This house is the gift that keeps on giving, in terms of blog stories, that is.
Time flies, and I can’t believe it’s been four years since this house was first listed, which of course, was the first of many subsequent listings, at various price points, with a number of different brokerages, which was an absolute debacle of a listing.
The house eventually did sell, but amazingly, it sold again this past week, for an insane price.
Let me start from the beginning…
The ironic part about choosing an image the like one above for a post about an “unsellable” house is that a dilapidated house like this one would sell in a hot minute here in Toronto.
Land value, a tear-down, a gut, or “granny’s house” will all sell quickly in this market, since so many people are looking to build anew.
Developers, speculators, and end-users alike all want to get their hands on land in its most basic form to start from scratch.
It’s the houses that result that can be tough to move.
When we look at houses that sit on the market, and don’t sell, more often than not, they’re new homes, owned by builders, and on the market for the first time.
Builders price contrary to the rest of the market, in that they start high, and come down gradually over time, whereas most freehold homes are under-priced so solicit multiple offers.
Builders don’t have the “rush” that users do. A user is usually selling his or her home since they’ve bought somewhere else. A couple buys a home in Lawrence Park with an August 19th closing date, and thus they put their home on the market in June to get it sold, and be able to obtain bridge financing to close.
Builders don’t have that problem.
Sure, they want to get the property sold in a timely manner. But like condo developers, they often hold firm on their price for months at a time, and wait for a buyer who caves, and pays the list price.
In the end, every developer, builder, speculator, or flipper will eventually “pull chute” and get out of a project. You can’t keep a house forever, and let it continue to burn a hole in your pocket.
Or can you?
I told this story a few years ago, but I’m sure few of you remember it.
Plus, I can’t provide the address of the home, so you can’t really search it anyways.
The house just sold, and while TREB will eventually lose this fight against the Competition Bureau over sold data, rules are still rules. So I’m not giving out the address.
But let’s start from the beginning here, as it will really set the table for the true shocker – that this house just sold, and what it sold for.
In September of 2011, the house sold in somewhat original condition, for $650,000 to somebody that was going to renovate and flip it.
That renovation was complete less than a year later, and in May of 2012, it was listed for $999,900.
There was an “offer night,” but the house didn’t sell.
It sat on the market for 38 days at $999,900, but I knew the agent who had the listing, and he told me that the owner wouldn’t have taken $999,900 even if it were offered to him.
That’s probably one reason why the house was re-listed with another brokerage in July of 2012, this time for $959,000.
There was an offer night, again, and again the house didn’t sell.
The price was raised, and then dropped, again to $959,000.
It was an absolute mess.
After 71 days on the market, the listing was terminated.
Would the seller have even taken $959,000? Probably not. That’s part of what made this so crazy.
In October of 2012, the house was re-listed for $859,000, again, with an “offer night.”
It was almost insulting to the intelligence of agents and buyers alike.
Listing at $859,000 – was that really going to work? Were buyers really going to line up to bid for this “low-low price” of $859,000, even though it was clear that the seller wanted over $1,000,000?
And after the offer night, the $859,000 price was raised almost $200K to $1,050,000.
The listing was terminated after 69 days.
Christmas came and went, and the New Year rang!
And in February of 2013, the house was re-listed for $1,059,000.
New year, same price, or thereabouts.
54 days late, that listing – the fourth listing for this house, was terminated.
In April, the house was re-listed with a third brokerage, this time for $959,000.
The agent was a “name” agent, but totally out of area, and he or she was offering a reduced buyer commission, which you almost never see in this market.
The house sat for 34 days, which is really odd because many of us watching this wondered if the house really was available at $959,000, given it was listed for $100,000 more, only a week earlier.
The house didn’t sell, and in May, it was re-listed for $929,000, this time with a full buyer commission.
And there it sat for 56 days before being terminated in July of 2013.
-322 days on the market
-High of $1,059,000, low of $859,000
So what happened next?
The builder leased the house out for $3,400 per month.
And that, after a year of insanity, was the first good decision that the builder made.
That’s where my original story ended. My 2013 blog told this tale, but there’s more to the story – two more chapters, in fact.
In September of 2015, the tenant was gone, and the house was vacant once again.
The house was listed for $1,098,000, but this time, luck (or simply the market…) seemed to be on the builder’s side.
The house sold for $1,071,500, after only 13 days on the market.
The builder elected not to under-price at $929,000 or thereabouts, create a buzz, a flurry of activity, and a bidding war, and try to get $1.1M, but instead elected to simply list at $1,098,000, and see what transpires.
I wonder – did the builder, who bought this property in September of 2011, ever fathom that he would end up holding the house for FOUR YEARS?
As crazy as this ending sounds, it gets even crazier.
Call that the “final chapter” for the house with the original builder, but there’s a bizarre epilogue.
Having paid $1,071,500 for the house in September of 2015, that buyer, now owner, listed the house for sale this month.
At what price do you list your $1,071,500 house, only ten months later?
$999,900, of course!
New day, new seller, new agent, new strategy!
And a new market too; one that is hotter than it’s ever been.
A lot of us took note of this house. “Remember this one?” we’d ask our colleagues at the office. I had multiple real estate agents ask me if I was following the listing, having blogged about it years earlier.
We wondered what it might sell for, given the owner had only had it for ten months! Not even a year, and we all know how tough it is to make money inside a year, what with transaction costs involved.
An offer date was set, but as is often the case, the offer date never came.
A bully offer was submitted on the house; the same house that took four years to sell, mind you.
$999,900 list, and guess what it sold for?
Over the $1,071,500 that the owner paid for it ten months earlier?
Over $1.2M, which would have probably been fair market value for the house?
I used to say “$200,000 over-list is the new $100,000 over list,” and that made people sick to their stomachs.
But this year, $300,000 over-list became the new normal.
And this dang thing sold for $1,335,000 – a whopping $335,100 over the list price, or 34% over.
Keep in mind that the owner didn’t even own the house for a full year!
That’s a 29.5% annualized return.
And that’s just nuts, for any house, but especially for one with the track record that this house had.
I suppose the market has a very short memory, and the buyers who had interest in this house probably never knew the back-story here, and if they did, they might not have cared.
Does anybody care how a house sold (or didn’t…) three years ago?
The only market that matters, it would seem, is today’s.
And in today’s market, somebody submitted a $300,000+ bully offer on a house that previously sold ten months ago, after a two-year rental, that resulted from a year-long fight with the market.
Or maybe it’s not.
Maybe stories like this should cease to amaze, and simply garner a quick “meh” accompanied by a shrug of the shoulders, and perhaps the ever-frustrating line, “that’s just the market.”