Royal LePage - Your Community Realty, Independently Owned and Operated, (905) 731-2000  Jim Reid, Broker, (905) 731-2000	INSIDE THIS ISSUE: MARKET FACTS: 1. Establishing Your List Price? 2. Commission Discounts? 3. Market Report 4. Economic Report * June Price record $404k * June unit sales up 27.4% * June Listings down 14.2% July-Aug Fcst: Low Stock = Flat Prices   1. Establishing Your List Price? Many high volume realtors will ask questions to determine how low a list price their clients will accept. They have expertise in influencing their Vendors to use a low list price. But how can you know if your list price is too low or too high? Just because a property sells in a few days doesn't mean the price was too low. Similarly, just because it hasn't sold in 60 days doesn't mean the price is too high. Any realtor, or friend, who jumps to these conclusions is very likely guessing and hasn't done a comprehensive study or research of all the relevant factors. Properties sell or don't sell for many reasons. "Not selling" can be grouped into four possibilities: 1. Ineffective Marketing Programme, 2. Poor Property Location, 3. Poor Property Condition, 4. High Pricing. One must be able to correctly assess all four of these to determine why a property hasn't sold. Properties sell because a willing Buyer and a willing Seller reach an agreement. These agreements usually have a range of conditions attached along with an agreeable price. A low price may be influential, but it is only one factor. In many instances, my clients were willing to List at price points below what we finally selected. A recent situation involved my client expecting to list at $419k. Unbeknownst to me, a local competitor had recommended listing at $389k. I proposed a list price of $449k based upon several facts that I understood about the local market, the local properties, local purchasers and my client's circumstances. My client was skeptical, but agreed to my strategy. (A realtor who would actually recommend a higher list price than their expectations was novel to them.) The property sold in 2 days and two more verbal offers came in whilst the Buyer's financing was approved. An all too frequent situation of listing too high occurs when the Vendor's expectations are unrealistic or when a realtor uses a high price to get the listing. Because of the latter situation, many Vendors don't trust realtors and they then develop unrealistic expectations. It is very important to trust the integrity of your realtor and to also know their level of knowledge and their range of expertise. Setting List prices is usually a very sophisticated process. The outcome can make you $thousands more than a commission discount.   2. Commission Discounts? It seems that since the industry increased the number of licensed GTA realtors by 40% to over 28,000, there is a growing expectation by Vendors to want a discount in the real estate commission. I'm sure that the quality of realtors has greatly diminished with all of these new licensees and the only way they know how to get listings is to cut commission. My experience is that if an agent can't negotiate a 5% commission, they very likely can't negotiate a high selling price and often list at low list prices. Also, the statistics indicate that their listings often don't sell within 60 days and they reduce the commission to co-operating brokers below the basic 2.5%. Many charge the buyer's agents marketing fees of $200, which reduces the number of showings on their listings. The discounters disproportionately represent the agents who have very low unit sales and those who leave real estate. They just don't make enough to be able to promote their listings properly and cover their office and operating expenses. Sometimes I will encounter experienced agents who will discount their commission to get a listing instead of me. Of course, this is fair competition, but I can show my clients hard statistics that my 25 years in marketing produces considerably better financial results for my Vendors. On homes around $600k, I consistently average 5% higher selling prices than my local competitors. This $30k extra blows away the $6k, or 1%, commission discount the other agents may offer. It would be untruthful if I told you I've never discounted the commission. We all do business with relatives and extra-ordinary circumstances occur. But, my policy is that if I do the job to my client's expectations or better, then I fully earn my commission. In fact, on more than one occasion, my clients gave me a higher than 5% commission after the deal was made. Selling a house involves a great deal of money. Even a small difference can represent substantial after tax dollars. Commission Discounts may sound good, but in the end you get what you paid for. Protect your bottom line by working with a professional realtor!   3. Market Report WOW! &ldots; again. June unit sales jumped 27% over June of 2008 and prices are now 1.2% above last year's GTA market peak. What does this mean? The key message is that in spite of a global crisis, Toronto is where people want to ride it out. But there is still plenty of caution out there. New listings were only 86% of last June's and the available properties are 30% fewer. This is a key factor in the price rise this Spring. Mortgage prices are still extremely low so first time buyers are highly motivated to get a home. The banks that cut back staff are taking longer to approve mortgages. In fact, with their penalty gouging fees on mortgage renewals, they may be reporting higher than expected earnings this quarter. The local Mill Pond and Heritage Estates markets have picked up although some long listings pushed the average discount from original listing price to 11%. New listings are selling close to asking prices. It appears that this momentum will carry through July, but there is increasing wariness about where the real estate market is going this Fall. Industry spokespeople are on a positive spin, but buyers and sellers are on a negative spin. My feeling is that prices will likely be lower by next Spring, but I'm not sure of the path they will take to get there. The real bottom line for Vendors is that you can still sell at historically high market prices. For purchasers, the bottom line is that prices won't likely rise for a while, so take your time and find the right property.   4. Economic Report For 78 years, Lowry's has been monitoring the NY stock market. At the beginning of July their Buying Power and Selling Pressure indices recorded the largest gap ever and thus indicates an imminent bear market. Yet, on July 22nd we are seeing the markets rising and Canadian bank stocks along with other equity stocks creeping upwards. News from the government and bank economists is also still brazenly predicting solid economic recoveries later this year. But, unemployment in Ontario hit a new high by the end of June. So, depending upon the hour and day of the week, we can get either good or bad news. My balloon metaphor makes it easier to see ahead. The financial sector created massive balloons of debt that needed large cash flows to keep them inflated. The cash flows couldn't be sustained due to loans to poor credit risks and these giant balloons finally collapsed in September 2008. Governments rushed to help by creating their own debt balloons by creating more money and loaning funds to the financial sector to keep their balloons from totally deflating. During all this the industrial sectors' large debt balloons began to deflate as business activity rapidly slowed down. The consumer also has their debt balloons, which are in trouble as unemployment rises. Government revenues are about to plummet, so government debt balloons are about to grow even more. They will also have to absorb debt balloons from the other sectors. This process of transferring debts to government is necessary to keep the economy going and to avoid social chaos. In the end it will be the international monetary fund and other huge financial entities that will have to revalue the world currencies. The measure of their success and humanitarian sesitivity will be reflected in the eventual deflation of financial asset values and inflation of prices. In my mind, it will take three to five years to get the global economy back on track towards prosperous development. Never forget that the stock markets are only mirrors of guesswork, speculation and creative accounting. Prudence will carry us through.