Everybody and their mothers are going to give you advice when you let it be known that you’re buying real estate.

So who do you listen to?

Call me naive, but my answer is obviously, “Just listen to your real estate agent.”

My colleague, Shelley, has been dealing with a real winner of a client for the last six months.

We all have these clients from time to time; the ones that send a shiver down your spine when you hear their name; and your heart skips a beat when you see their name on your call display.

Shelley has been desperately trying to find her client a condo in the $450,000 – $500,000 price range since the end of last summer.

But the process came to a screeching halt last week when her client pulled out of a multiple offer situation for all the wrong reasons.

A condo at 88 Broadway Avenue was listed at $429,000, and all the comparables said that it should be listed around $450,000.  No matter, since everything in the city is being under-listed right now.

Shelley’s client was all set to offer $450,000 and compete with the other four offers, when at the last minute she decided to pull her offer.

Why?

As she told Shelley, “My mortgage broker says it’s not worth it.”

I’m sorry…..what?

Who told you the condo isn’t worth $450,000?  Your mortgage broker?

Why was Shelley’s client listening to her mortgage broker about the values of real estate?

Oh – I should also mention that her mortgage broker works out of St. Catharines.

Shelley’s client explained, “My mortgage broker says that units in this building shouldn’t be selling for more than $500 per square foot.  He says it’s ridiculous; just ridiculous!  And I agree!”

So here we have a seemingly competent young lady who has the means to purchase a property for a half-million dollars, yet she feels inclined to take real estate advice from her mortgage broker….from St. Catharines.

I don’t give my clients advice on their mortgage options; I leave that up to their mortgage brokers.

So why did Shelley’s client feel the need to take advice from her mortgage broker about the cost per square foot of real estate located 150 KM from where he lives?

The condo at 88 Broadway ended up selling for $465,000, and it just added more fuel to the fire.

Shelley’s client became livid and took her mortgage broker’s words to heart.

“He says the whole city is nuts right now!  Nuts!  This is all craziness!  This condo never should have sold for more than $420,000!  I could buy a beautiful house in PEI for that kind of money!”

Who was this mortgage broker and why was he somehow the authority figure on Toronto real estate?  How could he possibly be able to accurately describe real estate down to the exact dollar-per-square-foot?

Unfortunately, it didn’t work out well for Shelley.  The client dumped her, and I’m sure this girl will work her way through 3-4 more agents before she buys a pre-construction condo for $220,000 in Etobicoke…

But this situation is not uncommon.

People constantly take bad advice from people that have no business giving advice in the first place.

Who else will be lined up to give you bad advice when you’re looking to buy your first home?

Your Parents

Sorry Mom & Dad, but just because you paid $83,200 for your first house back in 1971 doesn’t mean you’re a qualified real estate professional as it pertains to the ridiculously hot Toronto market in 2010.

Every time one of my 24 – 28 year old clients brings his father to see the condo he is just about to buy, I know how it’s going to end.

“Are you nuts?  You’re going to pay $475,000 for this hole in the wall?  Uncle Murray just bought twenty-six acres in Marmora, Ontario for $112,000 last week!”

Our parents have been through the ups and downs of many different markets.  They have seen 21% interest rates, and several booms and busts.  They care about us and don’t want to see us make a mistake, but you just can’t compare the 1971 Toronto housing market to the 2010 Toronto condo market no matter how hard you try.

Co-Workers

Everybody has a competitive streak, and your place of work is no different.

If you find yourself sitting in your office with your group, team, division, or whatever it’s called, and a conversation about real estate breaks out, you’d be best to tread with caution.  If you get 10-12 similarly-aged people in the same place talking about the same subject, don’t you think it’s going to get competitive?

If the guy two cubicles down from you just bought a house in Markham to save on property taxes and to get more bang for his buck, and the girl who’s desk is filled with the fluffy teddy-bears just purchased a condo in CityPlace, it seems to reason that everybody’s opinions will differ.

And when you announce that you are looking to buy your first property, the unsolicited opinions will start flying.

The Guy Who Works At Subway

He’s always got his nose in everything!

And now he’s telling you that his brother’s friend’s fiancee just bought a condo in Ajax and it has a 42.7% cap rate.

You’re just about to tell him that the average cap rate on a condo outside the GTA is probably 7-8% so there might be something wrong with his numbers, but then you see him putting black olives on your sandwich so you quickly address that instead.

As he picks off the black olives one-by-one, he begins to tell you about this land deal he just closed in Ghana that sounds like a scam, but only isn’t.

“Can I get extra pickles, please?”

His friend met this guy at a gym, who knows this guy that drives a cab, and he said that the land in Ghana is cheaper than it’s ever been, and only a fool would invest in the over-priced Toronto market when there are millions of dollars to be made in Ghana in the next 20-30 years.

“No sub sauce.”

His sister’s former boss says that the market in Riverdale is bound to tank eventually.

“Mayonnaise, salt-and-pepper.” 

The guy who brings the bread every morning told him that his uncle knows a guy who can get five-year, fixed-rate mortgages for 1.25%.

“No combo today, thanks.  Just the sub.”

His orthopedic surgeon’s nephew’s harmonica teacher invested in a student residence for kids with special abilities.

“Can I use this coupon that I found in the newspaper?”

His mother’s life-partner owns a farm outside of Barrie where the cows actually pay the rent.

“I’ll take the sandwich to go, thanks.”

He has two-hundred Ab-Rockers, seventy-five Slap-Chops, and close to one thousand Palm Wallets in his basement.

“Ummm…..I have to go now.  But thanks for the advice….”