Because if you are, you probably don’t stand a chance in Toronto’s real estate market today!
I don’t mean to name-call, or be insensitive, but a lot of the buyer pool who absolutely refuse to accept current market conditions are simply never going to be successful in their property searches…
Remember the movie Reality Bites?
A cult-classic from the early 90’s, in my opinion, that starred young versions of Winona Ryder, Ethan Hawke, Ben Stiller, Janeane Garofolo, Steve Zahn, and an unknown Renee Zellweger.
The best line from that movie, of which there are many, had to be “Did you know that ‘Evian’ spelled backwards is ‘Naive’?”
I’m sure you’ve all heard that line before, but I don’t think it had appeared in popular culture before Reality Bites.
“Naive” can be many things to many different people.
It can be cute to some, if that person is naive in a funny, carefree sort of way.
And it can be offensive to others, if that person is naive in a way detrimental to him or herself, or others.
When I speak of naivety as it pertains to the buyer pool in Toronto’s real estate market, it can often be a combination of both of the above.
Some people really are naive when they arrive in Toronto, just having paid $290/month for a sub-lease off campus in Waterloo, looking to pay $700/month for a gorgeous waterfront condo in Toronto. Hey, it happens, and not everybody is a real estate expert.
But then some people are deliberately naive, to a fault, when they decide that they’re going to not only make their own rules in the world of Toronto real estate, but also to try and live in a dream world that simply doesn’t exist. I simply can’t provide a kinder description than that; sometimes, people just want to close their eyes and ‘hope.’
Let me give you an example…
Last week, I received a cold-call from a potential buyer who found me on Toronto Realty Blog, and who said she liked my honest approach, and she felt she would be a good fit with me. She was direct, and said that she wasn’t a huge fan of Realtors in general (that’s fine, she certainly isn’t alone!), but that she needed help finding a home in Roncesvalles, and she did see the value in working with a buyer agent.
But she was very emphatic in one point in particular, saying several times, “I absolutely refuse to take part in those stupid bidding wars.”
Believe me, that’s not the first time I’ve heard that, and really – who could blame her?
I told her, “Well, you call it a ‘bidding war,’ and I call it a ‘multiple offer scenario.’ It’s six of one, half-dozen of the other. It’s semantics, really, but it’s all the same.”
I went a step further, and added, “I mean, you could go as far as to simply call a bidding war, ‘reality,’ in this market, that is. I wish it weren’t so, but unfortunately, it is.”
She didn’t agree.
“Well David, what I’m telling you is that I’m not going to make that my reality. I refuse to take part in a bidding war.”
This is where your average Realtor is at a crossroads. On the one hand, you want to turn this cold-caller into a a client, so you don’t want to turn them off; especially never having met them and established rapport. On the other hand, you don’t want to give them false hope, and support their incorrect views and understanding of the market.
I feel as though many Realtors will do anything to get a meeting with a potential lead, and this is where many Realtors would give in, and simply say, “Totally cool – whatever you want to do, that’s what we’ll do!” But I want to dig deeper, provide my insight, and try and come to a meeting of the minds.
So I asked a question which wasn’t meant to be condescending, but rather lead to the identification of current market conditions: “What kind of house are you looking for? Are you looking for a fixer-upper that nobody else will touch? Or something languishing on the market?”
She replied, “No, not at all. We’re not really looking to do any work to the house. I mean, we don’t need luxury, but at the same time, we want move-in ready. We’d paint, perhaps, and maybe do some smaller updates over time, like hardwood floors, or appliances, but yeah, we’re looking for move-in ready as we both work a lot.”
It’s as I suspected, and so I was honest: “Well, I think you’re going to end up in competition for the kind of house you’re looking for.”
Again, she reiterated, and in a very calm and polite manner, “Well, just keep in mind, we are NOT, under any circumstances prepared to ‘bid’ on a home.”
So I finally got to the crux of the matter and said my piece, which is something I say to every single buyer, for a freehold property, when I first start meeting with them:
“The Toronto real estate market, specifically for single-family dwellings, is hot, and has been for about seventeen years. Demand outstrips supply, and there is a lot of interest in virtually every home that comes onto the market. You need to accept, right from the onset, that you WILL be in competition for a house, at one point or another. With all those people looking, you would be somewhat naive to think you’re the ONLY person in Toronto looking at a given home.”
And that’s it. I hope this isn’t coming off as rude – the word “naive,” and all. But that’s as best as I can put it.
There’s no arguing with that logic: you would be naive to think you’re the ONLY person looking at a given home.
I guess I could say it differently, or sugar-coat it, but this isn’t meant to be rude; it’s meant to be to the point.
If a 3-bed, 2-bath semi-detached house comes onto the market on Hanna Road in Leaside tomorrow for $649,000, do you think that you will be the ONLY person who wants to make an offer?
If a renovated Victorian rowhouse comes onto the market on Withrow Avenue in Riverdale tomorrow for $799,000, do you think that you’ll be the ONLY person who looks at this house and decides to proceed?
Right? Is there any arguing with that? Stop me now if you disagree!
So, logically it follows that if you think you’re the only person who would be looking at one of these houses, you might be a little naive.
And so that is how I describe current market conditions to my new buyer clients.
I’m upfront and honest right out of the gates. I tell them that for every $599,900 house that hits the market in Leslieville, there will be 500 buyers who see the listing online, 50 buyers that view it in person, 10 buyers that contemplate an offer, and 4-6 that proceed with one on “offer night.”
This is the way it is, and we can’t change it no matter how hard we close our eyes, grit our teeth, and hope and pray.
There are exceptions to the rule. Not EVERY house in Toronto gets multiple offers; that’s not what I’m saying. But you know the exceptions, right? That house – that run-down, beaten-up house that’s listed with the agent from St. Catharines, has no photos on MLS, is priced at $688,800 when it’s worth about $600,000 on a good day, and only allows viewings from 4-8pm on Tues/Thurs/Fri. That’s the exception to the rule, most of the time.
A “nice” house in Toronto, that’s listed with a good brokerage, is prepared for sale, has dotted the i’s and crossed the t’s, and has been well-marketed is likely going to attract multiple offers if it’s in a good neighbourhood and under $800K.
The bulk of my buyers are looking for houses under $800K, and so the first conversation we have when we start working together is, “Be prepared to compete against other buyers for a nice house that you’re interested in buying.”
View this however you like. Read the above as, “Be prepared to be in a bidding war with other bidders,” if you want to.
And I’m sure that the average anonymous commenter on an online newspaper article would read this and say, “Look at this Realtor! What a jerk! He’s openly writing about how he pushes his clients into bidding wars! THIS is why the price of real estate is so high! It’s a**holes like this that are to blame – saying that you have to win a bidding war to buy a house!”
Again, translate it however you’d like.
I’m sure we all wish that there were several great houses available for every potential buyer, and we could all take our time, and have our pick. But that’s just not the case, so why would I allow a buyer to think that? How would I be helping them if I propped up their fantasies?
Bottom line: you’d be naive to think you’re the only one interested in a house that’s up for sale, so it follows that competition for houses in this marketplace is natural.
You’re free to hate the game, but you can’t hate the player.
I’m just telling it how it is.