Sellers test the Toronto real estate market
The Toronto area real estate market is entering the fall in spurts.
Sales fell 18% in September from the same month last year, while new listings contracted 34% over the same period, according to the Toronto Regional Real Estate Board.
Meanwhile, buyers pushed the average price in the Greater Toronto Area up 18.3% in September from the same month last year to $ 1,136,280.
The combination of a limited supply and a price spike prompts some investors to test the market.
But sellers who think every property sells for an exorbitant price quickly often face a different reality.
Many agents change their strategy for every ad they have.
Andre Kutyan, a broker at Harvey Kalles Real Estate Ltd., says some investors who bought a property thinking they would keep it for the long term are now rethinking that plan.
Areas such as Willowdale, Bedford Park and the streets around Bayview and York Mills have attracted many investors – domestic and foreign – in recent years, he says.
Now he is seeing homes appearing for sale after being purchased during the sparkling days of 2016 and 2017. He first noticed the trend, he says, when he began to recognize the photos of property listings. that he has shown in the past.
Often, he can infer that the seller is an investor if the property has been rented out in recent years or if it is currently vacant, he says.
Sometimes the listing photos give a clue that the property was listed in the recent past: Mr Kutyan points to a north Toronto home that sold in 2016 for $ 2.251 million. In the spring of 2017, it was leased.
It is now back on the market with an asking price around $ 3.5 million.
“There is snow in the photo,” Mr. Kutyan said incredulously.
Mr Kutyan adds that some of his own customers have decided to sell after the market boom in 2020 and 2021.
A pair of investors plan to see how much buyers are willing to contribute for the one-bedroom condo unit they bought in 2017 in upscale Yorkville.
The couple purchased the 645-square-foot unit at 40 Scollard Street with the intention of renting it short-term and eventually passing it on to a long-term family member.
But the shipping cost was higher than the amount they earn in rent. During the pandemic, downtown rental rates fell sharply and tenants demanded reductions.
Mr Kutyan says the couple decided to sell after a few units in the building recently received a lot of money.
Mr. Kutyan plans to list Unit 1504 with the eye-catching asking price of $ 475,000 and then hold offers until a scheduled date.
“I’m not about to set the price – let’s see what the market will do. “
Another group of investors are considering listing a bungalow they bought in April 2017 for $ 1.318 million.
Mr Kutyan plans to list the home at 394 Old Orchard Grove with an extremely low asking price of $ 1.295 million and hold offers.
He’s already anticipating calls from agents asking him why the asking price is lower than the couple paid for the property in 2017 and how much he really hopes to make.
“I will say, ‘You tell me what happened to the market in the last four years.’ “
Elli Davis, real estate agent at Sotheby’s International Realty Canada, says setting a low asking price with an offer date can be an effective way to attract multiple bids. But she cautions that this can also be a risky strategy as the agent is in a bind if the house doesn’t sell by that date.
“If this backfires on you, then you’re in trouble. Your salesperson still thinks the price is undervalued and that they should be doing more.
Some agents will then increase the price to the level they initially hoped for.
“I wouldn’t be in favor of that because the first two weeks usually tell the story,” Ms. Davis said.
She also noticed a lot of price drops recently on ads that had been left in place because the asking price was too high to begin with. Now that more inventory is flowing, sellers are motivated to lower their asking price.
She is not in favor of setting a price so high that property languishes or so low that it sparks a frenzy.
Ms Davis plans to price asking based on market value as she launches two downtown properties – offers welcome anytime in the coming days.
Buyers who come to the table are likely to be serious if the asking price is realistic, she says, and the property is more likely to sell out quickly.
The penthouse suite in a boutique building at 5 Rosehill Ave. has an attractive layout but needs updating, she says, so she advertises it with an asking price of $ 1.395 million.
A three bedroom semi-detached house at 31 Oriole Road. at Deer Park will have an asking price of $ 2.895 million.
The owners of both properties have lived there for many years, says Davis, and they are seriously considering selling so they can move on to a new stage in their lives.
Sellers who intend to get a very high price are often just opportunistic and they are willing to let a house sit, in his opinion.
Such announcements can be costly for an agent in terms of time and money, she adds.
“I’m not interested in people who are just testing the market. “
Ms Davis says an investor who purchased a condo before construction in 2017 contacted her recently to say he was considering selling the two-bedroom unit, which will be completed this year.
The owner paid $ 600,000 for the unit, which measures less than 700 square feet, in the Yonge Street and Eglinton Avenue area.
The problem he has now, she says, is that many of the projects that were started around that time go into effect this year. Most of the people who bought her building are investors, she said, adding that she advised him to be patient for a while.
“I looked at the sales in the area and I don’t think he will do anything. I think it will break even, ”she said, adding that he will have to pay brokerage fees and other costs. “It never changes – it’s always supply and demand.
Robin Pope, broker at Pope Real Estate Ltd., has noticed a recent increase in an unusual tactic: Agents set a low asking price for a property but they don’t set an offer date.
Typically, agents who want to start a bidding war set an offer date in order to create a sense of urgency about the deadline.
Mr Pope says these agents seem to be hoping that buyers will end up competing with each other anyway. But what really happens is they get a lot of calls and no offers.
“Due to the fact that the price is so attractive, they get a lot of activity,” he says. “It’s a really stupid strategy because it doesn’t always work.”
He points to a condo near the waterfront that was listed with an attractive asking price of $ 688,000, but three weeks later it’s still on the market. The listing agent said the seller was looking for over $ 800,000.
Mr Pope again thinks the listing agent is just confusing buyers by keeping the unit in place for three weeks at a price well below what the seller is hoping to get.
“I’ve been through it more often than I should have,” he says of the strategy. “I should never experience it at all.”
Mr Pope says a buyer believes he took advantage of an agent’s misstep. When a two-bedroom condo with an asking price of $ 999,000 and no offer date hit the market in the River City area, she was prepared to offer a little more than the asking price.
When Mr. Pope informed the listing agent, he replied “no way – we want more”.
Mr Pope’s client watered down his offer to $ 1.045 million. The unit should have been listed north of $ 1.1 million, says Mr Pope, who believes the agent’s hiccups gave the customer an advantage because the seller didn’t have a war. auction.
“It was a beautiful apartment and she got it at a great price,” he says.
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