Call me dramatic if you want to, but a story worth telling, is worth telling right.
I’ve told bits and pieces of Jake & Amanda’s real estate journey through some of my May and June blog posts, but in this series, you can see how one of the busiest 4-month real estate journeys I’ve ever seen, first began, and ultimately how it ended.
We made our first offer in the month of May, after the market had begun to cool.
But as you might have expected in a changing market, the sellers had no idea what was going on…
As I sit and write this (probably a while before publication), I just got the call that I lost in multiple offers tonight – my first big loss of the fall market.
There were five offers, and while that sounds like a lot, it pales in comparison to what took place in the spring market.
On the buying end, I was involved in a 24-offer melee on a property that was mere land value.
On the selling end, I received 22 offers on a condo in a building that historically has not sold well at all.
You almost began to expect double-digit offers on most properties, and you felt good when there were only three or four on offer night.
The interesting part about Jake & Amanda’s property search, which began in May, was that while they bid on nine different properties, the most competing offers they ever faced was five.
That’s how the market began to change in April, as I wrote about several times through the end of the month, and into May.
The Ontario government would have us believe that their ingenious “16-Point Plan” was responsible for the cooling of the market, but in reality, it was a host of factors: the Ontario Fair Housing Plan, the Home Trust scandal, articles about mortgage-backed securities, Easter & Passover falling in the same period, and buyer fatigue; lots and lots of buyer fatigue.
You might argue that “what goes up, must come down,” and the spring market was just so insanely hot, with year-over-year appreciation figures over 30% in March, that ultimately it did cool – as many said it would.
By the time Jake & Amanda were ready to make their first offer, we had already felt the cooling.
It was a very, very strange market, and quite tough to read.
In May, I wrote to blog posts that foreshadowed what was to follow
When the market began to slow, sellers refused to acknowledge market conditions.
What proceeded was one of the most frustrating market cycles – all of about two months, that I have ever worked in.
It was a period of blatant, comical false advertising, where sellers would list at an artificially-low price – as had been done before so many times, but without the response that was usually generated in previous market cycles. When they didn’t get the price they wanted, they would re-list higher, and often wait a week to do so – leaving the house up for sale at the price they had no intention of accepting.
What’s worse is that many sellers and their listing agents simply listed at those artificially-low prices, with no advertised offer date, and told anybody that inquired, “We may be listed at $929,000, but we’re not accepting less than $1.3 Million.” Those listings would stay up for weeks at fake prices.
I was urging Jake & Amanda to consider looking north of The Danforth, as far east as Woodbine, maybe even toward Main Street.
I was monitoring a house on Springdale Boulevard, which had been completely renovated and was up for sale for $849,000.
The house had been on the market for about 14 days, and while they had originally set an offer date, that date had past by a full week, meaning it was now “for sale” for $849,000.
Or so we thought.
The listing had been updated and the “Offers Reviewed On May 12th” part had been removed.
I spoke to the listing agent, and specifically asked if they would consider the list price, or if they were going to re-list higher like so many sellers were doing. He told me to show the property, and that he “liked where they were priced.”
So we took a look, and we loved it. What’s not to love? A 3-bed, 2-bath, fully-renovated semi-detached, for $849,000? It seemed too good to be true!
It was, evidently.
The listing agent grovelled about my short irrevocable date, said he would get back to me after he presented the offer to his clients in person, and then amazingly – never contacted me again.
It was bizarre. It was an experience like none-other, and I remained utterly confused.
I told my clients the truth: “I haven’t heard back from him,” and explained that this was a first, for me.
Several days later, the property was increased in price by $150,000, to $998,000.
Again, the agent never called to inform me. It was like he just couldn’t have been bothered.
I mean, I get it – the house was worth more than the $849,000 price at which they were listed. They ended up sitting on the market at $998,000 for 60 days, before listing for $799,000 in a pathetic attempt to trick the market, which of course worked, and they eventually sold for $880,000 in July.
But back in May, we submitted an offer, and never got a response.
This was just as things were starting to get weird, and of course, this was Jake & Amanda’s very first foray into the real estate market.
A week later, we found ourselves on the other side of the city, out at Eglinton & Keele.
Jake & Amanda were very intrigued by anything along the future Eglinton LRT route, and as you’ll read, we ended up spinning our wheels out here quite a few times.
A detached house came up for sale on Yarrow Road, at $799,900, but it didn’t sell on the scheduled “offer night.” Notice a trend?
The house was re-listed for sale at $829,000, and we went and took a look at the open house.
It was a 25-foot frontage, 3-bed, 3-bath, with parking, and in pretty good shape overall.
It was definitely worth what they were asking, but the market was acting strange.
We made an offer for $800,000 even, listed at $829,000, and I remember the listing agent saying, “This is a good offer, we’ll work with it.”
As luck would have it (another trend in this story…), a second offer was registered a few hours after ours, since this was Sunday afternoon, right after the public open house.
Jake & Amanda didn’t want to go any higher than $800,000, which was their magic number coming into the search, and we ultimately lost to a bid of $820,000.
Of course, the winning bidder, as I learned when I checked MLS and saw the buyer agent’s name the next day, happened to be the couple that we saw at the open house earlier in the day; the couple that I told my clients “probably weren’t interested” as they walked through the house in only a couple of minutes.
Live and learn, right?
We were now 0/2 on offers, both bad beats, as we lost the most recent one to a bid that might not have come in if we’d acted a day sooner, and we lost the first one without even being in competition!
See how things had changed since February and March?
Back then, you’d lose to 10, 11, or 12 offers.
Now, we were losing to the market and the chaos is was causing.
A mere nine days after Yarrow, we found ourselves bidding on a bungalow in the Lambton neighbourhood.
I knew the listing agent for this house; we had done several deals together, and I felt like that might give me an edge.
He had also just had his first child, and being a new dad myself, we bonded a little bit over fatherhood; as much as two competitors from different brokerages can bond.
The house was completely different from the first two we had bid on, which you’ll notice is yet another theme of this story.
Jake & Amanda were so open to areas, styles, sizes, and different value propositions, that it ultimately enabled them to make offers on a multitude of properties.
The first house was a 2-storey semi-detached, the second house was a 2-storey detached, and now we were bidding on a detached bungalow.
The house was on a gorgeous 30-foot frontage, which we figured would be ripe for development in 7-8 years as the area gets built up. In fact, we had already seen a few properties down the street where bungalows had been razed, and 2,800 square foot homes were being built in their places.
Something about this house just seemed to “fit” for Jake & Amanda. On their “nice to have” list was a space where Jake could have a home theatre, possibly in the basement. Well in this particular house, there was a home theatre, with an 80-inch projector-TV already installed.
The main floor layout was something that really “spoke” to Amanda, with all the original interior free-standing walls removed, presenting an open, inviting kitchen, dining, and living area.
The house was listed for $749,000, and we went in with a max of $850,000.
The comparable sales were all over the map, and you could argue this house was worth $700,000 just as easily as you could argue it was worth $900,000, since the market had changed, and was continuing to fluctuate every day.
I’m usually very rational, and realistic about the clients’ chances on offer night, but I really hoped with this one that there would be maybe one competing offer. I just felt as though the market had changed, and while this house was clearly under-priced, we would have a really good shot at $850,000. In fact, I started to think, “If there’s only one competing offer, what price to we lead with?”
In the end, there were three competing offers, so it was a case of putting your best foot forward, and crossing your fingers.
The agent did do me a solid – he told me if we got blown out, he would just tell me, rather than doing what every other agent does, and “send me back to improve,” which is often a fool’s errand.
We led with our $850,000 bid, and alas, he called to say “You got beat.”
The house sold for $888,000, which some of you might think is “only” $38,000 more than our bid, and thus the agent could have sent us both back, but assuming the other offer improved as well, they’d be pushing $900,000, and that was just too far from our bid, which I already conveyed was our max.
It was a bad beat. This one hurt.
With four offers, you’ve got a 25% chance of winning. But where we stood with our $850,000 bid at the onset, I really, truly thought we had a 75% chance.
That $888,000 bid was more of a “spring price,” and we were one day away from June. The sellers did well; they effectively got early April’s price at the end of May.
But Jake & Amanda, once again, shed no tears.
They never made any house out to be “the one,” but rather always seemed to have a backup option.
One week later, we were bidding on yet another house – our fourth bid inside a month.
We were into June now, the media was hammering away on the real estate market, the average home price in Toronto had dropped, on paper, 6.6% from April to May, and was about to drop a further 8.8% from May to June, and I figured we were going to start to see those on-paper numbers translate in practice.
I was wrong.
The next house had more competition on it than any house yet, and while the Lambton bungalow was a “bad beat,” this one was even worse.
Not only did the competition surprise us, and not only did we lose by a hair, but we lost in those “questionable circumstances” that would start become all too familiar to us…
(TO BE CONTINUED)