Hot or Cold, Top or Bottom; there is no time or place to “test” the market.

It’s time to be rational, realistic, and distinguish your dreams from reality.

Why waste everybody’s time, including your own?

Have you ever witnessed somebody dipping their toe into the water in a swimming pool?

I’ve never really understood the purpose of this.

The temperature is what it is, and it’s not going to change.  By dipping your toe into the water, you’ll surely get an idea of what temperature it is, but is that really going to factor into your decision of whether or not to get into the water?

Even better is the person that dips their left foot in, and then takes a few steps along-side the pool and dips their right toe in!

What result were you expecting?

I’ve always felt that there is never a time, or a purpose, to “test” the real estate market.

Here is a situation I encountered last week.

I was showing condos in North York, and when making an appointment for a unit at 155 Beecroft, the listing agent called me directly.  She started by saying, “Let me tell you a little bit about the condo,” and of course I immediately knew she was from out of the city.

Yep, Concord, Ontario, to be exact.

She gave me a sales pitch, telling me about the floors, cabinets, and room sizes; as if I wasn’t going to find out for myself, and then she added this little tidbit: “We know the unit is overpriced, but….”

No, stop right there.

There is no “but.”

The unit is overpriced.  You needn’t say anything more than that.

The solution is simple: price it reasonably, or don’t put it on the market at all.

But she went on to say “….my client is just testing the market.”

I’ve never understood this.

They priced their condo at $295,000, when similar properties are priced at $280,000.

Consider that only “the best” units are bringing in $275,000 – $280,000, and their unit is more likely to command about $265,000 – $270,000, and only after a couple of months.

So WHY are they listing it so high?

The agent told me, “My client just wants to see what type of response he’s going to get; what type of interest there’s going to be.”

I can give you answers to both those questions right now:
1) Lots of showings
2) No interest

“Testing” the market is a monumental waste of time.

Nobody is going to fly down from heaven on a pillow with a suitcase full of money and pay $25,000 more than the condo is worth.

But that won’t stop people from trying!

Here is a list of the people whose time is being wasted:

1) Seller.  Why go through the aggravation?  If you really want to sell, then be realistic and price the property appropriately.
2) Listing Agent.  I won’t work with people who are “testing” the market, because it gives me less time to work with my other buyers and sellers, and less leisure time to spin-up homemade brawtwurst in my kitchen…
3) Buyers.  A buyer is going to see “everything” in the building or area that he might be interested in, but there will be no interest in the unit which is “testing” the market.  It’s a waste of 15-20 minutes for that buyer.
4) Concierge.  A condo in this area could command 50 showings in the first month.  Think of all the people that work at the building that need to help facilitate appointments that serve no purpose.
5) Receptionists.  Along with the point above, think of all the support staff at real estate offices across the city that are wasting time dealing with phone calls, pages, and appointments for a property that will never sell.

It’s just a waste of time all around.

I’m not trying to sound negative, nor am I trying to rant about an issue while not offering up any constructive criticism.

I guess I just don’t understand the purpose or the motives behind “testing” the market.

As I said above, nobody is going to magically fall in love with a unit that is priced exceptionally higher than all the others.  There is nothing “special” about the unit, and if the listing agent and the seller even admit “We’re just testing the market,” then what do they hope to gain?

The outcome is pre-determined: you’re going to get a lot of showings, and nobody will be interested.

There are thousands of similar units in this area, and they generally trade in the same price range.

If the bid/ask of shares of TD Bank on the TSX was $34.84 – $34.95, what result do you expect from placing a limit order to sell for $38.00 on that given day?

Sure, the stock might climb back up there eventually, and if you placed a limit order that was good for six months, you could see some action.

But on that given day, in that given hour, your order is useless.

And the stock market is far more fast-paced and volatile than the real estate market, and the volumes are much higher.

“Testing” the market is just setting yourself up for disappointment.  If you start at a price you know is $25,000 more than you could ever hope to get for your property, it will seem like you “gave in” when you finally reduce the price and sell it.

Maybe people figure, “It’s worth a shot.  You never know.”

Early last year, I received a cold-call from an owner at The Hudson at King & Spadina.  He told me he wanted to list his condo at $399,000 and “see what happens.”  I checked on MLS, and amazingly, he had purchased that condo only six months earlier for $328,000!  I told him maybe, just maybe, he would get $335,000 – $340,000 for it since the market was hot and we might get lucky.

But he was persistent.  In his broken English and with his clown-like smile, with his hands waving in the air like a lunatic, he said, “But you never know.  That is the thing.  Maybe somebody come buy it.  Right.  Maybe somebody give me my four-hundred-thousand.  You never know.  That is the thing.  Right.  You see, maybe somebody come buy it, and nobody know!  You never know.  You never know.”

But that’s just “the thing;” you do know.

There is a reason that nobody is out on the street selling $5-bills for seven bucks a pop.

“Testing” the market is just like playing the lottery; you know the eventual outcome, but you give it a shot because everybody likes to dream…