The Edmonton Real Estate Blog

Name: Sheldon, aka "sheldonj"

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Web Site: http://www.edmontonrealestateblog.com

Posts by sheldonj:

The Difference Is? Calgary VS Edmonton

January 23rd, 2012

I always like to tease my Calgary counterparts. When I was on the Real Estate Council of Alberta as a council member, the pre-meeting banter would always include some sort of comment welcoming the Calgary members from their carbon monoxide filled commute. They would counter with a humourous comment about Edmonton and on and on it went. My favorite joke was about a friend who left a pair of Flames tickets on his dashboard, and after a few minutes parked at 7-11 found his window was smashed. Their faces would give that expression of understanding and empathy, and then I would fire away with: “and he found two more Flames tickets on his dash."

Seriously though, it has often amazed me that even though Edmonton and Calgary brokerages are governed and regulated under the same Act, the way business is transacted in each city differs in a number of ways. Now I’m not trashing one city over another (besides Edmonton is clearly better) I'm just pointing out a difference in practice. The Calgary Real Estate Board recently decided that members no longer have to report pending sales, whereas in Edmonton we haven't had to report pending sales for quite some time.  (When a conditional offer has been accepted by all parties it is considered pending). Once the conditions are removed then it's unconditional.

So whats the big deal?

Well, like many things it depends on perspective. If you are trying to sell your property and it's reported as pending, then it will not show up when agents search for properties unless they search for active and pending listings. In many cases a buyer might not be interested in viewing a property where the seller has the leverage of another deal, or they might not want to get emotionally invested in a property that already has a potential deal in place. So there would be a good chance your property would receive reduced activity. I say good chance because I can’t prove it definitively, but our experience shows it will not receive the full attention of the market place.

From the buyer's perspective you may want to know about all the homes on the market, whether they are pending or not. You could actually be looking at a pending listings and not even know it. If the seller is cautious that it is not a done deal, possibly because of the terms, or the buyer, or buyer's agent's credibility, or just a hunch, the seller may instruct their agent not to disclose other offers.

Whatever the case may be, this is one of those areas where Calgary and Edmonton have operated differently until now. Some other differences between practices in the two cities include:

• In Calgary it is quite common for buyers to have a walkthrough prior to closing on resale properties. This is unheard of in Edmonton. In fact, when I have had lawyers from Calgary handling the conveyancing they have questioned the lack of a walkthrough on the contract. My simple response is that you would have a hard time getting an offer accepted with a walkthrough (unless you are dealing with a private seller).
• In Calgary they regularly use the CBS codes on their keyboxes. This is an additional code that the buyer's agent must obtain from the sellers agent in order to open the keybox for a specific property. When I have used the CBS code here, not only have I had to teach every agent how to use the code, I get a fair bit of negative blowback on that extra step and in some cases miss out on showings.

These are just a couple of minor examples. I can’t even say one association is more proactive than the other; at times Edmonton has blazed the trail adopting new technologies and practices, and at other times Calgary has led the way. No matter what, it's still fun to tease my Calgary counterparts.

5 Comments "

A December to Remember

January 10th, 2012

I don't post a lot of personal stuff on our blog, or even very much daily business stuff, but we have had a lot going on over the past few months that I think we should share. Every year around December Sara and I spend a good deal of time on business planning. We look at the market conditions, what the market did in the year previous and try to reason out what we think might happen in the coming months and years. No we are not economists (if you read this blog you know why I had to say that). It just so happens we are and have been very good at predicting the number of sales overall. Fluctuations in price and sales numbers by types is a different story but we are working on that.

For the most part 2011 was a very good year. Our company grew adding a couple of really good experienced agents, and a couple of rookies while maintaining our strongest existing team members. We cut some dead weight including a couple of developers and builders who didn't fit our service and ethical standards. For one builder the straw that broke my back was a leaky fridge: during the inspection a leak was discovered, the builder told us it was repaired but when the single mom who bought the unit moved in it was still leaking. When we discussed this with the builder they told us "too bad it’s the buyer's problem now". I felt badly for the buyer's agent because they were relying on our word and reputation that the fridge was fixed when it wasn't, so they took it on the chin from their clients. Anyway, we offered to take care of the problem and then terminated all 24 listings we had with the builder. Probably not the smartest business move but when someone lies about a $250 fix the potential for bigger issues to damage our reputation with our other clients and other agents was serious enough to give them the boot. In any case that's the way it goes in business right? You win some and you lose some.

Other than that the year was uneventful until we found out we were pregnant. I say "we" metephorically for those of you who will point out that men can't get pregnant. In short order we found out we were having not one, but two. Ironically this news was delivered the same day my daughter entered her first day of high school. Needless to say it took me a few weeks to wrap my head around it all and just as we moved from acceptance to excitement we got some really bad news.

Sara's dad passed away suddenly at the beginning of December. John Maclennan was a former high school teacher, farmer, coach, hall of fame quarter back at McMaster University, conservationist and volunteer extraordinaire. At 74 John was in excellent shape, ate very well, and biked regularly. The week before John passed away my dad was taken to the Grey Nuns Cardiac care unit (to whom I must give koodoos to for excellent service and the care they gave my dad). He was in four 4 days while they deliberated the issues and the potential remedies.

So when news came about Sara's dad we were both in shock. The rest of the month was a whirlwind of travel back and forth to Ontario. The passing of John reminded me once again that life is so very precious, and it taught me a whole lot more than that. While I interceded the many phone calls that came to Sara's mom expressing their condolences, a message stuck with me because it was a recurring one: "You don't know me, and John probably wouldn't remember me, but he taught me at Nelson High School and I just wanted to say he had a profound impact on my life."
It just reaffirmed to me that we can make a positive impact on young people and strangers by the way we conduct ourselves and live our lives.

John's funeral was attended by politicians and business people from around Hamilton, farmers, teachers, neighbours and family. His friend who conducted the service told me there were over 500 people in attendance at the church service which was standing room only. There was an open mic session where former students and co-workers, neighbours, friends and family shared their favourite memories of John. Many of the students he used to have out to his farm to do "conditioning work" found that time they spent at the farm, and the time he gave to them was life altering, and many followed in his footsteps citing him as their inspiration.  Many people proudly displayed the official "license to hug" John had issued them and I myself am a converted "hugger" thanks to John. I found I had never laughed and cried so much in one day. On the night of the funeral I flew back to Edmonton and those on the plane around me must of thought I was nuts as I would recall something someone had said about John and either laugh, or well up with tears.

I share this because we realize we haven't been as attentive to the blog for the last while as we normally are, but we have tried our best and we appreciate the support and willingness of people to share their thoughts and views. We are into the new year now and are about 3 months away from welcoming two new additions to our family. So if I can leave you with one thought its this: you can make a difference in someone's life with a smile, a hug, your support, or your time, and most of all by just listening. I can't help but think if I and others were more like John the world would be a better place.

John Alexander MacLennan
December 18, 1937- December 3, 2011


John MacLennan paddling the North Saskatchewan last summer,
and 50 years earlier in the same McMaster Football Jersey.


p.s. John received many awards including being inducted into McMaster University's sports hall of fame, and coaching Nelson high school to numerous provincial basketball championships. John loved teaching and he loved McMaster University where this summer he toured my daughter and I hoping that she might one day consider going there. He loved teaching so much he dedicated his body to McMaster's medial research program to help train tomorrow's doctors. As a farmer and a teacher John was "outstanding in his field."

12 Comments "

Live Blog: I love #yegdt (downtown Edmonton)

December 15th, 2011

Actually today is a rare event where I’m tweeting (@edmontonsheldon) more than blogging! It's not just about density it's about how you do it says Ken Greenberg who kicked of the the conference today with a dynamic speech encouraging vision and partnerships. He shared his perceptions about stadium projects and that they can only be successful if the wealth is shared. He talked about mistakes they are trying to fix in Toronto and acknowledged that spaces for Universities are critical. He stressed that cities are becoming their own resorts for those who can't afford to travel, and that the suburbs need to be retrofitted. His conclusion is that a paradigm shift is needed from the way things have been done in the past. He also addressed some really good questions that I’ll address later on gentrification, affordability, seniors and transportation.

Then we saw the plans for the new Royal Alberta museum unveiled, with discussion about the airport lands. Gary Klassen the GM of sustainable development Edmonton pointed out that Downtown encompasses 1% of the land in the city but is responsible for 10% of the tax revenue.

Several projects have been discussed so far.

• Jasper Avenue revitalization
• Central Park in the warehouse district
• River promenade works
• Improved Dowtown LRT connectivty
• More bike accessability
• Infrastructure upgrades
• Capital blvd upgrade
• Arena and entertainment district.
• Grant Macewan university growth
• The federal building upgrade
• Centennial plaza
• University of Alberta Downtown campus And more.

I’ll add more detail as I can for each of these projects and their impact on the real estate market in Edmonton when I have a chance.

4 Comments "

I love Yegdt: downtown x-posed

December 10th, 2011

I frequently get asked what’s happening downtown, especially with the ARENA buzz. What will prices do? What areas will be most affected? I get asked this at industry functions outside of Edmonton on a regular basis as well. I get these questions at the Y in the change room, at Yoga, at Starbucks and so on. This level of buzz around the downtown is certainly warranted given the possibilities. A number of our clients have asked questions on their specific interests downtown as well.

Most of the time my answers have been very general with the acknowledgement that I don’t have intimate knowledge of what is going on downtown. I do believe that the people who have good solid information can take advantage of the opportunities that might arise. So, if you are interested in the answers then this is where you want to be on December 15th, 2011 from 7:30am to 3:30pm: www.Edmonton.com/downtown.
This information session on downtown hosted by Economic development Edmonton is where we will be to get the answers to our questions. See you there.
 

18 Comments "

How Sustainable is Edmonton?

November 30th, 2011

Maybe this is an unfair question but it is one that is going to come up time and again, especially as the population of Edmonton grows. This is something we have blogged about from time to time but we’ve never had a sustained conversation about making our communities more sustainable.

Today Sara and I attended a seminar hosted by Alberta Real Estate Foundation in their “thought leaders series," titled: "What are the characteristics of a livable, vibrant, sustainable neighbourhood?."  Basically it was a presentation on why sustainability is important. For example did you know that an average home produces almost 8000lbs of waste per year, and that only 3% of the treated water in Canada is used for drinking?

What was really interesting about today’s presentation was the discussion of ideas amongst the attendees. Lets face it, if the city of Edmonton embarks on a sustainability plan without us the citizens buying into it, it will fail. That top down approach just won't work. Granted not all ideas are good and there will be some very different perspectives on each idea. The following suggestions were made from participants at the presentation:

• The city of Edmonton creates a hard line around the city that says no development beyond this point.
• More flexibility is needed in zoning regulations for multi generational families and multi-family units in existing neighborhoods (other than just basement suites).
• More community based natural spaces and public meeting spaces are needed
• There should be more emphasis on community gardens
• Care should be utilized to understand the impact of sustainable initiatives on affordability
• More information is needed on how sustainable improvements affect the market value of properties
• Encourage community engagement to take on some of their own initiatives
• Make communities more walkable
• Time initiatives so as not to create artificial pressures on the market.

These are just a small sample of the ideas that were shared and discussed. So how does this all affect the average Edmontonian? There has been significant documentation that supports that our environment directly affects our quality of life and health. Areas with less public space or less walking areas tend to have higher incidences of diabetes and other related issues. Improper conservation of water might lead to lower quality and quantity of drinking water.

It is Vision that builds great communities, and Edmonton has a huge opportunity that many other cities wish they had. Edmonton has good transportation infrastructure, great health care and health care facilities, word class education and a fairly robust economy. Edmonton is still a hub to Northern Canada’s resources and related activities and unlike a lot of major cities where the downtown is the financial and social hub, Edmonton has the diversity of our employment which is not centred on the downtown. This can lead to a more robust city as a whole and is definitely worth talking about.

It's time to embrace our greatness as a northern city, it's time to think ahead, and it's definitely time to share your ideas about how this should happen. I don’t intend to be the spearhead of sustainable discussion in Edmonton so if someone would like to take it on please do, but I'm happy to help get it started.

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What’s in a title?

November 22nd, 2011

So, you're buying a condo and it comes with a parking stall, better yet two stalls. That’s fantastic, but are they actually going to be yours? Did you include the stalls in your offer? 

There are two common types of parkings stalls: assigned and titled. Titled stalls are individually titled just like a house or condo, and if they are not included in the purchase contract or a separate purchase agreement you may be parking on the street.

In addition you should review the titles of any titled stalls, before you make an offer to make sure there are no surprises on those titles. We've seen titled stalls that aren't actually owned by the person selling the condo and stall. In one case our client was considering buying a condo in foreclosure, but the bank forgot to forclose on the parking stall so we moved on. You should also ensure that the stall you think you're getting is the one you are actually getting - there are often stalls that are smaller or in less desirable locations - so go look at the stall. Or Park my words you will rue the day you didn’t.

1 Comment "

Buyer Brokerage Agreements

November 17th, 2011

A reader asked me to comment on our blog about an article on Garth Turner's blog discussing Buyer Brokerage Agreements (or Buyer Representation Agreements as they are referred to in Ontario).  While he hit some important points in his article, he obviously left a few out, or perhaps just doesn't know the history behind it enough to have included them. In any case, I think the commentor on our blog was looking for our point of view on it.  Frankly, Mr. Turner's commentators, through lack of understanding or just rabid faith made a big deal out of nothing.

What is a Buyer Brokerage Agreement? It is a contractual agreement between a real estate brokerage and a buyer where both parties agree to the type of representation, services that will be rendered, and the fee for those services, for a specific period of time. Similar to a listing contract, it is in essence an employment contract.

I think the first time I used a buyer's representation agreement in Edmonton was in the late 90's. Currently I use them very sporadically, and the use of them in my office is also very low (less than 1%). Most of our business is relationship based, and if it's a issue of trust we just won't work with that person. However, there are circumstances where I may use them and I'll explain how and why we use them in a bit.


In Mr. Turner's article he suggests that these agreements have recently come about because of recent changes in the real estate industry, namely limited service brokerages (often referred to incorrectly as discount brokerages). The reality is, buyer brokerage agreements have been around for years (at least in our market place), and for a considerable time before that in The States. When I entered the real estate industry in the late 80's it was common for commercial buyers to have their own representation which was set out in a buyer brokerage agreement. 

Are more buyer's agents using these agreements more today? Yes. Recent changes to CREA's rules allowing mere postings is more akin to the U.S. model of real estate. In my opinion, when these changes were sought by the Competition Bureau (who modeled their case around the American model) they knew full well these agreements would become more commonly used.

For example, in our market the REALTORS® Association of Edmonton has allowed the mere posting of listings for some time, but has always required that the seller's brokerage offer some form of compensation to the buyer's brokerage. Currently the minimum amount that can be offered to the buyers agent is set at 1 cent (precisely the amount the vast majority of these 'mere postings' are currently offering). In many cases the seller or their posting company has decided the buyer's agent isn't worth paying, or that they should be compensated by the buyer and not themselves.  So the reality is that if an agent is to take the whole market to their client, that includes these properties, and if they trust they will be compensated then they will do that, if they don't they may ask to formalize an agreement in writing. I don't think there is a single business model that could sustain itself on a penny per transaction. Long ago I forecasted that more buyer's agents would look to formalize their relationship as these listings became more common.

When you look at an actual transaction it's a chicken and egg argument when it comes to who pays the buyer's agent's commission: the seller pays the commission out of the proceeds of the sale, but the buyer is the one paying the seller for the home. I do know that without a buyer there is no sale.

One thing that struck me in the discussion is the dangerous assumption that a REALTOR® owes you fiduciary duties when working with you, and that we all provide the same level of service or disclosure.  In reality a mere posting company does not owe the sellers any fiduciary duties (or at least the courts have not established that they owe them a fiduciary duty). Instead of being clients these sellers become customers. This applies on the buyer side of the transaction as well.  For example, the buyer could decide to be a customer and therefore no fiduciary duties would be owed to them by their agent (for all you legal beagles out there this of course does not stand up if an implied agency relationship is created, but for simplicity's sake and brevity we will leave that out here). This means that various levels of service are available, and not all buyer's agents are required to, or will, offer the same services that you have traditionally come to expect.

One commenter suggested that there should be some incentive to sign one of these agreements.  In fact there are some real estate companies that offer incentives and inducements for buyers to sign up with them. Some traditional full service brokers may offer an incentive or an inducement as well. 

In my business I use buyer representation agreements infrequently today.  I have relationships with most of my clients and with that comes a level of trust. If I don't know someone we will not start out in a brokerage agreement, not until they get to test drive me first and vice versa. In general it is my client, who after working with me, reviewing the documents, and discussing them with their lawyer, requests a buyer brokerage agreement. A couple of exceptions to that rule for me are:

1. The buyer is coming from out of town for a number of days on a house hunting trip. These trips are intense, and require a significant amount of time, energy and resources, and limit my ability to do any other business. I can easily spend six days with someone educating them on the market, negotiating offers, and showing them dozens of properties, only to find out they bought a property completely outside the criteria they'd given me (or I would've shown it to them), or went directly to the seller to cut me out because we don't have a formalized relationship. There is also the possibility they will decide to buy a home where the seller is offering an amount of compensation that does not make it financially feasible for me to dedicate that much time and effort to them. This is something I explain to the client long before they get here, so they can decide if they'd like to work with me or find someone else.   
    
2. The type of property the buyer is looking for is so specific, or their criteria is so unique that it may take a require extra time, effort and resources to fulfill our obligations.

A buyer brokerage agreement can be for any length of time, and the terms of the agreement are completely negotiable. The shortest agreement I have signed was for three days, and the longest (after 4, 90 day renewals requested by the client) was 6 months. I am also approached by sophisticated investors on a regular basis offering to sign a buyer brokerage agreement as an incentive to work with them. 

Are there benefits and drawbacks to signing a buyer brokerage agreement? Potentially yes, both on the part of the client and the agent, but those change depending on the parties and their particular issues. 

I will close by clearing up some myths and facts about buyer brokerage agreements:

• Myth - A buyer must sign a buyer brokerage agreement. I'm pretty familiar with Alberta's rules, so I will only speak to them. A buyer absolutely does not currently have to sign a buyer brokerage agreement. An agent may work in a brokerage where the agreements are mandatory, but if the buyer doesn't want to sign one there they can choose another brokerage. I am only aware of one such company in Edmonton, and and I'm not certain of their position on this to be honest.
• Myth - Compensation on buyer brokerage agreements is fixed. They are totally negotiable and so are the terms. Both parties have to agree to any changes to the contract. If someone is not comfortable with the terms they should not sign it. This includes industry members as well.
• Fact - Agency disclosures are compulsory. Not to be confused with a buyer brokerage agreement, this disclosure outlines what your status is with the agent you are working with. Are you a Client or a Customer? It details the fiduciary duties, if any, owed to you. It is mandatory that your agent present this to you and get your informed consent. Signing this does not constitute any obligations on your part in Alberta. Reviewing the document prior to signing  is highly recommended - you should make sure a disclosure is all you are signing and not a brokerage agreement. I always allow people ample opportunity to review what they sign before I ask them to sign anything.
• Myth - Buyer representation agreements are new. Many agents have been using them for years. It is far more common in the States than it is here, but that seems to be the direction Canada is heading in based on the recent changes.
• Myth - that under a buyer brokers agreement you would owe a commission even if you don't buy. That entirely depends on the contract as some buyer brokerage agreements may require retainers. However, our standard buyer agreement in Alberta does not provide for compensation if the potential buyer does not purchase a property.
• Myth- every agent provides the same level of service, knowledge, experience and background information when buying. Even prior to recent changes there were many different business models in our market. People will often hire someone without doing their research, or merely because they like the person, or because the agent has offered an incentive such as a rebate. 

The reality is these agreements have been in place for some time and I look at them simply as employment contracts.  At present if a buyer does not want to sign one there are plenty of buyer's agents out there who don't require one signed. So all in all I don't see the big deal here, and I understand Mr. Turner is just fanning the flames as that's what he does. 

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A new way to research the home you’re thinking of buying

November 14th, 2011



I had a mind blowing experience the other night. Seriously mind blowing. I was showing a home in the Westmount area - by any standards a decent and desireable mature area in Edmonton. While we were looking at and discussing the home, my client started listing off some very significant and specific information about the property.

Now, I have always encouraged my clients to do their research when they're interested in a property; talk to the neighbours, review the current title we provide, consider the property history and so on. I knew this client was very thorough, and wasn't surprised to learn she had done her research, but I was blown away by what she'd discovered! She told me that the owner's fiance hated the property, that they had recently spent thousands of dollars on new pipes for this "money pit," and among other issues they had already bought and moved into a new home.

I assumed she must have spoken with the neighbours, and that they were more gossipy than most, but she assured me she hadn't. "Facebook!" she laughingly cried! My jaw dropped: "No way!." She then detailed how she got the seller's name, and proceeded to look him up and found him on Facebook. His privacy settings prevented much of a look but she found his fiance was an open book. Lo and behold the fiance had been complaining about the home on Facebook for months on end, detailing every issue they faced with the aging property.

Before the private detective work my client was very interested in the property, but there is no way to put Pandora back in the box, and why would you? This is the type of information that is priceless. This same client has since discovered tidbits of information from Facebook about some of the other homes we've viewed, including the reasons homeowners are selling. 

So, before you decide to dish your property on Facebook make sure you have secure privacy settings, or better yet don't post it online at all. I certainly know that I'll be checking Facebook for information for my clients in the future.

12 Comments "

Today’s Bouquet – Pacesetter Homes

October 3rd, 2011

Last week was a first for me in 20 plus years of real estate; my clients took possession of a newly built home, and the builder met all of our expectations. When we first found the home and made an offer with a very quick possession date (10 days after conditions were to be removed).

My obvious concern was there was less than 10 days for the builder to address any deficiencies. No matter what we tried the builder would not consider a holdback. I cautioned my clients that this means you are relying on their word and reputation to get the necessary work done. In addition my clients indicated they weren’t going to have an inspection because a friend of theirs told them the city had already inspected it and the inspection fee was a waste. After some discussion my clients agreed to do an inspection.

The inspection revealed numerous items that had been missed by the builder, so the list of deficiencies that we sent to the builder was pretty long. I got a call that we couldn’t do the walkthrough until possession day so my spidey senses were acting up: "Here we go," I thought to myself.

So possession day comes and I meet with my clients to do the walkthrough and get their keys. When we arrive a trades person was there changing the locks. Shortly after we were joined by the General Manager, Site superintendant and another trades person. They were busy marking the deficiencies and taking care of fixing them as fast as they could.

I was left with the impression that they are definitely serious about their reputation and product. I know that if they weren’t then they wouldn't have gone through the efforts they did to make my clients happy. Kudos to Pacesetter and enjoy your gold star - I certainly don’t hand them out often.

11 Comments "

What is a holdback?

September 28th, 2011
1. A Mixed Martial arts move.
2. A football play where the quarterback fakes a handoff.
3. What middle age men do with their stomachs when they enter a room.
4. A real estate term indicating money will be held back until certain items are completed.

If you guessed the answer is D then you are correct. Holdbacks are very common in real estate transactions although not all offers ask for them. Some common reasons for holdbacks are:

• The buyers have asked for, and the seller has agreed to provide a Real Property Report with evidence of municipal compliance and on possession day it wasn't available for whatever reason. In this case the lawyers will generally work out a reasonable comprise with the buyer's lawyer holding back some of the proceeds unitl they receive what’s needed.
• A delay in the registrations of the title at land titles. A similar situation to the above will occur.
• The seller has promised to complete, repair, do or remove something and a holdback of a certain value has been agreed to in advance on the offer to purchase. A few examples are:
  • The seller is in the process of renovating/finishing the basement and a holdback is agreed to so that the buyer is protected that the work will be done properly by a certain time. 
  • The seller has a lot of crap on their property and the buyer wants to make sure it all gets removed. If it's significant enough a holdback may be in order.
  • The property in question is a new property or one that is still under construction and want to ensure that the work is done to a certain standard, by a certain time.

There can be problems with holdbacks:

• If the amount of the holdback is not significant enough the seller may not be enough incentive for them to do what they agreed to do.
• If there is no deadline on the holdback the seller can take as long as they want and the money will remain in the buyer's lawyer's account.
• If the holdback agreement is worded poorly the outcome may not be clear or it could be written to favour one party over the other.

This is another one of those times when the experience of a good agent can be hugely beneficial to their client. Keep in mind the seller has to agree to the holdback; some builders will not even entertain the thought of a hold back in the purchase contract, no matter how much work is outstanding at the time of the agreement.

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