Real Solutions for the User Experience

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

The Mobile Age of Real Estate has come into affect with one purpose in mind: to improve the real estate experience. And although over the course of this series we have discussed some of the challenges in the real estate process, and the technological solutions aiming to solve them. We haven’t put as much time into what this realistically means for consumers. Will transactions really be smoother? How will more information affect the decisions of buyers and sellers? What effect will new technologies have on home/rental prices, if any? It’s almost like were left with more questions than answers.

What I have been discussing in this series is digitizing the real estate industry. In theory it sounds great. A transparent marketplace featuring all available information on the product and environment, how to seamlessly go about acquiring the product, and professional guidance available at a whim, all on the user’s terms. It’s all great in theory, but its practical application depends on user adoption. Home buyers really could see better access to affordable housing through more developers adopting modular/manufactured home building. Enhanced transparency, including tools to help consumers better interpret information, can both improve decision making in the market and the services offered by real estate professionals.

We live in a market economy, where the marketplace determines whether a product or service has value. Adoption of new real estate technologies, both by industry professionals and consumers, will show us how close we are to a digital real estate market. It’s fun to tour a home using VR but can that experience spark enough of an emotion in enough people for it to become the norm of real estate showings? The real estate process is an emotional experience and sometimes buyers need to see the physical property before any decision can be made. VR wouldn’t interest this group, but maybe a showings on-demand alternative can. How about if a buyer wants more control over the negotiation process? They’ve got the option of using the Reali app to place their offer and have it reviewed by a professional before it’s sent out, or can go to On The Block Realty and start using their auction platform to bid on qualified homes for sale. Whatever works for them!

And that’s a huge plus of the Mobile Age of Real Estate. It caters to different markets of buyers and sellers, renters and landlords, investors and even nosy neighbours. It’s about convenience and getting what you want, when you want. The mobile age will improve the experience of all parties involved in transactions and those just looking to get in the market. Shorter learning curbs, and more educated consumers, will force realtors to offer more value or risk obsolescence. An agent can’t just reduce their commission or offer “free home evaluations” as an incentive for people to reach out. Real value needs to be offered by professionals because the mobile age will expose those just looking to make a quick buck as a realtor. It helps to level the playing field.

There will be a lot of hits and misses during this transition in the real estate industry, and I for one will be loving every second of it! I founded House of Trade™ for the purpose of keeping consumers informed as to what is happening in the world of real estate and especially in the Greater Toronto Area.

Everyday brings a new opportunity to cover something exciting happening in the industry. The Mobile Age of Real Estate is here, and we’ll be bringing you the goings on within the industry as it happens… that’s Real Estate in Real Time!

How to Scale Affordable Housing?

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

The biggest problem in GTA real estate over the last few years has been the lack of housing supply. You probably thought I was going to say housing affordability, didn’t you? Well let me explain why I know the problem is specifically the lack of housing supply, with the affordability of homes currently on the market being a direct result of that problem.

Now as someone that has never taken an ECON 101 class, it’s obvious to me that basic supply and demand is at play here. The demand for real estate in the region has been insane, with the Greater Toronto Area seeing an increase in sales every year from the year 2012 (85,496) to the year 2016 (113,133). This trend would have continued in 2017 if not for some interference by the Ontario government, coming in the form of a foreign buyer’s tax, rules around rent control and a few other policies unhelpful to property owners. Either way, sales in 2017 were still around 2014 levels (92,286), with home prices rising from $497,130 in 2012 to $822,580 in 2017. But, according to data from the Ontario Home Builders Association, housing starts (that’s new homes built) in 2018 had dropped by 5.2% from their levels in 2015. Supply has not kept up with demand and, as a result, home prices (and yes rental prices as well) have skyrocketed. The challenge of affordability is a result of the lack of housing supply.

Demand for housing has affected home builders too, with labour and construction costs having increased along with demand. This makes building homes on site too expensive for some home builders and adds to our problem of low housing supply. We need a solution! My proposal is simple… start building indoors. One way to bring more housing supply to market is to reduce the costs for home builders to produce the homes consumers want and need. On site building becomes expensive when you must deal with variable costs outside of one’s control (i.e. the weather). Skyrocketing costs and a reduction in housing starts make this a great opportunity to discuss different, and more efficient, ways of building homes. Modular and manufactured homes are two method that have been proven to work.

Where site-built homes are, as its name states, homes 100% completed on the construction site, modular homes are homes built in sections, within a factory. Sections are transported to the building site and joined together on site. The sections are placed on your typical basement or crawl space foundation. Vinyl siding is mostly used for modular homes, versus brick as the preference for site-built homes; as 85-95% of the home is completed in factory and vinyl offers more affordability and is lighter in weight than brick. Manufactured homes are like modular homes in that they are 98% completed in a factory before being transported on site. Where they differ is on the foundation the home sits on. It’s not always a permanent foundation, like a basement, but often block tiers that are designed to make the home capable of being moved from site to site. Also, the preferred siding for manufactured homes are either vinyl or aluminum siding; aluminum being the most used home siding. This makes manufactured homes far less expensive to build, and buy, versus conventional site-built homes and modular homes.

A report by NAHB Research Center was prepared on behalf of the US Department of Housing and Urban Development back in 1996, and it details the following regarding costs of site-built vs modular vs manufactured homes, that are to sit on the same conventional foundation (basement or crawl space), and constructed to be the same square footage (2,000 sqft):

· There are much lower overall costs associated with building modular and manufactured homes; 50% reduction in time to build, lower labour costs, fewer materials needed

· The average 2,000 sqft modular home is 11% cheaper to purchase than a site-built home; manufactured homes are 26% cheaper

· Structure represents one of the largest cost savings; 17% for modular vs conventional and 43% for manufactured vs conventional

· Each type of building method had overhead costs—administration, marketing expenses, construction and inventory financing costs—make up a similar percentage of the final sale price (22.3%)

· Construction costs were the biggest difference in final sales price

Looking at some of these facts you would be right to wonder why site-built homes still dominate the market. If you can afford to build at a lower cost, you can afford to sell at a lower price. Items such as aluminum siding and block tier foundations are not as valued as brick (or even vinyl) siding and conventional foundations. Because site-built and modular homes are built on permanent foundations, they face far fewer land restrictions and are appraised at much higher values than manufactured homes. But this does not change the fact that modular home building still offers more attractive scalability than even conventional homes. If you can build more homes at a lower cost than you can make more money while cornering a section of the market. Seems like good logic to me! And companies like Quality Homes are working to prove just that. Quality Homes has been a modular home builder in Ontario, since 1987, that aims to scale this process. They offer assistance from beginning to end, with help in lot selection and purchase, to site excavation, to home design and finishes, to assembly and installation.

In my opinion, this is the way to build in the Mobile Age of Real Estate. We need more housing and more affordable housing at that. There are ways the government can help. One is by basically just staying away from the private sector altogether as involvement by the public sector rarely helps private businesses or consumers. Or, if they are hell bent on “helping” as the government usually is, an effort can be made to speed up the process of acquiring building permits (a problem for another day). But this is a solution where those directly involved in home building can implement their knowledge to solve a real problem. A home builder may have to sell their finished product at below market value but may also have an opportunity to corner a segment of the market desperate for housing. The end user will thank them for it…

The Realtor Shift

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

The shift towards the Mobile Age of Real Estate has poised many to ask the question, “What does this all mean for agents? Will realtors still exist 15 to 20 years from now?” In my opinion, the answer is both yes and no to the second question. Yes, real estate agents will exist decades from now, just maybe not in their current form. People often point to improvements in technology leading to the death of many travel agent jobs (i.e. as an example of this trend continuing. An article on even asks whether realtors will be made obsolete by 2025, and points to our past position as “gatekeepers” in the industry fading with the growth of the internet and new technologies. They’ve literally predicted the death of my career to be 5 years from now… That’s insane! It’s true that the internet has stripped us of that responsibility as gatekeepers, and I believe that’s for the better. More transparency leads to a more educated and confident buyer, and that leads to better decision making in the market. But 2025? Geez that’s bold… The mobile age doesn’t wipe out all real estate agents like some kind of natural disaster. It offers professionals an opportunity to transition their business to appeal to, and serve, a new generation of educated consumers.

It’s been said repeatedly that real estate is the largest financial asset most individuals (and families) will purchase in their lifetime. There is a lot of value that an experienced real estate professional delivers to their clients. From helping them save/make money on their purchases to offering a memorable client experience during a very emotional process. The mobile age puts us in a position to improve our value proposition at very low cost to ourselves. We can easily pair human intuition, our experience in the field, and advances in technology to improve our services. For example, I mention in Part 5 of the series (Showings On-Demand) that I offer video tours to many of my clients. Understanding that people live busy lives, I often find myself using my phone camera to record showings, with minor commentary, for my clients before I forward them the video, and listing itself, via WhatsApp. In this they receive many useful benefits: 1) a full walkthrough of the property that they can review on demand and compare to its listing details, 2) a professional interpretation of all necessary information to make an educated decision, and 3) the convenience of not having to trade time out of their day for hours of home viewings.

It’s something so simple but can deliver huge value to the right clientele. This has helped me position myself as a realtor that carters to young professionals. In 2018, I began working with many young people studying law. Some were doing their articling at law firms in Toronto, while others had just graduated and were looking to get their careers started in the city. I was glad to help them transition in their lives and deliver a memorable client experience with the help of technology.

Better access to data sometimes gives people the belief that they now know as much, if not more, than a professional. Because, of course, if we all have access to the same facts than what really separates what you know from what I know? That is arrogance at the highest level! It is great that we all have better access to information but that hasn’t stopped many in my sphere of influence from asking me to help them understand what many different data points and new information mean. Words on a page mean

nothing if you do not understand how to interpret them. Experienced professionals will be needed because we help to interpret what is going on in an often-chaotic real estate market.

What this really does is help agents redefine our role to the public as advisors or consultants, instead of just sales people. In my business I have noticed a huge difference when I take an educator’s approach as opposed to a transactional one. The hot seller’s market we came off in 2017 still has many agents in “I can sell your home for $150,000 over asking in 7 days” mode. You do not know how many times I’ve heard people tell me stories of agents knocking on their door and offering to sell their home for some over priced number, without even discussing, or considering, where the homeowner will live after the sale. When we help consumers understand what is happening in the market, with new developments and how new government policies will affect them, we are offering so much more long-term value for the client (and ourselves) than commission from a quick sale ever could.

And I reason that long-term thinking is the key focus in all of this. As market conditions shift and consumers become more educated, the amount of real estate practitioners will in fact decline. Many will drop out of the business because they refuse to readjust their business model. Others will cling to reducing the price of their services as their value proposition. These approaches may work in the short term, however are disastrous in the long-term. Doing what has worked in the past while the environment continues to change won’t appeal to any target demographic and will not appeal to the new generation. Technology is progress and we cannot fight back progress. All we can do is embrace it and readjust our offerings as trusted professionals to better serve the public.

The Mobile Age of Real Estate will not replace realtors. It will make it easier for us to do business and serve more people. Advancements in real estate technology are affecting so many parts of the industry, from the middlemen to services rendered. And it is also offering advances in the kinds of homes consumers demand…

Blockchain Technology & Real Estate

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

No technology has more potential to affect the real estate process, as it currently stands, more than blockchain. For those that don’t know, the blockchain is a digital ledger where transactions made using cryptocurrency are recorded chronologically and publicly. In other words, it stores digital information (i.e. “the block”) in a public database (i.e. “chain”). When you make a purchase on a platform using blockchain technology, instead of using your actual name, your purchase is recorded without any identifying information using a unique “digital signature,” sort of like a username. The technology offers a way to decentralize information, while making it public and keeping individuals’ personal information private. The blockchain is changing so much in the real estate industry, from access to deals, to the amount of time it takes to close, to property title mistakes, to the high fees and fraud that slow down the real estate process. I want to give you some understanding of how its application will affect how we, involved in the industry, do business.

It is becoming more and more difficult for anyone who does not currently own real estate to get access to affordable property. With home values increasing by more than 8.3% per year since 2014, many would be buyers don’t stand a chance acquiring a valuable capital asset like real estate. And over the next 3-5 years it will only become more challenging for anyone not already in the market. This makes investing in the sector very difficult for both buyers and sellers. A seller cannot liquidate their property if there are no buyers to afford the home. Blockchain offers us the introduction of two new concepts: tokenization and smart contracts.

A smart contract is a transaction completed entirely between the buyer and the seller (or renter and landlord) with little to no human interaction. The seller includes all the details of the property and the buyer puts all their necessary information on an encrypted and secure block. Computer protocols check the legitimacy of the transaction and no agreement can be completed until all terms are met. Tokenization uses cryptocurrency to split assets into tokens that are stored on the blockchain. So, a smart contract allows difficult to liquidate products (i.e. real estate) to be tokenized and owned by a multitude of investors, allowing the initial owner to not divest their entire stake but just a part of it. Let’s say you were a homeowner looking to sell off 50% interest of your downtown Toronto skyline home. Instead of seeking a buyer to purchase half of the interest in your home (would be very unlikely), or putting the entire property up for sale, that interest can be tokenized and sold to multiple investors; like a stock offering. This is a completely new environment for hard assets as it offers so many more liquidity options than what are currently available.

The blockchain can also help eliminate the need for things like title insurance. A November 2018 article written in Forbes details title insurance as a $15 Billion per year industry by ensuring buyers their newly bought property is clear of any outstanding liens and debts. This is a huge part of closing costs for real estate buyers. If all property title was decentralized on the blockchain, a large amount of time and money would be saved, and it could eliminate the need for title insurance altogether. “It could also be possible to add information about construction, damages and improvements to the title, almost like Carfax

for homes” citing the same article from Forbes. This will help make it so that people truly know what they are buying.

There are so many ways we can use blockchain technology to offer a more seamless real estate process. In fact, I recommend reading this article written by a software architect in Toronto name Michael Nolivos. In it he goes into detail regarding how we can use smart contracts and incentives to clean up real estate showings and offer a more satisfying experience not just for buyers but all involved parties.

There are some that view the Mobile Age of Real Estate as the death of the “middleman”. I believe that couldn’t be further from the truth. If anything, this is an opportunity for the middleman (i.e. realtor, banker, lawyer, etc.) to redefine ourselves and offer a different kind of value for our clients…

Transparent Negotiations

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

The recent seller’s market in the GTA ended in April 2017 when the provincial government announced a foreign buyer’s tax. Before that, homeowners had seen a consistent increase in the average price of a home rise from $198,150 in 1996 to $822,580 by the end of 2017. The average home price is currently $807,340 (as of November 15, 2018), and that’s significant because we haven’t seen a year over year drop in price since 1996 when the average price dropped by $4,878 from the previous year. Couple the foreign buyer’s tax, new mortgage rules (CMHC rules came into effect as of January 2018), rent control regulations and regulations around realtors double ending deals, and you get an environment where buyers got to step back and assess what was happening in the market.

Euphoria took over GTA real estate, with multiple offers and selling prices $100,000 over asking becoming the norm. Hot seller’s markets put a lot of power into the hands of sellers because demand for homes has dramatically outpaced supply. For example, there was a home in Oshawa that had my attention in 2015. A gorgeous 3 bedroom and 3 washroom detached home, just under $350,000 had come to market. I put in an offer right after I got a chance to look through the home and found myself competing with 17 other offers. The home ended up selling for $465,000 a day later. I hadn’t expected bidding wars to travel that far east of Toronto so soon but there they were! A very frustrating and stressful environment for buyers to be in, but that was now the market.

I realized that it was only frustrating because buyers were trying to navigate through an environment where they had only a fraction of the information. You don’t get to see the other offers made on a property; unless you are the listing agent. In a hot seller’s market, that led to a lot of scenarios that put buyers at a big disadvantage, like:

· multiple representation situations where a consumer is unsure where “their agent’s” fiduciary responsibility would be, and;

· tactics to list a home well under market value and spark bidding wars driving the homes valuation up

Consumers were awoken to the lack of transparency regarding real estate transactions, especially when it came to the offers and the negotiation part of the process. Transparency became a big talking point and point of focus for many innovate companies, both in Canada and the US., a real estate technology company based in California, offers consultations to users to review pricing, market and sale conditions, and be presented with an executive summary of all disclosures regarding the home. From there users can use the Reali app to submit an offer, on their own (reviewed by their consultant), directly to the seller. You’re literally done in 5 steps: enter your offer price, deposit amount, select your conditions (i.e. financing and home inspection condition, offer expiration date, etc.), any notes for your consultant, sign and done! Your offer is sent in for review and, when approved, sent to the seller. More control over your future with some guidance by a professional. Familiarizing clients with

how to put in a bid is a great way to get them more involved in the process. However, a Toronto based realty company is taking the bidding process to another level.

Enter On The Block Realty. Their auction platform delivers all pertinent information needed for a purchase decision (i.e. home inspection, comparable property statistics, and consistent terms of sale) to a qualified buyer looking to make an offer. Bids by all parties are visible to any who have been qualified (based of mortgage preapproval) providing much needed transparency to one of the most important parts of the real estate process. On The Block is offering a level playing field for buyers by helping them make decisions with more of the facts.

A streamlined bidding process is needed with the amount of real estate transactions being completed nowadays, and a larger buyer pool fighting for high valued property. Buyers become more confident in their decisions when they are educated on the product, process or both! With the Mobile Age of Real Estate taking over, we’ve entered a new world where transparency should become the norm. New technologies are leading this front, and one may affect change in everything from showings, contract negotiations, to the way we even transfer title/ownership of our homes. You may have heard of it… a little thing called blockchain…

Showings on Demand

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, 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…

Home Search – Real Estate Match Making

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 (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…

Mortgage Technology – Streamlining Affordability

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…

Open Source Data – The Straw That Broke the Monopoly’s Back?

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 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…

Where it all started

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!