You know what, guys?
Try as I might, I’m not able to tell this whole story in three parts, so we’re back to the old TRB days of new posts Mon-Wed-Thurs-Fri. Good times!
Er, not so good times for buyers in the spring of 2014 in Toronto, as every agent in my office was complaining about how hard it was to work in such a market climate.
Let’s pick up the story where we left off on Wednesday…
As I detailed on Monday, I began working with Isabella and Andrew in September of 2013, and I told them at the onset that the normal course of action was to do the initial research, then pound the pavement and learn both current market conditions as well as what exactly they were looking for, and then finally start to submit bids on houses.
And yes, we were “bidding,” as that is what the market warranted at the time.
In fact, that’s what the market has warranted for about 9 1/2 of the 10 years I’ve been in this business.
A colleague of mine told a group of us yesterday that a new client of hers said right at the onset, “I’m not ‘bidding’ on anything, nor will I be involved in competition, and I absolutely will not submit an offer unless I have an ‘out’ at some level.”
One of my other colleagues responded, “Sooooo……he’s looking in Kingston?”
You can set ground rules like that if you want to; nobody is stopping you.
But it’s tantamount to a young, 20-something guy saying, “I will only date supermodels, who are exactly 5’8” tall, with skin that smells like cocoa butter – and I mean natural cocoa butter, not that manufactured crap!”
What I’m saying, is that you have to accept current market conditions, or look for another market in which to transact. We can wish until we’re blue in the face that houses didn’t have “offer nights,” and that you didn’t have to “bid” on properties, but that’s the market today, and it’s been that way for some time.
In December of 2013, I submitted an offer on behalf of Isabella and Andrew, and once we had lost, we realized that we were basically finished for the year.
That was a very interesting period of 2013, since every buyer who hadn’t purchased was frantically trying to tie something up, or be relegated to resuming the search 5-6 weeks later. I remember Sue Pigg from the Toronto Star wrote an article about it called, “The Christmas Crunch.”
January 5th, 2014 marked the first official “day back” at the office, but it was slow going in the single-family housing market for a couple of weeks.
In fact, I didn’t have a single house to show Isabella and Andrew for the first three weeks of January.
Eventually, we had options, but nothing that really hit home.
Kent Road, Aldridge Avenue, Earl Haig, Greenwood, and Coady.
But these weren’t the locations we’d been focused on before.
We wanted the Milverton’s, Glebeholme’s, Wolverleigh’s, and Strathmore’s!
Our search was primarily focused on the north side of Danforth, between Greenwood and Woodbine, but we were checking out everything south of Danforth as well, and in actual fact, just about everything within spitting distance.
It wasn’t so much that the 15 x 100 foot lot on Bastedo Avenue was appealing, but rather we were interested to see what the market conditions would be like in 2014, compared to the Fall of 2013.
As we would soon learn, the Spring 2014 market would be hotter than anybody could imagine, and hotter than anything I’ve seen in my time in this business.
February was an absolute bust.
We found a few candidates in our area – one on Milverton, and a detached on Glebeholme, but nothing that excited us like what we saw in 2013.
Early March brought the “Ruckus on Rhodes,” where one insane listing with 30-something offers basically jacked up the value of everybody’s house by $100,000 overnight, and the street responded by selling off. You can read about, or perhaps relive that, in Sue Pigg’s Column in the Toronto Star HERE. She just always seems to be where the stories are!
Seeing what happened on Rhodes Avenue was positively eye-opening for Isabella, Andrew, and myself. These houses – selling for $700,000+, were worth $500,000 2 1/2 years ago, and suddenly the “Danforth East,” in lieu of anything resembling a better name, was the hottest neighbourhood in Toronto.
In mid-March, we happened upon an absolute gem on Langford Avenue, north of the Danforth, but west of Donlands. This is a better area, and better street, than the pocket we’d been looking in near Coxwell and Danforth, and the house showed it, inside and out.
It was “only” a 3-bed, 2-bath, on a 16 x 120 foot lot, but it was spectacular.
It was the best house we’d seen yet, and even better than the house on Lamb Avenue where we lost out six months earlier.
The basement was about 8-feet high, as it had been dug out, and that really resonated with Andrew, who was jumping up and trying to hit his head on the ceiling, unsuccessfully.
And the rest of the house, from the finishes, to the layout, to the room sizes, was just spectacular.
Listed at $699,000, I told Isabella and Andrew that it was going to sell for over $800,000, and this was new territory for us.
It was a better house than the others we had seen, and in a much better area, but the hard truth, that so many buyers had to learn in 2014, was that the market had also increased since we had started.
They acknowledged all three of those points, especially the last one, and said, “What do we have to do to get this house?”
I’m not a fan of bully offers, but I figured, “What the hell?”
I had one with me, of course (I always come prepared), and we offered $800,000 even, with no conditions, and the closing date the sellers wanted.
I emailed it to the listing agent (I never call them first when I have a bully offer, as it just gives them an opportunity to say “no”), and we waited.
As you might expect, given this is part three of a four-part series, our bully offer was rejected, but with thanks, and an opportunity to resubmit on offer night.
Three days later, on offer night, there were twelve offers, and our improved offer of $815,000 was blown out of the water by one at a whopping $880,000.
We thought back to Lamb Avenue, which sold for a paltry 110% of list price, and noticed that the premium over asking had DOUBLED, and then some. Langford sold for 126% of the asking price, or $181,000 over asking.
Things were getting insane in this market.
Two weeks later, I experienced something I had never come close to experiencing with a client before, and I truly believe it’s a statistical impossibility for this to ever happen again:
We lost THREE TIMES in one week.
There, I spoiled the surprise, but I promise the following will not be without suspense…
Having lost on Langford, we focused on two houses that came out in the first week of April: one on Alton, and one on Badgerow.
On Tuesday, April 8th, we submitted an offer on Alton, which was listed at $699,000. We offered $815,000, and came second-place, to an offer of $830,000.
On Wednesday, April 9th, we submitted an offer on Badgerow, which was listed at $679,000. This one was interesting…
There’s a certain brokerage in Toronto whose walls are so paper-thin that you can hear just about everything that is said, from the other room. I remember sitting in the lobby of that brokerage, listening to an agent who sat down at the table and said, “I’m really, really nervous, just give me a second,” and I would be shocked if the sellers and the agent didn’t hear my childish giggle from outside the door.
We offered $785,000, and low and behold, they chose two of the eight offers to “work with,” and asked us if we wanted to improve.
I know the listing agent well, and she is an absolute dream to work with. She’s professional, courteous, but also understanding of what it’s like to “be on the other side of the table,” so she handles things very sincerely with all parties involved.
I called Isabella and Andrew and did what no agent is supposed to do: I “guaranteed” them they would get the house if they went to $800,000 even.
They agreed, and I felt that we had got the house. I really did. I was sitting in the adjacent conference room, writing a blog post on my laptop, grinning, and feeling good. The listing agent was waiting for the competing buyer agent to return with her offer, and she and I both felt as if my offer would win out.
The other agent came back, presented, and then the listing agent came out and walked into the conference room where I was sitting.
She just starred at me for 5-6 seconds, blankly, and then said, “You won’t fucking believe this.”
I already knew.
“You lost. You fucking lost,” she said. Her language was not for effect, but rather borne out of shock, and dare I say, dismay. I could tell she wanted me to get the property, but we just didn’t have the price. The house ended up selling for $805,000.
She apologized, and I told her not to worry. She did her job, and I did everything I could do within reason.
I walked outside, and I’ll never forget seeing the competing buyer – a girl of probably 28 or 30 years old, sitting in the front seat of her agent’s car, with her hands over her mouth, as if she was trying to bite all ten fingers at once. She saw me out of the corner of her eye, and did a double-take, then started to panic.
She knew I was the competing agent, and just my mere presence set her on edge.
I know how tough a process this is for a buyer, since I’ve done this literally several hundred times, and I felt bad for the girl, and didn’t want her to stress about it anymore.
I pointed to her, mouthed “you,” and then gave the thumb’s up.
She screamed so loud in the car that her agent, typing on her iPhone, popped up in her seat like a piece of toast.
She opened the door and said, “It’s ME? Is it really ME?” And I told her it was, shook her hand, and went on my way.
On to the next, of course…
On Friday, April 11th, we submitted our third offer in four days, on a house on Monarch Park Avenue.
The house was listed at $629,900, and we loved it. It had features we hadn’t seen in previous homes, and it was on a very pretty part of the street, steps to The Danforth.
We submitted a bully offer at $795,000, and the listing agent called me back and said, “We really want to work with this, can you give us until tomorrow morning.”
I was on my phone standing outside Burger Cellar on Yonge Street at about 9pm, freezing in the miserable April weather, and I agreed to give the agent until noon on Saturday so she could mobilize her sellers.
The next day, the listing agent called me at about 12:15pm, for what I thought was going to be a “congratulations,” only to hear her say, “We took another offer.”
It made no sense.
What other offer? We were the ONLY offer. Weren’t we?
Isabella and Andrew were in shock, and we didn’t speak again that weekend. They needed time to cool off, and I told them I’d come by on Monday morning to return their deposit cheque.
Andrew came outside and met me at “the spot” where we’d met so many times before, and with a furrowed brow, a deep inhale, and a nod of the head as if to get his thoughts ready, he said, “David…….we need to talk……”
(TO BE CONTINUED)Back To Top Back To Comments
at 7:39 am
Let me guess…the “other offer” on the last one house on Monarch Park was submitted by another client of the listing agent, thus allowing the L.A. to conveniently double-end the deal?
at 9:39 am
“I walked outside, and I’ll never forget seeing the competing buyer – a girl of probably 28 or 30 years old, sitting in the front seat of her agent’s car, with her hands over her mouth, as if she was trying to bite all ten fingers at once. She saw me out of the corner of her eye, and did a double-take, then started to panic.”
I never get why people do this? If you’re a high strung person, why add 10x more discomfort and stress to your situation? There’s no need for a buyer to sit outside in a car on a cold April night staring at the house they are trying to buy while they anxiously wait with bated breath. Just go hang out somewhere comfortable close by and let your agent give you updates on the situation. Seriously your presence is not required.
at 10:24 am
I think that a lot of buyers, despite their denials, secretly love the drama of the situation. It’s an exciting time.
at 11:37 am
I will sell you our house on Milverton for $800K. 🙂
at 1:24 pm
David refers to the “Ruckus on Rhodes”. There was another house in north Toronto earlier this year that set records for number of offers and selling price over asking price. According to a blog post by Garth Turner the other, that house is now on the market as a rental, with hardly any renovations done.
If we’re going to have bidding wars, it would be nice if buyers would be end users.
at 2:06 pm
How do you know the buyer isn’t an end user? It’s quite common for end users to rent out a house they plan to tear down while they wait for designs and permits. In fact it totally makes sense to re-coup some costs, instead of leaving it empty? It’s also quite common for Garth to try and twist such an example into evidence that price to rent is out of whack in order to keep fooling the gullible people who believe him.
at 5:18 pm
So … not everybody agrees with Garth Turner that Toronto housing is over-inflated?
at 5:41 pm
If you’re asking that as a serious question, i certainly don’t see any credible evidence that Toronto housing is “over-inflated” or “over-valued” (if those terms even have any true meaning, David has a nice post on that – link below). In fact if anything i see lots of evidence for why it will continue to rise in price. And i would also say most rational people have long written off anything Garth Turner writes as nothing more than self-serving tripe.
at 7:52 pm
I agree. Many other World class cities are far more expensive than Toronto. I believe there is still plenty of price growth before Toronto hits any ceiling.
at 5:33 pm
I’m not anti-Real Estate, but I wonder about the wisdom of someone paying 800K for a listed house at 649K, and then expecting to sell it at a profit 5-6 years from now (average holding time). Does that not seem excessively risky?
at 5:56 pm
Not sure where you’re coming up with this assumption that people are buying to resell in 5-6 years for a profit. The vast majority who are shopping in that snack bracket are looking for a place to live not a speculative investment. But since you want to talk about it from a risk perspective. By not buying you face a 100% probability that you will lose 140K+ in rent to live in an equivalent house for 5-6 years. By buying you expose yourself to a much smaller probability of losing maybe 5-10% of your homes value if markets stagnate or pull back. Also note the loss under owning is just a paper loss, the loss from renting is realized each and every single month.
at 1:28 am
The asking price is not a relevant factor here though, its artifically low, am just surprised that buyers don’t see through this (I speak from experience as my house was listed at 699k…..but was never going to sell at that).
at 3:42 pm
What? No love for Springdale?