Canada Mortgage and Housing Corporation (CHMC) is predicting that the price of resale homes in Saskatoon will continue to rise through 2008. Citing lower inventory levels, an increase in demand, and low mortgage rates CMHC expects to see the Saskatoon resale real estate market maintain a “brisk pace” through 2007 and 2008. According to the government housing agency, several factors will play a role in maintaining the growth trend which Saskatoon is experiencing.

• Low vacancy rates in rental properties
• Pressure on rents resulting from increased demand and low supply
• Employment and earnings gains will continue to attract people to the area
• Escalating prices in Alberta will discourage some from seeking opportunities there
• Large equity gains for Saskatoon home owners will encourage people to upgrade to more expensive homes
• Escalating construction costs for new homes will continue to make resale homes attractive

Yesterday, Scotiabank released its annual Canadian Real Estate Trends report. They note that “Saskatoon has the tightest housing conditions in Canada” and predict that while there will be some cooling off in many areas of Canada they “anticipate pockets of buoyancy in housing markets across the country in 2007, including Saskatoon…”

I’m always happy to answer your Saskatoon real estate questions. 

Norm Fisher

Royal LePage Vidorra

There’s a new approach to marketing a Saskatoon real estate listing which is being met with mixed reviews, and it’s having mixed results. When it works, it works big. When it fails, it couldn’t be more boring. I think it has potential but it has to be done right.

I’m talking about the practice of delaying the presentation of offers until a specified date and time. It’s been done before in raging real estate markets across North America. The practice is just recently getting some play from Saskatoon home sellers and their agents. Of course, the objective is to create a bidding war on the property.

There are two factors that I think are critical in using this strategy successfully; timing and price.

I’ll touch on timing first. I saw an attractive new listing come on the MLS® system yesterday. The comment on the listing said, “Offers presented on March 12 at 8:00 pm on seller’s request.”A week is a long time in the Saskatoon real estate market. The odds that any two buyers will ever run into each other at a showing are remote. Nobody will really get the sense that there is any excitement about the property. Those that do see it will probably be back and forth as to whether or not they even want to buy it (I know of several instances where buyers have decided to withdraw an offer they’ve written or adjusted the offer price down). Certainly, they’ll be looking at and considering anything else which comes available in the meantime. That’s okay for buyers. I’m not really sure how it’s good for the seller.

Now, take all of the people that might consider this home, and have them view it within a one or two day period. Buyers are much more likely to encounter other buyers at the property and truly get some sense as to the level of interest that this property is attracting. People tend to want things that other people want. We’re funny that way. Shorten up your time frame and watch the motivated buyers pour in.

Now, let’s get to pricing. Your asking price must be attractive enough that it’s guaranteed to generate offers. If nobody makes an offer by presentation time it sort of takes the wind out of your “sale.”Where do you go from there?“Okay. I guess we’ll review offers on the 19^th.”It’s kind of like planning a big party and nobody comes. Not fun!

I’ll admit it’s very challenging to price home right now. It seems that there are substantial changes from one week to the next. You don’t have to worry about pricing the home too low. You can trust this real estate market to tell you exactly what your home is worth at offer presentation time, provided that your home is properly exposed to the market and buyers know it’s for sale. The more attractive your price is the more showings you’ll have and the more offers you’ll get. We’re seeing many offers which are $10,000, $20,000, even $30,000 over the asking price. If buyers see the value, they’ll pay a fair price and there’s an excellent chance that one or two of them will pay far more than a fair price.

It’s all about creating some excitement. It really is that simple.

I’m always happy to answer your Saskatoon real estate questions. 

Norm Fisher

Royal LePage Vidorra

It was another exciting week in the Saskatoon real estate market, and breakfast today ranks as one of the highlights. It wasn’t the eggs, the bacon or those crispy little tater thingies, though they were all very good; it was the company. I had the opportunity to sit down with Jay Thompson, the one and only “Phoenix Real Estate Guy.”

Jay is well known as one of the most tech-savvy real estate agents in the world. His website is ranked number 1 out of close to 105,000 websites on the Point2 Performance Index. If you’re curious about the odds of that happening, it’s about 1 in 105,000. :)It’s an accomplishment to be proud of, and curious as I am, I couldn’t pass up the opportunity to pester him for a meeting once I heard he was coming to town. He graciously obliged me and in spite of the fact that he’d just been through one of the longest travel days of his life, including a three-hour stopover in stormy Minnesota, only to arrive in stormy Saskatoon, Jay dragged his butt out of bed and met me for a 7:15 breakfast.

Most of what we discussed would be lost on my local readers, I’m sure. Internet marketing, search engine optimization, blogging, blah, blah, blah. It was largely shop talk which could only be appreciated by a couple of tech-geeks with a burning desire to dominate the Internet.

There was one thing that Jay said which was particularly relevant to the Saskatoon real estate market. I thought you should hear it.

After filling Jay in on the state of the Saskatoon market he said, “Wow! This sounds just like Phoenix a couple of years ago. Properties were selling within hours of hitting the market. Most listings attracted multiple offers and almost everything sold over the asking price, some by tens of thousands of dollars. Investors were pouring in from all over the country buying up real estate in hopes of making a big profit…and then suddenly, like someone turned off the tap, it was over.”(This is not exactly what Jay said. A note pad seemed over the top so I’m paraphrasing.)He went on to share how it “suddenly” seemed like everyone had a property to sell, nobody was buying and values started to decline. While things seem to be leveling out in Phoenix, a fair amount of equity was lost in 2006 and many of the out-of-state speculators have put their properties back on the market hoping to get out. Today, there are 37,000 active MLS® listings in Phoenix. That would be like Saskatoon having 2,000 properties for sale, instead of 200. It would certainly change the climate.

I remain convinced that Saskatoon is much closer to the beginning than it is to the end of this rising market. Most of us realize that this won’t last forever but I must admit I hadn’t even considered that it could end “suddenly like someone turned off the tap.”I’m only certain of two things; this fast-paced market will eventually end and it will produce some casualties. It’s rare that an out of control real estate market makes a soft landing.

Proceed with caution.

Jay, thanks so much for meeting me this morning. It truly was one of the high points of my week. I appreciate the time and the ideas which you shared with me. Next time, let’s do it in Phoenix. 

Norm Fisher

Royal LePage Vidorra

Cass poses a question in another post regarding the hot Saskatoon real estate market. By the time I finished my response I realized that I had written a whole new post so I brought it upfront for the rest of you.

If any of my real estate friends have something to add I would really appreciate your input and I’m sure Cass would as well.

Cass said:

My husband and I have put offers on 3 different houses and 2 were in bidding wars.  The last house we offered $7,000 over asking price and the house went for $26,000 over asking.  This house had a basement suite and the buyer came in and paid cash and is most likely using it as a full revenue property.  This is the 2nd house we lost due to another buyer using it as a revenue property.  Can you please give us some advice on how a young married couple with a baby on the way is supposed to compete in a market like this?  It tends to be very frustrating and discouraging when the houses in our price range are being scooped up by investors, as there aren't too many decent houses on the east side for around the $200,000 mark.  We are fully aware and prepared to place an offer over asking, but how can you compete with someone paying cash?

Norm said:

Cass, thanks for stopping. Cash sounds pretty impressive but when I'm reviewing offers it only goes so far with me. The seller is not normally very concerned with how the home is being financed.  However, cash offers do often come forward without any conditions attached and the thought of having a good offer completed right now is very attractive to most sellers. One of our sellers just accepted an unconditional offer which was $4,000 lower than the second-best. They see some value in knowing that the sold sign goes up right now and that there aren't going to be issues that have to be sorted out.

Perhaps you could see your mortgage person and tell them that you want to write your next offer without a finance condition. If that person can assure you that you're good for $225,000, for instance, there is probably little risk in eliminating that condition.

Request and review the Property Condition Disclosure upfront. It's always a good idea to ask your agent to "incorporate" the disclosure but if you view the statement prior to writing, you don't need to include it as a condition.

The biggest gamble is the home inspection. Do you have the guts to write an offer that is not subject to an inspection?  It's a tough call but the truth is that it's rare that significant problems are found. Most commonly we see busted furnaces, grade issues, and other items which are relatively easy fixes. I don't ever feel good about suggesting a buyer not have a property inspected, but the fact is this one is always a big concern for sellers, even those who are confident in their property. Do you have someone who could help you do a cursory inspection of a property prior to writing an offer? If you can't get around this gamble, you might consider writing the home inspection condition in a different way which would allow you to back out if major problems are discovered but also provides the seller with an assurance that you aren't going to nickel and dime. "This offer is subject to a professional inspection of the property to determine the structural integrity of the improvements. The buyer agrees that they shall have no right to rescind this offer for the discovery of defects which do not exceed (insert amount here) in repair costs."

Conditions like "satisfactory gas line inspection" or "review of local bylaws," etc are bound to doom your offer. Do your homework in advance.

Scrape together as much money as you can for a deposit and show the seller your good faith. A $10,000 is a strong sign and it's totally appropriate in this market.

Try writing the seller a personal note to include with your offer. Let them know who you are and how much you love their home. Tell them that you are very confident in the house (if you are) and how much you look forward to raising your family there. Ask them, "Is there anything else which we can do to have you favour our offer? We are open to discussing ways in which we can come to an agreement. We really want to make your house our family's home. We are available at a moment's notice to address any concerns which you may have."  Place the note in an envelope with the seller's name on it and enclose it with the offer in another envelope.  Have your agent deliver it to the house when offers are presented. Go with him. Wait outside in the car. Be sure that the seller's agent knows you are there; ready to deal with issues that concern the seller.

All other things being equal, most sellers would prefer to see their home go to a family instead of an investor. Try to use that to your advantage by giving the seller a little insight into who you are. Good luck.  I really hope you get the next one.

I’m always happy to answer your Saskatoon real estate questions. 

Norm Fisher

Royal LePage Vidorra

The Calvert government announced another election year carrot yesterday unveiling its plan to create the “largest free wireless Internet network in Canada.”The province will invest approximately $1.3 million dollars to install wireless transmitters in various “hot spots” through Saskatoon, Regina, Moose Jaw and Prince Albert. They’ll also foot the bill for the service costs which are estimated to be around $340,000 a year. The “Saskatchewan Connected” initiative should be up and running by May of this year.

Saskatoon residents can expect free wireless service in a number of locations including the downtown Saskatoon area, the University of Saskatchewan, SIAST and the Broadway business district. There is some possibility that wireless zones may be expanded in the future.

At the announcement, Premier Calvert said, “We need to keep Saskatchewan at the forefront…of information technology” and added that the initiative will “contribute significantly to the progressive image of our communities.”

Andrew Thomson, the minister responsible for information technology suggested that you may not want to move too quickly in dumping your current Internet service provider. He promised that the service would be superior to dial-up, but it won’t meet high-speed specifications. Secure transactions are not recommended. Porn and gambling sites will not be accessible.

Personally, I think it’s long overdue and a pretty cool move but I expect that the Calvert government’s hope that it will “attract and retain” young people in the province is a bit of a stretch.

Norm Fisher

Royal LePage Vidorra

What is up with the Saskatoon condo market? One and two-bedroom apartment-style condos have been flying off of the market at an unbelievable rate. The price change is almost mind-boggling for a market that has become accustomed to annual price increases limited to the 4%-7% range.

I met with a young guy on January 9. He’s finishing his final year at the University of Saskatchewan and will soon be ready to sell his condo which is located on the east-side. It’s a 2 bedroom unit of approximately 700 square feet. Back in January, we were discussing a list price of around $85,900 but at the time he was at least two months away from listing the home. He emailed me yesterday wondering what has been happening in the condo market and he asked if there has been any change in the value of his home. I responded by telling him I felt pretty confident that we could market it at $110,000 today. He promptly emailed me back for a head check.“Let’s make sure we’re on the same page here Norm. I’m the guy…$85,900.”

Well, here’s a little recent history of what’s been happening in the condo market.

On January 9, I helped a young woman purchase a two-bedroom condo at Shorebird Watch for $91,500.The following day, the price on those units went up to $96,500.A number of price increases were implemented over the next few weeks. By February 6 the price for these homes had reached $107,900.The last of those condos have been sold. On the morning of February 4, I listed a small condo on Kingsmere Boulevard for $102,900, which at the time was competitive with the Shorebird Watch prices. After doing a little pre-promotion we went to the market on the morning of the 6^th, showed the unit 23 times (that day) and by the end of a long day, my seller and I were reviewing a stack of offers. The winning bid was $113,000. Last week, my good friend Sean Wilson (as good a friend as one can be given the fact that we’ve never actually met in person) from Remax listed a 755 square foot condo on Wollaston Crescent for $114,900 and while there are still some conditions on the agreement which prevent the price from being published, I’m confident that it likely sold for the asking price, if not above. Wow!

Take a look at the Pine Creek townhomes (no longer available). At the beginning of the year, you could purchase one of the base entry-level units for $144,400.Those same homes are selling today at $199,400, a thirty-eight percent increase in just two months' time.

These particular homes all provide a pretty good overview of what’s going on in the Saskatoon real estate market. When you have what are essentially the same units selling repeatedly at progressively higher prices you can’t help but feel like you’re in Calgary or Edmonton.

I’m always happy to answer your Saskatoon real estate questions. 

Norm Fisher

Royal LePage Vidorra

If you’ve visited my blog before, chances are you’ve caught on to the fact that I’m very concerned about a practice that is occurring regularly which I believe is deceptive and hurtful to both buyers and sellers. It goes like this; the agent lists the seller’s property and promises to give the home full exposure to the market including all kinds of advertising and more importantly, MLS® service. He then does whatever he can to hide the listing from the market while he makes his best effort to sell the property himself, hoping to pocket the entire commission. Perhaps he lets a few of his best buds from the office in on the game, but for the most part, he tries not to let anyone know it’s for sale unless he or someone else from his office has the chance to show it to the buyer.

Why should you care? Well, if you’re a home buyer it robs you of the opportunity to see and consider homes that were supposed to be listed MLS®. It limits your options. If you’re a seller, you should care because these practices are almost certainly going to cost you money; lots of money. Every agent knows that there is a pretty direct relationship between the number of prospective buyers for your home and the price at which your home will sell. If an agent pulls this trick on you, he has no shame. He is a deceptive, selfish person who thinks nothing of stealing from you. He certainly has no regard for the fiduciary duty which he owes to you as your agent.

At first, I was reluctant to bring it up. Now, I’m like a raving lunatic who can’t be stopped until this evil practice is dead. Please forgive my rambling but I do take this business very seriously.

I did a little research today on Saskatoon and area real estate sales dating back to February 15.

Here’s what I found.

• A seller is more than twice as likely to receive an offer which is above the list price if the buyer is represented by another real estate company (or brand). Last week the average overbid exceeded $6,000 and we’ve seen offers as high as 15% over list price in the past few weeks. As a home seller, you probably want to maximize the chances that it will happen for you.

• Where a listing sold for less than the asking price, the average discount was just .4% if the buyer was represented by a different real estate company (or brand). The discount jumped to 2.4% when the same company (or brand) represented both the buyer and the seller. On a $250,000 home, the difference amounts to an additional $5,000.

I believe that this massive disparity is the result of agents who engage in the practice I’ve described. I can’t think of another reasonable explanation and I’m seeing it happen every day.

There is nothing wrong with entertaining offers from a buyer who is working with your agent, or your agent’s company. However, if there aren’t any agents from other companies inquiring about your home, you may want to find out if your agent is playing “hide the listing.”We are currently experiencing the hottest real estate market I’ve ever seen. Make sure your agent is helping you take advantage of it, and not robbing you blind.

I’m always happy to answer your Saskatoon real estate questions. 

Norm Fisher

Royal LePage Vidorra

Here’s a brief statistical overview of residential sales as reported to the Saskatoon Real Estate Board MLS® system for the past week.

Notable changes over the previous week:

The percentage of listings sold at the list price or above the list price increased from 48% to 56%.

The average selling price of a home exceeded the average listing price in four of five areas*.

The average overbid where listings sold over their list price increased 27% from $4,735 to $6,037.

Largest overbids

• 864 square foot Lakeview condo sells 10% over list price at $113,000.
• 1,000 square foot Dundonald house sells 10% over list price at $198,000.
• 975 square foot City Park house sells 10% over list price at $170,000.

I’m always happy to answer your Saskatoon real estate questions. 

Norm Fisher

Royal LePage Vidorra

I’ve said it before and I’ll say it again. Anyone can sell a house. Anyone! If securing a private sale on your home is the only goal you’re likely to find it a snap in this hot Saskatoon real estate market.

Take this lovely little Fairhaven, Saskatoon home for example. It was offered to the private market about one week ago for $145,000. Rumour has it that it sold to the first warm body that walked through the front door. Check today’s classified section of the Saskatoon Star Phoenix if you’d like to have an opportunity to buy it from the first buyer for only $165,000.Act quickly. It looks like a reasonably good buy to me.

There’s another story floating around the Saskatoon real estate community. I have no idea if it’s true or not. These stories are often jazzed up a bit for dramatic effect but this is what they’re saying. A private seller negotiated a deal on his home for approximately $190,000.The offer was subject to a satisfactory appraisal of the home. The appraiser visits the home and after he conducts his inspection of the property the seller asks him, “What’s it worth?”The appraiser tells him it’s worth between $220,000 and $230,000.He’s no longer interested in selling to this particular buyer. We can only wonder if his lawyer will find a way to get him out of the deal but you can bet it won’t happen without a fight.

Selling a home in this real estate market without an experienced, competent and trustworthy agent could be compared to learning to drive at the Indianapolis 500. You’re likely to learn some lessons but those lessons will come at a price.

Ask me what your home is worth today. I’ll most likely tell you that I can’t be sure. I can tell you that I’ll make darned sure it’s properly introduced to a huge number of prospective buyers and that you’ll likely have several offers to choose from. My last listing brought 38 showings and 16 offers. The one before that had 23 showings and 10 offers. Both homes sold at a premium price. Neither of these happy sellers had any doubts about the true market value of their home when the dust settled and they were both pretty darned happy to pay me for the effort. I believe you’d feel pretty good about it too. Give me a week. If I can’t deliver an offer that truly excites you, I’ll give you back the listing and be on my way.

I’m always happy to answer your Saskatoon real estate questions. 

Norm Fisher

Royal LePage Vidorra

If you’ve been shopping in the Saskatoon real estate market for longer than a couple of months I don’t have to tell you that the rules have changed this year, and they’ve changed dramatically.

At the close of 2006, resale inventory had dropped to an all-time low of around 250 active listings and while we’ve started to see more homes being listed for sale they are getting snapped at a pace which hasn’t allowed inventory levels to rebound at all. Today, the Saskatoon MLS® system shows 244 active house and condo listings across all price ranges and in all Saskatoon neighbourhoods.60-70% of those properties probably have offers pending and the majority of what remains are the laggards which most prospective buyers have passed on for one reason or another.

New MLS® listings are attracting attention and viewings quite quickly and in many cases, they’re generating multiple offers resulting in a bidding war. Last week, almost 25% of the homes which were reported sold on the Saskatoon MLS® showed sale prices which were above the asking price. The number of overbids ranged from a low of $10 over the list to a high of close to $30,000 above list price. The average overbid in most areas was less than $5,000.

Nobody wants to pay too much for a home. One might look to the aforementioned sale which went close to $30,000 above the list price and ask, “Are those buyers’ nuts?” I’m going to suggest that they just might be a little sharper than you think. See, these folks now own an interest in some Saskatoon real estate. While the other 37 buyers who viewed this home continue to struggle to find a place in the market, these buyers have locked in and any gains that the market experiences over the coming months will be theirs. If you believe that the market is going to continue to grow at its current pace, you might feel okay about paying a bit too much today in an effort to avoid paying much more tomorrow.

I’m not suggesting for a moment that a $30,000 overbid will be the prudent thing to do in most situations, but you will likely need to think beyond what the home is worth today if you truly want to be the successful buyer in a bidding war. Try to give some thought to where you think the market is going for homes in your price range. Will prices increase 10-20% over the next few months? How many opportunities will come up over the next few months? How might rising prices and limited inventory affect your ability to secure a suitable home at an affordable price if you miss out on this one? Is the property you’re considering underpriced for today’s market (some are)? Ask your agent for his or her thoughts on what price the home will sell for when all of the offers are in.

I’m always happy to answer your Saskatoon real estate questions. 

Norm Fisher

Royal LePage Vidorra

They expected schools and playgrounds would eventually occupy the vacant space that sits at the center of Saskatoon’s Briarwood neighbourhood and some paid a premium for the opportunity to be close. Now that those plans have been scrapped by both school boards there are some lingering questions about what will become of this land.

North Ridge Development Corporation and Boychuk Construction Corporation are both proposing a rezoning of that land to accommodate residential development. North Ridge would like to develop 17 lots in the northeast corner of Briarwood Park and Boychuk has their eye on a parcel across the park for 27 new homes.

Residents seem most concerned that the city takes some measures to soften the blow of the lost schools by insisting that the development takes into account the fact that many of these homes were constructed to enjoy a park view and not the backyards of neighbouring homes.

They’d like to see some green space to provide a bit of a buffer between the new and existing homes. The Municipal Planning Commission seems to be somewhat onside and has sent a memo to city administrators saying they won’t support the plan without changes which include adjusting North Ridge’s proposed orientation of the new homes and incorporation of linear or pocket parks.

Norm Fisher

Royal LePage Vidorra