Your condo has been on the market for 65 days, and it hasn’t sold?
It’s not the market, it’s not bad luck, and it’s not going to change…
Here’s a lead-in which you’ll just have to trust is going somewhere…
Are you familiar with the definition of “the unemployment rate?”
It’s rather interesting, since it’s not what many would think.
The unemployment rate is the total number of unemployed workers, divided by the total labour force, but what makes it interesting is the definition of “unemployed workers.” To some, that would mean any single person who is not employed. But in reality, and by definition, the unemployment rate does not take into consideration those individuals who are not actively looking for employment; those who have given up, or who have been out of the labour force for some time.
Use this same thinking, and apply it to the downtown condo market.
Maybe it’s not fair to say that some condo sellers have “given up,” but certainly those units that have been on the market for 128 days, in this market, have no real hope of selling.
A house in Leslieville that’s been on the market for 92 days? Yeah, it doesn’t really “count,” does it?
Once in a while, I’ll come across a property that has been on the market for over 200 days, and I think, “Did the seller just forget that this property is even listed? What is the agent doing?”
I almost wish that “active listings” took a page from “unemployed workers,” and adjusted for all those stupid listings that have been on the market for five months, with no price reduction, that still show on the listing, “Open House, Saturday, December 22nd and Sunday, December 23rd.”
But alas, they don’t.
Instead, we have to weed through them ourselves, and wonder why anybody would expend the effort.
In today’s downtown condo market, I’m seeing some pretty bizarre seller activity.
Well in fairness, I shouldn’t call it “bizarre,” since sellers are always right in everything that they do, but maybe I can call it “incorrect.”
I make the very naive assumption that any property owner who lists his or her property for sale does, in fact, want to sell.
We use “owners” and “sellers” interchangeably, but they’re actually two very different things.
Many of today’s downtown condo sellers, in my opinion, have refused to accept current market conditions.
And what bothers me more than anything are the listings that are going past 30 days, 40 days, and into 50 days on the market with no price reduction.
I rhetorically ask, “Do these people WANT to sell?”
You’d think so, since they’re listed for sale.
But sellers don’t decide on sale prices. The market does.
If a property is on the market for 30 days, and doesn’t sell – it’s over priced. No ifs, ands, or buts.
So a word to the wise: reduce your price.
It’s going on everywhere right now. Sellers, with zero leverage, are refusing to drop their prices. It’s as if every seller in the downtown core banded together to keep prices where they are.
My readers are a savvy bunch, so let me ask you this: if you had a property on the market for 51 days, and you didn’t get an offer, wouldn’t you concede that your property is over-priced? In this market, wouldn’t you acknowledge that the efficient market has spoken and told you that you need to reduce your price to have any hope of selling?
Don’t forget – a buyer or an agent who sees “51” days on market on the MLS listing is going to make assumptions, such as “there must be something wrong with it,” or “there must be a reason this hasn’t sold,” or “this must be over-priced.” Or all of the above.
I feel like a dog chasing my tail when I have these conversations with listing agents.
There’s a unit in my neighbourhood, priced at $444,000. It’s a great unit, but not worth the asking price, and it was on the market for about 35 days when I emailed the listing agent and politely said, “The days on market are piling up now, so might I be so bold as to assume a price reduction is on the way? Please let me know, as my buyer would pay $420K for the unit and can close in 30 days.”
Of course, I get a response: “As you are aware, units are taking much longer to sell these days. My seller is not contemplating a price reduction at this time.”
Sure.
I bet he’s really freakin’ happy about the 35 days on the market, and I’m sure he’s keeping his calm.
And starting with, “As you are aware” is classic, since it effectively makes me incorrect if I were to disagree. Nice salesmanship.
That unit was finally reduced about two weeks later, by a paltry $6K to $439,000. It will sit on the market until it’s reduced to $429,000, and somebody pays $420K, give or take.
So why bother? Why not just take $420K, today?
Well, there’s the mentality of the seller. “What have I got to lose?” He or she might ask. Maybe $2,500 per month in carrying costs? Considering this unit is vacant, I don’t understand the logic.
Then there’s the case of two units in a King West, building, one floor apart.
We’ll call the first one Unit #1001 for simplicity, priced at $459,900. It’s been on the market 54 days, with no price reduction!
Then Unit #1101 – same identical model, gets listed for sale.
You’re a savvy reader, ask yourself what you’d price your condo at if the identical condo is not moving at $459,900 and has been on the market nearly two months. Got it?
Well, as the story might suggest, Unit #1101 came out at $459,900. And I don’t understand the logic.
It’s like the seller mulled it over in his head: “Well, the same model unit as I have clearly isn’t selling at $459,900. It’s been two months, no movement, and I guess if somebody was interested at a slightly lower number, it would have sold. So that must mean it’s tragically over-priced, maybe by as much as $30,000. Right. Okay, well, I think I’ll go with the exact same price.”
Could there be any different logic?
So I called the listing agent for #1101, and not trying to be a condescending dick, I said, “My buyer is very interested, but we’re doing a little reconnaissance on pricing. We notice that the same model one floor below hasn’t sold, same price, on the market for two months. So what do you think about the price?”
She said, “My seller is very firm on his price.”
That’s not really an answer. It carries as much weight as me saying, “I really want to have dinner with Scarlett Johansson.”
I asked, “But is there anything I can tell my buyer that you think might sway him toward the $459,900 price?”
She said, “My seller is very committed to his price, and very pleased with it. And if he doesn’t get his price, he has no problem renting the unit.”
Ah, yes! The ever popular “My seller will just rent out the unit” rhetoric. What a load!
These two units are worth about $430,000, and neither seller wants to accept current market conditions.
#1001 has now been on the market for 60 days even, and that’s twice as long as I would advise my clients before contemplating a price reduction.
Thirty days.
That’s the magic number in this market. Assuming that you’re not listed with a discount broker who has no photos, no marketing, no info, and probably some incorrect information – you should have no problem at least getting an offer in 30 days, and likely selling the property. Otherwise, you’re over-priced, and you need to reduce your price.
Duh!
If you don’t want to reduce, well, I have news for you: nobody is going to magically come along and pay the sticker-price for a unit that has been on the market for 47 days. It’s just not going to happen.
But it won’t stop sellers from hanging on to that dream!
Sellers love to complain, and they love to blame.
They complain about the market, they blame their agent, they blame the buyer mentality, the media, the concierge who makes showings hard, and the neighbour whose dog is barking and scaring buyers away. But sellers rarely, if ever, blame themselves.
If your property has been on the market, unsold, for 57 days, take a look in the mirror.
You’re running out of excuses. Just a friendly reminder that the market is efficient, and you really need to reduce your price…
Monty Burns
at 1:27 pm
Like watching rats in a cage, keep an eye on the listings at 15/21 Iceboat Terrace for the ‘who blinks first’ staredown.
I think this is Ground Zero/Building Zero.
Paully
at 11:18 pm
I had no idea what or where Iceboat Terrace is. So I looked it up. Wow! 115 listings at those two addresses on MLS.ca tonight. Holy crap! Hundreds more within a block or two. Ground Zero for Condogeddon? Yep!
Dan
at 10:38 am
“Elegant structures on a stage-like podium. Architectural excellence in an uncluttered sky. An urban landmark. A symbolic gateway to Canada’s largest city.”
Google never lies!
Lilly
at 1:16 pm
I think a lot of the buildings in that area have had construction issues:
http://www.torontolife.com/informer/features/2012/07/24/faulty-towers/
ScottyP
at 5:38 pm
While prices of houses should remain stable due to continued demand (as long as interest rates remain low, at least) and limited supply, the best days for condo owners price-wise seem to be behind them.
With most of the condo buildings in this city being complete crap, it’s understandable. Gravity always wins.
2sides
at 10:32 pm
my recent favourite has been watching the ’08’ 3 bed 2 bath unit at 126 simcoe.
at one simultaneous point in time a short while ago buyers could have had their choice of:
1108
1208
1408
1508
2708
and/or
2808
(one would naturally have to presume that this building does not a 13th floor)
first one out of the gate listed at 589k…first one to sell sold like 520k after ‘reducing’ the price, duh, to 529k. one would think that if the unit one floor above you listed for 560k, then you might want to change your list of 569k.
Weirdy
at 3:32 pm
“Well in fairness, I shouldn’t call it “bizarre,” since sellers are always right in everything that they do, but maybe I can call it “incorrect.””
Actually, saying sellers are ‘always right’ and calling their behvaiour ‘incorrect’ is mutually exclusive.
‘Bizarre’ on the other hand means strange or unusual. So you can call them that all you want.
ScottyP
at 5:34 pm
Read the paragraph in context again, and I think you’ll see he was being sarcastic.
RPG
at 4:19 pm
The problem is that you have people clinging to “the customer is always right,” which only applies to a service. Real estate is a service, selling a product.
In fact, the service you pay for, among other things, is advice and expertice, so why a seller determines pricing and refuses to reduce the price is beyond reason.
Geoff
at 9:17 am
Doesn’t this posting go against your story a few weeks ago about the house that didn’t sell at a lower price, so they raised it, and actually managed to sell it to some idiot from the ‘burbs?
ScottyP
at 9:40 am
I think that was an exception to the rule.
Spiltbongwater
at 10:06 am
Did your client allow you to make such a phonecall spelling out what s/he is willing to pay for the condo unit? I would think if your client wanted to pay $420K for the condo, the first offer would have been at $405K or something. To go right out and state what they are willing to pay (unless permission to do such is granted) does not seem like an agent working in a buyers best interests.
David Fleming
at 11:01 am
@ Spiltbongwater
You’re assuming that “negotiating” is to offer far less than you want to pay, sign it back and forth six times between seller and buyer, and arrive at the price you want to pay.
This is how it works on real estate TV shows, but not in reality.
Spiltbongwater
at 11:31 am
405K starting offer is a little less then 4% of clients bottom line. If 4% is considered to be far less, what would be a good initial offer when willing to pay $420K?
My sale we haggled price back and forth 4 or 5 times. I was not on any tv show however, and consider my purchase to be a reality. Maybe it is the difference in markets we live in. In TO you just lead out with your cards all on the table?
David Fleming
at 11:55 am
haha point taken.
What I’m saying is that not all negotiating is done on paper, via sign-backs. Sometimes the negotiating process takes weeks, and sometimes, less is more in the end.
JC
at 4:15 pm
Ah yes, trying to explain to people that reality is not “as seen on HGTV” and that “we can always reduce later” really translates into , we’re losing a window of opportunity and it’s going to cost you $$.
I’d be inclined to submit the offer for 420k with a 30 day closing and laugh when the sellers flat out refuse. You know chances are they’ll never see that again.
lui
at 3:34 pm
First of all if I choose a star to dream to date it wouldnt be Scarlett Johansson,l was put in that position that my condo didn’t sell for 38 days,got lots of walk in traffic but to be honest the space wasn’t designed properly to max the square footage plus there were three similar units for sale,I lowered the price and got it sold in 47 days,weird thing is that I didnt get one offer at the higher price but two offers after it was reduced.What I learn if you got a average property for sale a agent is the ace card you got,she/he is the number one factor in the sale
.Ground zero like the previous poster mentioned has to be City Mess aka City Place downtown.If those investors are bailing out you better be worried.
Devore
at 10:56 pm
“My readers are a savvy bunch, so let me ask you this: if you had a property on the market for 51 days, and you didn’t get an offer, wouldn’t you concede that your property is over-priced? In this market, wouldn’t you acknowledge that the efficient market has spoken and told you that you need to reduce your price to have any hope of selling?”
It’s just a temporary slump, things will turn around shortly.
AndrewB
at 1:05 pm
I don’t think it’s going to be just a temporary slump. Housing prices are rising faster than inflation is. Sooner or later, having any decent sized property will be too expensive for the majority of the market. Prices inflated too fast, too quickly and I have a feeling that prices are going to steady out and minimally increase YOY so that the market corrects themselves. That, or interest rates increase and people can no longer afford their properties due to being so house poor, that they can’t sustain an increase in interest.
I get that it’s not a “right” to own real estate, but rathera privilege to those who can afford it, but those real estate values affect rentals in the city as well. Like many suggest, the days of buying a housing and flipping 100k out of it in a year are past us.
GQ
at 11:29 pm
These guys just don’t have that need to sell. 1 or 2 weeks in this Toronto market is a good idea of where you stand. I agree 100% that if you don’t have much interest in 2 weeks, something is wrong – and in most, if not all, cases , is the asking price.
GQ
at 11:32 pm
SWEEEEEET CAROLINE! PAH PAH PAH! GO LEAFS GO!!!
BiciBoyz
at 4:39 pm
Does this situation not apply to builders as well?? They all seem to be holding their prices …when do they blink??
David Fleming
at 6:01 pm
@ BiciBoyz
Good point!
For years, the adage always was, “Developers don’t negotiate.” And it was true!
Why would a developer negotiate when they had people sleeping out on the street to be the first in line for the pre-pre-pre sale?
When the market dipped in 2008 for five months, developers were offering incentives – $25K parking spaces for $5K!
Now it’s back to business as usual…
AndrewB
at 1:00 pm
Developers are high and smoking the good stuff if they think they can command the prices they are listing their new units. They must think it’s summer 2010 or something.
Although, I have seen some developments in the Square One area go to such drastic measures to sell units that are vacant in their already finished buildings. “No condo fees for one year. Only 5% down. Live here mortgage free for the first year”. Yikes, makes you wonder what reselling down the road is going to be like.
I remember when Liberty Central was up for sale and they were having a ridiculous time selling 80% of the units for their first tower. There was a second phase due to come and the building is designed like a podium so that the two towers will sit on the podium levels. Phase 2 kept getting pushed back farther and farther because Phase 1 wasn’t done selling. I wonder what has/will happen to that development…..
Ken
at 11:13 am
I think you should consider the difference between need and want.
Just because a seller wants to sell, does not necessarily mean they need to sell… which would give reason as to why someone might be unwilling to reduce the price.