Canadian Interest Rates - Seize the Day, Maximize Your Efficiency While Rates are at All-Time Lows

The Bank of Canada has done it again and for the second time this year, cut the nation’s interest rate. Widely publicized, you likely know that Canada’s lending rate is now 0.5%!

This has been in reaction to an underperforming Canadian economy – but interestingly, not so much in the Canadian housing market. In August of 2015, the Teranet-National Bank House Price Index http://www.housepriceindex.ca/default.aspx reported an increase of 1.2% from the previous month, a 7 consecutive monthly increase.

So, the housing market appears to be bustling and interest rates are at all-time lows – is it time to seize the day? 2 ways to maximize your profitability is strong marketing and maximum efficiency in your internal workflow.

Here are our tips for how to see a strong finish to 2015:

Marketing your listings

Be everywhere! Posting your listings on the MLS isn’t enough anymore. Ensure that you register with mobile apps for real estate that are marketing tools, like ViMO, Zoocasa, etc. Make sure that your listings are showing there. The more exposure you get to your listing, the better.

Marketing the brand that is you – what makes you different?

Leverage social media and mobile apps for real estate to market yourself. Outside of being able to share helpful information with prospects nurturing leads that may not be ready to buy or sell, you can establish yourself as a thought leader and a go-to source for real estate information and questions. You also increase your accessibility and connectivity to clients, prospects, partners and colleagues. Talk about what makes you different. What tools you use, what you do that makes you different from other real estate sales professionals and the best choice! You can demonstrate this by what you share.

Use the best tools to get the fastest most accurate results

The best way to maximize results in a hot market is to maximize efficiency. The more you can do in less time, the more profitable you will be. Let’s talk technology again. When taking on a new client there is immediate research that needs to be performed both related to the client and the property. Tools like GeoWarehouse provide a central place to research a property or borrower and obtain a host of other searches and documents. This platform enables you to go to single place to validate all the information you need to determine if you can move forward with your client.

Get rid of the paper – embrace electronic document signing

Remember we talked efficiency? Thanks to recent changes to the Electronic Commerce Act this past summer, you can now sign real estate documents with your clients electronically. A minor investment in a tablet and a mobile app for real estate like ViMO sets the stage for you to make your transactions paperless – whether in a face to face meeting with a client or if you are transmitting documents back and forth.

We hope that these tips help you to seize the day while interest rates are at all-time lows. For more information about the tools mentioned in this blog please visit:

Teranet-National Bank House Price Index http://www.housepriceindex.ca/default.aspx

ViMO (mobile app for real estate) http://myvimo.ca/

GeoWarehouse (web based tool) http://www.geowarehouse.ca/

Real Estate Sales Professional or Mortgage Agent?

Some think that the role of a real estate sales professional is merely to represent buyers and sellers buying homes. However, one very important aspect of this role is the financial aspect which is one that extends beyond helping a buyer find a home and negotiating the process or listing a client’s home.

The financial aspect of real estate transactions can actually be sorted into 3 baskets:

1.       Your client’s ability to pay you

2.       Your client’s ability to obtain mortgage financing

3.       Your client’s ability to afford to carry the property that they          want to buy

Aside from a client’s ability to pay you, the other 2 buckets sound somewhat like the activities of a mortgage agent or broker. Some real estate sales professionals will simply recommend that a client go to their bank or make a referral to a mortgage broker to secure mortgage financing. Doing so leaves you dependent on a third party to make your deals happen!

Over time and using technology, you likely have become more empowered as far as validating your clients’ financial ability to purchase a home and pay you – this is especially important when clients are not as honest as they could be - or when they forget information which is important.

Having provisions in your workflow that address the customer financial profile makes you more competitive because you will close more deals and not waste time on deals where clients can’t pay you or qualify for mortgage financing.

How review your client’s financial profile in 1-2-3

1.    Your client’s ability to pay you. This boils down to the equity in your client’s home if they are selling or the equity in the seller’s home if you are representing the buyer. In this regard you will need to review any financial encumbrances against the property that the commission will stem from. Using a tool like GeoWarehouse, you can run a property search and reveal registered mortgages and determine if in fact the equity is there. If you are concerned that there could be a lien you can go a step further and request a Parcel Register* which will give you even more information.

2.    Your client’s ability to secure mortgage financing. The same search of the registered mortgages on the property should give you some insight into whether or not the client will be able to get a mortgage – now this is at a very high level because most mortgages will also depend on the client’s credit and income – but – 1) If the client has 2 or 3 mortgages, that is a sign that the client could have financial problems, 2) If the client’s first or second mortgage is with a private individual it is a sign that the client couldn’t obtain institutional financing at some point which means there could be credit issues, 3) Equity – if the client has substantial equity it will not be difficult for the client to find financing regardless of poor credit.

3.    Your client’s ability to afford to carry to house they want to buy. For this we recommend that you have a mortgage calculator on your smartphone so that you can swiftly calculate mortgage payments for the client and then add them to estimates of utility costs and other expenses to give them an idea of a property’s carrying cost. Consider an app that offers a mortgage calculator that also tells you the bank’s daily mortgage rates – RateHub is a good example of a website that has lots of tools for calculating mortgage payments.

Real estate sales professional or mortgage broker – while some of you are both, at least having a basic process for assessing the financial aspects of the real estate transaction will make you more competitive and close more deals.

GeoWarehouse gives you the ability to do more - making your job that much easier and stopping questionable deals before they become issues. For more information, please visit http://www.geowarehouse.ca/marketing/index.php.

* An official product of the Ontario government pursuant to provincial land registration statutes.

Instrument Images and You

When you hear the words Instrument Images – do they mean anything to you? Why would Instrument Images be important if you don’t know what they are or how you could be using them? That is the very purpose of the blog you are about to dive into.

As a real estate sales professional you likely use one tool or another to run searches to verify legal home ownership information all the time. The place to get the most current, up-to-date home ownership information is through the Parcel Register*. While some think a Parcel Register* is a title search, it is actually just one part of a title search.

The Parcel Register* not only provides the home ownership information as it relates to the property but also a history of transfers, discharges and registered encumbrances. Each item will have a registration number which can then be used to pull an Instrument Image - an image of the actual document registered and associated to the transfer, registration or discharge.

To use an analogy, the Parcel Register is like popping the hood of a car but the instrument image is like putting the car up on the hoist!

The Parcel Register will show you the date, registration number, registrant (just name) and amount.

The Instrument Image will show you the registrant’s complete information as well as the lawyer who registered the registrant’s complete information and other details that would appear on the relevant document, whether it is a mortgage charge, mortgage discharge or mortgage transfer.

Not every situation will call for such in-depth research as requesting an Instrument Image – but some will, and having it will give you that much more knowledge and, after all, knowledge is power, right?

If you don’t know how to get Instrument Images already, here is a quick video: 

Not a GeoWarehouse customer? Find out why you should be by visiting www.geowarehouse.ca.

*An official product of the Ontario government pursuant to provincial land registration statutes.

Preventing Real Estate Fraud in 1-2-3

Preventing real estate fraud is a major challenge that most real estate sales professionals, and even lenders for that matter, encounter. Real estate fraud presents itself in many forms – some more common than others.

Title fraud: Though this doesn’t happen often, it is a costly form of fraud that one hopes they are protected against with their title insurance. As a real estate sales professional, do you want to be associated with the origination where title fraud is present on a deal? Absolutely not. The best ways to combat title fraud are to meet the borrowers, request identification, independently verify who is on title to the home and ask them questions about the home, sales history, even things in the area that may help you identify if something seems a bit off!

Value fraud: in a recent publication, the Law Society of BC had an excellent example of this type of fraud that we thought it would be prudent to share.

“Value fraud in this situation, back-to-back purchases of the same property are arranged from a legitimate vendor. The first purchase is for the arranged sale price — say $300,000. Then a subsequent (fraudulent) deal (from one fraudster to another) is arranged (i.e., a “flip”) for $400,000. Both purchases are set to close on the same day. The fraudster arranges for a high-ratio mortgage on the basis of the second deal. The high-ratio mortgage funds are used to close the real estate deals, since the amount of the mortgage (95% of $400,000 = $380,000) is enough to cover the deals. The fraudsters are counting on the financial institutions not doing their full due diligence or having an on-site appraisal done of the property to verify the stated property value. Sooner or later, the balance of the mortgage funds and the fraudster disappear, leaving the bank holding a mortgage for far more than the property is worth.”

“A second value fraud occurs when a legitimate agreement of purchase and sale is entered into between a vendor and the fraudster, say for $350,000. The vendor and the fraudster then sign a one-page amendment that provides a credit of $50,000 against the purchase price (stated to be for repairs). The fraudster does not disclose this credit in obtaining high-ratio financing. The deal closes and the mortgage payments stop shortly thereafter. The fraudster disappears with the balance of the financing leaving the bank with a mortgage greater than the value of the property.”

Check out the full article here: https://www.lawsociety.bc.ca/page.cfm?cid=1347&t=Practice-Tips:-Fighting-back-against-fraud-%E2%80%94-the-risks-in-real-estate.

Here are some red flags that can help you to suss out a real estate fraudster:

·         A client is making a large property purchase with cash and cannot evidence this from the sale of another property.

·         The client has documents to confirm the property transfer but not the original purchase and sale agreement.

·         The property’s sales history is showing multiple recent purchases – each showing the value increasing.

·         The client doesn’t want to provide identification, or will, but doesn’t want you to make a copy of it.

·         The seller indicates that there was a deposit made that was not recorded on the purchase and sale agreement – with payment being made directly to the seller and not through you.

·         The client wants the transaction closed very quickly.

·         The client wants you to indicate a higher purchase price on the agreement than the actual purchase price.

·         The sale price is unreasonably greater than that of other homes in the area.

·         The title shows a history of mortgages being registered and then discharged in short time spans.

Above is just a short list of behaviours that can occur that can mean fraud. Your ears might be ringing but here come the words again: due diligence saves the day, most of the time. Think of water, forcefully flowing from the tap as your deals, now think of the spatter that escapes the stream as representing these instances when something on a deal is off. Maybe in these cases it is better to dig a little deeper and perhaps pass on a deal rather than getting caught in the middle of a fraud scheme that can not only get you in trouble, but also put your relationships with your partners at risk.

For more information about tools you can use to identify real estate fraud please visit www.geowarehouse.ca.

Virtual Home Sales – Do You Think it is Safe for a Client to Buy a Home Sight Unseen?

It seems everything is online, absolutely everything. We can buy clothes online, electronics, even groceries… and these are all delivered right to your door. Groceries continue to be a surprise because who thought that one could purchase produce without seeing and feeling it? Well, the same seems to be occurring with real estate.

Virtual home sales (more common in the U.S. with all the fire sales going on) seem to be occurring more and more, especially with savvy real estate investor who are buying properties sight unseen. Here in Canada, many Canadians bought U.S. real estate without even taking a visit, just because prices dropped so low that it was worth the risk to some. There are even realty TV programs where investors buy homes at auctions that don’t even take place in front of the property in question!

This is not even considering the international housing market and the thousands of foreigners who buy real estate here, from abroad, through their trusted real estate sales professionals.

Could you ever see this becoming the norm in Canada? A day when a client comes to your office and views properties with you online, and then boom, is ready to make an offer. Sounds crazy, but in Canada this could be a standard practice in only a few years.

Look at the tools available to you when showing a property:

·         You are able to access photos of the property from the street and from above.

·         Many agents offer virtual tours of properties online to preview the inside.

·         You are able to access demographics in a particular area to identify who lives in a neighbourhood, schools, transportation, etc…

·         You are able to view a property from above to see what is beside it, behind it, and in the area.

·         You can search the property’s history and transfers.

·         You are able to access comparable sales in a neighbourhood.

·         You can validate that your client is the legal homeowner of the property.

There is not much that you can’t show your client online about a particular property as it stands today – outside of walking them through it. In the future though, they may not even want to.

Risky business or what could become the norm in the future - what do you think?

For information about how you can validate the information presented on your deals please visit www.geowarehouse.ca.

Due Diligence in Real Estate – Is There Such Thing as Too Much?

This question is fair enough and asked often enough for us to blog about it. There are many different skilled professionals involved in a real estate transaction: you, the real estate sales professional, a lender and/or mortgage broker, a real estate lawyer and many more. You, however, are the first line of defense when it comes to the long list of due diligence measures that have to be taken to prevent mortgage fraud and ensure that good quality deals are taking place.

OREA defines due diligence as “the reasonable analysis or research that is done to check or verify material information about a property.”https://www.oreablog.com/2013/02/what-is-due-diligence/

Real estate sales professionals can and do choose how far they can go with due diligence, making it a time consuming and costly task on some deals. With all the tools and capabilities available, one could spend countless time and a significant amount of money performing due diligence – so is there in fact such a thing as too much due diligence?

One way to mitigate the time spent on due diligence is to evaluate what due diligence to perform and when you do it.

For example, common types of due diligence performed by real estate sales professionals include:

·         Verifying who the legal homeowners are

·         Obtaining a survey

·         Validating the legal description of the property

·         Reviewing the sales history on a particular property

·         Checking for encumbrances like mortgages and liens and more…

Once you know what needs to be verified on every deal, your next step is to look at how you can get it verified. This is going to come down to the tools and technology you use to perform due diligence. Place a monetary value on your time and pursue tools that do as many of the due diligence items you need to perform, in one place – even in a single report. This will reduce the need to do 5-6 things separately, instead doing them all together.

Finally, when should you do it? We firmly believe at the application stage. Once a client has made the decision to engage you, due diligence should begin. Again, getting back to placing monetary value on your time – wasting time on deals that have issues is not good for you or any of your colleagues along the supplier chain. Not only do you stand to save time and expense, but you also stand to save credibility by performing due diligence at the point where a customer signs on.

There can never be too much due diligence when it comes to preventing real estate fraud. Generally speaking, if you establish a standard framework to perform due diligence within a set time and expense parameter, you should never find performing due diligence too time consuming and should be able to get through it with ease.

For more information about GeoWarehouse, a revolutionary tool that helps real estate sales professionals perform due diligence, please visit www.geowarehouse.ca

Real Estate Pulse: Barbara Corcoran a Hit at this Year’s InMan Events!

If you like Shark Tank or work in the real estate business, you can surely relate to this invigorating talk by Barbara Corcoran, presented at this year’s InMan. Real estate sales professionals across North America are raving! With a little something for all - and a whole lot of humor - she is worth going to see!

We don’t have the video from the keynote at InMan but here is another speech by Ms. Corcoran that covers similar subject matter.

 

As always, if you are interested in more information about GeoWarehouse, our tool that makes doing your job that much easier please visit www.geowarehouse.ca.