TREB to tackle phantom bidding
Use of concocted offers is to be the focus of a newly appointed Toronto Real Estate Board task force
It seems that Maureen O'Neill, President of the Toronto Real Estate Board, who only recently heard about the practice of "phantom bidding" has now made the revolutionary discovery that there should be "more transparency" in the real estate industry practices.
The following article appears in today's Toronto Star:
The head of the Toronto Real Estate Board is striking a task force of industry experts to look at ways to quash the controversial practice of phantom bidding.
"We certainly want more transparency in the industry," Maureen O'Neill said this week.
O'Neill has approached a Toronto broker to chair the committee and another five from across Greater Toronto to sit on the panel.
"I want someone from every corner of the GTA, so there is balance," she added.
The practice of seller's agents concocting fake offers in an effort to boost a home's sale price has caused a firestorm in the real estate industry.
Last month, O'Neill called on the Real Estate Council of Ontario to pull the licence of any realtor caught crafting bogus bids.
Her comments came after the Star revealed in September that RECO fined Kingston Re/Max realtor Bill Batson $10,000 for misrepresenting the existence of an offer to another member.
Batson was also found to have breached RECO rules governing ethical behaviour and duty to a client, and to have engaged in unprofessional conduct and "failing to act in an honest, forthright manner."
RECO spokesperson Sandra Gibney said a number of issues – including how to protect consumers in these situations – are under review.
"RECO would certainly welcome any suggestions that the Toronto Real Estate Board's new task force wishes to offer," Gibney said.
The issue first hit the headlines this summer when Michael Manley, owner of Prudential Properties in the Beach, ran against O'Neill for the presidency of TREB.
Manley vowed to put an end to false offers, which, before the Star broke news of Batson's troubles in September, O'Neill denied existed.
Last month, an informal poll of 30 Toronto-area agents suggested most believed phantom bidding occurred and there is a need for reform.
A Toronto broker told the Star that phantom bidding is "rampant."
"This is a major problem and it's causing a black eye for the real estate community," said the broker, who asked not to be named. "You end up with one man at an auction bidding against himself – it's plain fraudulent."
O'Neill is also urging TREB's board of directors to adopt a new system where "each and every offer" in a multiple bidding situation is registered on MLS.
Broker Ken McLachlan isn't waiting for TREB to change the rules before acting.
This week, McLachlan, who owns Re/Max Hallmark Realty, ordered his 450 agents, to register all offers.
This means that in multiple offer situations where Hallmark Realty agents represent the seller, the name and company of all realtors who have registered an offer will be disclosed in writing to any other involved realtor, upon request.
"We've been waiting for RECO and the board to do something, but they've been too tentative," said McLachlan, who also sits on the TREB board.
Registering bids is a necessary first step toward restoring public confidence in the bid process, McLachlan and O'Neill agree.
"It's a perception; it's the trust issue, and this full disclosure system would even the playing field for the buyer," McLachlan said.
The next step is for the actual bid amount to be registered officially, a practice currently banned under provincial legislation.
"I think the evolution of our business is toward full disclosure," McLachlan added.
O'Neill says she will oppose this because, even without names, it breaches a buyer's right to privacy.
Maybe sometime soon Ms. O'Neill will also learn about the concept of supporting competition in the real estate industry.
October 27, 2007 in Real Estate Practices | Permalink | Comments (0) | TrackBack
Community Safety - Amber Alerts
The Toronto Real Estate Board is a proud participant in the Amber Alert program. When an abducted child is in imminent danger an alert is posted immediately on TorontoMLS system.
As professionals who spend a great deal of time in the community, Realtors recognize that being alert could save someone’s life. Being engaged in community safety not only makes good business sense, it’s the right thing to do.
If you wish to participate in the Amber Alert program here is contact information:
The Toronto Police Service posts recent incidents up-to-the-minute at:
http://www.torontopolice.on.ca/newsreleases/
You can also register to have alerts emailed to you at:
In York Region recent incidents are posted at:
http://www.police.york.on.ca/media.asp
To receive community alerts in York Region visit:
Durham Regional Police post recent incidents in the media section of their homepage at:
http://www.drps.ca/netscape/index.asp
Wanted persons are posted at:
http://www.drps.ca/netscape/whatsnew/missingperson_browse.asp?Related_With=Most_Wanted
Missing persons in Durham are posted at:
http://www.drps.ca/netscape/whatsnew/missingperson_browse.asp?Related_With=Missing_Person
Peel Regional Police also post recent incidents in the media release section on homepage of website.
You can also subscribe to receive news releases from Peel Police through the following link:
September 5, 2007 in Real Estate Practices | Permalink | Comments (1) | TrackBack
Caveat Emptor
Caveat emptor, qui ignorae non debuit quod jus alienum emit.
- Let a purchaser, who ought not to be ignorant of the amount and nature of the interest, exercise proper caution.
The common law for the resale of real estate does not imply any promises of quality, habitability or reasonable fitness for a particular purpose. In Ontario that doctrine has been changed for new homes by legislation such as contained in the Ontario New Homes Warranties Plan Act.
Buyer and Seller Issues
The doctrine of caveat emptor basically means that sellers need not be concerned about the state of their resale property. However, there are some exceptions to the caveat emptor principle:
- The most usual exception is when the parties agree by contract (i.e. within the agreement of purchase and sale or other document related to the transaction) that the seller does state, represent or warrant certain matters.
- Another exception is if a court finds that there is a significant difference between that which was bargained for and that which was obtained - an error in substantialibus - where there is a total failure of consideration.
- Sellers can also be liable for misrepresenting the property, which would include lying when specifically asked about something or actively concealing known defects.
While sellers do not generally need to voluntarily disclose most latent defects, the courts have found an obligation on sellers to disclose material latent defects of which they are aware, such as those that make the property unfit for habitation, or dangerous, or that pose a serious health or safety risk. And, of course they can’t lie, if asked, even about a non-material latent defect … that would fall under the above-noted misrepresentation exception to caveat emptor.
Sellers are generally not required to disclose patent defects and therefore buyers take the property “as is” unless the contract provides otherwise. “Absent fraud, mistake or misrepresentation, a purchaser takes existing property as he finds it, whether it be dilapidated, bug-infested or otherwise uninhabitable or deficient in expected amenities, unless he protects himself by contract terms.” – quote from the late Bora Laskin, former Chief Justice of the Supreme Court of Canada
Latent Defect of Quality - Those that are hidden and not readily apparent to a buyer by any reasonable inspection.
Patent Defect of Quality - Those that would be discovered by a buyer by inspection and ordinary vigilance.
August 30, 2007 in Real Estate Practices | Permalink | Comments (0) | TrackBack
Internet real estate use jumps 13%
A report prepared by Comscore Media Matrix shows that the internet traffic on Canadian owned and operated real estate web sites, including mls.ca and sia.ca, has increased 13 per cent since June 2006. The report also shows that Canadians visit real estate web sites more than internet users in 15 other countries, including the United States.
Thirty-one per cent of all Canadian adults visited a real estate web site in the past year, the highest reach of all countries monitored by Comscore. That compares to 29 per cent of all adults in Britain, 25 per cent of all adults in China, and 23 per cent of all those 18 years of age and older in the United States.
The Comscore report says that in the period between June 2006 and June 2007 the average of unique visitors per month increased by 18 per cent on sia.ca, by 6 per cent on mls.ca, and by 5 per cent on the ICX.CA web site. In that one year period the time spent on mls.ca has grown by 15 per cent, while the number of pages viewed has jumped 32 per cent.
The Comscore report also notes that the number of visitors each month switching between the English mls.ca and French sia.ca web sites has dropped in that one year period. The report also shows that in June 2007, the greatest number of visitors coming to mls.ca and sia.ca from search engine sites are coming from Google.
August 8, 2007 in Real Estate Practices | Permalink | Comments (4) | TrackBack
Rent increase guideline to be 1.4%
Announced guideline is lowest in history
The rent increase guideline for the year 2008 will be 1.4 per cent, the lowest guideline in the history of rent regulation in Ontario. The 2008 guideline was calculated for the first time under the new Residential Tenancies Act, and is based upon the Ontario Consumer Price Index.
"Our goal is to protect tenants from receiving a rent increase well above the rate of inflation," said Minister of Municipal Affairs and Housing John Gerretsen. "By linking the rent increase guideline to the Ontario Consumer Price Index, we've ensured that landlords can recover the increase in their costs, while tenants can still pay their rent."
The rent increase guideline is the maximum amount by which a landlord can increase the rent of a tenant without seeking the approval of the Landlord and Tenant Board. Most tenants in Ontario receive an annual rent increase that is at or below the amount of the guideline.
The first rent increase guideline was announced in 1975. Guidelines have been calculated each year since, ranging between 1.5 per cent and 8 per cent. The new Residential Tenancies Act took effect on January 31, 2007, creating a new system of rent regulation that includes linking the annual rent increase guideline to the Ontario Consumer Price Index, a measure of inflation calculated by Statistics Canada.
The 2008 guideline applies to a rent increase that occurs between January 1 and December 31, 2008.
July 3, 2007 in Real Estate Practices | Permalink | Comments (0) | TrackBack
Builder hates Toronto's proposed tax
An article by Bob Finnigan is president of the Toronto Building Industry and Land Development Association
A double-whammy is defined as a combination of two unfortunate or negative circumstances or events. Paying the same tax twice, once to the provincial government and once to the local government, would be very unfortunate indeed, particularly when we're talking about a more than $4,000 increase to the price of an average home in the city of Toronto.
Under the City of Toronto Act, which took effect on Jan. 1, the provincial government empowered council to impose new taxes. Knowing the public antipathy to tax increases, Mayor David Miller insists on using the euphemism "revenue tools," but the bottom line for would-be homebuyers is that Toronto is set to become the only jurisdiction in North America to whack homebuyers twice with the same tax.
The city is proposing to mirror the provincial land-transfer tax on all property transactions, which would suck $300 million out of taxpayers' pockets with nothing to show for it whatsoever.
(The city's chief financial officer has said it is quite likely that this tax will be used to shore up the city's projected $575-million shortfall in 2008.)
The Building Industry and Land Development (BILD) Association has two major concerns with the city's proposal, the first relating to housing affordability and the second relating to the issue of sprawl.
On the issue of housing affordability, the average MLS home price currently sits at about $380,000. If you buy that home today, you will pay provincial land transfer tax of $4,200. When Toronto is done with you, you will pay about $8,400. Amortized over the life of a mortgage, the incremental cost will be much higher.
Some commentators have intimated that this home-buying tax would hurt only sellers, choosing to ignore the fact that the land transfer tax is payable as an adjustment on closing that gets passed straight through to the buyer. First-time buyers will be hurt the hardest, of course. You simply cannot take $300 million out of the system and not expect any pain to be felt by individuals or, for that matter, the economy of Toronto.
This tax also runs contrary to recent efforts by the provincial government to direct growth inward and upward, not outward. The Toronto land-transfer tax completely changes the mathematics of housing choice. People will drive across town to buy the supermarket special so anyone who thinks they won't cross regional borders to save $4,000 on their home price is dreaming.
Since this tax will also apply to commercial and industrial lands, the impact becomes a significant factor for businesses considering investing in the city. This tax will undoubtedly make Toronto less competitive and gives business another reason to opt for the 905 area, which is already happening in a big way.
Polling commissioned by our organization and others reveals that the city land-transfer tax is not supported by about 69 per cent of respondents within the 416 and 905 regions. The research also demonstrates that the city should not impose these taxes until it gets its fiscal house in order. New taxes are not the solution, nor are they likely to make our city more livable.
The doubled land-transfer levy would be a blatant tax grab. It will be bad for homebuyers and it will be bad for business.
June 23, 2007 in Real Estate Practices | Permalink | Comments (1) | TrackBack
Residential Real Estate Guidelines
New Real Estate Guidelines and Fee Schedule are important steps toward improved service during real estate transactions.
Residential Real Estate Transaction Guidelines recently adopted by the Law Society of Upper Canada represent an important step forward for real estate lawyers and the public they serve, says the Working Group on Lawyers and Real Estate.
Both the Guidelines, and a new Suggested Fee Schedule, embody a common principle: that good communication between lawyer and client is paramount. "Discussion of the type of legal work needed, and what it costs, means there are no surprises for the client or the lawyer," says Clare Brunetta, co-chair of the Working Group on Lawyers and Real Estate, an umbrella group of real estate lawyers and law associations. "Better informed clients and better instructed lawyers make for happier deals all around."
The Residential Real Estate Transaction Guidelines adopted by the Law Society of Upper Canada earlier this year (details on the new guidelines are available online at http://mrc.lsuc.on.ca/jsp/residentialRealEstate/)are based on six principles, first enunciated by the Working Group, that should apply to lawyers practising in the real estate field.
The Guidelines provide insights on many evolving practice issues, like the prudent use of title insurance, and represent the first broad updating of residential real estate practice standards since the mid-1990s.
A Suggested Fee Schedule, to complement the Guidelines, has been posted by the Working Group at www.lawyersworkinggroup.com.
"The Suggested Fee Schedule is a necessary and helpful corollary to the Guidelines," says Ray Leclair, co-chair of the Working Group. "The Guidelines represent an excellent way to deliver legal services for real estate deals. Value-added legal representation can only be had if there is fair and adequate compensation for the work."
April 4, 2007 in Real Estate Practices | Permalink | Comments (0) | TrackBack
New Assessment Model for Ontario
In the new Ontario Budget, the government proposes to introduce three important changes to the assessment system to enhance the fairness and predictability of assessments for property owners while continuing to revalue properties on a regular basis and enabling municipalities to continue relying upon a stable source of revenue to fund important public services.
These proposed changes are:
- a four-year reassessment cycle;
- a mandatory phase-in of assessment increases;
- enhancements to the fairness and effectiveness of the assessment appeal system.
The implementation details of these proposed measures, as well as related programs and policies, will be the subject of consultation with municipalities, the Municipal Property Assessment Corporation (MPAC), and the Assessment Review Board (ARB).
Timing of Re-Assessments
The next reassessment is currently scheduled to take place for the 2009 taxation year, based on property values as of January 1, 2008. For the future, the government is proposing that subsequent reassessments would be conducted every four years, coupled with the implementation of a mandatory phase-in program.
The timing of the four-year reassessment cycle would operate as follows:
- Upon the next reassessment for the 2009 taxation year, property assessments will be updated using a valuation date of January 1, 2008. This valuation date would apply for 2009, 2010, 2011 and 2012.
- The cycle would continue accordingly every four years.
Mandatory Phase-In
Budget 2007 proposes to introduce a mandatory phase-in of future residential assessment increases over four years. The proposed four-year phase-in program would be implemented province-wide in 2009, following the next reassessment. This approach would complement the proposed introduction of a four-year assessment cycle. The phase-in program would apply to residential, farm and managed forest properties. The program would not apply to assessment decreases. This avoids the possibility of a homeowner being taxed on an assessment greater than the actual value of their property.
New Appeals Process
The government is proposing to introduce the following measures to improve the fairness and effectiveness of the assessment appeal system:
- convert the optional request for reconsideration program into the mandatory first stage of the assessment appeal process;
- change the deadline for filing ARB appeals so that it follows the completion of the reconsideration process;
- establish standard information disclosure requirements at both the reconsideration and appeal stages.
and
Establishing a two-stage appeal process with sequential filing deadlines and standardized information disclosure protocols should:
- simplify the appeal process as only one avenue of review would be pursued at any time ensure that the reconsideration process is used effectively as a venue for the exchange of information;
- reduce the number of appeals by resolving factual issues through the sharing of information at the reconsideration stage;
- and provide parties with access to consistent information within consistent timelines.
The Ontario government proposes to implement these measures to dovetail with the timing of the next reassessment for the 2009 taxation year.
March 29, 2007 in Real Estate Practices | Permalink | Comments (0) | TrackBack
Beware of fraudsters stealing homes
You can lose your house without even realizing it
Susan Lawrence was trying to sell her home, but had it stolen instead. The 55-year-old widow said she never imagined that a "For Sale" sign on her front lawn would make her the victim of mortgage fraud. Now she is cautioning others to learn from her troubles.
The Toronto woman was in Vancouver yesterday to raise awareness of mortgage fraud, which is estimated to cost Canadians between $300 million and $1.5 billion a year.
March 16, 2007 in Real Estate Practices | Permalink | Comments (1) | TrackBack
Real Estate Commission Fees
Real estate commissions are generally based on a home's selling price, and although there is no set rate, five per cent, split between the listing and selling brokers, is most common. But the whole practice of tying commission rates to selling prices is the source of rising controversy, especially as soaring property values across North America have driven an explosion in paydays for top-end real estate agents. The system "ill serves the interests of both home buyers and seekers, and is a primary reason why such fees may be inflated by, on average, more than 100 per cent or US$30 billion annually," says Mark Nadel, an attorney with the federal trade commission in Washington, who writes on policy issues. In an article published in October for the AEI-Brookings Joint Center, Nadel writes that "this inefficient formula" results in a "protectionist industry" on the side of brokers, and one rigged against buyers and sellers because the agents make roughly the same money, regardless of marketing costs, time, expertise and level of service.
There's no evidence that a higher-priced home is more costly to sell and, as we've seen from Greenberg, the opposite may even be true, especially in red-hot urban markets like Vancouver, Toronto and Calgary. But commission rates do not decrease with lower house prices or quick sales. This means agents in Canada's top markets are making more money, selling expensive homes in less time, with fewer marketing costs, than agents in slower, less expensive markets like Halifax and Saskatoon.
And a backlash may be beginning. Some are calling for a lower commission system like the one in the U.K., where agents typically collect just a one per cent commission. Here in North America, more and more brokerages are popping up offering flat-fee home sales, where the agent's fee is fixed, regardless of selling price.
But not everybody agrees there's a problem. Alan Tennant, president of the Canadian Real Estate Association (CREA) and a realtor near Calgary with Remax Rocky View, agrees that there are definitely agents out there making lots of money. But he says there are other occasions when agents will have houses listed for three months, and when they don't sell, owners take them off the market and the agent gets nothing, which explains why agents are highly motivated to sell your home, even if the price is not what you want. But this creates another problem -- achieving the best price for sellers. There is little incentive for an agent to list a home at the highest possible price and stay firm. An increase of $10,000 in the selling price means just a $500 increase in the commission, and it might make the home harder to sell. It makes better economic sense, from an agent's perspective, to price homes to sell quickly.
At the root of the real estate paradox is the Multiple Listing Service (MLS). Accessible only to licensed realtors, with $120 billion in sales last year in Canada, this is one of the most effective marketing tools ever created. It's like the stock brokerage of real estate -- if you're not on the MLS, don't expect to get a great price for your house. But the exclusivity of the MLS is stopping real price competition from evolving among agents, argues Nadel. He'd like to see homeowners be able to list their own properties on MLS to encourage more competition to lower commission rates.
March 3, 2007 in Real Estate Practices | Permalink | Comments (6) | TrackBack
Truth in Advertising
English estate agent decides 'honesty is the best policy'
Estate agents are often accused of blatant dishonesty for the lavish descriptions of properties they are attempting to sell. But it is not often an estate agent is accused of using near-the-knuckle gags to catch the eye of househunters.
Julian Bending decided brutal honesty and a sense of humour was the best policy when advertising a property for sale. In one description he warned potential customers: 'Dear God, it's difficult to imagine a more disgusting house than this.'
But even Mr Bending may have overstepped the mark with his latest description of two properties on the market in Glastonbury, Somerset. One description for a two bedrooms terraced house at £155,000 reads: "All the charm and poise of a vicar on crack. Hall, cloak room, sitting room, kitchen, bathroom, parking and rear courtyard garden. Suit midget on a budget."
Meanwhile, an elegant cottage is advertised as: "An absolute stunner - if this cottage was a woman it would be Denise Van Outen in a rubber suit holding a cold flannel." Mr Bending, 40, who has run the estate brokerage for five years, said his blunt descriptions had proved a big hit with both sellers and buyers who were fed up with misleading information from estate agents.
"There's the most incredible strength in honesty," he said. " If you get called up by an estate agent and they tell you somewhere is lovely and perfect for you and it's not, they have no trust in you. If people ring us up we say: "No it's horrible, don't bother' if it isn't what they want. People thank us while sellers are also grateful they don't have to bother with people who aren't interested."
A description for a one bedroom home reads: 'My personal favorite. Delicious as a small bun sprinkled with sugar on the top this place fair glistens with delight. It's smooth and silky with a contempory twist but still holds fast to an ancient value. A must see and cracking investment.'
In the five years Mr Bending has been taking this unconventional approach, the company has only received two complaints. Both anonymous complaints made to the Advertising Standards Agency but both were ruled to be without foundation.
February 27, 2007 in Real Estate Practices | Permalink | Comments (2) | TrackBack
Real estate beyond Internet listings
Blogs and videos offer lots more than just an open house
When shopping for real estate across borders or across continents, how would you like to tap into the local news and gossip, have a virtual tour of the area and chat with potential neighbours before buying a ticket for a personal visit?
Just as Web listings transformed international real estate a decade ago, new Internet tools are making even more information available — and not just from real estate agents.
Increasing numbers of potential buyers and investors are exchanging information in online forums, downloading video and audio reports, tailoring Internet maps to their needs and reading blogs for news and opinion.
And what is in cyberspace today is only the beginning, says Mark Lesswing, chief technology officer and senior vice president of the Chicago- based National Association of Realtors, which recently entered its first international joint venture with its Mexican counterpart.
"What we're going to see goes beyond listings," he said. "We'll see blogs take off, maps take off, research-driven things like trends in the market, more tools on social networks."
February 26, 2007 in Real Estate Practices | Permalink | Comments (1) | TrackBack
Toronto's creative neighbourhoods
New approach sought in building future urban developments
Developers need to embrace their inner artist to help build communities where creativity can flourish. That was the message to delegates at the recent Canadian Urban Institute conference, The Path to Culture-led Regeneration: Who’s Leading the Way?
While new condominium and commercial developments often trade on the creativity of the neighbourhoods in which they’re built, they can also destroy the creative character of those communities. Case-in-point: Toronto’s Queen West Triangle, a creative and cultural centre whose regeneration is driven almost exclusively by generic condominium and retail developments with the blessings of the Ontario Municipal Board (OMB).
“The OMB comes to mind for reminding us recently that it just may not be the kind of place one looks to for creative planning solutions,” says Tim Jones, CEO, Toronto Artscape Inc., a non-profit group promoting the establishment of creative communities.
“Major centres of creativity and innovation cannot afford, as they did in decades past, to sit back and watch artists and creative entrepreneurs driven out of the neighbourhoods they helped enliven.”
Cities need to take a holistic approach to planning, instead of implementing planning policy on a piecemeal basis, says Ken Greenberg, principal, Greenberg Consultants Inc. He points to the City of Ottawa’s Master Plan, which goes into effect any time development threatens to change the character of a significant number of buildings or properties.
“In the Queen West Triangle, in effect there really is no plan,” says Greenberg. “What we’re getting is an accidental by-product of a number of decisions on individual parcels which, if built the way they have been approved, would be an incoherent jumble of highrise condominiums and apartment towers with no meaningful streets or walkways, no real vital public spaces, no significant linkages and very little acknowledgment of the special role of arts and culture.”
But Margaret Zeidler, president of Urbanspace Property Group Ltd., says she wonders whether developers can play any significant role in cultural development in a high octane real estate market.
“I don’t think they can play a constructive role in an overheated market economy like the current one we have in Toronto, even if they wanted to,” she says. “At the annual real estate conference in Toronto, you will not see a single image of a city or a building or a streetscape. You will see images of bar charts and pie charts indicating which markets currently provide a higher yield on investment. Developers are not interested in much else unless culture and creative industries become something that can be used to their advantage.”
She points to creative developments using older properties in Toronto’s King and Spadina area, which were possible in the depressed real estate market of the 1990s, but impossible today.
“Even developers who would want to have artists as tenants couldn’t afford to because those rents wouldn’t pay the current mortgage,” she says.
Instead of putting the brakes on the construction market, Zeidler says public policy should harness that market, requiring banks and developers to support and provide affordable creative workspaces as a condition of new development.
The artistic community can also be encouraged to purchase real estate, rather than to rent it and face eventual eviction when property values rise.
“In the United States and Europe, the banking system is required to fund these types of activities,” she says.
“They’ll lend a great deal more money than Canadian banks will.”
February 21, 2007 in Real Estate Practices | Permalink | Comments (1) | TrackBack
Challenging property assessment?
Assessment Review Board Complaint Process
Anyone who remains unsatisfied about the assessed value of a property after going through the reconsideration process with MPAC, may file a complaint with the ARB. The information in this section will assist in filing a complaint. View the ARB's How to File a Complaint pamphlet [pdf format].
Request a Reconsideration by MPAC
After each reassessment, MPAC sends the property owner a Property Assessment Notice that indicates the assessed value of the property as determined by MPAC. Persons who believe the value assigned to the property by MPAC does not reflect its current value, should phone MPAC. Complainants should explain to MPAC why they disagree with MPAC’s valuation and request a reconsideration. If a reconsideration is granted and MPAC agrees to alter the assessment, the parties will sign an agreement that sets out the details of the agreement and the revised assessed value of the property.
Even if MPAC does not agree to change the assessment, this discussion will help complainants to understand how the property was assessed. This will likely help in preparing the case for presentation to the Assessment Review Board should the complaint go to a hearing.
February 18, 2007 in Real Estate Practices | Permalink | Comments (1) | TrackBack
How Americans buy homes
Technology is transforming how Americans buy and sell homes in unexpected ways, including how they work with real estate agents and brokers, according to one of the largest surveys of real estate consumers ever conducted by the National Association of Realtors®.
Nine out of 10 home buyers use a real estate agent in the search process, but use of the Internet to search for a home has risen dramatically over time, increasing from only 2 percent of buyers in 1995 to 77 percent in 2005; it was 74 percent in 2004. The next largest source of information for buyers is a yard sign, mentioned by 71 percent of buyers.
When asked where they first learned about the home purchased, 24 percent of buyers identified the Internet, up strongly from 15 percent in 2004 and only 2 percent in 1997. Although most buyers use an agent to complete the transaction, 36 first learn about the home they buy from a real estate agent and 15 percent from yard signs; five other categories were 7 percent or less.
The 2005 National Association of Realtors® Profile of Home Buyers and Sellers, based on more than 7,800 responses to a questionnaire mailed to a large national sample of consumers located through county deed records, is the latest in a series of surveys evaluating demographics, marketing and other characteristics of home buyers and sellers.
NAR President Thomas M. Stevens from Vienna, Va., said the findings underscore the complexity of the home-buying process. "Buyers who use the Internet in searching for a home are more likely to use a real estate agent than non-Internet users, and consumers rely on professionals to provide context, negotiate the transaction and help with the paperwork," said Stevens, senior vice president of NRT Inc.
"The real estate industry today bears little resemblance to the way we did business 10 years ago. It is hard to find another industry that has adopted technology so readily to its customers," Stevens said. "Realtors® have invested a lot of time and money in building information technology, and because of these efforts, more consumers than ever are using the Internet in their home search." The survey shows 81 percent of buyers who use the Internet to search for a home purchase through a real estate agent, while 63 percent of non-Internet users buy through an agent; non-Internet users are more likely to purchase directly from a builder or an owner they knew in advance of the transaction. "We find that the level of for-sale-by-owners is on a sustained decline and is now at a record low. In addition, a growing share of FSBO properties are not placed on the open market - they're private transactions," Stevens said.
A clear downtrend in FSBOs has been seen since that market share experienced a cyclical peak of 18 percent in 1997. Only 13 percent of sellers conducted transactions without the assistance of a real estate professional in 2005, and 39 percent of those FSBO transactions were "closely held" between parties who knew each other in advance, up from 32 percent in 2004. The FSBO market share was at 14 percent in both 2003 and 2004. NAR began tracking the FSBO market in 1981; the record was 20 percent in 1987.
"In reality, the term 'FSBO' is a misnomer when used to broadly describe homes sold directly by owners. Since two out of five of these transactions are between related parties, and those properties are not placed on the open market, we believe that 'unrepresented sellers' would be a much more accurate term to describe this segment,< Stevens said.
The median home price for sellers who use an agent is 16.0 percent higher than a home sold directly by an owner; $230,000 vs. $198,200; there were no significant differences between the types of homes sold. "While many unrepresented sellers are motivated to save on paying a commission, we think the price difference speaks for itself," Stevens said. "Owners without professional assistance also have problems in understanding and completing paperwork, prepping the home for sale, getting the right price and selling within the time planned." Survey data don't explain the price difference, but Stevens offered some context. "Agents know best how to prepare a home and maximize value, agents provide broader exposure to the market and are more likely to generate multiple bids, and the portion of sales that are between private parties are likely to be at a lower price than those on the open market." "The housing market today contrasts sharply with predictions a decade ago that the Internet would 'disintermediate' real estate agents, including speculation that NAR membership would fall in half. In reality, it's grown dramatically - selling real estate is not like selling a book or buying an airline ticket," he said.
Realtor.com was the most popular Internet resource, used by 54 percent of buyers, followed by multiple listing service (MLS) Web sites, 50 percent, real estate company sites, 38 percent, real estate agent Web sites, 31 percent, and local newspaper sites, 15 percent; other categories were smaller.
Married couples make up the largest share of the housing market, accounting for 61 percent of transactions. Single women purchase 21 percent of homes while single men account for 9 percent. Unmarried couples were 7 percent of the market, and 2 percent were listed as other. In 2004, single women were 18 percent of buyers and single men were 8 percent.
The typical buyer walked through nine properties, searched eight weeks to buy a home and moved 12 miles from their previous residence. The typical seller placed their home on the market for four weeks, had lived in it for six years, moved 15 miles to their new residence and previously owned three homes, including the one just sold.
NAR's senior economist Paul Bishop said both buyers and sellers use traditional methods to choose a real estate agent. "Word-of-mouth recommendation is the most common way to learn about real estate professionals," Bishop said. "The most important criteria, whether you're buying or selling, are the individual agent's reputation and their knowledge of the local market."
In finding a real estate professional, 44 percent of buyers were referred by a friend, neighbor or relative, 11 percent used an agent from a previous transaction, 7 percent found an agent on the Internet, 7 percent met at an open house and 6 percent saw contact information on a "for sale" sign. Six other categories accounted for smaller shares each.
The most important factor in choosing an agent was reputation, according to 41 percent of home buyers, followed by an agent's knowledge of the neighborhood, 24 percent. In terms of desired qualities in an agent, three categories were rated as very important by more than nine out of 10 buyers: knowledge of the purchase process, responsiveness and knowledge of the market. Of buyers who use an agent, 63 percent choose a buyer representative. Satisfaction with real estate agents is very high, with 85 percent of buyers saying they were likely to use the agent again.
Seller responses are comparable: 43 percent chose agents based on a referral by a friend, neighbor or relative, and 28 percent used their agent previously; 10 other categories were 5 percent or less. Fifty-seven percent of sellers said reputation was the most important factor in selecting an agent, followed by their knowledge of the neighborhood, 17 percent. Eighty-two percent said they were likely to use the same agent again or recommend to others.
Four out of ten respondents are first-time buyers, a finding that is consistent for more than a decade. The median age of entry-level buyers is 32 years, also typical over time, and the household income was $57,200. They made a downpayment of 2 percent on a home costing $150,000, but 43 percent purchased with no money down. Of first-time buyers who made a downpayment, 23 percent received a gift from a friend or relative.
The typical repeat buyer is 46 years old and had a household income of $83,200. They placed a downpayment of 21 percent on a home costing $235,000, but 11 percent of repeat buyers paid cash for their home. In all, 94 percent of buyers and sellers believe their home purchase is a good financial investment.
"To underscore the value of housing as an investment, all you have to do is look at the difference in how repeat buyers purchase their next home - the wealth effect of homeownership provides the greatest source for their downpayment, which is significantly larger," Bishop said. Aside from sellers who pay cash for their new home, 66 use the equity from their previous home for a downpayment.
The most important factors in choosing a location to purchase a home are neighborhood quality, cited by 68 percent, close to a job or school, 43 percent, close to family or friends, 36 percent, and the school district itself, 23 percent; seven other categories were under 20 percent.
NAR mailed an eight-page questionnaire to a national sample of 145,000 home buyers and sellers, based on county records, who purchased their homes between August 2004 and July 2005. It generated 7,813 usable responses; the response rate was 5.4 percent.
January 17, 2007 in Real Estate Practices | Permalink | Comments (4) | TrackBack
