Do you play golf?
Are you familiar with the term, “Take your medicine?”
I’ve known my friend Jeff since I was 5-years-old and he was 3-years-old. He was my brother’s friend in daycare, and since I had trouble making real friends in my formative years, I basically took all of my brothers’ later in life.
Two summers ago, Jeff told me that he took up the sport of golf, and before our friend Chris got married that July up in Minden, we snuck in a round in Beaverton, Ontario along the way.
Jeff talked a blue streak about golf, both the sport itself and the PGA Tour, and his love for the game.
I was excited to play with him! I don’t think we had played together since high school!
On the second tee, Jeff sliced his ball into the trees, and I asked him, “Do you want to hit provisional in case you can’t find that?” He declined, and we drove up the fairway.
Amazingly, Jeff did find his ball! The trees were fairly spaced out, and his ball was laying flat on some hard-packed dirt.
“What do you think?” Jeff asked me.
“Take your 5-iron,” I told him, “Close the face, raise the club only as high up as your knee, and smack down on the ball so that you drive it into the ground about ten feet from here, and it should roll right back into the fairway.”
Easy plan. And because of the angle of the trees, he wouldn’t be just chipping out, he’d actually be able to advance the ball about 15-20 yards toward the hole, so not a total loss.
Jeff raised his finger to his chin and remained deep in thought, before he said, “Naaah,” and proceeded to pull out his 3-wood.
“Jeff, this is how a bogey turns into a quad,” I told him. “Take your medicine!”
The difference between an ugly amateur golfer and an amateur golfer who can regularly break 90 is demonstrated on decisions like these.
“Don’t worry, I got this,” Jeff said.
Jeff swung at the ball as hard as he could, and the ball smacked into the trunk of a tree, and went out of bounds. He then had to take a penalty and drop within two club lengths of the fence, but now he had zero angle, and had to go backwards. This time, he hit another tree, and the ball went further back.
Jeff scored a nine on the hole.
We got in the cart on the way to the third tee and I said, “Jeff, sometimes you just have to take your medicine.”
It’s a golf saying that everybody knows.
And it’s quite applicable in the current real estate market too.
Over the past two weeks, I’ve fielded six calls from prospective sellers, most of whom refuse to acknowledge market conditions, market prices, or where we are as a world and a society in September of 2020. The level of wishful thinking is absolutely off the charts, and I don’t know that I’ve ever seen anything like it.
Through sixteen years, I have never turned down so many listings, and I say that not to be braggadocious but rather to demonstrate a problem that exists in our market.
Last week, I received a call from a prospective seller who said she was interviewing agents and asked if I would like to be considered. She told me that her condo was worth $700,000, but in looking at sales for the identical units, I saw that one had sold in May for $650,000, and amazingly, one had sold in August for $690,000.
She said she wanted to list around Thanksgiving, and I said, “So you’d be looking at about $670,000 then?”
She said hers was a $699,900 list.
I wasn’t in the unit that sold for $690,000, and it certainly looked like a price-outlier. But regardless, it wasn’t prudent to pick the highest sale ever recorded, and then add to that price, given our market, and given the listing would be coming out a month later.
“But you haven’t even seen my unit,” she told me. “How can you be giving me instructions on pricing?”
I explained, “Because I know the market out there, and there are eleven listings in your building right now. Buyers only care about price per square foot and comparable sales right now.”
I agreed to come to see her place, and the last thing she said was, “My condo doesn’t need staging. It’s ready to go. You could photograph it tomorrow.”
I’ve heard that one before.
The first thing I saw at the property when she opened the door was a really large and fluffy cat. There’s nothing wrong with that, right? People like pets? People like cats?
Yes. But remember that my way of listing properties is to perfect them, and that means no pets during viewings where we can, and certainly not a large fluffy cat, in a 700 square foot condo, that has a friend – the second cat. Yes. Two large, fluffy cats, and all the hair, dander, and litter that comes with them.
I walked inside, and I sighed internally.
There was nothing about this property that said “Ready to go.” This property was what we call “a complete stage,” in the same way that we refer to homes in poor shape as “a complete gut.”
This is a 3-year-old condominium, very modern, with a very young demographic.
In the spirit of having nothing to lose, I was exceptionally direct and blunt with the seller. I’ve made it my mandate going forward not to sugarcoat things, not to let sellers be self-guided by their hopes and dreams, and not to risk offending somebody with the truth.
I commented, “You said on the phone that your condo didn’t need staging?”
She said, “Well, what, if anything, would you want to remove and replace?”
“All of it,” I said.
She didn’t look happy. So I explained.
“You have some nice pieces in here, like this antique wooden cabinet,” I told her. “But this doesn’t ‘go’ in a modern condo, and it’s way too big.”
She said, “My friends come over and they marvel at my that piece. They love it. They ask where I got it.”
“But how old are your friends?” I asked her.
I explained that this is a 3-year-old condo and the buyer would likely be a younger person, on account of the price, location, age of building, and just the mere fact that most downtown condo buyers are younger.
“It looks like a woman in her 50’s live here,” I told her. “And we need to change that.”
She was a woman in her 50’s, of course. Also one with two cats, old furniture, and a dark condo that she wanted to sell for 105% of fair market value in an extremely difficult market, in a building with fierce competition.
So I didn’t let up.
“Would you be open to painting?” I asked.
“I just painted,” she said.
“And you chose brown?” I asked.
“I suppose you want to paint it white?” she said.
“Yes, I do. Benajmin-Moore, CC-40, ‘Cloud White.’ It’s the colour that I paint all my listings. Usually fifty per year,” I explained.
“Well, I don’t like staged condos,” she told me. “I think they’re stupid.”
Then the true problem revealed itself as she said, “I look at a staged condo, and I can’t see myself living in it.”
And there was the rub.
I explained the concept of staging to the home-owner, and tried to convey that it doesn’t matter if she can see herself in the space, since we aren’t selling the condo to her. We’re trying to cast the net as wide as possible and appeal to the masses. Having a professional designer empty the condo of very personal and out-dated furniture, and bring in new, sleek, modern furniture, and add accessories and lighting, is how to showcase the property in the best light – especially with all the obstacles at hand.
She wasn’t moved.
“Well, I’m not staging,” she said. “No chance.”
She continued, “I’m simply going to give an agent of my choice a 60-day contract and wait until I get my price.”
Therein lays yet another rub, as I explained.
“You don’t need sixty days,” I told her. “There’s an inverse relationship between days-on-market and potential sale price. If you don’t get an offer on this place in the first 4-5 days, you have no chance at getting your list price. If you’re on the market for thirty days, you’re reducing $20-$30K.”
I explained that I still didn’t think she had a hope in hell of getting $699,900, and that if she sold for $670,000, she would have essentially won the lottery. It’s right in between a May comparable of $650,000 and a really odd and hard-to-believe August sale of $690,000. And with the market adding 100-200 new listings in C01/C08 every day, it didn’t seem like November would be any better.
“I’m not going to list for $699,900,” she interjected. My ears perked up. “I”m going to list for $649,900.”
Oh, well. That came out of nowhere.
“So, with no offer date?” I asked.
“No, offer dates are stupid,” she said. “I’ll list at $649,900 and have offers any time.”
“That changes things,” I told her. “I thought you were holding out for like $690,000 or something!”
Amazingly, she said, “I am.”
I didn’t understand.
“But you said you weren’t going to set an offer date though!”
“I’m not,” she said. “But if somebody offers me, like, $630,000, I’ll just sign it back at $695,000.”
This was quickly becoming absurd.
“Value aside,” I explained, “If you list a property at $649,900 with no offer date, and advertise ‘offers any time,’ you’re going to signal to the market that you’re looking for $649,900. And if you sign offers back $50,000 higher than your list price, people are going to pull their hair out. They’ll just walk away.”
She shrugged, and said, “Well, that’s what I’m going to do.”
I told her that it was nice to meet her, thanked her for her time, and went on my way.
Any agent who takes this on, without de-cluttering, without staging, and with an owner working from home with two cats, at an inflated price, is doing the seller a disservice by effectively letting them hit a 3-wood from trees, rather than helping them chip out into the fairway.
I’m aware that my critics will suggest, oh, I dunno, say that I’m only after a quick sale, or I don’t like being told ‘no,’ or something else that seeks to make me the enemy. But I’m hardly guilty of being dishonest here, and I pride myself on telling it like it is.
For a seller that needs to sell, a real estate agent who allows the seller to put him or herself in a bad position is not doing the job. And all over the city right now, there are agents who are too afraid to simply tell sellers, “Take your medicine.”
This listing will hit the market in the worst possible shape and simply sit, getting stale, racking up days-on-market, and will eventually get lost in a sea of inventory.
Buckley’s tag-line used to be, “It tastes awful, but it works.”
For those who need to take their medicine in certain segments of our Toronto real estate market, truer words could not have been spoken…Back To Top Back To Comments
at 8:28 am
Greed is a pandemic.
So is stupidity.
at 8:43 am
You speak the truth but most people don’t like hearing the truth unfortunately. There are some amazing condos on the market, staged beautifully and priced fairly which are not selling. Gone are the days when condos just sold themselves. Its a great time to be a condo buyer!
at 3:35 pm
Agreed. Great in the sense that there is more choice for buyers and not everything is being snapped-up with multiple offers.
A move toward market equilibrium in the condo and rental markets is good for the city.
Not sure how long the window of opportunity will be open for potential condo buyers, though, unless new and plenty of supply begins construction apace.
As everyone knows, the flow of immigration and NPR’s to Canada was almost halted due to Covid-19, but new admissions to the country have steadily increased for the past four months in a row.
Even if the flow is stunted further due to a second or even third wave, once a vaccine becomes widely available, there is going to be a great deal of catch-up on immigration to Canada by whichever government is in power.
Hands up. How many think real estate will be cheaper in the GTA in 5 years time?
at 4:41 pm
“new admissions to the country have steadily increased for the past four months in a row.”
Because per Ben Rabidoux’s assessment of IRCC numbers of monthly permanent residents, June was 19,200 and July down to 13,600 (63% below July 2019). Not sure of August numbers yet.
at 5:29 am
Source via TD Bank
at 5:29 am
at 7:55 am
That’s the exact chart Rabidoux was responding too. It shows permanent resident numbers at their lowest in April, then increasing May and June.
However numbers declined again in July. Thus, they have not “steadily increased for the past four months in a row”.
In addition, your source shows three months of increases. Three does not equal four. Where did your stated four months come from?
at 8:46 am
So prices cheaper in 5 years? Make the call.
at 9:14 am
“Why? Is there a prize for being lucky?”
at 9:26 pm
“How many think real estate will be cheaper in the GTA in 5 years”
at 5:31 am
That’s right Verbie – because owning real estate is all about greed?
at 12:44 am
Cloud white!? That yellowy white? People like that!?
at 5:40 pm
I hope people like Cloud White by B, Moore. Most of the inside of my house is painted with it. It’s not yellowy– unless maybe the person smokes. More like the white from a cloud.
at 12:08 pm
If you are speaking about condos – there is a chance.
Detached probably not.
at 1:15 pm
please update us on the price if or when her unit is sold HAHA
at 7:40 am
Time for the bears to take their medicine.
Unofficial TREEB sales data for September. Yet another record-breaking month for the books.
9,911 Freehold sales (+40% y/y)
3,311 Condo sales (+4% y/y)
Not to mention the latest data on new home sales indicating a record-smashing 4,539 transactions for August (+217% ). https://bildgta.ca/news/newsreleases/GTA-new-home-market-continues-strong-in-August
Might require a spoonful of sugar to help that one go down – eh?
at 9:01 am
Significant portion of condo investors are basically screwed. Also a good portion of condo owners who are trying to move into freehold are also in tough.
Even those who bought years ago and their condo appreciated 200k+, is it easy for them to sell now? Back in Feb it was worth 600k, now a similar unit just sold for 530k, but only after a month on market. The poor early-30 something want to move to the burbs, psychologically it’s not easy. In the meantime the freehold prices keeps going up….
Some recent condo investors are probably more than $400 negative cashflow right now. Yikes.
Time to take your medicine old man. I know you’re not telling your kid to go buy an investment condo now, but you’re telling the people on this board… *smh*
at 12:04 pm
Lol@ old man…how do you even know that he is old…
at 12:24 pm
He claims 33 (now 34) years of experience in real estate. Assuming he got started around 20 years of age, that puts him in his mid-50’s. I guess depending on how old J G is, that’s old enough to qualify him as an old man.
at 8:48 am
A New Low for 5-year Rates :
“Canadian 5-year fixed rates have cracked the 1.50% floor for the first time ever, at least in Ontario.
Default-insured borrowers in the province can now access rates as low as 1.45% for a full-featured mortgage. That’s a point below where they were eight months ago and half of what they were 19 months ago.” https://www.ratespy.com/real-mortgage-carrying-costs-have-never-been-higher-093016059
at 9:06 am
Why wouldn’t this client just list with FSBO if they already knew what they were doing?
at 3:10 pm
I’m surprised nobody is challenging the claim that golf is a sport. Haha!
at 3:15 pm
I just figured we all know that it isn’t.
at 3:13 pm
Another report from UBS that no one will remember when it has proven to be either right or wrong (of course, all the usual TRB suspects already know where they stand).
at 9:38 pm
What a totally refreshing article. FYI if realtors think that potential sellers do not check out their listings, and vet them based on how things are staged, priced and days on market, those realtors are dreaming. I actively dislike seeing a listing that is being absurdly managed even if it is the seller who is a kook! Because why is the realtor taking on a kooky seller? Unless they’re wacky too, right?
at 11:03 am