates the collection, use and disclosure of personal information by private organizations. The British Columbia Real Estate Association pamphlet “Working With a REALTOR ® ” discusses the collection and use of personal information. This act recognizes the right of individuals to protect their personal information and the need of organizations such as real estate agencies to collect this type of information for purposes that a reasonable person would consider appropriate. The Property Law Act requires that the vendor of land must deliver a registered title to the purchaser. Knowledge of this law is important because of some of the assumptions that it makes. For example, it assumes that land sold to two or more people will be to them as tenants in common unless their is information to the contrary. What does this mean? Under tenancy in common, if you own property with another person and you die, your interest in the property becomes part of your estate to be passed on according to your will. If this is not your preference, then you need to ensure that the land is sold to you as “joint tenants” so that when you die, your interest passes to the remaining joint tenant. This law also establishes rules on the transfer of ownership to oneself, the transfer of the responsibilities under and existing mortgage from a buyer to a seller, the requirement for mortgagees (banks, etc.) to provide financial statements to the mortgagor (free of charge) on the status of the mortgage, and much more.
The above acts are merely some of the many that have the potential to affect real estate transactions in British Columbia. Knowledge of these acts is important. If you are planning to buy or sell a home or property in the Comox Valley without the services of a real estate agent, you may wish to become more familiar with the law as it applies to real estate. Consult your lawyer on issues related to real estate law, and ensure that you know how to write a legally enforceable contract that contains all of the provisions you need to protect your interests. If you would like to discuss the potential purchase or sale of property in the Comox Valley, I would be please to meet with you. Contact me and set up an appointment with no obligation to discuss how I can help you.
Brett Cairns RE/MAX Ocean Pacific Realty Accredited by the Better Business Bureau
Return to Home page.
Testimonials
Serving the Comox Valley Real Estate Market by going Above & Beyond for Clients to give them Peace of Mind