Warning: Objects in this article may appear more self-serving than they actually are!
Buy local, a concept we are all familiar with. It is a good concept. An altruistic concept. Big box stores have their place in our society. As does online shopping, local markets, department stores and artisans. They are all in different parts of the spectrum to be sure, but there is a place for all of them.
When I think “buy local” for real estate, it means something somewhat different. If I were a fan of big box stores, so be it. But I wouldn’t go to a big box store in Ottawa if I lived in Toronto. In Southern Georgian Bay, real estate companies can measure their production and market share through our Multiple Listing Service. You may or may not be surprised to know that the #2 market share in our region belongs to an amalgam of out of area REALTORS® . As a student of the market and as a REALTOR® myself, I am not surprised. So much of what we do for our clients has to do with trust. So, when someone from Toronto wants to buy a property in Southern Georgian Bay, they sometimes bring their REALTORS® from Toronto as they have done business together for a long time and they trust them to have their best interests at heart. I like and agree with the sentiment. (If you think there might be a “but” coming, you are right)…. BUT…. only if they have the capability of properly serving their client’s best interest in a transaction in unfamiliar territory.
The Real Estate and Business Broker’s Act governs our licensing and when licensed to sell real estate in Ontario, that means the whole province. However, I submit to you that just because we CAN sell province-wide, that does not mean we SHOULD sell province-wide. I remember when I was selling full time, a friend approached me to help him buy a house in the city. I was born in the city. I grew up in the neighbourhood he was looking in. I know the guy well and he trusted me to give him good and honest advice. Here is what I told him: “I am going to refer you to someone whom I respect. Someone who I know will do a good job for you. Someone who knows more about this market than I do. Someone who can be your trusted advisor during this process.” My friend bought a house for over a million dollars. Potential commission to me was almost $25,000. Why didn’t I do it? Simply put, I didn’t know what I didn’t know. How does the municipal land transfer tax work in this market? What developments are going on in the neighbourhood? How has the neighbourhood changed since I lived there? Not just the demographics… how does it FEEL? What about the rumour of the LRT going through there? Who just bought the place next door? Are they going to demolish and rebuild? How many competing offers might there be and how do I help him win in that environment?
It may sound trite, but my friendship was worth more than the commission. Ironically, the decision paid dividends. The person I referred him to refers me all of her Buyers when they are coming North, and no less than 3 people from my friend’s sphere of influence used me as a REALTOR® when they bought ski places in Collingwood and Blue Mountains.
While I am certainly NOT comparing doctors to REALTORS® , I will use a personal medical analogy to illustrate my point. I have a family doctor. I like and trust him. I had a bump on my arm. Not being a surgeon, he referred me to another doctor to have the lump removed. He did…all good. Fast forward a year and I did something to my knee. He again referred me to a surgeon. But not the same one! He referred me to a guy who specializes in knees. Why would he not just do it? He is a trained doc…he did a surgical rotation when interning. I like him and I trust him. But docs have the same sensibility as most good real estate practitioners (and lawyers and teachers and counselors and so many others). If it isn’t in your immediate field of expertise, refer it to someone who can help more effectively. If the commission is all that matters, you are in this business for the wrong reasons.
Now…before the hate mail starts rolling in, I refer you to my first statement. Yes…this is somewhat self-serving. I wish more REALTORS® who do not know the ins and outs of a local real estate market would refer to someone who does. But I actually walk the walk when it comes to that. I also acknowledge that some REALTORS® who are not local may know a ton about the area and can professionally serve their client’s needs. Go for it!
The bottom line is that you don’t know what you don’t know. I could fill the pages of this entire magazine with stories of unmet expectations. Things like municipal water and sewer charges that were being paid monthly on one’s tax bill but were due in full by the Buyer once the title changed hands. Surprise!!! Like the person who tried to list their property 2 years after she bought it using a “friend from the city”, only to find out that she may be underwater because she paid way too much when she bought.
Like the person who bought a stunning waterfront home and came to realize that they may not actually own the waterfront. Like the person who bought a lot in a subdivision to build their dream house who found out that that neighbourhood is famous for having soil that requires a different type of (read more expensive) engineered foundation. The list is endless, and you don’t know what you don’t know.
Make sure the person you are dealing with, friend or not, knows the local market. It will pay dividends. Like many markets across Canada, real estate sales activity in the southern Georgian Bay region has slowed during the first five months of 2018 versus last year, much of this stemming from weaker sales in our prime feeder markets such as the Greater Toronto Area (GTA). MLS® sales volume reported by the Southern Georgian Bay Association of REALTORS® through the end of May totals just under $376 million, down 25% from the $501 million in MLS® sales during the first five months of 2017. It should also be noted that year-to-date sales volume in dollars is down 5% from the same period in 2016. This clearly indicates the market has softened from the fast paced, multiple offer with sale prices over list price environment that we experienced in 2016 and early 2017. Year-to-date MLS® unit sales for the same period reflect similar results with 770 MLS® sales reported this year compared to 1,041 sales at the end of May 2017 a decline of 26% and 28% below the 1,068 MLS® sales during the first five months of 2016.
While new MLS® listing activity has shown some signs of a resurgence this year, the inventory of available homes, condominiums and other properties listed for sales remains soft. Year-to-date new MLS® listings for the first five months of the year total 1,327 properties, a decrease of 8% from the 1,443 listings reported last year and 20% below the number of new MLS® listings to hit the market during the first five months of 2016. Once again it is worth noting that the sales and listing activity reported herein excludes new home/condominium construction and sales made by developers outside of our local MLS® system.
While the demand for area properties remains strong, we are clearly experiencing a different market from both 2016 and 2017 in all segments of our business. Single family home MLS® sales year-to-date total 592 properties, 27% fewer homes than what sold in the same period last year. MLS® condominium sales of 178 units this year compares to 233 sales in the first five months of 2017 a decrease of 24%. Lastly, MLS® vacant land sales this year totals 54 sales down 72% from the 192 land sales in the same period last year. Much of this decrease in vacant land sales relates to the lack of available inventory.
A reduction in sales activity south of us in the GTA and elsewhere, tighter lending rules and some modest increase(s) in mortgage rates have all doubtless led consumers to pause and re-evaluate their selling and or buying decisions. How long this slowdown may last is unknown but we are currently in a different market from the early months of last year. Real estate market downturns such as what we are currently experiencing often turn around with a buying frenzy without warning, further reinforcing the importance of using a local REALTOR® . It will be interesting to see what happens in the remaining seven months of 2018. Anecdotally, at the time of writing this article, the pace of the market seems to be picking up.
Stay tuned! |E|