The Value of a View

What’s in a view? 

Well, depending on what type of property we’re talking about & whether it’s a good view or a “bad” view, whether it’s something that creates privacy, or the perception of added or decreased value, it could mean the difference of tens of thousands of dollars! Plus or MINUS! Or…you could pay a premium for a view that disappears over time or that you simply can’t recoup the cost of when you sell. Tricky Business!

Builders charge a premium for things like backing onto greenspace/treed or forested areas, storm water ponds & corner lots, just to name a few. Problem is, sometimes, like with corner lots for example, you can’t recoup the actual dollar value of the premium you paid to the builder for it. A corner lot in a subdivision home will give you extra windows & light on the one side (as opposed to a view of a brick wall from the house next door) but many people don’t like the extra traffic that comes along with siding onto a road. I once sold a property that was both on a corner lot & backed onto a popular neighbourhood park & it was a surprisingly tough sell! Yes there were no neighbours behind or next door, but buyers shied away from this property because of perceived noise & traffic.

How about a disappearing view? These are a heartbreaker! Especially if the builder promised one thing when you purchased & then they changed the “plan”…it’s not like they give you your money back when your view disappears. All of a sudden greenspace turns into a block of houses & you’re SOL! I feel so bad for the people on both Tooley Rd & Centerfield Dr in Courtice who backed onto greenspace for decades, but who now back onto a newly-built condo townhouse complex…that’s a real tough pill to swallow & has sadly stripped away some of their homes’ value.

Ravine lots & lots that have great privacy due to mature vegetation or landscaping, are both always in demand & will usually command a premium as well. How much of a premium? $30k or more here in the Durham region! I’ve sold a few & boy were those HOT properties! Recently an agent in Brighton (a good hour east of here in Northumberland County) had a ravine lot home sell for $150k more than a very similar home across the street that didn’t back onto the ravine…same age, same builder, same finishes, same selling timeframe…$150,000 difference…just let that settle in for a moment!

Examples of views that can be challenging? And by challenging I mean that a home will take longer to sell & will most likely sell for less than a comparable property with a different view:
  •      Hydro corridors
  •      Backing onto a main road
  •      Fronting onto a main road if the house is not well set back from the road
  •      Overlooking something less than desirable
  •      Backing onto something less than desirable

Now presumably someone who owns a house with a challenging view like one of the ones that I’ve just listed, likely paid a purchase price that took that challenge into consideration…not always, but more often than not, that’s the case. And so selling for a little less, when you paid a little less in the first place, is easier to come to terms with. For those with the disappearing view, or a view that that can be subjective as to whether it’s a good view or a bad view, unfortunately all you can do is be realistic & work with the hand that you’ve been dealt.

Privacy, & what one of my clients calls “elbow room” have become a luxury, at least here in the ‘burbs. Luxury items come with higher price tags & they don’t tend to go on sale. 

And one final thought, the perception of value BECOMES the value & perception can be I said at the start of this, it's tricky business!

Until next time,

Pot & Real Estate

If you were a fly on the wall in a room full of REALTORS® when the topic of marijuana & real estate came upthese are some of the things you would hear...

I had one, totally renovated, was raided 10 years back, full home inspection, air quality tests, even infrared imaging and not one A lender would provide a mortgage. Very pretty house, good quality reno. 
Even B lenders are declining mortgages on former grow ops, even if the property is completely re-mediated. I only know of one lender - other than private lenders- that will do a grow op at this point in time and they will put you through the ringer.
Legal is legal RIGHT? So tell that to my client who leased 2000 sq feet in an Industrial Mall to a legal grow op... RBC called his mortgage, only about a 40-50 % ltv but he had to come up with $600,000 to pay them out.

Soooooo, you can imagine my surprise when I read THIS article by another  REALTOR® suggesting it would be a good idea to steer clients towards purchasing former grow-ops because they can get a "deal" on them. But if you look at the real-life examples above,  it's an uphill battle. Sure, I've heard about the odd "unicorn" deal that actually goes through, but that would be the ultra ultimate in exceptions to the rule.

With the legalization of cannabis just a few short months away, it feels like there are still so many details to be ironed out, especially when it comes to understanding the potential fall-out on real estate.

When pot is involved, one of the biggest & most difficult issues to overcome is financing. Lenders are all about risk management, especially the "big 6" institutions who tend to take the position that they don't need to take on the less than desirable properties or mortgagees. They're looking for the cream of the crop & all the rest can look for alternative options...and don't let the door hit you on the way out!

When a live deal goes in front of a lender there are many things that they look at when deciding whether or not they're willing to lend on it - the buyers' financials, the house itself, the neighbourhood, their own internal policies - and if it's an insured mortgage then CMHC or Genworth have their own criteria that need to be met as well.

Stigma is the key concept to understand here.  A property can be "stigmatized" by any number of being too close to something "undesirable", by having something undesirable happen in the house itself, like a violent act, or an illegal one, or even an environmental issue affecting the land that the house sits on.

I sold a property last year in an "emerging" neighbourhood in Central Oshawa. Great entry level home & it sold in multiple offers. The appraisal that the buyers' lender ordered had a LOT to say about the neighbourhood & treated it like a defect in the same way that they made note of some issues with the foundation. The lender felt that the neighbourhood was stigmatized & didn't want any part of it. Luckily for my seller clients, the buyers were able to get an "exception" from their lender & the financing went through & the house closed.

That was just a neighbourhood issue that needed an exception - lenders take a really hard line when it comes to former grow-op homes. These properties are stigmatized with a capital S! Re mediated or not, and even if it was rebuilt - yes you read that right, even if you tear the house down & rebuild it from the ground up - the stigma is attached to the address & can last forever when it comes to lending on that property. Also there is no Statute of Limitations on disclosure in Ontario so regardless of how many years have passed it always needs to be discussed if the property is being sold.

We need to deal with the bank rules on these places. I sold a "grow op" where the tenant was caught before any damages to home, all signed off on by municipality, required no remediation, but stigmatized, and banks wouldn't touch it.

The issue is, safe by who's guidelines? Until the big 6 agree it's also safe, home-growers might as well put money through the shredder. Same result. 

I think we can all understand the dangers to a home that has been used to grow pot in it. We hear about them on the news - police in hazmat suits bringing out hundreds or thousands of plants, electrical systems altered, mold, tons of damage to the interior etc. But what about the "little guy", the one who has a license to grow pot for medical purposes? They're getting caught up in this as well even though what they're doing is legal. Bottom line is, the lenders don't care.

I had a client who grew over 200 plants, did everything 100% by the book and when it came to selling he was SOL. Now, I haven't searched records, but if it hasn't happened yet, we will see a case where someone legally allowed to grow for medical purposes will challenge a bank on discrimination. An important side note for those worried about grow ops, you need to change the pre-printed clauses and remove "illegal" as for many growing or those who have grown in the past, it is 100% legal.

The banks take the stance that..Just because it is legal it doesn’t mean that I have to lend my money and accept a mortgage on it . Be careful advising your Clients , this is a new business with new legislation.

So there's the disconnect right there, in that last quote. Our various levels of government are famous now for not involving ALL the stake-holders in discussions around important legislation like this one. "Unintended Consequences" was the tagline for real estate in 2017 & perhaps will continue to be in 2018 as we see the impacts that stress-testing uninsured mortgages have on the real estate market & the faster than expected slow down of the economy. Until the big banks get involved in the discussion, look at changing their policies, that disconnect will continue & leave a lot of homeowners in big trouble.

More to come on this topic...stay tuned for Tenancy, Insurance & Valuation issues when it comes to Pot & Real Estate.

Have a fabulous day!

The Power of Re-Living The Past

So I’ve been working on a fun little side project with the CRA for the past 3mos (and by fun I mean NOT AT ALL fun, lol!)

But as I’ve gone through tens of thousands of emails, text messages & files, both electronic & paper, to find the supporting documentation that I’m looking for, I’ve discovered somewhat of a silver lining to this whole miserable exercise…

And it’s that I’ve gotten to know myself better. Patterns of behaviour, both good & bad have become crystal clear. Things I couldn’t or wouldn’t see when I was in the thick of them are so obvious now that I can see the big picture. Successes, failures, decisions & consequences – they’re all there in black & white. I’m not going to lie, it’s been more than a little painful at times, to see that who I think I am is not always who I actually am. But I think I will be better for it in the end. A better REALTOR®, a better friend, a better wife. The lessons are there if I’m willing to learn…and I am. I’ve literally got a blueprint of what to do & what not to do so it would be foolish not to take advantage of it!
I know, I know, they say you’re not supposed to look backwards, but I think the key is not to unpack & live in the past, just take the lessons & move on…

January is a time of resolutions, self-improvement & goal setting for many, so that’s why I thought I’d share this story with you. You don’t have to go pedal to the metal like I have (thanks to scary deadlines, lol) but pick a year, and go through it to see what you can learn. Reflect. About yourself & about the people around you…and then pick another year, and then another and another & I bet you’ll find your own blueprint! Be bold & be brave & most of all, take action on what you find!

I’m going to make 2018 my best year yet, how about you?

Have an awesome day!