Real Estate Insider: September 2017 News Report

Welcome back to the Lalovich Real Estate Insider! We've been busy reading a tonne of topics and wanted to share the best finds with you. How much do you need to make to buy a house in Toronto? How did a multi-million dollar home street sell for less than $100k in California? What does the end of the Canadian housing bubble market mean for you? Find out the answers and much more in this edition. Enjoy!

Don’t be tricked by ‘buzz words’; make sure you know your options when applying for insurance. >>

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Looking at the house price-to-rent index, to balance out from the recent spike in housing prices, value either needs to go down or rent needs to come up. Based on this, the OECD predicts a 28% decline in home prices by 2020. Read more here >>

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The Ontario Real Estate Association is stepping up to become the self proclaimed “watch dog” for the industry’s regulatory body. This transformation is catalyzed by the fact that as of 2020, they will no longer be providing real estate education. Read more about the transformation here >>

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Thinking of becoming a landlord? Here are 10 tips to follow to make your rental property a successful one. >>

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A change of heart ended up costing this buyer $360,000! Learn why walking away from a deal could cost you more than just your deposit. >>

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While the housing boom drew thousands into the Real Estate career, the inevitable slowdown is expected to decimate the ranks of the inexperienced realtors. >>

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A private street in San Francisco with 35 Mega-Million Dollar mansions was sold to a couple for $90,100… all because of a $994 unpaid tax bill. Read why here >>

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Are you getting the best rates on your mortgage? Experts say people need to start comparing mortgage rates the same way they do when booking flights or hotels. Read the startling facts here >>

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Thinking of moving to Toronto? A recent study has found that to afford the average detached home, residents need an average income close to $200,000. >>

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Deciding what to do with your rental properties? Considering entering the rental property market? Be sure to read this list of every indicator to consider when selling an investment property. >> 

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Going with traditional: a new mixed commercial/residential building is planned for an empty Walkerville area lot, becoming one of the first buildings of its type built there in a long time. >>

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Learning from past mistakes: it seems as though Canada’s housing market bubble is officially over, without the notoriously feared “pop”. >>

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Buyer's remorse: people are scrambling to close after the recent cool down of the housing market. >>

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The real estate association believes it's time to increase the penalty for unethical behaviour in the real estate profession and is lobbying for stricter regulations due to the fact that the current regulations are close to 15 years old. >>

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Feel like you're paying too much for your mortgage? It's likely you've made one of the top five costly homeowner financial mistakes. Find out here >>

Real Estate Insider: 2017 Summer Report

Welcome back, real estate readers! We are going to be adding a new monthly series to our blog. In addition to interesting real estate blogs, we'll be including helpful articles and subjects we think you'll benefit from reading. Last month, we found a treasure trove of insider info we just can't help but share.

Worrying about your credit score? Make it a thing of the past! CIBC is set to launch an easy-access platform for all clients to check their credit scores whenever they want, indicating the importance of everyone being comfortable and up to date with their financial situation. >>

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How much do you know about your condominium’s governance? After investigating some questionable practices in downtown Toronto, this article gives tips on what you should be doing to ensure that your condo is well-managed. >>

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Are we digging ourselves into a deeper hole with the Foreign Buyers Tax? The Montreal Economic Institute says that public decision makers are “missing the mark” and that this tax will do the opposite of what it was imposed to do. >>

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Trying to halt the train! Chief economist at the Canadian Real Estate Association says Torontonians should prepare for a possible tax on speculative home purchases to try and stop outrageous house prices, but will it work? >>

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What goes up, must come down. Home sales dropped 6.2% from April to May 2017, signifying the largest drop since August 2012. This could possibly mean the market is beginning to balance itself out once again. >>

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Is your house under seven years old? Make sure you know about the new home warranty program in Ontario and the changes coming! >>

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Could the legalization of cannabis affect the real estate business? Who should be responsible for all the costs and risks associated with growing marijuana plants? This commentary discusses some of the legal implications that could come with the industry. >>

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Risk big, win big. With interest rates set to rise, are variable rate mortgages worth the risk? Locking in your mortgage rate now might be the way to go for the more cautious homeowner. >>

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Canada has a historically moderate financial situation. In the wake of the recent housing boom, learn how the economy is protected with policies like the Foreign Buyers Tax to ensure Canada’s economy is safe now and in the future. >>

We hope you enjoy our findings -- happy summer and happy reading!

GUEST BLOG: A Day in the Life of a Lawyer

Today we have a guest blogger! Continuing on with the theme of "a day in the life of", we have another professional that realtors often work with - a lawyer. Lyndsey Lalovich, an associate with the Willis Law Firm (and my Sister), is going to take us through a typical day.


Ever wondered what a day in the life of a corporate lawyer would look like?


I am a lawyer with Willis Business Law, a new, cutting edge business law firm, located in the heart of downtown Windsor at 1 Riverside Dr. W. Around here, they call me the “closer”. I am the lead associate lawyer on all our firm's transactional work, overseeing all aspects of a deal and going the extra mile to ensure timely completion of deliverables.


So what does a day in the life of a transactional lawyer look like? While no day looks quite the same in this field, below is a snapshot of my day!


7:00am – Rise & Shine! Hearty breakfast and morning news.


8:00am – En route to the office, Willis Business Law, to start another day.


8:30am – The calm before the storm. Catch up on emails and get organized for the day.


9:00am – Join Willis Business Law’s founding partner, William Willis, for a meeting with clients in the beautiful boardroom at Willis Business Law to discuss a proposed commercial real estate purchase. Complex factors related to the transaction made the face-to-face effective to strategize the best approach.




10:00am – Return calls and emails.


11:00am – Time to put my head down and do some work! Prepare closing agenda for an upcoming commercial acquisition and work with our corporate and real estate clerks to get the package of closing documents prepared.


12:00pm – Networking lunch! Relationship building is key in this career. One of the best parts of working downtown is our close vicinity to our referral sources and, of course, the great restaurants!


1:15pm – More emails.


2:00pm – Signing with client for a commercial financing transaction. Once the client leaves, the pressure is on! Our team needs to get the signed documents to the other lawyer as fast as we can to ensure there is no hold up in the closing of the transaction. With our experienced clerks, we have it down to a science!


3:00pm – Uh oh... Residential real estate closing gone sideways. Various phone calls (and emails of course) with the other lawyer and our client to get the issues resolved.


4:00pm – Wrap up work projects for the day. Have I mentioned responding to emails? Much like other fields, nowadays email is the primary mode of communication for lawyers. At Willis Business Law we try our best to maintain a 24 hour response time on emails, even if we are just responding to let the client know we will look into their inquiry and get back to them. This means a significant percentage of my day is spent sitting in front of this computer keeping up with my inbox!




6:30pm – Head home for some dinner with the hubby.


7:30pm – Gym time. After sitting at a computer for most of the day it’s especially important to stay active in the evenings!


9:00pm – Wind down. Watch some Big Brother Canada while treating ourselves to protein pancakes!


10:00pm – Get a head start on preparing for tomorrow’s work day and, you guessed it, respond to emails.


11:00pm – Lights out!



So there you have it folks. Thanks for participating Lyndsey. Contact her for all your business law needs. You can find more info about her and the firm at www.willislawfirm.ca. Thanks for reading!

A Day in the Life of A Real Estate Agent

Have you ever wondered what a typical day looks like for a realtor?  Well I have bad news for you… no days in our industry are typical!  Depending on the day we could have a whole range of things going on.  You never know when your appointments could all cancel and you're left waiting around for a document to get signed or for a call back from another professional.  Sometimes you'll wake up thinking the day will be quiet, but by 10am it has completely flipped flopped and the rest of your day is totally booked.

A typical day just doesn't exist. But here is an example of a recent work day I (Russel) had so you can peer into the life of a real estate agent!

8am – Breakfast (most important meal of the day) and answer some emails.

9am – Out the door ready for the day.

9:30am – Inspection out at a waterfront property in the County.

12pm – Drive back into Town and return calls in the car (over Bluetooth of course).

12:30pm – Business lunch Downtown.

1:30pm – Meet photographer for photos for new industrial property that we listed this week.

2pm – Tenant comes to view same property that was just listed this week.

3pm – Back to the office to do some follow ups and work on an appraisal for a property we are being asked to submit a listing proposal on next week.  Return more phone calls and respond to emails. Set up appointments for tomorrow.  Eat a snack (Daryl's Bar).

5pm – Meet tenant to view office unit we have listed.

6pm – Head home.  Return some more calls.  Appointments finished for the day.

6:30pm – Dinner at home.

7pm – Gym time.  Need it to stay fit and healthy.  Productivity and sleep quality slip without it.

8:30pm – Return Home.  Protein shake while reviewing new listings that came up that day.

9pm – Finish up appraisal for next week.  Prepare for appointments tomorrow.  Answer more emails.

10:30pm – Netflix and Chill.

11:30pm – Read some non-fiction.  Recent recommendation is Thinking Fast and Slow by Daniel Kahneman.  Reading is very important to keep you mind sharp and it helps me wind down.

Midnight – Lights out!

I didn’t pick the most exciting day but it was pretty busy and varied in scope.  The important thing in this business is to be consistent and work hard everyday.  It is also important to have a good work-life balance so you can keep up your productivity.  We are lucky to have flexibility in our schedules that way.  Is this day in the life different than you would have expected?

2017 Real Estate Trends: Sky High Hydro Costs In Ontario

Have you looked at your hydro bill lately?  Did you have sticker shock?  This is a topic that everyone is talking about in Ontario and it doesn’t look like relief will be coming anytime soon.  Naturally, the effects of this rising expense are felt throughout the economy, including the real estate sector.  Today we are going to look at some of the ramifications from a real estate perspective.

Reduced Disposable Income

All things being equal, this increase in utility costs equates to a lower disposable income for workers in the local economy.  This will affect retail sales, which will lower economic growth.  Potential home buyer’s budgets will be more stretched and therefore will lower the amount of money they have available to service mortgage debt, either reducing the value of homes they can afford or completely taking some buyers out of the market.  Therefore, demand will suffer.

More Efficient Homes Becoming Important

The stakes are high in Ontario these days when it comes to energy efficiency.  It is more important and economical to live in an efficient space than ever.  Some of the large, older homes have inherent difficulties in energy efficiency and the costs for utilities in these homes are becoming prohibitive.  Because of this we see a shift to more demand for newer constructed homes that are more energy efficient.  We also see a shift to people building smaller and smartly designed homes to be able to fit in everything they want in less sq ft.  Homeowners with 3,000-4000’+ homes are routinely getting $1000+ utilities bills. With utility rates projected to increase significantly from here, demand for operating these homes could slow as a result.

Renewable Energy Becomes More Economical, Technology Becomes Important

As prices of hydro continue to rise, the economics of the payback on renewable energy get more attractive.  Things like solar energy will look more attractive on a micro basis for consumers.  Technology like smart thermostats and appliances will also be important to conserve energy for the consumer.  Do your research!  As these alternatives become more widely adapted they should also come down in cost.

Increasing Costs to Businesses

As a large input cost to many businesses, hydro is getting to a tipping point in Ontario.  These could affect the future of many businesses in our Province and could lead them to turning to lower cost jurisdictions.  One would also assume the consumer will see prices increase as businesses pass on the additional costs.  This would result in an inflationary period where the consumer consistently get sticker shock.  Time will tell how this all plays out but its safe to say it won’t be positive for the real estate market!

Those are some of the effects we are seeing from rising hydro costs.  What are you seeing?

2017 Real Estate Trends: Trump

Did you hear the US has a new president?  Unless you’ve been living under a rock, you’ve no doubt heard about incoming president Donald Trump.  The unlikely victory by the polarizing figure has sparked protests across the US and the world.  No doubt, this a volatile time.  Regardless about how you feel about him and his term as president, there is change coming.  Today, we are going to discuss how some of that change could affect our real estate market.

Disgruntled US Citizens Moving North Of The Border

During the campaign season, you heard over and over from non-republican voters that they would consider moving to Canada if Trump became president.  Although this sounds great, I don’t think we will see a material population of Americans trying to move to Canada.  There are too many logistical issues such as immigration, etc that would prevent it.  Overall we don’t expect to see much impact from this.

Immigrants Choosing Canada Over The US

As two countries with lots to offer immigrants, Canada and the US sometimes battle over the most skilled applicants.  With Trump being viewed unfavourably by much of the world, these cream of the crop immigrants may choose Canada over the US.  This could be good for growth in Canada and therefore our real estate market.

Focusing On The Economy & Jobs

The emphasis on much of the policy Trump is expected to be putting forward centres around jobs and the economy.  He doesn’t really mind if he ruffles feathers in the process of gaining or keeping jobs in the US.  We’ve already seen announcements from different manufacturers about moving jobs back to the US or deciding the keep them there instead of moving to a lower cost jurisdiction.  Most of this rhetoric is aimed at low cost producing countries such as Mexico or China.  Canada is a higher cost producer and has a pretty balanced trade relationship with the US.  Therefore we do not see Canada as a trade target of the Trump Administration.  If we see a resurgence in manufacturing in the US, that could benefit our economy by proximity and inter-country companies building components in both countries, making it mutually beneficial.  As a border town, this could benefit our local manufacturing sector and therefore our real estate market.

General Uncertainty

Markets and companies don’t like uncertainty, which without a doubt, the incoming Trump administration has brought about.  People like to invest in stable economies.  During this period with Trump, Canada could look very attractive as a place to invest for companies and real estate investors.  Our real estate market could benefit from this perceived relative stability.

The times they are a-changing.  Those are some of the takeaways we see from the changing landscape under Trump.  What are your thoughts?

Real Estate & Related Predictions for 2017

Happy new year everyone!  Hope you all had a great holiday season and are rested up for a busy 2017.  While the year is still young, we wanted to consult our crystal ball and take a stab at making some real estate predictions.  Here goes.

Interest Rates Edge (Modestly) Higher

Since interest rates are near all time lows, common sense would dictate that they don’t have anywhere to go but up.  We think this year that happens, albeit in a limited fashion.  With the combination of higher bond yields, and some of the government mandates coming down on the financing industry to curb runaway real estate markets in parts of Canada, this will finally be the year for higher rates.

Buyers Get Multiple Offer Fatigue

During 2016, it seemed like every listing had 5-10 offers on it and bidding wars ensued.  While the market dynamics forcing this are still in place, we feel a segment of the market is growing tired of the constant competition.  This will result in a lesser number of the crazy bidding wars we saw over the past year (hello 31 offers!).

Cap Rates Flatten Out

We remember back 6-7 years ago when obtaining an apartment building with a cap rate of 10%+ was common place.  Those days are long gone and prices have been bid up consistently since then, compressing cap rates.  Today you have a hard time finding an apartment building with a cap rate over 6%.  This dynamic has also been seen in retail plazas, office buildings, and other commercial properties.  We don’t see much more room to run on cap rate compression going forward.

Continued Sticker Shock On New Construction Costs

With new construction going through a boom in the last few years in our local market, builders and related trades are very busy.  Combine that with increased prices for land and imported material costs rising because of the low Canadian dollar, buyers will find their price range won’t get them as much when considering a new build.  We don’t see this subsiding anytime soon and if anything expect further price increases.

New Condo Projects Coming Online to Meet Demand

Build it and they will come.  It wasn’t always this way in our local market, as condo ownership was slow in being generally attractive to buyers.  But times have changed and the condo market may be the tightest of them all.  The market can now support more condo developments and developers will respond to this demand with multiple new projects in our area that we expect to be met with brisk demand.

Those are some of our predictions for 2017.  Time will tell if our crystal ball was right.  What are your predictions?

2016 Year End Real Estate & Related Observations

 As the holidays draw closer we are going to do a few posts wrapping up the year.  And what a year it has been for our real estate market and many other markets in Canada and the US.  Today we are going to discuss some observations we’ve made throughout the year.

The Year of Multiple Offers

Multiple offers seemed to be a way of life this year.  Bidding wars were everywhere, in all parts of town and all price ranges.  This even spread to the commercial market as some retail, multifamily, and industrial buildings had multiple offers.

New Construction Is Back In A Big Way

New construction was a bit of a tough business since the recession of 2008 in our market.  That changed in a big way as sales of new construction boomed all over the area.  Clearly there was some pent up demand from the last several years and that translated into huge numbers.

The Local Economy Is Finally A Tailwind

We deal with lots of business owners, and so many of them talk about having way more business than they can handle.  This applies across all industries.  The local unemployment rate has plummeted from being one of the worst in Canada to below average.  This bodes well for a continued buoyant, local real estate market.

We Need to Build More Condos

There are not enough condos out there to meet demand.  With an aging demographic, mixed with the  acceptance of condo living by Millennials, the once stagnant demand for condos locally is long gone.  We expect to see more new condos being constructed in the next few years with brisk demand to meet them.

Downtown Is Still A Sore Spot

The downtown hasn’t really been able ride the coattails of the improvements in the local economy and real estate market as much as it was hoped for.  We still need more people living down there to change the demographics to support more retail and attractions that people like to speak about.  Hopefully the University opening in the near future will be a catalyst, but time will tell.

Those are some of our observations from 2016.  What were yours?

New Series: Real Estate and Related Terms Explained

Over the next several weeks we will be doing a new series on the blog. In a nutshell, each week we are going to choose a term that we often find that is either confusing or misunderstood in our travels with our clients. We will define the term in verbiage that is easy to understand and expand on the concepts where necessary.

After this series we hope that you will be able to talk confidently about many real estate related topics. Sometimes, there are different terms for different items in different jurisdictions. For example, in Ontario (where we live and sell real estate), we use the term Condo for condominium ownership, whereas in British Columbia, they use the term Strata. So therefore, as experts in Ontario only, we will focus on terms used in our market.

The first post next week will be regarding a term that we get asked about a lot…triple net.

Readers: are there any terms you find confusing that you’d like us to touch on? We’d like to make this series informative so we’d love to hear from you.

Bonus – Tax Time 2016: Tax Refunds

Now that the tax filing deadlines are officially behind us, a good portion of you will be getting a nice refund from the tax man! Now, before you go blowing it on the latest gadget or on a weekend getaway, it’s important to remember that this isn’t free money and it really is just a refund of the overpayment of taxes you made throughout the year. Considering it comes in the form of a lump sum, there are many opportunities to invest that money which can benefit you on an annual basis. Today we are going to make a list of the prudent potential uses for that hard earned tax refund, from your friendly local real estate professional’s perspective☺

Save Up For A Down Payment On Your Next Property

A lump sum tax refund can be a great head start towards saving for your next down payment.

Renovate or Update Your Investment Property

Have you deferred a renovation because cash flow has been tight? With your tax refund in hand, now could be the time to address some of those outstanding issues.

Value Added Upgrades to Your Home

Thinking about adding a bathroom or changing some flooring? Having some freed up cash to complete these tasks will not only make your further enjoy your home but increase its resale value.

Paying Down Mortgages

Without delving into people’s personal financial situations, paying off debt is never a bad option whenever you have a cash windfall. It gives you a guaranteed return on investment (ie. interest costs  saved). If you have any outstanding non-mortgage debt (credit cards, car loans, lines of credit) I would recommend you start with those as they are typically at the highest interest rate. Once those are taken care of, I would move to the mortgage on the principle residence. Lastly, I would pay down the mortgage on the income properties because of the tax deductibility of interest (as opposed to the principle residence mortgage debt).

So there you have it readers. What do you normally do with your tax refund?

Title Insurance - Is It Needed and Who Does It Protect?

This is an area generally covered by your lawyer, but it plays a prominent role in a high percentage of real estate sales. Occassionally problems and defects regarding the property are not discovered prior to closing, but become major issues after you complete the purchase. Such matters are often costly to remedy, but more importantly can make the property less marketable when you subsequently look to sell. In short, TITLE INSURANCE provides coverage against such problems and helps cover the financial consequences which arise as a result.

Title insurance can be issued on behalf of both the purchaser and the lender, or both. Lenders will often require title insurance as a condition of approving a mortgage. Types of risk typically covered include:

• Survey irregularities
• Removal of existing structures
• Unregistered easements
• Set back or side yard non-compliance
• Zoning restrictions
• Right-Of-Way matters
• Fraud or forgery
• Fundamental Title Issues

As with any type of insurance, certain risks may not be covered. Be sure to discuss with your lawyer what risks are covered/excluded, and take the time to read the policy. Premiums will vary, but it is relatively inexpensive and well worth the investment.

Title insurance can often help ensure that a closing is not delayed due to a defect in title, especially one that arises right at the time of closing. It has become a widely accepted practice throughout the Ontario real estate industry and one that we strongly endorse.

We welcome any feedback that you may have had with Title Insurance – good or bad! And as always just reach out to us, if you would like to get connected to Windsor-Essex and learn more about our local market opportunities.

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Mark Lalovich
mark@lalovichrealestate.com
Office: (519) 966-0444
Cell: (519) 259-5434

A Real Estate View on Environmental Assessment

Why? Cost? What if Problems Exist? Remediation?

Although we are not engineers in the environmental industry, we do see "Environmental Assessments" as part of the due diligence process. The above questions are a good place to start and gives you a practical "Real Estate View" with respect to EAs.

WHY - any EA (be it a Phase I, 11, or Ill), will identify either actual or potential property/site environmental issues. Some may be minor in nature, whereas others may be seriously problematic and pose major risks to users of the property. Beyond identifying environmental issues, a proper report should provide a series of recommendations to deal with and correct the problems outlined.

COST - will vary based on the type of report required and the depth of analysis needed. Every jurisdiction will have both national and local firms which specialize in EAs. Best practice is to compare services between 2 or 3 providers and be realistic based on the history of the subject property. Lowest fee is not always the way to go - again, you get what you pay for.

WHAT IF PROBLEMS EXIST - from a transactional standpoint, this is why you have a DUE DILIGENCE REVIEW built in to your offer. Beyond the problem(s) identified, there is going to be a cost to correct. Options may include:

1. terminate the deal
2. request the cost to correct be at the expense of the Seller
3. accept the problem and assume the liability
4. review all details and any proposed resolution with the lender

REMEDIATION - this is the common term for correcting the problem, and applies more in the event of complex matters - ie. contaminated soil,asbestos removal, underground tanks etc. Two key points here:

• ensure the engineer who created the report remains involved through the remediation period
• ensure a final report clearing the matter is obtained upon completion of the work

Again, the lenders need to be on-board with all matters relating to the EA, otherwise your financing could be at stake. Would love to hear about your experiences on EAs - and yes - the good, the bad, and the ugly.

As always, feel free to connect with us on Commercial Properties here in Windsor - Essex!

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Mark Lalovich
mark@lalovichrealestate.com
Office: (519) 966-0444
Cell: (519) 259-5434

Mistakes to Avoid with Building Inspections

Obtaining a detailed building inspection in purchasing an investment property is an important step as you move through the due diligence process. The objective should be to get a thorough assessment of the property ‘top to bottom’ and gain a good understanding of its major physical elements.

Some of the BIGGER MISTAKES we see include:

Selecting the WRONG INSPECTOR/FIRM – in order to obtain a full physical review, you want an inspector who is competent, thorough, and trustworthy. Look beyond their website/resume – meaning you want to check with past clients and references, ask for credentials/professional affiliations, and their network of trade specialists (ie. Roofers/ HVAC Techs) which they can call on if needed. They should also carry sufficient insurance which they can provide proof of.

Going with the LOWEST PRICE – the least expensive is often the least experienced and often times provides the poorest service. Not an area where you want to be focused on saving a couple hundred dollars – remember you get what you pay for!

Not doing a WALK – THRU with the Inspector – in our experience the time spent at the property with the inspector (be it 1-2-3 hours), is invaluable and a key step of the inspection process. You get to experience the assessment of the property, through the eyes and words of the inspector. It also provides an excellent opportunity for Q & A, as you re-visit the property with more of a critical view of its condition. As well, It often times makes the review of the written report much easier

Not following up on INSPECTOR’S RECOMMENDATIONS – as deficiencies are identified, a set of recommendations (fixes) should also be outlined. This may involve bringing in other specialists (ie. HVAC techs), in order to determine repair estimates as identified. Once these costs are determined, you are then in a position to either accept them, or look to the seller to correct or compensate for them . Best practice is to resolve matters relating to ‘identified deficiencies’ within the due diligence period – not waiting until after closing.

Expecting the INSPECTOR TO PREDICT THE FUTURE- even the best are no better at predicting the future, then economists or sports handicappers. Matters relating to the life expectancy of HVAC units and roofs, are educated guesses at best, and should be viewed as such. Your expectations should be focused on the ‘here and now’ and plan on getting the best assessment of the condition of the property today.

Just a final comment on’ hiring an inspector’ – remember their work is not at all dependent on the deal going forward and the transaction closing. You pay the fee regardless of the outcome of the deal and their interests as a result, are truly in line with yours and they work on your behalf!

Tell us about any inspection experiences within your market – the good , the bad, and the ugly… And as always , just reach out to us if you’re interested in investment properties in Windsor-Essex.

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Mark Lalovich
mark@lalovichrealestate.com
Office: (519) 966-0444
Cell: (519) 259-5434

Growing Trends for 2016 Real Estate - Electronic Signature

With technology changing the way we work and play, it is only natural to see advances relating to the real estate industry. One new development from last year that we are excited about is electronic signatures. This paperless option should increase productivity across the board and significantly reduce waste (saving trees).

Already sweeping through a myriad of other industries, electronic signatures became legally binding in Ontario real estate transactions on July 1, despite the province’s initial trepidation. Ontario joins British Columbia, Alberta, Saskatchewan, Québec, New Brunswick, Newfoundland and Prince Edward Island as provinces that allow e-signatures in real estate transactions. **
The amendment to the Electronic Commerce Act originally was expected to occur under Dalton McGuinty’s government, but his resignation and the election tabled the motion. An unusually long subsequent review by the Law Society of Upper Canada caused further delay.

Rightful concerns over security have been allayed. E-signature companies adopt the same impervious security measures that banks use for their online services, rendering hacking virtually impossible. Many electronic signatures companies are cloud-based. A built-in feature for all these products is an audit trail. As soon as sales agents or customers log in, everything they do – whether providing signatures, initials or simply changing pages – is time stamped right down to the second. Their IP addresses are also recorded. Everything is meticulously recorded, should a transaction become subject to litigation.

Our office has chosen to use DealTap’s software. Additional features included for the benefit of agents and buyers/sellers:

1. Sign on any device without apps
2. Sign cursively or with a keyboard
3. Guided client sign highlighting so nothing is ever signed wrong again
4. Keep everything all in one place so no paperwork is ever lost
5. Easy archiving

So next time you are finished booking your next vacation stay on Airbnb, while waiting for the ride you requested on Uber, you can sign the offer your realtor put together for your dream property, from your smart phone or tablet.

Increased productivity anyone?

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Russel Lalovich
russel@lalovichrealestate.com
Office: (519) 966-0444
Cell: (519) 995-5620

Property Due Diligence

In considering the acquisition of a property, it's wise to take the time to evaluate the building/site on a top-down basis. Typically this is done during a 'conditional period' within your Agreement of Purchase and Sale, and it facilitates your investigation of the property on a number of fronts.

Some of the more common elements of a due diligence review can include the following:

Physical Condition - which should be undertaken by a qualified building inspector or possibly an engineer/architect. Normally this is centered around issues relating to the structural condition (i.e. roof) of the building, electrical/plumbing systems, heating/cooling equipment, and site improvements (i.e. parking lot). The goal is to do a 'top -down' review of the property to determine any deficiencies which will be assumed PRIOR to firming up your purchase agreement. Keep in mind that any deficiencies which are assumed, become expenses which ultimately get added to the acquisition cost.

Environmental Review - normally handled by an environmental consultant within your jurisdiction. Even though it is generally a requirement for mortgage financing purposies, it is generally a good idea to complete one in order to establish a 'base line' position on the property on a go-forward basis. The details of such reports will vary from property to property, as will the costs to complete them. Environmental problems can be expensive to remediate and correct after the fact, so the reviews are most often well worth the investment.

Title Review - this is an exercise best completed during the due diligence process. It should reveal any easements, property restrictions, and lien/encumbrances which affect the property and ultimately your use of it. The bottom-line here, you want to ensure that there are no title matters affecting the property that you are ultimately UNABLE or UNWILLING to accept. It's a good practice to complete it during the conditional period.

Other reviews might include building code/zoning matters, special designations (i.e. heritage), equipment inspections (i.e. cranes).

Dollars spent in conducting good due diligence, is generally money well spent and well worth the investment. 'Caveat Emptor' lives on in the real estate world ... be an Aware Buyer!

Feel free to comment on any of your recent experiences with property due diligence -- the good, the bad, and the ugly. Look forward to connecting with you on any investment opportunities here in Windsor-Essex -just give us a call or connect through our website.

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Mark Lalovich
mark@lalovichrealestate.com
Office: (519) 966-0444
Cell: (519) 259-5434

Our Real Estate Wish List for Santa

Well this is our last blog post of the year and Santa is coming on Friday. Hopefully you’ve all been good this year and he is bringing you all the presents you have asked for.

 Today we wanted to talk about our wish list for a healthy 2016 real estate market:

1. Continued low interest rates. With historic low interest rates of 2015, it makes housing payments more affordable and investing cash flows higher. We don’t forsee these going away for a while but why not appreciate how good we have it (talk with those who owned real estate in the early ‘80s with 20%+ interest rates).
2. Immigration and migration into the Windsor-Essex Market. With the push for retirees and low housing prices, the area has become successful in attracting people from large high priced markets to relocate to Windsor-Essex. We hope to see this trend continuing to increase.
3. The continued resurgence of the Automotive Industry. The rebound in the last few years has created significant jobs and economic activity for the area which has helped drive the local real estate market.  
4. No more terrorist attacks! Aside from the human tragedy that we hope to avoid, we hope not to see these terrorist attacks continuing around the world and shaking the confidence of people in the global economy.
5. A mild winter. Put your hand up if you love brutal winter conditions….anyone? Didn’t think so. Buyer and Sellers in the real estate market don’t love bad weather either and a mild winter should keep this booming real estate market going.
6. A healthy increase in supply of houses and commercial properties. In 2015 we saw the stats swing highly in the favor of a sellers market and we have many buyers who haven’t been able to find the property they have been looking for. A slight increase in supply to balance the market out would help in 2016.

What are your wishes for Santa?

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Russel Lalovich
russel@lalovichrealestate.com
Office: (519) 966-0444
Cell: (519) 995-5620

"The Rich Get Richer" Thanks To Real Estate

Recently we came across an article in which it is stated that the rich have been getting richer in the developed world due to owing real estate.  It struck a chord and is something that is hard to argue with.  Given our profession we can relate to these findings.

Through the day-to-day dealings of working in commercial real estate, we are often in contact with many successful entrepreneurs, business owners, professionals and corporate executives.  Luckily we are able to gain great insights into what makes these people successful in their business and financial lives.  Often a large component of their financial success comes from (owning) real estate. 

Whether owning the building their company is in, investing in residential or commercial income properties or simply owning their home,  a significant portion of their net worth is invested in real estate.  Over the long term being an owner of real estate assets has tended to work well.  With real estate prices being at all time highs in many different sectors and markets, this seems a relevant time for this discussion and we will piggyback off of the rich get richer idea, with some reasons why real estate assets have performed well over the long term and why the trend should continue into the future:

Source: Rich & Olivia

1. They are hard, tangible assets.  Compared to buying financial assets - i.e. stocks or bonds, which are essentially paper assets - real estate has tangible value (you can live in it in the example of a house, or farm it in the example of farm land).
2. Over the long term they are an inflation hedge, as rents and construction costs rise.
3. Land is scarse and they aren’t making any more of it!
4. The population is growing and with advances in modern medicine this doesn’t seem to be a trend reversing itself any time soon.
5. You can use leverage to increase your returns or acquire assets that you don’t have the cash to pay for.  Financing options are also robust in developed markets.
6. Historically low and falling interest rates.  Although no one can predict the future, even if interest rates rise substantially, they still would look like a bargain compared to previous cycles (hello 20+% in the early 1980s).
7.  Continued innovation and technology to propel economic growth and therefore peoples' standard of living.
8.  In the example of investment properties, they pay income, as opposed to some other asset classes such as stocks that don’t pay dividends or investing in commodities.  Good for retirees or people who live off of a nest egg and need the income.
9. Easy to understand.  Whether it be residential prices in your neighbourhood, or prices for apartment buildings.  The concepts for valuation (comparables, cap rates) aren’t difficult to understand.  Some other assets such as stocks and bonds are more difficult for novice investors to understand.

What are your thoughts on the effect of real estate assets over time? Leave a comment down below.

Russel Lalovich
russel@lalovichrealestate.com
Office: (519) 966-0444
Cell: (519) 995-5620