RomRealty

Tag: real estate investing

  • Four Reasons Why Negotiations Go Quickly Sideways in Real Estate

    A good realtor acknowledge the importance of negotiating and that without certain skills negotiating a good real estate deal can go sour very quickly. When I see a negotiation go sideways it’s usually because someone didn’t take into consideration the person sitting across the desk from them.

    1. Lack of Respect

    Respect of both parties in negotiations is so important. If you want to kill any deal quickly, throw respect out the window. It’s a lot about understanding the differences in personalities and how the person you are negotiating with is different from you. Recognize that it’s a human being sitting across the desk from you with different needs and wants. Not everybody is the same.

    I’ve seen people call the other person down in a negotiation and although it’s obvious that you shouldn’t do that, it still happens. Recognize the quality of the person that sits across the desk from you and don’t shut them out. That’s what I mean by respect. If you shut somebody out, you might as well stop negotiating. If you keep pushing back on everything, all you’ll end up with is a lose-lose situation or maybe a lose-win situation.

    A successful negotiation reaches that win-win situation.

    2. Lack of Trust

    To an extent, trust is part of respect. Of course you can’t go in blind and trust that they will be totally open and honest about everything but that’s not what I’m suggesting.

    You need to trust with skepticism.

    Coming in with a bit of trust with skepticism allows you to negotiate. If you go in with zero trust, your gut is automatically going to go against everything you hear from the other party because you’re assuming that they are being dishonest.. If you constantly think that they are lying to you, how can you trust them enough to get to a conclusion that you can solve together? That’s why I like to trust with skepticism because you aren’t going in with blind trust.

    3. Not Considering Desired Outcomes For Both Parties

    Get a feel for what their desired outcome is and also know what your own desired outcome is before entering into negotiations. A negotiation doesn’t usually start and finish in the same session so there’s usually some time to gather additional information and do some homework to help you validate what you have been told. Hopefully that extra research will build your trust and confidence in whomever you are negotiating with.

    4. Poor Due Diligence

    In the case of negotiating real estate, let’s say you are negotiating a commercial building or a project and the seller says the utilities are $1,000 per month. You’ve got to trust him that utilities are $1,000 a month while going through the negotiation process. If you accuse them of being incorrect, you can’t negotiate.

    When you are finished negotiating, it’s time for due diligence. This is when you check to ensure the utilities are in fact $1,000 a month. If you don’t check, then shame on you because I can tell you that the numbers you receive in real estate negotiations for commercial buildings are often incorrect. I’m not saying people are fraudulently give wrong numbers, what I am saying is it’s not unusual to see the numbers skewed for the situation.

    For example, the seller show you a utilities bill for the month of September that says $1,000 but leaves out the fact that September is always the least expensive month of the year. He’s not technically lying but if the rest of the year it was $3,000 a month, you are going to need to know that before finalizing the deal.

    Cover All Your Bases

    These are the types of things you need to watch out for in negotiations or else they might go sour on you. Maintain a balance of trust and healthy skepticism, always have respect for the person across the desk and consider their needs. Most importantly, always do your due diligence.

    I’ve been in negotiations where you sit and negotiate based on the numbers and then you finish the negotiation and do the due diligence only to find out all the numbers are all wrong. Does that re-open the negotiations? Maybe, maybe not. That will be up to you at that point in time but the important thing is that you stay vigilant through the entire process. After all, it’s the client who will pay for it in the end.

     

  • September Sizzling Housing Sales in most of Canada

    The weather may have chilled in September, but the housing market proved hotter than expected, according to the latest CREA figures.

    With more buyers snapping up properties to capitalize on historically low interest rates and wanting to lock in mortgages, home sales increased again in September.

    Year-on-year, sales of existing homes across Canada increased by 18.2 per cent. National home sales edged up by 0.8 per cent from August to September on a seasonally adjusted basis, according to the monthly statistics from The Canadian Real Estate Association (CREA).

    “Year-over-year increases in the sales over the past couple of months highlights how activity softened across much of the country following the introduction of tighter mortgage rules last summer,” said Gregory Klump, CREA’s Chief Economist.

    The biggest monthly gains were in the Greater Toronto and Greater Vancouver markets, offsetting declines in Calgary and Montreal.

    The average price of homes sold nationally in September was $385,906, up 8.8 per cent from 2012. The association says year-on-year average price gains in recent months “reflect the decline in sales activity recorded last year in some of Canada’s larger and more expensive markets which caused the national average price to drop.”

    The number of newly listed homes declined by 1.4 per cent on a month-over-month basis, with marked declines in such markets as Ottawa, London and Fraser Valley.

    “Sales activity across much of the country has improved in recent months following a slow start to the year and new listings in some areas have not kept pace,” said CREA President Laura Leyser. Based on a sales-to-new listings ratio of between 40 to 60 per cent, about three of every five local markets were in balanced market territory in September.

  • Low Mortgage Rates till 2016?

    The Bank of Nova Scotia has reforecast its outlook on the Bank of Canada and now believes the bank will hold off on hiking its overnight rate until 2016.

    “The Bank of Canada probably now envisages spare capacity remaining into 2016,” the report stated. “It could well push out its forecast to return to the two per cent inflation target in the October 23 statement and MPR.”
    Prior to the latest forecast, which was researched by Derek Holt and Dov Zigler of Scotia’s Capital Markets Research, many believed the rate will be changed in 2015 – including the aforementioned two.
    “We have changed our house forecast for the Bank of Canada to show no rate change throughout 2013-14. As such, the overnight rate is forecast to end 2014 at an unchanged one per cent,” Zigler and Holt intimated in their prior February 2013 forecast.
    Of course, that forecast was actually a reforecast as well.
    “Our prior print forecast was that the Bank of Canada would remain on hold until 2014 Q1 and so we are therefore now pushing that out by about a full year,” the February 2013 report said. “While I have long spoken about how the fat tail risks to our print forecast are skewed toward later rather than sooner, this is a pretty sizeable forecast change that merits delving into some of the key reasons.”
    This newest forecast is the result of increased speculation that the Bank of Canada will hold off on hiking rates until its American counterpart, The Federal Reserve, raises its own.
    “The Bank of Canada until now has forecast a return to the two per cent inflation target by around mid-2015,” the report said. “Delaying this guidance would be consistent with leaving rates on hold throughout all of 2013-15, with the Bank of Canada lagging the Federal Reserve either in timing and/or magnitude under current Fed guidance.”

  • 5 Ways to avoid Investor hell

    5 ways to avoid investor hell

    If there’s one area where savvy real estate investors excel, it’s finding and following through with lucrative deals. The very thought of purchasing a property and turning it into a cash flowing powerhouse is one that entices investors of all levels to get out there and start buying.

    However, as the old adage goes, “All that glisters is not

    gold,” and that is as applicable to real estate investing as it is to other aspects of the business world. There are countless stories out there about investors who ended up getting the short end of the stick in what seemed like a fantastic deal, and lost thousands – and sometimes even millions – of dollars in the process.

    In short, investors need to know how to avoid landing in nightmarish situations, and Tony LeBlanc, owner of Ground Floor Property Management in Moncton, NB, has a Top 5 list of things to avoid.

    Not knowing how much maintenance costs

    Before buying an investment property, buyers must have some basic knowledge on what things costs, he says. We’ve had owners buy properties that needed significant amounts of work to be done. Once the work began, the owners were surprised by the associated costs.

    Not analyzing the numbers properly

    A big mistake I see with a lot of novices investors is the lack of verification of numbers provided by the seller. When buying a property, you should always ask for at least two years’ worth of expenses, examples are heat, electricity, water and sewage and maintenance. As the purchaser, you should pay great attention to all of these details to make sure things look right.

    Security Deposits
    It’s common practice for renters to pay some sort of security deposit when renting an apartment. Each province in Canada has different regulations as to how these security deposits should be handled by the property owner. With a typical purchase and sale agreement, most investors will always ask to have copies of all the current leases. Within the lease itself, there is usually a section to document details about a security deposit. The buyer must be aware of the status and location of all deposits. If the property owner has kept the deposits for himself, these funds should be then given to buyer on closing.

    Financing and knowing what you need to pay
    When buying a rental property, there can be numerous fees from different parties, says LeBlanc. “We had some clients recently close on a 12-unit property and they thought they knew all the fees that they would be charged. After everything was said and done, they ended up paying close to $7,000 more than they thought. This was very frustrating to them as they had to take this money from the reserve fund they had created for the property.”

    Property management
    Most new investors underestimate the time and expertise required to manage a rental property, often times this results in expensive lessons learned, says LeBlanc. One of the most popular issues that new investors struggle to get a hold of is dealing with tenants and the laws the govern tenancies. Before jumping into managing your own properties, be honest with yourself and see if you have the time, money and expertise to self-manage, he says.

     

    Courtesy of “Canadian Real Estate Wealth Magazine”