Strange Times: Are Toronto Buyers Lowballing Sellers?
Hello kids and welcome to Oz: the Toronto real estate market – a place where bidding wars are de rigueur, but never guaranteed. So what’s happening? This October, absolutely by coincidence, a number of hopeful sellers listed their properties for sale right after Thanksgiving.
That’s the explanation David Fleming, a real estate agent with Bosley Real Estate told the Globe and Mail as he envisioned deflated sellers sitting around the dining room table, wondering why their property didn’t inspire the skirmish they expected.
“The eight people that they expected to bid are going to turn out to be three,” Mr. Fleming says. “Everyone had the same thought – ‘We’ll wait until everyone’s back [from the long weekend],’ he says.
But Fleming thinks that the absence of a bidding skirmish might also be due to a simply capricious market, despite the stats showing the market growing consistently. In fact, the MLS Home Price Index rose by 1.3 per cent last month compared with September 2018
“There are properties that are selling for numbers we never thought possible and others don’t sell for what we thought they would – or don’t sell at all,” Mr. Fleming says.
“Home sales activity and prices are improving after having weakened significantly in a number of housing markets,” says Gregory Klump, the Canadian Real Estate Association’s (CREA) chief economist. “How long the current rebound continues depends on economic growth, which is being subdued by trade and business investment uncertainties.”
However, Mr. Fleming says more sellers have been experimenting with gimmicky tactics, such as listing the price at ridiculously low costs. Remember the four-bedroom recently listed for a single dollar? He cautions sellers against these kinds of tactics, since people who set an asking price of $799,000 or $899,000 when comparable houses have sold above $1-million are going to be lucky to break through that mark.
“You’ll be lucky to get $1-million, let alone the premium you expected for listing low.” But it’s not like those who have listed their prices low haven’t gotten over the $1-million mark – so what’s happening?
But Mr. Fleming says the market’s completely become unpredictable and has been swinging between hot and cold – almost from one week to the next – since after Labour Day.
“That’s what makes this market so tough – one week to the next can make a major difference in this market.”
One client of his listed a well-staged, two-bedroom condo unit in a prominent downtown building. He figured the unit – in the $750,000 to $800,000 range – would sell in a day.
After two weeks with no bids, the seller had to eventually lower his asking price. The lower price sparked interests, two quick offers, and eventually sold above asking.
“You end up getting two people bidding it back up somewhere between the old and the new price,” Mr. Fleming says. “That’s been the fall market in one listing.”
As if to make matters even more confusing, some deals are leaving agents baffled by the intensity of the action.
For example, Mr. Fleming says an East end home listed with an asking price of $999,000 received 22 offers and the house sold for just short of $1.6-million.
“There’s absolutely, positively nothing to justify that price,” he says.
Bidding wars are still happening in bizarre pockets all over Toronto, like Leaside, for example. One house was listed with an asking price of $3.5-million and sold for $4.3-million – or $800,000 above asking! Soon after, the house immediately across the street was listed with an asking price of $3.6-million. It sold for $4.3-million as well.
“These two sales in Leaside just rocked everyone’s world,” he says.
While there’s no predicting outcomes, Fleming says he has also noticed a new trend of house hunters submitting lowball offers, whereas they were waiting for price reductions if they thought a property was too expensive in the past.
“People are trying things,” he says. These “things” make it near impossible for the average buyer to know what to do.
“On the one hand you’ve got properties selling in 20-offer melees and on the other hand you can offer less than the asking price and end up getting it.”
We’re in the Dada phase of Toronto’s real estate market.