Month: January 2019

This post is a continuation of the Mobile Age of Real Estate series. Click here to start reading from the beginning.

Home viewings can be the most fun part of the home search experience for an agent and their clients. Most of the real estate process is paperwork. Mortgage applications, agreements/offers, home inspection review, etc. Showings are the opportunity house hunters can’t wait for because it gives them a chance to let their imagination run wild! “We’re going to put the couch and tv right here, and the kids can each get their own room, and OMG look at the size of this closet!” The client really gets to envision what their lifestyle will look like in the home.

Showings can also be one of the more frustrating parts of the experience. I’ll give you an example: A pair of clients and myself were looking to see a unit in 19 Grand Trunk Crescent, located off Lower Simcoe Street and Lakeshore Boulevard in downtown Toronto. As agents, we usually receive showing instructions telling us where the lockbox is to retrieve the keys to the property and show the unit. Unfortunately for this building, all lockboxes were on a pole outside the building and most were not labelled with either the unit number or even the listing agents business card on the back. On a cold December evening, my clients had to wait almost 20 minutes while I went through just under 60 different lockboxes. By the time I retrieved the keys I could see in their faces that the enthusiasm we started the evening with was gone.

That’s just one of many experiences I’ve gone through with clients during the showing part of the process. The are plenty of times when availability is the bigger issue. We just came off a very hot market where homes were being snatched up within days, sometimes hours. Having to wait on your agent to coordinate their availability with yours, book the showing, wait on confirmation for the showing and then meet you there can take up valuable time, and cost the client a potential home. The real estate market moves faster and faster as the years go by, and demand for real estate is ramping up how fast homes are bought and sold. According to Inman.com, an industry source proving real estate information, 48% of house hunters want to view a home the same day. Due to availability, most see properties either on Saturday, or during their lunch or after work on weekdays. One of the things new technologies have allowed us to do is see homes we want to see, when we want to see them.

Showings On-Demand! US companies like Naked Apartments have been bridging the gap in this area with innovative solutions. They connect people who want to get inside a new home with nearby realtors ready to take on a new lead. No waiting on when your agent is ready with a service like this. Just make a request on the app and within minutes receive a response to view your dream home. Naked Apartments released a report for the month of June 2018 that shows more than 3,000 showings booked for the month; of those on demand requests, 12% became closed deals. Half of the customers using the platform requested immediate or same day showings. This tells me the demand for on demand showings is ramping up. I’ve experienced it in my own career. Often, it’s tough to coordinate showing times with clients due to their work schedules, so I check out listings on their behalf and record videos for my clients to review. During 2018, I received more requests for this style of home viewing over in person showings due to convenience, and it’s completely understandable. See as many homes as you want without having to leave your living room, or in the case of Naked Apartments you never have to wait on your agent to be ready. Short notice can sometimes be a problem for property owners though and that is something figure out, but it is not as much of an issue in the rental market, where a higher number of homes lay vacant that homes for sale.

Such is the mobile age. Virtual reality has become another tool making it easier to see what you want, how you want, when you want. Many brokerages have started inviting clients to their offices for a VR home tour of their favourite listings; some technologies even offer virtual home staging, so you can get a feel for what your dream home looks like fully furnished! A company named iGuide, located in Waterloo, Ontario, offers 3D property tours with panoramic views of the rooms in a home. I’ve experienced their tech myself and was blown away by its utility.

House hunters have been able to seize control of their experience thanks to new technologies in the mobile age. Open source data, mortgage tech, real estate match making and on demand home tours offer a level of transparency, and convenience, that we’ve been craving in real estate. Unfortunately, what our recent hot market showed me is that consumers still have very little control regarding transparency during the offers and negotiation part of the process… but even that is beginning to change…

This post is a continuation of the Mobile Age of Real Estate series. Click here to start reading from the beginning.

When I think of match making in 2019, I think of Tinder. When you’re looking at someone’s picture on the app, swipe right if you like them and swipe left if you don’t. If you like someone who also likes you, Tinder will tell you that a match has been made. It’s that simple! The creators broke an emotional process down to a very simple science we can all access on our phones. But can we do this with real estate? I see no reason why not!

You see, what I am talking about is really no different. The Mobile Age of Real Estate gives us Real Estate Match Making! Connecting the perfect home buyer to the perfect home can be made simple with machine learning to help streamline the home search process. This is where the software will remember what YOU are interested in: home type, style, neighbourhood, amenities, etc. Think YouTube, Netflix, Amazon… each has a recommendation system that uses our past searches, and likes, to present us with content they know we’ll be interested in because we have “told” them we are. Real estate offers a standardized listing system (TREB’s MLS) and customer profiles. All this content helps feed the machine with the data it needs to learn and effectively automate the search process. Tools like this help narrow down our search and save time.

A valiant effort was being made by TheRedPin.com (TRP), who were one of the few Canadian companies focused in this space. TRP’s former CEO, Keith McSpurren, spoke with the Toronto Star in February 2018 and discussed their pick 3 challenge; that worked like a recommendation system. Users just click on three properties and put a check mark or an X under the pictures, depending on whether they like it or not. Based on their preferences, the system sends them other comparable properties, refining the choices each time to provide a closer match. A tool like this, with enough data input by users, can be extremely useful to home buyers. But it needs to be able to adapt and work well together with the sales process, else it could stall the process. Let me give you an example:

“Your using the tool and it’s recommending great homes and neighbourhoods around your preferences. You then start working with a realtor, who may not be aware of all the homes you’ve gone through to refine your search, and that realtor starts asking you questions you’ve already answered, and sending you homes you’ve already seen. A simple communication disconnect like this will turn off many prospective buyers, and possibly cost the agent a sale.”

The Mobile Age of Real Estate is meant to improve efficiency and convenience for buyers, sellers, and everyone involved in the process. If it slows it down than what’s the point? The home search is the most fun part of the process. This is where you get to imagine yourself in the property of your dreams. In a beautiful growing community that YOU picked, where you can envision your whole life ahead of you! Like I said, it’s no different than Tinder. The mobile age will either turn our match making dreams into reality, or nightmares. The choice is up to us…

This post is a continuation of the Mobile Age of Real Estate series. Click here to start reading from the beginning.

I spent a good portion of my last blog post talking about the innovation in America’s real estate industry. This is not to say that Canadians are doing nothing in the space. The US has just created an environment that better supports the creative real estate entrepreneur. With the advent of the internet comes the expectation for transparency and faster processes. Real estate, traditionally, has been a slow-moving industry. A prospective home buyer will go from the mortgage pre-approval stage, to interviewing a realtor, to seeing potential homes, to making and negotiating an offer, to (hopefully) offer acceptance and a “sold conditionally” status, to the removal of conditions (usually home inspection and mortgage approval) and a “sold firm” status, and finally to the new home owner’s move-in (typically around 45 to 60 days from the sold firm date) *wipes forehead*. The entire process can be draining for anyone, especially a first-time buyer, with most frustration coming from the mortgage approval stage.

Modern technologies give us the opportunity to make the process easier for anyone looking to get into the market. But how do you streamline mortgages? Realtors typically make offers conditional for five business days after acceptance to ensure their client can get a mortgage and close the deal. This is because originating, processing and underwriting a home loan with a traditional lender (usually a bank) is long and complicated, requiring paperwork to touch multiple hands before it is approved. That’s five days where both the seller and hopeful buyer are both in limbo. That’s a lot of wasted time and unnecessary stress for all the parties involved. Large lenders need to focus on creating digital products to streamline the process, like our friends down south have done.

Let’s look at one large US lender for a second. Quicken Loans is the largest retail lender in the US, and the largest online mortgage lender. In 2015, the company launched Rocket Mortgage, a desktop and mobile loan application process that streamlines financial document and information sharing, speeds up approval to minutes, and lets customers lock in interest rates. Rocket Mortgage funded $7 Billion in loans in 2016, with 80% of those customers being first time buyers. Quicken Loans has clearly figured something out in the new economy: digital loan products are the future of the mortgage industry!

But digital lending requires A LOT of trust between customer and lender. Big banks have been suffering from a lack of trust for a while now. This distrust has nothing to do with their ability to lend but more so revolves around undisclosed fees to the customer. Many of these fees can be mitigated by automating the process to save costs. For example, customers can authorize their lender to retrieve their financial data and aggregate it, then run the data against its underwriting models to verify the data. This significantly reduces the friction of understanding the customer’s financial picture, and paves the way for a more speedy, low cost approval system. A perfect system for millennials; who are the generation that have grown up in the internet age and expect a faster process.

Millennials are burdened by student debt and high rental rates, causing many to struggle in managing their finances to qualify for a mortgage. This generation is failing to build up the capital for a down payment, adding to the struggle to get a mortgage by traditional means. And like many of us know, the longer it takes to build up a down payment the more homes appreciate and, in turn, the larger the down payment needs to be. Companies like Better Mortgage, SoFi, Loan Depot (yes, they are all US companies) are helping to tackle this problem by offering digital mortgage lending and marketplace lending. These innovators see the change in consumer behaviour shifting around technology and consumer debt profiles.

The home buying process is changing with the new generation of high debt burdened consumers entering the market, and they expect streamlined digital processes. Bank lenders that are slow to improve their technology will lose out to these new mortgage companies offering smoother and faster results at lower costs. And a few years from now the loan process will look very different than it does today. This excites realtors like myself because it gives us an opportunity to serve the new generation of buyers in a unique environment. The experience is getting to know the customer and their goals as quickly as possible. Faster loan processes will continue to change the game. Let’s see if we can keep up…

This post is a continuation of the Mobile Age of Real Estate series. Click here to start reading from the beginning.

Open data = Access… Access = Knowledge… Knowledge = Progress?

What does it mean when you have access to an ocean of information but keep it all to yourself? Everyone involved in real estate, and many who have just been trying to provide a better experience, have been asking this question when it comes to open source data from the Toronto Real Estate Board (TREB).

TREB held the largest monopoly in Canadian real estate; 50,000 of the 70,000 realtors in Ontario are members of TREB. The real estate board also owns, and manages, the Stratus MLS (Multiple Listing Service) that feeds new and active listings to TrebHome.com. Most of the real estate transactions in the province flow through their MLS system, which means almost all home sales data is property of TREB.

TREB said their concern regarding open data is for the privacy of homeowners. This is clearly nonsense. How can privacy be the concern when title information is already public knowledge through the Land Registry Office? The clearest reason for them to withhold this data is to maintain the monopoly they have spent literally decades working to protect. The fear of real estate agents becoming less relevant as a result haunts TREB and with good reason. People no longer look at realtors as the gate keepers of real estate information anymore. We are more like advisors, guiding our clients through the process at this point. Prospects often reach out to me with properties they want to see already in mind before they’ve even gone through a pre-approval. This seems like a risk to the livelihood of some TREB members. In my opinion, this risk is purely psychological. If open data will prevent an agent from serving their client to the best of their abilities then there is NO reason they should be in the business. Stifling progress for the sake of maintaining the status quo serves the interests of a privileged few. This does not move our industry forward. All it does is make us less competitive vs other markets!

In case I haven’t already made this clear, open source data is the most necessary step we need to take to progress our real estate industry. Just look at the US and the progress made with access to their MLS and some technological innovation. Like our real estate boards, the National Association of Realtors (NAR) were holding back competition by blocking MLS access to internet brokerages that offered online services. It literally took the United States Department of Justice (DOJ) to file an antitrust lawsuit in September 2005 against NAR for them to settle in 2008 and agree to give access to internet brokerages. There would be no Zillow (currently lobbying our government to feature Canadian listings on their site), Truila (owned by Zillow), or Redfin without that settlement. By providing access NAR opened the door to unheard of innovation in the real estate space, while creating opportunities for realtors to go from local to national brands.

As a Canadian, I don’t want to see more American brands taking over our space. We have plenty of home-grown talent that just needs the right juice to thrive. Canadian real estate has been in dire need for real innovation that influences the sales process. The US seems to have gotten that message a while ago, and though we are late to the party, I for one am glad we’ve arrived.

TREB attempted to drag out a battle that started in 2011 with the Competition Tribunal. A ruling was made in April 2016 that TREB’s practices of prohibiting sharing information are anti-competitive. The board also lost their appeal to the Federal Court of Appeals in December 2017 and had their appeal dismissed by the Supreme Court of Canada in September 2018. Realty brokerages are now permitted to post sales data in real-time on their password-protected websites. But all this did waste time and delay the inevitable. Progress stops for no individual, or institution, and the progress I’ve been seeing in the real estate industry blows my mind… Unfortunately, most of the innovation is south of our border…

I have an Associate Degree in Culinary Management, and I sell real estate. Yes, you read that right. Your first thought might be, “Who’s this guy and why the hell should I even keep reading?” And you wouldn’t be wrong in that first reaction. What would someone that spent a few years of his life preparing chicken stock and refining his knife skills know about the real estate market? More than you expect actually…

I bought my first piece of real estate at age 22 (currently 29 as of publication) before I ever thought about selling homes. A one bedroom, preconstruction unit off Lakeshore’s waterfront. The broker that sold me on the unit convinced me that I’d likely triple or even quadruple my down payment if I invested in preconstruction. I had no reason not to believe her. She was the professional, and I was a kid trying to figure out the most “adult way” to use the money I had saved up. “I’d be first out of my friends, and one of the first in my age group to own property”, I thought to myself. I bought the unit and didn’t look back. From there I became so interested in real estate that I researched what I needed to do to sell homes. I started taking OREA (Ontario Real Estate Association) courses late in 2013, and by summer 2014 I was out selling!

It’s January 2019 now and I’m still in the business of selling homes. During the last 6+ years much of my time has been spent studying real estate economics and historical trends, and new technologies moving the industry forward. I do this, so I can help clients making BIG life changing decisions. I look back at my experience buying the preconstruction unit at 22 years old and realize two things: 1) I could make A LOT investing in the right real estate during the right market, and 2) An uneducated buyer is a buyer without power, and a powerless buyer can be sold any load of s*** so long as it’s pitched the right way. I was an uneducated buyer that was sold what some might call “hyperbole”. Had I truly known what I was doing, I may have put my money into a resale townhome in 2012 instead of a preconstruction condo. The average price of a townhome in Toronto went up over 96% since that time. My preconstruction unit has appreciated just over 55% since then, and, because it STILL is not complete, I can’t sell it and take profit.

Don’t get me wrong, an appreciation of 55% is great, but it’s taken 7 years to compound (as I said which I still cannot access). An agent looking out for my best interests may have guided me towards a higher return investment, or helped me piece together that in an environment where interest rates are near zero buyers are more likely bypass starter homes (like condos) and demand freehold options (detached, semis, towns). Whether she was looking out for her own pockets first or was genuinely unsure of the direction our market was heading I’ll never know. What I do know is that many opportunities were missed because I was an uneducated buyer. The lesson was learned, and education on real estate economics became my focus and that change happened when I finally got access to the right information.

In this series I will discuss what I like to call the Mobile Age of Real Estate. As new technologies and access to information become more convenient, it will dramatically change the real estate process. Consumers will become more educated, and transparency will lead to more confidence in their buying decisions and the useful industry professionals that help to guide them through the process. Things that took days to complete, mortgage applications and title transfers for example, will be streamlined with great efficiency. In fact, they already are! And that’s the exciting part. We don’t have to wait long for the mobile age to reach us… It’s already here!