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Say What??

Say What??

Can anybody really believe we are more than a year into this pandemic, and things seem worse than ever before? With another lockdown in effect, schools and restaurants closed yet again, and vaccines rolling out at a glacial pace things seem grim, real grim. Like Armie Hammer’s current career grim.

There have been many daily rituals that have kept me going over the past year, one of which is making sure I laugh out loud a few times a day. I’m definitely indiscriminate when it comes to comedy. High brow or low brow, Mel Brooks or Albert Brooks, the eloquent Stephen Colbert or some dude taking a ball square in the crotch. If it makes me laugh it’s all good.

With that in mind, I wanted to write a blog that is light hearted and doesn’t require heavy rumination. I want to put in layman’s terms the sneaky code words us shifty real estate agents love to use. I want to break down and expose these flowery terms for what they really are. So without further ado…

Condo alternative / cute as a button. “This cute as a button home offers condo alternative living without the fees!” Translation: This house is small AF, like teeny tiny shoebox tiny. Smaller than Verne Troyer’s casket (God rest his Mini me soul). If you buy this house you will outgrow it and regret your puchase within a year. Guaranteed.

Transit at your door. “Urban living at its finest with transit at your door!” Translation: This house is located on a busy ass street, with a bus route, bicycle lanes, a shady dive bar right across the street and an on ramp to the DVP. Think O’Connor Dr in perpetual rush hour mayhem, and go get those ear plugs.

Loved by the same family for over 50 years.
“On the market for the first time ever, this charming home has been loved by the same family for over 50 years!.” Translation: This home is an untouched time capsule to the 70’s. This home is a museum. Grandma and Grandpa got it on surrounded by wallpaper, blue carpets and antique brown kitchen cabinets.

Attention handymen and renovators. “Attention handymen and renovators, bring your imagination to this blank palette!” Translation: This house is the biggest dump you will ever see. It smells like piss and stale beer and needs a gut renovation and likely more. The water and power are turned off, and it was smoked in for 50 years.

Speak to LA (listing agent) re parking. “House shows like a 10, speak to LA re parking before making an offer!” Translation: This house has no legal OR usable parking. In the first case it means there is a front pad space that isn’t legally recognized by the city (and could be revoked at any time), and in the latter case it means there is a parking space but it’s at the back of a mutual drive that’s so narrow a motorcycle can barely fit down it.

Funky, up and coming location. “Funky, up and coming location offers unbeatable value!” Translation: This neighbourhood is still sketchy and scary AF, and that’s why it’s cheap. Funky = not yet gentrified and still crime ridden. Think Regent Park of 15 years ago crossed with the future town from Back To the Future 2. Single ladies need not apply.

Boutique building. “Rarely available unit for sale in sought after boutique building!” Translation: Unit for sale in a SMALL building without a concierge or any amenities to speak of. The real estate agent dusted off their dictionary and is using the word boutique to jazz up a mediocre offering and goose the price further.

Motivated Seller.
“Any offer will be considered, motivated seller!” Translation: In this current market if you are a motivated seller something has gone horribly wrong. Either the enterprising Uber driver and part time discount realtor botched the sale, or the house is overpriced even in the hottest sellers’ market ever. The words “motivated seller” is tantamount to throwing chum in shark infested waters.

Seasonal Lake Views. “This serene oasis in the city offers seasonal lake views. Translation: In the dead of winter, when every single tree is bare and every soul is crushed, if you stand on your tippy toes on a ladder with a pair of binoculars you might see a sliver of the frozen and barren lake.

Long term tenants willing to stay. “Long term AAA+ tenants willing to stay!” Translation: If you are a potential buyer of a house and you see this head for the hills. Long term = rents way below fair market value = tenants who will fight you tooth in nail to leave = a year plus struggle in our current backed up system. Nuff said.

That’s all for now. Stay safe and healthy everybody, brighter days are certainly ahead.

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HouseSigma – Friend or Foe??

HouseSigma – Friend or Foe??

I find it fascinating to grab a beer with the veteran agents in our office, the agents 25 plus years in. They often speak wistfully of the “good old days”. That glorious time (for them) before computers when new listings were literally sheets in a book, fax machines were revolutionary and deals got done in bars with handshakes. With sadness they speak of this time, as they struggle to understand the direction our industry (and society) is heading in.

I would say I fall somewhere in between. I’m old enough to have gotten through high school in pre-social media times (and for that I am eternally grateful), and I was trained to use traditional sales methods, primarily telephone cold-calling.

The phones served me well for a long time, but I would be lying if I said that the returns haven’t been diminishing in recent years. The only people with landlines are getting older and older, and during a pandemic that’s not exactly low hanging fruit.

It became apparent to me that I needed to embrace new technologies and modes of doing business. As a person that finds the concept of the Kardashians vapid and soul crushing, I definitely had to come around to the notion that social media is a legitimate thing, and a legitimate way to do business.

This got me thinking about how much things have changed in my decade in the business. What stands out most to me is the advance in the level (and quality) of information that has been made available to the (non-agent) general public. This is what has “changed the game” and been most disruptive, and the hardest thing for the wistful agent in the opening paragraph to react to.

Ten years ago, real estate technology was relatively simplistic. Apps were still in their infancy, and there was effectively only one website where the public could find information. That website was Realtor.ca, and it was (and still is) far from a user-friendly platform and generally deficient in many ways.

Fast forward to today and the times they are a changin’. Realtor.ca has been left in the dust by much better public websites, none more innovative than Housesigma.com. This site truly raises the bar and just about every buyer I worked with in the past year mentioned it or used it as an additional data source. If you haven’t checked it out you should.

All you need is an e-mail address, and with that Housesigma.com will provide you with full details of every house for sale on the MLS (Multiple Listing Service), complete sales history of the house you are interested in AND sales data for comparable houses recently sold in the area.

The last point is key, because up until 2017 the public could only consistently access sales data by having a registered real estate agent send it to them. Thus actual person to person engagement was required. But the 2017 Federal Court of Appeal ruling overturned this, and all of a sudden sold data was there for every Tom, Dick and Harry to see.

This ruling divided the agent pool. Traditional agents were worried – if the public has access to more information they will have less need for an agent. They could point to Napster and what it brought to the music industry. But anybody that opposed Napster certainly ended up on the wrong side of history.

Meanwhile, forward thinking agents embraced the release of sales data. We are after all in the business of providing our consumers the service they want, and the one thing they wanted more than anything was access to more information. In fact, give the public all the information they want. They will always need an expert to help them make sense of it.

Another aspect of the site that I find fascinating, and traditional agents find a huge pain in the ass, is the “estimated price” feature, where an algorithm provides a projected sale price for the house you are interested in.

The reason some agents hate this feature is that sometimes buyers “lock in” on the estimated price and take it for gospel, when in reality it is often wildly inaccurate. Just last week buyers I’m working with were interested in a home in East York and had dug up intel on Housesigma.

It was showing a sale price of $1,160,000 on a list price of $1,129,000. We didn’t end up making an offer, but in conversations after we saw the house I could see they were getting stuck on the $1,160,000 number, which I knew was way too low. Other agents have complained of the same thing happening, and “deals lost” because of this bad intel.

I explained to my buyers to take it with a grain of salt. I explained to them what it is, and what it isn’t. I took them through my own curated comparable sales one by one in painstaking detail, and talked about where the market is today and where it is heading.

In short I did the job they hired me to do, and together we decided the house was out of budget. By doing so we opted out of making a hopeless offer that would have further pushed the price up. By doing so we made it easier to get the next house that came our way.

So what does this all mean?

Yes, there is more information available to the public than ever before.

Yes, the “good old days” are gone forever, especially with the pandemic.

And yes, agents are needed more than ever before, to help navigate the information, mis-information and tumultuous times. It’s never been more important to do things right, with an experienced professional, especially as I write this on the eve of the US Inauguration. The stakes are too high otherwise.
And the home that Housesigma predicted would sell for $1,160,000? It sold for $1,340,000!! Somewhere the monkeys with the typewriters are grimacing.

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2020 Year In Review

2020 Year In Review

If nothing else 2020 has been consistent. Much like warm beer, cold french fries and wet hockey equipment 2020 has been a consistent drag, providing humankind with repeated blows to the nether regions. 2020 has also been a huge bummer for celebrity deaths, taking beloved icons like Alex Trebek, Sean Connery, Eddie Van Halen and the dude who played Deebo in Friday. But what 2020 has ultimately proved unequivocally is that the Toronto real estate market remains an unstoppable force.

2020 began full of hope and optimism. You could still actually get a haircut, have friends over for dinner and make an ass of yourself at a bar. The real estate market started out blazing too, just like every other year. The average GTA sale price for all home types in January was $838,087, which represented a 12% increase from January of 2019. The next month the average sale price shot up to $910,142, a massive month over month jump and suddenly in reach of the all time record month of $920,791 from April of 2017 (the now infamous month that led to the creation of the Fair Housing Plan).

Cut to March of this year, and then everything went to seed. We all unfortunately became familiar on a first hand basis with a global pandemic, and went into a lockdown on March 23rd. Schools closed across the province, and the fear became very real. People were afraid of the virus, afraid for elderly loved ones and afraid of losing their employment, to name just a few things. But in spite of all this, and the last week of the month being a full lockdown, March somehow closed out at $902,787.

In April things became dire. The Prime Minister began addressing the nation on a daily basis, and the government pledged billions in relief to help stave off financial ruin for millions of Canadians. In spite of real estate being declared an essential service after some initial debate, the average sale price plummeted to just $820,222, which represented an almost $100,000 drop from February. But what was most troubling was the drop in total sales. April is often the busiest month of the year, but this year we saw only 2,958 sales – a stunning 67% drop from the year before!

April became all about “surviving the day”. Parents were stuck trying to work (if they still could) and juggle childcare and homeschooling. Zoom parties became a thing. Sales of booze and pot hit record highs and Netflix became our best friend. In addition, many people were simply afraid to leave their home. And this is where the real estate market felt the pinch. In spite of the industry’s best efforts to “digitize” the process (virtual tours, buyer walkthroughs and cyber open houses) the vast majority of buyers were understandably not down with the notion of buying a house without actually being able to see it in person. They would rather wait, and the question we all had was for how long? How long would this current state of affairs go on for?

The answer for our industry was (thankfully) not very long, and by May things started to rebound. People started thinking about their real estate plans again, and started feeling safe enough to venture out for in-person showings (masks, gloves and hand sanitizer were and still are mandatory). The average sale price creeped up to $863,523 and total sales nearly doubled from April. We were cautiously optimistic, and it turned out we had good reason to be.

By June it was back to trying to take a sip of water out of a firehose. Drop it like it’s hot. June represented an all time record month at $831,882, meaning April of 2017 had finally been eclipsed. And guess what happened next? Another record month in July, then again in August and September until 2020 hit its peak in October at $968,162. To throw one final stat at you, that sale price represents a 14% spike from October of 2019.

So what to make of this surge, when so many other sectors have been virtually collapsing? I have a few thoughts.

I think the roughly 5 weeks of people self isolating created a pent up demand that we have rarely ever seen. Once people adapted to co-vid life and realized how to still work, (and realized that the world wasn’t going to end), the Spring market kicked off in May a couple of months later than usual. This Spring market fervour carried into the Summer and Fall and is only now waning as we enter the holiday season.

From a budget perspective it became evident early on that the pandemic was making it difficult to spend money. There would be no European Summer vacations or Christmas in Jamaica. For most of the year there have no expensive dinners to spend on, and most have saved significantly on things like gas. So why not grab that saved money and go all in on a house?

Co-vid undeniably accelerated certain societal behaviours. This is especially true with the shift to people working from home and using things like Zoom for meetings and conferences, which I believe will remain to some degree even when things get back to “normal”. If you are going to be spending more time at home you want to be comfortable. You want space, a pepper home office and a nice yard. For many the only way to get these things was to get a new house.

Further to the previous point, co-vid also accelerated condo owner’s plans to move up to a house. I spoke to many condo owners this past year and they often said they felt like “the walls were closing in on them” and it felt like living in a fishbowl. This feeling drove them to seek out a house which offers more space and a backyard with some grass.

Finally, it is my firm belief that in 2020 the market simply did what it was supposed to do. Toronto is a world class city and our real estate prices are going to increasingly reflect that. It’s hard to imagine anything more devastating than a deadly global pandemic, but even that only put a small and temporary chink in the Toronto real estate market. It’s hard to imagine what could ever stop this train.

So as we stumble towards 2021 in yet another lockdown, the question we all have is what will the next 12 months bring? I don’t profess to have the answer to that, but I certainly wouldn’t bet against the Toronto real estate market

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Thoughts On The Fair Housing Plan

Thoughts On The Fair Housing Plan

Overheard recently at Starbucks.

Exasperated Buyer (loser of 8 bidding wars): I’ve had it. My wife is 7 months pregnant and I am sick of spending every Saturday with you. I want to bid $1.8 on the semi on Prust Ave.

Well Meaning (but increasingly desperate) Agent: You mean the one listed at $1.2, with the leaky basement and knob and tube??

Exasperated Buyer (loser of 8 bidding wars): Yep, that’s the one.

Well Meaning (but increasingly desperate) Agent: Ok. But you know, there were some recent changes to the industry that I should probably tell you about.

Exasperated Buyer (loser of 8 bidding wars): Oh yeah, like what?

Well Meaning (but increasingly desperate) Agent: Well, to name a few…

There is now a 15% Foreign Buyer Tax and they are cracking down on “speculative flippers”.

The have expanded rent control for all buildings, including post 1991, and there are new initiatives to stimulate the construction of rental buildings.

And best of all, they are going to take a hard look at “realtor practices”, which will involve the tarring and feathering of douchebag agents that continue to list houses at $699k when they know they will sell for over a million.

Isn’t this great?

Exasperated Buyer (loser of 8 bidding wars): Dude, aren’t you listening to me? I don’t give a rat’s ass about foreign buyers looking to jack up rents. I want to bid $1.8 on the semi on Prust Ave listed at $1.2.

Well Meaning (but increasingly desperate) Agent: Great, let’s do it!

And the market will bravely march forward unchanged. Have fun house hunters.

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The Trump Effect

The Trump Effect

Well, America actually did it. They did it. My beloved America went and left the biggest turd in the toilet bowl you could ever imagine. Or in the words of Michael Moore “the biggest f%&k you in the history of America”. Probably the history of mankind. And now I have to stare at that god awful hairdo for another 4 years.

I will not wade into the politics at all in this little entry, but suffice to say as the father of a daughter (and as somebody who believes in equality in general) you can gather what side I am on. I can find Trump moderately amusing as a buffoon in a boardroom firing people, but this is next level.

No, the matter at hand is the Trump effect and real estate. The question I have been asked again and again over the past couple of days is “how will this affect our real estate market?” Some people are genuinely concerned (frightened even) on a macro level about the effect he will have on the world as a whole, and on a micro level about the effect he will have on our real estate market. One past client called me and is convinced Trump is going to drag the entire world into the shitter, and that the ripple effect is that the Toronto real estate market will flush right down with him.

So could this possibly happen?? I really don’t believe it could, and I think we all just need to take a deep breath and relax a bit. Brew up a nice mug of hot cocoa and listen to some Anne Murray. Happier times.

Some industry people actually think Trump’s election will have a positive effect on our market, for 2 main reasons. The first is that there will be an influx of our desolate neighbours to the South looking to buy in Toronto, and the second is that interest rates will stay low as a hedge to offset the chaos a Trump presidency is expected to create. I am skeptical that either of those things will help. First off I don’t believe there will be a mass exodus out of America (again, relax people). And secondly low interest rates are one of the main culprits that keep pushing prices up an unattainable rate.

So what do I believe will happen? Honestly I don’t know, and that’s what is kind of scary about this whole thing. Trump has been so unpredictable up until now, crazy even, to the point that nobody can really say they have a firm grip on what he will (or won’t do). Even his closest advisors don’t know what he is going to do. He probably doesn’t even know what he will do.

So while I don’t think the real estate market will crash, as I stated above, I do think there is the chance it could behave erratically in the coming year. It could very well soften if buyers become reluctant to increase their financial exposure in the context of a muddled America and world economy. Buyers may decide they no longer have the stomach to pay $900k for a smallish 3 bed semi with a crappy basement and a narrow mutual drive on Milverton. Or things could remain unchanged, and prices keep shooting up as bullishly as ever. The point is that nobody truly knows as I write this just a couple of months before Trump is elected. Call it the Trump Effect, and Wednesdays are now officially Trump day (sorry hump day). Thanks again America.

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Holy Bungalow!!

Holy Bungalow!!

The meteoric increase in real estate prices across the GTA has certainly been well documented, in some cases ad nauseam with certain media outlets. Being in the business, it seems every week I have some variation on the same conversation, usually “Holy crap, did you see what 123 Main St. sold for last night? Those people must be nuts!!” Every night new sale records are set, with no end in sight. The poor buyers have the deck stacked against them like never before.

In this environment, I would argue that no house is more coveted than the humble East York bungalow. These bungalows are hot, white hot. Think Margot Robbie hot in the Wolf Of Wall Street, and you get the idea.

 Take Lankin Ave in East York as our test street. Our team listed a standard issue bungalow for $639k in April of this year, and we expected it to sell for anywhere from $750k to $775k. Offer night came and with a flood of offers, 12 in total. When the dust settled the winning bid came in at $861k, or approximately $100k more than we expected. We were shocked and our lovely seller was even more shocked. A new high bar was set for the street, for about 6 minutes. August 30th saw a new record set, and this time the number was $999,000!!! That’s an increase of $138,000 in about 4 months, and we now officially live in looney land.
Lets look at some sales of bungalows on the street since 2014.
Bungalow A – sold for $676k in December of 2014.
Bungalow B – sold for $747k in June of 2015.
Bungalow C – sold for $861k in April of 2016.
Bungalow D – sold for $999k in August of 2016.
 So who is buying Bungalow D at this kind of price? It’s certainly not the flippers anymore. Interestingly Bungalow A was flipped by being “topped up” with a second storey, and re-sold for $1,246,000 in July of 2016. This sale also happens to represent the high sale on Lankin Ave for this year. But that was 2014 (for the purchase) and this is now, and these flips just don’t happen anymore. There simply isn’t any margin for profit, no “spread” to make money.
Lets look at Bungalow D again in the context of a potential flip.
1) Purchase price of $999k
2) Renovation / permits / soft costs (realtor fees, land transfer) of $400k
Total investment of $1,400,000. Most flippers insist on a profit of $250k in this scenario, meaning it needs to sell for $1,650,000. The market is blazing, for sure, but not $1,650,000 blazing. Keep in mind the high sale for 2016 is $1,246,000 as mentioned above. A flipper making money is a bigger longshot than the pimple faced geek scoring with the prom queen.
Clearly, then, the bungalows are being snapped up by end users. End users who don’t mind overpaying and being over exposed. The real shame in all of this is that the buyers for whom bungalows make the most sense are priced out of the market. That would be first time buyers (who can`t afford an $800k mortgage) that want a 2 bedroom home they can grow into and expand over time, and the aging baby boomers who are starting to feel overwhelmed by climbing stairs and hate the idea of living in a condo. I feel bad for these buyers in this market. In fact I feel bad for all buyers.
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Gimme Some More, Gimme Some More

Gimme Some More, Gimme Some More

It seems appropriate to kick this blog off with a tip to Busta Rhymes and his pulse pounding hit “Gimme Some More”. Between this song and his meaty supporting role in “Finding Forrester” (who hasn’t pined to see Busta and Sean Connery in the same movie), Busta was on top of the world. But just as quickly as he rose he soon fell, flying too close to the sun with his blingy wings.

Now for the matter at hand. As we all know mortgage rates are at historically low levels, and this has been one of the principal factors that has driven up prices and created such intense competition in the purchasing process. There are MORE buyers than ever, and FEWER houses for sale than ever. The math becomes simple in this scenario, but this is not the point I want to cover in this blog. Instead I want to offer some practical advice.

Sometimes buyers will come up with their purchasing budget before they ever visit a bank or see a broker. They will do this crunching monthly payment numbers (there are scores of websites now where you can do this) and figuring out what is comfortable. For this example let’s just say they determine that $800,000 is their “comfort” number. They will then go to their bank and apply for a mortgage that will facilitate a purchase up to $800,000, and not a penny more. Sounds rational and safe, right? But they are actually making a mistake that could cost them their dream home.

I always tell my buyers to apply for as much money as the bank will give them. Go for that “max” approval. In most cases the banks will give people higher mortgage amounts than they ever imagined, and that’s ok. It doesn’t mean a buyer has to borrow more than they want, or spend more than they want. But they should always know their “push” number, and ensure they can swing the payments if push comes to shove (which is unfortunately common in our current market).

Let’s go back to the buyers that applied for $800,000 and not a penny more. They start shopping and find the perfect house. All is good, until they realize on Sunday night that they won’t be able to buy the house unless they can offer $850,000. Offers are Monday afternoon, and anything conditional on financing won’t be considered. They don’t have enough time to go back to their back to arrange financing for $850,000, and they miss out on the house. The kicker here is that they could have afforded the house, and if only they initially applied for a higher mortgage amount they would have been armed with that confidence.

Just like the morning after a suicide chicken wing binge this is a terrible feeling, and one I hope my buyers never encounter.

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July 2016 Market Report – WTF???

July 2016 Market Report – WTF???

When speaking with buyers, particularly first time buyers with very fixed budgets, I am often asked if they should wait to make a purchase. Again and again I will hear statements like, “this market is overheated”, or “this can’t last forever” or (best of all) “prices HAVE to go down”. I wish this was true, for all the bargain seekers, but all evidence points to the contrary.

With interest rates holding steady until 2017 at minimum (and likely longer), and more active buyers than ever in Toronto, prices will continue to shoot up like Mercury on a hot day. The sales data for the month of July was just released, and it tells a familiar (and troubling) tale. According to the published sales data from TREB (Toronto Real Estate Board), the average selling price as a whole in Toronto was $709,825. This represents a whopping increase of 16.6% from July of 2015. You certainly don’t need an MBA to see where this is going.

The Numbers

What this means is that the potential buyer “waiting out” the market is really just throwing away money each month (and day) they delay. As the numbers above illustrate, the house that cost $608,875 in July of 2015 shot up to $709,825 in July of 2016. That’s a freaking spike in value of $100,000! So right off the hop the “waiting” buyer missed out an increase in equity of $100,000. I dare you to show me any other investment that provides that type of return, or rather show me one that doesn’t involve moving truckloads of drugs across borders.

Worse yet, assume this same buyer is paying a relatively modest $1200 per month in rent. Add this up over a year and you have (or rather don’t have) $14,400 – a disheartening amount of money to pay towards somebody else’s mortgage. Add this $14,400 to the aforementioned $100,000 and that year of sitting on the sidelines ultimately ends up costing $114,400. You could buy a lot of tequila and fish tacos with that chunk of change.

 So if you have the means and desire, get in the game and make a purchase! In the Toronto real estate market good things don’t come to those who wait.

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The Tale Of 2 Offer Nights

The Tale Of 2 Offer Nights

I’m not going to sugar coat things in this Spring market of 2016. For buyers it is certainly the toughest market that I personally have seen, and I am sure many other agents would say the same thing. But even in this insanely hot market a buyer can sometimes catch a (relative) break, and there are still times when you just never know…

Recently I found myself in bidding wars on consecutive nights with two different buyers. The first property was a renovated detached house in the Beaches on Waverley Rd with a very nice yard. It was listed for $1,399,000, which wasn’t absurdly low, and I figured it would attract 4 to 5 offers (which counts as a slow night these days). My buyers had a (seemingly) strong offer, and I felt a real chance. But then out of nowhere came 12 offers, and we ended up losing by a margin that can be counted in hundreds of thousands!

The property on night two was a character detached on Woodfield, south of Queen St. The location was prime, backing on a park, and it had legit 2 car lane parking and a still spacious backyard. The list price was $999,000, and I had a feeling of dread that day as I expected another 12 offer debacle. However on this day luck was shining upon us. When I texted the agent for the final offer count I was shocked (and thrilled) to find out we were one of only four offers. 90 minutes later my buyers had the winning bid of $1,200,000 – a true bargain buy if there ever was one.

The moral of the story is stay in the game, and eventually things will go your way. Sometimes we see “buyer fatigue”, when people expect a property to go crazy and they decide to sit it out. And sometimes the potential winning bidder breaks his leg on his way to sign the offer. You just never know.

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The “Pocket” Listing

The “Pocket” Listing

In this blog I am going to talk about pocket listings, and how they are a real estate occurrence that can be mutually beneficial to both buyers and sellers, but particularly buyers (as we will see later).

A “pocket” listing, in the simplest layman terms, is when we have a client that wants to sell but DOES NOT want to list their house on MLS. Now, at this point it would be totally reasonable (and expected) to ask why the hell somebody wouldn’t want to list their house on MLS, and go to the open market in the hottest real estate market ever. All I can say in response is that it happens, and sellers have their reasons:

  • Some people might be hoarders and can’t bear the thought of disposing of all of their old Playboys from the 70’s
  • Some people have kids and they don’t want to disturb their day to day routine with prospective buyers coming through the house at all hours of the day.
  • And some people simply have a sale number in their mind, and they are happy to achieve that without taking on the hassle and hard work that inherently comes with getting a house ready for market.

A recent pocket listing I had is an extremely informative real life example, and it illustrates a significant swing in value that would have greatly benefitted the eventual buyer.

Whenever I start working with new buyers I always ask them to provide me with a list of their “dream” streets. This is mandatory, because I then either knock on every door or call each address on the streets in an attempt to find somebody that is willing to sell off MLS or exclusively with our team. The advantage to a buyer in this approach is obvious, as it allows them to avoid getting into a bidding war and they can negotiate one on one (presumably more pleasant) with the seller.

Last Fall I had buyers that narrowly lost in a bidding war (less than $3k) on a 3 bedroom semi in the West end on the subway line. Coming so close really stung for them – the disappointment was palpable and I can still remember the extended pause on the phone when I told them what the house sold for. Rather than cry in our beer I of course went back to the area where we lost and knocked on every door to tell our story. After about 5 days of doing this I finally hit paydirt.

On a bitterly cold Thursday afternoon I knocked on Frank’s door, and eventually he answered (step 1 in door knocking success). I told him why I was there, and he was kind enough to invite me in out of the cold. The first thing that struck me was how similar his house was to the one that sold in the Fall, albeit somewhat cluttered and in need of a paint job (no big deal). The second thing that struck me was when he told me he would sell his house today for the right number. So, (drumroll for effect) what was that number?

A lot of times when pocket sellers tell you their number it is completely ludicrous, and the listing stays in your pocket for good reason. They want $1 million when the house is barely worth $600k. But in this instance Frank was totally realistic, in fact he was low. He told me he simply wanted to “clear” $700k, which would put the sale price at $739,550 when you factor in realtor fees and HST. I liked Frank, and I told him he could get more. Frank thought for a minute and told me that was fine and dandy, but at the end of the day that was what he wanted and if he could get that without the bother of going to MLS he would be happy. I shook his hand and quickly pitched it to my buyers.

Unfortunately for my buyers, their life situation had changed dramatically and their search was now on hold indefinitely. They would have to let this one pass. I pitched it to other buyers I had, and ultimately they all passed as well. Too bad but all part of the game. I went and saw Frank again in person, and told him that at this point in time I didn’t have the right buyer. Frank thanked me for my efforts and told me to keep in touch. As Frank said, “you never know…”

A couple of months later Frank came back into my life. He had been keeping his eye on the unbelievable sale prices, and he had now softened his stance about going to MLS. In fact he now wanted to go to MLS, and he wanted our full service package! So a few weeks later (and with a bit of de-cluttering, staging and painting) we went to MLS with a list price of $699k. A week later the house attracted multiple bids and sold for $826k, or $127k over the list price. Or to think about this another way (buyers pay attention), the same house that could have been purchased for $739,550 two months earlier ultimately ended up costing $826k!!

If you do the math this represents a swing in value of $86,450, or about a year’s worth of salary for most folks. This sale certainly demonstrates the fluidity of the real estate market, without a doubt. A month or two is a lifetime. But for buyers, more than anything, it shows the value of tenacity and hard work from their realtor, and the need to seize an opportunity and run with it. This market demands nothing less, unless you feel like paying more…

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