How Many Wrongs Make A Right?

If I can admit when I’m wrong, but I think I can explain my way out of it, then does it count? ūüôā

You know December is a slow month in real estate, right?

And you know not only do the stats back it up, but the “feeling” out there is that the market has finished for the year.

Well let me tell you a story about a condo that sold on December 20th, just to tell you how wrong¬†I was…


You do not list your home for sale in December.

That’s a well-known fact in the real estate community, and while an argument can be made in favour of taking on the “risk-reward-equation,” most of us still think you’re better off waiting for January.

Real estate has long been a “chicken and the egg” phenomenon, with buyers only coming out in full force when they know listings are going to peak, and sellers only listing when they know the number of buyers is the strongest.

Our “spring market” starts in January, so excuse the verbiage, as we don’t really refer to it as the “winter market.” ¬†But the spring market runs through to the end of June, and then we have a slowdown in July & August, followed by a very quick yet busy market in September, October, and November.

Then comes the December slowdown.

Those who¬†do¬†decide to list their properties in December are taking on the risk – that there are fewer buyers looking, as many have put their searches on hold for the year, to chase the reward – that with listings down significantly, they’ll face little to no competition.

The fact is, December is slow for many reasons.

Buyers who haven’t yet bought in the fall market are discouraged, tired, and looking forward to “time off” from the search. ¬†With the holidays right around the corner, most of them hit the pause button.

Real estate agents work around the market cycle, and most will choose to take their time off in December; many of them right at the start of the month.

Overall, that chicken-and-egg, follow-the-leader cycle has most participants in the market feeling the slowdown.

This year, I felt it even earlier.  By late-November, it already seemed as though the market was drying up.

Sure, we still got new listings.

But most of what hit the market in December was junk. ¬†“Recycled” listings – those that had already been on the market previously, were at the top of the list. ¬†There was a lot of¬†assignments¬†out there, perhaps some plagued-investors thought a new condo sales agreement would make a great stocking stuffer. ¬†And overall, we just didn’t see a lot of quality.

There were a few, no doubt.

But not enough, from what I could tell, to really motivate those on-the-fence buyers who had resigned themselves to the fact that they’d be back out looking in January.

From a seller’s perspective, I still think, even as I write this blog which will¬†clearly¬†demonstrate I was wrong in one instance, that it’s a mistake to list in December.

The numbers show a massive decline in sales, take a look:


Sales plummet in December.

And when sales are slow, it reminds us that buyers aren’t buying.

Some of that is due to buyers not seeing what they want, but as I said above, many buyers are out of the market.

When it comes to price, the decline isn’t as pronounced, but enough to make you reconsider listing:


In a market where the average home price is increasing every month, we see a decline in December.

This has been consistent, every year, for two decades.

So if it’s me, or my clients, I’m saying, “Wait until January.”

But you guys know a story is coming that could contradict all that…

In mid-December, there was a new listing up in a very popular, very well-known condominium in the St. Lawrence Market area.

The listing hit the market on December 12th, with an “offer date” of December 20th.

I saw this, and I thought it was nuts.

By December 12th, the market was basically “over” for 2016. ¬†Half the agents in the industry were already on break, and most of the buyers were focused on the holidays.

Offers on the 20th?  That late in the year?

I didn’t think this would work. ¬†And boy, was I wrong…

The listing was, to be completely honest, nothing special.

I know this layout as I have sold it a couple of times, and for a 2-bed, 1-bath, it’s a decent layout but the second bedroom is tiny, and the unit is wedged into the corner of the building, where it turns into an “L,” so you can see your neighbours’ windows from your living room, not to mention this is the only exposure to natural light.

The unit was listed for $424,900, with no parking space.

What did the comparable sales tell us?

Well I’m the one always telling my clients, “Throw the comparables out the window in this market.”

With the market increasing over 20% per year, what can “comps” really tell you?

Perhaps that’s more the case for¬†houses¬†rather than condos, but nevertheless, the same model had sold in July, which would give us some idea on price.

That unit sold for $467,500, with a parking space, albeit five floors lower down, but that difference is negligible.

But parking runs $30,000, so we’re looking at a comparable sale of $437,500, apples-to-apples.

So what would that unit be worth¬†today, with “today” being December 20th?

You can make numbers say anything you want.

We know the average home price was up about 20%, year-over-year, in each of Sept/Oct/Nov.

Do you want to call it 1.67% per month, for five months?

It sounds crazy to suggest that the same condo is worth 8.33% more from July to December, but the market is crazy, is it not?

So let’s value that condo at $473,944 as it was in December.

Crazy eh?

The¬†same¬†unit, WITH a parking space just sold for $467,500, and now we’re saying this unit, without parking, is worth more?

Well, that’s what the numbers are telling us.

My colleague had a client for this unit, and we chatted about pricing before and during the offer night.

I felt that with December being slow, they might not pull that $470’ish price point.

$465,000 sounded more than reasonable, given it was listed at $424,900, they were holding back offers five days before Christmas, and this layout wasn’t the best. ¬†Not to mention, 2-bedroom condos¬†without¬†parking don’t always sell well. ¬†Moving a 2-bed, 2-bath without parking in this market is tough, since that demographic usually has, and requires, a car. ¬†So a 2-bed, 1-bath, albeit smaller and cheaper, might experience a bit of the same issue.

I told my colleague that despite the December slowdown, to expect at least 1-2 competing offers.

Imagine that.  Three offers on a condo, five days before Christmas.

My colleague tried his hand at a bully offer, but the sellers wouldn’t look at one.

The listing agent was up front with him, and suggested the sellers were looking for $460,000 on offer night.

A big price, but in the ballpark, give or take.

Offer day came, and my colleague registered his offer first thing in the morning.

By noon, there was only one competing offer.

I started to wonder if perhaps this unit could be had for $440,000. ¬†With only¬†one¬†competing offer, it wasn’t unreasonable.

A third offer was registered later that afternoon, and my colleague figured he’d have to arrive with his clients’ max: $465,000.

$424,900 list price, three offers.


It might sound like a lot to some of you folks, but remember that the list price is often insignificant in this market. ¬†And the 2nd and 3rd offers were registered by buyers who already knew that they were in competition, and thus they weren’t fence-sitting, but rather they knew they would have to be aggressive.

By the time 6pm rolled around, however, there were six offers on the condo, and I was just absolutely flabbergasted.

I won’t drag this on any longer, folks.

Sometimes when I write stories like this, part of the theme is the suspense, and the step-by-step updates.

But that’s not the point here today; it’s the discussion¬†after¬†the fact that’s important.

So I’ll spare you the suspense – the property ended up getting¬†sixteen¬†offers, and selling for $505,000.

Oh, and the winning bid was unconditional.

Nuts, eh?

Sixteen buyers were ready to pounce on a property five days before Christmas (actually it was four days, since the listing agent and seller had to extend bids until 10am on December 21st), and the winning bid was about 10% more than expectations.

10% doesn’t sound like a big number, in this market.

But let’s work backwards to show what the property really sold for.

Take this $505,000 sale in December, and compare it to the $437,500 equivalent sale (ie. $467,500, minus $30K for parking), back in July.

That’s a $67,500 increase on a $437,500 sale, which based on five months, is an annualized return of 37%.

THAT is a number that raises eyebrows!

37% annualized.

That makes the 20% numbers being thrown around in the fall market look like peanuts.

So where did we, namely I, go wrong in all this?

How did a property get sixteen offers, and sell for an unfathomable price in a market that most people expected to be dead?

Well, I suppose the obvious answer is – buyers wanted to get in before the New Year.

Sure, a lot of buyers, or most buyers were out of the market by December 21st.  But many saw this as their last opportunity to buy in 2016.

Personally, I see that as an arbitrary number and date.

If your “goal” is to buy in 2016, as opposed to waiting three weeks until the January market picks up, then that’s silly.

And I don’t think this has to do with mortgage rate pre-approvals or anything. ¬†I think a lot of folks just saw this as a “last chance,” and they jumped on it.

But I also think the reason for the sixteen offers, and the obscene price is partly due to the idea that there might be a “deal” out there, based on opinions and understanding of the market cycle.

If most buyers out there feel that¬†other¬†buyers have put their searches on hold, then they’re going to get involved whether this is the “perfect” condo or not.

Maybe some buyers naively expected a¬†steal. ¬†Maybe those buyers thought they’d catch the rest of the market sleeping.

What I don’t understand is why any buyer, knowing there were already, say,¬†nine¬†offers, would get involved with a bid if they weren’t going to go for broke.

I’ve been on the other side of the table.

I know what bids are like when you’ve got 16 of them.

More than half are throw-aways, and in this case, you know somebody that registered their offer at 6:55pm, knowing there were 10, 11, or 12 offers, made a bid of slightly over the list price.

That is also part of the reason for the crazy sale price.  The winning bidder, in the end, saw the 15 competing bids and put more on the table than he or she ever contemplated before.

It’s a classic bidding frenzy.

We just never expected to see it this late in the year.

So will I now change my tune?  Having seen this, will I alter my approach?


This is but one story, that makes for a great read.

And next November, when a would-be seller calls me on the 28th and says, “I could have my condo ready to list in two weeks, should I get it on the market?” ¬†I will still tell them, without hesitation, to wait until the busy spring market…


Post A Comment

Your email address will not be published. Required fields are marked *

  1. Condodweller says:

    It looks like things are heating up in the condo market as one of the buildings I follow where 1 bedroom units have been hovering around and under 400k there was a unit listed recently for 80k above that, which was sold very quickly as it was off MLS in less than a week.

    Now this building is pretty desirable and if there was nothing special about the unit in this story, perhaps it went so much higher simply because it was in a desirable building where there haven’t been a lot of listings.

  2. Ralph Cramdown says:

    Here’s an admission, out of character for me:

    If I was selling in a nutty market like this, an agent would probably be worth the money.

    I sold a FSBO for family in the 905 4 1/2 years ago, and I’ve no regrets. In normal markets you’re looking for one good offer on your fairly priced property. I had enough interest that the buyer could see that he wasn’t the only one in the mix, and that was good enough. I had the property appraised, offered it for 6% above that to give myself some negotiating room, and got full price (after a sweaty verbal counter to a written offer $10k less than asking). Cleaning out the property was a ton of work, and actually selling it was minor in comparison. Could an agent have gotten 10% or 11% above appraisal to earn the commission? Maybe but I doubt it, and the experience was fun. Listening to some clown explain how he wants to do a lease-to-own because he’s supposedly hiding assets offshore from his wife in a divorce, and by the way he’s got a friend who runs a hedge fund with low volatility and high returns in said tax haven, in case you want to invest the proceeds from the sale… pretty entertaining — and I didn’t tell him to go fly a kite because I wanted his interest to drive up bids from people with actual wampum. But I could see how a pro agent, exposed to the thirtieth suchlike character, might find it a bit less entertaining.

    But I was only looking for a few other interested parties to keep the bidder honest. David’s story, above, is a whole different thing. He actually downplays the effect, as condos in C08 didn’t go up anywhere near 20% in a year, or a pro-rated value annualized since July. As a FSBO, there’s no way I could’ve generated that much crazy without being on MLS, or generated that high a sale price without that much crazy. So, ironically, I guess the broker commission is most worth it when the selling agent has to do the least work? Sure I’d pay 4 or 5% to catch a bid like that, which I’d never be able to get as a FSBO — it’s totally worth it.

    1. Ed says:

      Well said Ralph.
      I recently sold wife’s house in Brampton as a FSBO and I too am not disappointed with the results.
      However come spring time when we plan on selling the Etobicoke house I’m 90% sure we will be using an agent in order to generate more bids and hopefully higher sale price. My feeling is that even if I am listed on MLS with Comfree I will probably only generate half as many offers compared to using an agent.

      1. Kyle says:

        Curious where you find buyers. 90%+ buyers are already working with an Agent, who are disinclined to show them your property. And those buyers that have signed a BRA (Why would anybody ever sign one of these stupid things???), could also be on the hook for paying a commission to their Agent if they buy a FSBO.

        I know in cottage country selling privately is widely accepted, but in the City i don’t think there are many buyers actively looking to purchase privately.

        1. Ed says:

          I would assume you are asking where I would find potential buyers/bidders for the Etobicoke home. I agree with you there are many who I assume are already working with an agent and you would therefore have to be willing to provide a commission to the buyers agent. Very true. So to be a FSBO AND to sell in a bidding war one must expect that they would only save the commission they would have paid to the listing agent, minus the comfree cost of course. Is it worth it?

          1. Kyle says:

            Ah, makes sense now. In cottage country (the type of private sale i’m more familiar with) most sellers advertise through other means: Facebook, Cottage Association, Kijiji, Classifieds, posters, word of mouth, etc and they aren’t necessarily targetting buyers with Agents. Neither buyer nor seller pays commission, but the properties take a long time to sell.

        2. Mike says:


          While you’re right about agents being disinclined to show the house to prospective purchasers and the obligations if they’ve signed a Buyers Representation Agreement (only sign when you’re putting an offer in on a house and then make sure it’s only good for the property you’re bidding on). Most home purchasers are increasingly aware of what’s happening in their market. From auto-generated emails listing houses in their neighbourhoods and price ranges to continually searching MLS; so if a house get’s listed on MLS that might fit their requirements they’re going to want to see it.

          Agents are required by their code of ethics to show you all houses that meet your requirements and can’t prejudice your search just because of the commission. So as long as you know that, make sure your agent takes you to all the listings that you think are interesting. If an agent is unwilling to do that then find a new agent (that’s why you don’t sign the BRA).

          1. Condodweller says:

            @ Mike
            While agents are theoretically required to show all listings we all know how much rules are enforced, or not in this case. Realistically, I would not expect an agent to work for free, therefore as the buyer you really should compensate him/her if he is showing you an FSBO listing where the seller is not offering anything to the buyer’s agent.

            I had a relative who sold a house FSBO a long time ago where an agent had a buyer and asked them for compensation. My relative told the agent he was not willing to pay and if he wanted to get paid the buyers would have to pay him. They ended up selling to them without paying, therefore the agent must have worked out something with the buyers.

          2. Mike says:


            I agree that they should be paid, but if the agent I wasn’t using didn’t want to show me a house or put their best offer in, I’d have no issue having my lawyer submit the offer and then reporting the agent to the authorities.

  3. Boris says:

    As inventory gets more and more ‘junky’ and the x axis grinds ahead, the time of year will matter less as people NEED to own property for various life commitments (babies etc).

    The market is ridiculous, will likely stay that way and the lack of suitable inventory for so long is making every ‘ok’, ‘good’, and ‘average’ listing set records.

    1. Appraiser says:

      The Greater Golden Horseshoe and the entire Quebec City to Windsor corridor is THE future for the next fifty years folks. A dynamic, wealthy, vibrant life-force accelerator, slowly and inexorably marching toward the economic equivalent of nuclear fusion. Get with it.

      There are many who are already 20 years behind the curve, but still won’t budge. They’re the ones perpetually waiting for the crash.

      1. doctor zhivago says:

        “A dynamic, wealthy, vibrant life-force accelerator, slowly and inexorably marching toward the economic equivalent of nuclear fusion.”

        Woah… I can already feel myself evolving into pure energy!

      2. Julia says:

        Oh my – that is probably the most poetic sentence ever written about real estate…