TORONTO — Drew and Jonathan Scott live in Las Vegas, but the "Property Brothers" stars still invest in real estate in their hometown of Vancouver where red-hot home sales and prices show few signs of cooling.
"The big thing is we're seeing a lot of these houses that are selling for a million over list," said Drew, a real estate expert who scouts and negotiates fixer-upper homes on the hit W Network series. His identical twin brother, Jonathan, is a licensed contractor and master builder who handles the renovations.
The Real Estate Board of Greater Vancouver said last month was the second busiest January on record as residential property sales in the region jumped nearly 32 per cent, compared to January 2015. The estimated price of an average home across Metro Vancouver surged nearly 28 per cent to just under $1.3-million from January of last year.
"Some people get into a big frenzy and they bid up, bid up, bid up, and they don't realize they're paying way more than the house is worth."
Across Canada, the national average sale price for homes increased 12 per cent last December compared to December 2014, according to the Canadian Real Estate Association. When the greater Vancouver and Toronto areas were excluded, the increase was 5.4 per cent, CREA said.
Drew recommended would-be buyers seek an agent to evaluate comparable sold properties to help determine true market value.
"Some people get into a big frenzy and they bid up, bid up, bid up, and they don't realize they're paying way more than the house is worth. You don't want to be in that situation.
"There are several times that we've looked at properties with clients, and they have all these things that they want to do. But every neighbourhood has a cap for what you can do for an improvement and what people will buy and pay for in that neighbourhood."
Enlisting a contractor who can provide a quote on repair or renovation costs can help support the efforts of an agent who can determine whether changes will be a financial boon or bust, Drew noted.
"Most people skip the step," added Jonathan. "They think: 'Hey, I want to renovate my house.' They just dive right in and they spend all this money and they don't think about the fact that 'Oh, wait: Am I actually going to be able to get the money back out of the place if I have to sell?'
"I've had so many clients that have said to me: 'Oh, well, I know I'm overspending on the renovation. I'm doing a little more than I should, but I'm going to live here forever.' But circumstances change and a year later they have to move. So you always, always have to keep in mind that future resale value."
Drew said another cardinal mistake prospective buyers make is embarking on the process unprepared, including looking for properties when they're unaware of what they're qualified to spend.
"Have a home inspector ready to go. If you're going to do a renovation have a contractor ready to have a look at the place so you can come in right away with the strongest offer," he said. "That's why people miss out. It's because they're not prepared to pounce when they know it's the right property for them.
"We tell clients all the time ... Real estate is a great way to make money. It's a great way to grow an investment over the years. However, if you're not ready to get into a property, or if you're not ready to get into a certain size of property, don't rush. The worst thing you can do is become house poor, and we want to make sure that people aren't."