Real Estate’s Dirty Little Secret - It’s The Price That Makes The Sale

Every Real Estate Agent should tell you to remove your personal items and to declutter your home to make it show better.  Some will suggest bringing a stager in to ‘Fluff’ your home.  Good agents will have professional pictures taken as 90+% of buyers see your home on the internet first.  Great Marketing, Mobile Sites, Social Media, Open Houses.  All these things will drive buyers to your home, but in the end, it’s the price that makes the sale, especially in a Buyers Market.

The best listing agents are professional.  They set your price properly right away, guide you through the complete process, negotiate the best deals, and protect your interests every step of the way.

When you invite an agent to come to your home to do a listing presentation, listen carefully to what they say before, during and after they suggest a price.

Some agents like to ask what you think your home is worth before they do the Comparative Market Analysis (CMA) so they can meet or exceed your expectations. If they immediately ask how you came up with your price, it’s probably not realistic.  If they present a price that is same as the one you quoted, ask yourself if they used your price to work the CMA or if they let the CMA suggest the price.

When an agent takes you through the CMA and continually points out how similar less expensive homes are to yours, they are letting you know that you will probably have to readjust your expectations.

When an agent says: ‘If anyone can sell your home for that price... I can’  they are really saying ‘No one can sell your home for that price but I still want the listing’.  They are sure they can talk you down to a ‘sellable’ price later on.

When an agent says: ‘Let’s try it for a couple of weeks to see what happens’ they are really setting a time to have the ‘We need to lower your price’ talk.  If you say it to the agent, they know you are not confident with your price.

The first week on the MLS® is the Golden Week.  All the buyers who haven’t found what they want at the right price yet will see your home.  They will know if it is priced right or wrong because they will be keeping up on the market and they have probably seen several homes like yours.  Don’t waste your Golden Week on the wrong price.  

If you would like an accurate estimate of your homes value please fill out my Free Home Evaluation Form, give me a call or send me an email.  I do a CMA, an Assessment based Price, and an average price per square foot price to set the right price, right away.

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Depreciation Reports AKA:Will My Condo Fees Go Up?

What’s a Depreciation Report?

1. A physical inventory of the common property, including building systems
2. Anticipated maintenance, repair and replacement costs for common expenses projected over 30 years
3. A financial forecasting section that contains at least three cash flow funding models for the contingency reserve fund
4. the name of the person from whom the depreciation report was obtained and a description of
1. That person’s qualifications,
2. The error and omission insurance, if any, carried by that person, and
3. The relationship between that person and the strata corporation;
5. Date the report was done

It’s Mandatory, Maybe

The Strata Property Act requires all strata properties with more than four units to have a common property depreciation report to provide estimates for “the repair and replacement costs for major items in the strata corporation and the expected life of those items” completed by December 13, 2013.  

The Strata Corporation can exempt themselves with a 75% annual vote and they can defer the first depreciation report by 8 months with a 75% vote.

We are not alone

Similar legislation has already been enacted in Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Yukon, Northwest Territories, and Nunavut.  Ontario’s legislation has been in place for 10 years or more.

Report Now, Pay Later

The law does not require that the funding requirements identified in the depreciation report be implemented.  It does, however, allow for a simply majority vote to increase the reserve fund instead of the old 75% yearly vote.

How are Depreciation Reports Used?

The depreciation report will assist strata owners with the prudent management of their common property by providing information on repairs and replacements that will need to be funded, as well as determining the amount that should be contributed to the contingency reserve fund.

Highlights the current state of repair and the Financial ability to pay for needed upgrades in a  Strata building.

Used by Real Estate Appraisers and Realtors® in assigning a price for your unit.

One of the important documents that will be requested when buying a Condo as it can serve as valuable disclosure information for potential buyers.

It may be requested by mortgage providers as part of their financial risk assessment process.

How Long Does A Depreciation Report Last?

Depreciation Reports have a 3 year lifespan, then they must be updated.  This includes a visual inspection.

What must be inventoried?

• The building's structure
• The building's exterior, including roofs, roof decks, doors, windows and skylights
• The building's systems, including the electrical, heating, plumbing, fire protection and security systems
• Common amenities and facilities
• Parking facilities and roadways
• Utilities, including water and sewage
• Landscaping, including paths, sidewalks, fencing and irrigation
• Interior finishes, including floor covering and furnishings
• Green building components
• Balconies and patios

Who can Create A Depreciation Report?

According to the act: “ A "qualified person" who has the knowledge and expertise to understand the individual components, scope and complexity of the strata corporation’s common property, common assets and those parts of a strata lot or limited common property, or both, that the strata corporation is responsible to maintain or repair under the Act, the strata corporation's bylaws or an agreement with an owner and to prepare a depreciation report that complies with the act.”  

It’s likely that Engineers, Architects, Reserve Planners, and Real Estate Appraisers will create the Depreciation Report.  It is hard to imagine one individual with all the expertise required to prepare it.

How Much Does A Depreciation Report Cost?

The initial report will cost several hundred to several thousand dollars depending on the size and scope.  

The 3 year updates require onsite inspections.  They should cost significantly less than the initial report because the numbers just have to be updated.

All costs are paid by the Strata Council on behalf of the owners.  In other words, it's included in your monthly Condo Fees. 

Will My Condo Fees Go Up?

Today’s Strata Corporations focus on keeping monthly Condo Fees down.  This often results in putting off needed maintenance which increases the cost of doing the repairs by as much as 50%.  

Low Condo fees lead to using Special Assessment of Hundreds to Thousands of dollars per unit to finance repairs.  Special Assessments are completely paid by current owner, which is unfair to those who have just moved in, but great for those who just moved out.

Tony Gioventu, Executive Director of the Condominium Homeowners Association (CHOA) said: If we compare the average monthly contribution condo owners make to the contingency reserve fund here in BC it’s $22/month, compared to $80-100/month in Ontario (Who already have Depreciation Reports).

Although, no one wants to pay more, Monthly Condo Fees will probably go up and the number/cost of Special Assessments will probably go down.  

Useful Links:

The Strata Property Act - See Section 6
The Condominium Home Owners Association of British Columbia (CHOA) - Great Resource

What a Strata Corporation Needs to Know About Depreciation Reports - CHOA

The concept of Reserve Fund Studies - CHOA
Depreciation reports will “shock” some condo owners - Western Investor: Oct 2012
Depreciation Reports, Contingency Reserve Funds and Special Levies - Office of Housing And Construction Standards

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Do you ever wonder what your Strata council is supposed to be doing to maintain your home?  

Check out the Maintenance Matters bulletins and videos, provided free by the Homeowner Protection Office for  helpful information on the following topics:
 

• #10 At-Grade and Below-Grade Assemblies - Video – New!
  #10 At-Grade and Below-Grade Assemblies 
• #9 Exposed Wood Structures - Video – New!
  #9 Exposed Wood Structures
• #8 Cladding - Video – New!
  #8 Cladding
• #7 Building Envelope Maintenance and Renewals Planning
• #6 Decks and Balconies
• #5 Sealants
• #4 Residential Windows and Exterior Doors
• #3 Avoiding Condensation Problems
• #2 Maintaining Your Roof
• #1 Paints, Stains and Coatings

Never miss any of the bullietins by subscribing to the email lists: http://www.hpo.bc.ca/email-subscriptions

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Everyone should have received a 2012 - Property Tax Notice in early July, which shows how much you owe.  There are 3 columns that show what you owe without the Home Owners Grant, with the basic grant and with the additional grant.

You must renew your Home Owner Grant every year between late May and December 31.  The easiest way to do it is online.  

1. Find your 2012 Property Tax Notice.
2. Click on the Electronic Home Owners Grant 
3. Choose Complete your grant between late May and December 31
4. FIll in your Folio and Access number as circled below
5. Fill in the form
6. Print a copy for your records
7. Put a reminder on your Calendar for next June 15th

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Call Me On: Terry.Burgess.In.Vancouver