Er, that should read 2017-2018, since technically, the sale I want to discuss has run through two calendar years.
There’s a difference between a seller and a listing agent working tirelessly to get a property sold, and that of two people who just have no clue what they’re doing, and fail to acknowledge market realities.
Let me explain how not to sell real estate in 2018, and then give you a dynamite look at a real, live mess of a listing – now in its second year…
Hmmmm…..an auspicious start to the blog.
Is that really the best image I could have come up with?
Some nights you feel creative, and some nights you use an image that looks like a sign on the side of a ski hill…
The month of May is in the books, and I for one am looking forward to seeing the TREB numbers when they come out today/tomorrow. I’m most interested in seeing the following five statistics:
1) Average GTA Sale Price
2) Average Toronto Sale Price
3) Average Toronto Condo Sale Price
4) Average Toronto Detached Sale Price
5) Total New Listings
The average GTA sale price is the holy grail of real estate statistics, and while many of us only care about what’s going on in the City of Toronto, and don’t want the statistic to be skewed by sales in Grey County, the overall number is still important as it puts the “big picture” into context.
The Toronto-specific average price is just as important, however. For those of you that live in Oakville, Richmond Hill, Unionville, et al, you would disagree. But as the overall GTA market has declined, I think many would have predicted that properties “close to the core” would come out ahead. So far, that’s the way things look. But I’m curious to see if April’s trend continued into May.
I also want to see how new listings compared to April, as well as to May of 2017, as I think they’ll be down once again.
June is always an interesting month.
On paper, it should be the second-best month of the year to sell, after May.
There are a lot of fair-weather buyers out there, as well as sellers who truly believe that a freehold, single-family home is best shown when trees are green, flowers are blooming, and kids are still in school.
In practice, however, June can often be hit or miss. Last June was a dreary month to sell. After the market turned in late-April, and continued through May, the month of June basically saw about 30-40% of home-sellers re-listing their homes for sale after failed “offer nights,” and often going through 2-3 listings at various prices.
I do not expect this June to be like that, however. I’m merely pointing out the stark contrast between this year and last.
I’m bringing out at least five listings this month, some of which were strategic in nature. I personally expect this to be a very strong month, and if you’re a seller out there, and you’re about to go to market – be confident!
Now of course, in order to be successful in this market, a seller can’t shoot him or herself in the foot, and expect to walk past the finish line.
Whether the market is up, down, or sideways, there are always sellers and listing agents that read the market wrong, implement incorrect strategies, give the buyer pool too little credit, and overestimate the value of their homes.
Remember last May/June, how many sellers were listing and re-listing, over and over? It was an epidemic. I even wrote as much on my blog:
Last year was a whole other level; like nothing we’ve ever seen.
But even still, we’re seeing the odd seller this year make the same mistakes. And I continuously bang my head against the wall, wondering how the seller could be so stupid to think the buyers our there, are that stupid.
Here’s my favourite example to date:
I’ve deleted the address, in case you haven’t noticed.
So this property was sold in 2017 for $905,000, renovated, and the seller tried to flip it.
You can see how the listings unfold here, but if you’re like me, you do a double-take when you see $1,199,000, then down to $1,099,000, then up to $1,299,000.
This is the crazy part.
We know that sellers will often list a property, receive no offers, then re-list higher, right?
You list at $999,900 with an offer date, even though your property is worth somewhere between $1,150,000 and $1,225,000. But offer night comes, you don’t get what you want, and so you re-list higher at $1,224,990 the day after your failed offer night.
But what happened with this detached listing above is priceless.
The seller, who is also the agent, lists at $1,199,000 and sets an offer date for May 22nd:
Offer day comes and goes, but the seller/agent doesn’t get what he wants.
So what’s the move?
Re-list higher at $1,299,000, which is what he wanted to begin with?
Nope. Not yet, at least.
As you can see above, the seller/agent re-lists lower at $1,099,000, and sets a-n-o-t-h-e-r offer date!
Check it out:
That offer date fails too, so then the seller/agent re-lists at $1,299,000:
What I find truly amazing is the thought process of the seller.
Let me try to get into his head for a moment; it goes something like this:
“Well, I set the price at $1,199,000, looking for $1.3M, or thereabouts. It didn’t work. The market didn’t respond. So what the heck went wrong? What did I do incorrectly? And more importantly, what can I do in order to correct my mistake? Well, maybe I didn’t set the price low enough! That’s it! So maybe I’ll just re-list even lower this time – $1,099,000, and assume that buyers won’t remember my listing from three days ago, and think that I actually want $1,099,000, then bid it up to $1.3M! That’s it! I just need to completely ignore the fact that you don’t get a second chance to make a first impression, and hold on to the naive belief that an inexperienced, unqualified, inside-the-box thinker like myself can outsmart and manipulate the market.”
Yes, something like this.
I just find this absolutely amazing.
How in the world can this seller/agent think that the market would respond to this “strategy?”
He could have waited 4-6 weeks, and maybe the market would have forgotten the property.
But to re-list the next day at a lower price, with a SECOND offer night? It’s so bizarre! It’s so illogical! And yet this was an idea from a real estate professional.
Now, my second-favourite listing this spring has to be this one, which is now on its seventh listing.
Take a look:
They tried the property on the market for $1,749,000 in June of 2017, and it didn’t sell. Twenty days on the market, and they took it off in July.
They re-listed in September, which makes sense, since September is a busier month than July or August. Although the detached home price was down in September from June, but that’s hindsight talking.
After 20 days at the same $1,749,000 price, they took the property off the market for about two weeks, and then re-listed at $1,698,000.
Still no takers.
Now here’s what you can’t see from the screenshot above, and pay very close attention.
On November 21st, they re-listed the property for $1,198,000.
Yes, you read that correctly.
$1,198,000, with, of course, an offer date.
That offer date didn’t work, so they increased the price to $1,688,000, which is what you see there – #4 on the list. MLS shows the last active price, and it’s only in the listing’s history that I can see the $1,198,000. Plus, I remember this listing.
So that was their first attempt at “under-listing” as a strategy, which they did to the tune of $500,000.
They left the property at $1,688,000 for another five weeks, before they terminated on January 2nd.
They took their time in early 2018, and with that time put in between the last failed listing, and the new 2018 spring market, they decided to try under-listing once more.
So there they went, listing #5 on the photo above, at $1,499,000, with an offer date.
This time, they held back offers for almost two weeks – 13 days!
Did it work?
They terminated the listing, and re-listed for the 6th time – at $1,698,000.
42 more days on the market before, apparently, they started to feel the burn.
They listed for a 7th time, with a $100,000 price drop, and here we sit at $1,598,000.
In hindsight, many of you will point out that the cost of their debt is likely $10,000 per month, not to mention property taxes, utilities, and maintenance. So had they sold for $1,598,000 in June of 2017, they’d actually be $120,000 further ahead.
But hindsight is hindsight, so we won’t go there. Even though I just did.
My issue with this listing is more to do with the seller and listing agent’s lack of respect for the buyer pool, just like the seller/agent from the first example.
Buyers are not as stupid as sellers want them to be.
It’s like the seller at a department store saying, “That will be $20,” and the customer says, “That’s too much,” so the seller says, “How about four $5-bills then?”
There’s something to be said for “showing your hand,” and many sellers don’t acknowledge it.
If you list your property for $1,500,000, and nobody buys it, and then you re-list for $999,000, the buyer pool doesn’t think you’ll actually sell for $999,000. Nor would they probably think you’d sell for…..maybe…..$1,400,000. They know what you want, because you already showed your hand! And you can’t change that.
You can’t have a second shot at making a first impression.
This simply isn’t the way to sell real estate in 2018.
Er, try to sell real estate in 2018.
But you know what?
That won’t stop sellers and listing agents from trying. I just sure as hell hope none of the folks reading this fall into that camp…