New Changes Announced Affecting Real Estate Commissions

In recent years, real estate commissions have become a topic of frequent discussion with many consumers of the opinion that commissions charged are too high or perhaps it’s a matter that the perceived value they received from their REALTOR® was not commensurate with the commission or fee charged.

  Contrary to what consumers may have been lead to believe, real estate commissions are and always have been negotiable.  The only real restriction that has been placed on commissions is not the amount that can or cannot be charged but rather the format of how commissions are calculated but that is about to change.

 The real estate profession is governed by Provincial law, specifically the Real Estate and Business Brokers Act (REBBA 2002) Previously as per REBBA 2002; a real estate brokerage could charge either a flat fee to list and sell a property or a percentage of the sale price, but not a combination of the two.  Recent amendments to REBBA 2002 have removed this restriction, allowing brokerages to have the option of developing fee or commission structures that may include a combination of a flat fee and a percentage of the sale price.

  This now gives brokerages the additional flexibility in how they structure pricing to suit their business needs and desires of their specific clients.  Personally I view this as a win win situation for REALTORS® as well as consumers.  Every property and every selling circumstance is different and this change as to how real estate fees/commissions are derived provides greater freedom to address each situation in a manner that will garner the best results for everyone involved.

  Ultimately, market forces will determine which fee structures are attractive to consumers. It is more important than ever for consumers to understand what services their REALTOR® will provide and how or who will pay for those services.

 If you are contemplating the sale of your property and are not certain as to how the new rules affect you, please feel free to contact me and without obligation I would be happy to discuss and clarify the issue for you.

Chinese Buyers Will Continue to Impact the Luxury Home Market in 2014

  It’s no secret that foreign investors from China have made up a large component of the buyers in Canadian cities such as Toronto and Vancouver. This is especially true within the luxury home market  and the prediction for 2014 is that the number of affluent Chinese  will be an even bigger force in the U.S. and Canadian luxury property market.  Already the second largest foreign buyer group in the U.S. (after Canadians), wealthy Chinese are drawn to the U.S. and Canada for several reasons:

Growing numbers of affluent Chinese send their kids to North America for university education.  Major university towns will see growing numbers of Chinese buyers as Mom and Dad look for a condo for the student and perhaps a luxury home for use when they visit.  Sometimes a student in the U.S. or Canada is the first step toward relocation.

Chinese, who are looking to make a favorable currency play, invest where there is economic value and political stability.  Expect them to continue to gravitate to cities where there are Asian population centers.  Cities like San Francisco where I just visited and Vancouver are good examples where a property investment is viewed favourably by Chinese

Look for very wealthy Chinese, who want a degree of status both here and back home,  look to buy what might be considered as “trophy” properties in Manhattan, San Francisco, Los Angeles, Toronto, Vancouver and a few other major cities that offer global recognition.

While we have yet to see a major influx of Chinese buying into the local luxury home market, one only need to visit the Village at Blue Mountain on a busy summer weekend or during the ski season to see that a strong Asian contingent has embraced the Southern Georgian Bay lifestyle.  I suspect in time as the luxury home market in our area matures and expands, it will gain the required notoriety that will attract not only affluent Chinese, but other foreign buyers as well.

What's New & Hot in Counter Tops

When we think of “luxury” real estate two of the first aspects that define a high-end property are the bathrooms and the kitchens.  Sumptuous spa like baths especially the master ensuite that feature things liked heated floors and towel bars, multi spray over-sized elaborately tiled shower stalls,  soaker tubs and large vanities come to mind.  One local property I was in even had a flat screen TV mounted behind the vanity mirror thus allowing you to watch the morning news while shaving.

 In the kitchen its high-end commercial grade appliances such as a Sub Zero fridge/freezer and in some cases refrigerated drawers, multi-burner gas ovens by makers such as Wolf, cappuccino/espresso machines and other high tech gadgets some of which seldom get used as the owners routinely eat out.   All of these are then wrapped in custom cabinets often in exotic finishes to the owner’s specific tastes that will coordinate with the rest of the home. 
 In recent years we have seen a variety of new and different materials used for counter tops.  It started with Corion® a polymer material, created by DuPont.  Then came granite, marble, soapstone even concrete.  What's the current trend in luxury homes?  Click on this link to find out other materials that are being used along with the pros and cons of both.

JUST LISTED - PRIME WATERFRONT CONDOMINIUM in MARINERS HAVEN

Panoramic Georgian Bay View. Secluded in a quiet enclave of upscale residences close to downtown Collingwood, Mariners Haven offers a unique & distinctive year round lifestyle experience. Nowhere on southern Georgian Bay will
you find 4,000 sq. ft. of luxury waterfront living with deep water protected dockage for a 40` boat or floatplane at your  doorstep. This 5 bedroom, 4.5 bath condo offers one of the best views available in the complex and features a customized and renovated floor plan with numerous upgrades features & finishes that will satisfy the most discerning of buyers. Newer windows, geothermal furnace, roof, cedar deck, custom kitchen with granite, master bath, interior flooring, doors & trim plus much more. Double, heated garage, with separate work area. Contact me for a complete list of enhancements or to view & experience this unique waterfront ownership opportunity for yourself.
For more information and pictures see: http://beta.realtor.ca/PropertyDetails.aspx?PropertyId=13905170

Requisite Requirements of A Luxury Property

  In my prior post I discussed the financial criteria, which is deemed necessary to designate a luxury property in most markets, three times that market’s average sale price.  Price however is not the only factor that determines the luxury worthiness of a property especially in the eyes of buyers. 

  The complete formula to establish what constitutes a luxury property is three times the average market price in a given area + requisite qualities.  Requisite qualities includes a variety of criteria most of which pertains to the design, overall features, amenities and the quality of finishes in a luxury home or condo. 

As of this posting, there are 112 homes and condos listed on the MLS® system of the Southern Georgian Bay Association of REALTORS® that meet the financial (value) requirements of being considered a luxury property.  At the current rate of sales, that represents over four and one-half years of available so-called luxury home and condominium inventory.  As outlined in my last post, the luxury property market is very small.  The number of luxury buyers is even smaller.  Among the available four and one-half years of inventory, there are almost certain to be some properties that don’t “cut it” in terms of the requisite qualities required to satisfy discerning buyers.

  To begin with, luxury properties are for the most part one off designs, custom homes designed by an architect for their high net worth clients.  The finishes must be and often are impeccable and typically include custom mill work usually performed by talented craftsman on site.  Custom kitchens with outstanding cabinetry, granite, marble or limestone counters as well as high end appliances such as Wolf ranges and Sub Zero refrigerators and refrigerated drawers are not extras, they are often the normal expectations in this type of property.  The same applies when it comes to bathrooms.  Fixtures such as shower stalls, sinks and toilets from the local big box home improvement retailer just don’t belong in a luxury property priced at  $1.5 or $2 million dollars.  And let's not forget the exterior, it surprising how many of these properties have grounds that are not well landscaped, properly maintained or even the driveway leading into some high-end rural properties is not befitting an expensive home.  

  Technology is becoming an increasingly prevalent and important feature with today’s luxury home buyers.  Recent reports indicate that luxury home buyers are looking more at smaller homes but with the very latest in technology from elaborate home entertainment and security systems to the multi-function ability to control heating and cooling, lighting and other aspects of the home even remotely from afar.

  “Celebrity status” also has a bearing on the luxury home market and while this isn't Hollywood, we do have some television and business personalities with properties in the southern Georgian Bay market. 

    

  Having personally listed and sold a number of higher end properties in recent years, I know first hand that high net worth buyers looking in these price ranges know and demand quality.  Anything that doesn't meet their expectations will result in either (a) “No Sale” or (b) a discounted offer price reflecting the changes and or upgrades the buyer wants and or needs to make in order to bring the property up to their standards.  It's often very disappointing when showing some area properties priced above $1 million to find that quantity of floor space has sometimes taken precedence over quality of finishes and other details.  Some sellers do not understand this and can't understand why their property languishes on the market or draws only low a offer and fails to sell.

  As they say, "beauty is in the eyes of the beholder,"  and while we do have some luxurious properties listed for sale in our market, we also have some where the requisite qualities fall well short of what a luxury home buyer(s) demands.  This in part explains why we have over a four year inventory of homes listed for sale in our market above the luxury price threshold.

  I'll talk more about price in my next post.

What Constitutes Luxury Real Estate?

  In my inaugural posting of this luxury property blog one of the questions I posed was constitutes or designates a luxury property?  For years, the general rule-of-thumb has been anything that is in the top 10% of a given market from a value perspective which in the case of the southern Georgian Bay market would be $750,000 plus.  But is this simple definition enough?  In my opinion the answer is no, and this is shared by some of the top REALTORS® elsewhere that are actively engaged in the luxury property market.  

  Housing data accumulated in a U.S. Census some years back indicated that there were approximately 314,000 owner occupied homes in the U.S. valued at over $1 million.  A secondary study by the U.S. Federal Reserve came up with a higher number which illustrates the difficulty in trying to obtain accurate data in this regard.  Taking into account the conflicting results, it is very safe to say that the $1 million plus housing market is less than 1% of the total number of homes in the U.S.  and there is no reason to think Canada would be much different.

The issue here is the fact that markets differ widely from one are of the country to another.  In some locales such as Toronto or Vancouver for example, $1 million will buy you nothing more than a lot or a home that gets torn down in order for the buyer to build their luxury dream home.  In others, $1 million may allow you to buy the ultimate home on the water or on a large acreage.  

  In 2011, I attended the National Association of REALTORS® conference in the U.S. and met two of the leading luxury property REALTORS® in the U.S. whom I have kept in contact with.  Based on his years of experience listing and selling luxury properties, David Michonski has developed his own definition of what constitutes a “luxury property” which is reflected in the following formula:

Luxury Real Estate = two to three times the average price in a market+ requisite qualities.

  As of the end of August, the current 12-month average price for single family homes sold through the MLS® system of the Georgian Triangle Association of REALTORS® is $332,512.  Using a multiple of 3 times this average price would define luxury homes in our market as having an approximate value of $997,500 or greater which is about as close to $1 million as you can get provided they also have the requisite qualities or features that further contribute to the definition of what constitutes as luxury home.

  In my next posting I will explain the concept of “requisite qualities” as it relates to the value equation when defining luxury real estate.

Luxury Buyers Want Smaller High Tech Homes

  According to a recent survey conducted by Better Homes and Gardens® Real Estate, today's luxury homeowners and buyers are smarter and more confident about investing in luxury properties than ever.

  High net worth individuals know what they want and have the resources and capabilities to get it, allowing them to transform luxury living spaces into ultra-comfortable, high-tech homes.  Properties consisting of vast amounts of square footage no longer equate to their idea of the ultimate dream home.  Today’s affluent consumer now has a desire for multiple homes to fit their lifestyle needs with an emphasis on high-tech features and amenities.  Having sold several million dollar plus properties in our market, I know from personal experience that many buyers find homes of 6,000 and 7,000 square feet plus, are simply too large. 

  Whether the concern is about the size of their carbon footprint or that a smaller property is easier to maintain especially if they own several homes, less square footage combined with high tech features is the order of the day.  Further findings in the survey also found that 75% of luxury home buyers believe home ownership is a more sound investment than the stock market while 57% percent of employed luxury homeowners believe that luxury home ownership is more indicative of their success than either their job or title.

  The mechanics of buying and selling of luxury real estate does not differ to any significant degree than buying a home, condo or cottage at the mid or lower price range of any given market.  Today’s consumer and relying heavily on the Internet to locate a property and more importantly a REALTOR® they can trust and work with.  However, information gathered as part of the Better Homes and Gardens survey reflected that 96% of luxury home buyers are depending on their REALTOR® more than ever before to provide relevant information such as market trends and neighbourhood data that will help guide them through the purchasing process.  This is ultimately why I am writing this blog on luxury home owenrship.

The World's Ultra Wealthy Are On The Rise

  According to the recently released “Wealth Xand USB World Ultra Wealth Report,” 2012 saw the global population of Ultra High Net Worth (UHNWI’s) individuals grow to a record number of 199,235 individuals.  On a global basis, their combined net worth is reported to be a staggering $27.8 trillion.

   One of the key areas, which has and will continue to benefit from this growth in the number of HNWI’s is the luxury, upper tier real estate market.  Unlike Muskoka for example which has drawn wealthy visitors and property buyers since the turn of the last century, the southern Georgian Bay region has only just recently started to attract wealthFrom time to time we’ve all heard the phrase “the haves versus the have-nots.”  As the global economy regained traction after the 2nd world war via rapid growth in the manufacturing sector, jobs became plentiful, the middle class grew and along with it their overall prosperity.

  Fast forward into the 1980’s and with much of their activities fueled by junk bond financing, corporate raiders became overnight millionaires if not billionaires setting a new benchmark for personal wealth.  Other noteworthy events and or milestones that similarly defined a new level of what constitutes “high net worth individuals” (HNWI’s) was the short-lived dot com era and the emergence of the middle-east as the major source for the world’s oil needs.  More recently we’ve had the stock price manipulation and other financial high jinx by companies such as Enron, Worldcom, Tyco and to a degree Canada’s own Bre-X and Nortel.  Lastly the explosion of the technology sector has brought us the likes of Microsoft, Apple, RIM and others all of which enjoyed immense success, albeit some have withered.  Lastly, let’s not forget the professional sports and entertainment industries which have also enjoyed substantial success in recent years.  Throughout this era, a new level of unimaginable wealth has been created for those fortunate to have participated in these once-in-a-lifetime opportunities.

y buyers looking for either a recreational or potential retirement property.  As of yet, we are hardly a destination for wealthy International buyers but this too may change.  Overall, Canada is viewed as a safe haven.  Our economy has outperformed many other countries throughout the latest global recession making us attractive to foreign investors.  Time will tell how well the local luxury real estate market will fare in the years ahead. 

  In my next post I will report on the current luxury market in general including what the wealthy are currently feeling relative to luxury real estate as an investment. 

Southern Georgian Bay's Luxury Property Market

Welcome to my newest blog, Southern Georgian Bay Carriage Trade Homes.  With upper end, luxury properties becoming an increasingly important segment of the local real estate market, I decided it was time to share with you, the distinctive aspects of luxury home ownership.  Whether you currently own a luxury, upper end property, are intending to purchase one or just like dream,  I will try to offer something here for everyone. 
  What constitutes a luxury property? From a monetary perspective we typically consider anything that falls in the top 10% of the market as being as being an upper end luxury property.  In the southern Georgian Bay area that is any home or condo that is valued over $750,000.  But value alone does not necessarily make a property worthy of a luxury home Carriage Trade designation.  
  The accompanying graph illustrates southern Georgian Bay luxury home and condo sales during the past 5 years.  Just like the overall real estate market in general, this segment of the market took a downturn during the 2008 recession by has bounced back significantly since then. 
  In future postings I will  share with you what today's luxury property buyers are looking for.