My thoughts on Ottawa Real Estate based on my CBC Interview today!#OttawaMorning

I was on CBC  radio’s Ottawa Morning with Hallie Cotnam today to talk about the Ottawa real estate market and the proposed (as yet unknown changes) to be introduced in the April 27 budget. (Here’s a link to that interview!) Those changes, as we know, are meant to cool down the Toronto housing market which saw a 33% year over year increase in prices.

Peggy at CBC

Me and Hallie Cotnam. She looks a lot more alert than I do at 7 AM, that’s for sure!

On radio, there isn’t a lot of time to amplify the discussion, so I thought I’d take a minute to do so here.

First of all, while Ottawa’s market is hopping, it’s nowhere near as hot as Toronto’s. We saw  a 17.5% increase in residential sales year over year and a 22% increase in condo sales in March. Prices were up 5.5%. So that’s a nice, healthy increase, but not out of whack for a market that’s been slow, almost stagnant, for the last several years.

One factor that shows the difference is our average days on market  (that’s how long it takes to sell the average house). We’re at 92 in Ottawa. It was 12 in Toronto the last time I asked a realtor pal in that market.

We talked a bit today about the government’s stated goal of wanting to make housing more affordable. If that’s the case, some of the options being tossed around don’t make sense and could have unintended consequences.

For example, the last time the feds tried to slow down the housing market, they made it harder to borrow money. The changes to the mortgage rules made it harder for first time buyers to borrow. They certainly didn’t make housing more affordable for them; they had to come up with more money for down payments.

Similarly, the provincial government says it now wants to close a loophole that allowed landlords of post-1991 built buildings in Toronto to raise rents without being subject to rent controls. There are reports of condo tenants whose rents have doubled since that announcement while landlords try to get their increases in under the wire. Not exactly more affordable for those folks either.

I’ve heard the provincial minister, Charles De Sousa,  talk about real estate speculators as well. He seems to be concerned about buyers who buy new builds and assign (sell) their contracts to new buyers for more money before closing. (In BC, this was happening with home purchases generally. The problem was addressed by requiring seller’s consent to any resales, and ensuring they get any profits.)

But in the condo market, those buyers — the ones who come in and often buy four or five condos before the shovel hits the ground and then assign their contracts for a profit before the buildings are finished — are often providing the financing the builder needs to reach the 70% in pre-sales required to get the project rolling. Shut them out, and you are shutting down a perfectly valid investment strategy (why shouldn’t I be able to make a profit when the underlying value of the property I bought rises in the year or two it takes for a condo building to be completed?). You may also find yourself with fewer condo developments,. That means less supply and higher prices.

Then there’s the foreign buyer tax in BC that may be replicated in the Ontario budget. Will it be targeted at Toronto only? Pundits credit the 15% increase in BC for a 40% drop in sales there.

First of all — are foreign buyers the reason behind  Toronto housing prices? Do we know? And secondly, if they are, where are they from? We don’t have any data to answer that question. We can’t even be sure that the BC market was being driven by foreign purchasers; studies now suggest that it wasn’t and that it’s the uncertainty in the market those changes created that’s caused the present drop.

One thing we do know that Ottawa has lots of foreign buyers who come here to work in our technology sector, work at our hospitals and teach or study in our universities. Do we really want to discourage those people from finding affordable housing?

As I mentioned to Hallie, I was contacted by someone in BC last year who was directly impacted by the 15% foreign buyer tax. He was an American who’d been offered a job in the Lower Mainland. He decided to buy a home for his family — as I recall, he and his wife had four kids. He put down a hefty deposit, only to find out before closing, without any advance warning, that he had to come up with an extra 15% or forfeit his deposit. He couldn’t afford to do either. The new tax kicked in without any reprieve for those who’d already purchased.

Is that really the way we want to treat good faith buyers? Like some kind of banana republic where the inflation rate changes daily?

My problem with the government trying to fix the Toronto problem is that they have no idea what’s driving the market increase. It’s possible that the 15% foreign buyers tax in BC actually drove foreign buyers to Toronto and has driven up  prices. Assuming that’s true,  introducing a foreign buyer’s tax in Toronto could drive more buyers to Ottawa, making homes less affordable here,  and then what? New taxes in Ottawa? It’s like a game of whack-a-mole. But the point is: we don’t know. There is no data.

Imagine a doctor saying to you, “I know you’re sick but I’m not sure why. Here’s a prescription based on your symptoms, without any accurate diagnosis. It may not make you better, but it could cause side effects you don’t like and it might just kill you.”

I’ll wait to see what the budget brings, but I’m not optimistic.

(One small correction from my CBC interview. The average sale price in Ottawa is currently  is $415,467. Hallie had suggested $ 300K; I said I thought we were over $ 500 but I was thinking of sales volumes in March. That’s what happens when you get up at 5 in the morning for an early interview!)

And finally, always nice to see this kind of feedback, from our Mayor:

 

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Renovations that don’t add value to your home.

A lot of people do renovations without really thinking of their impact on resale.  I walk through other people’s homes most days and see hundreds of thousands of dollars that have been wasted or worse, that will reduce the value of the homes. Here are some examples:

Income suites. Creating an income suite in an area where there is little or no demand for rentals is a mistake. It’s one thing to put an income suite in an area with high demand and density, but despite what you see on TV, you’re going to spend a lot more on those renovations than you will get back in rent, particularly if they have to be soundproofed, fire retrofitted and inspected. And you will be taking away living space that prospective buyers want for their own families. I can’t tell you how many times I’ve had buyers walk into a house that has an income suite in it and say, “oh no, we’ll have to tear that out.” Not everyone wants to live with tenants. An income suite narrows your market.

Pools. Pools are great if you loving swimming but not so great for resale unless you’re out in the country where everyone has one. They are expensive and time-consuming to maintain and we only get to use them for a few months in Ottawa because of our weather. If they aren’t properly fenced (and even if they are), they will  deter a lot of buyers with small children. At a $10-15K cost to break up and remove, getting rid of one isn’t easy.

Ill-thought out Kitchens. If you’re going to redo your kitchen, spend the extra money and get a designer. I’ve seen wall-mounted ovens put up on walls above eye level; cabinet doors that open into sinks or prevent dishwashers from opening; wall ovens placed where they open into doorways, and create hazards. I don’t care how inexpensive your cabinets are, they can be refaced or replaced; it’s the placement and design that’s most often the issue. It’s expensive to move plumbing and electrical and hard for buyers to get past those mistakes.

Paved backyards. Low maintenance is one thing, but an asphalt back yard is a major deterrent to buyers. Maybe you  want a place for your boat, but I don’t care; this is one of those things that buyers really hate. I’ve seen three of them in the past month. Ugh.

Converted garages. Seems like a great idea, doesn’t it? To turn the detached garage into a man-cave? Not if it’s the only place you have to put your patio furniture, lawn mower, or even worse, your car. I’ve seen people turn attached garages into extra bedrooms  and living space; bad idea. Most people want garages to park their cars in, and if they don’t use them for parking, they still don’t want to park their cars in the driveway right in front of their “garage” windows. Even worse are the ones where the inside has been redone but they still have garage doors. Double ugh.

Main floor bathrooms with showers and tubs. If it’s not a bungalow, stick with a powder room. No one wants to take a bath or a shower right next to the kitchen. If that’s the only place for a full bath, fine, but just be aware that not too many buyers like it.

Be thoughtful when you renovate. The choices you make may limit your market when the time comes to sell.

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Buying a new condo from a builder? Here’s a checklist of questions.

If you’re thinking of buying a new condo from a builder, there are some things you should find out before you sign on the  dotted line. I was recently involved in negotiations with a builder on behalf of a client who was thinking of purchasing one for an elderly relative and wanted my input.

First of all I needed to find out if the builder cooperates with realtors, i.e. if they would pay my commission if I got involved. Usually that requires that we show up for the first meeting at the Sales Centre with our clients and register them, but in this case the salespeople said it was fine if my client wanted to drop by on her own.  That gave her a chance to see the unit when I wasn’t available last week; I went back with her today.

Here are the questions I asked the salespeople:

How many units have been sold? At 70% sold, the builder will take steps to register the condominium corporation. Until that happens (registration can take several months), once your unit is ready for occupancy, even if it isn’t registered, you’ll have to pay interim occupancy fees or risk losing your deposit. If the project doesn’t sell well, the builder may have to rent units out; it’s good to know if the people around you are renting or owning because it does change the dynamics.

What are interim occupancy fees going to be?  These are what the buyer is required to pay once the unit is ready for occupancy but while the builder is waiting for the condo corporation to be registered.  They include condo fees, the land portion of the property taxes, and a proportionate amount for common spaces. They will also include interest on your mortgage if you are not a cash buyer, but not principal amounts.  In our case, the salesperson said he would check with their accountant and get back to us.

How much will condo fees be? The builder should be able to tell you what the condo fees will be, at least initially. Bear in mind that these fees probably don’t include a portion for a reserve fund for future repairs and will likely go up once the condo is registered and the condo board is in place. Based on square footage, this builder told us to expect to pay $ 209/month.

How much deposit insurance does the builder carry?  The Tarion warranty which covers new builds only covers $ 20K of deposits. If your builder goes bankrupt, where does that leave you? Ask if the builder carries insurance for deposits over $ 20K.  This builder doesn’t ask for more than $ 15K in deposits so my client is covered.

What will the taxes be? The builder should be able to give  you an approximate value. (They are going to run around $ 2,300/ year for this unit.)

How long to occupancy after signing? In the case of my client, the salesperson said occupancy would be sixteen weeks from acceptance, but also agreed to see if he could expedite that time frame. Note that acceptance doesn’t come until the ten day cooling off period for your lawyer to review the contract is over (you have ten days to back out of the contract and get your deposit back) and that ten day period begins on signing. I asked him if the builder expected to run late, and if so what kind of notice my client would receive. He told me they’ve never had a delayed occupancy in thirty-four years. Great answer!

Does the builder reserve the right to change specifications? Often the builder’s contract allows them to change specifications unilaterally and sometimes without any notice. I was concerned about things like ceiling height being dropped to accommodate ductwork, but here the space has already been roughed in and drywalled — we went over to take a look. Ask anyway — nothing worse than finding out what you ended up with isn’t what you thought you were getting.

Is there any leased equipment? The costs of leased equipment are passed onto owners. In our case, when I asked, I found out the furnace was owned but the tankless hot water system is leased although the buyer can purchase it outright at an additional cost. My client was happy to find out there was a tankless HWT as it will keep down hydro costs, but you need to know what that buy-out cost is, and what the rental is, so you can make an informed decision. The tank rental will cost my client $ 38/month.

What are utilities costs likely to be? The salesperson was able to answer this based on other buildings they’ve built:  including the HWT rental, it works out to about $ 250/month.

Where is the A/C located?  I asked where the HVAC system was going to be located. In a flat roof building it can be right up on the roof, and that can be noisy. Here, because it’s a pitched roof, the A/C unit is actually located right on the unit’s balcony. Knowing that, I wanted to know how big it would be and where it would be positioned, so that I’d know how much space my client would have left to enjoy on the balcony. (The answer was that the balcony is 10 x 6′ and the A/C is about 18″ x 18″– we were able to see exactly where it will be hooked up.)

What kind of heating is it?  In our case, it is forced air gas, and the furnace is right in the unit, which is great. But you need to know if it’s that or baseboard, because baseboard will be a lot more expensive.

What are the basic finishes?  You need to know what’s included in the base price and what is considered an upgrade.  In our case, there were a lot of inclusions already in the base package: stainless steel appliances, granite counters, engineered hardwood floors and ceramic tile.

Are there incentives? Ask! Even though the basic package included a lot of higher end finishes, I  was able to negotiate a $ 5,000 decor package for my client. That will allow my client to put in an extended kitchen counter, among other things, where she can have seating.

Will there be nearby construction? Right now the unit has lots of light. We wanted to know what kind of construction will be taking place nearby that might affect that, as well as noise. (There will be some, but it shouldn’t affect the light — there are two new buildings going up on the same lot being developed by the same builder.) This is a big one: make sure you know what development will be taking place and how it might affect your unit.

What kinds of noise remediation is being done?  I wanted to know what steps were being taken to mitigate noise from other units. For example, this unit is right next to an elevator. It turns out there will be a closet in the unit between the elevator and the unit that will act as  a buffer. We were satisfied after talking to the salesperson that other steps have been taken to reduce noise from the upper level, but were also aware that there could be some noise from the upstairs unit given the hardwood flooring.

How accessible is the unit? I wanted to know if the building was wheelchair accessible; it does have an elevator. The person living in the unit is elderly; I wanted to know what would happen if she lost mobility. The living space is open but doors are standard sizes. It turns out there is an accessibility package if my client wishes to pay for the upgrade.

Are there any amenities? In our case, there are none. But you pay higher condo fees for these, so you need to find out.

Can you have a walk-through?  We requested a walk-through of the unit, even though it isn’t completed and the salesperson agreed. This meant booking a time when the workers were finished. When we took a look at the actual unit, we discovered there was a weird closet in one bedroom. Seeing it let us go back to the original plans to find out why it was located where it was, and move it if we chose to.

What are the demographics of other buyers?  As noted, the person who will be living in this unit is elderly. We asked about the age of the other buyers, and were satisfied there will be  a good mix of ages, but there are at least a few other buyers around her age so she won’t be all alone.

What can these units be rented for? This unit could end up as  an investment property down the line, so we asked and found out the builder had rented units in the past for $ 1300-1350. That information helped my buyer see the unit as a potential investment in the future once her relative no longer needs it.

In this case, the salespeople were honest and forthcoming and a real pleasure to deal with. A big shout-out to Valecraft: Jeff and Steph gave us enough information for my client to make an informed decision, without any pressure. Much appreciated!

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Competing in a super hot real estate market.

Ottawa’s real estate market has taken off. We are seeing multiple offers all over the place. Multiple offers are great for a seller, but they can be frustrating for a buyer. Here are my tips on how to compete:

Make a bully offer. The listing says, “No offers until Thursday at 6.” It’s Monday. There are people streaming through the house when you go to see it, and you want it. What do you do?

Well, you don’t have to wait until Thursday. Your agent can submit an offer now, but it better be a good one, or the sellers aren’t going to respond. They know by waiting until Thursday, they’re likely to get multiple offers and top dollar.

So put in your best offer now. The listing agent will have to notify all the interested parties about the offer and let them know when it expires so they have a chance to compete, so don’t give a long irrevocable period, just long enough for the listing agent to get hold of the sellers and make a decision. Give too long and you’ll be in a multiple offer situation anyway.

If the seller says, no thanks – we’re going to wait until Thursday at 6, get a home inspector lined up or a friend who’s a contractor and go through the house before then. If you’re still happy with what you find, call your mortgage broker and make sure your financial ducks are in a row.

Get an offer ready with as few conditions in it as possible. An offer that doesn’t have conditions, or fewer than the others,  is appealing to a seller: if they sign it, they’re done. The more conditions there are, the more likelihood there is of something going wrong and the deal not going firm. They’ll take less money for less risk.

Make your very best offer upfront.  Most times you won’t get a second chance in a multiple offer situation.  Yes, it’s a blind auction and you don’t know what anyone else is offering.

But here’s a rule of thumb: If there are more than two offers, forget about getting the property for $ 5-10K over asking; you’ll need to go a lot higher than that. In most multiple offer situations, the listing agent has priced the home 5-10% below market value to get interest, so use that as your guide.

If 5-10% higher than the list price is what they think market value is, how much over that are you willing to pay to get your dream house? Remember, house prices are up 8% over last year in Ottawa so factor that in when you are looking at comparables: they are already out of date.

Take your realtor’s advice. Several times I’ve gone into a multiple offer situation with offers I know won’t be accepted because my clients haven’t listened to me, and are going in too low, or with too many conditions. Listen to your realtor; they know the business, you don’t.

It’s about relationships.  A house deal is not a zero sum game. It’s not just about money. Sellers love people who love their homes. Where two offers are close, they’ll tip towards the person they like:  It’s human nature.

I was successful in a multiple offer situation with a buyer (eleven other offers) who didn’t have top dollar  because I found out the sellers were from Newfoundland and so was my buyer. I made a point of presenting my offer in person and mentioned that connection, as well as how much he loved the art in the house because it reminded him of home. He got the house, and the sellers even left behind some of those pieces of art for him, because we built that relationship, just in that brief interaction.  But they later told me about agents who came in thinking they could get the house for less than list price by bad-mouthing it. Not a good strategy.

Meet the sellers’ interests. If the sellers want a June 1 closing date, give it to them, even if it’s inconvenient to you.  If they want to keep the mirror in the powder room, and you love it and want it, let them take it with them and  ask your realtor to tell them how beautiful it is and to ask their agent where they got it. Either way they’ll be flattered, and they may just leave it behind.

In one multiple offer situation, we found out the sellers had lost  a prior deal over a leaky skylight. I made sure to assure them that we’d take care of that problem and that they could count on my buyers to complete the deal. My buyers didn’t make the highest offer, but they got the house.

Always be reasonable. I’ve had multiple offers come in where I knew the agent and had problems with them in the past. When I’m advising my sellers what to do, what do you think I tell them in that situation?

I learned at Harvard when I trained in Negotiations to always be trustworthy, but never trust anyone else. It’s advice I bring  with me into negotiations in multiple offers as well. A person who is difficult to deal with during offer negotiations will be that much harder to deal with in the stress of an actual deal. Be reliable, and be reasonable. Sellers and their agents will respond to that, and it might well be the tipping point in getting you that dream house.

 

 

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Power of Sale – is there a duty to disclose latent defects?

For the third time in the past few months, I’ve seen a certain row unit be conditionally sold and then pop back on the market. It’s a power of sale, meaning the financial institution that held the owner’s mortgage wasn’t paid, and has taken over title so they can sell it and recover their money.

It’s priced so low that I was curious why it keeps coming back on the market so I searched the adjacent row units and discovered there had been a fire.

Clearly, these deals collapse when the prospective buyers do the home inspections and find the fire damage.

It got me to thinking, because as realtors we have an obligation under our code of ethics to disclose material defects, ones that might affect a buyer’s decision. There’s a difference between  latent defects, i.e. those that a buyer would not be aware of and patent defects, ones that are obvious,  which  don’t have to be disclosed.

I would consider a fire to be a latent defect, since a buyer can’t always tell if there’s been one in the absence of disclosure without an inspector gaining access to an attic and seeing the scorch marks.

But banks in foreclosure and power of sale situations sell properties “as is.” They don’t disclose anything, not even taxes — everything is up to the buyer to verify themselves.

Do they, or the realtor, have an obligation to disclose?

Now, I can see how a bank might not know there had been a fire in the unit. They don’t have anything to do with the home after they finance it until the payments stop coming and the power of sale procedure is invoked.

If the bank doesn’t know, then the realtor wouldn’t know either, at least not initially. So no disclosure.

But after three deals have collapsed, the realtor must surely know now that there was a fire in the unit and  I would expect they would have advised their client, the bank, as to why each deal has collapsed. Shouldn’t there be disclosure of the fire in the listing now, as there was with the adjacent property, so that a prospective buyer can decide what to do, at least knowing the issue?

Well, I’ve checked and I can’t find any case-law that says yes. Perhaps the seller doesn’t have to disclose the fire in these circumstances where a property is being sold “as is.” Perhaps  caveat emptor applies: the prudent buyer will find there was a fire when they do their home inspection and can decide whether to proceed or not then.

But it seems to me that not disclosing the fire damage does a disservice to both  buyer and seller. It’s unlikely the seller will ever be able to sell when every home inspection leads to the buyer finding out about the fire;  certainly not fair to buyers to keep making offers that go south after they’ve had to pay for an inspection. The only people benefiting currently are the home inspectors.  And I’m not so sure a realtor would be protected if someone complained to our governing body that a material defect was not disclosed and as a result they are out of pocket.

But I’m adding a new question to my list of questions when I’m acting for buyers.  I always ask if there was any kind of water damage or anything else I should know about. From now on, I’m going to ask if there was a fire as well. And you can bet if I’m acting for the sellers in these circumstances, I’m going to want written instructions either way.

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This zany business of real estate.

I have clients in another country; it’s six hours later there than it is here, which makes communicating with them difficult at times. They’re moving to Ottawa this summer and planned to come to look at homes themselves, but weren’t able to for various reasons, so I said I’d preview the homes they were interested in.

I previewed one in particular I thought they would like that was getting quite a bit of activity. They had planned to have a family member come back the next day to see it, but I thought that was leaving things a bit late. I persuaded them to arrange that viewing a little sooner; I really didn’t want them to lose the house by a day.

The Ottawa market is crazy right now – there are multiple offers on almost everything, and so the family member, Kim,  came back with me that evening. She also thought it was beautiful  and agreed this was the right house for them.

They decided to put in an offer and we went over the terms but by then, it was past one AM where they were, and I knew they were getting pretty tired.  I asked them to fill in the paperwork for me the next morning so we could send off the offer first thing.

I put in a relatively short irrevocable (that’s the time period the seller has to counter the offer). As I explained to them, we wanted to be reasonable but not give the seller enough time to rustle up a second offer, given the activity on the house.

I sent off the offer to the other agent. The buyers wanted me to show Kim the other homes they’d been interested in  in the interim in case they didn’t get this house and so away we went to see  more homes. Meanwhile, I had several back and forth discussions with the other agent as part of our negotiations, and when I got home from the showings, I called her to find out when we could expect the sellers’ counter-offer.

Now, an agent cannot, by law, tell another agent they have received an offer unless it’s in writing. However, there’s nothing wrong with giving an agent a head’s up that they are expecting one. And in the course of our conversation, she mentioned she was expecting another offer to come in about an hour and planned to present both offers together.

Which would put my clients in a multiple offer situation — exactly what we’d hoped to avoid. More problematic, by the time we got the formal notice of the second written offer, if one arrived, given the time change and our short irrevocable, we’d have no time to respond.

Somehow I managed to persuade her to have the sellers counter back and she agreed, but wanted assurances we could get it  done within an hour. Which was more than fair; after all, she was expecting another offer and ours was soon to expire.  There was sufficient activity on the home that the sellers had options. If we didn’t act quickly, my clients were going to lose the house.

I scrambled to get hold of my buyers and told them to be on standby for the seller’s counter. A few minutes later, we received it and it was acceptable to them but left us with slightly over a half hour to respond. But they had no scanner and their embassy was closed. It was already late evening there; nothing was open.

We agreed they would take jPeg images of each page and send them to me, and a few minutes later, they confirmed they had signed everything and were sending the images shortly. I let the agent know the good news, that verbally we had a deal. But once again, verbal means nothing in real estate – you need the actual paper.

Ten anxious minutes passed and still I had nothing. My emails to my clients  asking how they were making out were suddenly returned undeliverable. I tried calling them, and I couldn’t get through: I kept getting automated messages telling me  I had the wrong area code.  I called Kim and she  said it’s hard to call that country because of special  area code requirements; she didn’t have their number.

Then finally, halleluah! the pages arrived. I looked at them and was horrified to see there were only three of the six I needed. Worse, I was missing the fifth page, the most important one with all the signatures, the one that actually accepts the sellers’ counter and makes it a deal. And the clock was ticking.

And then when I finally got the missing page, gahh!!!! They’d signed and dated it but in the wrong place.  So there I was with only minutes before the deadline expired, scanning back a version to them to show them exactly where to re-sign and where to put the time and date, replete with arrows and circles and giant “SIGN HERE”s.

I told my buyers I needed  page 5 ASAP. Minutes ticked by and I got nothing. I emailed them again. And again. And again. And then one of their email accounts stopped working altogether.

“You guys are killing me” I emailed. “I NEED PAGE 5.”

I finally got an email: “We sent it to your Royal LePage account,” they said. I checked again. Nothing. (I found out later that they had misspelled my Royal LePage email address  as Royal LePaige so their emails to me were bouncing back to them too.)

They tried again to send it using several different methods. Meanwhile I was getting undeliverables, repeat emails, and anxious “we sent it again– do you have it yet?” messages as we got ever closer to the deadline.

I was on the phone to the other agent explaining that yes,  we had a  written deal, but were some email issues getting the Jpegs to me,  and I thought their Internet there might be down as my emails were bouncing.  “You don’t use e-signatures?” she said, and then, in a tone of voice that reminded me of my mother:  “Peggy.”

Anyway, I”m happy to say we met the deadline; I sent the documents over to the other agent and we now have a conditional sale. My clients are thrilled:  they bought a great home, and they’re very excited. But I’m a few inches shorter than I was when I got up in the morning.

Now, I am a late adapter when it comes to technology: the laptop I’m still using is nine years old, and I have what must be the original Blackberry. I still use a rotary phone. And years ago, as a young lawyer (okay, decades ago), I was involved in one of the first cases to deal with mortgage fraud after a husband presented his girlfriend as his wife to a lawyer, mortgaged their house to hilt and ran off with the money. As a result, I’m very conscious of the potential for abuse when you can’t verify identity and because of it, e-signatures make me nervous; I don’t know who’s on the other end of the computer.

But I have to say, I will be looking a whole lot more closely today at using e-signing technology and will probably be setting up an account. I don’t think my heart can take this kind of craziness again.

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How to find (and keep) a good tenant!

I’ve been blessed; the folks that rented my investment condo are absolutely terrific.

But I hear horror stories about  landlords whose tenants are destructive, demanding, and either late paying rent or stop paying at all.  Ontario laws are heavily weighted in favour of tenants. It’s very difficult to remove even bad tenants who don’t want to go,  and can take months (without any rent) to get an order for an eviction.

How much better to avoid those problem tenants before they move in! Here are some tips when it comes to screening prospective tenants:

Reliability. Do they call you when they say they will; show up at the rental unit for viewings on time? A person who treats your time like it doesn’t matter probably won’t look after your property either.

Openness. Are they forthcoming with information about their needs, their employment situation? My tenants moved here from another city, but I’d certainly want some information if they’d been living here already about why they’d left their last rental.

Communication. Do we communicate well? This is essential. If I don’t hear from my lovely tenants,  I can assume everything is fine. But if something breaks, I want to know about it right away. If talking to them before we sign the lease is like pulling teeth, it won’t get better later. And conversely, someone who texts me every five minutes to confirm I’m meeting them may just be anxious, but may also prove to be a pain in the rear.

Great references. You don’t want a weak or tepid reference, you want to hear these tenants  kept the home immaculate and paid their rents promptly.

Do not rely on reference letters. Sometimes a difficult tenancy comes to a premature end with the landlord getting rid of the problem by agreeing among other things to give the bad tenant a  reference.

I know of a situation, for example, where to get rid of the tenant,  the landlord agreed to provide the tenant with a letter that said the tenant paid their rent. In fact, they’d paid the rent, yes, but it was constantly late. You need more  than a letter that says “So and so paid their rent. ”

You need contact information for previous landlords, and you need to call them. You need to know if there were any issues and not just about rent. Was there anything beyond ordinary wear and tear when the tenant moved out that the landlord had to deal with? Any other problems?  Did they have pets? Did they smoke? Were they loud?

Pets.  Do they have any? You can say no pets are allowed, but unless it’s a condominium with specific rules against them, your tenants are permitted to have them under Ontario human rights law.I know some tenants who lie about it, knowing that once they get in, the landlord has no recourse. If you really don’t want pets scratching up the new hardwood, say so. But don’t be unreasonable. A well-behaved pet should be welcome in any rental property. A crazy barking dog that scares the hell out of the neighbours, not so much. (Maybe  meet the dog first; I don’t think that’s unreasonable at all!)

Do a credit check. Ask for details about employment and do a credit check. It only costs a few bucks to get  onefrom Equifax ($ 10, when I order it through my office) and it will tell you volumes! Someone who pays down their student debt and pays all their bills promptly is conscientious. You can assume they’ll be just as conscientious when it comes to your rental property. Someone with a poor credit history, or a patchy one, may be a problem.

Follow your gut. If you don’t like the person, don’t assume you’ll get along well in a landlord-tenant relationship. Tell the prospective tenant the truth: that you’ll be reviewing all applications before you make a decision, and keep looking. This is your property, your investment, and your nest egg. You want to make sure the people you allow into your property  are ones you’ll be happy to have there, ones you don’t want to have to worry about getting out.

Treat the good ones well. My best tip is this: when you find a good tenant, look after them. Make sure they know how much you appreciate them!  I left my tenants a bottle of wine and a card and some chocolates to welcome them when they moved in. When they called me to let me know the baseboard heaters not working and there was a leaky hose to the washing machine, I sent my trades over ASAP. Good tenants need to know you’re reliable too; if you don’t look after them properly, they’ll leave. I want my tenants to know that they are in good hands, and how grateful I am to have them!

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