Real issues in Real Estate
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Real issues in Real Estate
- 1. Issues in Real Estate A Primer on How Municipalities Should Deal with Realtors Terry Landon Broker of Record, Re/Max Cornwall Realty
- 2. Overview of Presentation • A quick overview of Ontario’s Real Estate Industry • The PROs and CONs of using a real estate professional to handle real estate transactions • How to market municipal Terry Landon Chair, RECO Education Committee business parks and vacant Broker of Record buildings Re/Max Cornwall Realty Inc.
- 3. Ontario’s Real Estate Industry • As of April 2011, Ontario had 62,964 registrants • 36,940 salespersons • 10,292 provisional salespeople • 11,112 brokers • 3,411 brokerages with 1,209 branch offices • Since 2002, the number of registrants has increased by over 45%, and in the past couple of years, the number of brokers has increased by 25% • A large percentage of salespersons have 2 years or less of experience
- 4. Ontario’s Real Estate Industry • The majority of Registrants real estate Belonging to professionals Organized (but not all) Real Estate (Boards, OREA, CREA) belong to organized real estate Other Registrants
- 5. Professional Organizations • The Canadian Real Estate Association (CREA) • represents its members at the federal level of government • acts as a watchdog on national legislation that pertains to the real estate industry • CREA owns the MLS® trademark and has a proprietary interest in the REALTOR® trademark. • Ontario Real Estate Association (OREA) • represents 45,000 brokers and salespeople who are members of 42 real estate boards • develops and publishes standard forms
- 6. RECO • The Real Estate Council of Ontario (RECO) • regulates the activity of trading in real estate • a self-managed, not-for-profit corporation • Responsible for administering the Real Estate and Business Brokers Act, 2002 (REBBA 2002) • Protects the public interest • Encourages professionalism
- 7. REBBA 2002 • Real Estate and Business Brokers Act, 2002 • Administered by RECO • Ministry of Small Business and Consumer Services • Governs the trade of real estate in Ontario » Who can sell in Ontario? » Advertising Standards • Real estate professionals must follow a Code of Ethics • Penalty for breaking the rules is severe • Loss of registration • Public humiliation
- 8. Representation • Buyer Representation • Seller Representation • Multiple Representation • Represents both sides • Usually limits on permitted disclosure • Must declare & get consent or can’t act • Customer Representation
- 9. Commission • Commission rates cannot be set • A example commission would be 5% • Buyer’s rep usually gets 2.5%, Seller’s rep gets 2.5% • Leasing commissions usually paid on net rents are similar in rate • Fees can also be flat rate or hourly • Rate can fluctuate due to a number of factors • Economy • Prior agreement (negotiation) long time clients • Scope of work
- 10. ICI (Commercial) • ICI is a special part of the real estate industry • Stands for Industrial, Commercial, Investment • ICI Brokers are a breed apart • Often higher level of Education • Often bigger commissions mean more is at stake • Results often takes more time than residential sales • Requires a more sophisticated knowledge set • Will spend more $$ on marketing • Will jealously guard clients • Not necessarily members of organized real estate • Good ones often have big egos
- 11. Big Town ICI Brokers • More experienced, more connected • May not be as committed to your community as you might think • Distance can cause problems may arise in arranging or attending showings & access to building • Less familiar with local rules & regs • Usually don’t know the local players • Foe? Likely not. • Friend? Likely not.
- 12. Small Town ICI Brokers • Usually more committed to the property & community • Likely more friend than foe • Less experienced, less connected • Easy to arrange personal showing & direct access to the building • Usually more local knowledge Zoning, Official Plans • More likely to know the local players (EDOs, CBOs, politicians, lenders, surveyors, engineers, etc.)
- 13. Pros and Cons of Hiring Real Estate Broker • Should the municipality hire a real estate professional to handle real estate transactions? Pros Cons • Property is listed on MLS • Cost • Marketing expertise • Need to manage buyer’s realtor • Save staff time and resources • Less control of prospects • Knowledgeable Professional • Local politics • Arms length negotiations • Insured (Errors/Omissions) • Best possible price
- 14. Consultants • Experienced real estate agents can be hired as consultants, to perform services outside of the normal real estate transaction • Appraisals/Opinions of Value • Market Studies • Prepare, Review and Present Offers • Assist with Land-Use Planning – Zoning By-Law Review – Official Plan Review
- 15. Real Estate Asset Management • What the benefits of developing a municipal real estate asset management plan? • Inventory of public lands • Forecast for future needs – Landfill, Snowdump – Recreation – Road Widening – Employment lands • Should the municipality keep land deemed to surplus?
- 16. Employment Lands • How much employment lands does a municipality need? • Different sectors have different needs • Manufacturing vs Logistics vs Service/Light Industrial • Should the land be serviced? • Water/Sewer • Utilities / Road • What are your competitors doing? • Cost • Supply • Development Charges
- 17. Case Study : Cornwall • Over 350 acres sold in less than 5 years • Shoppers Drug Mart DC: 70 acres • Boundary Properties DC: 120 acres • Target DC : 160 acres • Many smaller sites in support of these DC’s • Two other competing locations for Target • Both involved situations that required land assembly • Cornwall had all the land under one owner, the ability and willingness to service on the Buyer’s timelines
- 19. Marketing Your Business Park • What does Investment Ready mean? • Services • Utilities • Zoning • Reports • Site Plan Control • Commercial Parks vs Industrial Parks? • Realtor Agreements? • Brownfield program?
- 20. Marketing Vacant Buildings • Basic Information to Gather • Area, Ceiling Height, Dock-level doors, Service Capacities • Photos, including aerials/GIS mapping • Zoning, Site Plans • Assessing the Property • Do you need a property value assessment? • Environmental Issues • Obsolescence • Your Role, the Broker’s role • Site tours • Joint Venture Marketing
- 21. Marketing Opportunities • Offline • Brochures • Classified Ads • Direct Mail • Signage • Online • Broker website, MLS • Municipality Website • Ontario East website • Social media
- 22. Brochures • Investors still ask for hard copies • Good for trade shows • Easy to make available online as PDFs
- 23. Video Brochures • Videos are easier to produce than ever before • Short 2 minute virtual building tour to showcase its features • YouTube allows you to host the videos for free
- 24. Online Listings • Most cost effective way to reach investors • Still some challenges with regards to database integration Realtor Website Let the www.remax-cornwall.ca investor choose what CREA Website website they www.icx.ca want to visit, Listings Ontario Website just make www.InvestinOntario.co m sure that all data is Municipal Website available (if available)
- 25. Summary • Using the skills and experience of a real estate professional can be beneficial • Often both parties have the similar goals : to see the property change hands and to see new development • Often the realtor is the first point of contact with the investor – take advantage of that!
- 26. Terry Landon • Terry Landon and Jamie Cameron founded RE/MAX Cornwall Realty Inc. in 1982, and together they helped the office to become the preeminent real estate brokerage in the area. Terry specializes in commercial real estate. • Terry is an advocate for the City of Cornwall and region, and has played a key role in several economic development initiatives. He helped to create Team Cornwall, and is currently the President of the Cornwall and Area Chamber of Commerce. • Terry has also played a key role in the evolution of real estate practices. He is a two term Past President of the Cornwall and District Real Estate Board, and was a founding Director of the Real Estate Council of Ontario. He was elected chair of the Real Estate Council in 2004/2005. He continues to work with RECO and presently is the Chair of the Registrar's Education Committee. • Mobile: 613-551-102 • Office: 613-938-8100 • E-mail: landon@remax-cornwall.ca
Editor's Notes
- OREA Ontario Real Estate Association has some 45,000 members 42 boards Ontario east encompasses all OREA’s Eastern Ontario Region and a large part of its North Eastern region. at least 14 distinct real estate boards in your region. Some large Ottawa and some small Cornwall & Renfrew
- Organized real estate has existed in Canada since 1888 And CREA since 1943 Has a large Political Action Arm (PAC) Has a Canadian Commercial Council
- Founded in 1997 Primary mandate is Consumer Protection Unlike organized real estate with very few exceptions you must be a member of RECO to sell real estate in Ontario Mission statement Fostering confidence and upholding integrity in the real estate industry
- New Act was brought in in 2002 Requirements- 18 yrs old - Resident of Canada (address for service in Ontario) - Complete the courses - pay the insurance fees - pay the application fee Advertising standards – Ads, Business cards, websites, promotions, gifts etc. EDO Marketing – Short answer yes - Long answer be careful, generally speaking you can sell property that you own or that your employer owns and you are authorized to sell for them. You cannot sell third party property. You cannot list and sell a third party industrial or commercial property for a fee. You can’t advocate for (represent) a prospective buyer. You can advertise the property. You can introduce the buyer to the seller, tenant to landlord, but no negotiation.
- Recently terminology change from Agency to Representation - 4 main duties (Competence, Obedience, Disclosure, Accountability) Key points – Written agreements (no documentation, no pay) - Buyers & Sellers whether clients or customers are instructed not to talk to the competition, - multiple rep - no discussing how much a buyer may pay or seller will accept without written consent - no discussing motivation buyer’s short time frame, seller in distress again without written consent - Biggest drawback to customer rep disclosure obligations of buyer or seller rep’s to their clients
- Agreements in writing or not pay, Agreements longer than 6 months must be initialed, A lower fee does not rid the salesperson of its duties CODA
- Many Commercial salespeople have post secondary education Law, MBA’s, engineering background Generally the terminology is changing to simply Commercial brokerage Don’t necessarily agree with the last bullet but ego’s can be big
- Conflict of interest allegations
- My opinion is no. Lands that are on no benefit to the municiaplity should be sold so they can become tax producing assets
- Cornwall had some 150 acres of vacant serviced land about 5 years ago. Over the past 5 years it added another 150 acres of land and it serviced the lands. Most of that land has been sold and we are in the process of adding another 180 acres of land, which will soon be serviced In addition to that the City’s economic development planning committee is considering recommending that Council undertake a study to search out the most appropriate location for the next phase. Interestingly enough this may also involve discussion opportunities with neighbouring municipalities. Cornwall is not unique in this regard. There are several municipalities I know that where the current business park is adjacent to another jurisidiction. Some may have access to services but no lands and some may have no land but excess capacity. Eastern Ontario is an ideal location for an expanding logistics industry and the dc’s that result form there. Certain other industries including the food sector may be the next growth sector while we work to feed the logistics industry. Logistics industry is lured to eastern ontario because of our ideal location that allows for same day return trips to and from the Eastern Ontario to the GTA, because or lower service land costs and in my opinion because of no development charges.
- Shovel Ready -Services sizes, capacity permitted discharges, - Utilities: power on the lines, telephone, cable, High speed access, - Reports - Geotechnical, environmental, both physical |& functional Contamination/ ECA - Site Plan control ready made guidelines and a person to guide the prospect through the process Commercial Parks - Zoning & Official Plan – permitted uses, lot occupancy, outside storage, sensitive land uses issues, green space requirements, public art - many industrial parks product of 50 & 60’ – zoning doesn’t suit the new employment regime, has your municipality adapted, changing can cause opposition from other sectors DBIA’s, Chambers etc. Realtor Agreements – Does you municipality have a policy in place to deal with salespeople & commissions Brownfield programs – Many communities Cornwall have lost millions of square feet of heavy industrial and 000’s of jobs. - Buildings are obsolete, bylaws no longer suit (cleaner & greener), - Support & encourage change help with the transition, encourage decomissioning, even demolition (no use fighting it/if you don’t support it you may own it along with the incumbent liability) - Have easy meaningful programs that reward redevelopment. Have the pre(re)trained staff at hand ready to provide assistance without unnecessary roadblocks. Take a chance.
- Basic Information – more is better 5 years ago 24 ft ceiling were the norm, now 28-30 ft ceiling hieghts seem to be the minimum and many approaching 40 ft. Assessing the property – reassessment - Environmental if commercial get the report yourself, necessary, you know, you can correct better to control destiny that be led by it - Big factor today obsolescence, marketing public buildings -usually over assessed why overlooked because non taxable but over assessment will kill a sale) Roles - 2 main ones - use us – free - almost
- Off line you know them let’s talk briefly about them
- Still needed but multifaceted brochure in print, on-line are needed as decomissioning moves forward and plans are more concrete it will be enhanced, updated and expanded
- Started marketing on U-Tube. Why Free & fast. Not really free but we are seeing more & more video presentations. You can get a lot of information for $1,000. So we can gain exposure through new growing medium
- Studies indicate that 70 % of buyers residential real estate look on line first. Don’t have a study to back this up but know more and more prospects are searching online and they expect and want the answers now.