I put “should” in quotation marks for a reason.
I’ve always maintained that any time a person, be it a friend or a complete stranger, starts a sentence with “You know what you should do…” it’s going to be advice you really don’t to hear.
I was told last week that it “should” take six months to buy a house or a condo, and that a buyer “should see 30-40 places, minimum, before buying a home.”
Is that sound advice? Or is it the opinion of somebody who is ultra-conservative, and scared, and trigger-shy?
As I wrote in a blog post last week, I’m always meeting people who have opinions on real estate.
You know what they say about opinions…
But when it comes to real estate, it’s not only something that people enjoy talking about, it’s also something that we can all relate to – because we all live somewhere.
More often than not, conversations about real estate, whether they’re over dinner with friends, or having drinks with a complete group of strangers, are stimulating, and enjoyable.
But as I wrote last week, when some friend-of-a-friend-of-a-friend, told me something moronic and inane about property taxes in Toronto, I’m often on the receiving end of some ridiculous thoughts and opinions on the real estate market.
Case in point: how many properties should you see before buying one?
This topic came up over the weekend, and as usual, it was some know-it-all (who I believe rents an apartment, just in case that matters…) who had an axe to grind about the level of transactions in Toronto.
His opinions reflected that of a 70-year-old man, who last bought and sold real estate when people wrote cheques at the grocery store, and computers were something you read about in Time Magazine.
Paraphrasing him, he stated something to the effect of, “Buying properties in Toronto has become this sexy hobby for the most impulsive members of society, who buy based on emotion. You should really look at 30-40 properties before you EVER consider buying, and the process should take six months, minimum.”
It’s a strong opinion, no doubt.
And I understand what he was getting at when he called buying real estate a “hobby.” I often have clients who refer to the process as “condo shopping,” when shopping should be something you do for a winter jacket; not a $500,000 asset.
But the idea that every buyer should see some sort of pre-determined number of properties is ridiculous. It’s a waste of time, and in my opinion, it’s counter-productive.
To use the argument, “The value of a property in Toronto moves higher and higher every day, so waiting longer to buy costs you money” wouldn’t be fair, given that we really have no control over prices, nor can we forecast where they’re going. But having said that, this argument wouldn’t be false.
My problem with setting some sort of minimum time needed for a property search or minimum number of properties to see isn’t so much with the price of real estate, but rather the lack of logic, and inability to identify the market conditions.
Every real estate market is different, whether you’re comparing two different cities, like Toronto and Phoenix, or whether you’re comparing two different products, like Toronto condos versus Toronto single-family homes. The difference between Toronto condos and Toronto houses is massive, and it could be an even bigger difference than that of Toronto and Phoenix!
Real estate shows like “Property Virgins” do a large disservice to the viewer, since they set unrealistic expectations, and portray a process that exists in very few markets, if any. These shows glorify the process of searching for housing, when in many markets, it’s anything but glorious. Then again, perhaps a show about losing in multiple offers six times and crying in your partner’s arms might not sell quite as well…
On a real estate television show, a buyer might get in the car, grab a Starbucks coffee, tour three neighbourhoods, and three houses, at three similar price points, and then “pick” one. Oh, if only it were that simple! I guess there are a handful of American cities where houses sit empty, or banks foreclose on a whole development, and thus you really can go home, pour a glass of wine, and talk it over with your spouse (in front of the cameras), before taking weeks to make a decision, and slowly negotiate the price. But in Toronto, it doesn’t work like that.
We don’t have nearly as much freedom with how we purchase properties, but it’s because we don’t have as much choice.
You might find your dream home the very first time you set out to search, and if you feel you “should” see 30-40 properties, then it could take you eight months to realize you made a mistake.
Now I’m not suggesting that everybody should buy the first house they see. But I am saying that it can happen, and that every buyer comes into the process with a different knowledge base.
If I met a potential buyer who was brand-new to the city, and didn’t know North Toronto from South Parkdale, then I would tell them right off the bat, “This process is going to take a while. We need to identify your price point and your needs/wants, and then start looking at different locations to figure out where you’re going to end up.”
That would probably mean that this buyer would see a dozen properties with ease, maybe more.
But on the flip side, I get buyers who come to me with actual photos of properties they like (think “dream kitchens,” or the architecture of a Victorian home) that they save in a folder on their desktop at work, having browsed MLS for the past year or more. They’re online every day, and they know exactly what they want.
Don’t tell these folks they “should” look at 30-40 houses. If they’re looking for a 3-bed, 3-bath semi-detached in Mount Pleasant West for $1M, and that house hits the market the first week they’re searching, then what would be holding them back from buying it?
I had a client a few weeks back who wanted to buy the first condo I showed him. We went out one afternoon and saw two townhouses, and he loved one, and said, “This is it.” He had never been inside a condo townhouse before, and I felt a duty to show him what else was out there, and really make sure that this was indeed the place for him.
So I took him out the next day and showed him three more places, none of which interested him, and our tour only served to reinforce that he really did love the first place he saw.
He moves in next month.
I couldn’t sell him the first place I showed him because I didn’t know that he had the background knowledge necessary to make that decision. It wasn’t quite a matter of “seeing 30-40 properties,” or “spending six months searching,” but I did feel like he needed to know why he was buying that condo townhouse, beyond just liking the look and feel.
Every buyer is different, and there is no set plan that every buyer needs to follow.
I’ve sold a lot of clients the first place I’ve shown them, and I’ve had equally as many clients who have spent 8-12 months searching for the right place.
But ask a buyer who spent 8-12 months searching, and they’ll likely tell you that wasn’t by choice. Toronto’s real estate market isn’t like most. We don’t have the inventory necessary to satisfy the demand.
As foolish as it is to say, “You should spend at least six months looking for properties before you buy one,” it’s just as foolish, and unreasonable, to say, “I need to buy a home in the next two weeks.”
Unless your “wants and needs” list simply says “house with four walls and a roof,” you might have trouble finding what you want!
In a perfect world, we would be just like those folks on real estate TV shows, who have all the time in the world, tons of inventory to choose from, and no pressure whatsoever. Oh – and the ability to negotiate the price, as opposed to bidding on a house with eight other buyers!
But that’s not our market, and I feel that to paint every buyer with the same brush, and suggest that they need to see 30-40 properties before buying isn’t feasible, and likely mean those buyers pass on several good opportunities, that might not present themselves again.
There’s a difference between “due diligence” and “fear.”
At the end of the day, a buyer “should” do what makes he or she the most comfortable, no matter how little or how much time it takes, and no matter who says what to the contrary…