NEW & VIEWS
VIEWS FROM TOM
(October 2, 2015)
To Our American Clientele
Interest rates effectively represent the price of money, and the Fed has had a $0 price tag on US Dollars since December 2008. Janet Yellen continued that policy last week with only a vague reference to the Fed's intention to begin raising rates before the end of the year.
But one should note the Fed's balance sheet shows an increase of 5 times the number of dollars there were seven years ago at the time of the Crash. Does that imply that the American economy is 5 times greater? Or productivity having taken off to being 5 times more? How about there being 5 times as much goods and services? No! There is simply 5 times as much paper dollars floating around, but the price remains at Zero! In fact, Yellen has indicated that the price of a dollar could even turn negative. Implying that the fiat currency will cost you to hold it!
Clearly this condition cannot last. As currently what the Fed's policy is declaring to the world is that a dollar has no intrinsic value! While discussed amongst concerned financial analysts, the media and the Public continue to mainly ignore the warnings.
Serious professional analytical work suggests a real danger of this extraordinary condition being about to collapse. In other words, a global reaction to the obvious fact that the American currency is rapidly losing whatever purchasing power it still has, in effect suggesting that the dollar - could - join the German Mark of 1923 when it deteriorated to the level of 4.2 Trillion marks to one US Dollar!
The past 8 months has seen the Canadian Dollar's value in US Dollars decline to almost 70 cents US to one Canadian dollar. Reflecting the world commodities' decline in value and volume, the Euro, Australian Dollar and Russian Ruble has declined along with the price of oil. Trading between nations is decreasing, and investors are seeking safe havens.
As Mark Twain suggested around the turn of the nineteenth century, "Buy land, they're not making it anymore!" And indeed the suggestion is logical. Real property, rather than fiat currencies (with no valuable backing), has traditionally been an historically important means of preserving value, along with precious metals, jewelry and art.
The price of Nova Scotia real estate strongly suggests that select properties in Cape Breton (that we follow - see below) represent a serious opportunity to protect value, as well as provide alternative dwellings should chaotic conditions require a bug-out location in a calmer environment, In fact while Deutsche Bank's global real estate analyst has portrayed Canadian real estate as being the most over-valued in the world - the reference is mainly to western urban and skiing areas, but including the greater Toronto and Montreal sectors. Nova Scotia and Cape Breton have experienced significant declines in price, particularly in rural real estate, due to banking policies against mortgaging raw land. But developed waterfront property, while also exhibiting reduced prices, represent significant value, particularly using presently expensive US Dollars.
We would welcome the opportunity of discussing this strategy at your convenience.
(May 1, 2012)
“Buy land, they're not making it anymore”
Is one of Mark Twain’s memorable pithy, and amusing remarks - that is worth repeating now - but as a serious suggestion. The catch, of course, as with any proposal seeking to part you from your money, in exchange for a ‘valuable’ asset, is which land, and where.
But let’s put an answer aside for the moment and review the context of the proposal. That is, look at the atmospherics – the present conditions in which the suggestion is made – the reason why buying a piece of real estate makes sense in the current financial market and political environment.
While it is true that Wall Street and Bay Street are falling over themselves with enthusiasm about the “The Recovery”, and the major media (read paid political propagandists) echo the sound bites and mainly vacuous claims of the financial world, the reality is actually quite different. Government mandated payments of unemployment insurance, the accelerating requirements of “entitlements”, the vast sums expended on ‘Green” and Politically Correct projects, and the gap between tax revenue and expenditures, is seriously alarming – and growing. Not just in Greece, Portugal and Spain, mind you, but in France (which just was downgraded by the bond markets) Holland, the UK, most of the Euro market, in fact, the US and – yes – in Canada. In a recent article evaluating sovereign and consumer debt, Canada ranked third lowest after Greece and Portugal in overall debt to GDP. While in the US, over 40% of its population no longer pays taxes, due to deteriorating incomes.
Not to over state this condition, the fundamental differences between Greece and Portugal with almost no natural resources, and Canada, are profound. But the condition of the Canadian sovereign and private sector debt levels is not healthy. The recovery in Canada is slow but vulnerable. Resources abound, but if world trade declines significantly (as appears to be beginning) the impact in Canada is consequential and speedy.
The US alone as Canada’s largest trading partner, can affect Canada’s current account very quickly. The implications socially are consequential. When one realizes that the published US unemployment figures are quite simply – lies – the reality is both shocking and very alarming. According to the leading contrarian financial man and author, Bill Bonner, founder of Agora Financial, using 1930’s measurements, US unemployment is presently at 22%! This is nearly the same as Spain, and close to the bottom of the Great Depression! What’s more, “by all accounts, even though the mainstream narrative is one of growth, recovery and increased consumer spending, the US economy is and has been in a recession since 2005”. Richard Yamaronne – Bloomberg senior Economist.
Ignoring for a moment the deliberate double talk from Bernanke and Geithner, the undisputed fact that the US borrows more than 41 cents for every dollar spent is being completely ignored, except by a few genuine financial professionals. The dramatic deterioration in the purchasing power of the US Dollar (over just the past 12 years is in the region of 28% or more) is a warning written in glowing Technicolor. (96%+erosion since 1913 and the beginning of the Fed). This is a signpost one can simply not ignore, without seriously endangering one’s financial stability, and potentially one’s physical safety.
In this environment real estate has become one of the growing asset categories being used by the informed wealthy to protect their positions. Both stable income properties, and high value, more securely located properties are being sought out by the best financial advisors and managers. There are obvious reasons. Not the least of which is that as Twain suggested, ‘they’re not making it any more’ – and – aside from precious metals, real estate is the very essence of a ‘hard asset.”
However, the recent headline grabbing stories of what amount to racially inspired attacks in America, and the overtly inflammatory reaction of minority leaders is an alarming sign of the times. If, as would appear to be quite possible, North America, like Britain, sinks into a double dip recession (there are those [see above] who say that the much heralded ‘recovery’ isn’t, and that we remain in recession, with a nasty potential for a further drop) then social unrest and worse is a very clear and ugly possibility.
We might therefore adjust Mark Twain’s remarks for our times and put them: “Buy selected high value and securely located property, they’re not making this anymore.” Canada has the potential to resist the social vulnerabilities apparentin the Americas, and outside of the several urban markets, have rural markets that provide sensible prices for – in some cases – very high quality and secure properties. These properties should be seriously considered in the present unstable times.
NEWS FOR SELLERS
Most Common Seller Mistakes
By Bernice Ross
With the credit crunch and huge amount of competition from distressed properties, "normal sellers" have had a tough time getting their properties sold. If you must sell in this market, it's absolutely critical that you
price your property right.
Pinpointing the best possible price for your home can be a challenge. If you overprice your property in today's market, it can stay on the market for months. If values in your area are declining, the longer you take to sell,
the less money you will net. If you want to net the most from your real estate sale, avoid these common seller pitfalls:
1. Basing the list price for your home on the list price of other properties
This is probably the most common mistake that sellers make. They look at what other properties are listed for in their neighborhood and base their price on those numbers. This is a huge mistake. To correctly price your property, the only accurate "comparable sales" are those properties that have closed either for all cash or where a lender has funded a loan. While properties may be selling, many are not closing due to the credit crunch. Appraisals are a huge issue. The reason is that a property worth $200,000 today may be worth $196,000 when it closes 60 days later. Appraisers are aware of the issue and often set values more conservatively as a result.
You can obtain comparable sales information online from real estate brokerage sites, Realtor.com and multiple listing service (MLS) Web sites. These online resources are a great starting place. The challenge is that they often lack up-to-date sale and/or price-reduction data. The best source for comparable sales information is a competent local broker who has access to the most up-to-date MLS data.
2. Basing your list price on what you paid for the property
Many sellers believe that what they paid for the property influences their current sales price. "We paid $200,000 for the property three years ago. We have to sell it for at least $218,000 to break even." This reasoning is based upon a very common fallacy. Many people believe that the agents and the sellers determine the price at which a property will sell.
The truth of the matter is that the real estate market is like the stock market. The buyers -- not the sellers or agents -- determine whether a property is saleable in any given market. For example, if you paid $80 a share for IBM stock and today it's selling for $50 a share, if you wanted to sell for $80 per share, you wouldn't be a seller in today's market. The same is true for your real estate. The price you paid for the property has no bearing on what the buyer will pay. (It does make a difference in terms of your tax liability and a host of other issues.)
3. Overestimating the value of your improvements or upgrades
Many sellers have a challenge understanding how the improvements or upgrades that they have made to the property impact value. Some improvements do increase value. Generally these include adding square footage or bringing your property up to the same standards as most other properties in the area. Most improvements, however, make your property more saleable, but they don't necessarily add to the value.
For example, assume that you have white travertine marble countertops throughout your home and distressed walnut floors. These features make your home more attractive to potential buyers, but normally don't add much to your sales price. The reason is that those improvements have no value to a buyer who prefers dark granite and plush carpets. Also, if you overimprove your property by making your home substantially larger than that of your neighbors, you probably won't recoup that money either.
4. Testing the market
Sellers often want to "test" the market. "Let's list it at a higher price for a few weeks and see what happens." This is a huge mistake. Real estate professionals know that all listings have a "honeymoon period" where the listing will have the most showings. This normally takes place during the first 30 days the property is on the market. The reason is that buyers who have not yet found a property attempt to see new listings as soon as they come on the market. This initial rush normally drops off after the first 30 days. After that, showings are normally limited to new buyers coming into the market. If you don't sell during the honeymoon period, there's a high probability that your property will be on the market for an extended period of time. You can generate additional interest with a price reduction, but
it never creates the attention you receive when you first list the property.
To get the most from your real estate sale, avoid these costly mistakes.
Bernice Ross, CEO of RealEstateCoach.com , is a national speaker, trainer and author of "Real Estate Dough: Your Recipe for Real Estate Success" and other books.
VIEWS FROM TOM
Joining Tradewinds Realty Inc.
Tradewinds has global visibility unmatched by any other real estate company in Nova Scotia. That immediately enhances a property owner's potential for a sale, due directly to the fact that more people, in more locations around the world, are viewing the offerings available from Tradewinds. Not only is there the award winning website at www.seanovascotia.com but there is also world class access to European markets through Mayfair in London, and of course this website, CapeBretonEstates.com.
It is a fact that innovative marketing leads inevitably to greater market penetration, which is the single biggest reason for a client's using a real estate company. A sale or purchase, completed with a minimum of complications or surprises, in as short a time as possible, is the reason that successful real estate companies exist. While active and professional marketing is certainly the most obvious value sought after by a client, I believe that an ethical and thorough approach to the specifics of any property being traded is every bit as important. That is to say that whatever problems arise in completing a transaction, an honest and professional ability to work through those sticky points is mandatory.
The geographic coverage of the province by Tradewinds is also second to none in Nova Scotia. It is therefore my pleasure to be able to refer buyers or sellers to my professional colleagues throughout the province, when the occasion arises.
I have joined a company - Tradewinds - that not only has the awards to decorate their success, but also the key management and business history to prove it. I am very pleased to have made this assocation and couldn't be better equipped to assist both buyers and sellers
NEWS FOR BUYERS
A Message for Buyers about Real Estate Terms & Conditions
Every profession appears to have its own language, it's an 'in' thing, as well as being convenient short hand for practitioners. The problem is that frequently the language is not very clear to the public who are trying to deal with the products or services being marketed.
Real Estate is no different. While one person believes 'offering for sale' suggests (from experience in other areas) a property that is for sale - and decides that he wants the property - he is not then putting a "bid" - against that offer - but in real estate he is actually putting in an "Offer". Inconsistent - would be the reaction of anyone used to dealing in investment instruments, or on the floor of an exchange. There, one would put in a "bid" when trying to negotiate a purchase of a stock, bond or other investment instrument. An "offer" to an investment dealer is strictly a proposal to sell something - not to buy it.
So let's take a more important point. Consider the terms "Under Offer" or "Offer Pending" or "Conditional Offer" or "Accepted Offer" - such as are added on to some of our properties listed on this web site. One could easily misconstrue that term to mean that a deal has been struck and no further "offers" would be considered by the vendor of the property. While this may be true if the various criteria of the Agreement for Purchase and Sale are all met, that is - the dates for completion of inspections, the insurance coverage, etc. are all successful - - but it doesn't necessarily mean the property will close as scheduled or - at all. A lot of things could come unstuck. The bank may balk on the level of the mortgage take down, the interest rates could take a jump, or any one of a dozen different variables could derail the completion.
Thus - if a buyer really wants a property, and there is an "Under Offer" designation on the MLS or other web site - it is frequently wise to put in a "Back-Up" offer. Whether one decides to increase the amount to or above the list price; or perhaps increase the deposit to a larger sum than 'normal'; reduce the time frame for completion, or all of the above - if anything shakes the original "Offer", a back-up offer could easily take over, and possibly win the day. Failure to understand the language of Real Estate could cause the loss of an attractive and desirable property that might have been a realistic and sensible purchase.
NEWS FOR SELLERS
Land Registration Requirements as of March 1, 2005
As of March 1, anyone selling their property (and in some cases, this applies to property transfers as well) in Cape Breton must "migrate" the property first. Conversion (formerly known as "Migration") is an expanded land registration process that provides government guarantee for the validity of a deed.
When you decide to convert your property's title documents - usually a move that is wise the moment you decide that you wish to sell it - keep in mind that attorneys do NOT all charge the same fees.
A recent article in the Oran discusses the pricing practices of legal firms handling the new conversion process. Apparently, some attorneys claim that the "conversion" process HAS to be expensive. Do not be mislead by these claims.
There is no mandate for attorneys to recover their full cost of "education" in the conversion process immediately on the first one or two conversions they perform. We have seen prices that range from under $700 to over $1500 on the island, so there is a great deal of variance.
Keep in mind that legal fees for conversion on the mainland, where conversion requirements were put into place in 2003, have dropped precipitously. A conversion on the mainland can be done for as little as $300. Legal practitioners there have learned that many conversions do not involve a great deal of complexity.
For more information on Conversion (formerly known as "Migration"):
- "Migration of Property" Article
- Good general article on topic on Trade Winds Real Estate site.
- Migration Issues
- An earlier article written by attorneys on Migration Issues.
- Registry 2000 (migration) System
- Provincial government site explanation of the Registry 2000 (migration) system.
Please feel free to use the toll free number to contact Tom instead of email:
NEW LISTING ALERT
Want to know when we add a new property to the site? SEND US your email address (name optional) and we'll add it to our notification list. Or, periodically check here for new property additions and news about the Cape Breton real estate market.