February 17, 2012 — As President of the Toronto Real Estate Board I’m excited to announce to you the consumer that a new system to measure and provide clarity on home prices and home price growth was launched on February 6th.

TREB, along with the Canadian Real Estate Association (CREA) and four other major real estate boards across Canada have developed a new system called the MLS® Home Price Index (MLS® HPI).

The MLS® HPI is calculated using a sophisticated statistical model that takes into account a home’s quantitative (e.g., the number of rooms it has) and qualitative (e.g., whether it has a finished basement) features.

The MLS® HPI approach provides a less volatile measure of price than averages and medians, which can swing dramatically in response to changes in the share of very expensive or inexpensive home sales from one time period to the next

Each month, there will be two key outputs published using the MLS® HPI:

1. A series of price indices — The MLS® HPI price indices work in a similar fashion to the Consumer Price Index (Canada’s measure of consumer price inflation). The indices have a base month/year of January 2005, where the indices are equal to 100. In January 2012 the TREB’s composite HPI was 143.1. This means that the composite price index grew by 43.1 per cent between January 2005 and January 2012.

2. A series of benchmark home prices — The MLS® HPI has also been used to establish benchmark homes down to TREB’s Community level of geography for major home types including single family (detached and attached, townhouses and apartments). A benchmark home is composed of a set of attributes typical of homes in the area where it is located, and remains constant over time. This allows for an apples-to-apples comparison of price over time.

So look for in the coming months, an increasing amount of data and analysis based on the MLS® HPI in our monthly Market Watch reports. This reporting section will be called “Focus on the MLS® Home Price Index”. Eventually, the MLS® HPI will become TREB’s headline price number for release and reporting. However, traditional average and median calculations will continue to be published in the Market Watch.

This new approach will provide clarity for the consumer and prove to be a major improvement over any other method to measure home prices and home price change available in the marketplace today. I look forward to discussing the many benefits and uses of the MLS® HPI in the coming months.

So I invite you to learn more about the MLS® HPI at www.homepriceindex.ca.

Richard Silver is President of the Toronto Real Estate Board, a professional association that represents 32,000 REALTORS® in the Greater Toronto Area.

Follow TREB on www.twitter.com/TREBhome, www.Facebook.com/TorontoRealEstateBoard and www.youtube.com/TREBChannel

With the market going through constant change, it is natural that Sellers would be thinking about selling privately to maximize their profit. This is a tough market and you have to be primed to sell, so here are some suggestions that might help:

1) Make sure that everything in you house, construction-wise is perfect or close to it. 99% of homes in this market will be inspected for flaws, so you need a knowledgeable 3rd party to go through your home to make sure it will pass a home inspection. You might even want to hire a pre-selling Home Inspection by a certified Home Inspector.

2) I suggest that you disclose in writing what the Home Inspector finds. Certain issues could prove to be an out for a Buyer at or before closing time, if you knew them and did not disclose them at the time of the Offer.

3) Have a 3rd party with a design background advise you on de-personalizing your home and make it stand out in the marketplace. I pay for a professional Stager to visit all my listings and give them a lengthy report before bringing them to the market and I know that it gives my listings an advantage.

4) Follow their advice especially if it entails storing a lot of clutter. I would suggest off-site storage rather than filling the basement or garage to the brim. This just broadcasts to the Buyer one of the shortcomings of your home.

5) Once your home looks great, the number one step in marketing is correct pricing. Make sure that you know what the most recent sales are (not listings, as they may be overpriced) and then reduce your house to reflect that you are not using an agent.. If you are offering your house privately, the buyer must perceive a benefit to them. The biggest mistake private sellers make is pricing their house within the market range and not reflecting that there is no commission.

6) Develop a web presence for your home. Very few people buy anything today without searching on the Internet so your home-sale web site must be viewable by the largest market out there. Remember that your competition is National, Regional and Local MLS that have spent years and thousands of dollars to be in the top positions, not to mention the Brokers and Franchises.

7) Make sure that you hire a professional photographer who offers Virtual Tours or Video. Buyers want as much information as possible before they even view the property. I believe in these photo formats so strongly that I even pay for these photos for vacant houses or ones needing major renovations. Don’t waste your time or the Buyers by alluding to qualities that are not there or could-be-maybe-potentially there…Let the buyer decide.

8) Post the site on www.kijiji.com or on www.CraigsList.com. Both offer great visibility. However, make sure that you re-post often as they keep the newer posts at the top or on Kijiji you can pay to have your post on the front page for a period of time.

9) Make sure that any contact phone numbers or emails will be answered by you or someone else immediately. Unless I am in a business meeting, I respond as soon as I can. Buyers, mostly come from a generation that views microwaves as slow cooking….you must be prepared to respond ASAP.

10) Realize that you will get a lot of phone calls from Buyer-agents who will tell you that they have clients that would be perfect for your property. They may be right, so allow them to show your house. Remember they, like you, will not work for free so your pricing should take that into account.

11) Open Houses are the way that a lot of Buyers surf the marketplace to buy. Make sure that you use proper signage. The City of Toronto mandates that all Open House sign show the address and time of the Open House. Make sure that you have visited the local stock of houses in your area with a Buyer’s eye. To be noticed you will have to be the best on the market that day.

12) If you receive an Offer on your property you should have a knowledgeable 3rd party (Lawyer) lined up and ready to take you through the contract, explain the clauses and watch for conditions or timing that could pose future problems. When I sit down with clients, their first thought is price, mine is the terms and conditions. I have seen too many times when sellers became so obsessed with price that they forgot other “small” issues that by closing became “huge” ones. The job of the 3rd party is to make sure that those issues are not missed in all the excitement. Make sure that if that 3rd party is also giving you pricing advise that they know the market and have a grasp of negotiation skills and can view the issues from the Buyers side., when needed, to give you a dash of realism when you have a flight of fancy.

Note: when I have bought or sold for myself I have always run through my offer with an Office Manager or Lawyer for that important 3rd party viewpoint. Sometimes they have presented my own offer for me so I can have the proper emotional distance to make the right decisions.

13) The Toronto Real Estate Board has a consumer info page that shows 6 of the major Forms that are used in Ontario with the plain language explanations. Follow this link for more information.

14) Put all communication that occur between Buyer and Seller, after the Agreement of Purchase and Sale has been accepted through the 3rd Party, by email rather than phone. Make sure that all is kept in an online folder until closing and up to 6 years after just in case.

15) Do not use the same lawyer to close the transaction for the Buyer and Seller so that you can “save” money. Make sure that all parties in the transaction disclose, in writing, their relationship to either you or the Buyer. REALTORS must always disclose their fiduciary duty in writing at the time of the offer.

16) The Agreement will usually allow for the Buyer to visit your property for a Building inspection and visits to measure. Make sure these are stipulated in the contract by both the number of visits and the length or you could be in for a big surprise when all the 20 long-lost buyers’ family members visit with three contractors looking to compete for quotes. I usually suggest two or three visits of no more than one hour at mutually agreeable times. I would suggest you not be there and .that all questions and answers be done in writing so there are no misinterpretations later…the old he said-she said.

17) Ask for a substantial deposit, 5-10% of the Purchase Price to be held by your lawyer in Trust. The amount of deposit gives you a sense of the seriousness of the Buyer.

18) Conditions on Financing and Building Inspection: Most offers in this market will have conditions that must be met within a specified time period. Keep the time as short as you can. For a Building Inspection or Financing, I suggest no more than three Business days. Hopefully your Buyer will have been pre-approved by the Bank and then there is little to do but a quick appraisal of your property. Building Inspectors should be able to complete a full inspection within 3 Banking days and give the report to the Buyer. Be aware that the Buyer may try to renegotiate the price if the Inspection is of poor quality.

19) Conditional on the Sale of the Purchaser’s Property: This is a tough one, made tougher because you have no control of the asking price of the Buyer’s Property. You may have sold your property conditionally for a great price and find that the Buyer decides to overprice their home. In essence, your home is pulled from the marketplace with little guarantee that the Buyer will get a satisfactory offer and start the ball rolling. You might want to ask the Buyer to have a Professional appraisal of his property before agreeing to this Condition.

20) Do not accept any cash as part of the transaction. FINTRAC (Financial Transactions and Reports Analysis Centre of Canada) is keeping an eye on suspicious movements of cash and I am authorized to ask for and retain the personal information of all Sellers and Buyers.

21) Be careful of Scam artists. They sometimes hunt for Private Sellers because they think that there will be less scrutiny in the transaction. A client of mine whose brother helped her sell privately accepted a long conditional offer. A week after it fell through we listed at $399000. Imagine our surprise when a Bank called to say they had an offer sitting on the desk of their fraud department for $540,000 of the property. The conditional Buyer was trying to finance a house for $150,000 more than the value. Thankfully, the transfer was held up by the Bank’s scrutiny. 

Hopefully, some of these suggestions will hep you sell privately but if not know that there are a number of excellent hard-working Realtors in the marketplace every day to help you. If you have any further ideas, please feel free to comment!

Just started making videos for the areas that I have sold Real Estate in over the years. My first video is about the community that my first home was in Cabbagetown. Let me know your thoughts as I will be making more of them and appreciate your thoughts.

From time to time, and mostly from people who don’t know me, I get an email or a phone call where the commission question comes up front and centre: “Can you tell me what your commission rate is?” I know that this consumer has decided that commission is the most important issue. It’s not that I have not dealt with the question before but it seems that the consumer’s assumption is clear that “all Realtors provide the exact service but for different fees”. That assumption is very wrong.

Each agent develops a style with services that they include when selling property. Knowing this, the first question I am surprised that a consumer does not ask is “What services will be included in the commission that I will be paying?” Each successful Realtor I know, has developed their own technique that they use to accomplish a successful result.

Before the discussion begins please realize that the listing agent, who collects the commission from the Seller, usually offers half of that commission to the Buyer’s agent. That agent needs to be out in the marketplace daily, viewing listings, guiding and presenting successful offers for their clients. Please note that no commission gets paid to either until the property closes successfully. Not many business models exist where all the work has to be completed before any money changes hands.

I cannot speak for what other Realtors provide, but here are the services that I include for my half of the commission:

1. I am a big believer in staging so I offer all my clients a written consultation with a home stager at my expense.
2. Floor plans allow a prospective buyer to imagine their furniture in the property so I pay for the Home to be measured. There are also some Buyers who can only justify asking price in relationship to square footage.
3. Property photos are hugely important in today’s marketplace so all my listings are professionally photographed at my expense, and featured with Virtual Tours.
4. Your property will be on TorontoMLS and on REALTOR.ca but they will also have virtual tours and at least 21 professional photos as well as professional floor plans attached to the listing for both Realtors and the consumer to view.
5. I am known for providing Agent Open Houses with food served at my expense. It encourages the Realtors to spend more time, look around, feel comfortable and engage with each other. Announcements of new listing and their Open Houses are broadcast on Twitter, Facebook, LinkedIn and more.
6. I have often been surprised at the power of “neighbour marketing” so I send out Just Listed and Open House invitation cards to the surrounding 2000 homes at my expense.
7. I long ago realized the importance of the Internet so not only are properties placed on the TorontoMLS  system, they are on REALTOR.ca , shared on the Toronto Real Estate Board’s  Internet Data Exchange or IDX, they also appear on my sites: www.RichardSilver.com, www.Torontoism.com, and www.DowntownTorontoNews.com as well as our Company site www.BosleyRealEstate.com. All these sites are optimized professionally to be on the front pages of the Search Engines  in the top 30 Categories of search terms for Toronto Real Estate.
8. I am available always and have a licensed assistant who handles extraneous appointments, database and follows up with showings  and updates on your property through www.HomeFeedback.com.
9. Recognizing that Today’s Buyers  have changed the way they shop (that is a whole other Blog), I suggest Open Houses for the Public on every possible weekend. I have been working with a trusted group of Realtors below who handle those Open House if I am not available.
10. There are four Realtors who I look to for assistance in making sure my Buyers are getting the best of service: Sherille Layton , Ken James , France Trudeau  and D’Arcy Burkholder . I have found that over the years, property marketing has become much more complicated and a consuming time commitment leaving me  frustrated when trying to search for Buyers at the same time. These four people have been excellent in helping our buyers find that best available in today’s marketplace because they focus on that task.
11. I do advertise in the Globe and Mail on Friday’s but find that a banner ad sending interested parties to the web is the best way to go. Very few contacts have ever come from Print ads today. 90% of Buyer are now searching on the Internet.
12. I happily work with other agents in facilitating offers on your property to get you the best price possible in Today’s market.

Hopefully this list provides some clarity about how I handle my business model but remember that each of us bring a different set of services to the table and those services may be offered to the consumer for different commission rates. My suggestion when shopping for a Realtor would be to ask them to list the services that they provide when listing a property. When you know what is involved, then it is up to you to decide whether the value is there to commit to that Realtor. If not, you have over almost 100,000 other options in Canada and over 1,000,000 in the United States.

Happy Shopping!

Here are the latest Housing Market Charts from the Toronto Real Estate Board for January 2012. These take you back over three years and help to gain some clarity about the Toronto Real Estate Market.

January 20, 2012 – Greater Toronto REALTORS® reported 5,025 condominium apartment transactions in the Fourth Quarter of 2011. This result was up 10.5 per cent in comparison to the Fourth Quarter of 2010. Over 70 per cent of total transactions occurred in the City of Toronto, with Peel Region (including Mississauga City Centre) accounting for the second highest share of sales.

The number of new listings for condominium apartments was up by 14 per cent in the fourth quarter of 2011 compared to the same period in 2010.

“The condo segment of the market continued to be a key driver of sales in the fourth quarter. Even with an uptick in new listings following strong condo completions over the last year, market conditions remained tight. Tight conditions were the foundation for a robust year-over-year increase in the average selling price,” said Toronto Real Estate Board President Richard Silver.

The average selling price for condominium apartments in the fourth quarter of 2011 was $336,748 – a seven per cent increase over the fourth quarter of 2010.

“In addition to the healthy situation in the ownership condo market, the condo rental market tightened up at the end of 2011, with the number of units listed down and the number of transactions up. This prompted above-inflation increases in average one-bedroom and two-bedroom rents,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.

TORONTO, February 3, 2012 — Greater Toronto REALTORS® reported 4,567 sales through the TorontoMLS® system in January 2012. This number was 8.8 per cent higher than the 4,199 sales reported in January 2011. Sales growth was strongest for low-rise home types in the regions surrounding the City of Toronto.

“A favourable affordability picture bolstered by very low posted fixed mortgage rates has kept home buyers confident in their ability to achieve the Canadian goal of home ownership,” said Toronto Real Estate Board President Richard Silver. “The buyer pool remains diverse in the GTA with strong interest in home types across the pricing spectrum,” continued Silver.

The average selling price for January 2012 transactions was $463,534 – up by almost nine per cent compared to January 2011.

“Low inventory levels have kept competition between buyers strong, resulting in robust annual rates of price growth over the last year. Strong price growth is expected to attract more listings. A better supplied market should result in a slower rate of price growth, especially in the second half of 2012,” said Jason Mercer, the Toronto Real Estate Board’s Senior Manager of Market Analysis.

Buyers today are getting a lot of mixed messages. The statistics from the Toronto Real Estate Board have been strong but a lot of the price increases have been driven by a shortage of listings meaning a lack of options for buyers. It is a tight market for Today’s Buyer at a time when mortgage rates are at their lowest in history, making it the best time to get a mortgage. There are also a lot of confusing statements coming from the Banks and the Government about the future of Real Estate and a Media that says: “The market is up; There is a bubble in Real Estate; There is no bubble in Real Estate; (and the other day) The market is a balloon, not a bubble.”

Here is what I think:…like our neighbors to the South, Canadians have a DREAM and that includes a home where they share family life. We have more stringent tax laws and mortgage laws than south of the border and the “Canadian Dream” has always included paying off your mortgage and not using your home as an ATM.

Since 1980 when I started selling houses the market has gone up and down a few times. To me it has been all about finding the right fit for a family and I have watched a lot of those families grow and enjoy a few properties as their repertoire of moments grew. Values have changed but the real value in Real Estate has not been financial, it has been lifestyle oriented. When did home ownership become more about the money and less about the family?

Granted, Toronto has changed and the market here has been one of the healthiest in North America. We are lucky but are we overpriced? Talk to someone from Manhattan, Chicago, San Francisco, Hong Kong or London and they will tell you no…

Buyers: make your decisions based on community, schools, street life, Kitchens and Family rooms,  realizing that the market will go up and it will go down…just enjoy the ride in a home that fits your needs and makes you feel that you are living your “Canadian DREAM”.

Here is a link to an excellent recent article in the Economist. The article does deal with the economics of the marketplace but don’t give up the long term lifestyle dreams. My house goes up and down in value, but it is the center of great family memories are unable to monetize.

Here is the Toronto Area Housing Market Watch for December 2011. There is a lot of detail here and it covers the whole City but for those of you who like to drill down…all of the MLS Sales are here. Always remember that these figures are ones that happen when members place listings on the Multiple Listing System and do not account for any other transactions.

Here are the housing market charts for the Toronto Area MLS Sales for December 2011…Sorry if I am late getting them to you as it has been a crazy busy January 2012.