I sell a fair amount of real estate.
It’s my job, and it’s routine.
I often take it for granted.
And when you take it for granted, you might skip a step, miss a beat, or gloss over a detail.
If there’s one thing I’ve learned about myself and about my business over the last year, it’s that I often fail to realize that the market participants in our ever-crazy Toronto real estate market are just not on the same level as those of us that live and breathe real estate.
And how could they be?
I sold two condos on Tuesday – one to a very experienced investor, who didn’t need to see the unit, or include a condition in her offer, and another on behalf of a first-time seller. But if I take the same approach with both clients, then I’m making a dire mistake.
There is no one-size-fits-all approach in this business, since every buyer or seller is different.
The first client made an offer on a condo, sight-unseen, because she knew the value and that the unit was under-priced, owns in the building, and knows the Agreement of Purchase & Sale inside out. This process was expedient, but not cavalier.
The second client sold his condo, having obtained four offers, and having just completed the deal, I feel as though I could have explained the Agreement of Purchase & Sale in greater detail.
Price, deposit, closing, chattels/fixtures included, clauses, conditions. That’s about it, right?
In my mind, yes. But in his mind? Perhaps there’s more.
I say all this, not because I’m really tired, and run-down, and in a state of self-reflection, but rather because I have come to realize in the past two weeks that being a buyer in the current Toronto real estate market is harder than I ever thought possible.
And it’s at the point where I feel bad for first-time buyers. I really do.
I had a phone call on the weekend with a first-time buyer that I’ve been chewing on for a couple of days now, and it’s affected me the point where, as noted above, I’m starting to see that not everybody has the same level of experience in our market.
I had a listing for a freehold home, priced at $899,900, that was an absolute gong-show.
Over 60 showings with agents, close to one-hundred people through the open house on Saturday & Sunday, multiple sign calls and MLS inquiries, and just a downright barn burner all around.
On Sunday afternoon, my phone rang, and the voice at the other end of the line was so full of energy and excitement.
“Hi there,” she said, “I’d like to ask you a few questions about XX Smith Street.”
“Sure,” I said, somewhat unsure as to who I was speaking with. I mean, in our business, an agent should say his or her name when he or she answers the phone, and should do the same when calling another agent. Again, not everybody has the same level of experience and know-how, but suffice it to say, you learn a lot about an agent when he answers, “Hulloh?” rather than, “James Smith!”
The voice on the other end of the line said, “Great, so I visited the property yesterday, and I have a bunch of questions…”
I asked, “Sorry, who am I speaking with?” assuming that perhaps it was, in fact, a young agent who forgot to introduce herself, but she continued “Oh, sorry, my name is Nicole, and I’m a young, first-time home-buyer, trying to get into this market.”
I should have stopped for a moment of reflection right there.
I’ve never been to an Alcoholics Anonymous meeting, but from what I’ve seen in cliché scenes in movies and on TV is that powerful moment when a person says, “My name is David, and I’m an alcoholic,” and the rest of the room claps. It’s that moment of self-identification that’s so brave, and so empowering to those that accept it.
For any “young, first-time home-buyer” in Toronto, just knowing who you are, and understanding the battle that lays ahead is an important first step. And as you’ll see from the rest of the conversation, there’s a lot to learn.
I told Nicole, “Alright, I’m all ears, let’s have it,” and she certainly threw me for a loop.
“Well, as I said, I’m a first-time buyer, and I have a pre-approval for $835,000. So I’m wondering if you think the sellers of this house are negotiable enough to work with me on my budget? And if so, would you be able to assist me with the necessary next steps?”
Right there, in that moment, I felt awful.
I hadn’t met Nicole, but I could feel the excitement in her voice. I didn’t want to be the person to take that away from her, but I also didn’t want somebody else to do it, and break her heart.
I paused, and then said, “Nicole? Can I be honest with you?”
She said, “Of course!”
She didn’t know where this was headed, so I explained a little.
“Nicole, we haven’t met, and you really just cold called me…”
“Yes, I did,” she said. “I was at the open house with my Dad yesterday, and I took your business card, made some notes, and wanted to follow up with you right away!”
God, she was so chipper. So eager! I’m so old. And so…..realistic.
“Right, well,” I continued, “What I meant, Nicole, is that we haven’t met, and you don’t know anything about me, but I fashion myself a very honest guy. A brutally honest guy, and if you were familiar with my work on the Toronto Realty Blog, you’d know that I’m opinionated and I like to share those opinions, even if the truth often hurts.”
“That’s great,” she said. “That’s what I need, that’s really what I’m looking for.”
“So here’s the thing, Nicole,” I continued. “You’ve picked this property that’s listed at $899,900, and have asked me if the sellers are negotiable on the price, when in fact, this property is under-priced, you see? This property is likely going to get four, five, or ten offers, and sell for a million dollars.”
There was no response.
“Do you have an agent working on your behalf, Nicole?” I asked her.
“No, I don’t,” she said, “But if I were to make this offer, I would like to make the offer through you,” she said.
So now even though I wasn’t finished my first point, I knew there was a second point I wanted to make.
“Nicole, let me finish that thought. The way properties are listed for sale in Toronto, for the most part, is that they are listed on a certain date, and offers are held back for a week. At that time, the seller will entertain offers, and typically if a property is under-priced, then multiple offers will result, and the property will sell for over the asking price.”
“Yes, I’ve heard that,” said Nicole.
“So in this case, you’ve picked this property that everybody in the city is looking at because of the price and the location, and you’ve got a budget that just isn’t anywhere close to being able to afford it,” I told her.
And in telling her this, I realized the trap that the big, bad Realtor wolf set for the unsuspecting, first-time-buyer sheep.
“You need to look at the listings and see if there’s an offer date,” I told her. “And if you had an agent working for you, the agent would let you know if and when there’s an offer date.”
“I don’t want an agent,” Nicole told me. “I want to make an offer through the listing agent,” she told me. And that was, yet again, coming back to the second point I wanted to make with her, but I hadn’t yet finished my first.
“Not a lot of $899,900 listings sell for $835,000,” I told her. “Maybe here or there, and maybe outside the core. But if you’ve got a budget of $835,000, you need to be looking at houses that are actually going to sell for this price,” I explained.
“Well that’s why I was hoping you could help me with this offer,” she said. “If I make the offer through you, then you get double the commission, so it’s worth your while to help the two parties come to an agreement,” she finished.
I wondered where she was getting her advice, so I asked her. She said, “My Dad tells me that agents are out there to make deals, and that I should find an agent who will work with me on the buy side, who is already listing for the seller.”
I know these Dads. I see a lot of them.
I love that this guy is looking out for his daughter, and I don’t blame him for not trusting agents, and for telling her to use them as she sees fit. But we all know this approach is misguided, and I told Nicole exactly that.
“Nicole, I do not represent buyer and seller in the same transaction. Ever. I wouldn’t do this under any circumstances.”
“But you get double the commission,” she told me.
“I’m flattered that you’re looking out for my financial well-being,” I mused, “But I’ve been offered far more, to do far less, and still haven’t taken up the offer,” I told her. “There are agents out there that will do what you’re asking, but they’re not representing properties like this. They’re probably listing dumps, and they’re probably going to screw their seller a little less than they’re going to screw you.”
It was at that point that I could finally sense disappointment in her voice. It was as though everything she had been told, was untrue, and she was coming to the realization that she would not be moving into this house in the fall, having her girlfriends over for drinks, and walking to work.
“Okay, so, what do you recommend I do,” she asked innocently, and sincerely.
“I would recommend you find a real estate agent to help you through the process,” I said.
And I don’t want to turn this into an advertisement for why to hire a Realtor, but if ever there was a candidate for assistance, it would be Nicole.
“Ask your friends, your family, search on Google; do whatever you need to do, but find somebody you can trust, who is experienced, and who can explain this process to you.”
“But what about my offer?” she asked, with her voice truly demonstrating her young age. “I still wanna make my offer.”
“Nicole, I had a listing last week on Palmerston Avenue, and we got nine offers. The list price was $1.3M, we sold for $1.55M, and we had an offer for $1.25M that was conditional. This offer never should have been drafted, but it was. And it was a waste of time. It was a waste of the buyer’s time, and a waste of the agent’s time, and I blame the agent for not telling the buyer that he or she had less than a zero percent chance.”
Nicole was quiet, and I wasn’t sure if she was following along.
“You want to offer $65,000 under list for a property that’s going to sell at least $100,000 over list, and next, you’ll tell me that you also want a condition?”
Nicole actually perked up and said, “Yes, but, I would only need three business days for financing instead of the usual five.”
Well, at least she knew that financing conditions are typically five days.
But she had reverted back to that excitable, naive, wishful buyer that was completely misplaced in this market.
And that’s when I did something that made me feel older than I have ever felt in my life, but also made me realize that I feel for these young, first-time buyers: I called her “kiddo.”
“This isn’t going to be the one. Live to fight another day, kiddo,” I said.
She thanked me, and that was the end of our conversation.
Who am I?
When did this happen?
I swear, she sounded like she was 19-years-old. Probably wasn’t much older, in all honest. Maybe 23? 24? She went to an open house with her dad?
Having just written the preceding, and seeing the words up on the screen, I feel even stronger than I did before about just how unfair our market is.
It’s expensive, and impossible.
But the process is so complicated, and it’s tough for any first-timer to figure out.
Yes, agents are partly to blame for the “offer nights,” and under-pricing, but that’s necessitated by the market, unless you really do want to sell for less money, so save me the sanctimony.
Having just received an email from a client who is looking to buy in the Netherlands, I can tell you that the Toronto market is a dream compared to over there.
And talk to your friends in London, England about “gazumping,” and how hard it is to actually close on a home that you’ve purchased.
But take this young buyer, Nicole. She’s trying to do the work on her own, she’s pounding the proverbial pavement, she’s getting advice from her dad, and she’s completely lost.
She’s lost on price, she’s lost on process, she’s lost on protocol, and she’s still being guided by hope and wishful thinking.
I hate crapping on people’s dreams, but I’m a realist.
I would like to think I was helpful, and perhaps if I had it to do over, I might have warned her about scumbag agents, but how would that sound coming from another agent? Is there any credibility on my part?
It’s not my job to coach and educate the buyer pool, but my God, do I ever feel for these young buyers. I just can’t help myself. Maybe because I have a daughter. Maybe because I spent seven years coaching teenagers. Or maybe because the market was never this tough when I was their age, and I can’t help but feel a bit guilty – and fortunate.
I’d love to finish this post with something upbeat, or a solution. But I don’t have one.
I mean, does anybody?Back To Top Back To Comments