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Real Estate buyers should also be honest when seeking a broker

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You often advise home buyers to interview potential salespeople, but will sales reps also interview me? What sort of questions should I expect them to ask?

The Real Estate Council of Ontario (RECO) strongly advises buyers and sellers to use the Look up a Real Estate Salesperson, Broker or Brokerage search tool on the RECO website and to interview several candidates before you sign an agreement with a brokerage. When you conduct your interviews, you could request references and ask about their experience, general approach to buying and selling, the services their brokerage provides and what the proposed commission or fee would be.

You’re correct that those potential candidates will ask you some questions, and some of them could be pointed and personal; they will certainly want to know if you’ve signed a Buyer Representation Agreement (BRA) with another brokerage, for starters.

You may not want to lay all your cards on the table during these initial interviews. As I mentioned in a previous column, unless you are a client — not a customer — of a real estate brokerage, a salesperson or broker doesn’t owe you a fiduciary duty to keep sensitive information, such as your finances or your reasons for buying, confidential.

Once you’ve found the salesperson who is right for you, it’s a good idea to be open and honest about your needs, finances and service expectations so your salesperson can find you suitable properties. Trust your salesperson but exercise some caution if they show you any properties where they also represent the seller.

Here are some questions your salesperson may pose, and a few you should ask yourself.

“What sort of home are you looking to purchase?”

Have you thought carefully about what you want in a home versus your actual needs? Hardwood floors and granite countertops are nice to have, but if you have a large family, you primary interest will likely need to be the size of the dwelling and the number of bathrooms.

Do you have any deal-breakers? Some buyers may not want a home near train tracks, hydro wires or a wind farm. A train runs close to my home a few times per day. I usually don’t notice it, but it might be a deal-breaker for others.

“What’s your budget?”

Even if you’ve been preapproved for a mortgage, you will still have to provide the seller with a down payment out of your own pocket. And have you factored in additional expenses, such as legal fees, the land transfer tax, moving costs, or utility hookups?

“How would you like us to stay in touch?”

Do you need regular in-person progress reports, or would you prefer that your salesperson communicate through email, text or other electronic means when they have news to share? Make sure you’re on the same page.

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Fronsac Real Estate Investment Trust might be Overpaying Its CEO?

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Jason Parravano became the CEO of Fronsac Real Estate Investment Trust (CVE:FRO.UN) in 2017. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Fronsac Real Estate Investment Trust

How Does Jason Parravano’s Compensation Compare With Similar Sized Companies?

According to our data, Fronsac Real Estate Investment Trust has a market capitalization of CA$81m, and paid its CEO total annual compensation worth CA$147k over the year to December 2018. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at CA$135k. We looked at a group of companies with market capitalizations under CA$263m, and the median CEO total compensation was CA$161k.

So Jason Parravano is paid around the average of the companies we looked at. This doesn’t tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.

The graphic below shows how CEO compensation at Fronsac Real Estate Investment Trust has changed from year to year.

TSXV:FRO.UN CEO Compensation, October 20th 2019

Is Fronsac Real Estate Investment Trust Growing?

Over the last three years Fronsac Real Estate Investment Trust has shrunk its earnings per share by an average of 51% per year (measured with a line of best fit). It achieved revenue growth of 43% over the last year.

As investors, we are a bit wary of companies that have lower earnings per share, over three years. But on the other hand, revenue growth is strong, suggesting a brighter future. It’s hard to reach a conclusion about business performance right now. This may be one to watch. You might want to check this free visual report on analyst forecasts for future earnings.

Has Fronsac Real Estate Investment Trust Been A Good Investment?

Most shareholders would probably be pleased with Fronsac Real Estate Investment Trust for providing a total return of 42% over three years. This strong performance might mean some shareholders don’t mind if the CEO were to be paid more than is normal for a company of its size.

In Summary…

Remuneration for Jason Parravano is close enough to the median pay for a CEO of a similar sized company .

While we would like to see improved growth metrics, there is no doubt that the total returns have been great, over the last three years. So considering most shareholders would be happy, we’d say the CEO pay is appropriate. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Fronsac Real Estate Investment Trust.

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Slowdown on Gripped Iran Real-Estate Market

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A serious and historic slowdown has gripped Iran’s residential real-estate market, with nationwide sales down 55 percent this month compared with the same period last year.

Iran’s semi-official ISNA news agency says nationwide sales from September 21-October 6 were 16,400 units, a huge drop from the previous year when around 35,000 units were sold in the same period.

The main reasons for the drop is a deep economic recession and high inflation, which have affected the middle class, especially people on fixed incomes and salaries. They simply spend their money on bare necessities and are priced out of the market for buying an apartment. Some can barely afford rising rents, especially that in Iran owners demand extra cash for signing a rental agreement.

But oddly, high prices are also a reason why those buyers who have the money sit on the fence and wait to see a more reasonable market. Prices have risen anywhere from 70-200 percent in the last 18 months.

If there is an economic recession, why have prices gone up? The reason for this is a steep devaluation of the local currency. The rial has lost its value against the U.S. dollar and other major currencies fourfold since February 2018, mainly as a result of crippling American sanctions.

Owners of homes and apartments think of asking prices for their properties in terms of dollars, not the local currency. Therefore, prices owners demand easily double and triple. In fact, calculated in dollars, real estate prices have not risen at all. One square meter in Tehran goes for an average price of $1,200 or $110 per square foot. This is much lower than in other capital cities in the world.

But people with fixed incomes are not earning dollars to be able to afford the higher prices. In short, a combination of high prices in local currency and lack of jobs and higher incomes have pushed sales down.

However, prices seem to be slowly declining, as those owners who need to sell are ready to bargain. There are also buyers with ready cash who want to take advantage if the price is right. For them, it is a strategy to protect their capital in Iranian currency from further devaluation – invest in real estate.

In the last 30 days, sales in Tehran have improved by 25 percent, according to ISNA and real-estate agents who have spoken with local media. This might signal a better balance between demand and supply as prices have edged lower. But still the volume of sales remains much lower than last year and a fraction of what it was in 2017, before U.S. sanctions.

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Canadian Real Estate Sales Jump To 2016 Levels

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Who needs government stimulus? Canadian real estate sales are on the rise, in almost every major market. Canadian Real Estate Association (CREA) numbers show real estate sales are back to pre-cooling measures, as of September. The big spike in sales may have you thinking of a recovery. However, CREA’s chief number cruncher expressed some concerns. The length of the rebound from lows will be dependent on the global economy.

Canadian Real Estate Sales Rise Over 15%

Canadian real estate sales made a substantial climb compared to last year. CREA reported 41,819 sales in September, down 3.81% from the month before. Compared to the same month last year, sales are up a whopping 15.52%. Monthly declines are seasonally expected, but the annual increase is big news.

Canadian Real Estate Sales

The unadjusted sales for all home types, as reported through the Canadian MLS.

Source: CREA, Better Dwelling.

Sales growth is trending higher, as government’s promise to stimulate demand. September’s rise in sales is the biggest 12-month increase since February 2016. Last month is also 7.45% higher than the 10-year median number of sales for September, and the biggest since 2016. Strange to promise demand stimulus, as real estate sales approach new highs. Sales are right back to levels before governments tried to lower sales volumes.

CREA’s chief economist Gregory Klump poured a little cold water on the sales increase. Klump notes, “how long the current rebound continues depends on economic growth, which is being subdued by trade and business investment uncertainties.” Basically, things have improved – but remain cautious.

Canadian Real Estate Sales Change

The annual percent chage of unadjusted sales for all home types, as reported through the Canadian MLS.

Source: CREA, Better Dwelling.

British Columbia Has The Fastest Rising Markets

The fastest rising sales numbers are in Vancouver, Fraser Valley, and Quebec City – in that order. Vancouver reported 2,363 sales in September, up 44.6% compared to the same month last year. Fraser Valley followed with 1,283 sales, up 31.3% over the same period. In a distant third is Quebec City with 553 sales, up 22.6% from last year. Worth a note is BC markets were unusually slow last year. Even though Vancouver and Fraser Valley saw a big jump in sales, they’re still shy of 2017’s levels.

Canadian Real Estate Sales By Market

Canadian real estate sales in markets with more than 400 sales in 2018.

Source: CREA, Better Dwelling.

Slowest Rising Sales Are In Greater Toronto Suburbs

The slowest markets in Ontario are Greater Toronto suburbs, and Halifax. The Niagara region reported 472 sales in September, down 4.3% compared to last year. Hamilton follows with 1,020 sales, up 3.2% from last year. Halifax was the third slowest major market with 514 sales, up 5.5% from last year. In case you missed it, only one major market in Canada saw declines in sales last month.

Canadian Real Estate Sales Change By Market

The percent change in Canadian real estate sales, in markets with more than 400 sales in 2018.

Source: CREA, Better Dwelling.

Canadian real estate sales are up around the country, in all but one major market. When markets move like this in sync, it typically has little to do with local fundamentals. Instead, this more likely has to do with the anticipation of broad policy changes.

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