How old is your oldest friend?

You know what I mean; not this person’s age, but rather for how many years have you known your oldest friend?

Or another way of putting it: how old were you when you first met that friend?

Perhaps mine comes with an asterisk, since technically my friend Jeff is my brother’s friend.  They met in Junior Kindergarten when they were 4-years-old, which would have made me 6-years-old.

But as my brother and I are only separated by two years, our friend groups sort of “merged” when we hit our 20’s, and I consider Jeff one of my closest and oldest friends.

On Saturday morning, Jeff sent me a few text messages to chat, but there were two hyperlinks therein, and I found it interesting since they were about completely different subjects!

The first hyperlink was this one:

Street Fighter 2 WATA New Sealed Graded 9.4 A+

Oh, Jeff!  I know you guys all think I’m a crazy person because I collect odd things, and yes, I’m a glutton for nostalgia.  But collecting mint-condition video games from our childhood?

That’s next level.

I’ve yet to nerd-out to that level.

Yet…

The second link Jeff sent me was this one:

“I Can Only Drop The Price So Much”: Inside One Condo Owner’s Desperate Attempt To Sell In Toronto’s ‘Ghost Town’ Market”

Like I said: two very different subjects!

Naturally, I clicked the Street Fighter link first.  As expected, right?

That resulted in my getting lost down a rabbit hole of Ebay video games for sale, and it took me about twenty minutes to finally close my browser and move on.

Seriously though, you can’t imagine the price that some people will pay for vintage video games.  It’s astounding.  And if you haven’t watched, “King Of Collectibles: The Goldin Touch” on Netflix yet, then bookmark it.  Trust me.

Eventually, I clicked on the second link that Jeff sent me, and I realized that this was the first time Jeff had ever sent me a text message about real estate.

What did that mean?

Well, maybe nothing.  Maybe it was just a coincidence.  Maybe it was Jeff’s way of saying “hello” as friends that sadly only see each other 1-2 times per year often do.

However, maybe the fact that people who historically have had zero interest in real estate now find themselves reading articles, or having those articles pop up in their news feed, means that the topic is hotter than ever.

Except the market is slow.

So why now?

Jeff said to me, “Hey man, is this what’s happening in the market right now?  People can’t sell to save their lives?”

So I read the article.

Twice.

At face value, it’s a very basic case of a seller having a hard time selling a fantastic condo in one of the world’s hottest real estate markets over the past ten years.

The article contains a full timeline of events, complete with listing and pricing strategies, and quotes from the would-be seller.

At face value, there’s not much to this.

And at face value, somebody like my friend Jeff might say, “Looks like nothing is selling.”

But there’s more to this story as there is with every real estate story.  And the more that this summer drones on, with sluggish sales, flat prices, and an extremely unsexy real estate market, the more we’re going to see these “personal interest stories” in the media.

The problem with the personal interest stories is that they’re one-sided.  They’re delivered from the viewpoint and opinion of the protagonist portrayed, and whether the market is hot or cold, and the protagonist is a buyer or seller, I always feel like there’s something missing in these stories.

On Sunday, a blog reader sent me the article as well.

And by Sunday night, a second reader – meaning a third person, counting my friend Jeff, had sent me the link, so I figured that perhaps this should find its way into TRB.

So here’s what I want to do today: I want to read through the article while also looking at the past listings for the subject property and provide some context – specifically what I feel was left out of the article.

I’m certainly not looking to rub salt in the wound here, but given that the would-be seller has already put himself out there and provided all the details, an exploration of the experience thus far could make for a good learning experience.

Here’s the article:

“‘I Can Only Drop The Price So Much’: Inside One Condo Owner’s Desperate Attempt To Sell In Toronto’s ‘Ghost Town’ Market”
The Toronto Star
July 20th, 2024

Here’s the introduction from the article:

Alright, so we have a would-be seller who is experiencing a sluggish market in July of 2024.

This is nothing special, right?

But as the article goes on, there are a multitude of statements, actions, or strategies that I want to examine.

Again, this is for educational purposes and we’re not trying to slag anybody here, but it is what it is.

First a few notes about the building and the unit, irrespective of the article…

The building typically does not sell well.

Over the last twenty-four months, there have been 19 listings and 7 sales.  That’s a very poor ratio for an established building (ie. not one that’s newly registered with investor units flooding the market).

The last sale in the building was for a unit on its second listing which took a combined 118 days to sell, having been listed from December through the sale in April.

The building is twenty-two years old and has high maintenance fees, but is located in a fantastic downtown location.

–

There have been four owners of this unit in nine years.

This could be completely meaningless and random, or it could speak to the desirability of the building and the unit, or rather, the lack thereof.

Also, I have to wonder if buyers are looking at the turnover in the building and how long unit owners are living there.

Searching for a fifth owner in nine years could be a difficult task.

–

Pricing is everything.

The unit that did sell in April was a 2-storey loft with a 16-foot ceiling, measuring 705 square feet, plus a nice terrace with a barbecue, and an owned parking space.

This unit sold for for $1,039/sqft.

When the owner of the subject property listed for $689,900 in May, this represented $1,037 per square foot but without a terrace and without a parking space.

So essentially, this was listed around the same price per square foot as the one sale in the building.

But there are differences, of course.  Namely the parking and terrace.

One could argue that parking is worth, say, $40,000.

A terrace with a barbecue?  I would probably value this at $50,000, but let’s say $40,000 just to be fair.

All things considered, the list price was about $80,000 high, strictly compared to the one comparable sale.

Not only that, the view from the subject property looked right into a parking lot that serves as a future site of a massive condominium development.

That’s a tough sell in any market, but in a sluggish condo market like the one we’re currently experiencing, it could be damn near impossible.

–

Now, let’s look at the article itself.

Let me select a few lines from the story and we can examine just why the seller is in the situation described above.

In April, Steinman and his realtor decided to list the property for $599,000, a deliberately low price to garner attention and attempt a bidding war.

Alright, so this was never going to work, right?

We all know this.

But it’s worth trying.  I get it.  And to be completely transparent, I’ve had several failed “offer nights” this year myself.

Over the last few weeks, I’ve been writing about how the “list low, hold back offer” strategy has been backfiring in the freehold market, but it was never working in the condo market.

Now, if we look at the list price that was going to solicit a “bidding war,” we might realize that it was too high to begin with.

If you want attention and you want offers, then put it out at $499,900.

But there’s an argument to be made that the unit is worth $600,000, so listing for $599,000 with an “offer date” is not going to work.

–

After one week, they raised the price to $689,900, but still no takers.

Re-listing at a higher price after a failed “offer night” is very common.  There’s nothing wrong with this.

But again, the article, the author, and the protagonist are all making the assumption that the unit was worth $689,900.

We only have one comparable sale to use as a baseline, but that unit makes this unit, at $689,900, look over-priced.

And if we want to go back and look at the previous sale, we’d go all the way back to October of 2023 when another 2-storey loft with 16-foot ceilings sold, and this one has a second bathroom, a den, and was 820 square feet; selling for $698,000, or $851 per square foot – with no parking.

October of 2023 was a very poor market, so that unit would fetch more today.  But as a second data point, it speaks volumes.

–

Then, they lowered it to $684,900…

Here’s a story…

About four years ago, Matthew, who works on my team, brought in a listing in a really tough building, but this sale would be among the toughest ever, because the balcony overlooked the site of a recent fire right next door.

We listed the unit for sale at $799,900 and I wasn’t optimistic, but it was a process, and we knew this.

After five weeks on the market with very few showings, and having gone three full weeks since our last showing, Matthew and I approached the owners about terminating the listing and re-listing at an improved price.

I felt that $749,900 was where we needed to be, as this was a really tough sale and we’d only had about 3-4 viewings thus far.  But I also knew that the sellers were very house proud, loved their space, and might lose their minds if we suggested a $50,000 price drop, so we approached them about re-listing at $774,900.

From $799,900 to $774,900.  That was the plan.

Simple!

Except, not so much.

When I proposed this on the phone, one of the owners said, “That’s……absurd.  Why……why…..I mean, why would we just give away twenty-five thousand dollars like that?”

I asked her to elaborate, as I was confused by “give away” but also how she stressed the word “that” as though she was simultaneously snapping her fingers.

She said, “Why would we drop the price so aggressively and desperately?  Why aren’t we talking about dropping to $795,000?  Then $790,000?”

Here’s where I often feel like I’m not doing my job properly, but then I question whether or not common sense should have prevailed.

Do I need to explain to sellers that a buyer could make an offer of $795,000 on a $799,900 condo listing?  Should I have had that conversation in advance?

I realize that many home sellers don’t understand the nuances of the real estate market, but this one didn’t seem all that complicated.

I told the sellers, “The buyer pool has seen the listing.  It’s been up for thirty-six days.  Nobody else is going to see this listing at $795,000 who had not seen it at $799,900.”

She said, “But you want us to just give up twenty-five thousand dollars!  That’s our money!”

The tough love came out as I said, “You guys bought the condo years ago for $550,000.  We listed the condo for $799,900.  That’s a list price.  It has no bearing on market value; and you can’t lose something that’s not yours.  Reducing the price by $25,000 is to get fresh eyes on the listing and try to solicit buyers from a lower price point.”

She said, “Right, and listing at $795,000 will do that.”

Except, it wouldn’t.

And in the case of the Toronto Star article above, when a seller “reduces” a price from $689,900 to $684,900, it’s not going to have any effect.

But more importantly, and you’ll have to take my word on this, I often think it backfires.

When we see a seller make a reduction of only $5,000, we typically think it’s a situation where a seller truly believes in the stale list price and isn’t flexible.

Reducing from $689,900 to $684,900 is telling the buyer pool, “We are not open to negotiation.”

And in a market like ours, we need offers.  Any offers.  Sometimes, even a lowball offer, when paged out to the other buyer agents, will result in a phone call from some buyer agent whose client had been sitting on the fence.

Not only that, the listing is now at $639,000, so who knows what could have happened back in May…

–

…and then again to $669,900, which was “very competitively priced,” Steinman added. But no more showings materialized.

This was now the fourth price and the third price reduction.

But “very competitively priced” is the issue.

By definition, if the unit were competitively priced, then it would receive interest.

But with no showings, then again, by definition, the unit was not competitively priced.

The definition of “competitively priced” must be defined by the market, not by a buyer, seller, agent, or other party.

–

Two other units are currently for sale in his building, which is “very unusual.” One of the units is for sale for $579,900 — putting pressure on Steinman to drop his price further. Both were listed in June.

What did I say earlier about the building’s history?

And isn’t there a giant condominium being built next door?

It’s no wonder that two other owners want to sell.

Not only that, the unit listed for $579,000 is the same square footage as the subject property, but it has a nice outdoor terrace.

So I ask again about the definition of “very competitively priced,” how this is defined, and by whom.

–

“I have an undervalued unit in the building, which is hurting my chance to sell,” he said. “It’s all really unfair having these undervalued units and it’s unfair the amount of commission we have to pay a professional representative.”

I think this is where most of us get off the bus.

What does “undervalued” mean?  Who defines this, and how?

What is unfair?

Is it unfair to have competition?

It’s unfair to have to pay for a real estate broker to do their job?

This is just frustration boiling over, and I’m sympathetic.  I really can’t blame the guy, but “unfair” isn’t the word I would use here.

–

Realizing he’d spend up to $20,000 in realtor commissions, he decided to cut ties with his realtor in June and advertise the property on his own. Already, he’s spent $2,000 on social media platforms and other sale sites, and spends a couple hours daily posting his listing in 40 Facebook groups.

I’m not sure that this is the answer.

People don’t buy real estate from Facebook.

But to each, their own.

–

“I can only drop the price so much,” he added.

This is all relative.

“Afford” can come with many different definitions and interpretations, just like the words “undervalued” and “unfair.”

–

“They would have to default on their mortgage and maybe be forced to live out on the street because they have no other option,” he said.

I think it’s a bit of a leap from “defaulting on a mortgage” to “living out on the street.”

Isn’t there a middle ground?

Again, this is frustration boiling over, and I understand.  But this was printed in a major Canadian newspaper and readers might come away believing that if an individual can’t pay his or her mortgage, the result is living on the street.

This is an example of what I’m talking about with these personal interest stories.

I definitely sympathize with the owner portrayed in this story and I wish him nothing but the best with the sale of his condo.

I often wonder how stories like this get written.

Was it the editor’s idea?  The columnist?  Or did the seller himself reach out to be part of a story?

Any publicity is good publicity, as the saying goes, so kudos to the seller for getting attention on his listing.

But every time I read one of these articles, I know there’s more to the story.

An article like this isn’t giving us an accurate representation of the market out there, and since the real estate news cycle is slow, I feel as though we’re going to be seeing a lot more of this…

P.S. If you were a child of the 70’s, 80’s, or 90’s, what was your favourite video game?  Mine was Zelda for NES.