Learning A Transitioning Market Is Not Easy

It doesn’t matter whether you’re a seller, a buyer, or an agent – learning a transitioning market isn’t easy.

Now to be fair, a lot of the people who fail to learn do so out of ignorance, or refusal.  It’s not easy for a seller to accept that they would have sold their house for a higher price in February, and still pull the trigger in June.

But as the spring market looks to summer, I don’t know who looks more foolish: the stubborn seller, or the ignorant one.

Old Way or New Way

Change is something a lot of people are inherently bad it.

Personally, I’ve never been good with change.

Big or small, I hate change, in every way imaginable.

I remember being 11-years-old when my father came home and told us that he had bought a new home, which was much bigger, and in a better area.  I cried uncontrollably for three hours, and was anxious every day for weeks.  When the “FOR SALE” sign went up on our lawn, I got a hammer out of the garage, knocked it off its post, and hit it around the side of the house.

We moved eventually, and the house was incredible, as was the area, and the street.  But in that moment – being told a massive change was coming, I was completely unwilling to accept it.

Big or small, I hate change.

I’m writing this from my dining room table, where I write most of my blogs.  I’ve sat in the same chair for six years, and my wife just moved the table against the wall so we can have more room for our 7-month-old daughter to play, and I’m losing my mind.  I feel lost on the other side of the table, in a different chair.

Anyways, that’s all besides the point.

Not all change happens immediately, overnight, or on the spot.

Some changes take time, and happen slowly, and that period is called a “transition.”

I’m not sure which change is tougher to accept: the one that happens right away, or the one that takes place slowly.

Perhaps with the former, you have more time to act in denial.

The Toronto real estate market has changed, and is changing as we speak.

Houses are still selling, prices are still up 15% on the year, and the market is still a seller’s market.

But we’re a long way from what transpired in January and February of this year.

As I’ve written on TRB over the past two months, and showcased in some of my Pick5 videos, single-family homes are no longer selling for 161% of the list price, nor are they getting 10-15 offers, each and every time the sign goes up on the lawn.

And remember when crummy CityPlace condos, listed at $379,900, were getting six offers?  That was an interesting time…

I’ve posted a few blogs on the “listing and re-listing,” as I call it, when houses come out at a low number, hold back offers, don’t sell, and are then subsequently re-listed higher days later.  But now I want to give you an example, just to show you exactly what’s going on in this transitionary market, and just how ignorant or careless some sellers are being.

But first, consider the following:

1) The price a house is worth.
2) The price a seller wants for the house.
3) The price the market will bear for the house.

Once upon a time, #1 and #3 were the same.

A house is worth what somebody is willing to pay for it,” the infamous real estate adage goes.

Whether the market is hot or cold, we can argue that a house is truly only worth, or worth as much as, a buyer is willing to pay.

Today, that might not be relevant, as I’ll explain when we talk about houses that are actually under-listed, but don’t get any offers on “offer night.”

As for #2, that’s also an interesting intersection of today’s market, since, for a long time, the sellers had absolutely no idea of what price they wanted for their homes.

When the market was at the peak of insanity, I was having trouble getting sellers to believe me when I told them how much I thought we could get for their properties, or even on offer night, when I called and said, “Our highest offer is for $681,0000,” the seller, who thought his property was worth $500,000 three months earlier, would say, “This is a joke, right?”

So whereas in a hotter market, #1 and #3 were more than #2, it seems today, the opposite is true.

Many sellers want and/or need to sell, and will do so in current market conditions.  They’re not looking forward, not looking ahead, but rather working in the current market.

Then some sellers are stuck in yesteryear, refusing to acknowledge that prices are actually down from earlier in the year.

I’ve never seen this level of willful ignorance, nor have I seen this level of greed.  The entitlement bears mention as well, as many sellers feel that having owned a house in March, entitles them to March’s price, today.

I told you the story a couple of weeks ago about a house on which I bid in Leslieville, listed at $799,900, for which my clients offered $900,000.  That house was re-listed for $1,050,000.

But that’s nothing compared to what I saw last week.

Another house, which we’ll just say is in the city, was listed for $899,900.

I had clients looking in this area, who are merely starting their search, and I told them, “There’s a house that’s up for sale, taking offers tomorrow night, that will not sell, and will be re-listed higher.  I think we should go have a look, just as an exercise.”

Disect what I just said, and it seems odd.

The house is for sale, but I know it’s not going to sell on offer night, and is going to be re-listed higher?


Well, three reasons:

1) The sellers likely want far more than the current market will bear.
2) The listing agent is playing a game that nobody wants to play.
3) The buyer pool want to know what the house is actually worth.

And that’s another distinction we need to make here.

Part of the reason why all these houses are being listed and then re-listed, after they don’t sell on offer-night, is because the buyers know there’s a built-in “Plan B” to re-list.

It’s at that point, that the seller has to essentially take off the disguise, and tell the market what price they really want for the home.

So with respect to this house I was showing last week, I told my buyers, “This house is worth more than $899,900, no question.  It’s a semi-detached, 3-bed, 3-bath, with parking, fully renovated; it’s a million-dollar house for sure.”

My clients’ budget is somewhere in the $900’s.  As with most buyers, they probably want to land under $950,000, but they can go to $1M if need be.

I wanted to show them this house, not only to introduce them to the area, and show them a particular style of home I thought they might like, but also, as I said, as an exercise in what’s going on in today’s market.

It’s one thing to have money, and another thing to be an active buyer, but navigating this transitioning market is not something every buyer is ready for.

We went and took a look at the house, and it was a very nice renovation, but extremely poorly presented.

I know I’m going against some of my own advice here, when I tell buyers to “look past” certain things, but it’s tough to do when your first impression is the old sh!tter sitting on the front lawn:


A million-dollar-house, you say?

It sure didn’t present like one.

There were so many careless and lazy elements of this listing.

Little things – like leaving fluorescent light bulbs in the garden:


It’s just really careless.

But why amateur-flippers finish 98% of the job and then list in a hot market, is a topic for another day, and one we’ve covered many times.

Suffice it to say, there were urine stains on the marble tile in the bathroom, the sellers were too lazy to peel off all the stickers on the new Pella windows, and it was quite evident that the listing agent couldn’t be bothered to drive 45-minutes into the city to check up on his/her listing, as nothing had been updated, cleaned, or rearranged after a slew of agents and buyers had trekked through.

In any event, the intrinsic value of this house was at least $1,000,000.

And yet I showed this house to my clients, when it was listed at $899,900, at 7pm on the very night of offers, and by the time they showed up at 7pm, I had just spoken to somebody at the listing brokerage who told me there were zero registered offers.

I told my clients, “We’ll keep an eye on this one, and see what they re-list for,” the same thing I had told them the day before, in anticipation of this very result playing out.

I figured they would re-list around $1,049,000, or $1,079,000, but I held out hope that they really needed to sell, the house would be re-listed for $999,000, and my clients might have a shot within their budget.

The next day, I couldn’t find it in “My Favourites” on MLS.

I thought it had disappeared.

But evidently, I just never thought to scroll down – way down, down there: towards the properties priced around……………..wait for it……………$1,330,000.

Yes, $1,330,000.

The increase in price on this home was nearly 50%.

And what astonished me more than the new $1,330,000 list price was the fact that, at some point, the seller and/or the listing agent thought that somebody would pay 150% of the list price for this home.

Why not just list the house for $1?

And now, the property will sit, likely for weeks, possibly for months, as the sellers lament the cruel market that surrounds them.

In reality, they never should have under-listed at $899,900 in the first place, but rather should have listed for a price that reflects #2 on our list above: the price that they want for the home.

Because I believe that the new $1,330,000 list price reflects a built-in “negotiating cushion” that they, for some reason, felt they needed.

Sellers in today’s market need to realize that they can no longer expect to under-list their properties for a price that often seems to be selected at random, have a windfall of offers on their pre-selected date, and then sell for a price that was nowhere near their expectations – because they never had any expectations to begin with.

Many buyers are now waiting to see what the re-list prices are, before they consider making offers on houses.

Welcome to the Summer, 2017 market, folks.

We’re in a transition, and so many sellers just refuse to accept market conditions for what they are…


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  1. duncan Bray says:

    It is my opinion that it is very useful to know what the Seller paid for the home and how long they have owned it. This can often suggest motivation and price expectation when there is confusion caused by the list price. As the market changes, some buyers are taking shots at homes offering realistic profits in the hope of discovering motivated Sellers. Quite a few Sellers have bought firm and are getting a bit nervous.

  2. Ralph Cramdown says:

    The more I think about this, the less I get it. You are at the property on offer night, it basically meets the client’s specs, poor curb appeal, out of town agent(?), lots of showings, zero registered offers, and the strategy is to…

    …wait and hope it gets relisted with a price low enough to signal to you AND EVERYBODY ELSE WATCHING THIS PROPERTY that they need to sell, so you can get your buyers into a multiple offer situation?

    Make a low offer on the night, with no competition! Maybe it gets accepted, maybe it gets countered. Maybe it gets ignored but they call you back after a month of nothing but crickets. At the time, you have no idea what the sellers and their agent are thinking. The worst that can happen is that you offend the kind of agent and sellers who think that a crapper on the front lawn is no biggie.

    Barring that, returning under cover of darkness and planting petunias in it might’ve gotten the neighbours talking.

    1. A says:

      FWIW, I agree… maybe they were desperate or motivated to sell, and the worst that could have happened was a rejection…

      1. Condodweller says:

        Yup, it’s like dating, of you don’t ask, the answer will always be no.

  3. Joel says:

    I have seen a few homes in my area sell for well over listing on offer nights. This is (as it should be) reserved for homes that show very well and are highly desirable.

    Run of the milll houses and those that are not staged and finished perfectly should not be getting multiple offers. The market is in an interesting state right now as some sellers are unwilling to improve their homes or drop their prices. When they need to fund their next purchase something will change.

  4. Real estate millennial says:

    The majority of buyers are taking out mortgages and don’t have the ability to make all cash offers or even put 50% down. My point is lenders are footing the rest of the bill and it’s what they believe the property worth, is the number most buyers and sellers should be concerned with. Most lenders will send an appraiser to appraise the property before issuing financing regardless. Why not just appraise the property before listing it, this way you have a base idea of the property’s value from an independent third party. CUSPAP the standards from which AACI’s and CRA’s work under is very thorough and their valuation is what will be relied upon in the end, why not get it upfront?

    1. Mike says:


      Real estate appraisals use the listing data (time on market, percentage of listing price ect) to come up with their valuation; so you couldn’t do an appraisal before the house sells Appraised value is generally what a house could get within 30-days of being offered for sale. In a bull market like we’ve experienced it’s easy to say that the value will be worth at least what the Buyer has offered because the market keeps going up.

      When the market stagnates or pulls back the valuation becomes trickier and while the banks have at least a 20% equity piece to fall back on that can evaporate quickly. As the market weakens, valuation get tighter as banks are the client of the home appraiser and that’s where you start to see issues arise with financing.

      Add to that mix the troubles at Home Capital and 4 out of 5 banks saying that they are placing more scrutiny on Toronto mortgages and you will start to see a lot more conditional sales fall apart based on appraisals if this market continues.

  5. Kyle says:

    Not sure flipper behaviour is representative of the average seller. They have been greedy and of touch with the market long before it shifted.

  6. Tamir says:

    These sellers are greedy pigs and suck, especially if they cut corners on the flip.

  7. tom Vertoff says:

    Very, very few people should be buying million dollar homes. It is not normal. If, for example, your household income is over 250k and you have 250k or more to put down then perhaps, but even then i would strongly advise caution. Circumstances (either your own or external) will certainly change over the next 30 years… at best you will die in poverty but more likely you will go bankrupt long before then. Be careful, it is not a game you are playing.

  8. H. Marshall says:

    I am still waiting to see what happens to condo resale prices. I was sure some of the huge price increases over the last year could not hold and that rent controls would have an immediate negative impact. Apparently, not so.

    It appears to be far too soon to tell what is going on.

  9. Jack says:

    That’s an interesting story, I enjoyed reading it. It gives those of us not directly in the market an insight on what’s going on. But how does the story end? Will there be a sequel?

    David, you have done your research and decided the house is worth $1M. And your buyers are willing to pay $1M. And the seller is bouncing all over the place with the list prices. So why not ignore the list price and make an offer of $1M?

    1. Condodweller says:

      Yeah, that’s what it thought. If the clients liked the house why not make an offer for just under 1 mil. Additionally, I would make the offer valid for a week for a psychological advantage. That way the seller would think for a week that he can get that price and if they don’t receive an offer for the week, they might just decide to let it go at that price thinking they are not likely to get their “wanted” price. If the seller is a flipper who bought it for a million and put in $200k is probably not likely to sell below a mil, but if the house was bought for $50k 25 years ago and renovated to sell just might let it go. David should be able to tell when it was last sold.

      1. Daniel says:

        Great ideas from two people clearly not in the market.

        You don’t offer “under a mill” for a house listed at $1,330,000. There is no point.

        Show us the last house on MLS that sold for 74% of the list price.

        1. Condodweller says:

          Great idea from an agent who doesn’t care about what his buyer client pays. If there are “zero” offers on offer night at 900k who would pay $1,330,000, your client? Why not offer $1,500,000 just to be certain your client is the winning bidder (someone really needs to come up with a sarcasm emoji).

          I indicated my rationale for why I would offer under a mil. What would you offer and why?

          At the time David was looking the list price was $899,000 and he thought it was worth at least 1 mil. You don’t think 99% of FMV is a good opening bid?

          It looks like David is right: Learning A Transitioning Market Is Not Easy

        2. Ralph Cramdown says:

          Conrad Black’s place and Peter Munk’s place, to name two.

          Anybody bound and determined to buy in this market should be writing up lots of lowball offers looking for the sellers who are desperate to sell before summer vacation or the closing of their next purchase, not wandering around looking for the one property to fall in love with so their agent can be the buyer’s hero with a full price offer — IMHO.

          How many times have you heard an agent say “If I’d known they would sell it for that price, I’d have bought it myself.”

        3. Jack says:

          In response to: “You don’t offer ‘under a mill’ for a house listed at $1,330,000. There is no point.”

          What’s the harm? The worst can happen is that the seller will say no.

          The “market value” (or rather seller’s minimum) and “listed at” have very little to do with one another, as discussed in this and other places numerous times. In David’s story, the house was listed at $899,900 the day before, so who knows what the seller will accept?

          You can argue that making an offer at 75% of the list price is bad etiquette. But then so is listing at 75% of seller’s minimum.

          1. Jennifer says:

            Agree. Listing it at 75% what you want is unethical and should be banned. It is a waste of everyones time. There is a house on First that was initially listed at 999,999 i believe and then relisted at 1.5 million. Underlisting by 500,000 what you want is a misrepresentation, false advertising, misleading, and every other term you want to throw in there. It should be illegal. If the property is worth around 1 million, then I agree I see no harm in putting in an offer. You never know. Who cares about being offensive to the seller by coming in at a “too low” offer. The potential buyers and their agents should be the ones offended by the sellers and the agent’s listing practices.

  10. Ed says:

    David you say it’s still a sellers market and although that may be true in some areas of the city or perhaps for certain types of homes but out in Etobicoke the tide has certainly turned and very little is selling, even when priced right.

    1. Appraiser says:

      “Without data, you’re just another person with an opinion.”
      ― W. Edwards Deming

      Of course it’s still a sellers market. There are approximately 2 months worth of listing inventory currently on TREB MLS. A “balanced market” is considered to be between 4-6 months inventory.

      It’s been absent for so long that people forget was a balanced market looks like.

      Still a ways to go before it returns, I’m afraid. Oh and anecdotes don’t count.

      1. Chris says:

        The GTA as a whole may still be a seller’s market (with 1.81 months of inventory as of May). However, as John Pasalis of Realosophy points out, there are communities (especially in the 905) with seven to ten months of inventory – well into buyer’s market territory.


        As David alluded to, it’s obvious that the market is shifting. A quick look at the following charts clearly demonstrates that the trends seen in the previous few years are no longer being adhered to:


        Nobody knows what comes next; anyone who claims that this is the beginning of the crash, or a minor gully before we go to the moon, is just making things up. Where I think we can all agree is that the market is changing. It will be interesting to see where things go from here.

        1. Francesca says:

          I agree with your comment that in the 905 area things have changed. In my area in Markham where all types of houses were selling above asking in matter of days or right on offer night up until mid to late April, now everything is sitting on the market for weeks if not months. People are still listing based on March April prices and either have been taking the houses completely off the market or not resisting at a higher or lower price. Ironically the less expensive towns and semis that were still selling over asking some over a million in March and April are selling faster at just below list price compared to the more expensive detached houses. In our area it is obvious that foreign buyers were a huge catalyst of why house prices increased so much in the last 2-5 years. I know two realtors personally who work in this market who have confirmed this. One is advising clients to only list right now if they absolutely need to sell, otherwise he is advising to wait to see what happens in the fall. I have a friend who lives in my area who bought in Collingwood before Christmas and listed her house the week in April that the government introduced the foreign buyer tax and her house was literally the last one in my area to sell on offer night over asking. If she had waited another week I’m afraid she wouldn’t have been so lucky.

          1. A says:

            Has your colleague’s sale closed yet? Maybe there is still some risk…

          2. LarryD says:

            “In my area in Markham”
            “I know two realtors personally”
            “I have a friend who lives in my area”

            Please see “anecdotes don’t count” above.

          3. Condodweller says:

            In my book anecdotes definitely count. When you are looking for changes in a market by definition you are looking for new information/signals which would be interpreted by most people as anecdotes. If you are waiting for stats to confirm your belief you are way too late if you are looking to act based on them. Stats are a trailing indicator where “anecdotes” are often a leading indicator.