Which analogy should I use right now: the definition of insanity or Sisyphus?
Let’s go with the latter.
Are you familiar with Greek mythology? I took “Classics” in grade nine, and it was so worth it! Not only did I already know what was going to happen throughout the movie Troy, and others, but it also introduced me to the wonderful world of Latin! What a language! Albeit a dead one, but it sure does teach you about the English language.
Do they still teach Classics in school? They should. Our kids would know where “Nike” got its name from! That, and the planets, zodiac signs, car makes and models…
I love the stories of these Greek gods. One of my favourite is that of Sisyphus, which has a much deeper meaning than at first glance.
Sisyphus was cunning and clever, but he was selfish and evil and, ultimately dying not once, but twice, after conning his way out of Hades the first time around. After his second death, the Greek god, Zeus, wanted to make an example of him, so he punished Sisyphus by sentencing him to an eternity of pushing a giant boulder up a hill, only to have the boulder fall back to the bottom of the hill, every single time. Once back at the bottom, Sisyphus would be forced to start over, only to have history repeat itself. Sisyphus was to do this for the rest of eternity.
The metaphor herein might not be obvious, but the real-world application is one of pointless, useless, miserable labour.
At least that’s how I felt when I was a 21-year-old intern working at Celestica back in 2001. I drew on my Grade-9 Classics learnings, thinking of Sisyphus, doing the same goddam thing every single day, with zero purpose or benefit, only to have the day repeat after the sun sets and then rises. At least I got a weekend! Poor Sisyphus! Soul-crushed. Spirit broken. Manhood stolen. Purpose negated.
Think of this as being stuck in a never-ending loop, if you will. Think of it as a start with no end.
And in our real estate market, every so often, I see poor Sisyphus out there, the only difference between the Greek myth and the real estate application is that Sisyphus didn’t put himself in this place and never had a way out of this continuous punishment.
How many sellers out there are the masters of their own misfortune?
Ask them, and the answer is “Zero.”
But ask me, or the person next to me, and we’ll tell you that it’s many. Most, in fact.
For every seller who has the massive tree in the front yard fall and crush their car on the front yard two days into their listing, there are hundreds of sellers who have no bad luck, no negative external factors, and nothing but opportunity ahead, but who still manage to stand in their own path.
There are many ways that a seller can do this, but the one I want to talk about today is pricing.
While we’re at it, we can see how pricing ties into mistakes that sellers make when listing, marketing, and in the way that a property is offered for sale.
Here’s our case study for today:
Click on the image to enlarge, if needed. Especially if you’re on your phone!
This is a fantastic example of a seller, or listing agent, or both, voluntarily becoming Sisyphus.
This listing has been on the market now for over one-and-a-half years!
While that’s a far cry from eternity, it’s an eternity in real estate terms, especially in the city of Toronto. There’s absolutely, positively, no house that takes one-and-a-half years to sell in this market, save for maybe a $20 Million estate.
This house was sold in January of 2017, right before the market shot up like a rocket.
We don’t know why the buyers purchased the home at the time. Maybe it was to flip, maybe it was to live in, and maybe it was just to hold long-term. But whatever the motivation, the owners offered the house for lease in May of 2017 for $1,699 per month, and the property sat for 148 days. That’s about five months, for those of you playing along.
The house was offered for sale on May 24th, 2017, which is five days after the January sale closed, so perhaps the idea here was to own this as an investment property from the start?
But after not finding a tenant, and after being off the market for about eighteen months, the property came back up for sale for $1,199,000.
Considering this was already a 2-storey house, and no structural changes were made, this is the longest IKEA-flip I think I’ve ever seen!
First offered for sale on March 15th of 2019, for $1,199,000, the house sat on the market for almost two months.
Then something really fun happened: the listing was terminated and re-listed on May 8th at the same price of $1,199,000, but merely hours later, that listing was terminated, and the property was re-listed for $1,099,000.
As much as I would like to say that this was a typo, and the listing agent meant to terminate and effectively do a price reduction of $100,000, I’ve learned not to make assumptions borne of logic in cases like this.
That listing for $1,099,000 stretched into the fall of 2019, and the listing was promptly terminated thereafter.
But with a new year ahead, Sisyphus appeared once again!
Not only did Sisyphus start the same process, but made it even harder this time around, by raising the price of the house by $100,000.
January 13th, 2020, the house appeared back on MLS at $1,199,000.
This time, however, the boulder rolled back down to the bottom of the hill much quicker; the listing was terminated after only two weeks!
Enter: today’s bright idea!
List at $899,000, but, hold back offers!
We’ve explored this topic a lot in the past, and there’s potentially more ahead next week, so stay tuned. But the agent and seller seemed to think that if the market wasn’t responding at $1,199,000, they would simply reduce the price to something obscenely-low, thereby tricking the market, and starting a bidding war for the home that would organically push the price up into the $1.1-$1.2M range.
Then the boulder rolled back down the hill.
February 6th, 2020, the house was re-listed $200K higher at $1,099,000.
But just in case you’re getting bored here, and assuming this is the same boulder being pushed up the same hill, I assure you, things get really interesting here.
That $1,099,000 listing on February 6th was accompanied by a lease listing on February 12th.
And guess what?
The property leased!
Sure, they started at a whopping $3,500 per month, but after a series of price changes, were able to achieve the “full list price” of $2,499/month.
Despite the lease, which closed mere days after the deal was written, the seller continued to offer the property for sale, even though the chances of selling a freehold like this with a tenant attached, at the very start of a tenancy are slim-to-none.
If you watch golf, you’re familiar with the concept of “mistakes compounding.” It’s how a golfer ends up with a quadruple-bogey. It’s never one mistake, but rather one mistake, that leads to another, and another after that. It’s poor judgment, leading to a different situation with even more poor judgment, followed by yet another poor decision thereafter.
That is what happened in this listing, but it’s not until we see the leasing action that the “compounding of mistakes” begins to make a golf enthusiast smile.
Offering the house for sale after it’s been leased is crazy. It’s a fool’s errand. It’s as pointless as Sisyhpus pushing that goddam boulder.
But how about listing the property for sale again in July, and again for $849,000 as “strategy?”
That’s what happened.
And it looks as though the first tenant ended the lease early, because the property was re-listed for lease in August!
Are you all caught up?
Listed for sale in February, leased in April, vacant by summer, re-leased in August, but offered for sale all along at a multitude of different prices.
Consider that last point for a moment.
Even though there was a tenant in the house, the “strategy” was to under-list at $849,000, hold back offers (for the second time this year, I might add…), and try to get $250,000 over-list.
Not the strategy I’d have used, but to each, their own!
And low and behold, the property was re-listed six days later at $1,099,000.
Lucky, or unlucky (not sure yet…) for the seller, they put the property on the market for lease on August 5th and secured a tenant only one week later! This time for a whopping $2,790/month which is more than they obtained in February, and completely opposite of what’s actually happening in the rental market.
So is that it? Does the tale end there?
No, it does not. Of course it does not, this is Sisyphus, after all!
Even though this property was leased in August, it is still available for sale!
September 16th, 2020. That’s today. And this property is still on the market for $1,099,000.
Why in the world would anybody purchase a property that was just leased out for one year?
If there was a number for “less than zero,” I would put that next to a percentage sign, and offer it to you as the chance that this property sells with a new tenant attached.
Oh – and it’s also not worth $1.1 Million, but that’s, surprisingly, secondary here.
The seller and the listing agent are both classic real estate versions of Sisyphus, because sadly, they’ve been forced to endure a pointless, never-ending task, involving starting and stopping, over and over, each time failing to actually “finish.”
But as I noted earlier, these folks have one thing that Sisyphus never had: the option to get off this roller-coaster any time! Sisyphus was forced by Zeus to endure this eternal torture, but the good folks involved with this would-be home sale have inflicted this pain on themselves.
As we move into the busy fall market, tactics like this have no chance of working. Less than zero, as my favourite author, Bret Easton Ellis, wrote in 1985.
There are a lot of pricing tactics going on right now, and I’m watching them all curiously in eager anticipation of further blog fodder, but more importantly because I think the market is more efficient this fall, and that starts with the buyers.
I’m not saying that buyers won’t submit bully offers, and that buyers won’t line up to bid on “offer nights,” but I am saying that listing histories are readily available through your House Sigma and Bungols’ of the world, and I’d like to think that buyer agents out there are doing their jobs as well. We’re seeing increased inventory levels across the board, and while the freehold market is still far from a buyer’s market, I just don’t think sellers can act like clowns, as the folks in the listing above have, and expect the hot market to come and rescue them.
In the condo market right now, I’m seeing a lot of properties that were listed low with an offer date end up being re-listed at a higher price after failed “offer nights.” Get used to that, this fall!
In the freehold market, we’re seeing houses listed low, then increased in price, then listed low again, as though the buyer pool has the same memory as Guy Pearce in Momento.
In past markets, I’ve seen nonsense like that listing above go on and on, and finally, conclude in a way that benefits the seller. Nuh-uh, no more, I say.
This fall will be very, very different…Back To Top Back To Comments