Agent Will

• I know it sucks but I shoveled my drive more times than I care to remember now you who have cars abandoned under snow go dig them out, pls! #
• Holy potholes Batman! Vancouver’s already blown the budget on snow clearing. Can they afford road repairs? #

The December 2008 Stats have just been released.  Interesting stuff to be sure.

Good news!   December sales increased over the abysmal November sales - a first in 27 years!

What was not said:  December’s sales were still the lowest on record going back the 16 years I have stats.  November was just absolutely pathetic.

Good News!  Listings have dropped off dramatically and the sales/listing ratio went up!

What was not said:  Still the lowest sales to listing ratio in the 16 years stats I have for December and we finished the year at a new 16 year high for total listings active just eclipsing 1996.

Obscure comment on Buyers:  “The reality is that people tend to buy when prices are going up, not when they’re going down,” - sounds like buyers would be crazy not to buy when prices are dropping but the reality is that people get fearful of missing out on  rushes in the booms and sure don’t want to catch a falling knife in a bust.

Oh, and Port Moody has the dubious distinction of going negative for their 3 year price movement.  In this case being first is not such a good thing (unless you are a buyer, right?)

This continues the discussion I had with the older realtor from the “List Your Home for $500” post.

When the topic turned to Buyer Agents and how valuable they are to get a deal done, to guide their buyers to the right home and advise them on selecting the best home his response was “not always”.  He ceded the point that Buyer Agents do bring tremendous value to their clients in their knowledge of the market, buildings, neighbourhoods, happenings, developments and connections to better financing which the clients may not have been aware of but he also raised a counter that with the amount of information flowing many buyers today are able to do an entire purchase without an agent at all and that these well-educated clients are the best ones to work with as they know exactly what they want and how much they will pay for it.  These are the most qualified clients who make their decisions quickly and they deserve to be rewarded for their time invested in the process.

It’s a very different matter to take on a client who is new to an area, a first time home buyer, or in search of a very specific property with extremely limited selection.  Those clients take a lot of time and effort to mature into a deal, if at all.  It is the old 80/20 rule applied here.  With these clients 80% of an agent’s time will only garner maybe 20% of their commissions earned.

His advice was to seek out those who are quick decision makers, actively searching for themselves and educating themselves on the process.  Offer guidance and service to those clients and do so in a way that rewards them for their active involvement.  They do not require a salesman, just a consultant on their selections and an advisor on the best way to get the deal done to their advantage.  Certainly someone who makes a successful offer within the first week of contact has used less of the Agent’s valuable time and knowledge than someone who takes several months to make a decision.

Here was the proposed system we worked out:

Buyer makes contact with the realtor to discuss the purchase of their next property and signs a Buyer Agency Agreement (BAA).   That BAA states that the Buyer will provide a non-refundable $500 retainer fee for each month of service and compensate the Agent $X upon completion of the Purchase (which is generally met by the commission offered by the Seller so has a net amount of 0).  The twist is that the agreement will state that the Buyer will receive a commission rebate if a firm deal is reached by certain dates.

Commission Rebate Periods

If a Firm deal is reached in:

• 7 days – 60% rebate
• 8-14 days – 45% rebate
• 15days-1 month – 25% rebate
• Over 1 month – subtract 2.5% for each day

So a firm deal must be reached within one month plus 10 days (40-41 days) or no rebate will be due.  The $500 retainer fee is a fee for service which would be non-refundable nor applicable to the commission.  This is clearly not a service that would benefit those who are just thinking about buying.  It is one that benefits those who have made and absolute decision to buy or are looking to make completely unacceptable offers.  The tools are there for many buyers to whittle down their selections and participate in the process.  The information is out there to help buyers make up their own minds (which I think they do, anyway).

How much of a benefit could it be?  Based on my average commission earned over the past few years, taking a $500,000 property as the example, if a firm deal was reached within a week then the rebate would be about $4700.  If purchased between two weeks to one month it would be almost $2000.  A $300,000 property with those same periods works out to rebates of about $3300 and $1400 respectively.

Services provided would not differ at all from buyer services normally offered including access to all property information, new listings notifications, setting appointments, advising on offers, crafting a Market Analysis before offering, consulting on property selection, introduction to financing options, and assisting in the removal of subjects from the offer (reviewing documents).  It’s not me placing a lower value on my services to you or reducing the service that would be provided.  It is me offering you a reward for all the work you have done on your own to find your next property.

If you are serious to buy some property this year then this is the best opportunity you have to be rewarded for all your effort in educating yourself on the market and still get the benefits of my services.  Call me today if you’d like to discuss this or get started – 604-787-6977

Now offering a fee for service to sell your home

I had an interesting debate over the holidays with a Realtor who had been in the business for over 34 years.  He was of the opinion that the vast majority of his success came from two things:  pricing well and getting other agents to sell his listings.

Nothing new there, right?

He went further.  Having been through the great changes and all sorts of markets, up and down, busy and barely alive, he stated that all the technological improvements that have occurred over the years only accelerated his growth but not his involvement in the selling process.  His opinion was that if clients price their homes better than anyone else and a decent (or better) co-operating commission was offered then the home would sell quicker than anything.  Pictures were important to some degree but reaching out to the Buyer agents was more important as they were the ones to bring the clients and the offers.  Virtual tours, videos, floor plans, fancy flyers, newspaper ads, Craigslist, and open houses were utter wastes of time and money.  Price it not just well but way better than anyone else and offer a bigger cooperating commission and it will sell quickly.

He went on to say that the MLS was the key and that listing agents were dead.  I was shocked at that.  Obviously the MLS is extremely important and buyer agents are more often than not a necessity to get a deal done but it was the listing agent who guided the seller to get into a position to attract the buyer agents and their clients.  He agreed but suggested that Sellers fall into two categories:  Those who want to list and those who want to sell.  Those who want to list are wasting their time and the agent’s as well as they will not be aggressive enough on price to get a deal done.  Especially in today’s market.  Those who wanted to sell would do anything (price) to get it sold if they could do it.

Buyers have a lot of choice and will choose the home they like the most, agreeing to terms that fit their needs/wants.  If a home looks gorgeous but is not priced well enough the buyers will just say “It’s nice, but that one is also nice and it is cheaper”.

The Buyer Agents out there also have a lot of homes to show but really just want to get a deal done so will be wanting to show the homes that, while in most respects comparable, reward them the most and the quickest.

His suggestion was to open up the listing process beyond the traditional full service commission based system and offer a Fee For Service plan.

What it is:

The listing agent is a consultant paid for services rendered regardless of outcome.  Since the risk is shifted more on to the seller the fee is obviously reduced.  The benefit to the Realtor is that they get paid as services are rendered and the benefit to the Seller is that the “savings” get reflected in the net thereby granting them the ability to reduce their asking price right away and improve the odds of selling.

We talked about it some more and came up with a proposed Fee-For-Service system

• Initial Listing:  $500 due upon signing listing agreement and valid for the first month of service.
• Market Analysis (optional):  $350 due upon delivery.
• Monthly fee:  $500 due every first of a new monthly cycle.
• Successful sale:  $500 which would be written in as the commission to the Listing agent.

If the property sells within the first month the absolute minimum would $1000.  If a CMA Market Analysis were performed to assist in the pricing strategy than that total cost would be $1350.  Services provided for that monthly fee would include placement on the MLS and listing agent’s website, attending requested showings if no buyer agent or handing keys to the buyer agent either at the office or by lockbox (lockboxes not allowed on condos, usually), and weekly reports on actions/results, listing detail changes (price changes, etc.), as well as feedback from showings.  A CMA is optional to assist in the pricing of the home.  Professional photography, floor plans, and advertisement outside the listing agent’s site and the MLS would be optional and available at an additional cost.  All negotiations and offer handling would be per the Seller’s instructions.

What would not be included would be advice and guidance on improving the saleability of the home, open houses, agents opens, and advertisements outside the MLS and Agent’s own site as well as the creation of marketing materials unless selected optionally (including the CMA).

The buyer Agent should be rewarded well but by how much would be entirely up to the Seller to decide.

Taking a typical $300,000 one bedroom condo as an example, the traditional method to sell the property where the Listing Agent takes on all the risk, advises strongly, and really tries to sell the property would cost, based on 7%/$100,000 + 2.5% remainder, $12,000 if and when sold.  If it didn’t sell, it would cost the seller nothing but time (and time can be money).  Under this Fee-For-Service plan, if it sold in a month and a genuinely attractive co-operating commission were offered it would work out to about $8000.  A difference of about $4000 which could immediately be applied to the listing price.

A buyer looking at two very similar well-priced homes, one priced $300,000 and one priced $296,000… which one would they likely offer on?

One more thing to point out is that the $4000 difference (if sold in a month) works out to 8 months of listing service if it did not which is well beyond the average days on market today so a Seller would likely benefit very well from such a service offering.

I do however have my doubts about such a system seeing as how it negates the value a good realtor presents.  I believe there are two sides to every good realtor:  Marketing and Sales Ability.  Strong pricing and attractive commissions are important but so is the presentation of the home both online and in person.  That said, I am a businessman and believe that you have to give the people what they want.  So here it is;  A trial run of the Fee For Service System.  It really only is for those who agree with the older Realtor’s points and really want to sell.

If this is something you are interested in then contact me directly at 604-787-6977.

Vacation? What vacation? I shoveled snow more times than I ever did in a long Toronto winter and did it all over just a few days. Seriously. Great workout for my now somewhat bulging biceps

No, this past holiday was a time for family, a time to reflect, and a time to cook when I wasn’t shoveling. The blog went silent. The twitter was turned off. Heck, the computer was off for the most part, too.

Being a realtor provides us the opportunity to spend more time with the family than many but that is an opportunity so few of us realtors (or other self employed people) take. That means when we do commit to spending some quality family time together we do make an effort of making sure it is stellar.

That said, being a realtor (or any other self employed person), frankly we can never get away from our business as it is always circulating thoughts in our head. We entrepreneurs can never stop trying to figure out how to do things better, easier, or more successfully. So in that spirit know that I did work on my business plan for 2009 (fine tuned it, I should say) and had some interesting propositions and challenges approach me over the holidays.

And as we approach the new year, more than ever, we reflect on the past and dream of a brighter future.

2008.  The year that was (how profound a title, eh?).

Some highlights:

• actually sat in a line for 1212 Howe all day after my client had camped out all night. (had never done that before)
• filmed an episode of HGTV’s “Househunters International” (not yet aired).
• got named as one of the top real estate websites in Vancouver by Vancouver Magazine.

And, I should add, the launch and growth of AgentWill.com.  It wouldn’t be what it is without the great input I get from speaking with so many of you (BTW, you can comment on the site as well).  And where did all of you come from?

• 37% came directly here through bookmark or typing in the URL.
• 35% came from a referring site (including only about 1% from RSS subscription)
• 28% came from various search engines (mostly the big G)

Top 10 search terms (grouped similarly and in order):

1. Agentwill (or some similar term made up 17% of searches)
2. 1212 Howe
3. the Beasley
4. V6A Onni
5. Sophia and Bill Eden
6. Alto
7. Maynards Block
8. Firenze Vancouver
9. Wall Centre False Creek
10. Millennium Water

Very interesting to see that list.  A few positives there (that I am being searched for or directly typed in is an honour) but two of those top search terms were in reference to canceled condos… a trend that only increased over the year.  1212 Howe will go down as the last great condo sales success of this past bull run and was the first and only condo presale line I ever stood in.  The fact that only one of the top ten searches refers to already completed construction is a testament to the popularity of that building (Firenze) and to the continued popularity of presales for the first few months of 2008 (though that has definitely waned over the past few months).

For 2009 I want to be refined!

If you are a regular follower here you may notice some changes in the content.

• First of all, the blog has always been about “Life and Real Estate”. I am going to spend more time talking about life. Since life happens daily I may get that post count up to daily from the four point something per week I just did this past year.
• Secondly of all I am going to be opening up about some of the tech I use on this site or in my business. This, I think, will be of interest to some of you who are into blogging, social media, web technologies, and should definitely appeal to other realtors who may want to employ some of these solutions for themselves. I’ve learned so much from other agents all over North America who share their knowledge and I think it’s time I also gave back.
• Thirdly, I am likely going to be updating my theme and moving some things around. You’ll know it when I do it.
• Fourthly I am really going to encourage your input.  I want 2009 to be my best year ever and as a businessman to achieve that goal is my only desire.  I am not set in my ways and am open to all options so if you have an idea or proposition I am encouraging you to please hit the comment key or better yet, pick up the phone and call me.  If you’re in town and have enjoyed reading my blog then do not be a stranger.  Let’s get together for lunch if only to sample some of the fine cuisine in this fair city.

This is also a time when we make resolutions.  Me?  I got them.  Should I share all of them with you all?  Nah.  I can’t think of a single resolution I ever kept and would hate to fail miserably so publicly.  This year is all about positivity as a theme so hopefully you will see that reflected in the writings here.

Too all of you have a terrific New Years Eve.  Be safe.  And let’s whip 2009 into  something fierce!

Great Just lost power in at least my area. Hope it gets restored in time for the ham to go in. Merry Christmas.

Just had one of the best prime ribs ever at the Players Chophouse. Fantastic restausrant. Highly recommended!

Attending a lunch tomorrow with Dave Watt REBGV President to discuss the future of the board. Any topic anyone wants me to bring up?

A half hour to drive 20 blocks and I just shoveled my first snowy driveway. Welcome to winter!

The Feds are looking for some input from you regarding the 2009 Federal Budget.  You can click this link to get to their online survey.  The Real Estate Board of Greater Vancouver has some ideas for you if you are stuck on what to say and they come from two initiatives that CREA (the Canadian Real Estate Association) is lobbying for.  They are:

Under Housing, we encourage you to input “increasing the maximum withdrawal allowed under the RRSP Home Buyers Plan.” Under “Other” we encourage you to put Capital Gains Tax Rollover, with the explanation it would encourage private investment in the economy and create jobs.

Both of those are pretty high up my my priority list.  Currently you can only withdraw a pretty paltry sum of $40,000 from your RRSP if you are a couple.  You then have 15 years to pay that back.  Some may counter that the Tax Free Savings Account would be better suited to saving for a home as it requires no payback at all however the Tax Free Savings Account is limited to $5,000 in contributions each year and can only grow at the rate of interest available.  Certainly many stocks outperform that over the years (past few months not included).  As well, there are many people out there who have been contributing to their RRSP for many, many years and have a sizable amount which could significantly improve the quality of home they could afford were they allowed to withdraw it.

And the second option… well, who wouldn’t like to see a Capital Gains tax rollover.  This is an advantage that investors in the United States have enjoyed for a very long time and the capital gains tax is one of the greatest hampers to climbing the wealth ladder.

I encourage all of you to click that link above and contribute your voice.  I also added that I would like to see greater investment in infrastructure from hospitals to rapid public transit and more investment in leading edge technologies such as hydrogen (which I am convinced is the automotive fuel of the near future and one that we should be a world leader in).