Pools do not add value - Not always true!

Recently a Globe and Mail article quoted an investopedia.com article that listed a Pool as the number one home renovation that does not add value. This is not always the case. Given a proper size land lot, a pool can in fact retain enough of its value to justify installing.

Although they are correct that, 'many potential home buyers view swimming pools as dangerous, expensive to maintain and a lawsuit waiting to happen', others see a pool as an amazing addition that adds tremendous value to family life. In fact for those who want a pool, the idea of going through the upheaval of installing a new pool from scratch is more of a turn off than any of the potential detriments of purchasing a home with a well maintained pool in existence.  

In my experience, pools that add value as opposed pools which create a flat value, are usually found in homes with pie shaped lots, or corner properties with a large side lots. In these circumstances the pool does not dominate the entire yard. The pool can be safely fenced off from the remainder of the yard and the non pool side is then utilized for other family needs and wants (swing set, vegetable/flower gardens, etc.) 

Nonetheless, homeowners do install pools on regular lots. The  result is a hard landscaped effect with the yard transformed into wall-to-wall pool and pool surround.  From a Real Estate perspective, investment in this circumstance is not sound.  However a well-kept pool with good landscaping rarely detracts from value.  With pools on average lots, homeowners should not expect to recoup as much of there initial cost. 

If you are thinking of installing a pool and only have a regular size lot, I would recommend staying above ground and minimizing cost.  I have visited some amazing deck-to-above ground pool combos that are better investments for small yards, as well as safe, and very enjoyable.

Value associated to home renovations and upgrades are often tied into trends and expectations of buyers within a particular neighbourhood. Contact us if you are thinking of renovating and/or upgrading and are unsure what is the best choice from a Real Estate investment point of view – especially if a sale is in the not too distant future.

The David Smeriglio Team

david@soldhabit.com

Bad Realtors Where do they Lurk? (repost)

I recently received a message from a friend asking for some insight. His friend had a condo on the market and was having trouble selling it.  Often when I get these calls they are quite unremarkable; with some research I can clearly see that that the property is over priced, or there is a glut in the market, or sometimes it has only been listed only a short time and falls within the normal timeline for the market in that particular area. Sometimes a listing is a very difficult ‘one off’ type of property that is difficult to sell; a true ‘need the right buyer’ type of deal.

When I began my investigation however, I quickly realized that in this case, none of the above held true. The condo was dramatically over priced. The Realtor had access to several recent sales of similar size, view/exposure, and upgrades none of which would have supported an asking price nearly 25% higher than the previous highest sale only 4 months earlier.

My first question was ‘who and how was this price decided on ’?  When the story began to unfold it was a little shocking, however not something unheard of.

Simple scenario. A buyer is looking to upgrade but does not have a Realtor. They meet a Realtor who seems very personable and professional.  They check him out on the Internet.  The Realtor has a website and some web presence (later to find out it is the company issue website and a basic social media profile set up by the office). There are listings and buyer sales on the website, so it looks like he is and active and busy agent. (Later to find out the listings are office listings and sales not the individual agent.)

Note: I do not want to suggest that without a genuine web presence that agents are unqualified, only that buyers and sellers should look beyond the web before making a final decision. In fact I am certain there are agents with phenomenal social media savvy who really are just that – a great social media presence.  I know several nearly new agents who have amassed huge followings on Facebook, and Twitter – it makes them great self-promoters – not great Realtors.

They decide to work with the agent and off they go looking for a new property.  Before long a suitable property is found. The client asks the Realtor,

Q.  “Before I sign off on this, what is my place worth and can I afford this?”

A. (25% more than reality so yes)

Q  “They want a quick closing so how quickly can my place be sold?”

A   (Quickly! The market is great)

Q. Should I maybe sell my place first then buy this place, or make it conditional on my place selling?

 (No the seller wont accept this - plus you don’t need to it’s a hot market) “

The answers received are based on lies, or incredible ineptitude.

1.            The client’s property is overvalued dramatically

2.            It cannot be sold quickly because it is overvalued

3.            If you need to sell higher in order to qualify to buy a place – you definitely should sell first! Or make it conditional on the sale of your place.

A few months later reality hits home. They now own a new property that is outside of their affordability range. They are carrying two properties and bridge financing is over and they cannot afford to carry both. They need to sell at or below market value ASAP and their property is stigmatized. 

To top it off they did not qualify for the new purchase any longer because the bank pre-approved them based on their current property selling nearly 25% higher.  They had to take a new short-term mortgage at rates considerably higher than the going 5 year rate! 

The ramifications of their agent’s actions have been costly and stressful.

Moreover the agent locked them into a 1-year listing contract! That alone should have been a reflag considering they were told it would sell quickly. Technically he does not have to release them.

Protecting clients is about of managing risk.  Uncovering potential pitfalls is essential. There are no guarantees. The market environment is never static. Prices, time to sell, as well as mortgage lenders requirements are just a few factors that impact sales price and time on the market.

There is no magic set of indicators for determining who possesses all the great qualities that are needed to be a successful and honest agent, hence a solid plan of action which explains risk and backs up claims with solid facts and figures is just as important as popularity.

Agents that I respect in the industry always prioritize their client’s financial considerations. Miscalculations of affordability are common.  An Agents due diligence to ensure their client is buying/selling within their means is an often overlooked value; the excitement of viewing gorgeous new property and preparing an awesome listing usually overshadows these mundane tasks.  

From my perspective, however inglorious the financial aspect seems, it is of the utmost importance because it not only protects the buyer and seller but also protects the integrity and transparency of organized Real Estate.

Bad Realtors hurt not only buyers and sellers but the industry also.

D

Bad Realtors - Where do they Lurk?

Bad Realtor

I recently received a message from a friend asking for some insight. His friend had a condo on the market and was having trouble selling it.  Often when I get these calls they are quite unremarkable; with some research I can clearly see that that the property is over priced, or there is a glut in the market, or sometimes it has only been listed only a short time and falls within the normal timeline for the market in that particular area. Sometimes a listing is a very difficult ‘one off’ type of property that is difficult to sell; a true ‘need the right buyer’ type of deal.

When I began my investigation however, I quickly realized that in this case, none of the above held true. The condo was dramatically over priced. The Realtor had access to several recent sales of similar size, view/exposure, and upgrades none of which would have supported an asking price nearly 25% higher than the previous highest sale only 4 months earlier.

My first question was ‘who and how was this price decided on ’?  When the story began to unfold it was a little shocking, however not something unheard of.

Simple scenario. A buyer is looking to upgrade but does not have a Realtor. They meet a Realtor who seems very personable and professional.  They check him out on the Internet.  The Realtor has a website and some web presence (later to find out it is the company issue website and a basic social media profile set up by the office). There are listings and buyer sales on the website, so it looks like he is and active and busy agent. (Later to find out the listings are office listings and sales not the individual agent.)

Note: I do not want to suggest that without a genuine web presence that agents are unqualified, only that buyers and sellers should look beyond the web before making a final decision. In fact I am certain there are agents with phenomenal social media savvy who really are just that – a great social media presence.  I know several nearly new agents who have amassed huge followings on Facebook, and Twitter – it makes them great self-promoters – not great Realtors.

They decide to work with the agent and off they go looking for a new property.  Before long a suitable property is found. The client asks the Realtor,

Q.  “Before I sign off on this, what is my place worth and can I afford this?”

A. (25% more than reality so yes)

Q  “They want a quick closing so how quickly can my place be sold?”

A   (Quickly! The market is great)

Q. Should I maybe sell my place first then buy this place, or make it conditional on my place selling?

 (No the seller wont accept this - plus you don’t need to it’s a hot market) “

The answers received are based on lies, or incredible ineptitude.

1.            The client’s property is overvalued dramatically

2.            It cannot be sold quickly because it is overvalued

3.            If you need to sell higher in order to qualify to buy a place – you definitely should sell first! Or make it conditional on the sale of your place.

A few months later reality hits home. They now own a new property that is outside of their affordability range. They are carrying two properties and bridge financing is over and they cannot afford to carry both. They need to sell at or below market value ASAP and their property is stigmatized. 

To top it off they did not qualify for the new purchase any longer because the bank pre-approved them based on their current property selling nearly 25% higher.  They had to take a new short-term mortgage at rates considerably higher than the going 5 year rate! 

The ramifications of their agent’s actions have been costly and stressful.

Moreover the agent locked them into a 1-year listing contract! That alone should have been a reflag considering they were told it would sell quickly. Technically he does not have to release them.

Protecting clients is about of managing risk.  Uncovering potential pitfalls is essential. There are no guarantees. The market environment is never static. Prices, time to sell, as well as mortgage lenders requirements are just a few factors that impact sales price and time on the market.

There is no magic set of indicators for determining who possesses all the great qualities that are needed to be a successful and honest agent, hence a solid plan of action which explains risk and backs up claims with solid facts and figures is just as important as popularity.

Agents that I respect in the industry always prioritize their client’s financial considerations. Miscalculations of affordability are common.  An Agents due diligence to ensure their client is buying/selling within their means is an often overlooked value; the excitement of viewing gorgeous new property and preparing an awesome listing usually overshadows these mundane tasks.  

From my perspective, however inglorious the financial aspect seems, it is of the utmost importance because it not only protects the buyer and seller but also protects the integrity and transparency of organized Real Estate.

Bad Realtors hurt not only buyers and sellers but the industry also.

D