When is a mobile home a mobile home? And when is it a mini-home? When is a mini-home a manufactured home? And when is it a trailer?

I think, more than anything technical, it is a marketing thing. Trailers came first and were just that - trailed behind the family car. Then they morphed into semi-permanent homes by getting larger. Then the parks came along to accommodate them and promote a new style of living and home ownership. Mini-homes are more recent and may be similar to mobile homes but have a more ‘house-like’ appearance.

Today, these homes can occupy upwards of 10% of the housing inventory in some communities - they are here to stay. But how can a person profit from them, apart from the initial sale and the rental for the homesite? Most of us would agree that they are a ‘diminishing asset’, just like a boat or a car. Sure, there are exceptions but they are rare. When the new owner drives one off the lot they lose up to 20% of its value and each year they generally lose a little more. There is no capital gain, as most traditional homes experience.
Recently I was asked about a mobile home as an investment and, frankly, I scoffed at the idea. However, the eager investor showed me how he had bought a 40 year old wreck and planned a major renovation which he would do himself. He showed me the purchase price (he could have used his credit card), his renovation budget, and then some examples of recent sales in the park. Yes, he would make a good profit. So, I was wrong.

The other thing is that he was a ‘first home buyer’. This is his way of starting at the bottom and moving up.
Some Realtors seem to specialize in this market but, if the sale prices are low, the commissions must be the same. Most use a flat fee and their work might be rewarded later by keeping a client and selling to them again in the future.

originally published in Making the Most of Real Estate newsletter December 2, 2013

Last week I received a flyer extolling the virtues of a certain company that specializes in helping private sellers. Their critics say their services amount to providing a For Sale sign, inclusion on their website, brochures with advice, and posting the listing on MLS. Their fans say they offer a good alternative to the established real estate brokerage industry and provide substantial savings.

I don’t know how it works in every jurisdiction but aren’t advertisers required to provide honest advertising? Realtors are prohibited from criticizing their competition but it doesn’t seem to work the other way around. The history of MLS is one of co-operation between brokerages which developed into a unique and valuable information service that spans the country. I think that is what the public believe and expect so, if a listing is dumped into the system by people and companies that have no training or ethical responsibility, the system will start to break down.

The flyer’s ‘small print’ really was small. I couldn’t read it and neither could several others I showed it to. The part that I could read showed an incorrect calculation of fees. How about showing us some stats? For example, the number of ‘private’ sales that are in fact co-operative sales with a traditional brokerage working with the buyer, or the number of clients eventually sign up with a Realtor.

So, how much are they really saving? How about explaining that about 100,000 Realtors in the country may view such listings as a tedious waste of time if they have to call a seller to negotiate a commission and then have an agreement signed before they can show a buyer who may be in town for just a day or two on a house–hunting trip? Even worse, if they have another buyer later, they must go through the same process again.

I think the public needs to ask more about the services being offered. I know one very successful Realtor whose listing presentation lasts about two hours. Maybe the client is worn out and just wants him to leave now.

originally published in Making the Most of Real Estate newsletter December 2, 2013

In the thirty year period from 2006 to 2036 the percentage of the following age groups in Canada’s population is expected to change:
  • 0-19 years from 24.4% to 21.5%
  • 45-54 years from 15.7% to 13.1%
  • 75+ years from 6.5% to 12.6%
The highest ratio of homeowners in Canada is for the 55 to 64 age group with 78% of households.

- Source, CMHC

The cost of a 60 second call from Montreal airport to Halifax using a public phone is $12.85.

- Source, my Visa statement

Just as I expected from my last newsletter, I have been challenged on my opinions about inappropriate agency relationships. So here is how I dig a hole even deeper. In my experience, many real estate salespeople really don’t understand dual agency and I can’t say I blame them. Depending on the type of agency their brokerage uses or how the local law on agency dictates, they may still jump into an agency relationship with a client without thinking. Just because they and others in the brokerage have always done it that way, doesn't make it right.

Try asking yourself if you could act as an agent for a seller if you want to buy their property. You know, if you want to buy your own listing. Many agents say yes and may go into a dual agency. Do they honestly believe they can act impartially after the seller has confided their innermost motives for selling and how much they will take for it? Imagine the conversation when the salesperson says, “So what’s your bottom line? Trust me, I won’t tell anyone. You see, it’s confidential.”

Alternatively, if the salesperson is the seller and finds the buyer, can she act for both parties? I think the answer is an unequivocal no. The definition of agency includes acting in good faith which also means acting in the client’s best interests. How can that be possible if the salesperson is also the 'opposing party'? Compare it to a lawyer representing a client in court. Could he legitimately represent both the prosecution and the defendant?

So, you list your mother’s house and find the buyer. Can you represent that buyer in some dual agency capacity? Can you really act neutrally? If you feel you can, maybe your mother should know about your lack of family loyalty. No, you shouldn't have a dual agency when there is such a bias.

There are many situations that call for single agency rather than dual agency and the other party could be represented by another salesperson in the same designated agency brokerage or one from another brokerage or even by their own lawyer. I think that salespeople are concerned that if they take the route of single agency then they will not be able to 'double-end' the transaction and therefore miss out on getting paid the full commission. It could happen but the occasions are relatively rare. Dual agency, even “limited dual agency”, is not a catch-all solution to inappropriate representation.

Drilled wells. Most commonly made by a motorized auger on the back of a truck that bores a hole in the soil and underlying rock to reach a reliable supply of water. The bore hole is generally over 50 feet deep and may need hundreds of feet before water is found. Commonly, the water is drawn up by an electrical pump at the bottom and piped into the house.

Dug wells. Older wells, going back to antiquity were hand excavated but today the work may be done by a backhoe. Then it is lined with concrete crocks from the bottom to the ground surface. The water may be drawn up by hand-operated or electrically-operated pumps, or even by hand-hauled buckets.

Driven wells. A spike that encases a perforated pipe is hammered into the soil and subterranean rocks, if possible, until water is found. It is most often drawn up by a hand-operated pump and is only possible in loose soil and fractured rock areas. Generally, they are under 40 feet deep and are not regarded as long-term water supplies. They are often called 'sand-point wells'.

Last month the police arrested the tenant of a property in BC where he had failed to pay rent or carry out the repairs he had promised the landlord he would do in exchange for it. The case had dragged on for nearly two years and the police claim they were unable to take earlier action because there was no written agreement or lease. The arrest was carried out on outstanding warrants from another province.

This situation of squatting is not uncommon in many other countries but it is rare in Canada. I think most people would assume that the tenant was a trespasser even an intruder who could be evicted and even charged, but typically the police say it is a civil matter, not criminal. Hence the civil courts are asked to settle it on the request of the landlord.

Many provinces have rental officers attached to their respective Departments of Consumer Affairs who may try to resolve tenancy matters and may hold a hearing that may eventually become a court order. So, why not in this case? The lack of a signed agreement doesn't sound very convincing. After all, there must be very few cases where home invaders are given written permission to enter but they are still breaking the law.

Now, in my day, if there was such an event and we couldn't get help from traditional sources, we would simply move in and politely help them move out their stuff to the curb. Now before you jump in and complain, let me tell you about a time when we asked the authorities to help us with a tenant who had come home drunk, smashed the glass in the front door of the apartment building, and left a blood trail to his apartment before shooting bullets through the floor to the apartment below. We were told he was entitled to 48 hours’ notice of a tenancy hearing. The police took away his gun (criminal matter) but left him at home (civil matter).

There are many such tenancy horror stories but somehow the landlord is always held responsible. I think it is because the media gives the minor stories to the 'cub reporters' and they are more likely to have sympathy for their fellow tenants.

When people move to a new province or to a more rural area, they may decide on a property that has an acre or two of land and where no other properties are close by. Ideally it would overlook a lake or some other water and the sounds of traffic are absent. They dream of this idyllic situation without much thought of the reality.

Just recently, I've come across some people who seem to epitomize this 'back to the land' syndrome.

The first was a couple who had been used to big city traffic that carried them to their workplace in about an hour or so from their suburban home. Their employer was transferring one of them far away to another city and here was their opportunity to get away from it all. They chose a house in the woods about 50 kms from their new workplace. It had acreage, solitude, and the price was right.

Not long after they moved in, they called the agent, “Did you know there are bears in these woods? My wife won’t leave the house or let the kids out. And did you know how much it costs us to drive our new SUV to town every day?” Maybe there is not much of a bear problem in PEI but I’ll bet that most everywhere else there are bears in the woods and always have been. What did they expect?

The other was a couple of seniors who moved from the city to a remote oceanfront property with magnificent views. They spent the summer outside in the yard landscaping the rock-strewn and feisty soil. For the long winter they were in the house doing repairs and making improvements. So, in the spring when everything was to their liking, they looked around for something to do. The neighbours had already proved to be friendly enough but admitted they were not the types to have over for a dinner party or a wine tasting. Drinks, yes, but they liked them straight from the bottle. Pate de foie gras? Not really, thanks.

The couple were left to wait for friends and family to visit them but found the house was too far for a day trip and too close for a stay-over. So the visits were infrequent. They were lonely and discovered that their investment in marble counter tops, saunas and sun rooms were not appreciated or even used very much. The agent was called but he broke the bad news, “The average time to sell any property in that area is over a year and they don’t have much, if any, increase in value. The improvements may help to sell it quicker but don’t expect to get your money back.” Like so many, they had become marooned in their own real estate.

I think both of these couples need to move and I’ll say it again, it pays to stay in touch.

Most residential Sale Agreements I have seen leave a space for the buyer to complete the amount of mortgage loan they are seeking. Some buyers have balked at such intrusion into their private affairs. It is not a mandatory requirement and the space may be left empty or even struck out, but agents may want to consider it from the seller’s point of view.

If the buyer is looking for very high ratio loan, such as 95% or more, and the current mortgage regulations prohibit this, the buyer is wasting everyone’s time.

Generally, a person who has the fewest conditions and the best tokens of good faith will be in the best negotiating position. That could mean no inspection, no mortgage, closing on a date that the seller wants, payment of a large deposit. Compare the buyer who needs a high ratio loan, provides a low deposit, and has all the usual conditions.

Also, if the seller receives more than one offer, the conditions take on even greater importance. Which is the best bet – the one who wants an 80% mortgage or a cash buyer?

All I’m saying is that the buyer does have a right to ask and the seller does have a right to refuse. The circumstances of the sale will make it clear at offer time. As a wise broker once said to me, “Don’t let the lack of a deposit get in the way of a sale.” This can be expanded to, “Don’t stand on ceremony if everything else is OK.”

Just recently, a past president of the Condominium Association of Nova Scotia cautioned buyers to include in their offer that their own agent may inspect the building during construction and, if it is not accepted, then walk away from the deal. Likewise, he advised buyers to consider existing condos that have probably already experienced deficiencies and have fixed them.

The problems, he says, are that the deficiencies are most often found after the one year warranty has expired and the developers do not feel obliged to fix them. He lists some which have been paid by the unit owners with special levies ranging from $500 to $50,000 per unit. Here’s some examples:
  • No flashing installed over windows and doors
  • Tyvek wrap was torn or never installed
  • Siding installed upside down
  • Windows installed upside down or inside out
  • Unit decks not properly anchored to the building
  • Roof not properly sealed to prevent water penetration 
  • Decks that drain rainwater into the building

The sales contracts for condos and any other new construction have not been written to favour the buyer. They are complicated and, consequently, many buyers cannot understand them. With or without a real estate agent, the buyer needs - really needs - a lawyer who is competent and experienced in this aspect of real estate law.

originally published Making the Most of Real Estate newsletter October 21, 2013

Generally, the developer is the client and, unless there is a special situation, such as 'designated agency', the salesperson may not act for both parties. There, I've said it. I know that many, if not most, real estate agents act as a dual agent but, honestly, how can they? The listing agent and their brokerage already have a special relationship with the developer who is under contract to pay substantial commissions for the marketing of multiple properties while the buyer is just one of many others. In the event of a dispute between the two, who would the salesperson favour?

A salesperson with a co-operating brokerage who introduces a buyer should have a single agency relationship with the buyer.

It is different if the developer uses their own employees to sell the properties rather than list them. They need no licence and so there is no agency relationship. It should be obvious to the buyer that the salesperson is working solely for the developer. I mean, does a car salesperson act for the buyer?

originally published Making the Most of Real Estate newsletter October 21, 2013