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#61 DavidL

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Posted 06 November 2021 - 09:12 PM

Current market conditions are rooted in supply issues.  Attainability, accessibility, affordability all flow from supply side measures.  This proposal is a demand side measure that will inevitably cause more supply issues.  Buyers tying up multiple properties.  Sellers deciding to not bother selling given that they won't know how many times they're going to have to sell their homes.  Buyers tying up properties and attempting to flip contracts with no intention of purchasing.  Regardless of what many think, our regulatory environment is pretty damn stringent and provides the best level of consumer protection available.  This proposal would only apply to the regulated industry, inevitably driving transactions to the unregulated side of the market, thereby stripping away all consumer protections - remember, this is proposed as a consumer protection measure first and foremost.

 

As for the pricing issue, it's a matter of law - real estate listings are an invitation to treat, not an offer of sale, hence the variability in sale price.  It is what it is, we didn't make it up, if you can figure out how to change a few hundred years of common and contract law, go ahead.  The dilemma today is that in a fast moving market, prices were very hard to predict, and this current cohort of buyers is now trained to add X$ to every list price, so agents who want to be accurate in their pricing jeopardize having the right buyers look at the property because proper price +X$ make it over priced in the eyes of the buyers that should be looking at it.  Not an ideal situation but all market participants are equally responsible for this tactic, sellers ask for it, buyers expect it.  I can assure you no one on the inside likes it.

 

Stop calling it blind bidding.  There's nothing blind about it except that the personal, financial and private information of buyers is kept exactly that, private.  Which is something we as Canadians have generally placed a high importance on. You know what you're offering on, you should have market comps and up to date data, you should have done your due diligence and you should be completely prepared for how its going to go in our current market.  You're anything but blind.   An offer is so much more than just money.  You're not buying a carpet for the living room here.  Its a closed offer process.  The same one the Supreme Court of British Columbia uses.  Good enough for them, should be good enough for us. 

 

There is no evidence whatsoever that an open offer process would yield significantly different results than our current closed offer process.  Of course you hear about someone freaking out and offering way higher than anyone else, but you hear about it because it is newsworthy, and it is newsworthy because it is exceptional.  Guess what - it happens at live auctions as well.  Jurisdictions with open offer processes-specifically Australia - have their own set of problems unique to their process.  The reason they won't change to ours and  why we shouldn't change to theirs is because all market participants in both markets know the rules of engagement and understand the process.  Changing he sales process so fundamentally would simply swap our set of known issues for a set of completely unknown issues from a practice perspective.  Consumer protection practices would go out the window.  Here's the important bit - Australia's prices have experienced similar gains to ours and they're experiencing similar supply issues.  Same results, different processes - probably not the processes...

 

...But you know, facts, who cares, real estate agents bad, real estate agents shady.  

 

I'll close with the simple idea that policy should be developed after consultation and after evidence is gathered to support a policy direction.  There has been no consultation and there simply is no evidence that this specific proposal, or anything to do with the sales process itself, will help with addressing our fundamental market issue, which all seem to agree, is supply.


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#62 Mike K.

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Posted 07 November 2021 - 07:23 AM

The one change I wound ask for is to have the seller provide an inspection report to buyers who request it. The way the market is operating now, buyers routinely get outbid if they ask for conditions like seven days for due diligence. The seller will often (almost always?) flip over to the buyer without conditions in a bidding scenario, even if their offer is lower.

In my example of the property that listed for $500k below what I think it will sell for, the agents have also delayed the offers until some time next week, but it’s not enough time to schedule an inspection and call up other pros who may have to follow-up an inspection. That’s a bad look for the industry, and the optics are the agents want to rush you and create an environment for uninformed, and high pressure bidding.

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#63 Victoria Watcher

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Posted 07 November 2021 - 07:25 AM

In this or another thread I asked why Realtors would not routinely provide one. If the seller has nothing to hide, it would potentially attract more bids.

But it seems there might be corruption or distrust there too.

#64 Mike K.

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Posted 07 November 2021 - 07:35 AM

A false report or one that omits major problems would land the agent and the seller in court, for sure.

But when you’re structuring a high priced sale, and creating incentives for a major bidding situation, and consciously not giving buyers enough time to pursue DD, something is very wrong. Furthermore, today's bidding scenario was created by agents. As soon as the market turned crazy, we started seeing properties listing for well under their logical sale price. Agents would then pride themselves on how much ‘more’ their ‘skill set’ landed the seller, and that is absolutely used for marketing purposes, and routinely marketed in advertising by agents (like 505 Smith Street sold for $350,000 over asking!!!).

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#65 Barrrister

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Posted 07 November 2021 - 07:53 AM

The simple solution is to make all sale contracts to allow seven days for inspection by the accepted buyers. This was pretty well aa standard condition for many years and it worked well. 



#66 DavidL

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Posted 07 November 2021 - 10:36 AM

Responsibility, and consequently liability, currently rest with the party that commissions the report.  So the seller and/or the agent become liable for the report contents which have consequences if relied upon by the buyer.  Also if you've ever read an inspection report you'll notice the limiting factors, visual inspection restrictions, waivers of omission and the release of liability of the inspector should something be missed.  So while inspections can be useful, they can also be waste of time and money, so why we're thinking they're some sort of holy grail of consumer protection is a mystery.  Homes were bought and sold forever without inspections and the system didn't fall apart. 

 

Having a pre-contractual "cooling down" period would make the most sense if there has to be some government mandated protection for buyers from themselves.  Consider offers after a 7 or 10 day exposure period during which whoever can do whatever due diligence they want.  Understand however that this would only matter in current market conditions, in a normal market it is common to have conditions in a purchase contract.  Remember-no one is being forced to write offers on anything, it's a choice.  Of the 15000 or so local sales in the past 20 months how many buyers have come forward to express regret? So do we want government to regulate based on the way the wind is blowing on a particular day, keeping in mind that government has the ability to regulate much more than real estate?


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#67 Victoria Watcher

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Posted 07 November 2021 - 10:40 AM

probably nobody suggested inspection reports were holy grail.

#68 Mike K.

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Posted 07 November 2021 - 10:51 AM

The cooling off period is not a fix, I agree.

But the rush to place offers and forced blind bidding environments agents are willingly fostering is eroding confidence in the industry, and ultimately that will be far more damaging than the cooling off period legislation.

I mean right now the industry is in bruised shape. Sentiment towards realtors isn’t good, whether it’s frustration over high commissions in light of price run-ups, frustration over failed bids and dampened hopes, the rush to buy without due diligence, the sexual harassment allegations, and the various ethical dilemmas encountered by purchasers.

Now on the flip side, commercial property sales are not laden with these unknowns and a rush to complete the sale. Commercial buyers expect and pursue a litany if due diligence with 2-4 months in which to do it all. Even if the property is no more expensive than a residential listing, commercial purchasers cover all of their bases, and yet the current residential market rewards forgoing due diligence by encouraging zero condition purchases and bidding wars.

Surely we can appreciate the disconnect here.

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#69 phx

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Posted 07 November 2021 - 12:54 PM

If you have to put up a 20k deposited to bid that should eliminate a lot of it. If you bid 9999k on my house I take your 20k immediately, you back out. Thank you, next.

An example of shill bidding:

 

I have my house for sale, you are the only bidder at $900,000.

I get my sister to place a bid for $1,000,000.

Two possibilities:

a) You man-up and offer $1,100,000.  I win.

b) You wimp-out and walk away.  My sister backs out of the “deal” and I give her deposit back.  Rinse and repeat until I get a sucker to fall for option a.

 

Shill bidding happens all the time.  



#70 Victoria Watcher

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Posted 07 November 2021 - 12:56 PM

will your sister put up $50,000 cash on the bid? Non refundable under her name?

Shill bidding can and does occur now. Unchecked.

Edited by Victoria Watcher, 07 November 2021 - 12:57 PM.


#71 phx

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Posted 07 November 2021 - 01:20 PM

will your sister put up $50,000 cash on the bid? Non refundable under her name?
 

 

Yes.  Or maybe it was my $50,000 all along.  It works either way.

We’ll switch roles when she next wants to sell a house she owns.


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#72 Szeven

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Posted 07 November 2021 - 07:40 PM

I get what you mean for sure phx. I would expect the industry would be able to regulate that. Just add in some KYC type stuff and if an agent is proven to submit a fake bid, fine + ban etc.

#73 LJ

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Posted 07 November 2021 - 08:21 PM

I think mandatory inspections should be required on all sales.

 

The winning bidder gets one week to have the house inspected and finalize the deal.

 

If the winner doesn't like the report he can back out of the deal.

 

If it was mandatory for the seller to provide an inspection I don't think it would work.


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#74 Redd42

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Posted 08 November 2021 - 08:05 AM

At least BC buyers and sellers are not likely to get "gazumped" like in the UK.

 

https://www.cbc.ca/n...deals-1.6236351



#75 MarkoJ

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Posted 08 November 2021 - 10:14 AM

Responsibility, and consequently liability, currently rest with the party that commissions the report.  So the seller and/or the agent become liable for the report contents which have consequences if relied upon by the buyer.  Also if you've ever read an inspection report you'll notice the limiting factors, visual inspection restrictions, waivers of omission and the release of liability of the inspector should something be missed.  So while inspections can be useful, they can also be waste of time and money, so why we're thinking they're some sort of holy grail of consumer protection is a mystery.  Homes were bought and sold forever without inspections and the system didn't fall apart. 

 

+1, I don't understand all the chatter about inspections and sellers being forced to provide one? First of all the differences between inspectors are insane, it is an online course. Inspection also includes a lot of other things outside the home inspection scan for oil tank, scope of drain tiles, confirmation of property boundaries (survey), record from local authorities, septic systems, well, issues associated with archaeological sites, etc. 


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#76 MarkoJ

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Posted 08 November 2021 - 10:15 AM

I think mandatory inspections should be required on all sales.

 

The winning bidder gets one week to have the house inspected and finalize the deal.

 

If the winner doesn't like the report he can back out of the deal.

 

If it was mandatory for the seller to provide an inspection I don't think it would work.

 

So what about asbestos testing, etc? We will force the seller to have ten 1''x1'' samples cut out of their home and sent for asbestos testing?


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#77 Mike K.

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Posted 08 November 2021 - 10:20 AM

I wonder, if commercial property purchasers pursue all of these inspections as a matter of course/DD before closing on their deals regardless of price, why are they deemed so inconsequential for residential properties?

 

I don't think a bank will even lend money on a commercial purchase unless it has had substantial due diligence undertaken to ensure there are no hidden pitfalls.


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#78 MarkoJ

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Posted 08 November 2021 - 10:31 AM

I wonder, if commercial property purchasers pursue all of these inspections as a matter of course/DD before closing on their deals regardless of price, why are they deemed so inconsequential for residential properties?

 

I don't think a bank will even lend money on a commercial purchase unless it has had substantial due diligence undertaken to ensure there are no hidden pitfalls.

 

Environmental concerns are big when it comes to commercial and also commercial you are often trying to re-develop where certain issues such as geotech could collapse the feasibility of your project.

 

The other thing I've noticed in my career is the numbers re inspection issues are less and less relevant due to the enormous cost of housing. Other than structural (which is rare and you would probably notice it walking around/through the house) most other inspection issues are less than >$15,000; however, the average home is $1.3 million. 

 

Also, some other major items like buried oil tank, encroachment, asbestos, septic, well, etc. are not covered off by the home inspection anyway so how many different types of inspections do we legislate as mandatory?    


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#79 Mike K.

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Posted 08 November 2021 - 10:45 AM

A buyer definitely should conduct a septic inspection if the home has one, and if it was heated with oil, the seller should provide information on oil tank removal.

There are environmental tests emerging for residential purchases now as there are so many hidden pitfalls that can corner a buyer.

Like imagine you buy a house today, then a decade later you want to sell to a developer. He runs an environmental test, sees you had a leaking oil tank, and land restoration will cost $700,000. That’s coming off your sale price.

A commercial buyer always dots their i’s and crosses their t’s but we don’t extend that courtesy to residential sales in a heated market.

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#80 MarkoJ

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Posted 08 November 2021 - 11:02 AM

A buyer definitely should conduct a septic inspection if the home has one, and if it was heated with oil, the seller should provide information on oil tank removal.

 

Sounds simple, but even this isn't simple as David can speak to as well. Every single company in Victoria that scans for oil tanks has missed a tank for me in my career. 

 

I had this situation last week. Buyer scans property using oil tank scan company A and they find an anomaly (possible tank). Seller says "that is odd, I had the property scanned when I purchased." We call scan company B and they find no tank. Now the buyer wants to seller to dig up the front yard at seller's cost to verify. Seller says, "nope, here is our letter saying no tank." 

 

Also septic inspection...that another shitshow David can speak do. I would say 90% of septic inspections I attend the septic does not meet code (no risers, etc), but out of that 90% of non-code compliant septic system 80% function perfectly fine. Now a negotiation between buyer and seller results and either parties can reach a mutual agreement or they can't.

 

Residential real estate transaction is a massive sea of gray I find...100s of examples to list. Some buyers are completely fine with Poly B plumbing and some buyers walk right away. 

 

How you would legislate anything involving inspections is beyond me. How do you prevent the seller was hiring a LICENCED horrible home inspector, for example. I know lots of them, David knows lot of them.

 

Even before this non-sense I made videos about how much I disliked pre-inspections provided by seller -> https://www.youtube....h?v=3iXn2co78JM


Edited by MarkoJ, 08 November 2021 - 11:04 AM.

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