So You Want To Write a Lowball! (part 2)
I hear the general public complaining about ‘lazy’ realtors not seeming enthusiastic about writing low ball offers. Some make outlandish claims that the realtors want to force their clients to write higher offers so they can make higher commissions. I don’t buy that. Who’s going to risk their reputation and license in most cases for a couple hundred dollars?
But look at it from my point of view. Why would I want to waste my time writing low percentage low ball offers with a buyer who comes to me without securing their financing and wanting to include a bunch of back door clauses? If you were me would you waste your valuable time if you had other clients?
Low balling isn’t the issue by a long shot. The real issue is the lack of education, reasoning & respect, and likely failure.
If you’re looking at property that has decreased in value by 5%, don’t expect the owner to jump at an offer 30% below market value, full of subjects, and without a deposit. Believing an owner should accept your low ball offer because you think your crystal ball is clearer than everyone else’s is delusional. It’s a sure way to waste everybody’s time, including your own.
I like to base offers & negotiation on stats, instead of personal opinion and sense of entitlement. Simply thinking an owner should accept your 20%, 30% or 40% below market value offer simply because you wrote it is wishful thinking.
It’s important to do your homework.
It’s important to be prepared.
It’s important to put yourself in the seller’s shoes and figure out what he’ll be able to accept and why.
If you do those three things you’ll improve your chances of success with a lowball offer, and you’ll find a quality realtor will be much more willing to work with you.
Do Your Homework
In this day and age its easy to get a ton of information on the market, especially if you’re working with a realtor. Find out how much competition your seller faces, what recent sales were, what the sell/list and MOI is, and what way prices are trending. Find out as much as possible about the subject listing. Know the DOMs. Find out about prior offers, and what those buyers have subsequently done (and be aware that your lowball offer is a good excuse for the listing agent to call previous offer writers).
Be Prepared
If you really want to write a low ball offer with some potential of being accepted, the least you can do is give a deposit cheque to your realtor up front to be put in trust and verify your financing prior to presenting the offer. These two things will make a strong impression. Your cheque is safe in a real estate broker’s trust account, and you can even have it put in an interest bearing account. Its easy for sellers to reject lowballs, but paying a deposit up front allows your agent to say “My guy is going to buy something. I’ve already go his deposit in the bank. The only question is whether you’re going to be the lucky seller in today’s tough market”. That makes it a little bit tougher to say no.
Get your financing arranged as well, and make sure your realtor is on the same page as your mortgage broker or bank. Lots of surprises come up at subject to financing removal time. Avoid those pitfalls. Allow your agent to present the subject to financing condition by saying “My guy’s approved for a mortgage – we just have to confirm that the bank is happy with your house”.
Know What the Seller Wants
Some circumstances force sellers to sell below market value. Focusing on neglected properties, long days on market, and foreclosures is a good strategy for finding owners in bad positions. They’ll be more open to accepting offers much lower than market value. Your goal isn’t to take advantage of them, but to offer them a solution to their problems (which you didn’t create, after all). In the beginning everyone thinks they want a certain price, but the real goal is always something else (a different property, steady monthly income, relief from the stress of a bad tenant or a damaged property, quick closing, long closing, whatever). Have your agent ask the listing agent what the seller is trying to accomplish. If you don’t get an answer in the beginning, keep asking. Often, during negotiations, the truth comes out. A simple exchange of money is the easiest and most common way to solve a seller’s problem, but its not the only way.
346 comments
If you were me would you waste your valuable time if you had other clients? –this here is the key, Aaron.
I like to base offers & negotiation on stats, instead of personal opinion and sense of entitlement. –no arrogance here, move along folks.
OTTAWA – Mortgage and consumer debt defaults could rise “significantly” if the global financial crisis deteriorates and triggers a widespread and deeper recession that cuts household income and makes it harder to pay the bills, the Bank of Canada warns.
Aaron, would it help to include this article with the low bid?
http://ca.news.finance.yahoo.com/s/11122008/2/biz-finance-bank-canada-warns-possible-debt-mortgage-defaults-conditions.html
The funny thing is:
lowball offers today = listed price in fall of 2009
Gadwin, you post too much for someone with such a modest i.q. stop taking up bandwidth.
More cheery economic news for ya’all. Don’t start writing those lowballs until we’re at least 50% off, now! Point Grey is only 35% off now, it will take at least 2 more months to hit 50%. Then you still have to ask yourself if an older bungalow is worth $600K or a newer 2 story craftsman is worth $900K. I really don’t see any way around hitting a 60-80% drop…
Obama team thinks economy will get a lot worse
It’s quite unsettling to talk to members of Barack Obama’s transition teams these days, especially those who are helping with the economics portfolio. Without going into details, the sense I get from them is that they are very worried that the economy will get a lot worse before it gets better. Not just worse… a lot worse. As in — double digit unemployment without the wiggle factors.
And, to remind ya’all, the Globe and Mail predicted, today, for the first time, a big wave of foreclosures in Canada.
Keep in mind also that Rob runs about 6 months in denial. The signs for the market turning were locked in place in April, he was in denial until the numbers started showing declines 6 mos later, even though it was a mathematical certainty. Lowballs are fine for the early stage in big price drops when you really want to get in and want the 10% discount. Now, the only intelligent thing to do is to simply wait it out, since the evidence is in for a long, fast plunge to depths never imagined a year ago.
Anyone thinking about doing a lowball should take a look at this graph, then review these hot rental deals. You can rent a fabulous Van West house for 1/3 the cost of ownership. Maybe 1/2 the cost of ownership with a “fabulous” lowball offer. In two years you’ll be able to have your choice of these dusty ‘08 vintage homes for ***less than the cost of renting today***
Why buy when you can rent until 2013?
That’s “In two years you’ll be able to **own** one of these homes for less than the cost of renting today.”
WBWUCSSAB?
Anonymous – I wasn’t trying to come across as arrogant. I’m just expressing the other side of the story. I’m all for slashing hard on the buy side. I just think there is a lot of misunderstanding that is leading to frustration on both sides.
Gadwin, I am betting the farm, listed prices in 2012 will be much much lower than 2009.
Naturally I could be wrong, but I doubt it, I am betting against Muir and accomplices, and their crystal ball has proven to be broken.
Oops, did I write accomplices? I meant to say experts of impeccable ethics, my apology, to the Real Estate Industry, I meant no disrespect. (Better be careful, we don’t want letters written on cloth like letterheads by expensive lawyers)
Nonetheless, I do feel Muir et al, are just plain incompetent, I certainly would not think the experts would pump and dump.
“If you really want to write a low ball offer with some potential of being accepted, the least you can do is give a deposit cheque to your realtor up front to be put in trust and verify your financing prior to presenting the offer. ”
This is okay, but I rather just keep the money in my account.
I will include a 10% deposit cheque with a lowball offer.
So if prices have already fallen 10%, and someone believes they will fall 40%, when should they contact a realtor about making a lowball offer? Wait until the market as a whole is 30% down? Or is it OK to start making significant lowball offers against properties that have been on the market for 90 days? 180 days? 270 days?
Also, if my realtor feels I am wasting their time, is it OK for me to call the other realtor and say “I’m considering putting in a lowball offer for $x, is this a worthwhile activity for my realtor to pursue.”
I will include a 10% deposit cheque with a lowball offer.
I meant “10% certified cheque upon acceptance”
WBWYCR:
“The signs for the market turning were locked in place in April, he was in denial until the numbers started showing declines 6 mos later, even though it was a mathematical certainty. ”
That’s good. According to you I was in denial until October. What exactly does denial mean? Recommending buying? Recommending selling? Any specific variations on those? You might want to sign up for my newsletter or point to something specific to back up your claim. I might have to send you a cease and desist email….
“I’m all for slashing hard on the buy side. I just think there is a lot of misunderstanding that is leading to frustration on both sides.”
Rob take note, the above is a quote from Aaron
“I might have to send you a cease and desist email…. ”
Take note the above is a quote from a member realtor of the Real Estate Board.
Billy:
What’s the advantage of keeping the money in your account? Compare that to the advantage of being able to figuratively throw a wad of bills on the table and make the seller refuse it.
Punface:
Its not strictly a DOM thing. Remember the old joke about the rich guy who leaves his wife for a younger woman and then asks the wife to sell his three cars – a Maserati, a Porsche and a Lotus. The guy who bought the cars figured the ad had a typo because he never understood the wife’s motivation. They sold the first day, and the price was unbelievable!
If your realtor feels that you’re wasting his time, ask why, and then ask yourself if he’s got a point. You’ve got to be reasonable. The realtor doesn’t owe you anything, after all, until you enter into a mutually beneficial business relationship. It stands to reason that if you’re wasting your agent’s time he might be the one who’s reasonable, and in that case you’ll be wasting the next guy’s time as well, not to mention your own. Lowballs are a way to make great purchases, not a way to work miracles.
Chili:
“would it help to include this article with the low bid?”
You certainly could, but you’d have to hope that the seller didn’t read the whole thing.
Aaron — you are saying your potential clients have a sense of entitlement, and to me that reeks of arrogance.
Who has a sense of entitlement – those waiting out this bubble based to buy based on fundamentals or those who jumped in at any cost just because they wanted their granite countertops and stainless steel fridges now?
Puleeeeeeeeeze.
15 Rob Chipman { 12.11.08 at 4:42 pm } Billy:
What’s the advantage of keeping the money in your account? Compare that to the advantage of being able to figuratively throw a wad of bills on the table and make the seller refuse it.
Rob,
As a general rule, money in my account is better than money in someone else’s account.
I can show my realtor my GIC account statement to prove it’s the money is there.
When I purchased my current home, it was certified cheque upon acceptance.
I plan to buy soon, and it will the same…..certified cheque upon acceptance.
What’s the benefit of having 10% ($50,000 to $100,000) in my realtor’s trust account?
lowball offer:
10% deposit cheque
1 subject: inspection
flexible possession
vendor says “bring your offer”
how solid is this scenario?
Anonymous 17:
Its not an entitlement contest. I think what he’s saying is that if you want your lowball to succeed you need to be realistic. Its got very little to do with the degree of entitlement that someone not involved in the transaction may or may not have had.
Now, if it is an entitlement contest between people waiting out a bubble and people who bought into a bubble, you might have a point. Still, people waiting out a bubble in order to buy on fundamentals still need to be realistic if they want a succesful lowball.
Imagine the market drops to within 20% of fundamentals and you want to buy. Why should the seller accept your offer? That’s the question. Nobody’s saying you should pay too much. Pay what you think is right. But don’t expect a seller to roll over just because you’ve found some like minds on a blog. It takes more than that.
Rob,
Is the 10% deposit cheque fine OR is Bigger better?
Like a 20% DEP Chq…. do you odds increase w/ a larger Dep Chq.
Thanks,
Romeo
Rob, don’t be silly, who would read the whole thing? But if the desperate seller has an inclination for facts, I would then point out how incredibly inept Derek Holt have been in the past, I would then show articles from the “experts” and what they said before the bust in the US.
I would also include a little historical trail of dismissals from Greenspan, Lereah, and some of the other superstars.
Then I would attach, for further leisure reading, recent articles from a few months ago, and the local expert prediction of 8 to 10% price increase projections till 2010.
If that doesn’t work, I guess I’ll have to show new clips from Ashley Ford et al, from the last Vancouver busts.
friends,
how about we prepare a powerpoint presentation . I mean SUPER awesome that points to further declines we can attach to the offer. that way we can ALL use it.
thoughts?
xoxox
romeo
Billy:
“As a general rule, money in my account is better than money in someone else’s account”.
As a general rule I’d say “sure”. But, when you send me out to buy a place for you with a low price on the offer we’re not talking general rules, are we?
The benefit of having the money in the realtor’s trust account is simple: it allows me to say “He’s already given me a deposit. This guy is committed. He’s let the money leave his hands”.
A guy who does that is more committed than you, who is insisting on keeping the money in his own pocket. Your resistance to take the step sort of proves that point. There is real power to demonstrating that a deposit has been paid. I’ve used the tactic to my buyer’s advantage in the past (in rising markets it helps with multiple offers). Even Mr. Turner recognizes the value of a deposit cheque, although he flinches when it comes to the presentation of it, and that dilutes its value.
The better question is: what’s the disadvantage of putting the money in the broker’s trust account? There really isn’t one.
Blueskies:
Why 10%?
Why subject to inspection? (the real question is, why have any subjects at all? That’s a serious question and its worth considering. Do you put subjects in when your in multiple offers? More to the point, do you put subjects in when you’re trying to buy a place before it goes to mulitples and you’re playing hardball? How can you do that and still be safe?)
What does “flexible possession” mean? How hard is it to fill in a blank?
“If you were me would you waste your valuable time if you had other clients?”
See, this is the problem with remuneration by commission. Realtors only get paid if they close. So there’s no incentive to represent the client if the realtor believes the prospects of success are low. And there’s no incentive on the client’s part not to waste the realtor’s time with pointless effort. The realtor’s and the client’s interests do not align.
And if all else fails, I would download the posts from this blog, onto a flash memory stick, and included with the offer.
I have verified my financing-I do have a pre-approved mortage that I have locked into this week for 120 days,-I am able to provide a deposit with an offer,and I will lowball all offers because a) the prices will continue to drop b) my down payment in my portfolio has dropped in value by $10,000 because of the stock market.
“As well, although debt is high, low interest rates means that at present most households are able to comfortably manage their financial obligations.”
The “experts” have been saying all along that Canadians are not overextended like the Americans, now they are saying something different.
But debtors be warned, we have a bond bubble, and when it pops, be prepared for high single digit, or even double digit interest rates.
Anon – Listen I’ll just say this. I wrote the article to try to bridge the gap that I seem to see on a regular basis. Take it for what it is worth. If you find it helpful, that’s great, I’d love to meet with you and talk strategy.
If you don’t, that’s fine to. I’m sure there are lots of hungry Realtors willing to run around in circles for you. Or if you choose to do it on your own. Good luck.
To Dignus’ point. I disagree. On the buy side nothing makes me happier then completing a deal that is the best price in the neighbourhood or building. Our interests do align. I don’t see the problem with getting paid to close a deal. If your goal is to run around in an endless circles that is your prerogative. It doesn’t mean I’m a bad guy cause I choose to use my time more wisely.
Rob (12) wrote
That’s good. According to you I was in denial until October. What exactly does denial mean?
Here’s a quote from March showing that the writing was on the wall and you (Rob) weren’t acknowledging it (I’ll dig around later to find one from late summer).
Jeff wrote
Jeff { 03.12.08 at 9:56 pm }
OH SH!T!!!
Big increases in inventory… just as I predicted… does anyone remember me saying that I will be on vacation through the winter and come back to sell people out of this crazy market… it’s happening!!!
Paul’s numbers are showing us on a daily basis the ballooning inventory.
Garth Turner has called an end to real estate:
http://www.greaterfool.ca
Stock markets are getting creamed… dead cat bounce the other day… fools!
I rent BTW.
DT+FCN=636 Listings
12 Jeff { 03.12.08 at 10:17 pm }
There has never been a clearer time to sell in Vancouver than now.
Prices are nuts and the odds are hugely stacked against owning; however, the fools are still buying… take this opportunity to get out.
The spring market will most likely see ballooning inventory and declining sales.
Clearly, the smart money is running for the exits.
************
To which Rob replied
Rob Chipman { 03.13.08 at 10:47 am }
Jeff:
Brave prediction, and one that I’m not gutsy enough to make (Hopefully, M-K, this doesn’t count as cheerleading, manipulative pap!
) Can you expand on your thinking? (I know that a lot of us would like that).
My question is this: what’s different about today’s market compared to last year? The argument that you’ve put forward (”Prices are nuts and the odds are hugely stacked against owning; however, the fools are still buying… take this opportunity to get out”) looks like the same one we’ve seen for quite a while. That begs the question: is the change a substantive one in the market that you can point to, or is it a change in your personal opinion?
I hasten to add that a change in your opinion, as in “I’ve changed my mind, and my gut feeling is that its time to get out now” isn’t by definition a bad thing or a wrong thing. At the same time, if your opinion is based on some objective data, I’d like to know what particular changes seem most important to you.
I think anyone who’s read some exchanges between WoW and myself know that I think the market suffers from some very high prices right now, but that inventory hasn’t exploded, prices are still rising, and sales, while weaker than last year, are still strong. That doesn’t indicate a strong trend to me (aside from “price growth is weeker this year”). The predictions of December haven’t panned out yet. FWIW, I’m squarely in the camp of “this market continues to defy”.
*************
To which Whybuywhenucanrent replied
Whybuywhenucanrent { 03.13.08 at 1:31 pm }
“My question is this: what’s different about today’s market compared to last year? ”
My response
* The pre-Olympic summer is barely one building cycle away
* Edmonton, Seattle, Portland, Salt Lake City and other Western “exceptions” to the housing crunch have followed CA and AZ into what appears to be a housing crunch.
* BC economy is taking a big hit from big slowdown in lumber exports (offset by increases in minerals, fossil fuel, commodities price increases)
* Chiliwack and Fraser Valley appear to be following Seattle/Edmonton into a RE crunch
* Canadian banks are taking big hits from bad investments in U.S. Real Estate. Canadian RE has had similar “bubbly” price appreciation–”liquidity” might be structured differently here, but “solvency” is the same–there’s not enough $ in the economy to pay all those mortgages, so up go the foreclosure #s, down go the prices. So Canadian banks are, presumably, less keen on lending to bubbly buyers. (Okay, this one *hasn’t* happened yet, but the writing is on the wall, and it wasn’t on the wall a year ago)
Again,
Whybuyifucanrent’til’13?
So, just pointing out that Rob traditionally does not stand in the lead when interpreting market indicators. Jeff was saying “Sell now while you can!” Rob was saying “this market continues to defy”. So now, when Rob starts talking up lowball offers, keep in mind (fellow bears) that you might want to take his suggestions a few steps further and simply wait out the market while it plunges…
On the run, will write a more substantive reply later
WBWUCR?
Chili:
You’re right, they won’t read the whole article (and RJ, pay attention) and here’s why: If you want to convince a guy to that things are going to go so far south that he’s better off with your hard earned cash than you are, you pretty much have to hope that he already believes that. If he doesn’t you’re pretty much in the position of trying to trade three magic beans for a cow, because let’s face it: when you tell him how bad things are going to get it will occur to him that you might be better off keeping your money, and so he’ll ask you why you’re willing to part with it, and that will hurt the credibility of your offer. (You get that RJ? The power point may trick the guy, but that’s not what I like to do).
Chili,
RE: Rates Rising Hard
I see that as a risk too- as a future buyer at 03′ish pricing it concerns me.
I guess the solution is NOT buy or pay extra and get at least a five-year fixed?
Any other way around it?
Aaron–don’t take “anonymous”’s comments seriously, he/she just sits around and takes pot shots at us all — the rest of us just ignore him/her.
Thanks for the post on lowballs,
WBWUCR?
Rob,
thanks for the explanation – I sense something in your tone like you think I’m trying to do something unethical or something.
I’m just a 28 guy trying not to get screwed – like in 06′ when I went to see a studio for 300K plus and realtor urged me to get in while I can. So forgive me for doing my homework – I don’t want to part with my hard earned money.
P.S.
U didnt answer the question about the deposit.
By the way,
I don’t hold a grudge against the realtor – I know his name but I won’t post it. He encouraged me to lever up as much as possible – while I could still afford a studio. Do I hold a grudge – no. Did it teach me a hard lesson – yes. Will he get a referral from me – no.
Whybuywhenucanrent? – Thanks for the heads up. By the way did you take a closer look at the picture of me and the socks yet? If not take a closer look. I think you’ll have a laugh!
Rob, finally something we can sink our teeth in.
Forget the science, forget the fundamentals, it’s about perception, smoke and mirrors, and the great illusionist know how the human mind just fills in the blanks.
The marketers can get people to camp out to buy leaky condos overvalued by 50% so long as you can keep the illusion alive, but remember Rob, it is an illusion, and eventually the lights go on, and the party ends.
Not once, so far has the crowd hysteria ended orderly or well.
Anybody low balling now is just as insane as the fools who stood in line on skid row to buy a leaky box.
Any other way around it?
Romeo Jordan:
After the Bond Bubble Bust, Re will Be very cheap.
Excellent Point Chili:
Chili bring up a important point about ethics. Listen, a lot of people bought into the whole RE bubble because of the marketing. The ads in the Georgia Straight, the hubris on television, the line ups for pre-sales, etc. The majority of entire tragic comedy was marketing 101. The bubble was marketed, and the bust will be marketed too. So, if we use some marketing techniques that were used in the last 6 years what is the big deal? Great point CCC.
The remaining people on the side lines are people who saw those ads, or listened to the hubris and just rolled their eyes.
Whybuy:
“So, just pointing out that Rob traditionally does not stand in the lead when interpreting market indicators.”
A little while ago you said I was in a 6 month denial bubble. Now I’m not sure if you’re saying that I hadn’t recognized the falling market by mid-March or if you’re saying I disagreed with Jeff, or if I had the opposite opinion from Jeff.
If its that I hadn’t recognized a market turn, with all due respect, even RJ hadn’t called it at that time, and he’s the self-proclaimed expert on the turn. We had 4.54 MOI, and prices were still rising.
If you’re saying that I was in disagreement with Jeff, re-read the post. I said I wasn’t gutsy enough to make the same prediction as him, hadn’t seen anything in February and March that we hadn’t seen in November or December, and wanted to know what his thinking was. My disagreement with him certainly wasn’t as large as you may be thinking.
If you think I was of the opposite opinion, that is, that it wasn’t a good time to sell, you’re not well informed. I recommended that people who beleived in long term holding should hold (and I fall in that camp myself). I also recommended that people at the end of a wealth building process should seriously consider leaving the market. You don’t know that because you dont read everything I write (although you could certainly see more if you wanted to – my recommendations are available; I just don’t share them with everyone).
You’re also jumping to a conclusion when I talk up lowballs. I’ll make it clear: buy when you want, on the basis that you want to buy on. I recommend buying on sound metrics and holding for the long term. You can do what I recommend in terms of metircs, and do what I recommend in terms of lowballs. The two aren’t mutually exclusive.
On the other hand, you can write lowballs that are a waste of time.
Which course of action makes more sense? And is it wise to become educated in advance? You tell me.
That was me,
Aaron–will do.
Romeo–you have to post the names of the ones that gave you crappy advice. There’s all sorts of lurkers on this board thinking about buying, asking how to find a good Realtor, and unless folks are upfront about their experiences, good and bad, there’s absolutely no incentive for them to shape up their act. Contrary to what some have said (DJ, probably Rob and others) Realtors don’t have much of a need to build up a long-term relationship with clients, as they only do the deed once. Not like a hair stylist, tax attorney, auto repair shop, restaurant, etc.
Or, maybe you don’t need to post it here, but maybe we can make a feedback section over on the Pope’s wiki. I’d like to recommend my Realtor, but do it anonymously since it would be too much IRL, and I’d like to recommend against a couple others that I talked to that gave me sketchy advice…
My $.02..
Back to my project,
WBWUCR?
Chili:
You’re going to have a hard time getting me to agree to abandon fundamentals. Sorry.
BTW, if you’ve got a problem with illusionists getting people to line up for hours to buy something, take it up with them. I have never recommended doing that, and have recommended not doing it. Its tough to make a fundamentals based case for buying a pre-sale. It can be done, but its tough.
Rob, all I’m saying is that some folks are six months ahead of you in interpreting the consequences of today’s news. I’m on the run, but will have a proper reply for you tomorrow — maybe I shouldn’t have shot off like that, Im’ a bit stressed at the moment.
You can look forward to it ;^)
WBWUCR?
“If its that I hadn’t recognized a market turn, with all due respect, even RJ hadn’t called it at that time, and he’s the self-proclaimed expert on the turn.”
I am getting really tired of the lack of adoration bestowed to me. I said the bear market began april 26th 2008, the weekend of the 10 myths of real estate… pull out the damn benchmark graph and look at the 3/4 poin in april – it almost perfects fits the inflection point.
Why- did i call the break -
inventory
sales
and most importantly, the PSYCHOLGICAL SHIFT I witnessed –
i said, it began april 26, and I would be proven correct if we have prices hit lower lowers, hence confirmation.
Rob, pay homage to the call – it was bang on. If you don’t I will body check you in a hockey game, and I will, AND I REPEAT, I will NOT Febreeze my pads before the game.
WBWUCR,
I won’t name the name.
Romeo Jordan, how do you like the latest campaign on the “talk radio” station?
“Our economy is works- keep it working” or something or such.
What an insult to the intelligence, cult like mantras.
I will admit there is a female host who does make references to the “bubble” I anticipate she will be told to tone it down soon.
Why 10%?
10% is a substantial sum of money and
shows the vendor we are serious
What would you suggest?
Why subject to inspection? CYA
oil tanks, crumbling foundations, survey problems
to name a few…..
Do you put subjects in when your in multiple offers?
i would never do a bidding situation with no subjects
you’d be asking for major problems…..
More to the point, do you put subjects in when you’re trying to buy a place before it goes to mulitples and you’re playing hardball? How can you do that and still be safe? you wouldn’t be safe in this scenario
What does “flexible possession” mean?
vendor wants long possession… no problem
vendor wants short possession… no problem
helping the vendor do what he wants….
CCC,
I do not listen to local radio nor do I watch local news. I think it is a complete waste of time. I much rather visit this blog and learn something.
Rob, Aaron said he didn’t want to “waste his valuable time”. I thought this was telling. He is not compensated for his time, just for closing a deal. Even though the client’s interest might be to write a number of low percentage bids, which may eventually pay off in a very good deal, the realtor won’t want to because that effort doesn’t get compensated — he’d rather the client write a single high percentage bid just to close.
Rob, you seem to say “happiness” is the motivator for a getting the client a good deal. I’m sure that’s true for you. Systemically, though, it’s not exactly as robust an incentive as ol’ do-re-mi, is it.
For the client who does want to “run in circles” as you put it (and how telling is THAT) — though who may have a reason for believing this strategy will pay off, the commission structure ensures the industry will not provide service to that client.
romeo wrote Rob, pay homage to the call – it was bang on.
True but Jeff and others were bang on a month before the April stats came out! Though I’m pretty sure if you’d been following the blog for the previous six months, you’d have called the top in late Feb instead of late April… You definitely called it at the point when the stats indicate the market topped. No question there. But you weren’t first ;^)
WB…
Rob I did not tag you as an illusionist, but let’s face it when they crank up the fog machine, you realtors benefit from the illusion and frenzy they create.
You know as a realtor, you are whispering against thunder. They have the system; you little guys have helium balloons and spec sheets copied at Staples.
Not fair.
And the push up bras help too.
I like the new MLS site….is there a way to set up a static search (ie. a set of search parameters that just lets me know what is new or falls into that search criteria)?
I haven’t checked, so I apologize if this is a silly question…
RRR – how you doing? (said in a “Joey” kinda way)
RJ:
Except you didn’t!
You called it as April 20, and here is the proof.
On 05.16.08 at 2:57 pm Romeo wrote:
The bear market in Vancouver Real Estate began on April 20th, 2008.
The correction will be sharp and short followed by flat real estate prices. All bear markets neeed a catalyst and they can be identified by the market’s and public’s reaction to news. I am confident in 1 year to two years when ware discussing what broke the camel’s back it will be linked to the “15 Myths of Real Estate” article. I have been a silent bear for 3 years now but I am outright bearish since I witnessed a truly amazing reaction to a bullish media release. When the market tumbles on bullish news be very very careful. The average Vancouverite has no clue the market has turtned – the smart money is exiting fast and hard. Wait till the cab drivers, average realtor, average joes start talking about prices actually falling. This will be very entertaining. I’m sure we will see some support from the fools that think 5 – 10% downside is a crash and they picking up bargains, but as in all bear markets, there will be a series of lower lows.
Since then you have referred to it as April 18, 24 and 26. And your spellcheck stopped working?
Just keeping you honest. If you want to be adored as a genius for the precision of your predictions (snicker), at least be precise!
WBWUCR,
I know other people said it was coming – but in my humble opinion, the tide turned, the emotional and psycholgical shift occurred april 26th.
The media went to far, they treated the public like children too long, and it all blew over – and I sensed it.
To be very honest, I’d been monitoring the psyschology of crowd looking for a change – the weekend of the 10 myths article ALOT of people had a negative response and sent letters to the Province and may vulgar posts by TOM, DICK, and HARRy on the website, many of which were deleted. When I saw TOM, DICK, and HARRY take offense and not gobble it up like idiots I knew the end of the days had arrived. Hence the post. Listen, it doesn’t matter – I don’t get any money or anything … but it was very very accurate.
anyways. just clearing things up.. Why were u upset earlier?
Whybuy:
“all I’m saying is that some folks are six months ahead of you in interpreting the consequences of today’s news.”
If you’re saying some people knew what was going to happen 6 months ahead of time then start looking back to November or October ‘07.
If you’re saying that some people knew that the market would retreat in a big way but didn’t know when, well, I’m squarely in that camp. (” 20%-40%, but I don’t know when”)
If you’re trying to say I’m a bad predictor, well, I copped to that long ago, which is why I recommend buying on metrics.
If you’re trying to say that I’m advocating buying anything right now based on it being a lowball relative to the list price, well, you’re going to have to show how that squares with my consistent advice to buy on metrics.
Personally, I think you (and I mean you, WBWYCR) can give good advice about buying without barking up the wrong tree.
RJ:
No can do. Take my number, keep your head up
Blueskies:
Bigger the better.
Inspect before the offer.
You may flinch in a multiple situation, but I’ve won them with less than the highest price.
The best way to win a multiple offer situation is to go in before the competition and elbow them out of the way so that it never goes to multiples. Few know how to do it safely, but it happens and I’ve seen it and I’ve done it. Its very effective. It is safe. Saying you can’t do it is like telling a welder that you can’t play with fire when he does it every day for a living.
Why not find out what dates the guy wants beforehand? Why do something the hard way when you can do it the easy way.
Keep it up and we’ll have to trot out that story about the old bull and the young bull (which might be good, because I’m pretty sure RJ has never heard it).
Chili:
Go to my VOW and tell me honestly: would a push up bra really make a difference in my case?
Rob — don’t mind wbwycr. He just comes on here to take pot shots at you. He thinks he is disguising them in his nonsensical garble but they stand out loud and clear to any readers. He just likes to play with you. The rest of us just ignore him.
anon,
we do? why buy is one of the most articulate guys here?
unlike my genius his is thoughtful and well laid out..
ALSO, i want to set the record straight about Jeff’s call of a top.. I think it is amazing, I saw the December post and that is awesome.
He was in the trenches and could smell the corpse.. but for me in bed on my lap top.. the stats + psychology was confirmed on April 26th.
I am not saying Jeff was not correct – he was and the post was amazing.
xoxox
romeo
good answers! thnx
and elbow them out of the way
i read this as being very close to asking price (1-2%)
What is this? Pick on Rob night?
Anyways my friends I have a youtube video you all must watch:
It is called Century of the Self, a must see – ALL EPISODES.
http://www.youtube.com/watch?v=f3LSyck0YTE
my early xmas gift to all of you.
xoxo
romeo
Also, I want to set the record straight about RJ’s call of the top. On May 16 you made your call of April 20!
I don’t know why my post pointing this out got hung in moderation… Perhaps it really is RJ’s blog and this is his way of avoiding embarrassment? Anyway, if you’re going to keep crowing of your precision, at least be accurate! Go back to 05.16.08 at 2:57 pm to see.
Alex,
u’d make a great personal secretary…
maybe I can hire you 1/2 time and help my existing assistant.
hot of the wire:
congress just agreed on a compromise on the auto bailout.. fyi.
Means nothing until it passes the vote. They’ve announced an agreement about 10 times already. Even then it won’t actually fix GM. Waste some money and delay the inevitable a couple months
Mish has another big post, with lot’s of pretty charts, all about deflation..
“It’s Not Disinflation
It’s Not Stagflation
It’s Not Inflation
It’s Not Hyperinflation
What’s left looks like a duck, walks like a duck, flies like a duck, and squawks like a duck. And that duck is deflation no matter what Humpty Dumpty suggests.”
He just plain makes more sense in light of the recent events than anyone who still talks inflation. And I’m not talking prices and and supply and demand stuff. True inflation/deflation. Print money though they might, the credit destruction overwhelms them.
U.S. auto bailout package collapses in Senate
http://tinyurl.com/5w2knt
it ain’t over til the fat lady sings……
ooops she just collapsed offstage…
is there a doctor in the house?
which is why the government will eventually resort to real monetization and inflation. monetized tax cuts/spending/handouts. the government will eventually control the credit markets also.
holy shite,
After hours is a nightmare. Dow down 300+ points. Hold on to you hats, boys and girls.
I have never ever heard of a realtor asking for a deposit upfront before there was a signed accepted offer and all subjects were removed.
Are your clients so bad that they are not pre-approved for their mortgages beforehand?
“If you’re looking at property that has decreased in value by 5%, don’t expect the owner to jump at an offer 30% below market value, full of subjects, and without a deposit.”
Hi Aaron, if this is the case there should be little surprise that potential buyers are waiting, without even entertaining the possibility of lowballing. It seems a lot of work that has no payback compared to waiting for a year for the same price and a lot more choice.
Hold on to you hats, boys and girls.
Back to meltdown? Sometimes I just hate being right.
oh yeah nutters! smart buyers know to buy in while money on the cheap! morgage rate going lower than prairie sunset! oh ;yeah neighbor can you say positive cash flow! i new that you could.
“Have your agent ask the listing agent what the seller is trying to accomplish”
Conflict of interest.
lowball specialists do not bother with a buying agent. bringing an extra parties’ emotions/motivations into it is awkward. phone or email up the selling agent and advise you can afford “x”. normally they would hint if it’s a possiblity or not. some agents would not feel comfortable doing dual duty on a low offer so will recommend the offer come in from a different agent. they might recommend someone from their own office of course.
This whole notion of the “sensitive seller” is compete rubbish. The ones perpetuating this myth is the Realtors. It’s no skin off my nose as a seller to reject a bid (any bid for that matter). And it’s just as easy for a buyer to write a low number on a slip of paper. It’s the Realtor who is complaining about their time being wasted. But come on…that’s your job! It’s just another cost of doing business. Sheeesh…
Realtors have been spoiled for so long that they have forgotten a fundamental rule of the market place; That things are easy to buy but difficult to sell. It reeks of entitlement at worst, laziness at best. Why not just charge a non-refundable fee on every offer, something meaningful that would cover time spent…plus a little extra (no need to be Draconian). And then let the ALL the offers flow and stop the sentimental “….think of the sellers feelings!!!” nonsense.
About my comment 72.
I do not WANT a financial disaster. I sincerely wish that TPTB had led us on a stable and sustainable path. I did not engage in any crazy speculative behavior on the way up. I ranted on until people were sick of me about how we are courting disaster.
I am now taking some profit, yes, but I HATE IT!
I just believe that we are in for a big and nasty recession/depression, and I can’t change it.
Sometimes I just hate being right.
blaireo, that is why the selling agent will appreciate the call/email first. they don’t want anyone’s time being wasted. if you come accross as credible and serious they will cut to the chase as best they can.
lowball specialists do not bother with a buying agent.
good point!
hand the selling agent your card
with your phone #
your offer and the line:
call me if you are willing to write this up…….
blaireo: I have to agree with you. When I bought my condo I made sure that I got as many hours of work from my realtor so that the commission added up to $10/hour because that was what I was making at the time.
alexcanuck:
it is always darkest just before
everything fades to black……
When I bought my condo I made sure that I got as many hours of work from my realtor so that the commission added up to $10/hour because that was what I was making at the time.
Hahaha. You mean pick up your laundry and wash your car? That would be hilarious.
“I don’t mind writing up that offer, but my car is a bit dirty, wink wink’ “Oh, and since your office is near my dry cleaners….”
AC, don’t get too cocky yet.
I’ve been making money as well but the moment I think I actually know what is going on, I lose money. Best strategy is to trade on what is happening instead of what we think might happen.
Well the bailout didn’t pass, greedy union not wanting to take wage cuts, here comes bankrupcy.
I’m not cocky. I’m terrified and way out of my comfort zone. I hate this, but it is too important to leave to “professionals”, none of who warned us this was coming. If I had listened to my ex “advisor”, I would be down 40%, plus we’d still own a crappy townhouse, which hasn’t lost much value yet, unless we tried to sell it.
Bailout – I think they get something done…mabye squeeze the union/pension benefits some more…they can’t compete with their cost structure…oh well, guess we’ll all just drive honda’s then…big deal.
Does BMW need a bailout? I drive a bimmer…my mom has a mercedes…my wife a honda…my sister a nissan and a honda…my brother an acura (honda)…are we in trouble, do these guys need a bailout to get through december?
I would be surprised if the bailout didn’t happen. I think it’s political posturing. From what I understand, they are leaning on the union (and rightly so) to match the salaries of Japanese companies. If there is one thing politicians are capable of, it’s spending tax payer money.
And posturing (they excel at both!)
“The Bank of Canada is warning.”
Bank of Canada is under obligation actually it’s Ontario in recession but provinces in good shape also likely to take benefit of falling interest rates, We have lots of jobs in B.C. STILL HIRING through 2010 unless global economy will be back on full stream,Significant job losses are not expected to happen in British Columbia http://www.cbc.ca/canada/british-columbia/story/2008/12/05/bc-economy-job-situation.html
Mr.William bought a principle residence in 2005 thought he should have done that in 2003 other side investor of second unit Mr.Travis Barker sold his investment property two months ago thought he should have done that in 2007.Some people who would have thought they were smart are likely to realize they were actually wrong.New home prices increased 1.5 per cent on an annual basis – Statistics Canada said Thursday. http://www.cbc.ca/consumer/story/2008/12/11/housing-index.html
Falling vacancy rates push up rents across B.C. http://www.cbc.ca/canada/british-columbia/story/2008/12/11/bc-vacancy-rates-rents-rising.html?ref=rss
Falling Inventory from 21,800 to 18,159 help pick up sell/list ratio,unit sales start picking up as interest rates are falling to reduce monthly payments.BUY WITHOUT FEAR because Canada is World’s friendliest countries that’s what forbes got in it
http://ca.finance.yahoo.com/personal-finance/article/forbes/932/worlds-friendliest-countries BOOM 2 HAS BEGUN Please take a note from Mr.Travis and Mr.William.
I have a friend who has been trying to sell his West Van SFH since May. Only 3 to 4 people have actually looked at his place during that time – but no serious offers. His Realtor basically told him that if he wanted to sell, he needed to price it at about 30% below assessment (which is based on mid-2007 prices). I believe that such a 30% haircut would bring us down to about mid-2005 prices. How low will the market clearing price be by this Spring? Interesting times.
What? no morning banter to entertain me while sipping the java? I guess you’re all sitting on your hands watching the Wall Street action unfold.
sorry patty cakes,
i was in the office at 4.30 am yesterday -had extra time.
today no time.
but, i will be posting about alex canuck in a bit. stay tuned.
Banter away, my friend. But I’m going to work.
Alright fellas…it was just my way of saying I always enjoy the chat.
How about the “fraud” on Wall Street?
How about the “fraud” on Wall Street?
$50 Billion fraud?
chump change given the huge amounts
of “bailout” money sloshing through
the system
TSX down a whopping 21 points at
this juncture…ho hum
pat,
did you enjoy Rob Chipman High?
The benefit of having the money in the realtor’s trust account is simple: it allows me to say “He’s already given me a deposit. This guy is committed. He’s let the money leave his hands”.
Rob,
Fair point that it shows he’s “let the money leave his hands”
However, perhaps I am old fashion. I don’t let money leave my hands until I have a contract.
I show my commitment by making an offer on a house with:
1) 10% or higher deposit on acceptance
2) downpayment of 25% or more
3) short period to remove subjects (financing & inspection)
If someone else shows more commitment (ie. no financing, no inspection or deposit in trust with realtor), all the power to them and I will put an offer on another house.
Vancouver, BC – December 12, 2008. British Columbia Real Estate Association (BCREA) reports residential sales dollar volume on the Multiple Listing Service® (MLS®) in BC declined 67 per cent to $1.07 billion in November, compared to November 2007. Residential unit sales were down 62 per cent to 2,707 units during the same period. The average MLS® residential price in the province was $395,687, down 12.5 per cent from November 2 007.
“The average sale price of a home in the province hit a 26-month low in November,” said Cameron Muir, BCREA Chief Economist. “The irony of markets is that there’s no shortage of buyers when prices are near a peak and a scarcity of buyers when prices are near a trough.” Home prices were 8 per cent lower in November 2008—nine months after the peak—than they were nine months prior to the peak.
“Today’s homebuyers are benefiting from a greater selection of homes for sale, more time to thoroughly investigate their choices and the ability to negotiate attractive prices,” added Muir
Year-to-date MLS® residential sales dollar volume in the province declined 30 per cent to $30.3 billion compared to the same period last year. Provincial MLS® sales declined 32 per cent to 66,467 units, while the average residential price increased 4 per cent to $455,537 over the same period.
3) short period to remove subjects (financing & inspection)
good point….
i can’t see putting in a ‘no subjects’ offer
if bank financing is involved
what happens if the bank refuses to fund
if there is no subject to financing…
you will lose your 10% (or more) deposit ……..
rob/aaron any answers on this?
The benefit of having the money in the realtor’s trust account is simple: it allows me to say “He’s already given me a deposit. This guy is committed. He’s let the money leave his hands”.
I would tell the realtor to take a hike if I was asked to put a deposit in the realtor’s trust account. In what way would I benefit? I can see the comfort level increasing FOR THE realtor’s, but I already know the level of commitment I have. I don’t need to prove it to anybody. If the realtor is afraid I’m going to flake out, he can find another client, because I’m pretty sure I can find another realtor. It’s the same reason why car sales people ask for a deposit when negotiating. I even got asked for a deposit at sleep country the other day. Tacky.
It’s “fully refundable and doesn’t commit you to the purchase” .
It looks like A.B. is getting some practical knowledge here, Rob was it the intend of the post and Aaron’s participation?
I was hoping to see some of the neat tricks of trades to peel these onions = “vendors agents” & vendors as we where talking about info fishing in part I.
I guess that was naive expectations.
So the Oracle of the deal making is to keep the “Hakuna Matata” style and attitude !
I can do that, and I can give you 10% NO PROBLEM! I can get it back one way or an other right ?
Please take charge and educate potential buyer here if it is feasible for you.
Thank you much in advance.
DJ
You have yet to come up with a game plan to accommodate the lowballer and you appear mad at them. Is this a productive?
I am a bear that would consider using you but this post has put me off.
I will wait till you see lowballs as an opportunity.
How much time does it take to write an offer?
How much money do you get paid if the offer is accepted?
What does that work out to in $/hr?
Basically you should read Garth’s article on being a vulture and come up with a game plan on implementing his ideas for a lowballer. This will tell the lowballer that you mean business and you are the best one out there for his business. Do not drive the lowballer around showing him houses. Let him do the legwork and you simply write offers and negotiate on his behalf. You know the fun stuff. Since the market has changed you need to change too and a new business plan is a great place to start.
So get to work and stop complaining.
A lowball offer template should be easy to make for the first 5 offers on a property and you should expect to excite the lowballer with this. Tell him the game plan. First we hit them with a good offer with a ton of subjects. Then a clean offer that is lowball. Then an offer in the middle with some subjects. Then a holdback amount held in trust as insurance against future drops in the benchmark. Then break off negotiations and say you are making an offer on another property. Then reoffer your last offer. ETC.
Is this bargaining in bad faith?
If you have the money and financing in place then the answer is NO and as a realtor you have a responsibility to represent the buyer and not the seller. Remember he wants the lowest price and there will be a time coming when the only offers out there are lowball.
Will you be in business then?
What’s with the pissing match? If you need to know who REALLY called the market… and not in a blog either… it was me. Bought: Aug 2001. Sold: Sept 2008. Highest price for 1/2 duplex in the area and it looks like no one or nothing will top that price now!
tony:
I have to agree with you. I think the Realtor is coming up with a reason that seems “legit” such as being able to tell the seller the deposit is already in… but I think the true motivation here is for the Realtor to secure committed buyers.
In fact, I think this could work against the buyer as it shows the buyers hand… it says I’ve got my deposit in and I’m gonna buy something… I’m eager so I’ll probably overpay.
RJ. What I like about this blog is the fact that it is a bit more eclectic than just rehashing “low ball offers.” We’ve got a little bit of the world economy thrown in coupled with some “love”
From working as a Realtor and my partner working in mortgage sales… I would say never trust anyone on commission… question their motivation because at the end of the day a Realtor, any sales person, or business owner is looking out for number one first.
“Are your clients so bad that they are not pre-approved for their mortgages beforehand?” – This isn’t solely about my clients. It’s more about what I see on a regular basis. There are a lot of people out there who say they are pre-approved when they really aren’t. They’re typically the ones that don’t want to give me (other Realtors) their bank’s or mortgage brokers contact information.
“I have never ever heard of a realtor asking for a deposit upfront before there was a signed accepted offer and all subjects were removed.” – It was actually the norm not that long ago to get the deposit in the trust account before even looking at properties. It guarded against the time wasters. I know older Realtors who still shake their head when they see deposits collected 24 hours afters final subject removal.
Aaron, as for Richmond, listing prices aren’t budging much. I am sure listing prices can be lowballed 10% off asking. But wait till spring and were talking reality taking hold to the seller that time is ticking away at the end of Q1 and still the house is not sold.
It’s all about Psycology.
Not even the Olympics can save owners now. Muahahaha!
“It was actually the norm not that long ago… I know older Realtors who still shake their head when they see deposits collected 24 hours afters final subject removal.”
I did only 40 deals in Vancouver… but I never even heard of this.
Get with the times! This isn’t the 80’s.
Shouldn’t we be lowballing in a few years time, when prices are even lower? Then we’d be lowballing even lower prices.
Makes sense to me.
Let us play here with real examples!
I can also arrange fare for a helicopter ride around Victoria or couch class tickets for 2 to LA upon successful completion 
MLS® No.: V735969, was listed before.
1971 (Age at list: 37)
My price is about 370.000 and I can assure any agent that I do have approval!
What is a game plan?!
First of all I wish the vendor All the best and Merry Christmas!
Please any agent out there sense no arrogance here as this is no time to be arrogant considering the outlook we starting to face.
“Hi Aaron, if this is the case there should be little surprise that potential buyers are waiting, without even entertaining the possibility of lowballing. It seems a lot of work that has no payback compared to waiting for a year for the same price and a lot more choice.”
Hi Jesse, the numbers I used were an example only. I could have used a 10% drop and a 80% lowball offer. The point I was trying to get across was buyers feeling that whatever offer they write, the owner should immediately accepted because the buyer feels he/she can predict the future, and is somehow doing the owner a favour by even writing the offer. Meanwhile the offer is full of subjects, high ratio financing, and a deposit payable in 24-48 hours. It’s not going to fly.
Smart investors will look for opportunities while the herd is sitting on the sideline waiting to see how low the values will drop. They’ll have their financing taken care of beforehand, have a healthy 10-15% deposit already in trust, and be able to complete in short order. Their lowball offer will have a better chance of being accepted. They may have to write a few offers before they get one accepted, but for me I would work with this client until we found them the deal they were looking for. I know it sounds elementary, but believe me I come across the aforementioned example all the time.
I’m eager so I’ll probably overpay.
it’s like having “SUCKAH” tattooed on your forehead….
Aaron! here is where I am right now! =
“have their financing taken care of beforehand, have a healthy 10-15% deposit could be in trust next day, and be able to complete in short order. Their lowball offer will have a better chance of being accepted. We may have to write a few offers before they get one accepted, but for me I would work with this client until we found the deal he+she were looking for.”
So this is GOOD!
can you look at the MLS # above and do the quick & dirty assessment?
Just my price vs asking?
I would like you to pay attention on location, age, and hints in the description.
Thank you in advance
DJ.. just wondering? do you go to parties, chat up any MDs there and ask them for advice on your tender backside?
jl
DJ,
if you can get V735969 for 370k you’re the man.
xoxo
romeo
p.s. I am talking to a realtor now… trying to see if 25% of list is a possibility – if so, robby u will get a call for moi.
What about this one: V726741
I’d pay 129K.
“Smart investors will look for opportunities while the herd is sitting on the sideline waiting to see how low the values will drop.”
Wow… it doesn’t stop… the Realtor lines just keep on coming!
BUY NOW… or not
Jeff – I’d hardly say I telling people to buy now. I’m following Warren Buffett’s advice. “Be Fearful when others are Greedy. Be Greedy when others are Fearful.” I also don’t believe in up or down markets, bull or bear markets, seller’s or buyer’s markets. I believe only in good or bad deals. Cliche? Yeah for sure, but it makes sense.
OK, what the hell is going on, why does Aaron get the blue back ground and I have yet to be granted the access.
Rob, I am not bluffing about the Febreeze(less) body check.
re:V726741
the breathtaking vista from the balcony
evokes memories of Van East…….. mebbe $99K
Hi JL,
my spouse is MD last night it was all right, but you are not allowed to flirt with me anymore
- do you go to parties ocasionally,
- chat up any MDs there and ask them for advice on your tender backside?
Sorry you sounds a bit shaggy if you no what I mean……
$fromA$ia – I’ve working with a client in Richmond. We’ve seen some 10-15% drops in list price in the last few months. I will say from what I have seen, I found Richmond to have some of the most unrealistic & inflated prices in the lower mainland. Like I mentioned though prices have started to come down.
I found Richmond to have some of the most unrealistic & inflated prices in the lower mainland.
Thank you! that is my point
“Be Greedy when others are Fearful”
did you get that JL?
“It’s all about Psycology.
Not even the Olympics can save owners now. Muahahaha!”
I agree with you it all psychology. It wasn’t that long ago that people were lining up for pre-sales and buying more than one for a cant lose investment. Now it Armageddon and everybody is hiding their money under their mattresses. Whatever the news tells us to feel, we feel. It’s a sad commentary on society, but it’s the reality as far as I’m concerned.
I’m not sure I agree with you about the Olympics. I have a feeling that there will be a lot of very positive news and marketing as we approach the Olympics. The party atmosphere in the city will be undeniable (even though I’m planning on going somewhere hot while the Olympics are here). I think there is a chance we may see another spike in the market. How long it will last is the question I’m not too sure about.
Even after everything has shaken out, there will be more international attention on our fair city, and there will be wealthy people from different parts of the world that will come here and fall in love with the city. They’ll buy up some Real Estate, which will push up values over the long run.
I’m not sure I agree with you about the Olympics. I have a feeling that there will be a lot of very positive news and marketing as we approach the Olympics. The party atmosphere in the city will be undeniable (even though I’m planning on going somewhere hot while the Olympics are here). I think there is a chance we may see another spike in the market. How long it will last is the question I’m not too sure about.
Even after everything has shaken out, there will be more international attention on our fair city, and there will be wealthy people from different parts of the world that will come here and fall in love with the city. They’ll buy up some Real Estate, which will push up values over the long run.
______________________________________
are you being sarcastic or serious?
“Thank you! that is my point.” – Don’t take this as advise to buy now. I don’t know you or your situation. But assuming you can afford to buy, and want to buy. Write an offer you feel is fair. The Realtor that is working with an unrealistic owner for a long time with limited interest and no offers is going to be happy to present your offer, and may advice his/her client to consider accepting your offer. You don’t know unless you try. Don’t be put off by asking prices. They are simply a starting point.
You need “mucho dinaros” in your pocket, so if you have them be nice and offer what you thing the good price is!
Seriously, agent who is managing the expectations alright would tell me to seat and wait “Rob kinda imply to me about that” and than come with “Hello how are ya doing” here is the buyer who will take care of your home can not wait for TLC!
But many like JL and other who may not even ones left this geographical paradise might say – you gotta be out of your mind pal, this is below the belt offer BC RE will never come down to this level…….
Perhaps they right, but I say you never know unless you try!
“are you being sarcastic or serious?”
Well I can see you are waiting to jump down my throat, but yes I’m being serious.
Smart investors will look for opportunities while the herd is sitting on the sideline waiting to see how low the values will drop.
I love it when people tell us what smart people do. God I wish I was smart.
“I love it when people tell us what smart people do. God I wish I was smart.”
Listen I’m not trying to tell anyone what to do. Maybe I should rephrase ’smart’ with ’some.’ You cannot deny that some people will be more bullish than you and some will be more bearish than you. The ones that are bullish and have the money will look for the opportunities. Times like these are when the big boys buy Real Estate in bulk. This is when they buy hecters of land to create a sort of land bank that they can develop when the timing is right. This is especially true in the US right now.
I love it when people tell that there are “smart people” & A herd =a large group of animals.
That is fantastic PR line!
Aaron,
I won’t jump down your throat but after reading you other posts I feel that was rather fluffy. I’ve seen better material from you.
Aaron,
Save this post for at least 12 months… the bear market just started….
“Listen I’m not trying to tell anyone what to do. Maybe I should rephrase ’smart’ with ’some.’ You cannot deny that some people will be more bullish than you and some will be more bearish than you. The ones that are bullish and have the money will look for the opportunities. Times like these are when the big boys buy Real Estate in bulk. This is when they buy hecters of land to create a sort of land bank that they can develop when the timing is right. This is especially true in the US right now.”
“I won’t jump down your throat but after reading you other posts I feel that was rather fluffy. I’ve seen better material from you.”
Really what part was fluffy? To be honest I hate fluffy, hype, gimmicks, selling a lifestyle, and generally BS. I feel I’m a straight shooter. Sometimes to my detriment, but that’s just who I am.
Hey romeojordan, how come I can not find any character description about me in your funny post a short wile ago?
“Save this post for at least 12 months… the bear market just started…. ”
Thanks for that. Actually it officially was noticed about 6 months ago. I started noticing downward pressureor at least a shift in public opinion last July-August.
DJ,
I don’t know you man. Sorry.
Aaron,
(sigh) you don’t get my point. forget it. good luck to you . I can tell your a nice person.
ahh *you’re
Two summers ago I really wanted a property near Queen’s Park in New West. They were asking $309K and I was not going that high. My agent said they are not moving on price and then told me the property had multiple offers and that I should offer $315!!! At that point I told him to take a walk.
I did not put in an offer and then called the selling agent. By miracles of miracles ALL of the bids fell through! What a shock! I then talked some offers with the agent and got the price to $305K. They would not go lower so I told them no thanks.
It seems to me both agents were using some very basic and unsophisticated tactics. I had similar tactics used on me when I was interested in a condo at the Victoria Hill properties in the same area.
Anyway, I would always suggest a low-ball offer and never settle on anything beyond your means. Just these two situations alone were enough to remind me why I dislike dealing with most agents. Finding a good one is like finding a diamond in the rough.
Hey, the markets did not melt-down, despite so many predictions…not saying (at all) that we are out of the woods…but perhaps the world won’t totally go into a black hole, even if we have major issues/recession to deal with.
Could be that life goes on, almost as usual, for most…
i agree with dingus that the way realtor commission is structured leads to divergent interests. realtors, by and large, have an interest in completing transactions (at any price). so they don’t like lowballing because it can be embarrassing to them and doesn’t have a high success rate.
with all due respect aaron, some of your posts contain variations on the standard “buy now if you have guts or brains” line common to all salespeople. quite frankly, i think now is a terrible time to buy because we are only in the very early stages of an economic crisis (in Canada) and the metrics still suck. so I wouldn’t even consider buying unless it was for an almost obscene lowball. “buy when others are fearful” is all well and good for buffett but people were fearful in September and you took a pretty huge bath buying then as opposed to now (remember, buffett’s buy when others are fearful line is about timing the market not buying value).
rob and correctly point out that sales involve both psychology and reason. price is obviously the most important factor but why not give the seller more reasons to accept a lowball, when the prices doesn’t appear very appealing. to me, a good approach would involve a discussion of risk. right now, it is risky to hold onto your property in the hopes that you will get closer to your asking price. i will buy it now for the lowball price because i am willing to accept that risk. are you?
romeo. enjoyed chipman high but i must admit it was the first time i have been called a nerd.
TSX closes up 123 points
floor at 8500?
is all the bad news digested ?
“Could be that life goes on, almost as usual, for most…”
You are spot on. Unemployment is still at historically low levels both here and in the States and investors have vast amount of cash that they are eager to put somewhere. There is still a lot of unwinding to go before the bottom I predicted at DOW 6700, but it looks like it’s going to be an orderly decent.
DJ.. I am confused about what you are trying to say to me/about me?
Just to ensure clear communication from me to you – I was trying to point out that you are asking for a lot of free advice from a realtor without an agreement with either Aaron or Rob (hence the comparison to asking MDs for free advice at parties)… (but then maybe I am making an assumption regarding your relationship with them)..
as for me being shaggy? huh? first RJ calls me a nerd – and no, I wasn’t that chick at band camp..
– (Hey Craigy.. maybe you and me could meet for a drink since we are both the “nerds” of this group? lol) and now you call me shaggy… ? Is there some sort of hidden meaning behind that besides my possible hirsuteness?
And the other references you make to me??? Sorry dude, but I really am not making any linear connections to anything I might have said? – you don’t know me – heck, you don’t even know if I have bought, sold or looking to do either in the next few months. I have not discussed my priorities at any time in this forum.
Of course, I like a good joke! and don’t even mind you trying to poke fun at me – but I would like to be in on the joke if there was one in your postings? Can you offer some clarity?
jl
“lowball specialists do not bother with a buying agent. bringing an extra parties’ emotions/motivations into it is awkward. phone or email up the selling agent and advise you can afford “x”. normally they would hint if it’s a possiblity or not. some agents would not feel comfortable doing dual duty on a low offer so will recommend the offer come in from a different agent. they might recommend someone from their own office of course.”
You’re right, some people feel its better to work directly with the listing agent. It isn’t a guarantee that the seller will want his/her agent working with the buyer as well. I’ve worked with those sellers, and I don’t mind telling the buyer to get another agent at all.
I hear about the agents that take advantage of ESL clients who do not understand the contracts or their rights, and wouldn’t want to question the Realtor. These Realtors simply shove the dual agency in front of their client and point to where they should sign. I would hazard to guess this Realtor isn’t going to be doing the Seller or Buyer any favours. Instead they’ll be looking out for #1 only.
Then of course there are the times that the “lowball specialists” come through my open houses, or call me late at night to come over to their house to talk about writing an offer through me. They’ll do me a favour and not bring another agent into the mix. This is usually followed closely by them asking about my commission. You know how they should get some commission because they’re doing me a favour. I explain to them that I work for the Seller first. If I’m going to be doing any cutting of my commission it will be in the Sellers favour only. By this point I know exactly what type of offer to expect. A price they can’t justify past “The market is falling pretty fast eh!” Accompanied by a $500 deposit, and 2 weeks for a whack load of back door clause subjects or a subject to sale! It never fails.
Here is a hypothetical situation of how in some cases dual agency doesn’t do the buyer any favours. I had a place for sale, and a ‘lowball specialist’ came through and wanted to write an offer. I had them come to my office. They asked me what price the owner would take. I told them I know the owner will accept full price, but you can write whatever price you feel is fair. They wrote an offer at a price favourable to my seller. I asked if they had anything to sell before hand. They said no, but they needed two weeks for financing, and they wanted me to assign them the buyer’s agent’s portion of the commission. I told them that if anything I’d cut the total commission for the Seller, but I wouldn’t be paying them anything. They agreed, and I presented the offer. The market was pretty slow at that time and we didn’t have any other interest so I told my sellers not to hold their breath for this offer, but we’ll accept and continue to look for back up offers. A week goes past and the buyers aren’t returning my calls. They won’t give me their broker’s number. I know this thing is falling apart. Then the buyer calls me to say they need to sell their house first. The seller wasn’t having any of that and the deal collapsed.
We finally received another offer from a buyer’s agent. We ended up selling for $80,000 less than the first offer the sellers initially accepted. It was a clean offer, and my clients just wanted out by this point. The buyer’s agent was able to negotiate with his client’s best interest in mind. From my point of view it can pay off to have a good buyer’s agent that you trust. Someone you would possible spend time with outside of Real Estate as friends.
must see TV:
http://tinyurl.com/5mgke2
ANP witnessed an increasingly common, but rarely documented, tragedy: someone being evicted from his home.
Hi JL,
– my spouse is MD, So as of today my tender backside was OK,
- do you go to parties – Yes occasionally,
- chat up any MDs there and ask them for advice on your tender backside?
Ignore the rest, I think you are beautifully inside!
Cheers
Aaron said-
$fromA$ia – I’ve working with a client in Richmond. We’ve seen some 10-15% drops in list price in the last few months. I will say from what I have seen, I found Richmond to have some of the most unrealistic & inflated prices in the lower mainland. Like I mentioned though prices have started to come down.
Now your talking my language Bud. It’s all about reality and yes Richmond is propped up by the asians getting off the plane.
The city of Richmond is also pushing this B.S. by pushing for higher assessments to aquire more tax… it’s really too bad. I grew up in Richmond, it used to be a really nice place till the city decided to put up all that high density crap where all those farms were. SICK!
$fromA$ia – My uncle lives in Richmond. He’s been thinking about moving our to tsawwassen or white rock. Personally I’m not huge on Richmond. Manly because of the bridges and tunnels, but also because of the below sea level thing. I probably get it from my dad, but I just wouldn’t want to be in Richmond when the big earth quake hits.
I’ve been looking at Tsawassen. Overpriced as well.
Home owners in Tsawassen hold their noses up really high!!!
4 road and east is better for Richmond. That way when the tsunami hits all the other homes will slow the waves down to about 3 raod, hopefully clearing out all that awefull construction and backwashing that stinky oval back down the river. Hopefully it’ll take City hall with it. You know city hall has 3 pumps 20 of which are pumping water full time so that city hall can have underground parking. How green is that.
“i can’t see putting in a ‘no subjects’ offer
if bank financing is involved
what happens if the bank refuses to fund
if there is no subject to financing…
you will lose your 10% (or more) deposit ……..
rob/aaron any answers on this?”
I would suggest sending your broker the MLS feature sheet ahead of time, and asking him to qualify the property. If you don’t have time for that, you could always write an offer subject to inspection and subject to bank approval of the property. That way your covered, and still showing that your financing is in order. If you couldn’t complete there is a good chance you are losing your deposit.
this is scary:
http://www.realestatetalks.com/viewtopic.php?f=8&t=36801
Tyler Gump of TRG Realty has been in the business three years, in time to experience the blazing market reach a tipping point in early 2008
(a whole 3 years)
But contrary to buyers fearing the current market, Gump says “It’s a gold mine for first-time buyers … I don’t think we’ll see these prices again.”
Gump says that unlike some colleagues and industry forecasters, he does not expect a further 10 per cent in price reductions for 2009.
“We should level off about next April,” he predicted.
Gump argues that prices have fallen to a point where sellers may simply remove listings from the market, turning the tables on what has become a buyer’s market pumped up with excessive supply from unsold listings.
“For people that don’t have to sell … (prices get) any lower and they’ll just pull it off the market.”
rob, aaron, thoughts?
RRR,
im going to play badminton today, wanna come?
xoxo
romeo
Alexcanuck,
I was going to do a long rant on you but I changed my mind.
On numerous occasions you have really annoyed me and I at times despise your logic.
But, one thing occurred to me – I despised my 2 bestest friends when I first met them…..
Awwww Romeo is sooo sweet.
“rob, aaron, thoughts?” – Everybody is entitled to their opinion.
ummm, my prediction still stands… many realtors will be sued.
it is not like he’s suggesting someone to take $5000 and buy some nortel.. he’s encouraging a 20-something to lever up w/ 350K.
Lots of law suits will come to you colleagues. I also forsee tighter control on realtor websites, and a centralized -email system where you guys will be audited periodically. And finally, you guys will have to slap on disclaimers on everything you say.
rj:
Interesting take on regulation for Realtors.
RJ – I can’t come out and play tonight….*sigh*
I’m still trying to figure out how to get out of my parking stall at work (thanks to that stupid speed skating oval’s grand opening tonight they’re parking in our complex as well)…I’m seriously thinking about leaving town during the Olympics if this is what we can all look forward too.
Might just miss out on Martini Friday this evening as well…*pout*.
Are we all still on for drinks next week? I hear Arit wants to join us.
~RRR
RJ -
Sue a Realtor? I can’t see that happening. No one holds a gun to anyone’s head and tells them to take out a huge mortgage. Banks, Newspapers, MSM, Brokers, friends/family and yes, Realtors perhaps all had a hand in “encouraging” people to buy. But in the end, we are all accountable and have to accept the consequenses for our own actions….
rrr,
your idea pleasing to a realtor’s ear is nice in theory BUT, that is not how the world works.
you ppl lose money en masses they start suing…. i work out w/ a bunch of lawyers downtown… the next boom for them will be going after realtors …..
tis the nature of the market.t
i hear realtors call themselves: RE Investment SPecialist, Real Estate Advisors, “professionals”…
if u r a professional or an advisor u r open to being sued.
RRR,
The same could be said for people who invest in Mutual funds (no one holds a gun to their head) but Mutual Fund companies are forced to send prospectuses and all of their advertising must clearly say that past returns have no bearing on future returns.
I’m also pretty sure that they are not allowed to use lines like “Invest in our fund… it’s what the smart money is doing…If you don’t invest then you must be dumb” (sorry aaron, but I had to take that job)
if you are a “professional” you risk being sued.
if you have no risk of being sued as Aaaron seem to indicate then you are nothing more than a encyoclopedia sales person.
Aaron, what are you?
mutual sales people get sued in bear markets….
Anonymous is an assho
RJ and Anonymous:
So that would mean…there’s no risks to being a Specuvestor or flipper? If it doesn’t work out….you just sue. hmmmm. I’m not sure I like that. I’d rather have people themselves be accountable – you play the game, you take your chances (Real estate isn’t for the weak of heart or the stupid). You or I didn’t drive prices up, sitting here in our rental units, waiting for the prices to make sense….
I really could care less if greedy pigs buying and flipping 2 or 3 condos go to slaughter….
…he was in denial until the numbers started showing declines …
Imagine that, waiting for tangible evidence rather than taking things on faith and projecting his hopes and fears into the future.
How shockingly…reasonable.
Blueskies….the video of the poor fellow in Virginia is sad. Some irate commenters on there as well. I sense a revolution.
RRR – u strike me as someone who’s read Atlas Shrugged.
RRR,
no, obviously one should be responsible for their actions – that is correct in theory. But, in reality, when shit hits the fan people look for a way out. It is a normal human reaction. This sounds foreign to realtors because it has been eons since the last majour bear market. Anyone in the investment advisory business know they run the risk of getting sued. Anyways, like my grandpa used to say “pray that you don’t have to do business with doctors and lawyers”. Listen, why johnny dunce and betty buttons realize they are in the hole 300K they are going to replay their whole decision making process AND IF they got some e-mails or printed documents from the realtor making projections and expected rates of return they have a case.
I don’t wish a law suit on ANYONE including myself but it is the reality of being a professional. Did the Investment Realtors think they could gobble up $150oo commissions without a catch? If I were a realtor and I was remotely concerned I’d retain a realtor and get proactive to protect my ass.
*when
*retain a lawyer
RRR,
badminton sucked w/o u tonite.
RRR
moreover, your opinion about the fairness of being sued indicates to me you’re a salaried employee. Business people and professionals know that the risk of getting sued is part of the game. AND, it does not mean your a bad person if you get sued – it may mean your bad, but not in all cases.
Wait and see- it’ll be in the headlines
RJ…..ditto tonight sucked here too. I missed “Martini Friday”….
RJ… I am a “professional” as well. The advice I give to clients, is what it is – black and white. Here’s not to say that some clients want to push the envelope as far to the line as legally possible, My reports also have disclaimers.
Here is a perfect example from a realtor’s website:
THIS IS A BREAKDOWN OF YEARLY PROFIT OF ONE BEDROOM APARTMENT.
The purchase price is $350,000
Gross rental income $2,500×12=$30,000
Appreciation $12,000
Strata fees $-2,400
Taxes $-1,300
Cable, phone, internet $-1,200
Net income $37,100 or close to 10%
No disclaimers…
So let’s fast forward one year and Johnny & Betty run the numbers and the 520K condo is now worth 399K what is their annual profit???
You don’t think a lawyers can’t make a case? Wake Up.
RJ – And the again…what’s wrong with “fairness”? I think it shows more about my upbringing, my nature, my prairie mentality…. I’m sorta proud of that.
RRR
1. is there a way we can catch… like a website or something..
2. I’m not arguing with you – I’m trying to shed light on the fact that people sue when they lose a shit load of money – especially with all the Vancouver RE hubris we had to endure.
sorry – CHAT not catch
rrr,
i found something – http://www.wireclub.com/
rrr,
goto the site , make a profie,
then meet me in the science room, no one in it.
RJ…oh my gosh. No more mystery! Should be interesting….
Fellow bloggers – wish me luck!
hurry, i’m waiting.
rj:
Nothing unethical in putting together an in depth presentation to demonstrate to a seller that the market is about to go down. Its just likely wasted time and effort unless you can answer a more important question from the seller: if the market is about to go down, why are you offering me money for my property?
From my POV the bigger the deposit the better.
dingus:
Aaron, like all realtors, is compensated for his time. Yes, deals have to close, but we dont rank deals based on the amount of time each requires. We assume that we’ll have to put some time in. Saying that you don’t want to waste time isn’t in conflict with that. Saying that you want a client who is realistic and informed isn’t the same as saying you don’t want to spend time on the deal.
If you still don’t accept that just negotiate a per hour rate with the realtor and still follow the advice and you’ll do well. Don’t let your pet objection hold you back.
My motivation for getting a deal done is a combination of many things – money, happiness, repeat business, positive feedback from the clinet (compare buying or selling a property to evicting a tenant for non-payment – guess which is more pleasant?). I guess my point is that you’re being very simplistic. Get to know your realtor. If he recommends that you pay more that what you and he agree is reasonable so that he can move on guess what? You picked the wrong guy. Its pretty straightforward.
A buyer may think that what I call running in circles will pay off. That’s fine. We can agree to disagree. The telling point is that I define running in circles objectively, and time frame is not part of the criteria. If the buyer does what I recommend I don’t really care how long it takes. Neither does Aaron.
coco:
“I have never ever heard of a realtor asking for a deposit upfront before …”
You’ve heard of it now. We’ve done it many times. After all, if you’re coming to me to buy a house, why not get down to business? Are we buying real estate or just thinking about it? Another point to consider is this: why wouldn’t a buyer give me a deposit beforehand? If its a trust issue don’t we have to go to work on that immediately? (Anyway, I don’t do it all the time, but there are times when its very smart to do it).
“Conflict of interest.”
Care to expand? Where’s the conflict? I don’t see it. I usually look for that info. Its pretty important stuff.
Jesse 71:
Effective lowball tactics work all the time. Its not just a right now thing. You can learn something anytime and then use it anytime.
Blareo:
I think you’re missing the point. The issue isn’t that the seller is sensitive and that the buyer should therefore walk on eggshells. The idea is that while you and your realtor can easily write a numebr down and not care if it gets rejecteded I’ll put some more time into it so that my buyer has a better chance of getting the deal done at the low price. How much simpler can it be? I’ll recommend to the buyer that he do his job, I’ll do mine, we’ll both go the extra mile, and we’ll get a succesful lowball. Its not about hugging people.
stagnate:
How many lowball specialists do you know? How do you define them? Is it a guy who makes a bunch of verbal offers and maybe one day gets lucky and grinds a guy for a couple grand on his commission?
Billy:
In most cases I’d agree with you. We’re talking about compensating for an inferior price by improving the rest of the offer. Why have any subjects at all, for example? We’re lowballing, right? We probably have plenty of time to get our ducks in order. Make it a simple 4 page offer. Why not? (We’re likely not in competing in this case, but tactics you use in competition can still help, because in competition you want to improve your offer as much as possible, just like lowballing).
blueskies:
You’re confusing subjects with protection. Subjects give you time to make sure you can do what you need to do. Why not get that cleared away beforehand? How is that less safe? Out of the ordinary, yes. Possibly beneficial? Also yes.
Consider this: if you’re buying a foreclosure you buy it without buyer subjects. Its only subject to court approval. You get all your ducks in order before the fact, with no garauntee that your offer will fly. But people do it, right? And they benefit by it as well.
Tony:
The deposit ahead of time isn’t to convince the realtor that you aren’t a flake. Its a tool you give your agent so that he has an easier time selling your low price offer to the seller. If you maintain that you don’t care what anyone thinks about your level of committment you’re essentially saying “I don’t care if I’m succesful”. Personally, I want my principals to be succesful, which is why I advise them. Crazy, I know, but that’s just how I roll.
Dyugle:
Here’s the game plan, regardless of who you use:
-learn about agency and make sure you understand it.
-do your homework on the market. Don’t be the kind of lowballer who defines success as a certain percentage off list price, for example. Know what’s sold and what hasn’t in your category. The data is easy to get, especially if you ahve an agent, you understand what he can and should do for you, and you make use of that.
-be prepared. Deposit and financing are the obvious pitfalls, but don’t limit yourself to that. Find out real reno costs, or zoning info, or whatever is important to your deal. Why not know what the minutes and bylaws of your target building say before you buy that particular unit, for example? Lots of that stuff is online.
-think about what the seller wants instead of concentrating on how special your money is. Changing your outlook in that way can make your chances of getting a lowball accepted increase.
It takes about an hour to write an offer. It can be less, it can be more, as offers vary, but probably an hour strat to finish.
The amount we get paid is set out in the Disclosure of Remuneration. Apparently that link isn’t working right now, but I’ll fix it. You’ll know (at leat you should know) what your agent is earning before you make the offer (refer to the agency brochure and you’ll understand why this is required).
If you want your agent to make certain amount per hour just negotiate that ahead of time. That’s allowed. Not everyone will do it, but there’s no law against it. Pay me something fair and I’ll do it.
I don’t want to spend much time criticising Garth Turner, but he’s not a realtor and some of his advice on being a vulture is downright poor. Follow it if you like. Remember, if you follow my advice and it turns out to be terrible, you can at leat try to prove negligence and sue me and my insurer. You can’t do that with Garth.
“Let him do the legwork…”
That’s how “look at 1,000, inspect 100, write on 0 and close on 1″works. Its also why I’ve started the VOW experiment.
“Since the market has changed you need to change too…”
The market has changed many times since I jumped on this train. Sometimes it changes back to what it was before. Some laws and techniques don’t change. We’re not complaining about lowballers who waste time – we don;t work with them. But, we do run across lowballers who don’t have a clue about what they’re doing, and others who do know what’s up. We’re trying to share some tactics for success. Take them or leave them.
“A lowball offer template should be easy to make…”
I agree, especially since I’m recommending a no subject offere whenever possible. If we do that writing the offer each time after the first instance takes about 10 minutes.
“you should expect to excite the lowballer with this. ”
I’m not too concerned with short term excitement. I want long term clients who do repeat business and understand what we’re doing and why.
Your tactics (three offers, break off negotiations, go back, etc) are fine. Is it bargaining in bad faith? Only if you start telling lies and aren’t committed to your offers (pretty much the definition of bad faith barginaing, no?). I think there is a more efficient way of doing it, but I’ve run across your method. It may fool some people, but it doesn’t fool me too much. It will make me wonder if you’re serious, and that makes it hard to really negotiate.
“Will you be in business then?”
Yeah. Not much doubt about that unless I a) die b) become a brain surgeon or super model.
V-Dog 103:
Nice call! Its always nice to have a bunch of chips in fromt of you while you listen to everybody talk about how smart guys pay their hands, isn’t it?
Jeff 104:
You might see it as tipping the buyer’s hand or as a tactic to get the buyer committed to the agent, but remember: the buyer can pull the plug on the agent at any time, and doesn’t have to pay the sellers price. In an environment of high inventory and low sales volume the buyer can say “Oh yeah, I’m absolutely desperate to buy, and I’m going to buy today. And yeah, I can afford to pay you exactly what you are asking, and even more. But I’m not going to. I’m going to buy something today, but it might not be your place. Your neighbour’s is for sale, right? Do you know if he’s home and how I spell his name? Got any white out? I’ll just use the same offer (using dyugle’s advice, right?). Wait, did I just tip my hand?”
Pick the right agent and your problem is solved.
(BTW, Jeff, I’ve told sellers “My guy can pay what you want, but he isn’t going to. He didn’t get all that money by throwing it away. What he will do is buy your place at this price and then complete. The offer’s open for an hour. Sign it and you can move on”. Once you do that you thank them for their time, get up and start walking to the door. You generally get a call to advise acceptance before you get home. Give it a try sometime. People can tell when you’re not bullshitting them).
“From working as a Realtor and my partner working in mortgage sales… I would say never trust anyone on commission… ”
I’m wondering: do you have any plans to ever come back to Vancouver and sell real estate, and do you have any plans to ever tell anyone who you are so that they know not to trust you? I’ve been in business in the same place, same phone number, same company, over 2 decades. I have a lot of repeat clients. I have clients who have bought houses from me that they’ve never seen. My advice is know who you’re doing business with.
rj:
Whether they turn out to be right or not is still to be seen, but you must be aware that large scale investors are looking at buying in depressed US markets right now. Its a repeat of what I saw in the mid-80s. Its a fact in the market right now. Recognizing that some people try to take advantage of market opportunities while others don’t doesn’t make you an idiot. It makes you an accurate observer.
G&B:
“Anyway, I would always suggest a low-ball offer and never settle on anything beyond your means”
I wouldn’t agree that they always have to be lowballs, but I would agree that you must decide on the price that’s right for you before you jump in the pool and then stick to that price. (I’ve bought properties at good prices that were simply very reasoanbly priced. Why lowball a guy who’s asking a fair price that you’re happy with? Some will always do it, but there are costs).
craigy:
” i think now is a terrible time to buy because we are only in the very early stages of an economic crisis (in Canada) and the metrics still suck. so I wouldn’t even consider buying unless it was for an almost obscene lowball. ” Its got to be pretty obscene now, or you have to think we’re really close to the bottom or you ahve to be a speculator. I can recommend that you buy on metrics (we still would have to cross the “should we wait for a bottom”bridge, but let’s ignore that for now) – but the fact remains – telling a seller that metrics don’t justify the buyer buying only goes so far. Dealing with the seller’s wants (when possible – sometimes he just wants top dollar so a lowball won’t work) move you that much closer. Still buying on good metrics and lowballing aren’t mutually exclusive.
“right now, it is risky to hold onto your property in the hopes that you will get closer to your asking price. i will buy it now for the lowball price because i am willing to accept that risk. are you?”
Its a good argument at times. The first stepis to recognize what it is, because it is the answer to the question that always comes up when someone says “Your place is bad, and not worth it, but I’ll still buy it”. You’ve moved past that and changed it to “The place is good, its value is yet to be detemrined, I’m more risk tolerant than you, let’s do the deal”. To say that and have it be true you need to know what the seller wants, and that’s one of the things I’m advocating that a lowballer does. Obviously a risk averse seller who needs cash right now is a good lowball candidate.
rj:
Experience takes time. You need to get seasoned. You’ll find that out
Devil:
You get the MOTO prize! Well done!
rj 180:
Tough to prove that an ad was a recommendation (jmho). I’m not saying its right, and I’m not saying an ambulance chaser won’t be able to make a statement of claim, but making it stick is tough. Remember, after $2000 the plaintiff lawyer runs into an E&O lawyer who will test him (“mere puffery”vs. a recommendation or advice).
The biggest problem I see isn’t the possible appreciation that doesn’t happen, but the rent – if $2500/month isn’t reasonable the realtor has breached agency duties right off the hop (not exercising reasonable care and diligence and not reasonably informed about his business). There may be traction along those lines.
“the video of the poor fellow in Virginia is sad. ”
Sad, yes. Remarkable, no. The man was played for a sucker. Happens all the time. The journalist said something along the lines of, just because people are not begging for food on the street and riding the rails, they say this is different from the Great Depression, but …. . Well, yeah. People say it is different from the Great Depression because it is. Thing are in the processed of being priced at what they are worth.
Rob:
I know that every single deal I ever did I worked for the client and worked honestly. I also know that most Realtors on the other side of the deal I’d spit on… maybe 25% were ok and 25% were good… but that leaves half that were worthy of my spit.
Newcomer:
“People say it is different from the Great Depression because it is.”
The internet is funny. I can’t tell if you’re serious or sarcastic. I don’t know what’s coming, but I will say this: I’ve seen recessions that deserve the name, and when I look outside around here I don’t see one yet. There may well be one coming, fair enough, and its certainly tough for guys lsing their jobs in Ontario car plants, but if anyone thinks that they’re seeing hard times around here they’ve got another thing coming. We’re seeing some absolutely amazing things on TV, but there’s no recession around here yet (or else my memories of the 80s have really gotten worse!)
Rob:
I agree with you… the recession has not hit Vancouver yet.
I think it will and I hope it will.
Rob:
My apologies for sounding a bit harsh… but Aaron’s rah rah it’s always time to buy, just look for the right deal… and then his and your oh no you can’t low ball just because you think the market will be lower tomorrow… is so conflicting and exactly why the market is what it is today… SALES DOWN 70% last month!!! And although it may not “look” like a recession on the street, the real estate market in Vancouver is certainly screaming recession.
When I suggested an offer on that lot you practically told me to forget about it and not bother wasting my time (“Yes, that would be a lowball. And you’re anticipating part 2. And no, nobody really cares what your subjects are because you’ve pretty much rendered them irrelevant”)… imagine if that seller were to find out that you called my offer irrelevant
but then again you probably know the seller very well and can speak for him… but I hope instead that you presented the “blog” offer before publicly dismissing it here.
”The internet is funny. I can’t tell if you’re serious or sarcastic. ”
I usually try to be at least a bit sarcastic in all things, but in this case I was just trying to say that it makes no sense to compare the current down turn to the GD. As you point out, nothing much is going on here yet (but BC is always last man in, last man out) and even in the States, it’s just not that bad. You read the NY Times and they tell you to tip your Doorman less, and there are stories about kids getting their allowance cut from $100/week to $60/week and nightmares like that, but we are a long, long way from the GD.
That’s not to say it can’t get worse. There must be some reason why governments and CB are saying the things that they are saying. But for now, I’m not impressed.
Jeff:
You hope the recession hits here. I’m guessing you’re under 35. Do you hope for famine in the Sudan or do you draw a line somewhere?
“it’s always time to buy, just look for the right deal… and then his and your oh no you can’t low ball just because you think the market will be lower tomorrow…”
Don’t think I said that. I think I said buy on good metrics, and that lowballing and buying on good metrics aren’t mutually exclusive concepts. I think I also said that your opinion about what the market will do tomorrow isn’t an effective sales presentation. I’ll add that lowballing today if you really think the market is going to drop 70% is pretty stupid ($365,000 – 70% is $109,500, right?)
If you want to write the offer at @$200k go ahead. I’ll present it. You can be present at presentation and I’ll let you try to sell the merits of the offer. Just for fun, set the merits out for us now.
Another thing to consider. An offer thrown out by an anonymous poster on a blog isn’t an offer, and how do you (or I) know that my clients don’t read my blog? The seller may well have seen your non-offer already.
Anyway, write it up, prepare a great sales pitch, and post your experience as a lesson to all the other lowballers out there to learn from. Balls in your court, shooter.
What happens if somebody offered 100 bucks for a property? Does the buyers agent have to present it? What is the borderline for offers?
Newcomer:
Don’t tip the doorman so much! Excellent advice!Reminds me of Will Rogers – `We’ll hold the distinction of being the only Nation in the history of the world that ever went to the poor house in an automobile.’ except that was a real depression.
G:
If the offer is written it has to be presented.
where’s Inventory with the early numbers for the month?
Rob what is the biggest lowball you’ve been involved with in %? How did it go?
We’re seeing some absolutely amazing things on TV, but there’s no recession around here yet (or else my memories of the 80s have really gotten worse!)
Rob, in some ways I admire your reticence in making calls until things actually happen or until there is clear evidence for something. That has already been demonstrated in your calls about real estate – you waited until there was stats in to back up your assessment.
But the problem with that is that it it doesn’t lead to very good financial planning. To successfully position oneself, there needs to be foresight. To say that the recession has not hit Vancouver is like saying there is no rain despite the storm clouds gathering.
I know countless people that have been laid off and I know many businesses that are struggling. This is just the tip of the iceberg. As for real estate, if I had waited until stats demonstrated the decline in real estate I never would have sold my properties in 2006. Foresight about the real estate bubble led me to get out. Waiting for something to happen before you endorse it ensures you are never wrong. However, it doesn’t get you very far financially.
The recession is here. And it’s going to get worse.
Rob
Nothing wrong with looking at the glass half full but here’s a heads up. The Conference Board, normally a credible predictor, recently projected flat growth in BC next year best case, or slightly negative growth, worst case. Compare that to the very robust growth we’ve become accustomed to in the last six years and I wouldn’t be taking too much comfort in anectodal observations. I consult to the small to mid size business sector and I can tell you that they are to a company rightly planning on the worst and hoping for the best, not the converse.
Will we fare better than a lot of other North American jurisdictions? Probably. Will we escape unscathed? Not a snowball’s chance in hell. Gird your loins.
I hope the recession hits Vancouver because I think there are blatant excesses. I don’t want people to starve or be living in the streets and I certainly don’t want to see a depression.
And about that offer… I personally think it’s too early to write an offer at $200k even though the seller may possibly accept it. And this may sound like a weak reason to not write the offer but I don’t have a printer/scanner in my vacation place. I could try to search one out or go buy one, but hey I’m on vacation right now… I could prepare the offer online but I’d need to sign it and without a printer/scanner that isn’t possible. What is even more bizarre is if I had a printer I’d actually write it up.
Aaron,
re: agent-less buyers, you said: buyers think “… they should get some commission because they’re doing me a favour. I told them that if anything I’d cut the total commission for the Seller, but I wouldn’t be paying them anything.”
What do you mean ‘your commission’? As I understand a agreement with the seller is made stating the commission and this would be shared by buyer and selling agent. If commission was say 6% (overall for simplicity) and the agent split was 50/50, you would probably expect to take 3%, my guess is a split happens in almost all deals, so this is normal. In absence of the buyer agent, it seems like you are saying you, as a selling agent, would then be entitled to the full 6%?
As an agent-less buyer, I would certainly make sure part of an offer includes me getting a good piece of the buyer’s commission. It doesn’t matter how this happens, if the seller agent insists on only giving the buyer commission to the seller, then my offer would consider this and be lower accordingly. Either way, the buyer has created more room for negotiation.
Aaron,
So, in your opinion, in absence of a buying agent, when negotiating reduction of elimination of the buyer’s agent commission the best perceived option is to negotiate the seller keep the share of the non-existent buying agent and that this will be the best chance at getting a deal done for involving these monies?
Subprime Canada ehh!!!
http://www.globeinvestor.com/servlet/story/RTGAM.20081212.wmortgage13/GIStory/
Rob
You’ve mentioned metrics more than a few times. I understand how you would metrics to purchasing income property. What kind of metrics would you use to purchasing a single family house? How do you use metrics to determine what lowball would have some sort of reasonable chance of succeeding?
If you are considering a part 3 to the lowball series one suggestion might be a real life case study of a successful lowball. Disguise it to protect confidentiality if necessary.
Ok — let me get this straight. Jeff is in OTTAWA and he can’t find a printer or fax machine.
Jeff — are you vacationing in an igloo with internet access?
How’s the bannock and pemmican tasting?
http://purplegables.files.wordpress.com/2007/03/igloo.jpg
out of curiosity, how is the Oxford St. Heritage place doing?
I love the igloo picture and yes that’s me… as you can see in the picture there is no printer/scanner/fax. If I prepare the offer online I then need to add my signature to it which means I need to print it, sign it, and then scan it to send it by email or fax it. So here I am sitting with a laptop and an internet connection. I guess I could see about finding an internet cafe somewhere or figuring out how to add an electronic signature.
Ah, Jeff. So sad you are vacationing in such a backward country.
Good excuse, though!
Jeff: Are you teasing Rob like RJ is teasing RRR?
Anon:
No. I’ve encountered this with clients in the past. Sometimes it delayed listing a property for several weeks and other times it resulted in no offer or a delayed offer. Alternatively, we could negotiate verbally and then write it up upon verbal acceptance. But in this case, where the list price is substantially higher than my offer price, negotiating verbally would probably go no where.
Lowballing was last summer’s amusement. Now? Renting!
Home and real-estate shows need renos amid housing slide
Networks are giving the “Flip a Home” programs the axe and replacing them with “Why buy when you can rent?” programs — Aaron and Rob–you two could be making the megabucks as rental unit brokers and helping clients get into 2 yr leases on brand new craftsman homes–why bother trying to find buyers?
WBWUCR?
The details
Shows are also being made for renters who wish to stay out of the rocky real-estate market altogether.
and…
Other related programs hitting HGTV Canada include “For Rent,” which helps young couples who aren’t ready to buy a home find the ideal rental space to live in (it debuts Dec. 29), and “House Poor” (to debut in fall 2009), which helps homeowners cope with their household finances.
macchiato:
“In absence of the buyer agent, it seems like you are saying you, as a selling agent, would then be entitled to the full 6%? ”
You are contractually entitled to the full pull. In most scenarios you’re also doing two jobs – that of the buyer agent and the listing agent, complete with all the agency reponsibilities. On the other hand, if a buyer declined representation, wrote his own offer and presented it, and advised himself on what he should do, I think a fair argument exists for the buyer to claim part of the total commission.
Let me fip it on you: if the buyer has no agent, can’t write the offer themselves, doesn’t know how much they should pay, asks for guidance and data from the listing agent, and asks for representation, shouldn’t the listing agent get the buyer portion of the commission?
If the commission is reduced it really doesn’t matter if its paid to the buyer or simply netted out (buy at $100 and get $3.50 back or just buy at $96.50 – what’s the dif?)
Jeff:
“I personally think it’s too early to write an offer at $200k even though the seller may possibly accept it.”
So the offer that you hope my seller didn’t see me blow off wasn’t really a serious offer? Wow, how was I able to see that in the beginning? Its worth $200k to you based on what you think its future may be, and the owner may even accept it, but its too early to write it?
If the selermay accept and its easy to write offers, just tell me: are you even in the neighbourhood of serious or is thislike the last time you were thinking of lowballing someone? Seems like a successful method. You should share it with the readers.
JR:
“slightly negative growth, worst case.”
“Will we fare better than a lot of other North American jurisdictions? Probably.”
I had to leave BC in the early 80s to find work. My employer went bust. In the following years, when I returned, there were many years when a rent increase turned into a vacant property. That was a recession. You’re supporting my point that we aren’t in recession yet, and not really painting a really scary picture of the future, don’t you think?
Tony:
“But the problem with that is that it it doesn’t lead to very good financial planning.”
Let me dispel the myth: I’m not a financial planner and I don’t offer financial planning advice. My advice on buying investment real estate is anti-market timing and pro-metrics.
“To say that the recession has not hit Vancouver is like saying there is no rain despite the storm clouds gathering”.
That’s pretty much exactly what I said. How do you conclude that once I’ve said “there be rain clouds” that the obvious conclusion is that I’m recommending buring all the umbrellas? I was asking Newcomer to clarify his position (which is like mine, and I notice you aren’t questioning him) and I clearly said that given the astounding events we see each day we may indeed see real erecession here.
Your statement that you know countless people who have been laid off intrigues me. In the 80s I was in the same position. Today I’m exposed to a wide range of people (especially in my role as a rent collector) and I don;t see it yet, but I’vebeen wondering if its because its not happening or becuase I don’t see it (exception, of course being the coinstruction industry). Who are you seeing getting laid off?
G:
Its hard to draw that line. Where do you start counting? Original list? Final list? Market value? TOugh to say, right? But, we jsut sold a foreclosure at 20% off and it was listed well below the competition, and that’s just recently.
SurreyJoe:
More to come. Metrics applied to a principal owner is a very personal exercise, but there is a bit of overlap.
Rob,
I know of several major corporations from commercial real estate, to construction, to insurance to retail – it’s a pretty wide spectrum. All the higher managerial jobs are getting chopped or reduced to lower paying positions. Even if you can’t see it personally, there is no shortage of layoff reports in the news.
We all have to predict the future to a certain degree, even in the case of applying metrics. Assumptions like income level, rent levels, and vacancy rates that under the umbrella of “metrics” all require predicting the future. Obviously, your view of the future is rosier than mine. Having an umbrella doesn’t work in a hurricane.
Jeff — If you were half serious you would get up off your ice cube and go find an fax machine and get the offer in.
I am calling your bluff.
rob,
you said: “If the commission is reduced it really doesn’t matter if its paid to the buyer or simply netted out”
Exactly, thanks for clarifying.
I had possibly incorrectly interpreted Aaron’s comments to mean that it actually did make a difference and I found that odd.
Rob
Scary is relative. Going from very modest growth to flat or slightly negative growth is troubling but not scary. Going from sustained high growth, as we have had in the past few years, to flat or slightly negative growth is scary. Its the length of the drop that’s pertinent, not so much the starting and ending point.
Tony:
“Obviously, your view of the future is rosier than mine. ”
Not really, and I’m not sure why you’d think it is unless you’re looking for someone to disagree with. All I said was that what we’re seeing right now isn’t what I equate with recession, but that it could certainly get much worse and actually become more like what people in the States and Ontario are now experiencing. To be honest I’m absolutely confused about waht might be coming, but nothing would surprise me now. A car czar? Is that the same as nationalizing the auto industry? And will the bailout last past March? We can go on and on about that, but whatever our perspectives are I think we’ll agree that the downsides exist.
Anyway, what we’re seeing now isn’t bad yet, and anyone who thinks it is isn’t being imaginative or doesn’t have a memory.
JR:
Scary is relative if you’re talking feelings (and that’s not me dismissing emotion – we know that psychology is important) but its not relative when we get to the numbers. Unemployed and not paying rent is an absolute. I’m hoping we don’t get there.
Rob… by too early I mean that the seller is probably not “prepared” for an offer that low YET… please update us on price drops.
http://www.spreadshirt.com/us/US/White-Chicken-Shit-Gift/Detail-3392/Marketplace/Products/detail/article/2367298/department/4/
“If you really want to write a low ball offer with some potential of being accepted, the least you can do is give a deposit cheque to your realtor up front to be put in trust and verify your financing prior to presenting the offer. These two things will make a strong impression. Your cheque is safe in a real estate broker’s trust account, and you can even have it put in an interest bearing account. ”
Aaron (and Rob), withe all due respect, I think (like a others eg. Billy, Tony) putting a deposit with a realtor does not benefit the potential buyer.
Why would someone in their right mind deposit 10% ($100,000 on a $1 mllion home) in trust with a realtor without an accepted offer?
Would anyone go into a car showroom and say, he’s my $50,000 to deposit in trust, and let’s negotiate to buy a car?
Aaron, Rob,
How many individual deposits in trust do you have on hand right now for purchases without an accepted offer?
Readers,
Do you know of anyone who has put a deposit in trust to a realtor without an accepted offer?
Jim – your tone implies that you think someone is trying to pull a fast one on you. The fact remains, paying your deposit after your subjects are removed is a new phenomenon. It has been customary to give your deposit before you even started to look, to show that you were actually serious and not just taking a free ride. Times have changed. Norms have changed, so that is why it has become more accepted to do business the way you describe. There is nothing wrong with doing business the way you feel comfortable. We’re only pointing out how you can build a stronger case for a seller to accept a low ball offer.
Putting your deposit into a trust account doesn’t do you any harm. Your going to have to give it eventually anyway. You might as well get down to business right away. A $100,000 is a lot of money for most people. You don’t have to give $100,000. You could structure your depost as $25,000 paid into trust. $25,000 additional deposit paid upon subject removal. Whatever floats your boat. If you’re looking at million dollar properties, you should be able to come up with a healthy deposit without too much problem. The sellers of the home will be looking at your deposit and financing subjects as a sign of whether or not you can actually even afford the house in the first place.
I’m sure Rob has seen more clients depositing their money into the trust account in the 80’s & 90’s. Like I said, giving your deposit after the fact has become the norm, so I don’t see it all the time. That being said I do have some clients that are regular players in the market, and that’s how we do business. It’s worked well for them. I just closed a deal not long ago where my client gave me his deposit to put into trust and then we bagan to look.
Aaron, where is the evidence for your strong statements?
Anonymous 229:
Which statements do you want evidence for? Make that clear and I’ll try to get you some.
Let’s keep a couple things straight: we’re making some suggestions about what you can do to increase your chances of success. We’re talking about things that other people don’t do, and we’re recommending them partly as a response to a changing market. Its free advice. You dont háve to take it.
London Banker has jumped off the fence and come down on the side of deflation.
And also announced he will stop blogging, as he has accepted a position and values his time too much.
Aaron, you should back up ALL of your statements with hard evidence. Otherwise it is nothing but HOT AIR.
http://www.cartoonstock.com/lowres/jfa1152l.jpg
Anonymous:
You’re being unreasonable. Some of the statements you get here have to be accepted or rejected purely on faith. we can’t say, for example, that Joe Smith, when selling 123 Main Street, accepted one offer for $500,000 and then when that fell apart accepted another at $420,000. Other things can have evidence put forward for them. Take a minute and tell me what things you want evidence for.
The fact remains, paying your deposit after your subjects are removed is a new phenomenon.
Evidence?
New is relative. For you it may not be new. For me, it is. When I started we never wrote “deposit payable within 24 hours of subject removals”. From my POV that’s new, I still don’t like seeig it on offers I receive, and I don’t make a practice of it when I write offers.
Evidence? You have to accept that one on faith. I’m not about to ask you to drop by my office and review my deal files. I will write offers that say the deposit is payable within 24 hours of acceptance, but I try to collect it at the time of writing the offer. If the buyer wants to pay after subject removal there will be resistance from me, but I’m a little old school.
Lot at 435 RENFREW ST reduced another $60k last week.
Now $339,000.
Evidence? You have to accept that one on faith.
Sorry, faith does not cut the mustard.
Jeff — are you going to put a blog lowballs offer on it?
Aaron: Give me your money. I will keep it in a trust account. Trust me. You have to give it up eventually, so why not give it to me now? It shouldn’t be too difficult for you to find $100,000. Christmas is coming and I need it to get by. Just go by your gut and have faith that I will give it back to you when you ask for it, ok?
i’m not so sure that i’d want some realtor with his grubby paws all over my hard earned dough…. it just don’t seem right….. i’m jus’ sayin’
So don’t hire a realtor with dirty fingers. Hire one you can trust. There must be at least 10 of them, including Rob.
Rob (or Aaron) If a Realtor does take off with your money does the REBGV pony up, right away, like professional bodies do? Or is this another of those caveat emptor deals?
Aaron, I’d encourage you to step back and read your posts. Frankly, when you’re wrong, it’s better to just admit you’re wrong than to try and back-peddle out of it.
Now you’re changing your tune and trying to do it subtly, but in my opinion you’re just losing more ground.
I was almost to the point of giving up on Rob’s blog when I read your posts in blue about “Rich people coming for the Olympics” and “Now is the time the big players are buying up large blocks”. Frankly on a scale of 1 to BS, that’s off the charts. Maybe you could point to the upswings in sales from all those big dogs coming in to pick up these “cheap” properties.
In fact Aaron, better than re-reading your own posts have a look at Robs. Pay special attention to where he recommends buying on metrics. Understand that the big dogs have other smart people working for them, and that they’ll very likely be following the advice on metrics (although their metrics might be different, when they’re looking for land for holding rather than income).
this one is still for sale:
http://tinyurl.com/64anv5
although the price hasn’t dropped
Jeff–
I don’t think Rob’s vacant lot is going to move anytime soon, enjoy your vacation! And there will always be vacant lots and tear-downs. Wait another year for construction costs to really tank before you get serious about building your dream pad.
Getting much tennis in back east?
Did ya’all notice the little G&M article this morning? [warning--rant ahead--skip to end if not interested]
How high-risk mortgages crept north
The untold story of how elements of the first Conservative budget in 2006 encouraged big U.S. players such as AIG to make a push into Canada, creating our version of subprime mortgages
So, Globe and Mail starts getting excited about this Big Secret that Canadian banks have been selling subprime mortgages. Hel-lo-o, haven’t they walked into a bank in the last couple years and seen those posters of the happy couple that just bought a house with zero down?
The mushrooming of a Canadian version of subprime mortgages has gone largely unnoticed.
It’s only gone unnoticed because reporters like you were either asleep at the switch or deliberately silenced by your supervisors!
The federal government waited until June of this year to slam the regulatory door on 40-year mortgages. Yup, thanks to the G&M being complicit in keeping the silence…
In Canada, we acted early over the past year,” Mr. Harper said in a speech to the Empire Club in Toronto. He didn’t say that, not only did his own government open the sheltered Canadian mortgage market to U.S. insurers, but it also doubled to $200-billion the pool of federal money it would commit to guarantee their business.
Yeah, he didn’t say it, and neither did you! Where have you “Report on Business” reporters been for the last two years? Flipping condos or something?
An investigation by The Globe and Mail found:
What follows is a pretty decent set of investigative reporting. Yup, they really nailed the gov’t, the banks, etc. Hot diggedy, Globe and Mail, you’re on the cutting edge of the mainstream media, but only because you and the rest of the mainstream media spent the last two years with your heads in the sand.
Lame lame lame.
If the G&M would have acted 18 mos ago and called a spade a spade, they could have saved, what, 500,000 or 1,000,000 Canadian households from certain bankruptcy…
Tragedy of epic proportions–people put their trust in the G&M, for crying out loud. When was telling people the RE market was going to tank, and tank soon and tank big, a year ago, they gave me this dumb look and said “the G&M is calling for continued appreciation…” The G&M is probably the only daily rag in western Canada that actually deserves some respect for covering issues thoroughly, interestingly and in a timely manner. And now they come sauntering in like this is new stuff. So much for their reputation with me…
End rant
WBWUCR?
& wbwucSSAB?
Last paragraph should read
“When I was telling people the RE market was going to tank…”
(When WBWUCR would tell his friends “don’t buy, sell!” they’d give me this look like I was stoopid and tell me how the G&M was calling for modest price appreciation… “If this was really going on, wouldn’t we be reading about it in the Globe and Mail?” And I’d say “when you read about it in the Globe and Mail it will have already happened!)
And the G&M article seems to have touched a nerve–847 comments so far.
Oh, and there’s another option that Aaron missed, you could provide 10% (or whatever your deposit is) on acceptance. Rather than waiting for subjects to clear.
I do have a question though, when a client provides a deposit that you hold in trust, does that get placed into an interest bearing account? a 100K deposit should generate at least a few hundred a month even just in ING.
WBWYC….:
I know that look well! Haven’t seen it in a while, though. I still don’t bring up RE with a few people who bought recently. I don’t like to see a grown man cry.
What do you say to a realtor who finally made a sale after 180 days on the market and a price drop of 134k: 2bdr/2bthr West End condo, initially listed at 559k, sold for 425k? She was the one who insisted the initial price was fair, and claimed the prices will keep going up “until the Olympics”. I wanted to buy it six months ago, I liked the place – and how on Earth could I get my realtor to write a low ball offer in June 2008? He said “we do not want to insult them”, and I did not make an offer. Thank you Lord.
Confused: You should send that realtor flowers for Christmas for saving your hide. Maybe a poinsettia?
I am in Palm Springs now… and yes I’ve played some tennis
jeff:
in case you didn’t know
we have snow and -2 C
this will have an effect
of lowering RE values…… enjoy
Yes, poinsettia would be nice
is anyone else FREEZING too?
this one is for GhostRider…..
http://tinyurl.com/5ovfgk
…there is a god!
oh god,
have you seen the new tv ad for cymbalta – anti depression pills.
It is really sad how the med-companies try to convince ppl they are sick – this ad is especially manipulative.
Jeff: Are there any fax machines in Palm Springs?
http://images.google.com/imgres?imgurl=http://www.edupics.com/cactus-in-desert-t8379.jpg&imgrefurl=http://www.edupics.com/en-coloring-pictures-pages-photo-cactus-in-desert-i8379.html&usg=__usvHkTOh3sZjJEw5uQou3j1Iuc0=&h=750&w=531&sz=57&hl=en&start=338&um=1&tbnid=0mul-fI9N02z4M:&tbnh=141&tbnw=100&prev=/images%3Fq%3Ddesert%26start%3D320%26ndsp%3D20%26um%3D1%26hl%3Den%26rlz%3D1B3GGGL_enCA294CA294%26sa%3DN
LOL… where do you find those pics!
“is anyone else FREEZING too?”
For goodness sakes, get out on the slopes. It warms you up pretty quickly.
Nice to see gold up again tonight, amidst all of this monetary deflation!:)
i’ve never snowboard or skied before.
fyi – born and raised in n.van
I went and made a snow woman today with the neighbour kids and then went skating. Didn’t cost a thing because it was free skate day with Santa Claus. HO HO HO
Ugly:
Nobody missed the 10% on acceptance. We recommended the buyer giving the realtor an extra closing tool to go hand in hand with a low price. You’re suggesting that we forget to mention that you can do something other than what we recommend. That kind of goes without saying.
FWIW, if you pay a deposit upon acceptance that means that if, when the offer is presented, it gets accepted, the deposit is payable then and there. In other words, the realtor needs it then, at 8:00 Sunday night, when he gets acceptance. That leads to either “within 24 hours of acceptance” or giving the cheque before hand.
Deposits that are going to be held for any amount of time can be put in interest bearing accounts. The deciding factor is the bank, not the realtor (bank may say 30 day minimum for example).
Regarding the Olympics, I think its fair to say that rich people will be coming here (it seems to make sense to me that the people who come here for the Olympics will be rich rather than poor – am I crazy to think that?). I think its also fair to say that visitors to Vancouver will be suitably impressed and will learn more about the place, thereby raising the city’s profile. I’m not saying that these rich visitors will maintain property values, but I think that they will be an contributing factor to price increases (and you’ll have to net that out against all the other pricing inputs). Is that setting your BS meter off, or does it sound reasonable? Will it be poor foreigners visiting who then spread negative impressions of Greater Vancouver?
Are big players looking to invest in depressed real estate, especially in the US? Well, bigger than me, that’s for sure. Big enough that if I tried doing what they’re doing I’d need a lawyer to file an expensive disclosure statement for me. If you haven’t seen that happening you’re not paying attention. Its even been brought up by other posters on this blog.
I think, to be fair, that you’re reading some stuff into what Aaron said, and then taking issue with that. He didn’t say big players are snapping up Vancouver area real estate with complete disregard for metrics, did he?
alex:
Deposits go into trust accounts that are subject to audit by the real estate council (not the Board). I think (and I’m no lawyer, much less a judge) that you would apply for compensation under the Real Estate Services Act, and be paid from the special compensation fund, providing you could prove your loss. More info here:
http://www.qp.gov.bc.ca/statreg/stat/R/04042_01.htm#part5
I can’t recall ever hearing about that happening, mind you.
Anonymous 238:
You’re just being unreasonable now. You can’t require that people back up every single statement with evidence that is satisfactory to you. There are times when the only evidence that would suffice is simply not available for public scrutiny.
RJ:
I will never take your RE advice again. If you can let an opportunity like that slip you by, how many more financial opportunities must you also be missing?
Aaron, sometimes I don’t know about you.
Aren’t you a professional who belongs to some Registrar? Professional Affiliation, or Something like /or equivalent to the College of Physicians?
And as such aren’t you breaking what might be the equivalent of the Hippocratic Oath?
Your post on lowballing seems in contravention on what a professional realtor is supposed to do.
It’s like Popeye and Hulk Hogan telling kids how to get around not eating their vegetables.
Rob, pretty serious contravention, if you ask me, Is Aaron not under your tutelage?
Well Rob, you’re right that I picked out a few things in his messages and took exception to those. I don’t think I took them out of context. Aaron’s message through this thread has been consistent, and along the lines of “If you don’t buy now, you’re not smart.”
That might not be how he meant it, but almost without exception his posts contain something to that effect.
113: Smart investors will look for opportunities while the herd is sitting on the sideline waiting to see how low the values will drop.
Why I take exception to this: This is standard fare of someone that wants to sell you something, and I might have overreacted because of my natural distate for being BSed to. Any time a salesman has called my intelligence into question before (for not following their obviously sage advice) I’ve been far happier to not have taken their advice as well as not taking their bait.
120: “Be Fearful when others are Greedy. Be Greedy when others are Fearful.” I also don’t believe in up or down markets, bull or bear markets, seller’s or buyer’s markets. I believe only in good or bad deals.
Why I take exception to this: This implies that real-estate deals are only good or bad in that moment of time. For purchases of this magnitude (in fact I’d say anything you invest in) you have to look at it over time. I might be able to pick up some Nortel at half of market value right now, is that a good deal? Sure if I can/do sell right away, but over time it might turn out to be a terrible deal. Real-estate is much less fluid of course, so it must be even more tied to the market trends.
If the big players ARE buying up real-estate as Aaron contends, then it’s certainly with complete disregard for the metrics, so I suppose he at least implied so.
127: Even after everything has shaken out, there will be more international attention on our fair city, and there will be wealthy people from different parts of the world that will come here and fall in love with the city. They’ll buy up some Real Estate, which will push up values over the long run.
Why I take offence: 2 reasons,
1) In order to push up “values” (I believe Aaron means purchase price, but it actually has the opposite meaning, i.e. what you buy costs more but is the same product = less value) over the long run it must be a significant investment over a long period of time (as long as the “long run” which the Olympics cannot provide). How do you figure Salt Lake City is doing? Their purchase prices are FAR down despite having had the same Olympics recently
2) Which properties are going to look attractive to them? If they are absentee rich then they’re not going to be in the market for anything but the extreme high end. Perhaps a couple of people fall and love and make their homes here, but likely more people get turned off of Vancouver from the business.
As for leaving out the option of having the money available on closing. The problem of the banks being closed doesn’t change if it’s in your realtor’s account rather than your own does it? So if it closes at 8pm on Sunday what’s the benefit of having it in the realtors hands rather than your own? He also compared his position to no money available at all until after the subjects were removed. He’s comparing his theory on deposits and so I think it’s very fair to bring in other more reasonable comparisons that have all the benefits of his theory on deposits, but not the drawbacks of his counter-theory.
Aaron: On a more immediately fixable note, I think in a couple of posts you’ve put your email in the website field, not a big deal, but it does generate an error in Firefox at least when clicking on it.
Speaking of deposits, realtors, and bs. Is it true that people are walking away from large deposits on downtown condos?
What strategic thinking would be behind walking away from large deposits?
Could these people be entertaining the idea that prices are going to fall off the cliff?
Realtors please help us understand.
Ugly, does firefox hide your IP address?
BlueSkies/256/..
Cheers for that…. still laughing!
Rob: I think you are being unreasonable. It is not unreasonable to expect a professional to substantiate his/her statements with normative data.
Nice to see gold up again tonight, amidst all of this monetary deflation!:)
I have been doing some research on backwardation in the gold market. Backwardation is when the spot price is higher than the futures price. Remember the big discrepancy between paper gold and bullion? A lot of people were suggesting to take delivery in the Comex for actual gold instead of rolling over or trading the contracts for cash. Well, it looks like it is happening now, according to this article:
http://news.goldseek.com/GoldSeek/1228499200.php
Apparently 40% of the gold the Comex has is slated for actual physical delivery. Usually, under 3% of futures contracts get settled. 40% is ridiculous. If it actually happens, the paper price of gold is going to skyrocket. I’m not a gold bug, although I do own bullion.
The caveat is that in a deflationary environment, gold is “supposed” to go down because cash is gaining in purchasing power. We’ll find out by December 31 is the delivery takes place.
Mish has a post on Tony’s goldbug link. nonsense about gold backwardation.
I’m NOT saying gold won’t spike. I have no real opinion on gold one way or another. But that article sounds more like goldbug raving than sober analysis.
Never underestimate the amount of irrationality in the markets.
Chili:
“Your post on lowballing seems in contravention on what a professional realtor is supposed to do…
Rob, pretty serious contravention, if you ask me, Is Aaron not under your tutelage?”
Are you asking me to read your mind? What seems like a clear contravention to you is pretty foggy to me. I pointed out in the first post on lowballing the agency brochure. The agency duties outlined there are what the realtor is supposed to do. Where’s the contrvention?
Ugly:
You’re not very convincing. You’re not really pointing out the shortfalls of what the guy said. You’re saying they mean something different, and then taking exception with that. Deal with the first two things first, and evaluate what was said:
-will the peoplewho come here for the Olympics be rich rather than poor?
-are big players looking at buying large quantitis of real estate now, expeciallyin the US?
I think its fair to say that the answer to both questions is yes. They aren’t controversial statements. Do you really disagree with them? If so, please explain. If not, why take exception to them?
When you take issuewith someone’s tone on the internet you need to be careful. You’ve said yourself “he may not have meant what I claim he’s saying, but I’m going to take him to task for it anyway”; in other words, he may or may not have committed the crime, but I’m going to punish him regardless. Its not a huge deal, but I still have to question your thinking.
Why not just ask: “Aaron, are you saying that rich Olympic visitors will buy enough real estate locally to pump up the market, and are you saying that big players are entering the local market now?” If you do that you at least remove any doubt about what the guy is trying to say.
“113: Smart investors …”
That’s just true. It doesn’t mean you’re stupid. It means use your brain and evaluate what’s going on in the market. Do you really thin the herd will jump back in at the bottom? Do you think we’ll hit bottom and then see high sales volumes? If not, then it stands to reason that smart investors will pick up bargains while the herd waits on the sidelines. I think its also fair to say that we saw the same thing on the way up.
You may take exception to the statement, and it may dredge up unpleasant memories for you, but that doesn’t detract from the statement’’s accuracy.
“120 – be greedy, etc”
The implication that you’re taking exception to is of your own construction. All Aaron’s doing is repeating a truism more usually stated by Ozzie Jurrock. Its no less true for that. Nobody (aside from you) is saying that the deal is good or bad only for that instant. I think what it means is that each deal has to be evaluated on its own merits. To be honest, I’m not sure where you’re coming from on this one.
Is Aaron advocating making a trade? Buy a lowball and immediately flip it? I don’t think so. I think he’s advocating thinking through the lowball process so that you’ll be more succesful. How you relate that to buying Nortel now is beyond me, but again, I think you’re disagreeing with things that aren’t being said (and by your own admission you are working on what you think the implied meanings are – and you’re more in control of what you think the imlied meaning is than Aaron is).
I guess the bottom line is this: you say this is the standard fare of someone trying to sell you something, and therefore Aaron must be selling something. What is it? Is he telling you to lowball him on one of his listings? Telling you to use him to lowball? Or just sharing his experiences on lowballs with the uderstanding that you can make your own choice on if, when and with who to make use of the advice? Where’s the close if he’s trying to make a sale?
“If the big players ARE buying up real-estate as Aaron contends, then it’s certainly with complete disregard for the metrics…”
That’s simply inaccurate. Even our own investigations into US markets indicate that metrics are much mre in ine in depressed markets than they are here, for example (and that can’t be surprising); Aaron said big purchasers buy when opportunities are good, and that they’re doing that now, especially in the US. That’s just true. You don’t get high sales volumes without buyers. Some of those buyers are syndicates buying to hold. The stuff has come across my desk, and its even been highlighted by posters on this blog. There’s no “if” about it. You may not be aware of it, but that doesn’t make it untrue.
“127: Even after everything has shaken out, there will be more international attention on our fair city,…”
Do you really think that after everything has shaken out values here will not rise? That there won’t be rich foreigners who come here for the Olympics and fall in love with the city? That the Olympics won’t bring more attention, as opposed to less, to this town?
Based on my experience (and I deal with people from all over the world who buy Vancouver real estate) those statements seem pretty reasonable to me. What part of them do you disagree with, and what’s your position?
Anyway, I have many wealthy offshore clients who buy rental property here. They don’t buy Coal Harbour penthouses for themselves. They buy stuff I recommend (3 bedroom/2 bath suburban places or 1 bedroom downtown condos that are right in the middle of the rental supply line). They are long term holds. Your assumption of what these guys do doesn’t conform with my (or Aaron’s) experience. That doesn’t make us wrong, but it doesn’t make you right either.
“As for leaving out the option of having the money available on closing.”
You’re confused about the series of events. You’re jumping weeks ahead of the Sunday night presentation and acceptance.
“what’s the benefit of having it in the realtors hands rather than your own?”
Its not a benefit thing. Going by the everyday contractual conventions in use around here now, if you say “Deposit of $x payable upon acceptance” that means that the seller will decided when the buyer has to pay the deposit (the seller’s acceptance is the trigger). If the seller accepts at 8:00 Sunday night at presentation your agent needs to have the deposit in hand then (its upon acceptance, right? That was your suggestion, after all). Who that benefits is irrelevant. Its simply a term of the contract that has to be met. If you’re doing that you’ve really put yourself in the position of giving the agent the deposit before presentation; if you’re saying “within 24 hours of acceptance”, well, then you’re not saying what you originally suggested.
The idea of paying a deposit to your agent before the fact isn’t a “theory”. Its a way of joining an inferior price (which is what a lowball is) with the strength of a very committed buyer who will complete if his terms are met. We’re saying take a negative and marry it to a positive to get yourself further ahead. You seem to be saying “No, just go with the negative and don’t improve it at all”. Maybe you aren’t saying that, but its what I’m hearing. If that’s accurate I can only say that it doesn’t make sense.
If your concern is taht you don;t want to give your agent a deposit ahead of time because there is some sort of danger or a lack of trust, that’s a clear sign that you need to work on the agency relationship (whether by getting another agent or learning more about the process).
Your 10% upon acceptance does not have all the benefits of having the deposit in the bank before the offer is even written. Trust me, I’ve done it. You walk through the house and the agent and the owner (if he’s there) “I’m ready and able. I’m on the verge of being willing. If I make an offer I want you to know from the get go that its going to very serious, unlike the previous 2 that you haven’t been able to get subjects off of”.
Anonymous 272:
If a doctor says he’s seen certain symptons of a social disease, do you require that he provide dates and names? When I tell you what I have done when writing offers for other people do you really think its likely that I’ll share other people’s personal info in order to allow you to accept my statements? If you accept that their business is theirs, and not yours, do you think it reasonable that I not share my experiences in a general way and simply ask that you accept that I’m telling the truth?
Rob: I am not asking for specific details of a person’s data. I’m asking for normative data.
Clearly Aaron is selling his services as a real-estate agent. Can’t we at least agree on that?
Writing a check upon acceptance would be considered “on acceptance” provided the check was good. If not then you probably shouldn’t be selling to that buyer anyhow.
Everything about the context of Aaron’s comment was that the big players are buying up in Vancouver right now.
Do you
a) Agree that big players are buying tracts of land in Vancouver right now to hold?
b) Disagree that big players are buying tracts of land in Vancouver right now to hold?
Aaron literally says Times like these are when the big boys buy Real Estate in bulk. This is when they buy hecters of land to create a sort of land bank that they can develop when the timing is right.
Directly in the context of Vancouver real-estate. He even puts on a proviso about “especially” in the US, which again shows that he was referring originally to Vancouver.
As for a deposit, I expect I’d be happy to put a deposit in my realtor’s hands before writing an offer, but I almost certainly wouldn’t before finding a place I liked. Maybe that difference is due to a focus on a SFH rather than an investment property, as I intend on being extremely picky on my home (so might take months), but far more willing to jump on any good opportunity for an investment.
Do we agree that “the big boys” are NOT buying real-estate in bulk in Vancouver?
Chili, no, as a matter of fact you can’t reasonably hide your IP address without going through a proxy. Proxies can easily be set up and there are even mechanisms to anonymize (including simple ways in Firefox) that rotate through proxies in semi-random fashion, but I don’t have it set up like that.
That’s just true. It doesn’t mean you’re stupid. It means use your brain and evaluate what’s going on in the market. Do you really think the herd will jump back in at the bottom? Do you think we’ll hit bottom and then see high sales volumes? If not, then it stands to reason that smart investors will pick up bargains while the herd waits on the sidelines. I think its also fair to say that we saw the same thing on the way up.
You may take exception to the statement, and it may dredge up unpleasant memories for you, but that doesn’t detract from the statement’’s accuracy.
The degree of “smartness” isn’t known until well down the road. And although after everything it is easy to to look back a congratulate somebody and say, “See….. he was smart to buy at this time” it means absolutely nothing when a realtor says that the smart buy when prices are low. If it turns out that the market has bottomed right now – something we won’t know for a few years, the people that have bought now will be considered to be smart. However, if the market drops another 30%, these same people are suddenly not so smart.
In all honestly, people we refer to as “smart” are simply lucky.
Is Aaron so smart as to be able to predict a bottom? Or perhaps Aaron is making a harmless “general” statement about smart people buying when others are selling and that he is not suggesting we go out and start making offers now. If that is the case, his statement hardly seems worth mentioning. He might as well say we should buy when the market hits bottom. Duh.
I think the negative reaction the statement is receiving is that he is making a prescriptive statement – that if we were smart, we should be looking into buying – not a year from now, but now.
Your defense of the his claim would be valid if Aaron was indeed making a bland statement about smart people buying low and selling high, but when the statement comes from a person whose livelihood depends on people buying and selling, it’s hard to read his comment as an objective statement of the obvious.
As for the whole lowball thing, I’m extremely skeptical that one can package an offer to increase the chance of success. If I was to lowball on a property, obviously I would minimize subjects and offer a clean as possible offer, but really, the only reason why anybody would accept a lowball is because of pressing financial need. And we won’t know that until the offer is accepted. If somebody really needs to sell and there has been no offers, I can’t see the seller turning down an offer because the deposit is not in the buyers agents trust account. He needs to sell and he’ll give the offer a try. What does the seller have to lose? Possible thought processes:
Seller who doesn’t need to sell:
“Gee this guy has offered me 25% below my asking – I don’t really need to sell, but since he seems serious by depositing money into his realtors account and has no subjects I’m going to to take it!!”
- yeah right
Or.
Person who is desperate to sell:
“Damn, I don’t like his offer of 25% off the asking price. I desperately need to sell, but I’m not sure if this guy is serious because he didn’t put a deposit in the trust account of his realtor and his offer has a lot of subjects.”
-yeah right again.
RC: “Regarding the Olympics, I think its fair to say that rich people will be coming here … I think its also fair to say that visitors to Vancouver will be suitably impressed and will learn more about the place, thereby raising the city’s profile. I’m not saying that these rich visitors will maintain property values, but I think that they will be an contributing factor to price increases (and you’ll have to net that out against all the other pricing inputs). ”
Exactly what will impress them on their visit? Our dawn-to-dusk February sun (unfortunately hidden by perma-overcast skies)? Our invigorating polar-bear swim ocean? Our packed powder (a.k.a. melted-and-refrozen-into-ice) North Shore ski slopes? Our high-power (or just high from pot?) economic engines of growth? Sorry Rob, the reality is that there ain’t nuttin these visitors are going to see that they haven’t seen twice as good somewhere else. Take off the blinders, eh?
“Our packed powder (a.k.a. melted-and-refrozen-into-ice) North Shore ski slopes?”
You’ve got some better slopes in mind? Have you skied on Eastern hard pack? Give me a break, nowhere beats Vancouver for good snow close at hand.
Vancouver is a gem and, long term, people will buy property here just because it is a nice place to live. However, rich foreigners cannot buy all the property, and there is lots, and lots, and lots of property in Vancouver. Compared to other cities this place just has scads, and scads, and of unused land. The other thing is that no rich foreigners are going to buying land until several years after the recession is over. In the meantime, prices will continue to drop.
More cheery news for those waiting —
(possible reposts)
Canada Starting to Mimic U.S. Retail Trends
While U.S. holiday sales are expected to be the worst in more than 20 years, trends in Canada began to deteriorate significantly in November and promotions flourished in December…
“The holiday retail sales outlook is extremely poor in the U.S., with many retailers desperate to turn inventory into cash in order to survive through 2009,” Mr. Howlett said, adding that Canadian retailers are also in cash-generation and cash-preservation mode.
So, everyone properly invested up on their put options on banks? I recommend getting them about 6 months out in a couple different banks. Then we open a few beers, start the popcorn popping, and enjoy the show!
wbwucSSAB?
Look at it this way. 9 months ago Rob Chipman may or may not have seen that RE was on the brink of collapse. But he did say about 5 different things that if the clever reader put them all together, would indicate a high likelyhood of collapse. (Note, all are based on my fallible memory–”buyer to verify measurements if important!”)
1) Only buy on metrics, and (spaced by a few paragraphs or days)
2) It’s been several years since the metrics have been suitable for investment in Vancouver
3) Rob was in Texas in the 80s and remarked on driving down the freeway and seeing miles of empty condominiums
4) Inventory was ballooning, yes. That was a fact. And he didn’t deny that inventory ballooning was a precursor to every crashed US market. (He merely pointed out that several US markets experienced ballooned inventory without crashes, so it took a little “putting 2 and 2 together here)
5) He was openly stating that he expected a correction, not a crash, and defined crash > 50%, then later refined “correction” to 20-40%.
6) He waffled a bit on the notion that since we have zero-40 mortgages now, that even a 20% correction could be catastrophic to the market. That also took some DIY 2+2 addition.
So, Rob was not in complete denial. He definitely waffled around a bit, but he wasn’t half as bad as Maggie Chandler or Downtown Vancouver Realtor Mike Stewart. But he was not willing to come out and say it, or even to hint that we should do our own math.
So, I suspect Rob will disagree with it, and maybe others, too, but I suspect this interpretation is in line with what many of you remember (and with an hour or two we could browse the archives and prove or disprove, but that’s not the point I’m trying to make today).
The point is, the same warnings are now coming out about the banks. You have one story saying that “Banks are probably fine unless a, b, and c all happen.” Then you get another story saying that “a” is happening. And another that “b” is happening.
So, do the math.
In the last couple days we’ve had the following stories
a) Yes Virginia, Canada does have Subprime mortgages. A lot, in fact. Link
b) The freezeup of retail spending that occurred in the US a couple months ago is now happening in Canada. Link
c) The US economy may well get a lot worse Link
d) If a few things happen (bad RE markets, etc.) consumer debts in Canada will go into default along with mortgages. Link
e) If consumer debts go into default, it’s going to be Hell on the banks. Link
Now, keep in mind that these reports are all coming from places that were reciting the “there is no subprime in Canada” mantra until a few weeks ago.
I postulate that since the tide in the news is turning this fast, the financial storm is looming close on the horizon, is certain to come onshore, the only question is how soon, and given the radical change in financial reports from all levels and all medias, it may be sooner than we think.
My question for all of you is — if you had such strong personal convictions about the coming RE crash that you were betting most of your life savings on it, and you’ve scored big, what evidence will it take for you to be convinced that there is a financial crash just around the corner?
Just curious,
WBWUCssab?
Compare these 5 news articles on the health of Canada’s financial system to the RE data that was coming out 9 months ago that preceded the RE collapse.
And compare the March dialogue that I reposted in post 30 of this page. The indicator signs were there plain as day, Jeff, myself and a bunch of other people called them as they were and predicted collapse. Rob said “the collapse hasn’t happened yet”
Is it just me, or is looking back to last March’s RE discussion eerily similar to these recent media reports?
Time will tell…
wbwucSSAB?
I’m trying to shed light on the fact that people sue when they lose a shit load of money – especially with all the Vancouver RE hubris we had to endure.
Suing and winning are two different things. Real estate agents have a duty to the buyer to correctly represent the property being sold and to correctly carry out all procedures related to the sale. That’s it. They are not investment advisors and their job does not include advising the buyer as to whether a given price is “fair”, whatever that means. That’s up to the buyer. Take it or leave it.
You’ve got some better slopes in mind? Have you skied on Eastern hard pack? Give me a break, nowhere beats Vancouver for good snow close at hand.
I can think of 3 cities off the top of my head that blow away Vancouver when it comes to good snow:
Salt Lake City, Calgary, Denver. And those places are usually sunny.
Existing home sales drop 12 per cent
http://tinyurl.com/5973fo
The number of existing homes sold in November was down 12.3 per cent from October, marking the second consecutive steep decline, the Canadian Real Estate Association reported Monday.
Canadian stocks undervalued, investment managers say
http://tinyurl.com/6mbrp4
Forty per cent of the managers surveyed said they expected gains of up to 40 per cent in 2009, while 13 per cent said they expected to see negative returns. Eleven per cent replied that Canadian stocks are overvalued, while 65.8 per cent felt they were selling at a significant discount.
I don’t know about Salt Lake City, but Calgary and Denver are both much further away from the snow than Vancouver. The fact that I can be on the lift in 40 minutes after I leave by front door means that I can go skiing in the evenings, or just for the morning, the way people in other cities go to the gym. You just cannot contemplate that kind of skiing in places like Calgary.
Blueskies. That link is the equivalent of surveying Realtors on where the RE market is going. Pure fluff.
Sorry.
ac:
but it fits so nicely in a bear blog and fluffy is warm
patriotz,
what about real estate investment advisors?
guys. Realtors have an objective in mind. As investors, we have to realize you will never get unbiased info. In fact, we biased opinions based on numbers. We interpret them differently. Don’t get hung up on why most realtors provide fluff. They are in SALES.
what about real estate investment advisors?
As far as I know, anyone can peddle advice about real estate investing without any qualification. Whether someone can do that and be a real estate agent at the same time I’ll leave to those in the business.
Sun Peaks has better snow too.
patriotz,
err, that is my point – the agents that did that are at risk for being sued. anyways, whatev – I don’t wish that on anyone BUT it is coming.. you can’t be a “real estate investment advisor” (as per the business card and website) and then when the going gets tough – you protest that you merly a salesman…
I’ve said it before and I’ll say it again – if you’re a realtor and you know you projected youself as an advisor – do yourself a favor and have a meeting with a lawyer – first consultation is free….
Ugly:
“Clearly Aaron is selling his services as a real-estate agent. Can’t we at least agree on that?”
Sure he is, and so am I. That’s not the same as saying ignore metrics. And its not in conflict with saring some advice about lowballing. Nor is sharing advice about lowballing the same as saying buy without regard to metrics.
“Writing a check upon acceptance would be considered “on acceptance” provided the check was good. ”
That’s true. If the cheque failed to clear the seller would have the option to terminate the contract without prejudice to other legal remedies. If you were present at the Sunday night acceptance you could, upon acceptance, present the cheque to the agent who would then deposit it into his bank account. What’s the point? Where is the saving? How is that equally beneficial to having a deposit in place? Compare the two:
“Here’s a cheque that I just wrote that isn’t in the bank” vs. “The deposit has cleared the buyers account and as soon as you accept this offer it will become held as a stakeholder for this transaction. No lag time. No wait” They’re not the same thing despite the fact that you keep trying to say that they are.
” Everything about the context of Aaron’s comment was that the big players are buying up in Vancouver right now.”
That’s not true. He says “especially in the US” and you interpret that to mean that he’s referring to Vancouver. That’s not the meaning of especially.
I’ve already responded to your other questions.
Tony:
” In all honestly, people we refer to as “smart” are simply lucky”.
Some people certainly share your view. Personally, when a client says to me “I’ve appraised the situation and I think that doing this will profit me”, and he then makes the investment and profits, I think “Smart enough guy”. When he does it several times I think “Yup, smart, and with a record to prove it”. We can agree to disagree.
” that he is not suggesting we go out and start making offers now. If that is the case, his statement hardly seems worth mentioning. …” Maybe not worth mentioning. Maybe not worth taking great exception to reading in lots of implied meanings that aren’t there. You could instead just ask: Hey, is this what you mean?
“if we were smart, we should be looking into buying – not a year from now, but now.”
What exactly is wrong with that recommendation if you take it in the context of all the other advice you seen written from this side of the blog?
-Look into buying now (those are your words, and not the same as saying “buy now”)
-Get prepared.
-Get educated.
-Buy on metrics.
-Don’t market time.
-Look for opportunities all the time.
-Make your offer as attractive as possible.
“As for the whole lowball thing, I’m extremely skeptical that one can package an offer to increase the chance of success.”
That makes sense. You think that people who prosper through deal making are lucky. Why would you think that you can have an effect on your outcomes by taking action?
” If somebody really needs to sell and there has been no offers, I can’t see the seller turning down an offer because the deposit is not in the buyers agents trust account. ”
We didn’t say that. We said that sellers who have seen several offers have been known to accept a much lower price than other offers, and that the buyers behind those offers have some things in common. We went further and said putting the deposit in the trust account before hand is a tool you can give the agent to make your offer more attractive. We didn’t say that failure to do so will result in a rejected offer.
Rather than simply predicting the future based on our opinion (“the seller will do A or B because soley based on himself, and that’s my opinion” which seems to be what you’re saying) we said “we don’t know what the seller will say. We’re giving him an offer with an inferior price. It makes sense to improve as many other aspects of it as possible to increase the chances that it gets accepted”. How unreasonable is that? I mean, you can disagree with the approach and prefer another, but are we really being unreasonable? In what way?
Its easy to get a no. Its not easy to get a yes. You’re suggesting that the seller will do all the work. That may be true, but it hasnb’t been my experience.
ObserverX, meet Newcomer. Another thing to consider: if 100 people pay to visit a place, chances are that some will like it. One last thing: even people who don’t like the place will live there, and they’ll either pay rent or buy (you’re evidence of that, right?)
Whybuy:
Your generosity impresses me. You point out 6 common statements that I make (repeatedly make, btw, as is the norm with “common” statements) and then say I wasn’t in “complete” denial.
So, how does that square with the “consistently 6 months behind the curve” comment, or have we moved on?
What is the exact nature of your problem with me? That I haven’t expressed your sentiments? Or that I’ve recommended that people do something that you wouldn’t have recommended?
The post you cite about me saying the collapse hasn’t happened yet was on Mar 12, I believe. Stats hadn’t indicated price drops yet. If we go by averages for SFH that was in Feb, and those stats didn’t show up as the peak until April, at the earliest. Others will set later dates for our local peak.
“Sun Peaks has better snow too.”
That is not the point, unless you want to argue in favor of living in Kamloops.
“I’m not saying that these rich visitors will maintain property values, but I think that they will be an contributing factor to price increases”
This will not happen. “Rich” people are less rich than they were last year. They have likely lost double digit percentages of their net worth compared to one year ago. Logic proves that if Rich people contributed to high prices last year, their power to raise prices this year and next has declined in proportion to the decline in thier wealth. If they are less rich, prices will be less high. Also, no one, especially rich people, are likely to invest in a assets with declining prices, let alone borrow to do so (unless they are idiots). Unless asset prices start rising, there is no demand to buy unless you can find someone who wants to loose capital. Who ever likes vancouver will just rent until asset prices bottom.
Real estate agents have a duty to act in the best interests of their principal, the client. If they knowingly or negligently misrepresent facts or likely outcomes in order to make a sale and earn their commision, they are open to liability if their misrepresentation induced the client to buy or invest and the client has been damaged as a result. Liability can be based on breach of fidiciary duty or negligent misrepresentation.
The facts of each case are different and critically imporant. Depending on what the agent said to the client, and what he privately knew to be the case and what disclaimers or reccomendations for independent investment advice he gave will be important in detrmining liability.
Any buy who feels that they have been wronged is well advised to seek legal advice to determine if their facts give rise to a reasonable cause of action.
I’ve been trying to post my comments on this blog but they seem to have been deleted or have been taken down. I have information on some of the unknown practices in the real estate world.
RC:
You’ll have to spell this one out for me.
“Another thing to consider: if 100 people pay to visit a place, chances are that some will like it.”
I’ve been to a number of places that I thought were nice — some of them with affordable RE. Do I own there? How many homes have you bought in places you’ve visited just because you thought the place was nice???
“One last thing: even people who don’t like the place will live there, and they’ll either pay rent or buy (you’re evidence of that, right?)”
First of all, I never said I didn’t like it here so nice job inferring something someone didn’t say. Yeah, there are people who stay in places they don’t like — for good reasons (job, spouse’s job, family, etc) — what’s your point? I think it was clear to everyone except someone purposely acting obtuse that the issue was whether a big O visitor would feel compelled to buy a home here and judging by what the other participants have subsequently said, your claim is missing a couple of legs to stand on.
#303. “Do I own there?” Answer is ‘No’.
I guess I should also ask Newcomer: So why are you here? For the ski-ing? New job? Inquiring minds want to know.
PPL, that hole thing is turning in to less constructive discussion/exercise on how to write the “Lowball!”
Can we get back to subject here, time is money for me at least …
I figured that much so far…
My Agent pro needs to demonstrate that:
- he/she can play a good chess game with the constant smile on the face.
- Have no fear or complex of being rejected! you know what I mean.
- Be able to convert my wishful thinking into financially sound metric and advise me on giving all extra tolling required for wrenching down the vendor in case vendor is not in “dire strate” (if evident).
metric – has to be in SI system not the imperial (yard or something) JK
Wat else for me to take out of this?
Many thanks
Rich ppl are going to spend here, buying yet to be seen……….
I am not sure but Monaco sound more suitable for reach to stick around, perhaps the scale of rich is important…..! semi Rich will see some special properties perhaps to add to the portfolio, even though they might be less worth that they where 1 ago! BUT Special is important and will be considered. What I personally see here among “Vancouver special” is not even near to pass the criteria of being special for foreign cash bags. That is my opinion, not necessarily the right one. I speak from the experience of talking to 3,4 really rich people, they are not my buddies but well acquainted to my father.
this was posted on garths’ blog in the comments section: ‘nuf said:
So the next time you hear an industry shill start off on this NOW IS THE BEST TIME TO BUY, plug your ears, start screaming at the top of your lungs and run away.
DJ:
“Can we get back to subject here, time is money for me at least …”
OK, I’ll save you some time. Don’t buy for at least another 12 months.
Thanks, I prefer to be perceived as person not “the heard” even though I am using pseudonym.
Newcomer, what I mean is thanks for your advise on timing but I have been tyring to uncover “the Metric” thing so I can park my cash in wood and land now not later, you know when the heard will stampede you! I had no chance to take time for a good thorough look at any properties since We came to Vancouver Canada. So I bought condo completely redone and suitable to our taste but small. So I am on a mission to kill 2 birds with one stone now!
Cheers
PS: If I would plan on financing my deal I would put it off till next spring after 2009
DJ:
So you need to sell and buy, huh? Then I can see wanting to move fast.
Why do we all assume that all Olympic visitors will be Rich? Is there a net worth level associated with curling or speed skating fans? And who here wants to bet that most 2010 tickets were purchased by people in Canada, mainly Vancouver. I’d like to see VANOC release those stats.
Newcomer, wrong assumption!
JK.
My condo has no rental restriction and I have no mortgage on it! You know we immigrants not used to buy on credit…..
But no rush to sell for me at all, I would prefer to change my condo to a fresher one if to be treated as an investment pad.
Anyway, waiting for further tips on “Lowball!”
I guess “The Pro” team is out for lunch…
I guess “The Pro” team is out for lunch…
or maybe “to” lunch
DJ:
In that case, it makes no sense to buy. If you want to park your money in something that is sure to loose value, it’s hard to imagine anything that will out perform Vancouver RE at the moment. If your goal is to reduce your equity, then I guess it makes sense. Otherwise I can’t figure out why you would want to buy now.
Also, DJ, if you want to buy Vancouver RE now, I cannot understand why you would want to low ball. Why don’t you offer over asking. That would be more in keeping with what you are doing anyway.
What is Rich? I’m rich (in immediate family)
Newcomer, you coming in with advice not even following my statements! Guessing assuming and as a result shooting blanks!
I am ready to buy RE today with 2001-2002 price level maybe lower if my lowball offer is cheery enough…
I do not ask for you clinical.. reply btw
Newcomer, I did not ask for you clinical.. reply btw, so keep shooting but not at me! I personally think that spreading the word (about RE trend) this way has affect only on mental midgets not real people.
Rob, Aaron, any further tips on “Lowball!” please!
DJ;
They’ll come, but we have to recover from the beating we’ve taken on them so far.
Apparently the tips mean “Buy now the market is always going to go up!”
Dignan:
“Why do we all assume that all Olympic visitors will be Rich? ”
I guess it depends on how you define rich. I don’t mean necessarily Robin Leach rich, but but at least rich enough to take some time off work, visit a foreign country, and pay inflated rates for accomodation and events. That kind of rich. I assume they’ll be that rich because it will take that kind of money to pay for it. So will they al be Oprahs, Tom Cruises, Bill Gates types? No. But they won’t be migrant fruitpickers either.
ObserverX:
You were questioning what visitors would find attractive about Vancouver. To me (and others) its obvious. Apparently not so much for you. Fair enough. I assumed you didn’t like the place because you couldn’t idenitfy its good points. My mistake.
I own real estate in one other place I visited and liked.
I hardly said an Olympic visitor would feel compeled to buy here. Neither did Aaron. Our sin was to speculate that some Olympic visitors would get a good impression from the city and some would buy here as a result. That’s all. My experience with clients from around the world leads me to believe that this isn’t a stretch.
You may not buy real estate in foreign countries that you visit, but some people do. That proves that your experience is not the rule.
So I’ll rephrase it and ask you again: if a large number of people visit a place that is considered attractive what has more chance of happening:
-nobody, zero,zip, ninguna will like the place and nobody willsubsequently buy
-or-
someone will like the place and at some point buy.
It seems to me tht you’re ataking out the more extreme of the two positions, but maybe I’m wrong.
ptrck:
Nothign stopping your comments on this end. Post away.
BoP:
We said long run, and I said net of all other effects. 1 rich person buying is upward pressure on prices. In the face of myriad downward pressures it doesn’t do anything. Long run the rich won’t be poor forever.
DJ:
Well, you’ve heard my advice. Wait. If you don’t want to wait, that’s your choice. It’s going to be hard to be sub-2001 pricing now. That is basically an unrealistic plan. You will only be looking at the bottom of the market. If you wait, it will be easier and you will get a better deal.
DJ
Rob has said he would work for an hourly wage and it takes 1 hour to write an offer. Why not hire him to write 10 offers at your 2000-2001 price and present them. You can look at the counter offers if any arrive yourself and then try the experiment again in a few months preferably to the same properties with the exact same offers. Eventually you may/will get a taker. Since Rob has already prepared the offers you will be reusing this would lower the costs after the initial go around. Rob could also help you out by finding properties that have had sales fall thought. These types are very apt to bite at a lowball that is clean with only a subjest to inspection clause.
Good luck.
Many thanks to all poker faces here!
Never state clear some diligent reader will corner you on that here!
Rob you mentioned that they won’t be migrant fruitpickers either. Way not perhaps they will like some areas around Surrey?
Will wait for “lowball offer – THE Metric” part III
Newcomer, Waiting as a game plan is good for many, no objections, but I can not afford to loos time to test market conditions and perhaps through the slim chance by blogging locate a suitable RE agent PRO!
You make very simplistic conclusion about my intentions. As I would buy now, you say – wait and get a better deal later, too general for me as an advise! I am not arguing the general trend and not even trying to convince any one to join my effort, quite opposite!
I would love and wish that all buyers just vanished for time being just long enough for me to get a nice place for our hard earned money! We are not planning to speculate, we might opt for investment property as an optional less time intensive option for our portfolio vs stock market and many here might argue that point but I state it clear that this is our choice.
No comments necessary
Thx
327 – it was DJ
Dyugle:
Good plan. I await the call, and am happy to consult on an hourly basis.
Do you think anyone will take me up on the offer? You’ve indicated the benefits fairly well.
Newcomer:
One thing you have to evaluate is the value of time. Telling a guy with two growing girls to simply wait until the market bottoms doesn’t address the space and emotional stability needs.
Some people will argue that DJ should just go rent, but I think its pretty clear that he wants to settle his family long term, wants to do it pretty soon, and wants to make the best deal that he can.
Its kind of like those Visa commercials – you know the ones : house $650,000, conveyance $600, PPT $11,000…solid home for your two little girls and wife….priceless. When the rubber hits the road a guy like DJ won’t agree with the priceless part, but chances are that if he can drive an acceptable bargain and close the file he will move before we hit complete bottom.
Rob:
I can see what you are saying, and I said as much to DJ. Like many of us, he wants to have his cake and eat it too. I guess a Realto’s job is to help him to that.
Rob (289) wrote
So, how does that square with the “consistently 6 months behind the curve” comment, or have we moved on?
Rob, Jeff and WBWUCR were all in a car driving east on the TransCan. Not quite sure where they were going. Enough gas in the tank to go 100 kms.
They saw a sign that said
Surrey 20
Langley 40
Abbottsford 70
Jeff said “Looks like we’re headed to Chilliwack. This is what I said would happen when we left North Van with enough gas to go 120 km, remember? Maybe we should stop for gas in Abbottsford so we don’t run out just shy of Chilliwack…”
Rob said “I don’t think there’s any way of knowing if we’re going to Chilliwack at all. Just because other people on this road have ended up at Chilliwack doesn’t mean we’re going there, and I’m not worried about the gas, the predictions that we’d run out of gas have all been wrong so far — this car continues to defy!”
Alls I’m saying is, you can’t have it both ways–you can’t say “A good, trained, professional Realtor can be of great assistance to you deciding when, where and whether to buy a home” and then at the same time gloss over a lot of obvious road signs that would be of real interest to a buyer… Or a seller…
WBWUCR?
“… So I’ll rephrase it and ask you again: if a large number of people visit a place that is considered attractive …”
So again what were the attractive things these visitors will see in Vancouver in February? And is Vancouver so much less attractive now than it will be after the big O? You seem to believe that these moneyed visitors will come here and fall in love with the place. I suggest if it’s known to be that great of a place, they’ve already been here before and would have already bought if they wanted to.
Low ball offers are the norm. Agents who will not do it for you will be out of business. 10% to 20% below asking is the norm. Agents are not busy. If one will not do it for you, find another.
Well, Whistler is a ski centre, not Vancouver. Winter Olympics are happening in the city, true, but – attractive are the snow slopes, not the ice rinks. And if anyone in RE will benefit from the Olympics, that is going to be Whistler. Vancouver is far, far away from Whistler/Blackcomb gondolas.
ObserverX:
Vancouver is an attractive city. That’s not up for debate. I’m not giving you a list of attractive quaities so that you can dispute them one by one. Either answer the numbers question or come out and say that Vancouver has no attractive qualities. Either way allows us to move on.
Whybuy:
Ïs this hypothetical Realtor who “gloss[ed] over a lot of obvious road signs that would be of real interest to a buyer… “the same guy who maintains a bog where people engage in extended conversations about that very thing? Not a very efficient way to gloss things over.
And if that’s “all you’re saying” is it fair to conclude that you’re dropping the consistently 6 months behind the curve claim?
Like I said, you’ve got more to offer than just barking up the wrong tree. I’ve said buy on metrics and don;t market time, and you seem to be saying “Why don’t you give market timing advice”? In other words, you’re complaining that I haven’t done what I’ve never claimed to be able to do. That’s kind of a waste of time, no?
“Vancouver is an attractive city. That’s not up for debate.”
Oh really? Who says it’s not up for debate? You???
“Either answer the numbers question or come out and say that Vancouver has no attractive qualities. Either way allows us to move on.”
I already explained my position and I don’t believe it’s been refuted so it’s not my move.
ObserverX:
Yup, its me who says its not up for debate. Here’s why: First, many people, including me, think its attractive. There’s independent evidence of that in response to your posts.
Second, you seem to think its not attractive, but you deny that you dislike it. You haven’t even taken the position that the place isn’t likeable, but seem to be saying that it can be likeable while being unattractive. I can’t debate someone who’s that confused.
Third, unless we have common ground on the quality of Vancouver (attractive or not attractive) we can’t debate the second proposition (its dependent on Vancouver being attractive). If Vancouver isn’t attractive, period, then it follows that no matter how many rich foreigners visit the place nobody will ever buy. Therefore, if you come out and take a stand (Vancouver isn’t attractive) instead of trolling for material (What do you think is attractive about the place?) we can simply agree to disagree (I can’t convince you that some quantity greater than zero will like something if you maintain that nobody, ever, will like the thing).
Conversely, if you admit that there is anything at all redeeming about this hell hole that you live in because you a) like it and b) because it has nothing attractive about it, we can then debate whether any number of vvisitors greater than zero will be favourably impressed enough to one day buy something here.
As for explaining your position, it seems that you feel that because you ahven’t bought RE in nice foreign locales that you’ve visited, nobody else ever does (I have, as have many of my clients, so that part of your argument is refuted unless you take the position that I’m a liar).
It also seems that you feel that we were arguing that an Olympic visitor would feel compelled to buy here. We never said anything of the kind.
You maintain that if a rich visitor comes here he won’t be inclined to buy because he’ll have been here before and would have bought already if he wanted to (that’s in conflict with one of your other positions, so you refute yourself one way or another).
Bottom line: I’m not interested in debating with you whether Vancouver is an attractive city, and I’m not interested in defending the position that if a large number of visitors like a place a certain number will buy, and that buying wil be upward presure on prices, with that individual pressure acting in concert with all other positive and negative pressures to arrive at the net effect. It seems pretty reasonable to me. If you don;t buy it, fine. You haven’t haven’t taken reasonable position either way as far as I can see.
My position was very simple and you simply read much more into it than was ever expressed.
I pointed out a whole bunch of things that people have expressed as reasons why Van is attractive (water, snow, climate, economy) and quite bluntly (sarcastically) explained why they were red herrings. Apart from one or two cautious comments, no one (particularly YOU) rebutted my reasoning so who’s not debating in good faith here? I don’t know why you keep fixating on what my personal feelings are about the place — they are irrelevant which is why I’ve purposely avoided expressing them; what matters is what visitors will see when they come to Van *in February*. (And I’m open to admitting that a lot of people have told me that they thought Van was a beautiful place when visited here in the summer but I’ve never met anyone who said that after having visited here in Feb).
Re: the argument about buying in a place you visited. Sure there are a few people who do that but it was you who suggested that they’ll be the saviours of Van RE. I was merely putting in my two bits as a counterexample. Can’t I do that and not be labeled as saying *no one* will?
There is nothing contradictory about my position or in what I’ve written; if you perceive that’s the case, then you’ve misread what I’ve said.
(If there’s anyone else still following this thread who agrees with Rob, tell me and I’ll be the more than willing to concede.)
ObserverX:
” but it was you who suggested that they’ll be the saviours of Van RE. ”
I actually said exactly the opposite. You can find me saying that in your comment #281 on December 14 at 10:59: ” I’m not saying that these rich visitors will maintain property values”.
I don’t even think Aaron suggested that Olympic visitors would “save” our real estate market. That would pretty much be suicide around here, no?
Anyway, “not maintain” does not equal suggesting that rich foreigners will be saviours. You’re arguing with your own thoughts, not my statements.
Are you saying there’s nothing attractive about Vancouver in February? As in, absolutely never attractive to anyone? Based simply on your experience? If so then you’re fine in maintaining that you think that nobody who visits here in February will ever get a good enough impression of the city to buy anything, anytime. 1000 people visit, none like it enough to ever buy. Olympics are not positive in that respect for the city. Fair opinion, but not a proven, nor even a reasonable position. Its just too absolute.
I just disagree with you, and frankly, you haven’t proven me wrong, or even likely to be wrong. You’re basing your position on your experiences (I haven’t bought in foreign places I like, so nobody else will, or if they do, they’ll already have done so; I don’t like winter in Vancouver and I can’t believe that anyone who likes winter sports enough to travel to winter Olympics will like winter in Vancouver; etc). You’re expressing your preference, and that’s all. I’m saying that, odds are, enough people visit, some of them will like it, and some of them will buy, and that’s a positive, but the positive has to be netted out against all other inputs. I think my position is more reasonable in that a) its not a very grand claim and b) it recognizes that not everyone thinks like you, and there are different tastes and c) it conforms with my experiences with offshore clients (do you really think a guy who’s worked in the Gulf for 20 years searches the earth for more sun? C’mon).
“I actually said exactly the opposite. You can find me saying that in your comment #281 on December 14 at 10:59: ” I’m not saying that these rich visitors will maintain property values”.”
Selectively quoting yourself? That very sentence continues with
“but I think that they will be an contributing factor to price increases (and you’ll have to net that out against all the other pricing inputs). ”
which I think any reader would interpret as suggesting that these visitors will have a material impact on prices. It is this general conclusion I’m disputing. Of course if you throw a thousand darts at a dart board rather than no darts at all, you necessarily have a higher chance of getting a bulls-eye; that is not the crux. The question is whether you hit enough bulls-eyes for it to be meaningful. We will have to agree to disagree since you pooh-pooh my perception of how other people think/act (again, nothing to do with my preferences) and you have provided no evidence for your position other than your own perception.
ObserverX:
Its not a selective quote. I said foreign buying won’t maintain prices, and although it will be an upward pressure on prices the effect has to be netted out against all other price pressures. You can’t take “won’t maintain” and “the positive pressure has to be netted against all other pressures” and come up with “foreign buyers will be saviours”. It just doesn’t work, no matter hwo many times you say it. It doesn’t even work if you say it slowly and raise your voice. You have to willfully ignore what I’ve said and give inordinate weight to your your unsupported conclusion to suggest tht I meant that foreign buyers will have a material impact on future values. A more reasonable position, I think, is to say that foreign buyers (like all buyers) will have a positive impact on prices, but the net effect is unknown at this point, and that I’ve made no specific claim that the net effect will be positive. Again, changing that to “they’ll be our saviours” stretches the very meaning of “stretching the meaning”.
You can dispute the conclusion as much as you like, but you should dispute it with someone who actually advanced the position. I didn’t do that initially, and haven’t done it subsequently.
“Of course if you throw a thousand darts at a dart board rather than no darts at all, you necessarily have a higher chance of getting a bulls-eye; that is not the crux. ”
I think we agree on that, and I think if you go back you’ll see that it was my original position (Olympic visitors will not save our market, if enough visit some will like the place, and a subset of them are likely to buy, that will be a positive that has to be netted against all other things). Its not that controversial a statement, and it never was. It was hardly worth disputing. I haven’t tried to prove the opposite. I’ve only tried to deny that I said something different. You’re the one claiming that Aaron and I said something different.
“The question is whether you hit enough bulls-eyes for it to be meaningful. We will have to agree to disagree since you pooh-pooh my perception…”
We disagree less now, actually. I agree that how many bull’s eyes get hit is a more important question, but I maintain that I never claimed that enough would be hit for foreign buyers to be “saviours”. If I had said that you’d have a point. Its a more disputable position, without question.
I don’t pooh pooh your perception so much as point out that if you accept your perception as fact, and disregard actual facts, (you don’t think foriegners buy RE in nice places they visit, although I and many of my clients actually, as a matter of fact, have done exactly that) you paint yourself into an absolutist corner.
As far as I can see I’ve said “some people will do something that will be a positive for prices, but the net effect will be unknown” and you’ve said either “Wrong, nobody will ever do anything” (too absolutist to be reasonable) or “No, you said something completely different, and that thing is wrong”. If the former, well, I’m more reaosnable and you’re too absolutist. If the latter, well, sorry, I didn’t say or mean what you think I said or meant.
Well I’m glad that it’s finally clear that we agree that it’s about degree of impact — my statements were never absolutist but simply represented counterexamples to your examples. Nonetheless, for you to even bring up the notion that visitors will have an impact suggests that you think that impact has a reasonable likelihood of being material (at least relative to a whole lot of other reasons that could be used). For example, I’m pretty confident that *some* people will move away because they’re tired of the rainy winters or because they’ve had an epiphany that they need to be in LA to make it as a Hollywood star, yet I don’t bring these up as arguments because I perceive the numbers involved are immaterial.
ObserverX:
We don’t “finally” agree that its about degree of impact. That kind of implies that I said that I took some sort of contorversial position on that. I never did. I said it would have an unknown impact – it would be positive, but had to netted against everything else. The question of degree was and is unknown to me, and I was pretty clear about that from the start.
I didn’t bring up the notion – Aaron did, and I simply pointed out (consistently) that the Olympics will be a positive that has to be netted against everything else. Saying I brought it up is just inaccurate. (“I have a feeling that there will be a lot of very positive news and marketing as we approach the Olympics. The party atmosphere in the city will be undeniable
(Aaron wrote on December 12: “…even though I’m planning on going somewhere hot while the Olympics are here). I think there is a chance we may see another spike in the market. How long it will last is the question I’m not too sure about”).
RJ then asked “are you being sarcastic or serious?”
That’s where it started. I was just putting a little (very little) meat on the bones. The Olympics won’t be a saviour to the market, but they won’t be irrelevant. I never said it would have a material impact. I said the net impact was unknown.
If you said “For example, I’m pretty confident that *some* people will move away because ….”and then said that the negatives had to be netted out against al other inputs, and you didn’t think that alone would cause a crash in the local market, I’d have to accept it as a reasonable, non-controversial and logical position.
Remember, I didn’t bring up the numbers because I think they’re material. I didn’t claim they’d maintain the market. You could have saved yourself a lot of typing by just asking “Are you saying…..? “
“If you said “For example, I’m pretty confident that *some* people will move away because ….”and then said that the negatives had to be netted out against al other inputs, and you didn’t think that alone would cause a crash in the local market, I’d have to accept it as a reasonable, non-controversial and logical position.”
I do not put forth such “logical positions” because it’s obvious to anyone with a quarter (not even half) of a brain that they are pretty much of the “Well, duhhh” variety. So when someone whom I think has quite a bit more than a quarter of brain makes such statements, should I not expect that his intention is to convey just a bit more meat? (If it’s nothing more, some people would label it ’spin’.)
ObserverX:
Isn’t that my whole point? I wasn’t a controversial statement, I never intended it to have great import, it was a response to a response to a relatively non-contorversial and non-absolute statement, and the whole thing wasn’t really worth much debate. My position throughout has been “No, not really, I didn’t say or mean what you’re taking issue with”. Like I say, you could have just asked “Are you actually saying….?”
Spin, I think, needs a goal. If you say “this will be a plus, but the net effect is unknown” you’re really saying Ï don’t know what will happen” I think calling that spin is over worked.
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