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Successfully Negotiating Real Estate Transactions

Thu, 12 Sep 2019 17:45:59 GMT

As we’ve seen the market change from prices falling this time last year, to properties lingering on the market, and now back to selling at lower prices it brings opportunities and challenges to buyers and sellers. Having the right negotiating tactics can put thousands in your pocket, whether you’re the buyer or seller. Here are the strategies that I keep in mind when representing my clients.

Put your ego to the side. One of the biggest reasons I see real estate transactions fall through is that ego gets in the way. Real estate negotiations can get heated up and many times people take things personally; don’t get hung up on the little things and lose out on the bigger picture.

It’s not just the buyer or seller taking it personally, realtors can be taking it personally as well. It’s important to be courteous and friendly. If something is said that could offend you, let it slide like water off a ducks back. I find people like to discuss value and get into a pissing match, this is counterproductive. I’d rather my clients have a successful deal over win an argument with another realtor. There have been many times I’ve had to hold my tongue and feed the other persons ego to get what we wanted. At the end of the day, you have a successful transaction and that is what matters.

Reverse offer. In a falling market you can be having lots of showings but no offers. I find it helpful to call potential buyers agents and offer the property at a lower price to get an offer, with the sellers permission of course.

The haircut. There’s many terms for this tactic, and it’s not my favorite to do, but it works in a slower market. This is when you have a property tied up and something comes up on the inspection report with deficiencies, you can use these to lower the price or change the dates or terms. Don’t try doing this in an increasing market because you’ll end up with nothing.

Ask questions. Whether buying or selling you want to know as much information as possible to find out motivation to use in your negotiations. I do this by simply asking a lot of questions. “Where are your buyers looking?” “What is their price range?” “Do they have kids?” “Are they looking to get into this school catchment?” “When do they need to move by?”
Asking questions when representing a buyer is good to understand the sellers motivation to make sure you tailor your offer to their needs, so they are likely to go with you in a multiple offer scenario.

Take action. You snooze you lose. As a buyer, when you see a property you like, write an offer right away. Chances are when you like something other people feel the same way, even if a property has been on the market for a while. As a seller, have an action plan of when you will deal with offers and let the buyers know. When the offers come in, deal with them. The best offers are the first offers, strike while the iron is hot.

Put it in writing. When making an offer, put it in writing. When an offer is written there is no mix-up in terms and conditions, everything is laid out. An offer means more when it’s on paper. A counter offer means more when it’s on paper. With tools like Docusign we can have an offer written up and signed within 5 minutes, countered within a couple minutes, and accepted.

Keep the ball moving. Always keep the offer moving by taking steps to getting the deal closer. I’ve seen offers take weeks, especially with larger deals. Keeping communication going with the other party, and keeping negotiations open to find a common ground is extremely important.

Have options. Ideally when looking to buy a home you’ll have a couple choices. Remember there is always another deal. When offering on a place don’t feel like you have to have it. If you absolutely have to have it, then pay up before someone else does. With sellers, the way to have options is properly pricing your home. Even in a slow market you will still get multiple offers.

Whether buying or selling keep these tactics in mind for a successful real estate transaction and overall good experience. This fall there will be opportunities for both buyers and sellers. For sellers the supply is low and now is a great time to list, for buyers there will be more product coming onto the market from the busy summer we had, giving you selection.

Let me know if I can put my negotiating skills to use for you.

Mark Hammer PREC*
RE/MAX Crest Realty
Direct: 604-761-1335

The Dog Days of Summer Are Here and the Market is Hot!

Mon, 19 Aug 2019 20:25:02 GMT

The last couple months have been very busy. I’ve been dealing with multiple offers on a regular basis and have been working more than typical this time of year. I was wondering if this was just me, or if the Real Estate market was picking up, so I called people that have been in the industry as long as I have been, if not more, and asked them how the market is going for them. Here is what they had to say-

Devika Mehta, Notary Public - www.mehtanotary.com
Devika typically sees her business get busier two months behind the market as closings come later in the deals. She is seeing much more business this year versus last year, with the second half of the year being much busier. She noted that she is dealing with all local buyers, and is again seeing first time home buyers getting into the market. Downsizers are also selling houses and being able to purchase a condo in the city as well as a second home outside of it.

Geoff Bamford, Mortgage Specialist – geoffbamford.ca
Geoff said that there is definitely more action now that rates have gone down below the 3%, though people still have to meet the benchmark stress test rate of 5.19%. There are lenders, such as credit unions, that don’t do a stress test if you are 25% down with a 25 year amortization. He also noted that he is dealing with all local buyers, and a majority of families moving up.

Wayne DeJong, House Inspector - vancouver.pillartopost.com
Wayne told me his business is up 45% from last year, and has noticed that he got really busy from May onward. Last month was one of his busiest months in the past five years. “People have time to look at things and do their due diligence, where before when the market was very competitive they would not have a subject to inspection, or would overlook the deficiencies of the house.” Buyers are now expecting sellers to fix deficiencies or renegotiate the price.

Gary Tiwana, Builder – www.paramaxhomes.com
Gary specializes in luxury homes on the North Shore. He said he’s had more calls this year than last year for smaller homes as well as luxury homes, due to the fact that there are less good products on the market and people are not finding the home they want. Typical clients have been local, with interest from Americans as well as people wanting to take advantage of the lower land cost. Land values get affected more when the market goes down.

Noel Hache, Victoria Realtor - noelhache.remax.ca
Noel says there is 15% more inventory this summer over last summer, and has seen a pent up in demand. People that were sitting on the fence in the Spring waiting for prices to go down started to buy in July. Properties that are priced well will sell within a week close to or at list price. “Majority of buyers are locals playing musical chairs.” Vancouver buyers are looking on the island again.

After talking to these people, it confirmed for me that the market is definitely busy. Keep in mind that all of these people have been in business for 25+ years, and in a tough market like we’ve had professionals like these people keep doing business regardless. In a city like Vancouver (and the lower mainland) there will always be a demand for housing. People’s lives are always changing, and their housing demands change with them. Even though we do not have masses of people coming in from China, taxes have increased, and mortgage rules have taken their toll on purchasing power, there will still always be a demand for housing in Vancouver.

Enjoy the rest of the summer, I’ll be in the office working away, so if you have any questions on the market please give me a call. I’d like to hear from you.

Mark Hammer PREC*
RE/MAX Crest Realty
604-761-1335

Real Estate Market Completes 18 Month Cycle

Thu, 11 Jul 2019 18:36:08 GMT

It has now been 18 months of a declining market. In my January newsletter of Predictions for 2019 I said by June/July the market will stabilize, and for houses it has. On a number of my listings recently I’ve had multiple offers, even selling over asking. It’s not just me, when I talk to other realtors they say they’re busy, as well as the bank appraisers. You may have noticed that those signs that have been up for sale now have sold stickers on them. This is simply because people can only sit still for so long, they have to fulfill their housing needs. We have ultra low interest rates and a steady flow of people moving into the lower mainland.

Condos and townhomes will have another couple months of correcting due to the fact that they didn’t start their correction until several months after the housing market. When it comes to the hot spots in the market, it’s based on affordability. East Vancouver houses with basement suites under $1.6 are selling like hot cakes, same with houses on the Westside under $2.5, and North Vancouver is very active as well. I’m even seeing some land assemblies starting to sell.

There are still great buying opportunities. For some funny reason, people feel more confident buying when there is more competition. We still have some hurdles, but there is light at the end of the tunnel now. My recommendation is if you’re thinking of buying, buy now. Prices will be higher in the new year.

Inventory is now slightly double than what the sales are. This is a typical daily screenshot on MLS of new inventory vs sales. A screenshot 2 months ago would’ve seen close to 200 new listings and around 50 sales. The amount of inventory on the market is significantly less than this spring. Typically sales slow down in June and July, whereas I’ve seen sales increase this year.

Mark Hammer PREC*
RE/MAX Crest Realty
Direct: 604-761-1335

The Perfect Storm

Wed, 12 Jun 2019 23:50:41 GMT

I remember seeing a movie starring George Clooney as a commercial fisherman out at sea and everything lines up to create the perfect storm. The storm catches these unaware fishermen by surprise and puts them in mortal danger. Vancouver housing is becoming the perfect storm of unaffordable and will hit us within a few years.

The government has stepped in trying to slow the real estate market by introducing new taxes, which has inadvertently created an even greater housing crisis. By adding these taxes, combined with the inefficiency at City Hall, builders simply can’t afford to build. Nothing new is going up and existing projects have been put on hold. If builders aren’t building and people are still continuously moving to our beautiful city, based on supply and demand we will have an even greater housing crisis.

As I mentioned in other newsletters there are roughly 40,000 - 50,000 people moving into the lower mainland every year. Even though new housing isn’t being created, these people will still be moving here. They won’t be looking for high end houses, they will be searching for affordable housing.

If you look around you’ll see the majority of rental buildings in Vancouver were built in the 1960’s and 1970’s when the government was promoting builders to create rental housing. In many cases now, the city is trying to promote the rental housing while adding an exorbitant amount of fees and restrictions, making these projects impossible.

What can we do to prepare? It’s simple, buy real estate. When the news media is talking about how bad the market is and everybody is running for the hills, it’s time to buy. If you want to buy your first investment I recommend bachelor suites and one bedrooms downtown. If you want to buy and hold for redevelopment I recommend buying into Cambie Phase 3, where the density has increased and many properties that were to be assembled have not gone through. If you’re looking to move up, buy a house with rental suites. Right now you can buy a house with basement or laneways providing excellent revenue. Also large houses with many rooms, as house sharing will become more common in the city.

At some point the city and the provincial government will wake up and realize that they made the housing market unaffordable. Money laundering or foreign buyers have nothing to do with affordability, the simple fact is that the government hasn’t done anything to support densification fast enough for this growing city. The only way to solve this problem is to create density and make it easy for developers to create housing for people.

Mark Hammer PREC*
RE/MAX Crest Realty
Direct: 604-761-1335

Spring brings a blip in sales, but just wait until summer

Fri, 10 May 2019 19:14:57 GMT

Traditionally the spring market (March, April, May & June) is the busiest market of the year, and this year is no different. We have seen an increase in sales compared to earlier this year. The difference with this spring compared to previous springs, is that almost every day there are 3 listings to every 1 sale. We are seeing supply increase.

My concern for sellers is that we have a large supply going into a summer market when it naturally slows down. Sellers need to price sharper than ever to get sold before summer. I especially see this with condos and the prices are starting to reflect that. As I said earlier this year, the condo market is six months behind the detached market, and prices are still decreasing making it the time to buy.

Adding to the inventory are a number of pre-sales completing this summer, which is great news for buyers. There will be excellent buying opportunities for first time buyers and investors during the dog days of summer, around August.

Let me know if you are thinking of buying and would like to receive updates on listings in your preferred areas, or if you have any other questions on the market.

Mark Hammer PREC*
RE/MAX Crest Realty
Direct: 604-761-1335

“Vancouver home sales hit 33-year low”, what’s my take on this as a residential realtor that’s been in the business for 24 years

Fri, 05 Apr 2019 22:00:00 GMT

Finally a news article that catches my attention, “Vancouver home sales hit 33-year low” from The Globe and Mail on Wednesday, April 3/19. 33 years ago, in 1986, the lower mainland population was 50% less than it was now, with a population of 1,266,152. Today we are sitting at a population of 2,555,884. There’s a lot more real estate to sell now compared to 1986, making this 33 year low more serious. The article reports that in Greater Vancouver there were 17,127 sales in March. What I found startling is that out of the 14,245 realtors there are in the Greater Vancouver area, only 1 out of 12 made a deal last month.

The article stated that the benchmark price of the typical home sold in Vancouver declined 7.7% compared to a year earlier. What I’ve found is some of the sales I’ve done have been up to 40% less, especially on land development deals. On the other hand, values in condominiums in Mt. Pleasant I’m just starting to notice a dip. I’m sure as more articles like this come out, buyers will get even more nervous.

The article also talks about speculation and vacancy tax targeted at out of province residents. Most of these buyers were coming over from mainland China, however it’s not this tax that has discouraged the inflow of foreign money, it’s the Chinese government crackdown on money leaving. The fact is these people can’t get their money out of China and unfortunately this tax is now mainly affecting local buyers. Your average mom and pop that live in Vancouver and want to have a condo in Victoria are the ones paying the price.

Talking about real numbers, here is a screenshot I took from the MLS showing a typical day in today’s market. 169 new listings and only 53 sold. This means that new listings are outpacing sales 1:3. We are seeing a tremendous buildup in supply, and we all know the simple economics of supply and demand, the more supply and less demand equals prices dropping.

The bright news is, by the time papers such as the article I’m referring to start talking about how bad the market is, it’s usually starting to get better as they’re always six months behind. I’ve already seen the bottom in some areas, and feel that we will definitely be at the bottom for Vancouver detached houses by July while condos will continue to drop through the fall. This gives opportunities for first time home buyers, people wanting to move up, and developers to pick up some deals. I’m having clients buy in areas they never thought they could before because of the lower end market holding strong and the higher end market getting hit hard. This is the time to buy.

Mark Hammer PREC*
RE/MAX Crest Realty
Direct: 604-761-1335

Predicting the Market Through Shoes

Thu, 07 Mar 2019 21:55:00 GMT

Counting shoes at the doorstep will tell me how many offers I’m going to get on a property.

Now that we’ve gotten two months of this year behind us in a falling market, I’m starting to see an increase in buyer activity in certain price points. One of the things I like to do when I’m at an open house is take pictures of the shoes at the front door and send it to my seller so they have an idea how many people are coming to see their home. Obviously the more shoes the better.

This past weekend I had two first showings, one at a condo in South Burnaby priced at $369,800 that had roughly 300 people come view it throughout the weekend, resulting in 12 offers. The other, a house on the Westside priced at $1,999,000 had over 100 people come to view. As you can see from the photo there was a good number of shoes, which resulted in five offers. The difference between getting multiple offers this year vs. last year is that they all have subjects on them, whereas they used to be subject free.

The real estate that’s moving across the lower mainland is catered to local buyers at price points within their reach. The market is now based on affordability. For example, in the past month Mount Pleasant 1 bedroom condos under $650,000 has seen 8 sales, and 4 of them went over asking. Westside houses over $3 million has seen 16 sales, and only 2 of them sold over asking. In the Mount Pleasant area prices are almost the same as this time last year, and the sales on the Westside are substantially less.

I guess what I’m trying to get across here is that the real estate market is healthy if it’s affordable to local buyers. It seems like the foreign buyers are totally out of the market for now. I do feel that the bottom of the market has come early and prices are firming up, but don’t expect to see any major price increases this year. This type of market is an excellent opportunity for condo owners to move up and get into a townhome or house.

If you (or anybody you know) would like to take advantage of this market, I’d be happy to discuss your options with you, and to send you some pictures of shoes.

Mark Hammer PREC*
RE/MAX Crest Realty
Direct: 604-761-1335

Year of the Pig

Tue, 05 Feb 2019 21:50:00 GMT

Gung Hay Fat Choy!

In Chinese culture, pigs are the symbol of wealth. Their chubby faces and big ears are a sign of fortune. In this year, it is a good time in business to be brave. It’s important to remember not to be short sighted, this is the time to set up opportunities for the long term. Take some risks in investments, but to an extent. Of course there will be obstacles, but after overcoming them the road to wealth will be smooth. Real estate is a good option for these Pigs.

My interpretation of this coincides with Vancouver’s Real Estate market. It is a good time to invest. Yes there are obstacles such as financing, but what better time to start looking at investing when everyone else is running for the hills.

As Vancouver’s prices are dropping in double digits, Westbank held a Lunar New Year Party last Tuesday to promote their new Oakridge grand development. I decided to check things out since there is a lot of talk about Westbank having success selling these units. Some say 70% on their first tower, others say 50%, no one’s actually sure. Since prices range from $1,939 to $2,658 a square foot, I found it hard to believe that anyone would be buying at such a high cost, especially since other new condos in the area are selling for $1,100 a square foot.

Even before I entered, I knew that this was quite the event as the parking lots were completely full. I entered Oakridge mall and realized Westbank rented out the entire mall for their party and it was jam packed. There was a complimentary night market food hall, traditional dragon dances, performances, games, prizes, and photo booths. My attention was immediately drawn to a stage with three large red wheels. It turned out, if you bought a home that night, you could spin a wheel for a prize.

Wheel #1, for the purchase of a one bedrooms, had prizes ranging from an Oakridge shopping spree to Air Canada business class flight passes.

Wheel #2, for the two bedroom buyers, had prizes such as BMW and Mercedes-Benz.

Wheel #3, for the three bedrooms, had Porsche, Rolls-Royce, and Luxury all expenses paid trips around the world.

While I was there I watched three lucky new homeowners spin these wheels, in fact someone had their child spin the wheel for them and he won a BMW car.

My friend and I were blown away by how busy this was, and that there were actually people buying these condos. It goes to show you that there are still people willing to buy into the dream of living in Vancouver. That, or these were paid actors.

Warm wishes for the Chinese New Year, here’s to a year of health and prosperity.

Mark Hammer PREC*
RE/MAX Crest Realty
Direct: 604-761-1335

Predictions for 2019

Wed, 23 Jan 2019 21:43:00 GMT

2018's Real Estate market has seen the biggest dip in annual sales volume in the last 18 years. December sales were down 43.3% below the 10-year December sales average. Some people are even comparing it to 1998’s troubled market, although I feel it’s going to get worse. All through the holidays people have asked me what is going on with the market and what should they do? I’ve broken down my predictions based on attached condos/townhomes and detached houses.

Condos/Townhome (Attached) Market:
The condo market was six months behind the housing market’s drop. We started to see a slow down back in June, and really noticed pricing and sales volume drop mid-October. I can easily say prices have come down 10% on average in the Lower Mainland in the past 6 months. In some areas, especially higher end, even more. Recently when prices have dipped, we would quickly see investors snap up the deals. With the new lending rules, the investors have not been able to take advantage of the market and the prices will have to drop even more. Prices will stabilize once affordability is brought back into the market. When someone can buy a condo with 25% down and their mortgage and expenses will be roughly the same as rent.

For Buyers-
The best time to buy in 2019 will be February, March, April, and May while prices are still correcting. Your strategy should be to have options. If you want a deal, now is the time to make low offers. If the seller doesn’t accept, move on to the next one. You will get a deal by doing this.

For Sellers-
The best time to sell in 2019 is either immediately before prices go down an additional 10% (or more), or hold off for two years. When selling in a down market, you need to be priced below the last sale. Believe it or not, there are still multiple offers on well-priced homes.

Houses (Detached) Market:
I first noticed the housing market being affected on Vancouver’s Westside in January. I’ve personally sold houses at 40% less than what they would have sold for a year prior. The big factor in this market is that it’s been very hard for people from China to bring money in. The increase in the foreign buyers tax to 20% coupled with the increase in Property Transfer tax to 5% on homes $3000,000 and above in February further eroded the market. Mortgage rule changes and rising interest rates have effected this market as well. The Eastside market started falling at the end of April, and slowly worked its way out to the suburbs. Reason being, people selling their homes on the Westside and moving east or out to the suburbs may have put their plans on hold, compounded with the mortgage rules.

For Buyers-
Whether you are buying a house anywhere in the lower mainland, there’s already been some big discounts. The housing market will stabilize before the condo market. I expect to see a 10% decrease in prices. Buyers should be looking at houses in areas of redevelopment. Land has had the biggest hit, and therefore is the best buy. Buy now and you will see great returns within the next two years.

For Sellers-
Sellers still have to sharpen their pencil on pricing. Be prepared to price your home lower than the competition, we still have six months of a falling market. If you want to put off selling, you will have to wait two years until prices start to recover.

The good news is interest rates will most likely not be going up. There are factors like a struggling economy and low oil prices. We may even see interest rates go down in the States based on bond yields dipping. Traditionally whenever bond yields go down, interest rates follow. By June/July the market will stabilize. By that time it will have been an 18 month cycle. This doesn’t mean prices will be going up, but they will stabilize and buyers will start to see value. From July on it will be a balanced market.

Supply across the board will be down. The fall market will have buyers looking for inventory and may start to see prices go up as the demand increases and supply remains relatively low. Going into 2020, prices will be on the rise for the Spring market, though I think we will see single digit increases as opposed to the double digit increases.

Mark Hammer PREC*
RE/MAX Crest Realty
Direct: 604-761-1335

The Untold Truth Behind Unaffordable Housing in Vancouver

Fri, 26 Jan 2018 19:28:12 GMT

I’m sitting here in my office looking at a beautiful architectural rendering of a small multi-family development I want to build that was rejected by the city. This project would create four residences to be rented out, that I’ve been going back and forth with the city over since March. On a larger scale, I was just talking to a friend that wants to build a 40 unit rental building. He said the city made it so hard and so expensive he would lose money, so he did not go ahead with the build.

Everyone I talk to in the real estate community has a story about the City rejecting, stalling and changing projects, which drives up the costs to provide housing. As I talk to developers and architects, they all have the same story: We want to provide housing but get shut down at the City. The City is holding everything up.

Dealing with the City is so brutal one architect tells me “Nothing can get done. They don’t know what they are doing”. The City of Vancouver makes it so hard to get things done, that builders are going elsewhere. Have you noticed all the construction cranes are in Burnaby, Coquitlam, and Surrey?

No builder wants to speak out because they are afraid of getting blackballed from ever doing a project again in this city.

There’s a site on the 100 block of Keefer that got shut down. I guess the city would rather see it as another vacant lot, just like the 15 acre site on 37^th off Main St that has been vacant for years! There are many sites like this around town. What about the Wall site in Kerrisdale? The Church site would provide a 40 unit condo building and 32 affordable rental units, plus restore the church for the community.

Basic economics say price is directly related to supply and demand. When you have a growing City like Vancouver, and the city restricts supply, prices will increase. Everyone is affected from renters; first time buyers to downsizers. There’s no supply and it’s not going to change soon! Instead the City of Vancouver points fingers diverting the problem. Taxing foreign buyers, Vacancy Tax, and even talking about not letting non residents buy. What about everyone else in Canada that wants to move here? How about companies like Amazon? How can Vancouver accommodate job growth. Instead of finger pointing, the City of Vancouver needs to effectively manage development.

If the city really wants to create affordable housing, they need to give builders incentives and make it easy for them to build! I would like to see places like Oakridge, that have transit, shopping and public services. Allowing 80 story towers and community services, such as schools, in these towers. We can’t put our heads in the sand and pretend this town isn’t growing. It’s time for a change.