Buying A Condo Sight-Unseen

It sounds crazy, but in this even-crazier real estate market, sometimes buying sight-unseen can represent the answer you’re looking for.

Certain segments of the downtown Toronto condo market are absolutely on fire right now, and with properties selling in a day, or even in a matter of hours sometimes, you have to get aggressive, and think outside the box if you want to be successful.

Let me tell you about an experience I had last week, where my buyer-client and I got aggressive, out-smarted the rest of the market, and ended up with a “steal” in a market where you’re hard-pressed even to find a “deal”…

KidHands

I know, I know.  The market bears are already thinking, “Is this what things have come to?  We’re now buying properties without having seen them?”

I might agree that in some cases, in some markets, this can be referred to as “speculatory.”

But not in Toronto, at least not in the case I’m about to detail.

I have a client who has her heart set on a 1-bed, 1-bath in the St. Lawrence Market area, around $400,000.

Now, for those of you that are in this market, you know that getting your hands on such a property is easier said than done.

There are about 30 condominiums in the St. Lawrence Market area by my count, which you can consider roughly bordered by Jarvis, Queen, just east of Sherbourne, and Front Street.

But every buyer has his or her preference, and my buyer wanted to be in one of:

55 Front Street – The Berczy
205 Frederick Street – Rezen
112-116 George Street – Vu
105 George Street – Post House

Those of you that know real estate will see that these four buildings are all relatively new (Rezen is actually from 2008 but most people associate it with the others), they’re not quite “loft-style” but are also not “apartment-style” like the older buildings, and the locations are all prime.

The Berczy is expensive, as it’s probably the most popular building in the SLM area right now, and when resale units first started hitting the market two years ago, you’d be hard-pressed to get your hands on one.

I live at Vu, so I can tell you that with the A+ location across from St. James Park, comes a whack of different floor plans, and it’s virtually impossible to find the same one twice.  This is the result of Aspen Ridge Homes, who primarily built sub-divisions, building one of their first downtown condo projects.

Rezen is getting up there in age, but you’d never know it.  There’s only 144 units, and the eight-year-old finishes all look brand-new.  Units rarely ever come out here.

Post House was prohibitively expensive when the building was first registered and units first started coming out, but prices haven’t really gone up since then, and the market has caught up.  So while the cost is still well above average, the floor plans, the finishes, the amenities, the low fees, and the location justify it.

My client started looking with me in February, somewhat one-foot-in-the-pool, but if the right unit came out, we would have made an offer.

The problem with not being “all-in” with respect to your property search, in this market, is that you’ll rarely be successful.

We often think that houses are the only product in the 2016 Toronto real estate market that require us to live and breathe real estate, but when it comes to $400,000, 1-bed, 1-bath condos in the St. Lawrence Market area, through the first few months of the year, the same is true.

We saw a condo at 112 George Street back in February that seemed to hit all the marks, but we dragged our feet a bit, and it sold.

It sold, in two days.

My client isn’t picky, by the way.

She’ll take a unit with parking, and rent it out, or without parking, and save money on the purchase price.

She’ll take a unit with a balcony, or with a Juliette, or with nothing but glass.

She’ll take a unit with one bathroom, or two.  No real preference.

And despite being this open-minded, we just couldn’t get our hands on a unit.

Two months later, our search got serious, and a listing came out at 112 George Street, priced at $399,900, and we were all quite confused as it seemed like a $340,000 unit.

No, really.  It didn’t just seem like a $340,000 unit, it was a $340,000 unit.

With respect to my colleagues who work in rural Ontario, when I get a phone call asking if I know the market for cabbage farms just north of Keswick, I say “no.”

I spoke to the agent for this $399,900 debacle, and when I asked her about the last unit that sold for $395,000, two weeks prior, she said in a thick Canadian accent, “Ooooh yaah, but that was like only a hun-red square feet beeger.”

Right.  Only 100 square feet.

And at $600/sqft, that’s “only” $60,000.

She said, “They’re both 1-bed condos, apples and apples ya know?”

Believe me, I didn’t want to engage her.  But my client told me to inquire, and so I did.

FYI – the property has been on the market for six weeks…

A couple of days later, a unit came out at Post House that looked perfect.  1-bed, 1-bath, 540’ish square feet, nicely upgraded, and a walk-in-closet!  The view from the 4th floor facing north wasn’t great, but at $355,000, we were pleased with the value.

We went to see the property the next morning, and we signed an offer on the spot.

I got back to my office and emailed it to the listing agent.

Do you know where this is going?

He emailed me back to say “thanks,” but they had already sold the condo the night before.

The night before.  As in, the night the condo hit the market.

That is how fast properties move in this market.  The condo came onto MLS around 3pm, and was sold that evening.  By the time we went to see it at 10am the next day, we were already on a fool’s errand.

The following week, a property came out at 205 Frederick Street, where properties rarely ever come out.  In fact, this was only the second 1-bedroom unit to hit the market in the past twelve months!

My client and I went to see the property that night, with an offer in hand.

In the end, we couldn’t get past the fact that the unit looked directly at the roof of the building next door, and a dozen transformers, A/C and HVAC units, et al.  In fact, we almost figured if the unit was lower down, and stared at the brick wall of that building, that it would be a little less ugly.

The unit, listed at $405,000, sold the next day for $408,000.

A couple of weeks later, we went to look at a condo at 55 Front Street, aka “The Berczy.”  $499,900 for a 1-bed, 1-bath with no parking?  Crazy!  Right?  I mean……right?

Well, if you use “price per square foot” metrics on www.condos.ca like they were handed down from the Heavens (I think they actually were…), then this unit was priced right where it should have been.  I told you it was an expensive building!

The unit ended up selling for $503,000 the next day.

Last Friday night, we went to see a unit at “London on the Esplanade,” known by laymen as 38 The Esplanade.  The unit, priced at $455,000 was a “pass” for us, and of course, it sold that night for $456,000.

So all told, we passed on the unit at The Berczy, the unit at Rezen, and the unit at London, but all three sold in less than 24 hours for over the list price.  We wanted the unit at Post House, but it sold within hours of being listed.

Where are all you people who think the condo market isn’t as hot as the condo market now?

As luck would have it, last Friday, when we were saying “pass” on the unit at London, another unit came up at Post House – a tenanted unit, with severe restrictions on showings.

This is when my client, young and full of gusto said, “I’d buy that unit sight unseen.”

“I would,” buy that unit, right?  Not the same as, “I will.”

You say, “I’m so hungry, I could eat a horse,” but how many times have you actually proven that level of hunger?

My client looked over the listing – 1-bed, den, 2-baths, south-facing balcony with a water view, 646 square feet, locker but no parking, $399,900.

“I’ll buy this,” she said.  “I want to make an offer…..now.”

And that’s what we did.

It helps that, in my professional opinion, this unit is worth $430,000.  Again, shout out to Condos.ca for helping me prove this…

But either way, this unit would have sold, and quite possibly sold in multiple offers, if we didn’t jump in there and tie it up.

The unit was tenanted, so it meant since the unit came onto the market Friday afternoon, the earliest there could be a viewing would be Saturday afternoon.  But with the restrictions on showings, it could be until Sunday before we could get in.  We didn’t want to risk losing the property, and we didn’t want to be in competition after the weekend past.  We also didn’t want to be at the mercy of a tenant who could keep us from getting inside the unit, so we got aggressive, and perhaps a little bold.

Of course, there’s more to the story, as there always is in this crazy market…

I sent my offer to the listing agent at 6:45pm on Friday night, with a midnight deadline, and when I finally got him on the phone, he said, “I can’t do anything tonight, I’ll take care of it tomorrow.”

I told him it was a full-price offer, with the closing date his sellers wanted, and he had no reason to delay.

He said, “Buddy, I started my night with a bottle of vodka at five o’clock.  I’m not dealing with this now.”

It’s always something, right?

You lose out on listings that sell in mere hours, you lose in competition, and then when you finally make an offer that looks like a slam-dunk, you run into the human-factor.

I asked him if his partner would review the offer with the seller, and he said, “He’s sitting here with me.”

I was about to ask him if there was anybody at his office that could help review the offer, and he said, “I’m also here with my office manager, my broker….” and by then, I got the picture.

The story has a good ending, however, as you probably assumed by now.

We extended our irrevocable date into Saturday, and they accepted.

We bought a condo, sight-unseen, because we knew the building extremely well, and had seen the floor plan before.

In case you’re wondering – the offer has conditions, so there’s always an “out.”

And as I wrote about last month, you can get out of a deal for any reason, so long as you have any condition.

Folks, the condo market is red-hot, don’t fool yourselves.

Not for everything, but for a variety of property types.

The client in this story wasn’t overly-picky; she just found herself in a really tough segment of the market, where the price point and location offers far less supply than demand.

Hmmm…..less supply than demand.

Where have we heard that before?

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  1. Dan says:

    When I read this I guessed who you were talking about. I checked this morning — yup, I was right. Small world!

  2. andrew says:

    if you are using condo.ca as a source for how you run the numbers, then I would question everything you say. Condos.ca, although a great resource, is not accurate in many ways. If you were to pay the $5.00 for the MPAC search, the square footage is often incorrect. Also, price per square foot only applies if its the same unit on the same floor. There are too many variables to consider when you determine value. And if you solely rely on Condos.ca, then i question a lot of what you say now, and in the past. Great Blog, but please start verifying some of these numbers for your clients.

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