When we showed up for the inspection we noticed a for sale sign on the property next door. Wouldn't you know it was also a lot and a half. It was listed almost $20k less than where we were sitting with our deal on the other property. This raised some pretty interesting discussions with my buyers as they are very familiar with the area and thought that our price on the current offer was fair.

Now if you evaluated the new listing without considered the extra half lot the list price would totally make sense. So my client decided to make an offer on that property as well, and low and behold if we got it for a bargain.

In an older area where there is redevelopment happening your lot size is a critical component to your value. Obviously this applies for all lots, but the size of the lot factors more prominently in redeveloping areas in my experience. Often in older neighbourhoods the owners have been there for a very long time and may not be acutely aware of what they really have or what is going on around them. Another reason to make sure the person you hire has the experience and knowledge to take care of your best interests.

Propertywire.ca reported yesterday that the winds of change were blowing in St John's where CREA had its meeting.  They go on to say that "at the very least it will change the face of the Multiple Listing Service (MLS®)."  A pretty bold statement.  Who is the face of the MLS®, what is the face of the MLS®?  If they could tell me the answers to these questions then I might be able to address them.

The deal that was ratified yesterday was basically the exact deal that was offered to Ms. Aitken, head of the bureau some months ago. So lets look at what is in this deal:

• You can post a listing with a broker for a flat fee in the MLS® system.  This has been the case for some time, years in fact.  There have been flat fee brokers for almost as long as I've been in the business.
• The big change is that the REALTOR® does not have to represent you.  Basically, a listing can be put in the MLS® system by a company who will charge a fee, flat or otherwise, but they may not have to present offers, or show your home, or have any fiduciary responsibility to you whatsoever. 
• As always, in order to have your home in the MLS® system, and displayed on the REALTOR.ca web site, you must use a REALTOR®. Contrary to what has been widely reported there will not be public access to the MLS® system.

What it really means is that more than ever, consumers will have to do their research into what services they want when selling their home.  If you ask me, this does not represent a major change to the industry. There have been competitive business models for years. I have had serval different service options and different fees associated with them, for over a decade.  We will continue to offer these options to our clients.  So when the winds of change have died down a year or so from now then ask me, was it all really much ado about nothing?

The first thing to realize is that the listing agent has a contract with the seller, and has contractually agreed to look after their best interests. When a buyer makes an offer through the listing agent the seller does not have to accept concurrent representation (formerly known as dual agency and now known as transaction brokerage in Alberta). In fact, in the process of completing the listing contract the homes owner is given three choices for representation – sole agency, customer status, or sole agency with the option of transaction brokerage on a case by case basis. So, if you write an offer with the seller's agent they may request that to their agent that you accept "customer status" in the transaction (customer Status is where the agent owes you no fiduciary duties). Or, they may request that you find another agent to represent you. If both parties agree to transaction brokerage the roll of the agent changes significantly (that's a topic for another day).

So keeping in mind that the listing agent has an existing relationship with the seller, it's also easy to see that the listing agent wants to sell that house, not necessarily the best house for you, at the best price. A buyer with their own representation will get more advice about comparable properties and the value of the home in question. When you walk into a home with Sheldon, he will quickly give his honest assessment – there is a home around the corner for a way better price, or this is crap, or this is a great deal. While the seller's agent can provide information on sales of comparable properties, any advice they give you has to be shared with the seller. Can you imagine a listing agent saying "I think this home is over priced" knowing they'd have to report that back to the seller?

The point is, you may save a couple thousand dollars in commissions by working with the listing agent, but that really doesn't matter if you pay 5, 10 or 20 thousand too much. How will you feel about your thousand bucks off when you discover some pertinent information was not disclosed to you because you are essentially unrepresented?

I've written about this before but I still get questions about it all the time. Here's the long and the short of it… the city assesses the value of every property in Edmonton. Then they determine the city budget (which is expected to increase by 5% this year). Your assessment is intended to be relative to the other homes in the city, and it determines how big your share of the city budget is, and therefore how much your property taxes will be. The assessment is supposed to reflect the value of your home in July of the previous year.

Also, just because your assessment dropped does not mean your property taxes will drop. The budget is the budget, and if it goes up, and everyone's assessment drops….you still pay more taxes.

The difference between market value and tax assessment

Your market value is based on recent sales of homes comparable to yours, your current competition, the condition of your home (including subjective elements such as layout, upgrades, style etc), and the current market conditions.

Your assessment is based on style of house (examples: bungalow, bi-level), size of lot, size of house (outside measurements), year built, basement finish, garage, exterior finish, type of roof, fireplaces, and location but none of those subjective elements that make such a difference to home buyers.

In other words, if your next door neighbour has a similarly sized home they will have a similar assessment even though their value could vary hugely from yours based on layout, finishings, condition etc.

The first article in this series contained a discussion of the full ambit of Real Property Reports (RPR).  In summary, they provide certainty as to all exterior matters such as the location of buildings and all improvements and their relation to matters such as utility right-of-ways and setbacks.  An RPR does not cover interior or hidden issues or off-Title issues such as fraud.

In the second article in this series, we discussed title insurance.  It provides coverage for a wide range of issues including matters that would have been disclosed in a RPR, gap coverage, interior or hidden issues, or off-Title issues.  As an insurance product, it only becomes active if an issue becomes an actual problem and then the only obligation is to pay damages not fix the issue.

So, which is better?

Both RPRs and title insurance have a role to play in residential real estate in Alberta.  Real Property Reports provide certainty.  They allow a buyer to see exactly what they are getting.  This information can be used to ensure the seller complies with all the warranties in the Real Estate Purchase Contract (REPC).

As the saying goes, sometimes it is best to let sleeping dogs lie.  That is certainly the case with some real estate.  An RPR that is submitted to the local municipality may trigger a process that can become very expensive.  For example, where a fence encroaches onto the land between the back of the sidewalk and the property line, the cost of an Encroachment Agreement can be very expensive.  Also, some accessory improvements such as a deck or carport may have been in place for many years and may not meet current building code requirements.  If the buyer insists on an RPR, they may be left with an expensive repair bill as the seller does not warrant building code issues.  In these cases, avoiding an RPR and utilizing title insurance is the best means to ensure a trouble-free closing.

In one recent purchase, there was a carport existing without permits.  The carport ran right up to the property line.  It would likely fail to meet building code requirements and would certainly not meet setback requirements.  In this case, the buyer had plans to remove the carport within a short while after purchasing the property.  This is an ideal case where title insurance allowed the deal to close while keeping the mortgage lender secure.  In a separate matter, another purchaser is facing the loss of a covered patio.  In this case, the seller submitted the RPR to the city who said there were no permits in place.  They sent an inspector who ruled the roof did not meet building code requirements even though it had been there for 15 years.  Here is another case where title insurance would have been the preferred alternative.

In conclusion, in my view, a Real Property Report is a preferred tool in most real estate transactions.  It provides certainty – as a buyer you know exactly what you are getting – and you can insist the seller remedy any issues.  However, caution should be exercised where the RPR might open more issues than it resolves.  In those cases, a seller is best to offer to close with title insurance only and no RPR.  A purchaser may find this alternative entirely suitable where they would otherwise face the loss of an amenity.  Title insurance provides comprehensive coverage for a wide range of issues during the entire tenure of ownership and should be considered in every real estate purchase.

About the author: Stan Galbraith is a lawyer with over 25 years of experience.  He was admitted to the Alberta Bar in 1983 and has operated his own law office since 1988. Stan has a wealth of experience ranging from litigation and appeal work, to teaching and writing. He has now left the world of litigation behind and works with commercial and residential Realtors and their clients on closing their transactions. He also practices extensively in the areas of small business and wills and estate planning and administration. You can find his website at www.galbraith.ab.ca.

Within the last 10 years, a new insurance product has arrived in Alberta.  It is commonly referred to as title insurance.

What is title insurance? This product was never available before so what has changed?  What does title insurance provide that cannot more adequately be provided by a Real Property Report (RPR)?

Title insurance has been a popular product throughout the United States for many years.  In fact, Chicago Title traces its history back before the famous Chicago fire caused by the cow.  The three major title insurance companies providing insurance in Alberta all have a parent company in the USA.  These companies first started Canadian operations in Ontario.

Both the USA and eastern Canada operate a different Land Titles registration and transfer system then we have here in Alberta.  We are fortunate in Alberta to have a government-guaranteed Land Titles system commonly referred to as the TORRENS system.  Throughout the rest of North America, when you get a Title, you can never be completely sure that it discloses everything.  For example, there could be an unregistered mortgage or unregistered transfer that may impair your title.  In Alberta, “what you see is what you get” and the government guarantees this.

Previously, title insurance primarily covered the issues covered by the Torrens system.  Eventually, companies became innovative and expanded their coverage, so their insurance had applicability here in Alberta.  Over the years they have continually added new items to their coverage.  Now, their product offers substantial benefits at a very reasonable one-time cost.
Some of the issues title insurance covers is as follows.

It covers the gap between submission and registration.  A couple of years ago when registration was taking 5 weeks or more, you could never be sure when you submitted your documents as to other registrations in the stream that may affect your title.  For example, I acted for one purchaser where the sellers ex-spouse filed a Matrimonial Property Judgment against the title one week before we submitted our Transfer of Land.  When we submitted, the Judgment was not there.  By the time we got registration, the Judgment was registered.  Title insurance will step in to deal with this.

It will cover deficiencies that would not show on a Real Property Report such as unregistered utility easements or builders liens or matters that would be shown by non-Land Titles searches such as deficient corporate status.  It will cover hidden deficiencies such as underground storage tanks or underground septic tanks.  In one case, they paid out a claim to move a septic tank when it turned out the tank was buried partly under the neighbors land.  Coverage is also provided for unknown special assessments on condominiums. 

Title insurance covers issues that would have been shown on a Real Property Report if one had been obtained.  Use of this product can avoid the need to obtain a Real Property Report.  It also covers internal non-compliance issues that would never be shown on a Real Property Report such as lack of building permits or failure to meet building code on renovations such as a basement development.

Even where there are known defects, title insurance will often underwrite these issues.  This could include a fence in the wrong location or a deck that is too big for the property.

Most of this coverage continues after the closing date.  Perhaps the most important coverage that continues after the closing date and during the entire time the property is owned is against forgery, fraud, duress, incompetency, incapacity, or impersonation. 

Title insurance is an insurance product.  As such, it does not fix a problem.  It provides insurance or indemnity coverage.  In other words, the title insurer has no obligation to do anything until a problem actually arises.  When this happens, they have the choice to pay damages rather than actually fix the problem.  Problems can be deferred or masked instead of fixed. 

Deferring or masking problems can come back to haunt all parties at a later date.  For example, when a seller, who accepted title insurance when they bought, sells and the buyer does not accept title insurance they may be forced to solve the problem.  Obtaining Encroachment Agreements, especially where fences or other structures encroach onto municipal land can be quite costly.  Likewise, applying for and obtaining development and building permits can be time consuming and expensive.  If a buyer insists on this solution, the seller may be forced to undertake an expensive remedy and may look to the realtor and lawyer who helped them originally purchase the property for some redress.  Accordingly, it is doubly important to ensure a purchaser understands the extent and impact of title insurance coverage and the fact that it does not apply when they sell the property.  By simply insisting that any new buyer obtain title insurance rather than relying on an RPR, they will continue to defer any issues.

Overall, in my view, title insurance is a valuable addition to the real estate marketplace in Alberta.  The coverage for future fraud for the entire ownership of the property by payment of a one-time premium is enough justification to purchase title insurance on every real estate purchase.  In some cases, title insurance is the only way to effectively close a real estate deal.

About the author: Stan Galbraith is a lawyer with over 25 years of experience.  He was admitted to the Alberta Bar in 1983 and has operated his own law office since 1988. Stan has a wealth of experience ranging from litigation and appeal work, to teaching and writing. He has now left the world of litigation behind and works with commercial and residential Realtors and their clients on closing their transactions. He also practices extensively in the areas of small business and wills and estate planning and administration. You can find his website at www.galbraith.ab.ca.

What is a Real Property Report (RPR)?  And what purpose does it serve in a residential real estate transaction?

An RPR provides a graphic representation of all the improvements and features of the property.  Years ago, it was called a Building Location Certificate and all it showed was the foundation lines of the buildings on the property and the lot lines.  Now, it is called a Real Property Report and provides a much more comprehensive report on the real estate or real property.

An RPR provides information such as the location of utility right-of-ways and easements.  It also shows boundary fences, the overhangs of eaves and additional improvements such as swimming pools and hot tubs.  In other words, it is a complete report on the real property or real estate.

Typically, in most residential real estate transactions in Alberta, this report is submitted to the local municipality for a compliance stamp or certificate.  This is a confirmation from the municipality that the buildings and improvements on the property comply with local zoning and setback regulations.  They will also verify whether permits are in place for all the structures.

The standard Real Estate Purchase Contract (REPC) contains warranties.

The seller warrants the buildings and other improvements do not encroach on any neighboring land.  They also warrant the location of all buildings and improvements complies with all relevant laws.  The RPR provides the proof that these warranties are true and correct.  As such, an RPR provides valuable information to a potential buyer. 

Where the deficiencies are noted in the report, the buyer can insist the seller take action at the time of the purchase to remedy these deficiencies.  For example, when the RPR discloses encroachment onto either municipal or neighboring land, the buyer can look to the seller to obtain an Encroachment Agreement at the time of closing.

Without the report, the warranties lose much of their impact.  Discovering a deficiency many years later makes it very difficult to pursue the seller.  For example, limitation periods may have expired or the seller may simply be difficult to contact and pursue.

Make note that the warranty in the standard REPC only extends to encroachment onto neighboring lands.  There is no warranty offered regarding encroachments onto the land that is bought and sold.  In other words, if the neighbor’s deck extends into the backyard of the purchased property, there is no obligation on the seller to do anything about this.  The buyer has the option, once they obtain Title, of negotiating with the neighbor to either remove the encroaching deck, or leave it as it is and put an agreement in place to cover the issue.

Most lawyers are of the view that an RPR provides the best solution on every real estate deal.  They say that is the only way to have the certainty required by the buyer.  Certainly, in most cases, it does provide certainty.  However, in my view, it's far from the ideal solution on every deal.

In the next article we will look at Title Insurance and what it has to offer.

About the author: Stan Galbraith is a lawyer with over 25 years of experience.  He was admitted to the Alberta Bar in 1983 and has operated his own law office since 1988. Stan has a wealth of experience ranging from litigation and appeal work, to teaching and writing. He has now left the world of litigation behind and works with commercial and residential Realtors and their clients on closing their transactions. He also practices extensively in the areas of small business and wills and estate planning and administration. You can find his website at www.galbraith.ab.ca.

So in this tough market, we're spending more on marketing our listings than ever. Our philosophy is that when the going gets tough, the tough get better, do more, dig deeper and spend more. While many advocate cutting back on spending in this environment we’ve been increasing the number of places we’re putting our properties, the quality of the marketing and the quality of our ads.

Why? Its simple, really. You’ve got to get noticed in order to sell. If you are one of the thousands of home owners trying to sell right now you have to ask yourself: what details am I taking care of to give me the best opportunity to showcase my property to potential buyers?

In certain markets better marketing can result in a higher net to the seller. In this market it can be the difference between a sale, or no sale. That can mean the difference between getting something or nothing.  You have to decide what’s important to you. 

A few things to consider are:

1. When you see your ads, are they advertising your property or are they more geared to advertising the agent who has your listing?  Are the pictures good quality and does it represent your property positively?
2. When people find your listing on the MLS and want more information, are they going directly to your listing when they click for more pictures and information or are they going to your agents site?
3. When you Google your area does your property come up on the first page?  Does your property come up on broader searches?
4. Have you been updated regularly on what is happening in the market specific to your home?  Have you viewed and analyzed the sales of other homes in your area?
5. What is your picture quality online like? Really crappy, crappy, just o.k., good, great or phenomenal?

If you’re selling on your own the answers to the above questions are not good. So then you have to ask yourself are you really saving the commission or just losing equity?

Homeowner solutions:

1. Hire someone who knows how to properly advertise when they do advertise and make sure its geared to marketing your home
2. Direct links on your listing are a must. Don’t hire an agent who links your listing back to their home page.  It's preferrable to hire someone who will use a custom domain for your property like, www.edmonton-condo.com , www.StAlbert-Home.com or www.edmontontownhome.com. What is your address online?
3. Ask for examples of everything – ads, photos, web sites, updates. Find out before you list what information would be included in your updates and how often you’ll receive them.
4. Check out www.sellmyedmontonhome.com for more suggestions.

In other words, you had a better chance of expiring than you did selling over the past few months. If you're among the home owners in Edmonton that are faced with the dilema of re-listing your home, there are ways to improve your odds. Before you re-list, consider all your options and ask yourself these questions:

1. Marketing - How was your home marketed on the MLS? Was there a link from the MLS to a web site dedicated to your home, where buyers could see dozens of photos and find out all the additional information they could dream of? Or was there a link to your agent's home page, advertising other listings? Was there a link at all? Was your home advertised on other web sites such as Google? How many times were your ads viewed? Could you find your home if you searched for it on Google? If you don't think good online marketing matters, know this: most of our ads get about 100,000 impressions a month, and each home's web site gets upwards of 1,000 visits a month and that's on top of the 20,000 people that come to our main site each month.
2. Presentation – Did your Realtor help you stage your home for showings? Did you have professional photography or just photos your Realtor took with their point and shoot camera? How about custom print ads? What were the hilite sheets at your home like? Dull photocopies or professionally produced custom colour sheets?
3. Negotiations - Did your Realtor coach you on how to deal with offers and what to expect? Did they explain all your options? What about dealing with lowball offers? Did you feel you were prepared and in control of the offer process (if you even got any offers!)?
4. Price – How did your asking price compare to the sale price of similar homes that sold while you were listed? Did your Realtor keep you informed of sales in your neighbourhood? Did they help you determine a reasonable price for your home or just tell you what you wanted to hear?

If you want to sell now, should you try the same strategy that has already failed you, or a new strategy, with better marketing and presentation, a more experienced negotiator and a more realistic price?

In 2008, over 90% of our company's listings sold.

If you'd like to know what we do differently, and why our listings sell instead of expire contact us anytime, or check out our site on selling your home at www.SellMyEdmontonHome.com where we discuss topics such as Selecting a Realtor, Getting the Most out of the MLS, Pricing Strategy, Avoiding Common Pitfalls and a whole lot more.

The end result was that all three ended up buying homes for their families to live in.

It makes me wonder though, just how many other relocating families or individuals are using their REALTORS to help them buy homes for their families in the Edmonton area?  The most recent migration stats I can find, show that plenty of people are relocating to Alberta:

It’s undeniable that the vast majority of relocations use a REALTOR. 

Relocating buyers are quite often the best buyers from a seller’s perspective, because they have a short period of time to buy, and are usually well qualified and motivated. In 2006 and 2007 we had to show and help our relocating buyers buy a number of properties that were being sold by sellers on their own, because of the shortage of inventory in Edmonton. A couple of these were friggen nightmares to deal with – I’ve posted on some of these experiences previously.

Today, with the amount of properties for sale on the MLS, most of our buyers (relocating or not) are focusing their time exclusively looking at properties on the MLS. How many properties could a buyer set up appointments to view on their own through private sales?  I don’t know how many relocating buyers could set up 30 private sale appointments in a 3 day time span – especially since most of these buyers look during the day on weekdays. How would a relocating buyer then obtain all the necessary information to make an informed decision? Clearly many sellers who aren’t on MLS are missing the "relocating" boat.

Recently the Canadian Real Estate Association did a member survey that found the following. In the past year:

• At least 64% of its members listed a property after the seller failed to sell on their own.
• 6% of their members listed 10 or more properties where the sellers previously tried on their own.
• Over 92% of those properties that were For Sale By Owner properties and then listed by a REALTOR sold after being listed on MLS
• In the previous run up market over 30% of REALTOR’s introduced their buyers to FSBO properties. (This is surely shrinking)
• 54% of those introductions resulted in a sale where a fee was paid to the REALTOR. (Hence my position that Comfree’s stats on commissions saved are misleading if they use their standard commission for every property sold, even if a REALTOR was involved.

My point is simply most relocating buyers still use the services of a REALTOR to assist in their relocation to the Edmonton area, and many sellers who try to sell privately simply miss the boat on this excellent market.