Holding back on offers is once again wrecking havoc in my business, and with this particular property, it’s so underpriced there had got to be a law against it!
I’m taking a new client out today and during his very first exposure to the Toronto condo market, I have to explain to him how two of the exact same units can be priced at $299,000 and $375,000 respectively…
I absolutely love referral business!
And no, not just because of the obvious implications; I get new clients, make more money, I have it handed to me, etc…
I enjoy working with referral clients because it’s the greatest compliment I can receive! It means that a past client was so enamoured with my service, professionalism, personality, or some other trait that he or she recommended me to a friend.
I have a certain “in” with a group of about 10-15 kids who met at Queen’s University.
I’ve done about 5-6 deals with their “group,” and each successive client or clients that I meet through the group seems to be more enjoyable to work with than the next. They’re all incredibly witty, sarcastic, spontaneous, and fun-loving. It makes looking at real estate a complete treat.
Later this evening, I’ll be meeting Kyle for the first time, who I was recommended to by the rest of the Queen’s-crew.
Kyle is looking to purchase to jump into the Toronto real estate for the first time and is looking in and around the $325,000 range.
He’s been read the riot act by his friends and family; “Stay away from clusters such as CityPlace, buy something unique, pick a great neighborhood,” etc.
He seems very well prepared in terms of his knowledge of existing real estate, but how does one prepare for the ups and downs of the business itself? When sending him listings yesterday, I passed along a rather confusing message…
I sent him two very similar properties on Brant Street which are both currently for sale.
One is priced at $299,000 and the other at $375,000.
Now I must say that when I first saw this unit on Brant Street listed at $299,000, I did one of these:
I only wish I had that long hair and the super-awesome goatee…
The question-mark danced overtop of my head as I thought, “Brant Street for under $300,000?”
There has been exactly ONE unit to sell at Quad Lofts for under $300,000 in the last two years, and that was at the bottom of the market in January, and for a unit that was in complete disrepair.
Something was amiss here. By all accounts, this unit should be listed at $339,000.
It’s a 1-bedroom-plus-den measuring 750 square feet! Just think about how many Spencer Pratt look-a-likes can give eachother fist-bumps while tightening the belt-buckles on their Seven jeans in that kind of space!
So with a suspicious mind, I scrolled down to the bottom of the listing and of course I found those words, “OFFERS TO BE REVIEWED TUESDAY, JUNE 16th, 2009.”
For some reason, I felt really sick.
Not just frustrated and angry, but physically sick.
This is a $340,000 condo and it’s been listed for under $300,000.
Isn’t there something inherently wrong about this?
What makes the situation almost tragically ironic is that a slightly smaller unit is currently listed for $375,000.
How can there be a $76,000 spread on two units that are almost identical in size?
How can a unit that is 2% larger than another unit be listed at 79.7% of the price?
There is no doubting that the $375,000 unit is overpriced. This building is nuts, but not that nuts!
So what is a seller thinking when he or she identifies that the unit is worth $340,000 and then decides to list it for sale at $299,000?
Tonight, I have to take Kyle to see these two units, and explain to him how the real estate business works.
Here is a kid that wants to buy his first “home” in the city, and he has to juggle the pros and cons of paying 113% of list-price on his very first day of condo-shopping!
I feel sick thinking about a first-time-buyer who has to deal with the dreaded hold-back on offers.
And while I do see many advantages to holding back on offers (as I detailed in my post last week), this situation is making a mockery of the real estate business. They might as well list the property at $1 or $0 for that matter, and may the highest bidder win.
But instead, there are countless first-time-buyers who will see this listing and think, “I’ve got a shot!” They aren’t educated enough about market conditions to know that this unit will never see the light of day under $300,000.
It’s unfair to buyers like Kyle who see a potential home in their price range one second, and then see a bidding war erupt the next.
I see both sides of the business: buying and selling.
So if I had a seller, there is potential that I would be a complete hypocrite and pull some of the same tricks.
But would I list a $330,000 – $340,000 condo at $299K?
Not only your life…