How was your long weekend?
Any better or worse than it would have been had we not been in a pandemic, or a pseudo-lockdown that very few people in society seem to actually be following?
I’ll admit, I still don’t really understand the lockdown. I’ll also admit that I have never really read the “rules” per se, but while some people believe they aren’t supposed to leave their house unless they need groceries, others are literally dancing in the park.
A friend of mine was going to head up north for a quick getaway, but his partner nixed that idea, noting, “We’re in a lockdown, we’re not supposed to leave the house.”
Meanwhile, playgrounds and parks are packed!
I’m about as confused now as I’ve ever been with respect to what we should or shouldn’t be doing, and I mean that both in terms of the “rules” but also in terms of society’s own ethical response.
I was around all weekend, of course. The real estate market in Toronto is busier than ever and the idea of a “long weekend” is a fantasy; one that seems as unattainable as, say, going to eat in a restaurant with no mask on.
The real estate market, post-Victoria Day, is always an interesting little grind. In non-pandemic years, it usually represents the last push before the kids are off to camp, summer vacations begin, and the city loses a large percentage of its population. As I noted on Friday, I wonder how this summer’s real estate market will shape up. Surely, nothing like last year’s, where we saw all the lost sales from March, April, and May end up falling into July and August. But while there’s no “hard stop” when we hit July 1st, like non-pandemic years, I do think we’re going to see a rush post-Victoria Day.
This long weekend, a lot of sellers are using the time to put the finishing touches on their houses or condos, getting ready to list this week, or stage and subsequently list the following week. We have a dozen listings in the queue and many of our sellers are working, as we speak.
I have a condo listing coming out this week at $399,900. Under-listed, with an offer date, of course.
I have another condo listing coming out at $499,900. Is that a hundred-thousand dollars under-priced? Maybe. But who really knows what “market value” is out there, right?
Then I have a freehold listing that might come out at $1,249,900, with offers any time, but also might come out at $999,900 with a set offer date. We’re not sure yet. We’re still analyzing the risk-reward equation.
Are the buyers tired of the “pricing games” yet?
That’s rhetorical. The buyers have been tired of this for a long, long time. Years. Decades, even. But this is also the way properties have been listed for decades as well.
I had a listing last week for a property priced at $379,900, which sold for $438,000. I received a call from an unrepresented buyer who said, “I won’t ‘bid’ on anything. I won’t be in competition with other buyers. And I won’t pay over any list price.” Naturally, I told him that I sympathize, but he, nor I, can change the way real estate is sold overnight, and to take that stance is essentially to say that he won’t buy at all.”
Buyer fatigue usually sets in, post-Victoria Day weekend. A lot of buyers have already purchased homes, and many of the buyers who have been fighting for five months are starting to get really, really frustrated. As a result, we’re seeing a lot of buyers say, “I’m not going in on offer night. Let’s see if they fail to sell, and re-list at what they really want.”
It’s re-list season. It happens every year at this time.
Properties are coming onto the market, listed low, with an offer date, and when the seller doesn’t hit his or her mark, the listing is terminated and the property is re-listed at a higher price.
I have only done this four times in my eighteen-year career. But two of those four times were in 2021…
So if we’re in re-list season, and buyers are starting to tire, what strategy is almost guaranteed not to work?
Listing at one dollar.
I had three readers email me the following article over the long weekend:
“Toronto Real Estate Agents Using New Tactic To Fuel Competition And Boost Housing Prices”
May 21st, 2021
If it sounds too good to be true, it almost always is.
A new trend in the Toronto real estate market, in which realtors are listing residential homes in the Greater Toronto Area for only a dollar, has left some buyers with questions.
Just because a property is listed for a dollar, it certainly doesn’t mean that buyers will pay that much, though.
Toronto real estate agent Paul Poliszot currently has a property at 15 Rebecca St. listed for one dollar. While he’s doing it as a means to attract attention to the property, he says listing prices have not reflected actual property value for some time.
“We’ve had a crazy six months. It’s been extremely volatile. Prices have fluctuated and asking prices and listing prices have not been reflective of a property’s value for quite a long time,” Poliszot told CTV News.
“All we’re really striving to do [is] be innovators in the real estate investment space in Toronto and serve our clients as best we can,” Poliszot said.
He says the low listing price has attracted hundreds of inquiries.
Marco Momeni, a Toronto realtor testing out the same strategy on 16 Kenrae Rd. in Leaside, has different motives.
“I’ve been in the real estate business in Toronto for the past 20 years and this is only the second time we are not disclosing the price because this is a very unique property,” Momeni told CTV News Toronto.
This particular property has approvals in place that could allow it to be redeveloped into two semi-detached homes, so its current property value wouldn’t reflect the potential it holds, Momeni says.
“They have all the approvals in place to convert the property to semis, so that’s why they don’t really know [the value.] They’ve been approached by few developers in the past year, so they didn’t want to disclose a price. They want to know what number is the highest number that the market can get to for this property rather than imposing a price,” Momeni explained.
Desmond Brown, Toronto real estate agent and host of podcast Soldinthe6ix, spoke to CTV News Toronto about the trend, which he says is nothing more than a marketing strategy.
“We see [the trend] periodically. In residential real estate, to me, if an agent puts [a listing] out for $1, [..] it’s to generate as much activity as possible on it. So they can get multiple bidding wars happening or multiple offers on it.”
When representing a buyer, however, Brown says it can be irritating.
“It ends up generating a lot more competition [than is] really necessary. So it’s a waste of a lot of people’s time,” Brown told CTV News Toronto.
While Momeni is implementing the strategy himself, he doesn’t recommend it for everyone — only for unique properties.
“I don’t recommend this for the average seller,” Momeni said, “and that comes from 20 years experience with buyers and customers.”
Once again, I’d be remiss if I didn’t take issue with the misleading headline, since listing at $1.00 isn’t going to “boost housing prices,” unless you mean boost them over one dollar.
Multiple clients and readers have emailed me that house on Rebecca Street, and since everybody and their mother has access to past list and sale prices, through House Sigma, everybody can see the listing history of this house.
This property was listed for $1,200,000 with an offer date, but failed to sell.
It was then re-listed for $1,399,000, with offers any time, but failed to sell.
Now, it’s listed at $1.00 with no offer date.
So what does this really accomplish?
The CTV News story makes this “strategy” out to be the most novel idea since Shawn Fanning started sharing music files in his dorm at Northeastern University! But is it that novel? Or is it actually the complete opposite?
The sellers aren’t going to take $1.00 for the house, right?
So would they take $1,000,000? Probably not, but you can offer it to them and find out.
Would they accept $1,200,000? Probably not, but you can try.
Would they take $1,399,000? Almost certainly, since this is the price they were listed at last month.
So I ask again: what does listing at $1.000 accomplish, other than to get a story in CTV News?
The other property featured in the CTV News story above, on Kenrae Road, has been on the market for 16 days according to House Sigma, where the listing and the entire history of the property are easily-accessible to the entire general public.
So if this property has been listed for $1.00 for that long, does the list price work?
The CTV News headline says that this strategy “Fuels Competition.”
How’s the competition on that house that’s been listed for 76 days, I wonder?
Now, consider another issue, one that might sound redundant to the frustrated buyers out there, but bear with me here: how is this not false advertising?
When you list a property at $999,900 for which you have zero intent on accepting an offer of $999,900, it’s not false advertising because you’ve noted in the brokerage remarks, “Offers Reviewed On Tuesday, May 25th @ 3:00pm.” You’ve let the market know that there is a set offer date, at which time the property will be bid upon by the buyer pool.
But when you’re listed at $1.00, with offers any time? What’s that about?
I’ve made this point before and it’s fallen on deaf ears. Some brokers in the city feel that it’s not false advertising to list a property for $999,900, advertise, “Offers Received Any Time!” and then laugh in the face of buyers who offer $1,000,000. Once upon a time, it was understood that if you turned down an offer for your list price, then you had to re-list $1.00 higher, to avoid being guilty of false advertising.
But all that’s out the window, right? Brokers of record throughout the city disagree?
As I said, you’ll have to bear with me as I try to explain the difference between listing low and holding back offers, versus listing at $1.00 with offers any time.
In any event, the $1.00 list strategy has almost never worked.
In Toronto, through the past twenty-four months, there have been 32 listings for properties at $1.00.
How many have sold?
Of those four, three were commercial sales, and many commercial sales are for properties offered on an “un-priced” basis.
Here’s the listing for one of those properties:
That property was listed for sale for $1.00 and a bid date was set for six months later.
The property sold for over $15 Million.
Two of the other four sales I mentioned above were also for commercial properties, also offered on an un-priced basis.
That leaves exactly one property in the city of Toronto, over the past two years, that has been listed for $1.00 and successfully sold.
One sale in two years in the city with this strategy.
So again, I ask, what in the world is the point of listing a house at one dollar?
And I also ask, is a headline that suggests this is a “new tactic” and one that is “fueling competition” in any way accurate?
Was that rhetorical?
Was that rhetorical as well?
Happy Tuesday, folks, welcome back to the grind!