Remember on The Price is Right when a contestant would bid $1.00 when they figured that everybody else had overbid?

I’ve heard stories about real estate “auctions” in other parts of the world where the properties were priced at $1.00 and an authentic silent auction would ensue.

There’s a house on Ossington Avenue in Toronto that isn’t priced at $1.00, but even the $99,000 price tag seems ludicrous…

If something is too good to be true, it often is.

In real estate, or other aspects of life.

Just think of the song “Lola” by The Kinks.  We all know how that one ended up.  Tasting like “cherry-cola” or not, I don’t think the author of that song got what he bargained for…

A house on Ossington Avenue recently caught my attention while I was scrolling MLS looking for parking spaces for sale.  When you search on MLS and you don’t insert a price, the cheapest listings on the market come up and they are usually condo lockers and parking spaces.  I saw “$99,000,” and at first I figured it was a parking space, vacant piece of land, or a typo—which happen more than you would think!

But upon closer inspection, I realized it was, in fact, a HOUSE!

Yes, this 4-bedroom, 3-bathroom, semi-detached house on a 17 x 117 foot lot comes with a $99,000 price tag.

The catch?

It’s worth more than $99,000.

Way more.

The sellers and their agent are being clever, and trying to induce a bidding war.

In fact, they’ve included the following instructions in the broker’s remarks on MLS: “Seller is letting you make your reserch and come up with the right price.”

I know what you’re thinking—I misspelled “research” and used the word “make” instead of “do,” but that is just the typical laziness and incompetence of a Toronto realtor.

The sellers have effectively listed their house at $1.00.  Really, what is the difference between listing a house at $99,000 or $1.00 when it’s worth probably $400,000?

Let’s work with some numbers here:

1) The house was purchased in 2000 for $180,000.
2) The house is assessed by MPAC for $350,000.
3) The owners unsuccessfully, and ridiculously listed their house for $699,000 in 2007.

What is this house worth?

Well, I have one idea of what the house is NOT worth and that is $699,000!  They left the house on the market for 184 days before pulling the listing.

What gives?

What the heck are these people doing?

They severely over-listed their house last year, and left it to rot on the market, and now they have severely under-listed the house at a ridiculous, unheard-of price!

Why not, you know—list at a reasonable price like the rest of the world and just sell it like normal human-beings?

Well, maybe they know something I don’t.  Maybe the agent is going to do her clients a great service here and get them $50,000 more than it’s worth.  But that’s the problem with this situation—what is this house worth?

The old adage, “It’s worth whatever somebody is willing to pay for it” rings true, but you have to start somewhere, don’t you?

Is this agent just lazy, or incompetent?  Is she unable to do her research and come up with a viable, realistic listing price?

I had a client last week wanting to offer on a condo priced at $249,900.  I told her that the property was worth $300,000, and should have been listed at $289,000, perhaps.  She told me that she wanted to offer $275,000, and I told her she wouldn’t get it; not even close.  She replied, “I think that offering $25,000 more than the listing price is a good offer!”

Well that is exactly my problem!  Listing prices are often irrelevant!  If the condo is worth $300,000, and it’s listed at $289,000, you might offer $11,000 over.  But since they under-listed it, people think about offering a “whopping” $51,000 over asking, and get scared off.

But what about Ossington?  Listed at $99,000, what’s to stop a buyer from saying “Well, I’m going to offer 150% of list price.  That’s a HUGE premium!”  Well, $150,000 is not going to get the house.

So how irrelevant are listing prices these days?

Very.

You have to look at the price you are offering, and nothing else.  If you offer $365,550 on a condo, what does it matter whether it was listed at $359,000 or $309,900?  You do your research on comparable sales, determine what you think the unit is worth, and act accordingly!

I would never get involved with anything like what’s happening on Ossington Ave.  It’s just a mess, a disaster, and a disappointment waiting to happen.

I can’t help but wonder though: how many offers, and what will the lowest offer be?  Will anybody offer $220,000, and argue, “It’s a damn good offer!  Just look what they’re asking!”?