Amazing!

A house listed at $499,000, sold for $499,000!

A condo listed at $319,900, got ONE offer and sold for $319,900!

Is this a phenomenon?  Is this a mirage?  No, it’s just the new trend…

I don’t know if I’ve ever claimed my job is easy.

Imagine meeting a client for the first time, somebody who is green beyond belief with zero knowledge of real estate, let alone the Toronto real estate market.

Imagine taking this person to see a “hot” condo at The Hudson and having this person “hmmm” and “hawww” over the price of $299,000.  This person then says, “Well, I’ll think about it.”

Imagine the person’s reaction when you say, “Well, actually, there is no time to think about it, or anything for that matter.  Offers are being accepted tomorrow night at 6PM, and oh yeah by the way, this unit is going to sell for $330,000 or more.”

Well, that is what most real estate agents have been going through for the past three years, or perhaps five years if you’re talking about houses in some areas.

It’s no secret that the Toronto real estate market has been in an “up-trend” for the past seven years, and during this time, both sellers and their agents have gotten fat and greedy beyond belief, and have taken advantage of the disparity between supply and demand.

At some point during the last five years, agents decided that rather than listing a property and waiting for an offer, they would “hold back” offers a week and accept them on a certain day, thus forcing buyers to come to them all at the same time.

Another strategy went hand-in-hand with this: under-pricing.

The combination of accepting offers on a certain day and time, and under-pricing properties, meant you ended up with multiple buyers interested and thus multiple offers.

Simply put: If your house is worth $600,000, the idea is to list it at $549,000, and hope this nets you one or two more buyers who hopelessly offer around the $550,000 mark.  This will in-turn push the realistic buyers (those that know the house is worth $600,000) to pay more for the property in the end.  You have to pay more if there are six offers than if there is just one offer, right?

Times……they are a changin’!

Is it the buyers that got fed up of playing this game?  Or is it the agents who finally shouted “enough!”

In the last couple months, I’ve noticed that more and more listings are coming onto MLS and instead of saying, “Offers graciously accepted June 22nd @ 6PM,” they are just saying “Offers anytime.”  In fact, some listings don’t say anything about offers at all, meaning that the property is just listed for sale, and you may come, go, and offer as you see fit.

Imagine!

I personally think that what’s happened is too many properties have been listed for sale at non-realistic prices, and owners have been upset and claimed, “This is ridiculous!”

Talk about hypocritical!

When it works, it’s genius.  When it doesn’t, all of a sudden it’s the fault of the agent, the market, or the forces of nature!

Yesterday I saw three properties “newly listed” on MLS that looked familiar.  In fact, all three properties were listed two weeks ago with a hold-back on offers, and then re-listed at a higher price this week.  Why?  Well, if you list at $289,000 hoping for multiple offers and perhaps $310,000, and on offer night, low and behold, you only get one offer for $289,000, you have no choice but to relist at a higher price!  So out comes the same property listed at $309,990 and disguised as a “new listing.”

Ugh.

This has caused a phenomenon recently, which is that properties are now being listed at accurate prices with no hold-back on offers.

A condo listed at $379,000 is NOT holding-back offers, and is NOT expecting $400,000.  It’s just a $379K condo, plain and simple.

This isn’t happening everywhere, and it’s not happening all the time.

Four years ago, only houses in hot areas were “holding-back” offers.  Then we started to see this happen with condos.  I remember saying, “Geeez!  They’re holding back offers on condos now?  What is this market coming to?!?!”

Now, the trend is undoing itself in the same way this thing started.  Condos aren’t holding back offers as much anymore, while houses in hot areas still are.  Perhaps it will take a while for houses to follow suit.  Perhaps it will take somebody under-listing to the tune of $200,000 and getting royally screwed in order for somebody to say, “Wow, I sure hope that doesn’t happen to me!  I’ll just list my property at fair market value.”

Imagine!

FAIR….MARKET….VALUE!

So what has happened in order for this recent phenomenon to start happening?

Well, if you turn on your local news station, you’ll see that the real estate market is imploding.  Don’t forget that the media has accurately predicted twelve of the last three recessions.  Yes, think about that for a moment…

As I’m going to write about in tomorrow’s blog post, you can make numbers say anything you want.

The market isn’t going anywhere but up.  It’s just that we are heading into a more balanced market.

Imagine a market where buyers equal sellers!

Egad!

We’re not there yet, since there are still more buyers than sellers for properties in many neighborhoods and buildings throughout the GTA, but it feels like we’re getting there.  We can no longer expect to have thirteen offers on a certain property, and under-price the property to get those elusive fourteenth and fifteenth offers.

Price the property at the price it’s worth.

What could be more simple?