Tag Archives: Condos

Live-work buildings have a place in Guelph, but not at 15 Mont St.

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Below is my contribution to the Guelph Citizen, published December 10th, 2014. The original article is here; and a counter-argument from the building’s architect can be read here.

Let me preface this argument by clarifying that it’s my firm belief that live-work apartments are an integral part of creating walkable cities, and intensifying city cores, as is Guelph’s directive. They have a positive impact towards reducing a city’s carbon footprint and improve density targets by better utilizing space in areas that are particularly starved by it.

Unfortunately, the developer planning to undertake 15 Mont St. has simply chosen the wrong battle. In reviewing the City’s zoning by-law and maps, it’s apparent that the corner of Mont and Woolwich is like many others in the downtown periphery. Many are zoned for office purposes along Woolwich, an arterial corridor, with low-density residential zoning along the side streets behind.

A 3-storey building currently occupies the corner of Mont and Woolwich, and is situated as far towards the eastern side of the property (towards Woolwich) as possible. 15 Mont St., the house whose existence hangs in the balance is placed on the westernmost side of its abutting property, creating the largest possible separation between the 2 buildings. This is often done to diminish shadow impact, noise pollution, etc., and is a fairly common design technique. It’s the same principles that are applied when deciding which types of development abut others; why factories don’t neighbour schools, for example.

The current three storey building at the corner of Woolwich and Mont

 

 

While still a relatively minor example of the instance above, an extension of the building at 360 Woolwich would envelop the majority of the lateral footprint of 15 Mont and have a detrimental impact on sightlines, noise and overall aesthetics, particularly affecting residents on the west end of Mont St. It’s important to additionally consider the style of the current office building and the virtual impossibility of incorporating the apartment addition in a way that blends at all naturally.

Furthermore, the property is located in an older, established area of the city. Live-work accommodations are more successful in the heart of the city, where amenities and employers are plentiful and directly accessible. The scale of the abutting office building is not to a level that would sustain the residential aspect of the development and tenants/owners would be no better served than a regular apartment building, for which the property is appropriately not zoned for.

mont2

The proposed development just in from the corner of Woolwich and Mont.

 

 

In summary, live-work buildings, when that’s what they are, are a major component of successful future growth in the City of Guelph. They do have a place though, and I don’t believe that place is 15 Mont St. Having said that, should this building go-ahead, I think it sets a whale of a precedent to accelerate future developments along the Gordon-Norfolk-Woolwich corridor, which in spots is an absolutely great thing for the city’s density targets and overall sustainability.

Tyson Hinschberger is a Realtor for Planet Realty Inc., Brokerage in the city of Guelph, Ontario. You can follow him on Twitter, @hinschcity. 

How Young Homebuyers Are Bucking the “Too Expensive” Narrative

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“Home ownership is too costly.”

“We don’t make enough money.”

“Banks are biased against us.”

Regardless of validity, the reasons against ownership for young people are numerous. Despite them however, more and more are defying the excuses and converting their hard-earned paycheques into a piece of property to call their own.

More and more young people are buying houses & condos, despite narratives to the contrary. From: The Globe & Mail

More and more young people are buying houses & condos, despite narratives to the contrary. From: The Globe & Mail

It’s a good thing they are too, as rates of home ownership tend to decline after age 65. While our demographics shift toward an older population, young buyers will be expected to fill that void. An inability to do so long-term could create a vast housing surplus, and drop property values across the board. So far though, it seems that the under-25 crowd are keeping things heading in the right direction.

Over the past decade and beyond, home values in some of the major urban cores have skyrocketed as land scarcity and foreign investment have pushed housing demand ever higher. It pits buyers of all kinds, especially young buyers with less accrued equity, in a tight spot. They’re being forced to compete with foreign, cash buyers using the Canadian real estate market as their own personal piggy bank, outside the grasp of their communist governments. Naturally, t’s a one-sided fight.

That said, in smaller markets, housing remains substantially more affordable; and the goal of home ownership much more attainable than the general overlying narrative. Furthermore, if buyers in Vancouver, Toronto and Montreal can buck the trend, then the same should be true across the board.

I hear people my age talk a lot about how expensive housing is, and what they don’t often consider is that there are landlords out there making positive cash flows off of them. In select instances, a landlord can lump mortgage costs, insurance and taxes together and still take his family out for a steak dinner on a tenant’s rent. So why then, aren’t young people more proactive about it?

Overall, we are finally catching on. In fact, home ownership among the youngest share of the population (Under 25’s) rose by 4% from 2006 to 2011 and now remains around 25% from the graphic above. To buyers’ benefits, price growth was minimally stunted by the US recession, aiding in affordability. However these gains come despite consistent upward price movement from the big 3 Canadian cities, and in ignorance of decreased affordability in those markets.

How is this possible?

Having established that, counter-intuitively, this generation’s ownership share’s been growing; it’s key to take a look at how. The biggest contributors are buyers’ parents, who are pitching in with down-payments more than ever before. From 2010-2014, first-time homebuyers received about 11% of down payments as gifts from family members, with another 6% coming from personal loans from family members. Though the loan share was unchanged from 2000-2004, the gifted portion is about 5% higher than 10 years ago. With average down payments equaling about 21% on first-time purchases, that 17% figure amounts to $10,080 on your average $300,000 home. For perspective, the house my grandparents bought in 1970 set them back a measly $10k to own it outright, so I guess $10,000 gifts are peanuts. It is understandable though that with the rise in values we’ve, the help from the folks is almost necessary to sustain the goals of today’s young shopper, and given that it’s been the parent’s houses who’ve seen the growth, we know the equity is there to be able to make these gifts, generally speaking.

As parents' aid pushes demand from D1 to D2, both the quantity demanded and the market price rise, furthering the handicap for those without family funding.

As parents’ aid pushes demand from D1 to D2, both the quantity demanded and the market price rise, furthering the handicap for those without family funding.

At the same time, parents are artificially fueling the fire. By adding $10,000 to the budgets of a growing market share, parents are effectively promoting the ballooning of home prices. As illustrated here, these gifts that young buyers are stumbling into is resulting in more buyers entering the market, and buyers’ budgets being greater than they might otherwise be. This in itself creates a bit of a dangerous predicament, since some buyers are being aided by their parents while others are not, and this price shift pushes the latter further from their ownership goals. The Canadian Association of Accredited Mortgage Professionals disputes the impact that parents are having on prices, but consider this: With 1/3 of 18- to 35-year olds who haven’t bought a home attributing the decision to waiting for prices to drop; how will they ever drop if parents keep pumping in money? Answer: They won’t. Even if you don’t have the help, use parents supporting the market as a way to make your house purchase work for you.

Housing is like any investment. You have to pay to play, and you’re not going to make a cent off of it unless you buy something. The people that complain certain stocks are too expensive are the ones who sat on the sideline didn’t buy in when they were affordable. There are elements of risk involved, but you can continue to pay rent to a landlord or you can cut out other expenses to make home ownership a reality. It’s a decision that more and more young people are making sacrifices to pursue. And I can’t blame them for a second.

 

With statistics from (Links in post):

“How young Vancouver buyers are crashing the real estate party”, Frances Bula, Globe and Mail, October 17, 2014.

“1st time home buyers get more family help for down payment”, CBC News, November 18, 2014.

The Canadian Condo Market is an Open Bar Wedding

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wedding_crashers_02Wedding season is essentially over. It’s cold, dreary, and unless someone gets pregnant, you’re probably not going to a wedding for the next little while. Chances are though, you went to at least one wedding this summer; and if there was an open bar, you got to see all kinds of kinds.

After an enlightening breakfast seminar with Craig Alexander, Chief Economist at TD Bank, last Friday morning, this blog post almost wrote itself. Craig described the overall real estate market in Canada, as an open bar. It’s traditionally a good thing, but the odd person goes overboard with varying degrees of consequence. Well, if that’s the case, then the condo markets in various cities are their own cast of characters.

At this open bar wedding we call the Canadian condo market, let’s grab a spot at that prime table between the bar and the dance floor and see who showed up. People watching can be a great time.

Vancouver: Who’s that guy? The one with an extra undone button or two? Fedora? Probably. Don’t worry about that him, that’s just Darrell (Or Darren, or Doug). I think he’s the bride’s dad’s friend. You know, the one all the kids call “uncle” but mostly because he’s older & drives a Mustang, and not because you put much stock into his guidance as an adult. He keeps reaching under his table and whipping out a fresh, cold Sapporo every 15 minutes or so. He also seems to have the inside track on shots of Russian Prince, but maybe it’s just optics. Regardless, it’s an open bar, and yet the guy is pulling this booze from anywhere and everywhere to keep an already roaring party going.

Vancouver’s real estate market features the highest percentage of cash purchases in North America. It’s also has the 4th highest sales of Mercedes-Benz cars in the world. The money? It’s not Canadian. It’s from Eastern Asia, an alternative to communist bank accounts or mattress stuffing. Like Darrell’s life skills, it’s all a facade. Side note: In reality, the guy was probably drinking something pretentious like Corona Light, but I changed the booze to fit the analogy. Sorry guys.

Calgary: We all know the bride’s kid brother had to feign interest through the ceremony, probably wishing he could just sit down. But after taking the obligatory 5th groomsman role, that wasn’t an option. Thankfully, 4 hours of photography later, it’s finally paid off. Now 19, and at his first open bar from the looks of things, this kid is pounding Coors Lights like they’re going out of style. The bar is fully stocked, he’s mixed in about 4 Red Bulls, and the night is young. My money’s on him to be the king of the dance floor about 11:30.

Even with the recent decline in oil prices, Calgary’s (and Edmonton’s) booming housing market is in it for the long haul. Relatively new to the dance, these markets are backed by real Canadian dollars, natural resources and when people are making $25/hour to pour coffee, naturally they can’t build fast enough to keep up with demand. Being young and free is the greatest.

Toronto: *Clinking Glass* Oooh, speeches. The moment of truth where we see just how hammered the Best Man is. The groomsmen’s gifts were flasks, and between that & cutting the bar line, this guy’s been to the well a few times. He’s got that slight lean thing happening, and his blinks are about 3 times longer than maybe they should be. We’re about 30 seconds away from either one of the finest clutch performances of public speaking or, the more likely, tales of crossing swords and poop jokes.

Toronto condos are the definition of a hot-button topic. People with no interest in real estate know about the Toronto real estate market, and absolutely have an opinion on it. Just like everybody somehow knows the Best Man, Toronto is top of mind in any real estate discussion. The speech equates to the inevitable rise in interest rates once the USA ends it quantitative easing processes and bond rates begin to rise. Then we’ll see how well the leveraged Toronto market withstands the jump in borrowing costs and the negative media attention that goes with it. Will prices hold? Only time will tell. But like the chances of the Best Man’s story not involving feces, I’m not wholly optimistic.

Kitchener: Unable to track down a bottle of sulfite-free, organic wine, the groom’s buddy (We’ll call him Gregory. Why not?) settles into dinner with a neat single-malt scotch. Despite the fact that nobody under 50 would ever do that, Gregory doesn’t care. He likes the taste, and by that, we all mean pretends to. Tequila shots and beer are too mainstream for this guy, and hey, it’s an open bar, he might as well go to town. That houndstooth tie screams “I’m better than you”, and we all know he believes it.

Condos? Pssh, lofts are where its at. At least according to every 21st century developer in Kitchener & into Waterloo. Arrow, Bauer, Seagram, Kaufman, the list goes on. Why build a new building where a house or parking lot was when we can just gut this old building with really high ceilings, huge windows and beautiful exposed brick? Actually, this does seem like an incredibly good idea. At a higher PPSF, the aforementioned buildings can justify it with stunning layouts that command deserved attention.

Waterloo: Ol’ Gramps is a bona fide member of the old boys’ club. He’s been around the block in his 60 plus years, so the only thing left to do is hit on good-looking 20-somethings. Just like the beer cart girls at the course, he’s overtipping to the tune of $5 bucks a Molson 50, just to get that blonde to smile. Sorry old gals, this suave gentleman’s only got eyes for the youngins. So what if he swings and misses? I doubt he really cares at this point. It’s all about this one night, so damn if Albert won’t enjoy himself.

Has anyone driven King St. North lately?! Holy. More and more student residences, admittedly of various types of ownership, but lets be honest; Waterloo developers are going to play the student angle until they’re blue in the face. If your kid doesn’t go to U of W, your money’s no good here. And you know what? More power to them. As the student population swells, so too will their profits. Who cares if the units don’t have balconies or functional layouts. Once they’re sold, they’re no longer the developers’ problem, so quick and cheap will be the way of the near future. More money for developers’ Lincolns & green fees. What happens as Universities shift to online entities? That’s the buyers’ problem to figure out.

Guelph: Is that suit from Men’s Warehouse? Sure it is. The bride’s cousin’s in University, so he’s working on a budget. Cut him some slack. He’s been clutching that fiver and looking at the bar longingly for an hour. His brother comes by with a drink and I’m no lip reader, but it’d seem he just realized it’s an open bar. Hah, yep. He stuffs the fiver, which now looks like it was his drink budget for the night, into his all-too-shiny suit pocket and dashes to order an Old Milwaukee, only to find real beers are also an option.

Just like this poor kid, Guelph finally realized that high-rise condos are a thing, and damn if they don’t taste better than the condo equivalent of Old Milwaukee. Granted, the condos Guelph had been working with are better than no condos, and certainly part of a healthy real estate mix. But just because we can build a bunch of 4-storey (soon to be 6-) wood frame, middle-of-the-road condos, doesn’t necessarily mean we should. It’s nice to settle into a Stella Artois once in a while, Guelph. Keep it up.

Montreal: There’s always a hot, sorta trashy looking 40-something floating around. Well, tonight is no different. Of the two table bottles, one was hers, and the other was the other five’s to split. And, well, look who’s first on the dance floor! Odds are, those heels will be off in about 10 minutes; since the red wine and vodka-crans are taking their toll. It’s that or a broken ankle. By the end of the night, this one’s going to be belligerent, vomiting, or some weirdly promiscuous combination of the two.

Sorry Montreal, I’m not buying that a big recession in unit sales in 2013 was a fluke. Among the big three markets, Montreal’s prices are the lowest, but affordability is still a concern. With large inventories, developers are probably feeling a little loose too. Expect that they may have to further incentivise pre-construction buying, which’ll continue to curb price growth, which has shrunk year-over-year, since 2010. Montreal might be a fun night for an 18-year old, but the long-term prospects aren’t stellar.

For some markets, the honeymoon might be over. I think we’ll have a better sense sometime in mid-2015. In the meantime, settle in and have a drink. Most markets are going to be fine. Especially around here.

How not to get burned buying pre-construction

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Two alarming stories have surfaced from (shocker alert) Toronto over the last little while regarding developers who’ve skirted their end of deals, and with what looks like a lack of intention to fulfill them from day one. These aren’t the first, nor will they be the last; but if you’re considering a condo purchase, it’s important to know the signs.

The first story of note comes from Centrium Condos- a North York hotel/condo/commercial development whose CEO and his lawyer allegedly conspired to con buyers out of their deposits by releasing funds that were to be held in trust until closing. Ultimately, the 140 pre-construction buyers’ deposits amounted to somewhere in the neighbourhood of $12-$14 million dollars. The lawyer released these funds to the developer who ultimately sold the land the project was to be built on and subsequently took off to Korea without looking back.

The purpose of the funds being held in trust is so that neither party, buyer or seller, has permission to access these funds; but they do provide leverage for the developer to secure financing from a third-party if required. It also provides a form of tender to solidify the transaction. Therefore, when the lawyer does shell it out well before she’s supposed to, she gets tossed in jail and slammed with 25 counts of fraud over $5,000, 25 counts of possession of property obtained by crime and 25 counts of breach of trust.

Before I go any further, this is ultimately nobody’s fault except for the company’s owner and the lawyer who aided in the scheme. I’m not about to suggest that anyone else is to blame here.

However, given the nature of the pre-construction condo industry and the relative lack of regulation; one of the most important due diligence items that a buyer can do is to research the developer. In this case, this was Centrust Development Group’s first and only development. They had no previous development experience whatsoever. Far from a Menkes, Tridel or Empire, which are among the closest to a sure thing Toronto will offer; these folks bought in hand over fist to a shelf company with absolutely no track record.

To put it in context, two products I’m fortunate enough to sell most are those done by two of the most reputable builders out there: Reid’s Heritage Homes & The Tricar Group. One is arguably the most recognized builder in the area, and the other was Tarion’s High-Rise Builder of the Year for 2013. Companies like that, with deep roots, ample capital and gleaming reputations aren’t the kind to take off with uninsured deposits. In fact, Tricar only requires $20,000 deposits for a number of their builds. Why? Because that is the maximum insured by the Tarion New Home Warranty Program. Meaning that if anything ever did happen to them financially, rendering them incapable of completing the build, buyers would never be on the hook for a shortfall, and never out so much as a dime. At Centrium, lost deposits ranged from $40,000 to $700,000; all of which is now being sheltered overseas, never to be seen again.

If you were buying a new car, you’d probably test drive it. Worst case, you could rely on third-party testimonials, reviews or the brand itself. What you wouldn’t do, is look at the marketing handout with all sorts of unfounded claims and pretty CGI pictures of a car that doesn’t exist and cut the dealership a cheque on the spot. And yet, that’s what 140 people did. It’s not rocket science. If ever there was a “buyer beware” industry, pre-construction condo development would be it.

The second story is equally gutsy, but less explicitly wrong. It’s about a developer exercising one of those pre-construction purchase agreement “weasel clauses” that allow developers to make reasonable changes to the plan. At Emerald City Condos, at Don Mills & Sheppard, building renderings in marketing materials depicted an “Emerald City” stairway leading up from the subway tracks and some of the brochure copy referred to “easy underground access” to the transit.

You can guess what happened next.

Move in day came for a young buyer named Wendy Ji, and only then did she discover the lack of a tunnel to the subway. Odds are it was never in the plans, since the developers denied that such claims were never made, and promises never broken.

This is the website for Elad Canada Inc., the developer of Emerald City

This is the website for Elad Canada Inc., the developer of Emerald City Condos. You’d think a with any semblance of a reputation could do better.

Terrible, and yet wholly predictable (See photo/earlier paragraphs).

Now, the buyers feel they should be entitled to a rebate on the purchase of the condo to account for the value or lack thereof pertaining to the tunnel having never been constructed.

The $30-million class-action lawsuit that Wendy and others launched is demanding 10-15% back, per unit, to account for the discrepancy in price between Emerald City units and comparables in other buildings with a lack of direct transit connection.

Personally, this seems like an entirely reasonable compromise for a developer who clearly tried to pull the wool over buyers’ eyes. You can’t sell a condo with materials that read, “the lower level lobby is connected directly to the subway, allowing you the convenience of going anywhere you like on the TTC without having to go outside,” without getting burned for not doing it.

Ontario has made progress to curb these types of raw deals by instituting a 10-day cooling off period for buyers to review agreements of purchase and sale, along with disclosure statements. In spite of that rule, it’s still a challenge for buyers to gauge risk; especially when they shouldn’t have to in the first place. If every developer just held up their end of the bargain, these stories wouldn’t blow up. But they do. And it hurts the developers who build an honest building & play by the rules.

The point I’m trying to make isn’t, “never buy a pre-construction condo”; but rather “know who you’re buying your pre-construction condo from”. There’s a lot to be said for buying something at its 2014 value and paying for it in 2017 with devalued currency and instant market appreciation. Just don’t get hosed. Buy from a developer who has done it a million times, and plans to do it a million more. Their name is on the line, their future rides on success, and they want the building to do as well as you want it to.

Zehr Bringing Life Back to Downtown Kitchener

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The other day I tweeted that Carl Zehr’s legacy as it pertains to Downtown Kitchener could depend on how strong the sales of OneHundred Condominiums wind up being.

For what it’s worth, the name is derived from its address at 100 Victoria St. S; they’re well clear of 100 units (276 to be exact). OneHundred just sounds cooler. Its sister building, One Victoria is rapidly approaching a sell-out, so Momentum Developments (Red Condominium, The42) is really testing the strength of Downtown Kitchener’s condo market in the face of its unstable past.

Downtown rejuvenations have been focal points of community agendas in both Kitchener and Waterloo for about the past 10 years, with Zehr being Kitchener’s mayor for that entire duration. As his term of leadership comes to an end, the downtown core is markedly improved, though only time will tell whether it’s reached the point where people are lining up to live there.

Downtown Kitchener has seen ups and downs over the past few years as developers looked to find appropriate residential uses for properties in and around the core. Kaufman Lofts was an incredibly successfully loft conversion, and the earliest buyers in that building have seen their investment appreciate astronomically. Additionally, Arrow Lofts was another successful recent project which saw brisk sales and creative floor plans that made downtown living an easy transition for many.

On the other hand, moving deeper into the core has been a battle for City Centre Condominiums. The project has taken longer to come to fruition than first expected, and though it’s now under construction, there are a number of unsold suites in the building. It’s taken about 3 years on the market to reach a sufficient level of pre-sold units to get construction underway.

The cleanup of central & eastern Downtown Kitchener has certainly been slower than the west-side, without the main draws (Tannery/U of W/LRT/Via). To some effect, EOQ (East of Queen) may still have a similar stigma to London’s EOA (East of Adelaide). That said; it’s all part of a natural yet municipally accelerated push towards the rebirth of downtowns across the map. It’s only a matter of time until the influx of disposable income from new downtown residents promotes renovation and growth out from the Victoria/King intersection.

Uptown Waterloo is seeing this same trend, although in fairness, they’ve had quite the head start. The rebranding of Waterloo Town Square, public gathering spaces, Seagram & Bauer Lofts; all have greatly contributed to what is now a thoroughly vibrant and thriving central core. Quick-selling newcomers like RED Condominium at King & Allen have opened the door for other developers to take their shot at being the next big thing.

Reinvesting in downtowns is certainly the smart man’s approach and Mayor Zehr has led an oft-contested push in the right direction. Ten years may seem like a long time, but with some condo projects taking 5 years from sales launch to occupancy; you have to consider that development, particularly re-development, is a slow process. I would guess that OneHundred is looking at a 12-16 month sellout, which is phenomenal from a developer’s perspective. That’d be great for cementing Zehr’s legacy as one of Kitchener’s all-time greats.

Multiple-Offers: Winning, or At Least, Not Losing

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Real_Time_BiddingBy now you’ve heard about the wild, buyer free-for-all that is the Toronto real estate market. The number of buyers looking to make a move combined with a shortage of lucrative inventory has created a sellers’ market to end all sellers’ markets. We’re starting to see multiple offer situations on Toronto condos again, a trend not seen in recent years as condo supply reached some record highs.

Chances are you may have seen other stories about multiple offers, but none compare to this one from last week that saw a house in the Yonge & Lawrence area, listed at $699,900, sell for $1,366,000 with 72 offers. SEVENTY-TWO.

I have no idea how this happens. At offer number 10, your odds as a buyer are incredibly slim, to the point that you probably shouldn’t bother. But hey, there’s a chance right? Apparently then, another 62 people proceeded not to care much for the odds either.

Naturally, there were likely a ton of offers in there that were just doing the sellers a favour by boosting the quantity of competition, without being a real threat to the serious buyers. The offers that included sale of property, financing, or insurance conditions would fall into that category. So would anything around asking price. Regardless though, they were there, and on every other bidder’s mind when it came to formulating an offer price.

In competition, the cleaner an offer is, the more lucrative the offer, as oftentimes conditions can be as important as price. When there are 72 offers to choose from, the seller isn’t going to accept a condition that forces them to wait for a house in a less sought after to sell. They’re taking the sure thing.

By far the biggest challenge buyers face in multiple offer scenarios is the blind bidding process. This will always garner the optimal result for the seller and will leave at least one bidder with a bad taste in their mouth, and hopefully that’s if they lose. In the story above, I’m sure all 72 will end up with some degree of animosity. From the guy who bid $675k conditional on the sale of his place in Georgetown; to the woman with the second best offer who lost by a few grand; to the winners who’ll look back at the $1.1M house they just paid an extra $260k for, and who will then be putting another few hundred thousand into fixing it up; they all lose. Working in their sellers’ best interest, listing agents don’t disclose any terms of the competing offers to the buyer agents, which forces buyers to put their best foot forward right off the bat. The best case for the buyer in multiples is that they get a house they love for what it’s worth. With 72 offers, that’s not happening.

Congrats to the listing agent for drumming up that many offers and doing their seller client a huge favour. At the same time, buyers and their agents need to do a better job of knowing what market value on a house like that is. Ultimately, list price doesn’t mean a thing. Only people who are willing to pay what a house is worth should be offering, and I’m willing to bet that 80% of those offers were nowhere close. As Toronto Realtor David Fleming (@TORealtyBlog, a solid twitter follow) was quoted saying, “we’re in a hot market, but no house is hot enough to get 72 offers”.

Fortunately, most of you aren’t buying in Toronto and will probably never encounter such an absurd scenario. There is a chance though, depending on location and market conditions, that you could find yourself in competition with a few other buyers. Let’s take a look at that process and what you can do to win out, or at least feel good about walking away.

As a buyer, you really need to weigh your interest in a property before committing to a multiple-offer situation in an attempt to buy a property. If you really love the house, chances are you’ll find a way to come up with a few thousand dollars if you need it. Because of the competitive nature of things though, it’s important not to get caught up in winning but rather ensuring you still like the house you buy at the end of the day.

When sellers receive multiple offers to purchase they basically have 4 options:

  1. Accept the best offer
  2. Send any number of the offers back for buyers to try again
  3. Counter-offer on the best offer
  4. Work with none of the offers

Number 4 is pretty rare. After all, as a seller, if you go routes 2 or 3, you’re not committing to any of the offers either, but it’s much better to work with an offer you have in front of you than to wait and hope a few more materialize. Your first offer is usually your best offer, so if you can pit more than one buyer against each other, you’re crazy not to.

With option 3, if a seller counters your offer, it gives you a sliver of leverage since you know that there are no other offers in play at the moment, and that the seller has lost their competitive scenario. However, you know that those offers could come back in at any time if you don’t accept the sellers’ counter offer. The seller is basically telling you that your offer was the best, and may be making a change to the closing date or a condition that’s simply there for you to accept and win the battle.

Leverage as a seller is paramount. I’ve offered with clients in a multiple-offer scenario which we lost, but when the other offer fell through, we went back in $5,000 lower than our original offer knowing that we had no competition. My clients ultimately got the house for $3,000 less than their original offer. If you’re a seller, you better make damn sure the counter is going to be accepted if you choose to go with option 3.

If the sellers send you and others back to submit a new offer, it’s for one of two reasons: Either none of the offers were acceptable OR multiple offers were very close to each other and the seller thinks they can get higher bids back from one or more to put them over the top. It’s a bit of a slap in the face and maybe a tad greedy, but if the seller thinks that buyers’ interest outweighs the offense, it’s a seller-friendly strategy that they can employ.

As a buyer, number 1 is the easiest to navigate if you win, but sometimes hard to swallow if you don’t. Eventually your agent is going to find out what it sold for (potentially right away if the winning offer is condition-free) and the worst thing that can happen is your agent giving you the sale price and it being something you would’ve been willing to pay. There you’re back to square one. Two of my listings have sold with multiple offers in the last 2 weeks, and the phone calls to the losers in the bidding process are usually tough ones to make. Let’s make sure that phone call doesn’t happen.

Multiple-offers can be a sticky situation as a buyer, so make sure you’ve got an agent who’s been there before and can help you strategize to achieve the best outcome for you. You’ll be glad you did.

4 Condo Buying Questions You Should Know the Answer To

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Dusk 109oz Rendering.jpgLet’s start with the obvious: Buying a condo has a number of key differences from buying a freehold detached home. As with any major purchase, it’s certainly important to do your research before jumping into anything with both feet. Being ill-prepared can lead to costly mistakes, especially when our home is the biggest investment most of us ever make.

Below is a list of important questions to ask prior to buying into a condo development:

What is a condo?

Let’s start from the beginning on this one. The word “condo” often gets associated with either a towering residential building with a hundred-plus units, or a beachside villa. Great as both may be, “condo” -or condominium, if you want to sound refined/bore people- actually refers to the type of ownership you’re buying into, not the building itself. Condos can even include townhouse complexes or entire communities.

Not only do you own your own “unit” within a complex, you also own a proportionate share of the common areas. In a building, this can include the elevators, hallways, amenities, etc., as well as the exterior land (parking lot, greenspace, landscaping). As a buyer, you become responsible for the maintenance of your unit, but also for common areas, often by way of paying common expenses or condo fees to the condo corporation or a property management company.

What do condo fees include?

condofeesIn every condo, there are costs beyond your monthly mortgage payment and property taxes that you must consider. Both the amount and components of a condo fee can vary greatly, depending on where you buy. One of the biggest considerations to make is the types of amenities you desire. A condo with high-end amenity spaces (lobby, theatre, etc.) will naturally have higher condo fees than a building which doesn’t have any amenities of note. Two of the biggest drivers of condo fees are concierge service and pools. While they’re nice to have, consider how often you will use a pool in your building, and make sure the additional expense is justifiable.

The age of a building can also increase the condo fees. While it may seem counter-intuitive to pay more to own an older unit, an older building requires greater maintenance expenses. Also, look over the financials and see the accumulation of the condo’s reserve fund. A reserve fund covers major expenses like a new roof or the re-finishing of a parking lot. Without a strong reserve fund, you could be on the hook for an unforeseen rise in your condo fees, should either of those need replacing. I’ve seen condos with locked up pools and hot tubs because jets or filtration systems have broken, there was no money in the reserve for them, and the residents that didn’t use them refused a special assessment to pay for it.

On top of maintenance and amenity costs, and reserve fund contributions, some condos will have utility charges bundled into the condo fees as well. This makes for a huge difference, especially if one $300 condo fee includes heating, cooling and water; and another one doesn’t.

Bottom line, find out what is included in your condo fees, and what you’ll have to pay on top. It’ll save you a lot of hassle down the road.

Will I be subjected to any rules or regulations?

The simple answer here is: “Probably, yes”. The number and flexibility of the rules varies from condo to condo, but there will likely be some degree of control put in place. Some of the most common rules surround:

Unit appearance (door/hallway decorations, window coverings, balcony contents)

Pets (size, number, noise)

Access (number of visitors, guest parking)

Noise (party limitations, quiet hours, amenity room closings)

It’s important that you find a condo that suits your lifestyle. After all, it’s a major key to enjoying your new living arrangement. There’s nothing worse than feeling restricted within your home, so make sure that the rules are conducive to the way you live.

What’s a better purchase, a new condominium or a re-sale?

At the risk of being blatantly non-committal, it’s hard to say whether one choice is better than another.

If you’re looking at a new build, there’s usually a cost benefit to buying pre-construction. Builders will offer lower prices earlier in the process and some buyers will flip the condos upon completion for a profit. If you buy pre-construction as well, you’re open to a greater selection variety. Not only can you choose the floor and location of your suite in the building, but you can also select the interior finishes such as flooring, cabinetry and countertops. The new building is also protected by the Tarion New Home Warranty program and condo fees are usually lowest at the birth of a new building due to the lack of depreciation and wear on structures & systems.

On the other hand, there are a number of advantages to buying a condo unit that has already been completed, whether new or previously lived in. For one, your occupancy or closing date will be fixed. In a new build, the builder can delay occupancy given adequate notice and building registration can require a certain number of occupied units before the purchase actually closes. Until the building is registered, buyers who live in the building pay an occupancy fee which basically equates to rent until the mortgage can be applied to the deeded unit. Deposits held in trust for a resale are often much lower than the required deposits in a pre-construction project. Not to be confused with a down payment, the deposit a builder requires can vary from about $20,000 to 20% depending on each builder’s unique structure. On a resale, a $5k deposit will usually suffice until closing. Older buildings often have larger unit sizes, and you can actually tour the suite prior to buying. More and more builders are creating model suites or vignettes; but resales allow you to experience the actual unit, its colours, sizes and views prior to pulling trigger on a purchase.

Whether you buy a new or re-sale condo, here are a few personal tips:

1. Builders always have a target market in mind. Get a feel for what that market is, so you live in an atmosphere wherein you’re completely compatible. If you’re a 20-something, a trendy downtown condo may be more suitable than a suburban tower with amenities geared to older buyers.

2. Spend some time in the unit, especially if it’s your first condo. Moving can be pricey, you want to make sure you get it right the first time. And a condo can be more of an adjustment for some than others. Take a coffee and a book, sit there and see if you can picture yourself spending time in your new home. If not, then maybe that unit’s not quite right for you.

3. Look at a few condos. Especially with new developments, the first impressions are great. Everything is clean and new. But that fades, so make sure the meat and potatoes of the unit is to your liking as well. By comparing multiple buildings and becoming a more educated buyer, you certainly decrease your chances of buyers remorse.

4. Act quickly with new developments. Not to contradict my previous point, but if you really like a unit, chances are someone else will too. Odds are, you can get a few of those units in the building, but not necessarily with the same view or options. Once you’ve decided that a condo is right for you, try and see a few in a short time. It makes it easier to compare and feel comfortable in that decision. New developments here allow a 10-day “cooling-off” period wherein you can change your mind and back out of a deal without penalty. Prices of new developments don’t go down after the launch, they only go up. And after all, you’d hate to miss out on that perfect unit.

Drake’s On the Move: His $4.2 Million Yorkville Condo

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My Fisher-Underwood mansion profile was the highest viewed RE Play-by-Play blog post to date. Which goes to show that despite my spouting of useful info and opinions, you guys like ogling rich peoples’ places. That’s fine haha, just means I’m back for a little more shameless self-exposure, courtesy our pal, Drizzy Drake.

I got Penthouse walls, I stay high above your a**.

And I can see it all, my balcony is glass.

Funny, he’s not kidding. This line from “Overdose” is spot on, which you now get to see for yourself courtesy the MLS and your favourite Realtor.

Maybe record sales are down, maybe Drake got tired of watching the Raptors lose, maybe he’s over paying $3,361 in condo fees every month. Whatever it is, he decided it was time to sell his 22nd-storey gem in Yorkville, seen here on MLS.

DrakesCondo1Priced at $4.195 Million, the 3 bedroom, 3 bathroom suite has some finishes worthy of a whiskey commercial. Think, Wiser’s. There’s walnut flooring everywhere to go along with meticulous custom millwork, and the whole place has a very rich feel to it. That said, the place is equally tame and subdued. Not what you’d expect from a young guy with millions to throw around. It’s one of the most tasteful, mature decor schemes I’ve seen.

Drake’s also got himself a nice little bit of outdoor space. With 500 extra sq. ft. spread heated terraces outdoors, the penthouse has what it needs to set itself apart from some of its competition. And though his unit doesn’t face south out over the lake, he’s had plenty to take in, with exposure in each of the other three directions.

The building itself is a work of art. Though it’s a new build, One St. Thomas has all the stylings of a 1930’s high-rise. It’s been described in different outlets as both luxurious and a “fusion of sophistication and class”. Have a look at it in this video, but turn the sound down, or else you’re just hear the wind.

You’d think the amenities here have to justify the over $3k per month condo fees. There’s a pool, exercise facility and terrace, fairly standard options across the market. There’s also full valet service, which Drake can use to park either of the cars he gets a parking spot for. Keep in mind that condo fees are apportioned based on the square footage of a unit, so naturally the penthouses pay the most for their use of the exact same set of amenities. So, here’s hoping that his heat and hydro are lumped into this as well. Not that $3,000 is even going to be missed in this guy’s chequing account.

Is Drake’s pad what I’d be lining up to drop $4 Million plus on? Probably not. But given that he just sold off 2 Miami condos to Mario Chalmers of the Heat, he might have some bigger plans in the works. Maybe that’s some motivation to cut us a deal.