My clients in Spruce Grove, Stony Plain, Parkland County and the Edmonton area have lots of questions, and I’m happy to answer them!  This article is Part 1 of a series that addresses the most common questions I get from home buyers.

How do REALTORS® get paid?

REALTORS® work on commission, a percentage of the selling price of a property.  This commission is specified in the Listing Contract signed by the seller and the REALTOR® who lists the property.  When a property is sold, the REALTOR® who listed the property for the seller shares the commission with the REALTOR® who sells the property to the buyer.  The buyer is usually not required to pay a commission directly (unless the buyer is under contract; ask your REALTOR® if you are not sure).

When should I start actually looking at homes with a REALTOR®?

As soon as you are pre-approved by your bank or a mortgage broker, you can begin looking at homes.  I would not recommend looking at homes prior to getting pre-approved because you may find something you fall in love with and then find out you do not qualify to purchase it! 

Do I have to call the REALTOR® who has the house listed to view the house?

No.  In Alberta, any REALTOR® can show you any house that is listed on MLS®.  If you have chosen to work with a REALTOR®, your REALTOR® would prefer to show you the property rather than you calling the REALTOR® who listed the home.  Remember, REALTORS® are paid based on a commission so if you are working with multiple REALTORS®, the only REALTOR® who may get paid is the one who writes the offer with you.  If you are looking for a REALTOR®’s full attention, you need to show you can be loyal. 

How do I choose a REALTOR® to work with?

Choosing a REALTOR® can be a difficult task.  REALTORs®, like people in any profession, are not all created equal!  Here are a few tips for picking a REALTOR®:

• Think about what you are looking for in a REALTOR®. Personality is a large part of this profession so think about what type of personality you are compatible with.
• Ask friends or family if they can recommend a REALTOR® to you. If not, start searching on the Internet or in the newspaper.
• Look through websites and see if there are testimonials posted. Do the testimonials give you an indication of the type of personality the REALTOR® has, and is this a fit for you?
• Interview more than one REALTOR® to get a feel for what different people have to offer.
• Find out if the REALTOR® is part-time or full-time and how often you will be able to get in touch with him or her.
• Find out what types of technology the REALTOR® uses: Internet, email, text messaging, social media, etc.
• Send an email to the REALTOR® and see how long it takes for that person to respond. This could be an indication of how attentive the REALTOR® will be to you.
• Ask how many clients the REALTOR® works with at one time. More can be less in this business. Do you feel the REALTOR® will have enough time for you?
• You want a REALTOR® who is client focused. That is, YOU need to be more important than the commission the REALTOR® will earn. The REALTOR® will earn his or her commission after all your needs have been met.

If you don’t see your question here, it might be answered in the Buyers Guide section of my website.  Or, feel free to contact me any time by email at barry@barryt.ca or by phone 780-910-9669.

Whether in Spruce Grove, Stony Plain, Parkland County, the Edmonton area or elsewhere, REALTORS® love statistics.  We like to know how many and what kind of properties are being listed and sold, and for how much.  We also like to examine trends over time because this helps us help our clients determine realistic property values when they buy or sell a home.

We often hear about the ups and downs of the real estate market, but what does this really mean?  Is real estate a good investment?  Does real estate always appreciate? 

Answers to these questions can be seen fairly easily by looking at a few statistics, especially when these are presented in graphic format.   If we look at the average residential selling prices for homes in the Edmonton area from 1962 to 2009, we’ll see some interesting trends.  Even more interesting is that these trends tend to repeat themselves.

From 1962 to 2009 the average selling price of a residence in Edmonton increased from $12,556 to $320,392 – an increase over 47 years of 24 times the starting value!  Does this mean that the value of one’s home doubles every few years?!  Well, sort of…  Examining the numbers year by year, we see that while the overall price trend has been ever higher, the movement is not always steady and not always upward.  There were a number of times during those 47 years when the average selling price in one year, or even for a series of years, was lower than the previous year.

Prices stumbled in 1964, recovering the next year.  Steady, and in some cases significant growth, continued until 1981.  Looking more closely at the gains during those 16 years, and doing a little math, we discover that double digit percentage gains over the previous year occurred in 1967 (12.3%), 1968 (12.9%) and 1969 (17.7%).  During the next 3 years prices continued to increase but at a more modest rate.  1973 saw prices take another leap (14.6%), and that was followed by 3 more years of huge year over year gains (1974 – 28.2%; 1975 – 26.4%; 1976 – 32%).  A house that sold in 1972 for $24,777 was suddenly “worth” $59,450 only 4 years later.  By 1981 the average selling price had risen to $91,438, a gain of 369% in just 9 years.  Many people buying and then re-selling property during this time made substantial financial gains.

But the sometimes cruel nature of the real estate market took over in 1981.  A person buying a home in 1981 would have seen prices drop for the next 4 years, and then increase modestly for another 4 years but still not rebound to the price paid in 1981.  A hard lesson perhaps.

By 1990 the average residence sold in Edmonton for $101,014.  Prices rose for 5 years, fell in 1995 and 1996, and then rose for the next 11 years, up to 2007.  This is eerily reminiscent of the trend mentioned above starting in 1964.  Several of the 11 years between 1997 and 2007 saw a price gain that was dramatic.  In 2002 and 2003 percentage increases were 12.6% and 10.2% respectively.  In 2006 prices rose 29.4%.  This was followed in 2007 by the largest one-year percentage increase since these statistics began:  34.7%, or a rise to a dollar value of $338,009.  Most people are probably aware of what happened to the housing market in the US during this period of time and its effect on house prices throughout North America.  The average selling price of a home in Edmonton dropped 1.5% in 2008 and 3.7% in 2009 but appears to be trending upward so far in 2010.

These trends are even easier to spot in a chart like this one:

Looking at the proverbial big picture, we see the following:

• The average annual price increase is roughly 7.8%
• The average 5-year price increase is about 49%
• Only 9 years between 1962 and 2009 showed price decreases
• If you held a property for 9 years, you would always see an increase
• Edmonton values appear to double every 9 years, on average, since 1962

Statistics and facts suggest that yes, real estate is definitely a good investment, and yes, it does appreciate over time.  

What about right now in the marketplace?  Are we once again in the trend of a couple years of soft prices followed by a decade of increases?  Are prices going to continue to fall before they recover as they did in the 1980s and 1990s?  Is now a good or bad time to buy and sell?  Hard to predict and impossible to know.  This is, of course, exactly what makes real estate interesting!

Interested in learning more about the real estate market in Spruce Grove, Stony Plain, Parkland County or the Edmonton area?  Phone me at 780-910-9669, email me at barry@barryt.ca, or contact me here.

Whether you live in Spruce Grove, Stony Plain, Parkland County, the Edmonton region or elsewhere, you have probably heard the phrase “location, location, location” used in real estate and wondered why the need to state it three times.  It is repeated to emphasize its importance.  It is one of those things in real estate that just is, and when you ignore its importance you will likely regret it.

As a buyer myself, I ignored it twice in the last 30 years.  One of those times was when I remustered to a Structural Technician (changed trades) while serving in the Canadian Armed Forces.  My first posting was to Wainwright, Alberta where housing was pretty pricey, so we decided to purchase a major fixer upper in Czar, Alberta (200 people, 10,000 head of cattle), 50 km south of Wainwright.  My thinking was twofold:  we could buy a house a lot cheaper in Czar, and this would be good practical experience to experiment with my new construction trade.  We could add sweat equity to this house, making a really nice home and still be competitive with the Wainwright market.

My wife Paulette and I spent the next 3 ½ years gutting the house, including the interior walls, kitchen, basement, lighting, electrical…  In the end the house turned out beautiful.  But when we got posted to the north end of Vancouver Island, no one wanted to buy the house, because we could not compete with the buyers’ desire to live in Wainwright.  To make a long story short, we rented the house to the only person who applied, and that person trashed the house.  I took time off, came back to Czar, fixed the house up for sale and put it back on the market, selling it for what the market would bear. The lesson here:  Buyers will pay a premium to live where they want to live. 

“Location, location, location” usually means attractive neighbourhoods close to schools, hospitals, and facilities for entertainment, recreation and shopping.  It can mean proximity to a lake or backing onto a park, green space or golf course.  Homes in undesirable locations might be next to commercial/industrial buildings, beside railway lines, under flight paths, or in neighbourhoods with high crime rates.  Also included are economically depressed areas, where neighbours show zero pride of ownership in maintaining their homes and yards.

Although you will pay a premium to buy in a desirable location, the payback is well worth the extra cost.  Desirable locations sell quicker, usually appreciate at a greater rate, and are likely to sell before less desirable locations even when the market is slow.

From my past experiences, if budget is an issue (and when isn’t it?), I would settle for a smaller home located in a desirable location, later moving up to a larger home when I could afford it.

Looking for a great home in a great location?  Let me help!  Call me at 780-910-9669, email me at barry@barryt.ca, or contact me here.

If you are asking the question, then the answer should probably be, yes.  No one should ever advise you not to get a home inspected.   If you do decide to go ahead, make sure the home inspector has experience, training and a broad understanding of home construction and all the bits and pieces that make a house whole.   This advice holds true whether you are looking to buy a Spruce Grove or Stony Plain home, a Parkland County acreage, or property in the Edmonton region or elsewhere.

A good home inspector will spend between 2 to 4 hours (depending on the house size) inspecting the home.  He or she should have equipment such as a moisture detector, carbon monoxide detector, ladders, magnifying glasses, mirrors and other specialized equipment in order to check all areas of the home and in cracks and crannies when needed.  A thorough home inspection should give you a good overview of the general condition of the plumbing, electrical, roofing, insulation, windows, grading, drainage, the foundation where exposed, furnace, hot water tank, and general construction and condition of the home.  It is advised that you be there for most of the inspection or at least the latter half of the inspection.  That way you can see firsthand any deficiencies (minor or major) noted by the inspector.  You can also ask the inspector to look more closely at any areas that are of concern to you.

At the end of the inspection the home inspector should provide you with a report outlining his observations. He or she should also give you an overall view of the condition of the home (i.e. sub-standard, normal, above average), and recommend maintenance that should be done over time.

A house put under a magnifying glass like this will create a list of observations.  That list can sometimes seem overwhelming.  Don’t be surprised when your home inspector refers to a 25-year-old furnace as being “fully depreciated”. That doesn’t mean the furnace has to be replaced tomorrow.  If it is operating safely, it could last, with proper maintenance,   another 5 or more years.  But a 25-year-old furnace is only about 60% efficient (60% of the fuel used by the furnace is used to produce heat and the other 40% goes up the chimney). Most people nowadays replace furnaces in order to have a more efficient furnace.  The building code now requires that all new furnaces be high efficiency (90 plus percent). The home inspection needs to be put into perspective.  It should reflect, within reason, what you viewed and bargained for when you negotiated your purchase.

Although a home inspection can be used to try to re-negotiate the original purchase contract or to try to get the seller to do repairs or upgrading, this is usually the exception to the rule, reserved for bigger ticket items that a buyer would not have expected from the original viewing of the home.  Things that fall into this category could include safety issues (for example, a cracked heat exchanger on a furnace), a structural issue that you were not aware of, or such a very large list of minor deficiencies that it now represents a major expense, with the exception of a home that was known to require a lot of work, such as a “handyman special”.  There is no one answer that fits all situations, so it is always best to discuss any concerns you have with your REALTOR®.

See also “How to Pass Your Home Inspection” on BarryT.ca.

Comments or questions are always welcome!  Contact me here, phone me at 780-910-9669 or email me at barry@barryt.ca.

With the popularity of all sorts of home renovation shows, people in Spruce Grove, Stony Plain, Parkland County, the Edmonton region and elsewhere are experimenting with home decorating home improvement, and home flipping at unprecedented levels.

I have to admit I watch a lot of these programs myself. We humans are drawn to watching other people work. It is amazing how easy some professionals make things like framing, dry walling, painting, decorating, etc, look. The key word here is professional. I often say to people you can do any improvement yourself and save the labour cost (about 60% of the cost of the improvement); however, the end result has to look like a professional did the job.

I understand the motivation to want to do the work yourself. First off it doesn’t look that hard to do. Second you don’t have the extra money to hire someone to do the work, we have all been there. But one day (statistically within 5 years) you will be trying to sell your home and the improvements in it to someone else. Even unsophisticated buyers, people who have never owned their own home, recognize poor or amateurish work. If a home has a number of areas where a home owner has done home improvements poorly, a potential buyer may perceive negatively.

Here’s how perception works

Perception is a buyer’s belief system.  Whether right or wrong, what buyers perceive they believe. A buyer’s perception can extend beyond any poor work done by you or someone else.  It could be perceived that most of the improvements in your home were done amateurishly or cheaply. I cannot overemphasize the importance of making your home improvement projects look like they were done by a professional. Here are a few hints:

1. Do some research before you take on a project. The internet is a great source. Be careful to select the right tools for the job. For instance when painting, not all brushes, rollers or paint are the same. They are all designed for different purposes and applications. Also if painting, make sure you learn to cut in properly. Roller hit marks on the ceiling are a trademark sign of a home improvement project gone bad.
2. Sign up for home improvement seminars at your local building supply centre, Home Depot, Rona, etc.
3. Find someone who is handy at doing their own home improvements and offer free labour to help them take on a home improvement that you feel most comfortable with.
4. Start in an area that is less visible, like a bedroom (preferably down stairs), closet, or storage room.
5. Be prepared to invest time. It will probably take you 2 to 3 times longer the first time you tackle a renovation, compared to someone experienced at it. If it doesn’t go right the first time you do it, be prepared to re-do it. Remember that by learning to do it right you are accumulating cumulative knowledge that will come in handy the next time you need to use it.

Although you feel you are doing the improvement for yourself, remember that when you decide to put your house up for sale, you are now trying to sell the improvement to someone else.

If you do decide to do home improvements on your own, either by necessity or desire, take it slow. Do the research, take your time, make sure you select universally appealing colours, and do the job well. It can be rewarding, both financially and emotionally. But remember:  whatever improvements you do to your home should look like a professional did it. Enjoy the savings and the added value of your home.

Looking for more information about Spruce Grove real estate?  Call me at 780-910-9669, email me at barry@barryt.ca, or contact me here.