Oh yeah – it’s happening.
And what’s even more alarming, is that it’s happening with increasing frequency.
I’ve blogged about the notion of holding back offers on a condo in 2014, previously saying that I thought it was ridiculous, and misguided. And while I still think it’s ridiculous, it seems that the red-hot housing market is spilling over into the condo market, and sellers and listing agents are feeling good about their options…
From my perspective, the condo market is lukewarm.
It’s not hot, but it’s not cold. It’s just about right.
It’s no secret that the market for single-family homes under $1M in Toronto is on fire, in fact, “on fire,” is an understatement. I just don’t know what’s hotter than fire…
The condo market is hot in some pockets, and ice-cold in others.
I currently have three condo listings, and I’ll have about six or eight more by the time we hit July.
I know that of these listings, some will be easy sells, and some will be damn near impossible.
Others, will represent what most condos in Toronto are – a so-so proposition.
Most condos in Toronto are saleable, but they’re not going to fly off the shelves in a day, or in 6-8 days as most single-family homes that have set offer dates.
Most condos will eventually sell, but it will take time.
There’s a condo at on Richmond Street, listed at $518,000, that has been on the market now for over two months. After two days on the market, I offered $500,000 even, as a “take it or leave it” proposition. The seller signed back at $518,000, and my buyer walked away.
Today, that condo has zero chance of selling for $500,000. The market simply won’t allow it. After two months on the market, this condo should (or should have already) be reduced to $499,900, and then buyers will probably still want to negotiate.
I always say that you have 30 days at your price, after which you have to reduce. Anything longer, and the buyers will know you’re unreasonable.
That condo won’t sell unless it’s reduced in price, or unless the seller takes $500K or less, but this is very, very common with condo listings in Toronto at the moment.
On the other end of the warmth spectrum, we have unique, rarely-offered condos in boutique buildings that will sell in a day, or sometimes in hours.
If a condo came out at, say, $399,900, in a 52-unit, hard-loft building, where only 1-2 units per year hits the market, I think it’s fair to say that there are so many buyers looking for this kind of product that the unit would sell overnight. It’s not inconceivable to suggest that there could be more than one offer either.
And perhaps that leads into the topic of discussion today: holding back offers on condos.
We all know that single-family homes are listed for sale, with set offer dates, and often sell in multiple offers for well over the asking price.
Through January and February, ever week I would see one or two condos that had an “offer date,” and I would laugh at the idea, and the listing agent crazy enough to try it. It’s like holding bronze, and thinking it’s gold.
Today, I’m seeing this more and more.
In fact, the idea for this blog post came to me on Thursday when I saw no less than six new listings for condos in C01 & C08 that had “offer dates.”
And God help us if this becomes the norm.
The toughest housing market I’ve ever worked in is this past Jan/Feb/March, no question about it.
But the hottest condo market I’ve ever worked in was in the spring of 2009, when every goddam condo in the downtown core was selling in multiple offers, with set “offer dates.”
It was a nightmare.
A condo would come out at Mozo, priced at $329,000, and they’d end up with six offers, and it would sell for $353,500.
The worst part about it was you were always so close when you lost!
The spread between $329,000 and $353,500 isn’t much. It’s nothing compared to a house listed at $599,000 that sells for $802,000! At least if you offered $750,000 on that $599,000 house, and it sold for $52,000, you could say, “Well, we weren’t even close.”
But in the spring 2009 condo market, we were losing by $5,000 or less every time. And as you know, the bidding process is blind, so we don’t have a clue what’s going on until we’ve either won or lost.
So far in 2014, I have only been in multiple offers on a condo once, and it was for a gorgeous unit at 901 Queen Street, which I’m happy to say my clients got. But that listing didn’t have a set offer date; it was just so popular and such a rare offering that it produced three offers within 24 hours of being listed.
And so far in 2014, I have yet to show a condo that has a set offer date. I’m not saying that I won’t, but I am saying that so far, I haven’t thought the market warranted hold-backs on condos.
I’m not being stubborn, nor am I refusing to accept market conditions like I blame so many of today’s buyers for single-family homes of doing.
I just don’t think hold-backs on offers for condos are warranted.
Case in point, a townhouse unit in the Carr Street complex which came out this week. Don’t get me wrong – I love this complex, and I have three clients in here. The location is great, and the area continues to gentrify, and the prices are lower than Liberty Village and King West. But does this type of condo necessitate a hold-back on offers? I don’t think so.
Another unit came out today at The Richmond, and it too had a hold-back on offers. It’s a great unit, nicely renovated, great floor plan, and priced at market value. But WHY does the listing say, “Offers Appreciated On Wednesday May 30th At 7:00pm, Please Register By 5:00pm” as if the seller is going to set up a lawn chair and entertain offers as though the property was a semi-detached house in Leaside?
I don’t understand.
Are we really in that kind of market climate for condos?
I’ll be brutally honest – of my three current and 6-8 upcoming condo listings, I know that some of them will be very difficult to sell. It is highly dependant on the building, and location almost has nothing to do with it sometimes. You might see a building that’s red hot, and the building next door is ice cold. It’s completely building-specific in this market, and of course, is impacted by price.
But what are today’s condo sellers thinking?
And are the listing agents advising them accordingly?
Some downtown condo listings could warrant a hold-back on offers.
Let’s say that I had a listing coming out at…….Candy Factory.
If it was in the right price point – say $399,000, and it had a parking space, and 12-foot ceilings, completely upgraded, completely open concept, staged to perfection, and featured the exposed brick walls and timber ceilings that people go ga-ga for, then maybe, maybe I would consider a hold-back on offers.
But even as I type this, I’m furrowing my brow trying to picture it. I’m trying to see the logic in a hold-back on offers in today’s condo market.
Am I wrong?
Do the rest of downtown Toronto condo agents know something I don’t?
Sure, fine, okay – hold back offers on a sought-after brick loft on Queen Street. I understand.
But The Richmond?
And how many others from today? College Street, Jarvis Street, Front Street. FRONT STREET! Really? Holding back offers, are we? Over $500K?
It doesn’t make sense.
I’d have a hard time even suggesting to my buyers that we go and take a look, because who knows what the sellers and the listing agents have planned.
What we want to try and avoid is that annoying, arrogant, rhetorical question that I hate more than anything in this industry:
“Are you aware that this property is priced for multiple offers?”
It’s what is said to you when you present the ONLY offer on a property, and the seller and listing agent had illusions of grandeur.
Imagine a condo priced at $449,900, that has a hold-back on offers until May 2nd.
You show it to your clients, they like it, and you say, “Let’s see if they get any offers next week.”
May 2nd comes, and you’re the only offer. You don’t want to create a fuss, or rock the boat, so you offer the whole asking price – $449,900.
And then the listing agent says to you, “What is this garbage? $449,900? Seriously? Are you aware that this property is priced for multiple offers?”
Then they sign you back at $490,000, and if you don’t accept, they’ll re-list the next day.
It sounds silly, but it happens all the time with houses, so why not condos?
My fear is that we could be walking our condo-buyers into this trap, and it’s simply not warranted. We’re not in the kind of market where you can “price a condo for multiple offers,” unless it’s a very, very rare offering.
The whole “this condo is priced for multiple offers” line is nonsense. If it was truly priced for multiple offers, then it would have RECEIVED multiple offers.
The condo market is not the housing market.
So why are sellers treating it like it is?
Maybe it will be tomorrow, or the next day, but from where I stand right now, I just don’t see it.