Today is Saturday September 30 and this is the sixtieth episode of the Marshall Report. Welcome to the podcast.
In this episode:
- Interruptive marketing strategies
- KW real estate news
- Other real estate news
- Winter wildlife
- A legal question and
Interruptive marketing strategies
The early 90s was when everything began to change. On 6 August 1991, the World Wide Web went live to the world. There was no fanfare in the global media. In fact, most people around the world didn’t even know what the Internet was. I didn’t. I was very happily living up in the mountains north of Taipei. Little did we know then, what we know now. We knew not how impactful the Internet would be on how we live and more importantly, how we work.
But in many ways, how we work is still stuck in the 90s. I recently wrote about open houses and how they were once the first chance to look at a place for both agents and consumers and how now they are still around only because of momentum, custom and lack of imagination. In short, open houses have become marketing vehicles for real estate agents, not vehicles to sell houses.
Although the Internet went live more than a generation ago, things do not change overnight. Momentum, habit, “baked-in” and established practices stand in the way of change.
What’s interesting is that in many ways Realtors are often early adopters of new technology and ideas. (I think it is because we are like small retailers and business owners. We are the last bastion of free enterprise on an individual level. For example, when Blackberry was just getting started, I’m sure more Realtors had Blackberrys than office workers, dentists, and school teachers. And when digital printing became cheaper, Realtors rushed in and flooded the market with postcards and feature sheets…. You get the idea.
However, the real estate industry at the brokerage level has not changed nearly as much or as fast. Brokers and managers, sales trainers and administrators were less keen to change. As a result, many Realtor business practices have not caught up with the times.
Lets talk about print advertising
Be it in the newspapers and magazines or through postcards and feature sheets, print media has lost its excellent return on investment. Not only are fewer people looking at these advertisements, but it’s also nearly impossible to successfully target potential clients via printed ads.
I got a post card in my mailbox today. It is from a two member real estate team that handles luxury properties, investment opportunities and condominiums. They also help with mortgages, rentals, and new builds. That is not targeting. That is the shot gun approach.
Moving on, telemarketing once ruled the world with absolutely fabulous ROI. Now, I have pretty much given up answering my telephone. I get a lot of spam calls and I get a lot of scam calls. I’m not really interested in buying your new widget, exhibiting at your trade show or advertising in your golf magazine. Also, Canadian Revenue Agency knows very well how to reach me by mail or email so I do not believe they have issued a warrant for my immediate arrest no matter how many times you call.
Next, the doorbell is a great example of an outdated technology. If my neighbour wants to borrow my lawnmower, he texts me. If my daughter’s friends are coming over, they text her from the street or sidewalk and say “we’re here”.nBy contrast, when the doorbell rings, we know in our heart of hearts that it is a stranger, a stranger who wants to interrupt us with something on their agenda, not ours.
And finally selly-sells on social media and email. Spam is spam. Sending generic messages to everyone in your database, pushing out social media content all the time about your open houses, your recent sales, your brokerage events…is really really irritating. These are communication platforms, not marketing platforms. So stop spamming me with your fake news. Go read a book by Seth Godin, or something. I’ve given up and all social media now and I’m much happier for the decision,
In terms of Kitchener Waterloo real estate, here are the facts:
Homes are selling for, on average, less money than they were earlier this year. Generally I think it is about 10% lower than they were at the peak time. Statistics that I keep for myself and my clients show that houses that I saw with clients in September sold for an average of 5% over list price.
Houses are spending more time on the market. Bidding wars are far less common, but still exist
Housing is booming in Kitchener Waterloo. Much of that housing is not detached homes, but apartments and multiple family dwellings.
There are currently 780 homes listed today in Kitchener Waterloo on the KW board. That is higher than the roughly 300 of six months ago. But it still seems like that there is nothing good to show my buying clients.
Back in the springtime, the real estate market was hotter than a fresh muffin. We, as realtors, had figured out now how to win bids (by looking ahead) and how to list homes (by looking back).
Then everything changed. Overnight it seemed, but it wasn’t. It didn’t. Part of the market hit the breaks, hit the wall, hit the bricks. Part of the market continued as it was, business as usual. It was like waking up and adjusting in your cramped seat on a long airplane ride when the lights are off and everyone else is asleep, slumbering over the Pacific.
And Realtors changed too. Some of us stuck our heads in the sand believing that it was just a momentary blip (wishful thinking)- things would return to the new normal. Some of us hobbled along the hillside like wounded goats, in the light rain and damp fog (life is tough. Get a dog).
And the rest of us adjusted. It is what we do.
Real estate is one of the last bastions of entrepreneurial free enterprise. We are on the front lines of the battle. We are like small town independent retailers. We are operating without a net but we are not working on mysteries without any clues. The clues are right in front of us.
In Canadian real estate news
Canadian home sales rose in August after four straight months of declines. This was thanks to a rebound in existing home sales in the GTA
The Canadian Real Estate Association expects Canadian home sales to drop to three-year low
CREA projects that the number of home sales in British Columbia and Ontario will fall by 10 per cent in 2017, compared to 2016’s record highs.
Newly released statistics show a growing trend of both investors and homeowners getting what they can out of the market. Essentially, now that the market has cooled they are kicking themselves and waiting to cash out.
There have been increasing reports of problematic closings, particularly for expensive detached houses, many of which sold for amounts inflated high over asking. Now, the victors of those bidding wars are facing a sobering reality: as the average Toronto home price has fallen 19 per cent since Aprils Fair Housing Plan announcement, buyers may have lost value before they even receive the keys.
Canada’s census revealed a lot about our housing needs and some interesting facts Canada had more one-person households in 2016 than at any time since Confederation in 1867
Canadians have a lot to be proud of. Melbourne is #1 and then Vienna, Vancouver and Toronto followed by Calgary and Adelaide, which share the fifth spot. These are the world’s most liveable cities In 2017.
Speaking of Vancouver, the foreign buyers tax isn’t making Vancouver more affordable
It is one of Canada’s most attractive cities, but it also boasts one of the country’s strongest local economies. One year into Vancouver’s foreign buyers tax, real-estate supply may actually be the city’s biggest problem, not foreigners.
A survey of more than 9,000 people in nine countries says that Canadians are among the most “digitally active” homebuyers in the world, which has “significant implications for consumers and the property industry”. I know my clients are digitally active, sometimes too active haha.
What do home buyers want — a bigger house or a bigger yard?
Smaller homes with more outdoor space seem to be all the rage lately as homebuyers are abandoning the motto “bigger is better” when it comes to square footage. Home owners also are tending to want to live closer to the city centre and that dovetails nicely.
Let’s talk about your money
According to the Canada Mortgage and Housing Corporation’s benchmark, housing is considered “affordable” when no more than 30% of pre-tax income is spent on homeownership expenses. In Canada, the national average is 45.9%. This means many Canadians will spend almost half of what they earn paying off their mortgage and other property-associated expenses.
In another new study, the Fraser Institute found mortgage interest rates fell from 7% to 2.7% between 2000 and 2016 and increased the maximum mortgage for Canadians by 53%.
Average Canadian mortgage is nearing $200K, up 5% in a year.
But the good news is that barely 1 of 200 mortgage holders is behind in payments. It’s not just that people are borrowing more, it’s more people are borrowing, too
The symbiotic relationship of racoons and garbage.
There was a story about Toronto’s new raccoon-proof green bins that got me thinking about winter-proofing my house. It’s time. It is time to put away the patio furniture, turn off the outside water, straighten things out, close the pool.
I live in a 100-year old home in UpTown Waterloo. The critters get in. Not raccoons and birds anymore, now that I have had the soffits updated.
Mice. I have a problem with mice. I didn’t know we had mice until the cat died.
I have a couple of traps. I set them with peanut butter. Mice go in but cannot get out. I take them to a local park and let them go in the trash can. Last year I caught 14 mice. That’s a record. That is a record I don’t hope to break this winter.
What is a valid agreement?
On the chat widget, I received the following question about what is a valid agreement. It read:
I am currently leasing an apartment in Toronto and my landlord offered me to buy the place privately.
After some emails back-and-forth on the valuation, I accepted to pay her offered price under the condition that she could let me review the minutes of the last few annual co-owners meetings and financial statements and perhaps arrange a meeting with the head of maintenance.
She refused and completely changed her tone: she said I was being “a pain in the ass” and that she would rather hire an agent and sell in the open market at a lower price rather than to sell to me.
This week the agent scheduled over 50 visits and today the owner provided me with an eviction notice.
Question: does my conditional approval of her offered price under a private sale have any precedent over her attempt now to sell to a third party?
Should I get a lawyer?
I’ll answer the second question first.
When it comes to the law, you should always consult with a lawyer. I’m not a lawyer. With residential real estate, most Agreements of Purchase and Sale are done on OREA forms with standard clauses (or on builder forms with different standard clauses). This means essentially that Realtors understand the fundamentals of law but are not experts.
I don’t know if lawyers love or hate private buyers and sellers, but I avoid them like I would avoid the plague, or Vikings, or early morning sales meetings.
That said, the law is really interesting. There is a reason for all of the books and TV shows and movies about the law. The law is interesting. It is a fundamental part of our society.
I will answer the first question now.
The question that JF is asking is does he or she have a valid contract to buy the place? Or, put another way, does JF and his/her landlord have a legal contract.
What are the essential elements of a contract?
A quick trip to the internet tells me that an agreement must have the following essential elements to become a valid contract:
- Offer and acceptance.
- Mutual consent of parties.
- Intention to create legal obligation.
- Free consent of parties.
- Parties must be competent to contract.
- Lawful object.
- Lawful consideration.
Without going into too much detail, it is clear to me that no valid contract exists. This contract does not have an offer that was accepted – it broke down in the negotiation phase of the offer. JF’s conditional offer to buy the place was rejected outright. That is pretty clear. Here are a couple of things to think about:
- Conditions were not met: JF was perhaps going to meet with the head of maintenance. That is pretty unclear. Contracts have to be clear. We need the who, what, where, when, why of this condition. What was the purpose of this meeting? What was going to happen after this meeting? Details.
- Intentions to create a legal obligation were not met: She called you a “pain in the ass” and said she would rather sell it so someone else at a lower price. Her intention is pretty clear.
There are lots of websites that explain the law. Courts distinguish preliminary negotiations from formal legal offers in that parties to preliminary negotiations lack a present intent to form a contract. Accordingly, no contract is formed when parties to preliminary negotiations respond to each other’s invitations, and requests.
Finally, it is unknown from the message whether or not JF and his landlord put anything down on paper, had any time constraints or if any deposit money changed hands. I suppose you can still have an implied agreement without them but whether or not an agreement like that would stand up in court is more than a little dubious to me. In my world, residential real estate contracts are always written down with times and dates and deposits are always received and held in trust.
And I will end here
I watched The Deer Hunter on Netflix the other night. Along with Apocalypse Now and Full Metal Jacket, it is a must see epic Vietnam movie, a moment in time and place – captured. Some scenes will stay with me forever: Floating downstream on an old dead tree. Russian Roulette.
I watched “First they killed my father” a few nights before that. It is the story of Cambodia under the Khmer Rouge in the late 1970s. It was being filmed when we were there a couple of years ago. Spoiler alert. It had a Hollywood ending.
I’ve been backpacking around Asia over the last two winters. I have a ticket booked for November 20 this year. It is a perk of being a Realtor – the ability to take off for several weeks over the winter.
When there, I get a certain disconnect between the Vietnam and Cambodia of today and memories of movies from the 1980s. This year, Indonesia.