As reported by CBC news, Capt. Bews is a very lucky man – he got to bail out.

If things are as some very bearish bears suggest, that the Vancouver real estate market is going to crash, one wonders if Vancouver’s homeowners are as lucky as Capt. Bews. It gives pause to ask if this market is about to hit the tarmac?

Photo Credit – Ian Martens/Lethbridge Herald/Canadian Press via CBC

Ready to Sell

If the Vancouver real estate market is as close as the about to happen disaster recorded in this picture by Ian Martens, and if it is as close to disaster as the very bearish bears would have us believe, then you have to ask, why are sellers not unloading their properties faster than the recorded number of sales?

Are they, the owners of Vancouver homes, as well trained as Capt. Bews who, in just the nick of time, pulled the cord to ignite the explosive charge to shoot him out of his doomed aircraft? Do these sellers know when the precise moment of no return is? It is a gnawing question? I don’t have an answer – do you?

If you are buying a home and are not working with a Realtor® the chances are that you may choose to deal with the listing agent. No doubt you will enter into an arrangement known as Limited Dual Agency.

For the most part, when dealing with an ethical Realtor®, you will be informed of the fiduciary limitations that will be put upon the three parties – the buyer, the seller and the agent who are involved in the transaction. In most cases, this arrangement works well as the experienced Realtor® thoroughly communicates how the arrangement works and the implications to all parties.

However, the B.C. Court of appeal has declared and you need to know that there is a Limited Dual Agency circumstance that will not work.

Decision

In 2008, a BC Supreme Court decision awarded damages against a REALTOR® for breach of fiduciary duty when acting as a limited dual agent. 1 The REALTOR®, while selling his own property to a client, entered into a Limited Dual Agency Agreement as well having the buyer execute an Addendum to the Contract of Purchase and Sale agreeing to seek independent legal and appraisal advice. At trial, the court found that the REALTOR® owed the buyer a duty of loyalty and disclosure which had not been sufficiently modified by either the Limited Dual Agency Agreement or the Addendum to absolve the REALTOR® from liability. The REALTOR® appealed. That the BC Court of Appeal upheld the decision is not surprising. ² What is of interest, however, are the comments of the Court of Appeal on the concept of limited dual agency.

First Time

This is the first decision of the BC Court of Appeal to consider the practice of limited dual agency in British Columbia. The court acknowledged the existence of the practice stating that “a dual agency agreement is an agreement entered into when a real estate agent acts for both the vendor and the purchaser. In such circumstances, there are inherent conflicts of interest for the agent, who is fixed with obligations to two principals. The dual agency agreement limits such fiduciary obligations so that such arrangements are possible.”

The court also quoted with approval from two other trial court decisions which had supported the concept of limited dual agency noting that:

“In British Columbia there has arisen in the real estate industry a practice and a procedure whereby REALTORS® can act for both parties, that is the seller and the purchaser. Where there is to be such an arrangement, a form of agreement has been developed which is signed by both the vendor and the purchaser. By that agreement it is acknowledged that both of the parties have agreed that one agent will act for both of them. The agreement purports to limit the scope of the duties which are owed by the agent to each of the parties. It contains an acknowledgement that all parties are aware of the specifics of the arrangement and the obligations that will be imposed.”³

Not Impartial

That the BC Court of Appeal has accepted the concept of limited dual agency is of significance as decisions of the BC Court of Appeal are binding on lower courts.

While the court was generally supportive of the concept of limited dual agency it found that it would not apply to a situation where a REALTOR® was not only the agent involved but one of the principals in the transaction. The court noted in this case that the usual dual agency arrangement involves three parties; the seller, the buyer and the REALTOR® and that the Limited Dual Agency Agreement imposed a duty of impartiality on the REALTOR® with respect to the REALTOR®’s dealings with the buyer and the seller. The court found that “impartiality is possible in the usual situation involving three individuals” but could not see “how an agent who is himself the seller could truly set impartiality as between himself and the buyer,” concluding that “where the agent is also a principal, the limitations in the dual agency agreement are inapplicable and cannot be given effect.”

Ineffective

In this case, having found that the Limited Dual Agency Agreement was ineffective in limiting the REALTOR®’s fiduciary obligations to the buyer, the court also found that the Addendum, which had been signed two days after the Contract of Purchase and Sale had been executed, did not assist the REALTOR® as the fiduciary breaches had already occurred by the time it was signed. It left open the possibility that the REALTOR® could have protected himself by getting the Addendum, or a similar waiver, signed at the outset of the negotiations.

Get Representation

Where a REALTOR® is selling or buying their own property to or from a client, limited dual agency is inappropriate. Their client should either be represented by another REALTOR® or should obtain independent legal and appraisal advice.

Courtesy of Brian Taylor Bull, Housser & Tupper LLP

• 2. DeJesus v. Sharif, 2010 BCCA 121.
• 3. Grimshaw v. Progroup Realty Ltd., 2004 BCSC 1836.

Copyright British Columbia Real Estate Association. Reprinted with permission.

* Formatting – YatterMatters

If Conrad Black can get out of jail there must be hope that a property exists that is affordable.

Depending on which end of the financial spectrum shines brightest there is a single detached home within the Real Estate Board of Greater Vancouver’s data that is sure to accommodate.

At The Top

You will find this home in Point Grey. At $25,000,000, its 21 rooms encompass 10,734 square feet of luxury living

.

According to the listing Realtor® – this home is on a “Magnificent .92 acre estate on this most prestigious street. Spectacular ocean views to Vancouver Island, the North Shore Mountains & Downtown Vancouver. A truly world class, 8 bedroom family home. Exceptional quality with beautiful African teak floors and mill work throughout. Extensive use of stone, CRESTON integrated lighting, sound and electronics. Geothermal Heat & 57′ indoor/outdoor Infinity swimming pool. Wonderful, private view side terraces and manicured gardens. Full gated, heated driveway.”

At The Bottom

There is a place called Lillooet Lake Estates somewhere near Pemberton. The listing Realtor® says it’s about 45 minutes north of Whistler.

It also has a view and is close to a beach. Although it might be a long commute to your Vancouver job, the spare $24,845,000 should be enough change for the new BMW 7 series to make the ride into town pleasant.

According to the Realtor® – “This fully equipped Cabin with large living area, 2 bedrooms, 1 bathroom and loft, is located in Lillooet Estates, only 20 minutes from Pemberton. Cabin comes furnished and features a new metal roof, new laminate flooring, propane appliances/heater, wood burning fireplace and generator. Enjoy this recreational 1/3 acre with mountain view & some lake view from the large sun deck and within walking distance to the common beach, which offers picnic area and boat lunch. Excellent gateway from the city (3 hours from Vancouver) to enjoy this peaceful setting or could become your residence. This is a share hold title property. Recreation is at your door step, ie hiking, swimming, boating.”

Pictures and Description Courtesy REBGV

I Know Stuff

Now if you are planning to buy or sell your Vancouver home in a price range that is somewhere between The Top and The Bottom, I’m around and know stuff that will expedite your buying or selling success.

Somehow many of us expected that it would be different.

It seems that big brother is once again going to drag us down.

False Hope

As Canada’s biggest trading partner the influence of U.S. economy on our well being as Canadians has always existed. Yet, for what ever reason, we keep hoping that each time they slide into an economic tail spin we won’t be affected.

Spillover

Barrie McKenna of the Globe and Mail makes it quite clear that the notion of escape is not realistic. Mr. McKenna notes that “The mighty U.S. economy is slowing again, and with it Canada’s chances of escaping the global downdraft.” He points to the index of consumer confidence saying it is the “latest clue the recovery has stalled in the U.S.” Canada should expect a “spillover”.

Photo Credit

Be Prepared

According to McKenna there are things to watch for:

• slowdown in manufacturing, and consumer spending
• increased unemployment
• shrinking economy
• rapid cooling of the housing market – leading to lost jobs, retail spending and manufacturing
• shock of increased interest rates expected next Tuesday

Some of the best things in life are free and come in little packages.

These guys pass through my back yard in flocks of 10 to 30 both in the morning and afternoon. Though some people are finding it tough to buy or sell their Vancouver homes, they serve as reminder that there are still many good things in life that will, if only for a moment, replace those worries with wonder and a smile.

Bushtit

Bushtit – ©YatterMatters

Invitation

If you live in Vancouver it isn’t hard to have the Bushtit visit you on a regular basis. They are not shy. A small feeder with a block of suet will attract them and allow you to see them up close.

You can find everything you need for your guests at Wild Birds Unlimited at Broadway and Birch (1302 W.Broadway). John the proprietor, and his staff are kind, informative and helpful.

Note: for size reference the dimension of the bar on which this Bushtit is perched measures 5/8 inches.

It’s hard to figure out what to do or what to expect when real estate markets change.

Searching through my repository of things that keep you up at night, I found this little picture, a road map if you will, of expectations.

Sine Wave

Westcore Funds of Denver produced this graph back in 1998. Presumed is that it was built to help explain the ups and downs of the stock market. I think that to some degree it also applies to the real estate market.

And Around We Go

Since the building of this graph in 1998 the story hasn’t changed much. Applied to the local Vancouver market, the graph emulates the up and down ride that has a lot of people wondering what’s next.

Stages

Some folks in the Vancouver real estate market might believe they are riding this ‘S’ curve. Depending on personal circumstance, they may be at one of these stages. For that matter they may have experienced any number of them be it optimism, euphoria, denial or despondency.

On this ride if you have full fare, it returns to optimism.

Question for You

I assure you that you won’t be put on a CBC interview if you comment. However, with full knowledge that you can’t resist the invitation to speak out the question is this: -

With due reflection, at what stage on this ‘sine’ wave do YOU think the buyers and sellers of Vancouver homes are presently sitting?

Admittedly, I’m not a psychiatrist. However, as an observer, one wonders if and how the stress of a changing real estate market affects buyers and sellers.

Two observations, which in of themselves are not meant to be insensitive, seem to verge on the macabre. They proved bothersome.

The Trigger

The correlation of thought was triggered by two reading events. First, was the reading of a comment in the Edmonton Real Estate Blog post about what is ‘normal’ in the market place. Followed a few seconds later was a report in the Province about someone attempting to open aircraft doors in mid flight.

The Comment

“Oh my gosh, this conversation is scaring me beyond belief. I am tempted to just let foreclosure take place if I can’t sell – I am in so much debt it is not even funny, and it was well-intended debt from renovations and school. So far all I have done is self-sabotage myself because of this economy…Does anyone think that there is something good that will come of this?”

The Report

Photo Credit

According to the Province, Barbara Morton of St.John’s decided she wanted to get off a West Jet flight that departed Calgary on it’s way to Halifax.

“She got up out of her seat and said she wanted to leave. She reportedly tried to yank open an escape hatch before concerned passengers and cabin crew restrained her…”

The Bothersome Part

Assumed is that the commenter had read the previous notations and her reaction was to reach out with heartfelt reaction palpable in fear. Sensed was that ‘she’ was at a point of capitulation to predetermined solutions waiting to harden as lines in concrete. Feasible alternatives to that hardening, do not present on the horizon. Despair it seems, appears at hand.

By comparison, the reaction of Ms. Morton to make a decision to jump off the plane, seemed extreme – but, was it?

The thought occurred, that if her reaction was a result of similar circumstance, she had passed fear, capitulation and was beyond despair. Her solution, an unacceptable but determined resolution.

Unaware

As real estate practitioners often we are invited into circumstance the depth of which we may not be fully aware or comprehend. I relate to my fellow US practitioners and real estate friends a few of which have in the past few years experienced situations such as these. I now wonder, in a while, will this market change have the potential to open doors to such circumstance?

It leaves me to reflect – what does one do, what can one do?

It’s bothersome!

Market states in Vancouver’s market segments are comprised of elements that include Units Listed, Units Sold, Active Listings, and Average Sale Price. Within those segments are property types referred to as Detached, Attached and Apartment. The data presented focuses on the detached property type.

We have examined the elements in previous posts having looked at the overall state of the Real Estate Board of Greater Vancouver’s (REBGV) and individually at the West side – one segment of the total market. Today we look at another major segment – the East side.

East Side Detached Units Listed

Units Listed have continued to drop sharply from April’s high of 408. That number is by comparison to May and June of 2004 small as those months recorded the number of units listed at 536 and 539. Currently, 302 units were listed in June 2010.

East Side Detached Units Sold

There has been a steady drop in sales to the current 145, down from this year’s high which in March 2010 recorded 174 sales on the east side – a number that approached but never came close to the 311 sales recorded in April of 2005.

East Side Detached Active Listings

No one is able to truly ‘guesstimate’ when Active listings will begin to subside. At 814 recorded this June, it is a force to be reckoned with but, it certainly is not as high as the 1,080 Active listings recorded in October of 2008.

Capilano Suspension Bridge 1906

East Side Detached Average Price

The average price on the east side has exceeded what was thought to be a high in March of 2010 when $802,364 was recorded as the average price. It currently rests at $803,939.

Bridge to Future

Somewhere in all of this is a bridge to future market conditions. In the interim, like these men and women who took a moment to appear in this 1906 snap shot while on the Capilano suspension bridge, it would seem that we too must take a moment in time as we wait for this east side snapshot to become market history.

The beginnings of the change can be seen. Units listed are decreasing as are sales. What remains incongruent is the balance between the number of Active listings and Average prices. One will follow the other and we can expect that both price and active listings are due to correct.

Sometimes it’s the unrecognized stuff that is right in front of your face that carries great importance.

Here’s a ‘What If’ for you.

What If

Speculation is always fun. You never really have to have the facts and if you did would it be speculation at all? In keeping, there are no compiled or verifiable numbers for this bit of smoke in your eyes.

Photo Credit

While reflecting on reasons that would justify the great number of active listings in the Vancouver market place it occurred to me that maybe, just maybe, it could be the result of the discounted commissions or broker fees that have become the rage.

Go Fish

Really, what does a seller care? For a few pennies he pays a Realtor® a discounted fixed fee to throw his listing into the MLS® cauldron. It is strictly conjecture that many of these sellers have a ‘go fish’ attitude. If it sells high – great! If it doesn’t – the only thing lost is a little Pine Sol splashed around the house.

A Maybe Problem

The problem might be that a majority of the current active listings are of this variety. If that is the case you have to ask if there is true impetus to sell? If there isn’t, then could this be a valid explanation for the number of listings that are floating around on the market? My guess that this is not the case but then again – we are speculating!

Without facts, we just don’t know. MLS® to my knowledge does not currently track this type of business. What we are seeing today could however be the result of a bunch of ‘maybe’ listings with nowhere to go except off the market.

Not Discounting

In the interim it might be wise to not discount this fact when looking at the active listings. What we might have is a very real problem of not actually knowing if there has been another element added to the market prediction mix. It is a ‘what if’ that could be important and one that will skew those elements leaving us to wonder how is the market really performing?

Yesterday’s Residential Averages delivered some surprises.

Combining market elements such as Units Listed, Units Sold, Active Listing to the Average price provides provides a more comprehensive perspective.

Vancouver Detached Units Listed

Units Listed continued to drop from April’s high of 3183, a record level, down to June’s 2300.

Vancouver Detached Units Sold

If the number of sales are the measure of a market then this market is slowing. At 1141 it has decreased from April’s high of 1372. Reviewing the year, January and February were lower at 709 and 984 respectively. Presumption is that the market may well reach those levels again but – be prepared for surprises.

Vancouver’s Detached Active Listings

Active Listings continue to pile up. Currently at 7529 it seems like an extraordinary number of homes for sale. It does not however, surpass the 10,382 active listings of April 1990, a month in which there were only 1,008 homes sold.

Thoughts

Photo Credit

While composing this missive at Hornby Island’s Ford Cove, it is hard to dismiss the implications that the continued high level of active listings relative to sales will have on this market. As evidenced from yesterday’s average price up and down bumps one should expect an unsettled market that will beg many questions –

• Will sales continue to decline?
• Will prices hold, rise or drop?
• Will buyers sit out the market till it settles into a more passive level.
• What effect(s) will global influences have on the local market?

Assumed is that any speculation regarding Vancouver’s real estate market will allow for as many surprises that were and will continue to be delivered by 2010′s FIFA games.