I Can Admit When I Was “Wrong”…

Technically, the recent sale of an east end home will demonstrate that some of my recent musings have proved to be incorrect.

But in reality, I still don’t think that listing the same property five different times in nine months is any way to sell real estate…

I don’t possibly think you could call me “unbiased” with respect to the way I run my business or the way I write my blog, but I’m always open to self-deprecating humor, and admitting when I’m wrong.

The only problem with being “wrong” in real estate is that it’s always open to interpretation.

I suppose if I say, “The market is going to increase 12% next year,” and it decreases 15%, then I’m absolutely, positively, wrong.

But in other respects, there is just so much subjectivity in our real estate market, and I find it’s often very hard to agree.

I’ve written several blog posts in 2011 about sellers that play “pricing games” and refuse to accept, in my opinion, that there’s really one way to sell real estate for top dollar in the city of Toronto, and you really get one chance at doing things correctly.

I’ve written blog articles as well as a couple columns in The Grid about listing at $1.00, re-listing over and over, and refusing to act rational and logical as it pertains to price.

I won’t back down off my stance, but I do want to demonstrate how one seller recently “succeeded” by playing pricing games, re-listing over and over, and basically doing all the things I argue against.  Of course, it took him nine months to sell his home that could have been sold in a week, but if you really want to call this one a “win” for the anti-TRB people, then you have my permission to do so…

“A house in the east end,” which is about as specific as I can get, was listed in April of 2011 for $539,000.

That price, for that house, at that time, was reasonable.

The market in the spring of 2011 was somewhat hotter than the market in the fall of 2011, but I’m not sure you can say prices were higher.  There are so many short-term peaks and valleys in our market, and listing one week versus the next could net you $20,000 more or less for your home.  It all depends on who is looking to buy at that time, and often whether or not you get the one “Yahoo” who isn’t afraid to overpay for a home.

The house was only on the market for 8 days before the listing was terminated, and it leads me to believe that the sellers believed they had “under listed” their home.  There is no way for me to confirm this, but 8 days is the most common period for a “hold back” on offers, and if they took their house off the market and didn’t re-list, they likely expected a windfall of offers which never materialized.

We won’t know whether there was a) an offer, b) several offers, or c) no offers, but there is a distinct possibility that despite interest in the property from the buyer pool, the sellers took the house off the market regardless.

A few months passed, and in August of 2011, the house was re-listed for $629,000, or a 17% mark up from the original list price.

Perhaps this is the price that the sellers had hoped/wanted/needed to get the first time around?

Personally, I think you’re a lot better off selling in April than you are in August – especially in a family neighbourhood, but far be it for me me to tell somebody, who isn’t my client, how to handle their affairs!

Nevertheless, that listing was subsequently terminated after a month on the market.

Summer came and went, and on September 1st, the house was re-listed at $599,900.

Still, no takers!

So it was reduced a mere $10,000 to $589,000 to try to stimulate interest, but after 41 days on the market, the listing was terminated.

On October 21st, the fourth listing for this same house hit the market, this time at $569,000, or $60,000 less than the first “re-list” in August.  This time around, the house sat on the market for 40 days and the listing was terminated.

Then, the seller got CRAZY!

FIRESALE!  NO OFFER REFUSED!

The house was listed for a mere $488,000 in the first week of December, and an “offer date” was noted in the listing.

$488,000.  Wow.  That’s 77% of the list price from August!

This time around, however, the sellers experienced a “successful” sale – $548,800, or a whopping 112% of the listing price!

Wow, 112% of the list price!  I suppose a congratulations is in order!

Or is it?  And this is where the opinions might differ….

It took this seller nine months to sell his house, and I’m wondering if it was worth it.

The original list price – back in April, was $539,000.  The price obtained nine months later, after four subsequent listings, and month after month on the market, was $548,800.

What if the seller had listed at $488,000 in April?  You might argue that he could have obtained $548,800 or more back then.  I guess we’ll never know, nor will we know if he turned down more than that price in the spring.

This “strategy” of re-listing, de-listing, and re-listing over and over seemingly worked for the seller, so as I said at the onset of this post – I can admit that I’m “wrong.”

I always advise that this “strategy” doesn’t work, and here is a case where it arguably did.

But I still don’t think that this is any way to sell real estate, even if you can argue that the seller obtained $10,000 more for the house nine months later.

Selling your home isn’t easy, and it can be an incredible burden.  If your home is for sale every day for nine months, then your life is in complete upheaval.  You might say, “For ten-grand, I’ll take that so-called upheaval,” but once again – we don’t know if the sellers would have got that same $548,800 price in the spring if they’d listed artificially-low at $488,000.  Any house on this street ‘should’ have sold in two weeks at any point in 2011, so long as it was priced accurately.  This is a hot area, where both the fixer-uppers and the designer homes are in great demand.  If they’d priced at $488,000 in the spring – the house would have sold in 8 days or less like it did in December.

I think we can all agree that listing at $629,000 did NOT work, so this leads me to argue that the overall “strategy,” if you could call it that, was still a bust despite the eventual sale price.

There is only one way to sell real estate for top dollar, and that’s the way I do it every time – the right way.  The hard work way.  The preparation way.  The two months of ‘getting ready’ way.  The marketing, advertising, and staging way.  The right-price way.  The timing-the-market way.  And on, and on, and on…

I’m all in favour of thinking outside the box, and I love to see new and different ways of approaching the purchase and sale of real estate.

But I’m not sure this method has a future.  Lastly, consider that when you do play ‘pricing games’ as a seller, the buyers know this, and are less likely to get involved.  A house with a “FOR SALE” sign on the lawn for three-quarters of a year develops a certain stigma, and buyers grow very, very weary…

5 Comments

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  1. lui says:

    Thats why the number one priority is finding a good agent that knows the area and can target a price point.I would rather have a honest agent that tells me what the property should sell for rather than “testing the waters” for offers.I have a buddy who has his condo on the market for over 5 months,he wants so and so price no matter what,well the condo is sitting empty while his investment is costing him money for the mortgage and condo fees while he waits for his price…

  2. Devore says:

    But I still don’t think that this is any way to sell real estate, even if you can argue that the seller obtained $10,000 more for the house nine months later.

    How much did they pay in interest on their mortgage in those 9 months? That’s money down the drain.

    1. Appraiser says:

      Irrelevant point regarding interest payments, unless the owners were intending to rent. One might also postulate how much was paid off of the mortgage principle in those nine months as well? What if there is no mortgage?

      Assuming they moved in to a another home 9 months ago with another mortgage – they would have paid interest on that mortgage anyway. Same goes for realty taxes etc.

      The biggest loss in this scenario was the waste of time and effort, and the needless stress involved in being on the market for so long.

  3. lola says:

    Do you think the buyer of that “east end” home overpaid?

  4. Geoff says:

    That the gazelle outran the leopard one time doesn’t mean the leopard’s strategy is wrong, young jedi.

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