If you don’t know what “One Dollar, Bob” refers to, then you clearly were not a child of the 80’s.
Having said that, I associate watching The Price Is Right with being a kid watching morning television, but it is an adult show, after all!
Bidding $1 in “Contestant’s Row” might get you up on stage playing Plinko, but bidding $1 on a house in Toronto gets you nowhere. Even if the agent offers it as a “rare opportunity” in the media. Let’s talk about the house at 11 Edith Avenue…
“The Price Is Right” was the greatest game show ever, was it not?
I know, I know – Jeopardy is probably the most famous, and longest running. But those questions are hard!
If you want to play along at home, and relate to the contestants, then TPIR is the show for you!
Then again, sometimes you play at a level above the contestants.
I learned this when I was 8-years-old.
I was so frustrated to see the contestants in “Contestant’s Row” messing up the whole $1 bid.
You know how it works, right?
A dining room set comes up for bid, and it’s probably worth $700, or $800, or maybe $900.
If the three people ahead of you go nuts, and bid $1,600, $1700, and $1,800, then you bid “one dollar,” thereby assuring you’re the lowest, since any bids OVER the actual retail price are eliminated.
And then there’s the idea of “cutting somebody off,” ie. they bid $700 and you bid $701, thereby ensuring they’re eliminated unless the actual retail price is exactly $700.
But then, every so often, you get a person who doesn’t understand how it works.
Somebody bids $700, and the next genius bids $699.
That genius has no clue what’s going on.
And at 8-years-old, while eating my Special-K at 11:00am on the Friday of a “P.A. Day,” I would yell and scream at the TV.
I couldn’t believe these people! It was such a simple concept, and yet they couldn’t grasp it.
So you can clearly see the parallel I’m going to draw here.
Bidding $1 on The Price Is Right is strategic, if you do it right.
Listing a house for $1 in the Toronto real estate market can be strategic, but in practice, it’s a gimmick, it’s a last resort, and I think it actually turns buyers away.
You all know I’m not supposed to give out sold prices, disparage a competitor, advertise listings that aren’t mine, etc. Lots of rules, some which have merit, and some which don’t.
But today, I’m going all out. The address of the property in question: 11 Edith Avenue.
This property was written about several times over the past week, and I hate that because I have a real estate license, I can’t openly opine about it; good or bad.
The property has now sold, and the word is out. So what the hell. Here’s my take…
This property wast first listed for sale in March of this year for $899,900, and there was a “hold back” on offers. Clearly the listing agent thought he was sitting on gold mine.
The property didn’t sell, and it was re-listed in April for $799,900, again, with a hold-back on offers.
It didn’t sell that time around, but who knows whether they got any offers or not. Who knows, on the other hand, whether the $799,900 list price was “low” in the agent’s mind, and set to entice buyers. Who knows whether the sellers would have accepted the list price!
So when all else fails in the real estate market, and sellers and agents can’t manipulate the buyer pool to their liking, they often do something crazy: like list the property for one dollar.
Here’s the listing history:
As you can see, the property just sold for $655,000.
So accuse me of telling you that Darth Vader is Luke Skywalker’s father before you even see the movie, but I don’t know if the actual sale price is the story here.
The story is whether or not this “strategy” is a gimmick, or whether it has merit.
The story is whether this sort of thing should be allowed, or whether it’s false advertising.
Here’s the remarks section from the MLS listing:
So yes, I would agree with you if you said that this is poorly written.
In fact, I’d agree with you if you said it was pathetically written.
“Missing This Means Missing A Lot.”
“A Real Gift For Some Lucky Buyer.”
“All Da Info On MLS Is Deemed 2 B Correct.”
That last one was written like a 14-year-old girl texted it to her besty.
Or, maybe my cynicism is running rampant.
Maybe this is a cool, chic, and different way of marketing.
Maybe it’s an attempt 2 B dif’rnt.
I think I could make an argument either way, so in the spirit of debate, let me do that.
The listing agent did nothing wrong here.
He listed the property for sale at $1.00, but with a hold-back on offers. This happens all the time in Toronto; properties are virtually listed for a dollar every day, when a $900,000 house is listed for $699,900.
It’s stupid. But it’s legal, and it happens all the time.
The agent listing at $1.00 isn’t really different, in my opinion, from that $900K house being listed for $699K. Once you’re significantly under fair market value, and the buyer pool is aware that that the list price is a “starting bid,” then what does it matter what that number really is?
And that’s the key here – that the buyer pool is aware.
If some sorry fool feels that this house is really available for $1.00, then that’s their problem.
Buyer beware. The courts have always held it.
And in a red-hot real estate market, if a naive buyer wants to cry foul because he or she didn’t do their homework, then maybe they should have hired a top agent instead of using their cousin from Niagara Falls.
When you go on Ebay and see a $4,000 purse listed for $1.00, you know that’s a starting bid. So how is real estate any different?
The listing agent said in the remarks, “No Pre Emptive Offers.”
So this isn’t a case of somebody lighting a fire and running away from it. This is what the park ranger calls a “controlled burn.”
If you don’t like the game, then don’t play. But don’t try and change the rules that everybody else are playing by.
It’s a gimmick.
And it’s absolutely pathetic.
This is a case of somebody who over-valued his own house, and tried multiple times to sell it, all resulting in abject failure, and who then set the professional bar as low as possible.
Any house listed for $1.00 is going to get more laughs and shakes of the head than it will get genuine piques of interest, so this agent really just shot himself in the foot.
He took down the “FOR SALE” sign and put one up that said “I’m Nuts.”
But more to the point, it’s just not fair.
It’s misleading, and it’s a classic bait-and-switch that would be illegal in other industries, but for some reason, is hunky-dory in real estate.
Feel free to add to either argument, if you wish.
But as much as I’d hate to admit this, I feel the first argument holds more weight. Maybe that’s why my second argument came up so short!
The whole notion of what is “fair” just doesn’t hold water.
I don’t think there was anything misleading about this.
Nobody really thought that this house was available for sale for $1.00, did they?
Maybe the same folks who bought all those CD’s for one penny each back in 1992, thinking there was no catch?
I don’t love the gimmick, and I honestly do think that it turned more people away than it helped reel in, but I truly don’t see a difference between listing at $1.00, and listing a $1.2M house for $899,900.
Under-priced is under-priced.
And if you’re going to hold an “offer night” then this concept of “fairness” ultimately prevails, since every interested buyer gets to come to the table at the same time.
Unfair would be if you offered the house to one person for $1.00, and to the next person for $655,000.
But to list for $1.00, in an auction-style, and then review any and all offers at the same time? No. Not unfair. A lot of things, but not unfair.
The Toronto Star’s Dan Takema wrote a good article about the sale HERE last week. In the article he reveals that the seller “would not take less than $700,000.”
Well, in the end, the seller looks ridiculous for causing much ado about nothing with this $1.00 listing, since he did sell for less than $700,000, and it wasn’t even close – $655,000 in the end.
To me, this just reeks of somebody that doesn’t understand the market.
People incorrectly use the term “bidding war” more than any other in real estate.
A true bidding war occurs on a house when you have no idea what the house is going to sell for, and multiple parties bid, with multiple rounds, and eventually – with somebody paying more than he or she ever thought they would.
A bidding war is not a house listed at $899,900, then $1.00, which sells for $655,000.
There’s no “war” present.
People aren’t “bidding” on this house. They’re just taking a stab at it, since the seller has demonstrated that he’s completely unpredictable.
Now the last point I will make here is that the listing contained this:
“Best Offer Wins For Sure 100% On 5/18/2016.”
What if the seller did not elect to sell the house, to the best offer, on 5/18/2016?
What if nobody wanted to play in this farce?
What if only two people came forward, and the highest offer was $500,000, and the seller didn’t take it?
Would there be ANY repercussions?
Edward Keenan is one of Toronto’s best columnists. I remember working on a real estate piece with him back when I wrote for The Grid years ago. Or maybe it was Eye Weekly? Time flies…
In any event, Mr. Keenan wrote a piece called “Toronto Real Estate Gimmickry Hits The Limit Of Our Patience,” and he calls out this practice of under-listing in a way that no Toronto journalist or columnist ever has.
He calls the practice “a fiction bordering on fraud.”
His second-last line packs the most punch:
“Asking prices are not expected prices, they aren’t minimum prices, they aren’t prices at all. They are just numbers chosen to attract attention.”
And while I don’t agree with the entirely of Mr. Keenan’s piece, I do agree that the idea of a listing price being a “number” in today’s market, and not a “price,” is spot-on.
So for buyers out there, my advice is simple: any energy you expend complaining about the way properties are sold, is energy you’re taking away from your search.
Real estate has no fixed value, and is not like a share of stock, that’s easy to price along with millions of others, all the same.
So do your homework, run your comparables, see competing properties, and figure out what you think the house is worth, and what it’s going to sell for, and ignore the list prices; whether they’re “close” to the value, or the equivalent of what a lemonade costs at McDonald’s…