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Deciding if a Career in Real Estate is Right for You

Published November 26, 2018 by Real Estate Leads

One of the things that anyone considering a career in real estate should understand is this; unlike the way it was decades ago, the fact of the matter is in most cities there are more licensed realtors operating than there is a fair share of the pie to go around. This is especially true in regions where you’d think there is ‘money to be made’ – Vancouver, Toronto, Calgary, Montreal etc. If you live in one of these areas and are thinking about becoming a realtor then you really should know that you’re going to be in direct competition with literally thousands of other individuals.

It is true that you have less competition in smaller, more rural areas but know as well that properties here are not as valuable and as such your commission rates and profits will be lower. It’s definitely a trade off. Here at Real Estate Leads, our online real estate lead generation system is designed to help working realtors generate greater numbers of buyer and seller client leads, but we feel there’s also value in helping people decide if making the move to real estate is a smart one for them.

We’re not aiming to be discouraging here; choosing a career in real estate is a viable profession with a great deal to offer a very large cross-section of Canadians. But weighing the pros and cons and then referencing them against the particulars of your situation is something you really should do.

Is Self-Employment Right for You?

All of the benefits of being self-employed also come with much more in the way or responsibility and requirements. Many people simply aren’t cut out for the potential volatility and sheer unpredictability of being alone in the career. Real Estate has no guaranteed income or benefits packages (realtors operate exclusively on a commission basis) and being out on your own can be a daunting prospect. However, flexibility and autonomy are big pluses and add to the appeal of real estate as a career. The way the career rewards people for endeavouring and being entrepreneurial is really great for those who are successful with it.

Earning potential

A statement from Stats Canada some years back related that ‘long-term rise in residential real estate prices, particularly in Canada’s large cities, has benefited real estate agents and brokers. Between the first month of 2014 and the same time in 2015 real estate professionals saw a 2.5% increase in weekly earnings on average across Canada. In real terms, though, this is different – real estate is often very much a ‘feast or famine’ livelihood. An average realtor can earn $50,000 through a very small volume of transactions, and this can be very attractive to outside observers. What many fail to see is the incredible time and effort required to sell even one of those properties. Understand that realtors can go months (even years) between sales, so earning potential is often tied to a very small number of transactions that realtor has facilitated.

Low Commitment & Barrier to Entry

What it takes to become a licensed realtor varies depending on the Province. Generally there is a very low barrier to entry, however, and many realtors do agree that there should be more required to enter the profession. It’s true that only a basic level of formal education is required, and aside from that a written realtor’s exam is needed to become a licensed broker. There is also a very low level of commitment required to remain a realtor, and the best indication of this is how many people get their realtor’s license as a means of working beyond their existing careers. Generally, these people won’t hustle to get clients but if the opportunity to assist in a sale arises then they are quite open to earning a realtor’s commission on the side.

Too Much Saturation

This is perhaps our biggest caution about becoming a realtor in Canada; In March of 2015, the Canadian Real Estate Association was representing more than 109,000 realtors working within Canada. The number will of course have increased greatly since then too. It is estimated there is one realtor for every 245 Canadians over the age of 19. In Toronto, Canada’s largest metropolitan area, the Toronto Real Estate Board represent 39,000 brokers, which works out to one for every 140 people living in the GTA. The numbers will be only slightly better in other major urban centers, and it speaks to what we talked about earlier – there’s so much competition in the real estate business these days.

Fewer Qualified First-Time Homebuyers

The new mortgage stress tests introduced by the Bank of Canada last year have had a direct affect on the real estate business in Canada, as fewer first-time homebuyers are out there for realtors to serve. Yes, there are qualified buyers out there that you can secure as clients, but the general consensus is that there’s fewer of them now. Add to this that the current real estate market is considered to be ‘flat’ – meaning that homes are generally not gaining or decreasing in value nationwide, and fewer homeowners will be selling.

These market conditions always change, and the current ones shouldn’t be dissuading you from a real estate career on their own. But it is important to know that these climates will have an effect on you at times throughout your career, and if they’re not favourable when you’re starting out you may find it very difficult to establish yourself on solid footing like you’d want to.

For those of you who have decided to begin a career as a real estate agent in Canada, we are happy to help you build your business. Sign up with Real Estate Leads here and receive a monthly quota of qualified, online-generated leads delivered to you exclusively, and for your privately-served region of any city or town in Canada. It’s a proven-effective and potent way to put you in touch with greater numbers of people who may become your home buying or selling clients.

Real Estate Investing with the ‘Sandwich Link’

Published November 20, 2018 by Real Estate Leads

If anyone who’s recently embarked on a career in real estate thinks that the industry is exclusively in the purchase and sale of residential properties, that notion will be quickly dispelled. They’ll come to learn that it’s a multi-faceted industry with many different approaches people can take to what is essentially investing in land for any number of purposes. Yes, the most common purpose is to provide a home for a family, but there’s also providing land for a business and a whole host of other interests.

Investing in property with the interest of making profit is another, and here at Real Estate Leads our online real estate lead generation system is proven effective for connecting you with prospective clients with all sorts of different prerogatives when it comes to purchasing real estate. It comes highly recommended from a whole host or realtors who’ve already gotten on board, and of course being realtor with extensive knowledge of every aspect of the industry makes you look much more like the authority these clients will be looking for

Today we’ll be discussing sandwich link real estate investing, which is a less common approach that’s very effective and something you can advise your clients on if you feel it will benefit them. What it is exactly is a recipe for rental property investing with little or no cash of their own.

This strategy involves using lease purchases to acquire a rental property, and then placing a tenant in it using lease options. There will be 3 parties involved here, and – done right – sandwich lease investing can benefit all three of them. Let’s take a look at who’s involved here:

A. The Frustrated Seller

Typically you’ll have a seller who’s having difficulty selling a property through standard avenues, or must sell quickly to move and take a job. This individual is a great candidate for this particular investment strategy. Your client provides them with a way to get out of the home without needing to pay other payments. They get to move on with their life, while your client takes over their house payments.

B. A Rent-to-Buy Tenant

Some people want to own their home, but they are hampered by credit problems, a lack of a down payment ability, or both. Your clients offer them a lease purchase on the home, and they are able to rent it until their credit has been repaired and they’ve been able to save up their down payment.

C. Your Client, The Investor

By identifying distressed sellers and helping them to move, and also helping people who want to buy and get into a home, it’s a service you’re providing to both. And – perhaps more to your interest – there is the ability to have your clients profit nicely here. Let’s now look at the steps in the sandwich lease process:

Step 1
The first step is locating a seller who needs to move quickly, and they are in possession of a home with a low enough payment that allows it to be rented out each month – this should equate to a positive cash flow. Your clients execute a lease purchase with them, giving the 3rd party the option to buy the home at some date in the future, and typically 3 to 5 years away at an agreed-upon price. Your client assumes their payments, and then also pays them an option premium to help them to move. This number will of course vary based on the established value of the property.

Step 2
Now you as the realtor begin marketing the property to rent-to-own buyers, and show photos of the home to those who express genuine interest in buying it. You execute a lease purchase agreement with them for the same period as the one with the seller. The rent-to-own buyer now has the option to buy the home on or before that date, without being explicitly obligated to do so. You must charge them an option premium at specific $ amount, and that’s of course because your client will be into this deal with no cash out of pocket. The would-be eventual buyer will like this, as it promises to amount to a lot less than a down payment.

Step 3
With this agreement the monthly lease payment is set at a higher number than the payment your client is making on the home. This equates to your clients’ monthly cash flow. The price at which they will allow the leasing buyer to buy the home is going to be higher than the one you’ve agreed to with the seller. That’s the appeal right there, and it has a lot of appeal to be sure.

Your client now has a profitable monthly rental, and at the end of the lease there is the promise of the sale of the home to the leaser while they’ve made cash flow profit along the way. Yes, it is possible that the tenant doesn’t buy, but if so your clients can renew their deal with the seller and place another tenant in the home or simply walk away.

Sandwich leasing won’t be a good fit for every market or every investor, but it is a fairly reliable way to generate strong cash flows for those who are in a position to use it appropriately.

 

‘Buying Power’ for Homeowners in Canada Expected to Drop 11%

Published November 12, 2018 by Real Estate Leads

According to Canada’s national housing agency, much smaller mortgages are set to become the norm in this country. The Canada Mortgage and Housing Corporation (CMHC) is this month forecasting numbers that include projections for mortgage rates. High projections included within them suggest the rates would add almost 1/5th to the cost of servicing a mortgage. Should those projections come to be reality, buyers would lose up to 11% of their max mortgage size over the course of the next two years.

The connection between mortgage qualification and the quantity and types of buyers in the home buying market is easy to make. Purchasing power goes a long way in determining the clients real estate agents are able to secure. These market projections pair with many others to reinforce the conclusion most realtors in Canada have already made; it’s increasingly difficult to generate new clients as reliably as they’d like.

Our online real estate lead generation system here at Real Estate Leads can be part of the solution for realtors like you. It uses a specific algorithm based on Internet Marketing principles to generate qualified buyer and seller leads based on the information entered into online surveys and other means where the individuals are submitting information based on their home buying or selling prerogatives.

It works, and it’s increasingly popular. But back to our topic for now, and further insight into why purchasing power looks like it’s going to take a dip for the average Canadian.

The New Realities

The focus is on the CMHC mortgage rate projections, and how they’ll impact the average household. The Crown Corp uses 5-year fixed terms, and they’re run against a 30-year amortization. Stress testing isn’t incorporated in these findings, rather the look is at the pure impact of rates on households with consistent earning over 3 years.

The 5-year mortgage rate is forecasted to rise nearly 22%, according to the CMHC, with

interest rates ‘normalizing’ as they put it. Analysts have a high forecast of 5.6% in 2018, 6.2% in 2019, and 6.5% in 2020. As of now the 5-year posted Bank of Canada rate is only 5.34%, and it’s easy to see the huge reduction in buying power that will be a product of that. Too be ceratin, the 21.72% increase in rates from today to 2020 will have a serious impact on buying power.

History of 5-Year Fixed Mortgage Rates:

  • 1980 – 15.4%
  • 1985 – 10.4%
  • 1990 – 9.9%
  • 1995 – 7.4%
  • 2000 – 7.6%
  • 2005 – 6.2%
  • 2010 – 5.1%
  • 2015 – 4.9%
  • 2020 – PROJECTED – 6.5%

 

The 11% Reduction

Homebuyers in 2020 can expect to be paying a lot more interest, and encountering a reduction in the size of principal that can be borrowed. If rates hit their forecast, the max mortgage for a household in 2019 would be 8.7% down from one earning the same today. By 2020, it would be 11.69% lower than a household generating the same income today. The increase in rates promise to bring a big potential loss in buying power.

The impact of the rate increase skews to markets with heavy debt-to-income ratios. Markets like Toronto and Vancouver, obviously, are ones that meet the criteria there and will feel this pinch most pronouncedly. Reduced liquidity will likely be the new reality. Cities like Ottawa and Calgary have very high incomes and relatively cheap housing, so these markets are more likely to handle the hikes more effectively and maintain buyer purchasing power to a greater extent.

Sign up for Real Estate Leads here and receive a monthly quota of qualified, online-generated buyer and / or seller leads delivered to you exclusively and for your also-exclusively served area of any city or town in Canada. You’ll quickly see how it’s a good budget expenditure with the way it puts you in touch with folks who are genuinely ready to make a move with buying or selling a home.

A New Approach to Relisting – And Revitalizing – An Expired Listing

Published November 5, 2018 by Real Estate Leads

Any realtor will take an interest in them, but there are some real estate professionals who specialize in pursuing expired listings. They believe that they have the expertise and forward thinking to be able to work with sellers who are frustrated with their previous realtor’s inability to sell their home. Now of course there are many instances where a home’s failure to sell is more attributable to factors other than what the listing realtor has done, but this is often the home owner’s perspective.

It’s a part of the business, and it happens to nearly every realtor. Learning how to work with these types of clients is highly advisable, but success is dependent exclusively on one criterion – will you be able to generate more buyer interest in the property. That can be challenging, as can be finding these clients. Here at Real Estate Leads, our online real estate lead generation system is an excellent way for realtors across Canada to have the strength of Internet marketing working for their benefit.

You’re able to generate clients of all types, including ones who have had their home listed previously but without success. Today we’re going to look at some of the good – and not so good – points about working with expired listings. We’ll then offer a somewhat different approach to getting them to list with you.

Initial Hurdles

Expired listings can usually be attributed to one or more of the following factors; price, condition, marketing, agent neglect, or something completely out of left field. The prospective client might not think very highly of realtors based on what they’ve experienced with the one who recently listed their home. This is your opportunity to make a different impression on them, but you will have to clear these initial hurdles and in order to do so you’ve got to distinguish yourself as being different right off the bat.

Take a Consultant Approach

You want to approach this type of prospective client from a much different angle than you would when making first contact with a homeowner who hasn’t listed their home before. Your value now isn’t so much as a salesperson, but more as a problem solver. Your focus needs to be on getting to know the prospect and their requirements. This is especially important because long-term success comes from referrals from very satisfied clients who valued your help.

The conceptual approach you should be embracing is that you will help the owner of the home get past their emotional response to the previous failure to sell the home. You will be reorienting them to a more positive perspective based around what is required to sell the home, and more specifically what you can – and will – do differently to make that a reality in as short a time frame as possible. Be specific and measurable when you present this plan to them.

You must understand the importance of first moving them away from emotion and instead towards pragmatic business decisions involving the look, condition, and pricing of their home. What we’ll detail now is a very effective way of doing this; the flyer and formula.

Logical Decisions Based on the Facts and Market Dynamics

This flyer is geared to do a great deal of your work for you and do it before you ever speak to them. Presenting would-be clients with a Market / Property Profile Formula that sheds light on the forces that influence whether their property sells, as well as what forces dictate the time homes in the area spend on the market, is a very effective way of beginning a discourse. The prospective clients are lead to understand the forces they can control, and those they cannot.

Presenting the formula in a flyer gives them time to think it through in full and hopefully come to a realization that a new and different approach is needed to get their home sold in a reasonable period of time. You’ve presented yourself as an authority on the subject in a very non ‘pushy’ way, and in particular you’ve made it so that they can contact you if they’re so inclined. Often, it’s the way you’ve presented them with real information that they can digest on their own terms and timeline makes these owners much more agreeable to seeing what you can do for them.

Present Data and Explain Simply How It Should be Interpreted

The flyer should lead them to an easily-formed understanding of how the market works, telling them what they need to know and the data they need. Then you provide your knowledge and expertise to share how that data should be interpreted. This is Sales 101:

  • Define the problem – why the house hasn’t sold
  • Offer solutions – Suggest making decisions based on data AND realistic perspectives and insights on it
  • Call to action – Your contact information and your invitation to help

Arrive with Full Confidence in Your Ability to Gain the Listing

You’ve now established yourself as a market expert, but you’ve done so in the most non-pushy and simply ‘offering to help’ manner possible. You’re not there to sell them something, or speak badly about the competition. You seem like someone who can shed some light on things the owners and their previous agent could have done better – or didn’t do at all. You’re an expert in your field, there to solve their problem and get their home sold, if that’s still a priority for them, of course (with your knowing full well that of course it is).

Lastly, you need to arrive with a thorough understanding of what was and wasn’t done during the home’s previous listing. Have a list of concrete solutions for reasons the home didn’t sell before, and present them to the owners with full confidence that they’ll make real differences in selling the home. You’re there to get the job done with new solutions, and nearly every homeowner who’s had a previous listing of their home be unsuccessful will be very receptive to someone like you when you’ve taken this approach.

Sign up with Real Estate Leads here and receive a monthly quota of qualified, online-generated leads delivered to you exclusively, and for your exclusively-served area of any city or town in Canada. That area is yours alone, and the buyer and / or seller leads you receive will not be shared with any other realtor. It’s a great way to supercharge your lead prospecting efforts and many realtors have already gotten on board and quickly seen it to be money well spent for growing their real estate business.