Look Outside Your Price Range!

I know, I know – it sounds like something a salesperson would say!

But just hear me out!  Looking both higher and lower than your target price point will help you to determine what you want in a house or condo…

Oh sure, let the salesman speak…

“Hey guys, I know you’re looking for a $500,000 house, but why don’t we take a look at this one here, priced at $600,000?”

It sounds like BS, but it’s not.  Just trust me on this one…

Every time I get an email or a phone call from a new buyer, the conversation always starts the same way: “Well, we’ve been pre-approved by the bank for $550,000, but we only want to spend around $400,000.”

Of course.

I’m not the first cynic that will tell you how banks are approving massive loan amounts to people who don’t necessarily want them, and, debatably, who shouldn’t be getting them.

But you won’t be the first cynic who will say that I’m pushing my clients’ boundaries when I tell them to look outside their price point!

However, I do this because I think it helps them focus in on what they really want.  And believe me – most buyers think they know what they want, but in practice, they don’t.

I have a theory that there are three major factors when it comes to searching for a house or condo:


These three factors are all intertwined, and more importantly, the presence of two of them will help to fill in the third.

For example, if you know that you want a hard loft of about 800 square feet with a large kitchen and high ceilings (STYLE), and you want to live in the Queen West area (LOCATION), then as a result, you can determine that you’ll be in the $450,000 ballpark (PRICE).

A + B = C

And price, location, and style can be any of A, B, or C.

If you know that you want to spend $300,000 (PRICE) in the St. Lawrence Market (LOCATION), then you’ll end up with a 650 square foot unit in an older building, or perhaps a 550 square foot unit in a newer, more modern building (STYLE).

We can work this equation all three ways, and although you’re already ahead of me, I’ll demonstrate the last point.

If you want a 3-bedroom, 2-bathroom, detached house with a private driveway and a large backyard (STYLE) and you can afford a maximum of $150,000 (PRICE), you’ll have to extend your search to Valdosta, Georgia (LOCATION).

So having said all of this, you can see why I encourage my clients to look out of their target price point in order to fill in the blanks.

I know this seems ironic, given that I’ve been writing about personal debt lately, but I’m not telling my clients to buy a $900,000 house when they’re comfortable at $600,000.  Let me explain with a real-life example.

On Thursday night, I’m taking out two new clients who are shopping for a condo in the $400,000 price range.  They’ve given me a whole laundry list of things they want: second bedroom or den, second bathroom, large balcony, high ceilings, modern design, upgraded kitchen, open concept floor plan, parking space, locker, etc, etc.  The reality is, you’d be hard pressed to get this for $400,000, if you include everything on this list.

So my job is to figure out what is important.  What are the must-have’s and what are the nice-to-have’s?

What are the deal-breakers?

I can find you a spacious 1,200 square foot 2-bed, 2-bath with parking for $340,000, if you’re willing to commute from Markham Road every day.  No?  That’s no good?  Okay, so now we’ve reigned in location.

I’ll be showing these clients a variety of properties ranging in price from $364,900 to $439,900.  The reason I’m showing them a property that is a full 10% above their price point is threefold:

1) If the price is negotiable, and we can get it for, say, $420,000, then they’re only 5% above their ‘target,’ which is more of a psychological barrier.
2) This unit has everything they want, and if they determine they can’t afford it, then they realize they have to compromise on something.
3) It shows them what “the next level” truly is, and puts things into perspective.

Now on the flip side, I also show them properties that are priced significantly lower than their target.

A few weeks back, I had a retired couple purchase a unit that was about 15% lower than their target.

They walked into this condo and basically said, “I could live here.”  They looked at one-another and said, “Do you need more than this?  Does this work?  Could you live here?”

The result was that they bought something for $35,000 less than what they had intended on spending.  They saw larger units at their target price point and decided that they didn’t “need” that much space.  So why buy that space if you won’t use it?

I did the same thing with this retired couple – I showed them units above their price point, and they weren’t interested.  We looked at things right at their target, and they were quite interested, but it wasn’t until we saw something significantly lower than what they assumed they would spend, that they realized what they truly wanted and needed.

And that is the entire point of this post.

Many buyers don’t truly know what they want and need until they’ve seen it all.

I have buyers send me MLS listings for condos and houses that they’re “really, really interested in seeing,” only to get them inside and have them say, “this is not at all what I’m looking for.”  In today’s modern age of MLS, buyers will send me 20-30 listings, and I’ll weed through them as best as I can.  But if a buyer, who is interested in hard and soft loft condos, really wants to see that “big, open, value-play” at 330 Adelaide Street, I’ll show it to them.  Only once we get inside and see that the “value” exists in doing a $25,000 renovation, AND getting $25,000 off the asking price, then the situation changes entirely.

We have that old saying in my business: “buyers are liars.”

Well, no.  It’s not that they’re setting out to lie.  It’s just that they don’t know quite what they want.

And how could they?  I see 30 houses and 30 condos every single week, every month, every year.  How many does the average buyer see, before he or she ever sets out to buy?  About zero?  That is – zero through the eyes of a buyer?  Sure, that buyer might visit a friend, family member, or colleague, but without being in a buyer’s mindset, they won’t really look about the property through a buyer’s eyes.

We can’t expect a buyer to know exactly what he or she wants, right from the initial phone call.

Thus, I like to take my buyers to see properties above and below their targe price point.

It’s all intertwined – price, location, and style.

Most buyers wouldn’t object to seeing properties in different locations or of different styles, so how could price be any different?  It’s not as if I’m trying to push a buyer into a financial bind, but rather it’s part of the qualification process.

If A+ B= C, then how can you completely ignore one of those variables?


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  1. h. Marshall says:

    I look at buying condos a little differently. I look at buying for the long term so I would pick an area where I would like to live and have a good idea on what I can afford.

    Then I would pick the building based on the corporation’s finances, Reserve Fund Study and the number of renters. Finally, I would want to know if the condo allows short-term rentals.

    The understanding of the finances, declaration, by-laws and rules plus getting a feel for the condo’s politics is so important.

  2. Groperty says:

    It makes sense to browse around, maybe save up for a larger down payment? The most important thing is to never invest in property that is the absolute maximum you can afford. Leaving yourself with zero financial breathing space could really hurt you during a crisis. Definitely talk to some professionals (certified financial planners) before taking the next step.

  3. rosemary says:

    Great post …Planning to buy as i am going to settle here only.My hobby is travel… i have traveled many parts of North America..Toronto is one of my favorite places… And whenever I visit here I prefer Corporatestays.com for cheap and luxury accommodation…

    1. Scott says:

      Looks like we have a spammer in our midst….

  4. Floom says:

    This is good advice. I don’t think its sneaky on behalf of agents. 80% of the homeowners I know (myself included) have said at some point “I was preapproved for X but I only want to spend Y” and ended up splitting the difference somewhere. I can think of 10-12 people who did the exact same thing and no one that I know if regrets the decision -wishing they’d forgone the 2nd bedroom or a parking space, to save $75 a month.

    That said, you need to be realistic – I told my realtor that I wanted a condo with a private inground pool but I would be willing to accept shared laundry (compromise) and no kitchen (to keep the price down). He talked me into the exact opposite -no pool, but laundry and kitchen and who would have known that I would be happier (until I tried to turn sunken living room into wading pool and flooded many units)

  5. George says:

    I was told there would be no algebra.

    With all the pricing games in Toronto (undepricing/overpricing of properties), you almost invariably end up looking outside your price range by accident.

    I hated looking at things more expensive than I could afford because it just made me find the flaws in the cheaper properties. Kind of like meeting your girlfriend’s more attractive single friends.

  6. IanC says:

    It costs big $$$ to sell and buy another condo. So if going above your price range …. But it means that you stay in the place 8 years instead of 3 (to upgrade to something better)… it’s always something to consider.

    And if you are comfortable with spending X…. you assume average maintenace fees, and state of the unit with appliances and such.

    If your maintenace fees are exceptionally low or high – or the the appliances are brand new vs. breaking down – or the layout and finishes are perfect vs. needs updating very soon …

    That puts a filter on how you see the price for that unit…