Do you remember Ted Dibiase?

I do.

But I was born in 1980, and as a child of the 1980’s, I was the lucky beneficiary of that incredible spectacle we all knew as WWF wrestling.

I was a huge fan of Bret “The Hitman” Hart, and that’s before I knew he was Canadian.  I think I just really liked pink as a child.  Or long hair on men.  Or cool sunglasses.  But I find it ironic, looking back, that I was a fan of “The British Bulldogs” tag-team (I had their pajamas when I was 6-years-old), and then of Bret Hart, but I never knew that they were all family.

If you don’t know about The Hart Family, oh man, I don’t think I have the time to educate you on this right now.  They’re a Canadian institution, to say the least.  Stu Hart is a legend, if not a somewhat overbearing father, but all his boys wrestled, and all his girls married wrestlers.  The family’s story is torturous at times.  It’s hard to imagine so much tragedy happening to one clan.

A few months ago, I watched a biography of Bret Hart on A&E on an otherwise uneventful Saturday night.  I don’t know if the two drinks were a factor, but the two-hour show was just ending as my wife came down, and I started to weep a little bit.  She looked at me like, “What the….” and I actually started to cry.

This was a trip down memory lane for me.  Like a timeline of my childhood, teenage years, and into my young adulthood.  And to see my one-time hero, Bret Hart, now an old man, recovering from a stroke that almost killed him, well, if that doesn’t move you, then you’re not human.

Around the same time that Bret Hart was rising to prominence, there was a wrestling bad-guy, or “heel,” named Ted Dibiase.  He went by the moniker, “The Million Dollar Man.”

He was a total piece of shit.  An arrogant, pompous, obnoxious ass whose entire persona (most of it contrived, of course) was about how great he was, how rich he was, and how he could buy anybody.

The Million Dollar Man, Ted Dibiase, wore a gold-studded suit and a jacket made of dollar-signs.  His tagline was: “Everybody’s got a price.”

He would be accompanied to the ring with vignettes on the jumbotron of him buying and bribing people, like paying the concierge at a luxury hotel to kick a couple out of the Honeymoon suite so he could move in.

After every victory in the ring, he stuffed a $100-bill into the mouth of his defeated opponent.

He used to bring fans to the ring to humiliate them (also likely actors).  I remember him bringing a kid into the ring and saying, “If you can bounce this ball ten times, I’ll give you $500,” and on the ninth bounce, he swatted the ball away.

That was his whole gimmick; throwing money at people.

And he used to smile and look into the camera, saying, “Everybody’s got a price.”

I suppose, in theory, everybody does have a price, but it’s not always monetary.  People have limits.  People have breaking points.  But there are, however, those who simply wouldn’t act on a request, no matter the monetary compensation.

Last year, we talked a lot here on TRB about the lack of supply in our real estate market.  At times, we analyzed the data, both Toronto-centric and Canada-wide, and then there were times when we talked more broadly about how skyrocketing prices are more a product of the deficit between supply and demand.  We seemed, by and large, to agree that even artificial demand caused by low interest rates is less of a factor in rising prices than the dearth of supply.

Perhaps a question we never asked once last year would be prudent at this juncture: why do people sell?

It’s the most basic question and yet it’s one we never discussed.

Let’s brainstorm for a moment.  Why do people sell?

1) They’re moving up.  They’ve already bought, or are selling to buy.
2) They’re downsizing.  Sell first, or buy first, doesn’t matter, as with the above.
3) They own multiple properties and are moving to a different one, choosing not to keep this one.
4) They’re moving out of the city, province or country.  Could be for work, or for a new life.
5) The property is an investment and they’re taking their profits.
6) They have fallen on hard times and ‘need’ to sell.

I think this just about covers the main reasons.

And the one theme within those six points is that all these people effectively “need” to sell.  Or at the very least, they are actively looking to sell.

So in a market starved for listings and inventory, how hard is it to motivate a person to sell who doesn’t fall into the six categories above?

Everybody’s got a price.

Or do they?

Over the Christmas holidays, my phone rang and I saw the name and number displayed, and I immediately thought, “Oh boy, what’s wrong?”

I’m not a pessimist, but a call over holidays from a client who purchased his home two years ago couldn’t be a good call, could it?

I was expecting a sump pump explosion at best; a roof implosion at worst.

In the end, it was neither.  It was just a social call!  Imagine that?

“Jake,” as we’ll call him, had purchased his home in the fall of 2019.  His purchase and his home falls into the “luxury” category since he paid $4,000,000 for it, and at this stage in his life cycle, it’s close to a “forever home.”  Jake is a suit-wearing, downtown-working professional, as is his wife.  They have three children and have made very good use of this house so far!

Jake called me in between Christmas and New Year’s and the first thing he said was, “I was just checking to see if you were in the office.”

I didn’t know if it was a trick question or not, but I was honest.

“Yeah, I’m here,” I told him.  “You?”

“Yup, just me and the cleaners,” he said jokingly.  I’m sure his office was busier than mine.  I was literally the only person in the building, aside from one part-time staff member at front desk.

“I got a story I thought you’d enjoy,” he told me, which made me think perhaps he was equally as busy as I was, which is to say that we were both in the office, looking for things to do, to convince ourselves we needed to be there…

Jake said that the day prior, there was a knock at his door and while he expected Christmas carollers, the Salvation Army, or a friendly neighbour dropping off cookies, he found the next best thing: a real estate agent.

She introduced herself and extended her hand, not to shake his hand but rather to offer him an envelope.

“This is from clients of mine,” she said.  “It’s a personal letter.”

This was three days after Christmas.  Love the solicitation or hate it, but you have to respect it.  The work ethic of that agent, knocking on doors at this time of year?  Good on her!

“We’re not selling,” Jake said.  “We have no intention of selling,” he added.

“Oh, I know, nobody is selling in this area,” she told him.  “That’s why I have to knock on doors, meet people, and try to dig up something that will never be on the market.”

Jake told her that he’d only been there for two years and that this was a forever-home.

“But everybody has a price,” she said.  “And my clients identified your house as one of a handful that they love and they would gladly overpay for,” she said.

Jake is in a line of work where a comment like this is going to intrigue him.  Knowing full well that this wasn’t going anywhere, he decided to engage.

“Like what?” he asked.

“What?  Like what….what?” she responded.

“Like what price?” he said.  “What’s ‘overpaying’ to you?” he asked.

She explained that she’d have to see the house in person, that the clients would have to walk through it, and that she’d be happy to set up a day and time, but Jake cut her off right then and there.

“Forget all that,” he said.  “Just humour me.  You’ve seen the photos from MLS and the virtual tour is still floating around on the internet, plus you know what we paid two years ago.  Give me a number and I won’t hold you to it,” he said.

This is where Jake told me, “David, you should have seen this woman’s reaction.  You know Mike Tyson’s famous quote?  ‘Everybody has a plan……until they get punched in the face.’  Well, this woman knocked on my door, told me her clients wanted to buy my house, and then when I asked her how much they’d pay, she had no clue what to say.  It was amazing.”

So what did Jake do?  He got more aggressive.

“Come on, throw some numbers out at me, don’t be shy,” he said, as the agent shied away.  “We paid $4,000,000 for this house two years ago, what’s the ballpark?” he asked.

“I would guess…..maybe…….maybe starting at five-million?” she said, as though it were a question.

Jake told me he laughed out loud at this.

“Amazing,” he said to her.  “You’re knocking on doors telling people your clients are going to overpay for houses but then you lowball them,” he said.

He explained that $4,000,000 two years ago is $5,000,000 today.  That’s twenty-five percent in two years, or 12.5% per year, which is actually well below the GTA average but call him conservative.

She was very polite and perhaps a bit sheepish by now, and she said, “I think my clients might be willing to pay that number, but I’d have to talk to them, I’d have to show them the house.”

This was where the breakdown in understanding really showed, and this is where, in my opinion, we can really demonstrate why it’s so hard to motivate people to sell in this market.

Jake said, “Yeah, but you’re talking about paying fair market value for my home.  I told you I’m not selling.  You told me that your clients would be happy to overpay and now you’re talking about ‘perhaps’ being interested in a number that I wouldn’t sell for.”

Then, Jake dropped the bomb:

“I wouldn’t sell this house for $6,000,000.”

He said her head literally shot back.  Then she smiled.  She thought he was posturing.  Maybe negotiating.

So Jake explained it.

“Let’s say my house is worth $5,000,000.  There could be somebody out there that would pay $5.2M or $5.3M for it.  Maybe $5.4M or $5.5M for it.  Now let’s say I sell for $6,000,000.  To buy a new house of the same value, I’ll have to pay $300,000 in land transfer tax.  Plus, I’d owe you $150,000 plus HST in commissions.  Then what about furniture for my new house?  What about painting it, and not necessarily renovating, but changing things to make this my house.  What about that?  Now how about the moving?  The packing?  The toll it takes on the kids and my family.  What’s the value there?”

Jake said that the agent was nodding along with a forced smile as she likely started to realize he was right.  But she surely wasn’t expecting what came next…

“Lady, I wouldn’t sell this house to you today for $7,000,000.”

Jake said that this time, there was no expression on her face.

“I could probably get $5.5M for my house on the open market even though it’s only ‘worth’ $5M.  I’d have $500K in fees, and then I’d have to relocate my family.  For what?  A million bucks?  Not a chance.”

But before the agent could interject, Jake said, “If my best bet to buying back into this area is hiring a real estate agent to go around, knocking on doors, and offering people $7 Million for their $5 Million houses, without any hope of success, then why in the world would I sell my home?”

The agent was speechless.

Jake wished her a nice day, and went back in his home.

Jake told me, “David, the minute I closed that door, I started going over this story in my head because I couldn’t wait to tell you.”

I laughed, and told him he could write a guest blog, but he declined.

Either way, it gives me a great blog topic and a fantastic story to demonstrate why it’s so hard to buy a house in Toronto.

Now, the cynics are going to look at the prices and the numbers thrown around above and say, “Oh, poor Jake, won’t sell for $3 Million more than he paid,” but if you do that, you’re missing the point.

Transacting in real estate is expensive to begin with.  Land transfer tax, real estate fees, legal fees, moving/packing/storage costs, relocating during the sale process, re-furnishing your new home and putting on your personal touches – these costs add up!

Now, factor in the mental toll of uprooting your family if you did not plan on selling, and there has to be a value.

In Jake’s case, the numbers made no sense.  And he was right – there’s nothing for sale in his neighbourood.  Ever.  So rare are houses in this area, in fact, that agents are knocking on doors!  So for Jake to buy back in, he’d have to put himself in a position just like the buyer who hired that agent to knock on doors, and that was a position that made no sense to enter willingly, even for a million bucks.

So let’s look at a lower price point.

Let’s say you paid $1,350,000 for a semi-detached house in Leaside in 2019.  And let’s say this house is worth $1,650,000 today.  Let’s say somebody knocks on your door and offers you $1,900,000 for the house.

Do you sell?

That’s $250,000 more than your house is worth!

Could you sell this house, then buy a different house in the area for $1,650,000?

Maybe.

But factor in the costs, and it doesn’t make sense.

Why invite that chaos into your life, and the lives of your family?  Especially if potential options to purchase aren’t in abundance.

This is the problem in Toronto!

The only people who are selling are those that need to sell, either because they’ve bought another property to upsize/downsize, or they’re moving out of the city, or perhaps it’s an estate sale, or maybe the sale of an investment property.

But if the idea of using money to motivate home-owners to sell in Toronto is a non-starter, then that speaks volumes about our market.

What would this guy say?

He would say, “Everybody’s got a price.”

He’s not wrong.

But in Toronto, unless somebody is going to give you $1,400,000 for your $1,000,000 house, you’re probably not motivated to sell unless you were already planning to do so…