We are currently experiencing a hypercompetitive seller’s market with low inventory and many active buyers. This quickly spirals potential home-buyers into the frustrating realm of buyer fatigue. Buyer fatigue refers to buyers who have seen so many properties, written too many unsuccessful offers, and are flat out exhausted with the buying process. Searching for the dream home can be an exhaustive undertaking and when you are losing out time and time again you start to feel like you will never win a bid.
Where Does This Fatigue Come From?
Buyer fatigue sneaks up on house hunters that want to start slow and take their time feeling out a hot market. Possibly based on their family or friends’ advice, they may make a cautious initial offer on a home with the hopes of strengthening it if it’s rejected. Unfortunately, listening to someone who is not familiar with the market can lead you into disappointing territory.
When buyers are skeptical of market advice and don’t capitalize on opportunities to write winning offers, they can waste crucial weeks, or even months, in a damaging cycle of submitting offers, getting rejected, modifying offers, getting rejected again, then starting all over with the next property. Listening to a knowledgeable Realtor can help you navigate through this process in a more efficient way.
The Greater Vancouver housing market is extremely competitive. The current market value in most neighborhoods is quickly increasing and the sale price of each condo, townhouse, or single-family home sets the precedent for the next one in that neighborhood. New home buyers can fear overpaying when advised to bid above the asking price on their first offer. The cold hard truth is that some houses are selling for upwards of $100,000 over the asking price. Sellers have the leverage and the luxury to pick whichever offer has the highest price and the fewest subjects.
Buyers have to learn quickly! If you take too long adjusting to the market conditions, buyer fatigue is going to set in. Unfortunately, desperation can also kick in at this point.
The biggest bummer of this whole process is that when the buyer finally does buy a home, they may long for the one that got away!
5 Tips to Boost Your Defense Against Buyer Fatigue:
Hire an experienced agent you can trust!This means that right now may not be the best time to try out your cousin who just got licensed. Choose an agent who can balance writing a winning offer and protecting your interests. Select someone who clearly communicates and takes the time to explain the risk in waiving subjects.
Speak with a mortgage specialist to help you get the most out of your money. They can walk you through the best type of financing for your individual situation and share helpful tips based on their knowledge of the industry.
Get fully and thoroughly pre-approved! Get pre-approved before making an offer. Make sure to complete all the paperwork you can ahead of time.
Don’t be afraid to go ALL IN with your first offer. Know that it is okay to fall in love with the first house you make an offer on. Remember that subjects can be removed if due diligence was properly done before writing an offer. Having an experienced agent to guide you through these decisions is vital.
Consider updating your wish list. If you have lost out in previous offers, speak with your agent about reevaluating your wish list. You can increase the number of potential homes by broadening your preferred neighborhoods or updating the minimum property size (just to name a few). Additionally, the properties in less popular areas may have reduced audiences which lowers the amount of competition.
Next Steps for Success
While waiting for a showing or in preparation for your next offer, listen to our most recent podcast episodes to equip yourself with the information you need to help land your dream home:
It is important to know that buyer fatigue can happen to anyone, even experienced buyers. Align yourself with a proven and trusted team. Our hope is that you will find the home of your dreams before the fatigue sets in!
You have found your dream home and are wanting to put in an offer. Watch this video from 2016 and review the updated list of 10 due diligence steps you should take to ensure you can move forward with confidence in 2021.
1. Find Out How Much you Can Afford
A mortgage broker or a mortgage specialist at your bank can take you through the steps to get pre-approved for a mortgage. A good mortgage pre-approval accurately measures your financial qualifications and how much house you can afford. Furthermore, the financial institution will provide a 90 or 120-day guarantee of its mortgage rate in case those rates jump while you are shopping. For more information on mortgage pre-approvals, visit the Government of Canada website.
It is important to note that a pre-approval isn’t a firm approval. When you’re ready to make a purchase, the lender will likely want to appraise the property to ensure that you’re paying market value and the property has an adequate lifespan. If the purchase price is well above market value or the home is deemed to have a short life expectancy, you may require a higher down payment. In some cases, the bank may not give you a mortgage at all.
When setting your budget, do not forget to factor in costs like closing fees and maintenance or repairs. Another cost to consider is condo strata fees.
2. Go to City Hall
Another due diligence step is to request any information City Hall may have on record about the property such as its zoning, lot dimensions, permits that have been issued or any future plans for the surrounding area. Checking the zoning is especially important if you’re planning to operate a business out of your residence, renovate or redevelop, or rent a suite in the home. Review all extensive renovations for proper permits.
3. Request a Property Disclosure Statement
While property disclosure statements are not required under BC law, realtors will often ask for one from the property’s current owner so they can give buyers as much detailed information about a property as possible. The property disclosure statement is a three-page document that itemizes potential problems like renovations done without a permit, unauthorized rental suites, asbestos insulation, unregistered easements or whether the seller is aware of any issues like the presence of an underground oil tank, moisture problems, if the property was ever used as a grow op, or if it has ever been designated as a heritage site. The statement can be legally incorporated into the contract for purchase and sale.
4. Do a Title Search on the Property
A title search will confirm whether the person selling you their property is actually the rightful owner. It will also determine whether there are any easements, right-of-ways, or covenants against the property that could affect its future development. It will show if there are liens or outstanding mortgages on the property. Click here for more information.
5. Ask for a Site Survey
A site survey will tell you what you are buying. It shows the property lines, how the property is aligned with neighbouring properties, and features like roads or sidewalks. It will also show where the house is positioned on the property. A lender will often require a survey certificate as part of their mortgage requirements. In some cases, the lender will request a title insurance policy instead of a survey certificate, and sometimes they will ask for both. Title insurance protects the lender against potential issues with a property such as encroachment or past fraud. For more information about site surveys, visit the BC Land Title & Survey website.
6. Find out the Home’s Utility Expenses
Another due diligence step is finding out the home’s utility expenses. Utilities include gas, electrical, annual solid waste, water and sewer levies, and property taxes. Your realtor can request utility bills from the property’s current owner. Water/sewage rates as well as the taxes for a particular property can usually be found on a municipality’s website.
7. Hire a Home Inspector
A qualified home inspector will walk through and around the property to assess any major defects, safety concerns, or potential threats to the integrity of the home. Keep in mind that there are limitations to these inspections as they cannot see behind walls.
In a hot market it can be difficult, even impossible, to purchase a home with a “subject to inspection” clause. When this is the case, hire an inspector before presenting an offer. When you’re considering the qualifications of a home inspector, assess their knowledge, experience, training, certification, licensing and their level of participation in the industry. For more information, listen to our podcast episode on the benefits of working with an experienced home inspector.
8. Consult a Home Insurance Provider and Purchase a Home Warranty
Most lenders are going to require you to have insurance in place in order to get a mortgage. Home insurance helps pay for structural damage and loss of personal property from emergencies like theft or fire. If you’re buying an older home that has a wood-burning fireplace or knob-and-tube wiring, you may encounter some issues getting insurance or have to pay higher premiums. Insurance companies can deny coverage if the property has been poorly maintained or vacant for an extended period of time. Renovations could also affect your ability to get an insurance policy. Remember that events like sewer backups and earthquakes are not typically included in basic policies.
A home warranty covers the repairs and replacements of your home’s major systems and appliances when they fail from old age. Carry out thorough research to compare different companies to find the best plan that meets your family’s future needs.
9. Check for a Buried Oil Tank
If you are purchasing an older home, your due diligence should include confirming there is no oil tank buried on the property. Many homes used an oil-burning furnace that was fueled from a tank buried somewhere on the property before the widespread adoption of natural gas or hydro for heating.
Some municipalities keep records of properties known to have oil tanks, or those that have had old tanks decommissioned. This is a great place to start. New Westminster: call the fire prevention office to see if they have anything on file for your property Burnaby: send an email to email@example.com Vancouver: call the city’s information line at 3-1-1 to check if there are any records for oil tank removals or abandonments Coquitlam: call Coquitlam Fire & Rescue at 604-927-6400 to have them check their records
If those searches come up empty, you’ll have to check with the current owner to see if they have had the property scanned for an oil tank, or else hire a company that can do the scan. A basic scan will cost you between $80 – $150. It includes a technician scanning the property with a metal detector and probing device. For a more accurate and detailed scan, consider a company that uses Ground Penetrating Radar (GPR). Low clearance decks and metal debris may affect the ability to get a conclusive scan.
The decommissioning and removal of old oil tanks is labourious and expensive, especially if it’s leaking oil into the soil. Be aware that if a tank is discovered after you’ve acquired the property, you will be responsible for its removal as well as any remediation for the surrounding soil. Visit the British Columbia website for more information about residential heating oil storage tanks.
10. Confirm all the Items Included in the Sale
Unless specifically written into the contract, appliances like the stove, refrigerator, dishwasher or microwave may not included in the purchase. Garage remotes, window coverings, curtains, keys, sheds, appliances and corresponding warranty manuals, potted plants, shelving units that aren’t attached to walls are all items that should be specifically written into a contract. The inclusion of fixtures like TV mounts, blinds, security systems, hood fans and central vacuum systems should also be clarified.
It is also a great idea to research the neighbourhood and find out more information about where you will be living. Mapping out your daily commute to work, finding the best shopping centers and stores, and getting a better feel for your neighbours is a great start.
Once your due diligence checks out and you are confident in your purchase decision, you can remove subjects, submit your deposit, and wait for the day when you get the keys to your new home!
This is the story of a family selling two strata properties and coming together to buy a multigenerational dream detached house in a scorching-hot market. We will rename them the Smith Family for the purposes of this blog post.
Currently, we are knee-deep in a Seller’s Market, and desirable, well-priced properties are flying off the shelf. While detached houses are selling quickly with overbooked showings and multiple offers, the buyer’s side is very competitive. Buyers may lose out on several houses before winning the bid. So, what does this mean for those wanting to buy AND sell?
Searching for the Dream Detached House
It was an advanced magic trick that required trust, timing, and finesse to secure this three-part deal for the Smiths. We had been searching for the perfect multigenerational home for the Smith family for over a year in the Port Moody real estate market. It was a slower Buyer’s Market when we started shopping so we had more time and less pressure to visit local showings. Unfortunately, the right product was nowhere to be found.
The Smith family was looking for: – A completely above-ground in-law suite that felt like part of the main home. – A property in the Heritage Mountain, Port Moody area to stay close to friends and family.
We found a few potential homes in the summer of 2020, but the market was starting to shift. We put in offers on 3 or 4 houses but lost out in multiple offer situations because we had Subject to Sale of TWO properties.
Finding the Dream Home
Being Port Moody realtors, we had the advantage of regularly being in the area. We continued to keep an eye out for any new listings that fit the bill. It took time and patience, but a few weeks ago we finally found THE DREAM HOME! The Smith family was willing to do anything to get this house. The property was $200,000 over budget (and in our opinion a little overpriced), but otherwise perfect. My real estate partner Lucas and I discussed this purchase many times and it all boiled down to timing.
Sale #1: How we Won the Dream Detached House
It is a challenge to negotiate dollars off the purchase price in a Seller’s Market. Our plan was to present the offer in a way that would convince the Seller that this is a win for all of us. We put our offer together with an extensive Comparative Market Analysis (CMA) arguing our case for the purchase price and a personal letter from the family.
We decided to drop the Subject to Sale of the townhouse because we had a good feeling about where the market was at for this type of property.
After a few cleanup items and a fair conversation with the Listing Realtor, the Seller accepted our offer! The house had been listed for over a year, and the family wanted it sold.
Condo and Townhouse for Sale
Now came the scary part: we needed to sell, and we needed to sell fast. With only two months until completion (the day you pay for the home), there was not a lot of time to test out the market. We priced their Westwood Plateau condo and Heritage Mountain townhouse at the top end of market value. This meant that we had to bring the heat with marketing their homes!
The townhouse in Port Moody was very popular, so we decided to give it 2 weekends on the market before looking at offers. This strategy was nerve-wracking and definitely tested our patience. For the condo in Coquitlam, we opted to look at the offers as they came. We put the condo on the market one week before the townhouse, as we knew it could potentially take longer to sell.
Sale #2: Offer time for the Cascade, Coquitlam condo
The day before we were going to drop the condo price, we received an offer! We negotiated the price up to a very acceptable range: $5,000 higher than the price drop that was scheduled. Just to note, the contract did come with some subjects.
Sale #3: Offer time for the Discovery Ridge, Port Moody Townhouse
We were scheduled to present offers on the townhouse in Port Moody the very next day. We received 8 offers after 45 buyer showings. Two of those offers really stood out. All buyers were given a chance to put their best foot forward and, in the end, we had a winner!
I want to take a quick break here to let you know that the winner was the LAST BUYER to view the property. We may have easily left money on the table if we had not given every person a chance to see the home.
Once we had our winner, we negotiated the exact dates we needed for Completion/Possession to line up with the dates on the Smith’s DREAM detached house purchase. We also managed to slip in a very clever subject protecting the Sellers in case subjects did not get removed on the condo sale.
Are you still with me? To break it down, we put in a Subject to the Sellerentering into an unconditional contract to purchase a new residence. This type of subject typically does not work in a buyer’s market, but we knew the moment was right and had the expertise to present it to the buyers in a way that made it feel like a win-win. We agreed to let the buyers do some due diligence during that time AND we got the 2nd best offer to agree to be in a Back-Up Offer position. This way, if the first offer fell through for any reason, we had another one on deck!
Putting up SOLD Stickers on THREE Properties
When Subject Removal day arrived, we were excited to remove subjects on all 3 properties. Our plan worked perfectly!
How were we able to quickly sell the strata properties? The major keys were market timing, appropriate price, and prepared real estate agents. Having the strata documents ready, all paperwork in order, and thoroughly reviewing the documents prior to listing gave buyers a sense of confidence. Buyers have a much higher rate of removing subjects when realtors can answer every question with clarity. This is extremely important.
Goodbye strata life!
The Smith family is packing for the big move that is set to take place in just a few short weeks. Our real estate team is delighted for this family and so grateful that they put their trust in us.
Congratulations to our amazing clients on your dream detached house in Port Moody!
The real estate industry fluctuated throughout the 2020 year, finishing strong during the fall and early winter months. The last Garbutt and Dumas recap was done in June 2020 which marked an uncertain time with little data to help with future predictions.
Fortunately, there was an increase in activity and September was a record-breaking month for the Garbutt and Dumas realtors (with November being a close second). Rates are low, higher priced properties are starting to move, and land value is increasing.
Single-family homes went from slow-selling to outrageously active
Condos remained relatively slow unless they had a strong selling feature (like great view or good neighborhood)
Big trend towards upsizing. Buyers are wanting more space!
Multiple offers for certain listings (depends on how saturated the market is in that area)
The number of homeowners moving out of downtown Vancouver to the surrounding cities is still increasing
Driven by affordability
Includes Langley, Tsawwassen, Sunshine Coast, and the Okanagan
Communities with little population will double in a relatively small amount of time
This movement will keep the market busy for years to come
Downtown Vancouver market remained slow
Buyers finding larger and newer condos in Brentwood for the same price
What makes the market climb?
The real estate market will climb when there is a shortage of supply. When there are limited properties on the market, more buyers are looking at each one. Real estate agents may receive multiple offers on a listing, however only one can purchase the house. The other buyers must continue looking and place an offer on another property when it becomes available. As more buyers enter the market, it can become more competitive, pushing the prices to increase. In a hot market, the offer that is subject free and has a deposit attached will be a real contender.
There is a definite upward trend in the real estate market and here are the numbers to prove it!
A sales ratio breaks down how many sales were completed in each month compared to the total number of listings available. Townhouses had the highest sales ratio with 40% and condos had the lowest sales ratio with 20% – both are significantly high. Townhouses are in high demand and it is estimated that we will see an approximate increase in price of 10-15% by summer.
Low interest rates have also played a role in the real estate market climb. More people can now afford a mortgage and are entering the real estate market. This increases the competition and can help to boost prices. HSBC announced a 0.99 rate. This will put pressure on other big banks like RBC, TD, and Scotia Bank to make their rates more competitive. It looks as if rates will remain low! A great tool for finding out what type of rate you will qualify for is ratehub.ca. Talk to your bank or an independent mortgage broker for a better idea on your specific situation.
our predictions for 2021:
The market will be active – lots of up-sizers (due to low interest rates and wanting more space) and down-sizers (due to high prices)
People will continue moving out of Vancouver into smaller cities and suburbs
Port Moody, Langley, Maple Ridge, Squamish, Tsawwassen, North Vancouver, and East Vancouver will see record-high prices and sales activity
Townhouses and detached houses will be hot! Value of property will continue to increase
Condos will increase in price (but less so compared to houses and townhouses)
More investors will be coming back
Denny’s advice: buy a house now or you may never own one!
There is a limited amount of land available for single-family/detached homes to be built on. With a decreased chance of a newer house being built in your community, there are fewer properties to compare to when looking to sell. This leads to less competitive pricing, which will in turn increase selling price over time.
It is hard to know for sure if all of our predictions will come true, but one thing is for certain: the Garbutt and Dumas realtors are looking forward to helping you navigate through all things real estate in 2021!
Do you have questions regarding low-interest rates, the upsizing trend, the popularity of apartments and townhouses, and the growing appeal of moving out of the city and into the surrounding areas? We would love to hear from you – contact us and we can help you with some of the specifics.
Monica Harmse and Lucas McCann live and work in the beautiful city of Port Moody. They created the vlog PoMo Life about two years ago to create a genuine resource for information about what is going on in the community, new shops or breweries opening, or to find great restaurant recommendations.
Denny Dumas caught up with Monica and Lucas to learn more about PoMo Life and see how things have changed since it was first created.
Why did you start the vlog and how has it evolved?
Wanted people to see more of Port Moody and learn about us through where we love to spend our time most
We wanted more real estate business in the area that we are passionate about
Had to change our process in the last 10 months because of COVID-19 restrictions: cannot go into as many shops, not as intimate, and harder to do interviews
Focused on how the pandemic has affected businesses – heard their story of hardships and survival
Not shooting as much, focusing more on Instagram and Facebook
Reposting what local businesses post to help with a larger reach
Do not need to have both of us in every post/get each other’s permission for everything
Trust each other; be a part of the team, hold each other accountable for our own responsibilities
What have you learned?
After about 1 year in, we realized that not many people knew we were real estate agents so had to start posting more about that
We did not want to advertise ourselves, we wanted to interact with the community and show our personalities
Recognized we had to share what we did for a living so that our followers could use us as a resource for real estate as well
Finding balance in work life and personal life is so important
The intention is to get as much content out as possible but must realize that we are busy professionals and have other priorities that need our time
Our most successful posts are created when we have fun with our content and show things that most others are not posting about (going into dark crawl spaces, etc.)
Do not let fear or ego hold you back; we are all learning and do not know the answer to everything
Do not overanalyze! This could stop you from moving forward personally and professionally
How do you measure success with PoMo Life?
Hearing from shop owners that our followers stopped by after we posted about their business
Owners love it – free exposure, a great way to get their business out there
Businesses have started reaching out to us about upcoming events or promotions
Starting to see more real estate referrals – the more people who know you, the more likely you are to get a recommendation
Starting to feel like we are a part of the community
What are your long-term goals with PoMo Life?
In 5 years, we want to build something that people trust and find entertaining
Bring more business to the local shops and showcase our community
Feel more fulfilled working in Port Moody
We want to get busier in this area to decrease the amount of travel done for work all around the lower mainland
Become real estate experts in Port Moody
When buyers or agents walk into our properties, we want them to already know who we are, could be advantageous in deals or in creating long-lasting relationships
Lucas and Monica join Denny to discuss all things Port Moody
Tell us about Port Moody and why people love it:
It is such a cool city to live in!
Consists of a mostly younger demographic (25 to 45-year-old adults), newlyweds or young families
Great community feel, you get to know your neighbors and see the same people every day
Beautiful backdrop – mountains, water, and great trails
The amount of PoMo businesses increased within the last 5 years to cater to the families moving here
Connected to surrounding cities by Skytrain
Housing prices are more affordable here compared to comparable properties in other areas (North Vancouver, New Westminster, etc)
Large variety in types of real estate available: luxury homes to small condos
No new detached homes being built in Port Moody, so will not have a better newer house than yours 5 years down the line
Long term value in Port Moody, real estate value is constantly going up
There is a misconception that Port Moody is so far from everything else, but it takes on average about 25 minutes to get to North Vancouver or downtown
One area of the city that needs more attention is the amount of infrastructure available to accommodate the population growth
More roads and better traffic signs need to be put in place before the city gets too big and too much is built
Certain parts of the city are difficult to get to or have not seen any road updates recently
Monica and Lucas are excited to see where year three of PoMo Life takes them! Follow them on Instagram @pomolifebc to stay up to date with their adventures.
The amount of caution surrounding COVID-19 has recently increased, and as a realtor, it is important to understand that everyone has different comfort levels. Common methods used by real estate agents in the past (for example, door knocking) may not work during today’s restrictions.
Open houses have changed as well, with a limited number of people able to enter the house at a time. It is key to take this opportunity to make a personal connection, get to know what the buyer is looking for, and answer any questions they may have while walking through the house. This is a great way to make a long-lasting good impression, and you never know which buyers do not have a realtor to represent them yet.
Be pleasant with everyone you come across – it can go a long way
If you do not know something, never leave it at, “I do not know.” Always promise to find out the answer and follow up with them
This is also a great way to get their contact information!
Real estate agents have had to adopt new strategies to reach more clients. One of the biggest opportunities in building a database and a following is by going virtual and reaching your target audience online.
What should agents be doing online in the next couple of months?
The first step is to get started: begin learning and creating content around topics you are passionate about, and who you want to be or what you want to do in the future. The more you share during this downtime, the more benefit will come from it. Experiment to find out what social media platforms or mediums work best for you – do you like video, blogs, Twitter?
Understand that you are not perfect and try to push past the insecurities that come with trying something new. Get comfortable being uncomfortable! Continue to produce content and if the message is genuine and helpful, your audience will enjoy it. With practice, you will gain confidence and authority in that field.
Analyze what you want to be known for:
Certain property type
A specific community specialist
Know the OCP, zoning, how it is changing, building applications
Common issues of homes built during a certain period
Quirky property videos with fun intros
Market yourself and show your personality
This process takes time, but the pay off is worth it when clients start noticing. Channel your focus into one thing and do it consistently well. Once you have become an expert in a certain niche, your followers will trust you and will continue consuming your content. It is this support that will have people sending you business from your channel and when it is time for them to sell or buy a property, you want to be the first person on their mind.
Do you have questions regarding gaining authority in your field, using social media and other platforms to reach your target audience and the power of videos in getting your brand out there? We would love to hear from you – contact us and we can help you with some of the specifics.
It can be a confusing and frustrating task trying to figure out which real estate deals the 5% goods and services tax (GST) applies to.
There are some examples that are not in question for paying GST. These include new construction from a developer, a brand-new lot, and a new condominium or house.
The grey areas arise with the following circumstances:
A significantly renovated home (75% or more of the home was renovated)
The criteria for these homes are difficult as each house and renovation is different; tough to get a straight answer
GST will probably apply if there is an extension/square footage is added to the home or if it changes the exterior
GST will also probably apply if the owner is in the business of buying a home and significantly renovating/flipping it (especially if you do not move into the property)
In new construction, sometimes not only the first owner but also the second owner must pay GST
This depends on the first owner’s intent for the property
GST may or may not apply to land purchases
It is important to note that the intent of the owner is crucial in determining whether GST must be paid.
For example – let us say that Bob buys a new construction condo in 2015 that completes in 2019.
Once completed, he decided that he wants to sell. In the time that it took for the condo to be built, the condo’s worth increased. If Bob’s initial intent was to have it as his primary residence, then the GST does not have to be paid on the increase in price. If his intent was to sell for a profit, then GST is applicable.
If Bob were to have a tenant rent out his condo for a year and claim it as an investment property, then that can change whether the GST must be paid. However, be careful with this as if it is done too often, there could be consequences. The longer the unit is an investment property, the better.
This is only one scenario with relatively little information – every real estate deal can have its own challenges, so it is best to seek out an expert who can help guide the transaction properly.
When searching for properties, look at how the property is represented and if it states whether the GST has been paid or not.
In deals where it is unknown if GST must be paid, real estate agents should ensure that a GST clause is put into the contract so that it is the buyer who is obligated to pay the taxes. This stops the seller from proactively paying the GST, and instead puts the responsibility on the buyer who is less likely to pay it if deemed unnecessary.
In any circumstances where it is unclear whether the buyer will have to pay GST, it is beneficial to talk to an accountant or someone who is an expert in the tax field. They will ask all the necessary questions and help navigate the process. Real estate agents will do their best to help their clients, but they may not have the expertise for each specific situation.
Do you have questions regarding when to pay real estate taxes, investment properties, the fine print in contracts, and what a significantly renovated property is? We would love to hear from you – contact us and we can help you with some of the specifics.
A depreciation report is a formal, standardized report created by an engineering firm to evaluate older buildings in the greater Vancouver area. It was created in 2013 as a proactive way to increase the amount of information available for strata to plan and pay for the repair, replacement, and renewal of common property and assets (roof, windows, elevator, etc.) over the next 30 years. This report is also used by prospective buyers to reduce the chances of running into unexpected and expensive issues after the deal goes through.
Gives detailed information on previous renovations – before this report, it would be difficult to know when the roof was replaced, plumbing was done, etc.
If the seller was living in the building for a short amount of time, the report will offer a more detailed history that they may not be aware of
It is a long document that is not meant to be taken word for word; the percentage of people who go through the full document and understand how to read it is quite low
Not buyer-friendly – jeopardized deals when it was first created and could still be doing this today due to lack of understanding
The reports tend to err on the conservative side – making estimates on all possible renovations within a 30-year span; the strata does not have to follow recommendations if upgrades are not appropriate at that time
Can be overwhelming and look very negative when listing all possible upkeep projects on older buildings
A depreciation report can be a helpful tool, however, how it is communicated and used can play a huge factor in its effectiveness. Before presenting any report to your client, ensure that you understand what it means. Additionally, keep in mind that each tenant is only responsible for a certain percentage of the total cost depending on their unit entitlement, making a large renovation cost more manageable.
Remember that sizeable updates will be voted on by the strata and may not necessarily happen when they are predicted to if deemed unnecessary. Professional assessments and quotes from different experts in that field will be collected to ensure that the proper work is done at the best cost.
In the end, the positives of a depreciation report outweigh the negatives. Always take into consideration that the property’s land may be worth more than the actual structure, and it could still be a good deal even if the depreciation report is pessimistic.
Do you have questions regarding older buildings, understanding how to read reports, and knowing if it’s a solid real estate deal? We would love to hear from you – contact us and we can help you with some of the specifics.
COVID-19 continues to challenge the norm for real estate in the lower mainland. Many people have questions and concerns regarding the buying and selling process today.
Question #1: Should we buy now, or do you think the mortgage deferral program will catch up with homeowners and they will sell for less in the future?
At this point, waiting for housing prices to come down does not seem logical. There has not been a big enough trend to suggest that mortgage deferrals will influence prices.
For mortgage deferrals to make a bigger impact, prices today would have to be less than what people paid for the properties back in 2017.
Single family homes are still selling strong right now. First time home buyers are probably the most affected by COVID-19; however, they are also some of the most active in the market.
Overall, this is unknown territory and there is not a lot of data on how the real estate industry will change throughout this pandemic. It is best to buy when you find the right property as rates are so low right now. Do not wait out of fear for what might happen in the future, instead wait for the perfect house or a buyer’s market for the specific type of property that you like.
Question #2: As a real estate agent, what kind of conversations are you having with your seller if their property has not received any offers?
A lot of home buyers are already stretching themselves financially to be able to afford property in greater Vancouver. Now is not the time to overprice your home when selling because you may receive very few offers.
It is important to understand the value of the home and the market activity on those specific type of properties when setting a price. Most sellers do not have the experience or knowledge of what the best price for their home may be – talk to your real estate agent to get their opinion.
For example, condos have a lot of selection right now and are selling at over 97% of list price. If your listing is too high, it might automatically take it off some buyers’ lists. It must be a unique or luxurious property for it be overpriced and still sell.
Additionally, buyers are generally too nice to write low-ball offers. This means that if a seller chooses to put their home on the market at a number that is too high, they may not receive any interest. After a price reduction, the offers may start rolling in.
Timing is everything when it comes to buying or selling property, so it is recommended to stay off the market until you are confident with what you are doing. Real estate agents are there to help you with some of these decisions and can offer helpful insight into this ever-changing market.
Home inspectors have been extremely busy the last couple of months as the real estate market has been heating up! This can make it difficult to find a thorough and experienced professional when trying to sell a home. Here are some tips to hopefully help you through this process.
To begin with, it is important to note that not all home inspectors are the same. It is recommended to go with someone that you know or an individual who has great reviews and a strong reputation.
Communication is one of the biggest variables in having success with a home inspector. Entire sales can break down and a potential buyer may lose the house of their dreams if the home inspector is inaccurately able to communicate what the deficiencies are in a property.
Common questions to ask a potential home inspector:
Are you licensed?
What is your experience prior to doing home inspections?
Previous work experience can help with understanding the home better (such as construction)
How many inspections have you done?
The more inspections the better, there is a learning curve associated with this job (recognizing common flaws, knowing what to look for)
Do you get up on the roof and down into the crawl space?
Want to make sure they do not miss anything that may be lurking in the dirtier and darker spots (animal droppings, mold, wiring or plumbing issues)
What type of equipment do you use during an inspection?
A moisture meter can be used to find moisture in the walls (ex. behind tile in shower)
Heat sensors can be used to determine how well a home is insulated
For both sellers and real estate agents, try to be present for the home inspection so you can walk through the house with the inspector and ask questions. You can use this time to hear practical explanations of the issues with the home and gain a better understanding of how to fix them.
After a home inspection, a report is created. This report should include information about electrical faults, moisture content, design flaws (ex. old skylights), and any major structural integrity issues. This report can be daunting as its main purpose is to list what is wrong with the property. It is important to keep in mind that the older homes being sold today were not built following today’s building code. Focus on what is common for houses of this age and price point and what is not common.
There are some big-ticket items that are difficult to get closure on during an inspection. These can include:
Drainage – home inspector may have a small scope that can show if surface drainage is clogged; would need a professional with a longer scope to gain more information on this
Asbestos – need a professional in a hazmat suit to perform an inspection; would cause structural damage to multiple areas of the house as they would have to open the wall for sample
Presence of an oil tank on the property – may be able to find some evidence, but would need a ground penetrating radar scan to know for sure
One last note is that a home inspection is a condition report of how the home sits today. This means that it cannot predict what will happen in the future and cannot tell for certain what has happened in the past. Using an experienced home inspector can help with some of these uncertainties, however there are still limitations. Nevertheless, a thorough home inspection can help you make a more informed decision when selling or buying a home.