5 minute read

November 7, 2008

If you’ve ever had a tough time completing a real estate transaction, just be thankful  that a bank wasn’t involved as the seller of the property.

The bureaucracy is astounding, and who knows if their way of doing things is the right way?

I’m interested to see how this latest scenario pans out…


“One man’s trash is another man’s treasure.”

Believe me; this house was definitely trash!

I got a call from a friend of my mother’s this week who said that her “dream home” had finally been put back on the market.  We had taken a run at this house about a year ago, but there were a few……..snags along the way.

I remember trying to book a showing for this house on Kennedy Road, unsuccessfully, day after day.  The listing agent kept telling me, “The tenants are very difficult.  We are trying, but they are unresponsive.”  I finally went over the agent’s head and talked to the broker, and simply told them to either allow me to show the property, or take the property off the market.  If they didn’t, I would report them to TREB.

We never got access to the house, and it was taken off the market.

One year later, my client tells me there is a “FOR SALE” sign on the lawn, and sure enough, the property is on MLS for a paltry $186,500.

The house had last changed hands in June of 2006 for $242,000, which at the time I thought was a great deal!  This house is a bungalow, but the lot is 35 x 125, and a bulls-eye for builders once this neighborhood begins to take off.

So why is the house now priced at $186,500?


We hear this word quite a bit coming out of the United States, but not so much in Canada.  The reality is, the percentage of residential mortgages in Canada that are behind current payments by 90 days or more stands at only 0.27%.

Nevertheless, something happened with the good folks at Kennedy Road, and the property was finally seized by Toronto Dominion Bank.

I went with my client the other night to inspect the property, and it seems our opinions on the house differed significantly.

I’ll admit, I was privileged to grow up in a nice neighborhood and I’m thankful for everything I was given.  So perhaps I’m just not accustomed to looking at houses priced at $186,500 that smell like dead bodies and where the walls and ceilings look like they could literally cave in at any moment.

The house is a bungalow but it’s built above ground so there is no basement.  We saw this house at 6:30PM, and fumbled around to find the lights (I’m so surprised the hydro was still on!).

Once inside, we found what I deemed to be a dilapidated house that was unfit for living.

But you know what?  My client loved it!

The bathroom had no toilet, only pieces of what used to be a toilet, since the tenants and/or owners probably took a sledgehammer to the bathroom when the bank foreclosed.  In fact, it looked like a sledgehammer had also been taken to every single wall in every single room!  There were holes in all the walls, and some rooms were actually missing walls and had sheets of plywood in their place.

The kitchen floor was so warped that you could race toy cars up and down the linoleum tile.  The one side of the room was literally eight inches higher than the other.

The windows were all broken, and the back door was nailed shut.  You could actually feel the wind coming through the cracks in the walls, and the ceilings all had cracks where support beams would (hopefully!) lay above our heads.

Despite all this, my client was determined to get out of the rental rut, and her boyfriend is a contractor so they figured they could make it work.

We drafted an offer for $175,000, and figured we’d “give it a shot” at the lower price, even though it was worth the full $186,500 just for the land value alone.  Afterall, this house sold 18 months ago for $242,000!  Market growth might be stagnant right now, but nothing has dropped significantly, let alone 23%.

So when did I stand up on my twirly-chair and proclaim, “Shenanigans!”?

An hour after I faxed my offer to the listing agent’s office, I received a call from some assistant, probably named Lucy, Cindy, Sally, Ginny, or some other assistant-type-name that ends in the letter “y.”  She told me that “there was a a mistake” in the listing, and that they actually won’t be reviewing offers until November 12th, and that the offer must be irrevocable for 72 hours.


There are no mistakes in real estate.  There are monumental-f*ck-ups, and then there are shenanigans.

Here is what I think happened.

I think that the good folks at Toronto Dominion Bank foreclosed on a house and had no clue what it was worth, how to sell it, how to price it, how to market it, or what is happening in the real estate market right now.  They put it on the market, and waited until they had an interested buyer (seven days).  Then, they told that buyer that they wouldn’t review offers until November 12th.


To cause a bidding war.

“Bidding war?” you ask, “But I thought those were long over with!”

True that.  But nobody told the good folks at Toronto Dominion Bank that we have moved into a balanced market.  My issue is not the attempt at a bidding war, but rather the way they went about it.  Had they been up front and put on the listing when the property came out last week, “No Offers Until November 12th,” then I would plan accordingly.

But they didn’t, and I think they did it on purpose.

And the fun is just beginning!  I was faxed EIGHT PAGES of conditions that the bank imposed on the sale.  Some of them are ridiculous, some of them are unfair, and some of them are irrelevant.  For example, there is a clause that begins, “If this property is a condominium….”  Well you know what?  It’s NOT a condominium!  It’s pretty obvious from the street that it’s a damn house, so why bother including that clause?


Red tape.

Doing things the way they have ALWAYS been done.

That’s why.

The bank is going to spend a week trying to fit a round peg in a square hole so long as they’ve always been trying to fit round pegs in square holes.  And it doesn’t matter how many square pegs sit idly by.

So what happens on November 12th?  Well, any interested parties will submit their offers with a 72-hour irrevocable window, and then wait for the good folks at Toronto Dominion Bank to sif through all the red tape and finalize a deal.

I’ve always been one to fight fire with fire, so I think I’ll take a different approach.

If the offers are good for 72 hours, I’ll wait until November 14th, ask how many offers there are, and then submit my offer based on the information I have at the time.  I’ll make my offer good for 24 hours, and they can line up all their ducks in a row, and pick the best offer (presumably mine).

The reality is: this house is worth more than $186,500, and I have no problem advising my client to pay for it.  The land value alone is probably worth that much, since the house two doors down is asking $319,000 for a functional bungalow on a smaller lot.

But I’m not looking forward to dealing with TD Bank and the pages and pages of unnecessary documents we’ll undoubtedly have to sift through.

As for their “strategy” of holding back on offers in a market where this has cease to become the norm, well, I think they might shoot themselves in the foot.  If they don’t get a windfall of offers or enough to push the price over $200,000, then they’re leaving money on the table.

But I guess perhaps they’re not quite as worried about a measly few-thousand-bucks when they charge all their account holders $1.50 or $2.00 each time they take money out of an ATM…

Written By David Fleming

David Fleming is the author of Toronto Realty Blog, founded in 2007. He combined his passion for writing and real estate to create a space for honest information and two-way communication in a complex and dynamic market. David is a licensed Broker and the Broker of Record for Bosley – Toronto Realty Group

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1 Comment

  1. Jess

    at 10:44 am

    Can you explain what you mean by “nothing has dropped significantly”? TREB just published their October Market Watch newletter and stated that prices in the City of Toronto are down 13%. The average price is now lower than it was in 2006.

    I’m in the market for a condo in the C2 area and everyone is listing their condos as though “nothing has changed”. The result? A record high inventory of 103 condos on the market, a record low of 7 sales and a measly 7% sales to listing ratio (for the month of October).

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