It’s going to happen, so be prepared.
If you’re looking to buy a condo in the upcoming Fall market, the best thing for you to do is accept that “offer dates” for condos will be the new normal, and then you won’t be caught off guard, and/or frustrated come September.
Easier said than done, considering “offer dates” for condos were rare in the spring.
But hot has gotten hotter, and we simply have no choice anymore…
What do I mean by that last part – when I say “we have no choice anymore”?
We always have a choice, with anything in life.
When it comes to listing condos for sale, we can choose to accept offers any time, or we can hold-back offers to a certain night.
But that’s the literal response to the idea that “we have no choice.”
In practice, there are properties, and situations, in this real estate market where as a listing agent, I have to advise my clients to hold back offers, otherwise I’m doing them a disservice.
I may not like the hold-backs on offers for condos, but because of the market conditions, I have no choice.
A quick refresher, for those of you that are new readers to TRB.
With virtually every single-family home in the central core, there is a set “offer date” for that property, whereby the listing agent and seller will review and accept offers, and before which they will not (in theory) entertain offers. I say “in theory” because of the prevalence of “bully offers,” but that’s a topic for another day.
Many, if not most of these single-family homes, are priced far below fair market value, to attract multiple bidders, and drive up the price.
But in this market, I don’t feel these properties need to be under-listed anymore. It’s just become so commonplace, however, that it’s expected.
When it comes to condos, we rarely see these “offer dates.”
The strategy of “under listing” and holding back offers to try and get multiple bids, for condos, is not the norm.
It’s a strategy that’s usually only effective with very rare, niche properties.
Case in point, I told the story two weeks ago about a west-end loft that came out at $699,900, and ended up selling via bully offer.
That condo was “worth” somewhere around $775,000, based on comparable sales, and the current market conditions.
But it ended up selling for $826,000, via an unconditional bully offer, which is just insane.
Had the property been listed at $779,900, with “offers any time,” it might have sold right away for the list price, or it might have got multiple offers.
But would it have sold for $826,000?
I don’t know. But I do think that the more likely way to get $826,000, is to list at $699,900, and hold back offers, than to list at $779,900, with offers any time.
The Toronto condo market is red-hot, and it’s getting close to the hottest condo market I’ve ever seen, which was in the Fall of 2009, when every damn 1-bed, 1-bath condo had an “offer date” and where every damn unit was selling with 4-6 offers. They didn’t always go crazy – I’m looking up an offer I did on October 1st, 2009, for a $329,900 listing at Mozo, that sold for $348,000 with five offers. But it did get five offers, and the listing did hit MLS with a set “offer date.”
So based on the heat of our current market, offer dates for condos are almost necessitated.
Call me hypocritical for saying that I don’t like offer dates for condos, while subsequently saying that I no longer have any choice in the matter.
But first, let me explain my reasoning for the former – why I don’t, or didn’t like offer dates.
2014 and 2015 – the market didn’t necessitate offer dates for condos.
The market wasn’t that hot, and thus when I saw a unit come onto the market with those words, “Offers Graciously Reviewed On Thursday, March 7th, At 7:00pm” I got angry.
I felt it was unnecessary, and misplaced.
It was often some rookie agent, who watched too much Million Dollar Listing, or read too many articles in the Globe & Mail about the housing market, who decided to list some cookie-cutter condo with a set offer date.
I told my clients, “The seller is getting bad advice, and this isn’t going to end well. Let’s see if it sells, and then maybe take a look after.”
Time and time again, I saw these condos with “offer dates” hit the market, and pass their date without selling.
I began to think that there were other buyer agents out there like me who didn’t want to show the unit.
And so it seemed to follow that a lot of these listing agents were actually enacting a “strategy” that backfired.
And then somewhere along the line, maybe spring of this year, things started to change.
Units began to sell so quickly, that we started to think, “It might have made sense to hold back offers on this one.”
A property would come out on Tuesday morning, and be sold by Tuesday night.
And whether you’re the listing agent, a buyer agent who lost out, or even an onlooker who had no horse in the race, you knew that had another 24 hours passed, there surely would have been at least a second offer.
I can’t tell you how many times, in the spring market, I ended up in competition for condos within 6-8 hours of the unit hitting the market.
I won some, and I lost some.
But I always knew, when that listing hit MLS at 9am or 1pm, that there would be offers by 7pm.
I would email my clients and tell them, “We need to see this tonight when you get off work. If you love it, we’re making an offer on the spot. And if we’re lucky, we’re the only offer!”
As was often the case, we’d end up competing against one or two other buyers, who had also seen the unit that night, or even that afternoon.
So by 10:00pm, after the listing had been on the market for less than half a day, the unit would be sold.
And then the next morning, scores of buyers and their agents would find out that the unit they couldn’t wait to go see, that day, that night, or maybe on the upcoming weekend, was gone. Gone before they ever had a chance of seeing it.
In fairness, those buyers who see a hot listing come out on Tuesday and tell their agent, “Let’s set something up for this weekend” deserve to lose out. Our market is way too hot for that kind of passive effort, sorry to say. Blunt, but not untrue.
Now what if, for those hot units, offers were held back a week so that the lazy, passive buyers could see it on the weekend? What if all those “day-two” showings that never happened did take place?
Well, now we’d have a fourth, fifth, and sixth offer.
And that is what I expect to happen this fall.
Every listing agent in the spring market who had 10-20 listings, and maybe even those who had one or two, could feel this coming.
The market is just too hot to allow “the first horse to the trough, to eat.”
I had a listing at 38 Joe Shuster Way earlier this year.
The building is a dog, plain and simple.
It was built by Urbancorp, who as you know has gone bankrupt, but not before constructing some of the worst condominiums in the city.
In my wildest dreams, I never thought I’d get this thing sold inside of two weeks, since I had a listing there three years ago that took two months to sell!
So would it surprise you to know that I got three offers on the listing, after two days on the market?
Three offers. On a crappy, cookie-cutter unit, in a “problem building,” around the very same time that the developer of that building had declared bankruptcy.
And you don’t think the condo market is hot?
Now, I would never “hold back offers” on this unit, but it goes to show you how hot the market is.
So when I do have a hot unit hitting the market, I have to consider that there are a LOT of potential buyers for the property, and thus the property needs time for exposure.
I have a listing coming up at 660 Pape Avenue. It’s a church loft, and these things are rare.
Do I hold back offers? How can I not given the potential for multiple buyers to be interested.
I have a listing coming up at 78 Carr Street. That’s the townhouse complex at Bathurst & Queen, where just about every unit sells in multiple offers, and five of the last seven units sold had “offer dates.”
Do I hold back offers? How can I not given the track record in this complex over the last few months?
I have a listing coming up on Maitland for an original-condition, 2-bedroom. It’s a building where a ton of units are bought to be renovated, and either rented out, or resold.
Do I hold back offers? How can I not given the price point, and the insane amount of showings I would expect to have inside a week?
I could go on, but you get the point.
I know somebody reading this is going to say, “David, you always preach fairness, and you call out other real estate agents for practices you don’t like. How can you say you’re going to set offer dates for condos when you have said you don’t like it yourself?”
Well first of all, what the hell is fairness?
Seriously – I’ve got that a lot in the past. People have bizarre ideas of what is “fair” in a competitive market, and keep in mind that I’m being hired by a seller who wants me to get as much as I can for his or her property.
There’s nothing unfair about listing a property and saying “Offers Reviewed On Tuesday, September 20th.”
And I could turn that whole “fairness” idea around on its head. Because if we wanted to be “fair” to all the buyers out there that want to see the property, or the agents what wanted to show it, then we wouldn’t sell it inside six hours of the damn thing being listed. We would wait until everybody had a fair chance to get in and see it.
As for the fact that I don’t like it, well, I explained that. I didn’t like it when I didn’t think it was warranted.
All that changed in 2016 as the market rose to a whole new level.
I’m not saying that a listing at 38 Joe Shuster Way should have an “offer night” because I got three offers on a listing in there in the spring.
But for a rare unit? A great price point? A property that you know is going to have 50 showings in four days?
If I didn’t tell my clients that this was a strategy worth taking, then I wouldn’t be doing my job.
I still don’t like the idea of under-pricing a condo and holding back offers. That’s unnecessary, and misleading.
But as for pricing at market value, and giving the property a few days to help get it exposed to the market, I think that’s a must for a lot of units out there.
And I think we’re going to see a lot more of this in the fall.
So if you’re a buyer, get ready. Don’t hate on it, or you’ll spend so much time being angry at the market, that it will be December before you know it, and you’ll be left behind, once again…