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Maple Leaf Square: Highest Proportion of Out to Lunch Sellers in Toronto?

Some buildings downtown you will almost never see a listing in them. Why? Because units come on the market and sell so quickly that at any given time there is nothing available. On the other hand, there are some buildings where ‘insane seller syndrome’ runs rampant. These are the buildings where there are always dozens of units available, and many of these listings sit on the market for months and months at a time with no buyers. The key reason: they are over priced.

One building in particular always seems to have an abundance of ‘out to lunch’ sellers trying to pawn their listings off on an unsuspecting buyer at outrageously inflated prices. That building is Maple Leaf Square (55 and 65 Bremner).

Exhibit A: a small 2 bedroom unit is on the market at $469K with no parking, or $499K if parking is included. The listing has been on the market for almost 3 months. Several of the same floor plan have sold in the past year. Average selling price including parking was $465K (6 sold units). This seller is approximately $35K over market value or 7.5% over market value.

Exhibit B: a small 1+Den with no parking is on the market at $429K. The listing has been on the market for a total of about 300 days at various different price points. Average selling price of the exact same unit over the last year is $353K (4 sold units). This seller is approximately $76K or 21% over market value. One listing of the same floor plan was priced as high as $455K this year!

These are just a couple of examples. Having been working with a buyer-client who is trying to get a unit in this building it’s very frustrating and a serious time waster for all trying to negotiate with someone who is completely out of touch with reality. In the summer I submitted an offer for this buyer-client on a unit that was listed at $399K. The offer was for $355K. The seller acted like he was insulted and his agent was just as incredulous. Several months later and 100+ days on the market that unit never sold. Meanwhile 2 other units of the same floor plan and very similar floor level sold for $349K and $357K respectively.

What is it about Maple Leaf Square that seems to foster this insanity among sellers? I don’t know but I suspect there are a lot of investors who paid all cash for their units who really don’t care if they sell them at all, however, if someone wants to offer them an outrageous price above what all other units are selling for they will gladly take it!

Questions or comments? Please contact me.

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What Makes a Good Location Good?

Location is the most important factor when considering any real estate investment. You can change many things about a property, but you can’t change its location, therefore it’s vitally important for any condo buyer to understand exactly what makes a good location good. Why do some condos appreciate at higher rates and command higher resale prices compared to others that are often located just steps away?

Just being downtown is not enough with today’s buyers. Buyers want to experience the best of urban living.  Today’s urbanites are more sophisticated than ever. They know the difference one block in the wrong direction can make on quality of life and resale-ability down the road. They know the impact of having a Starbucks in your building can make versus having a Coffee Time.

The best locations are those that combine two key factors:

1) Highly visible. Being in a highly visible location is critical to attracting people, businesses, services, and even government dollars to fund things like transit and infrastructure. You need to be seen from the street by pedestrians, people in their cars and on transit. You need to be in a spot that is well-known and familiar with the average person in Toronto. This is why condos located immediately on the crossroads of two major streets are always tremendously popular with buyers (One Bloor at Bloor and Yonge, The Hudson at King and Spadina, L Tower at Front and Yonge, etc.). This is also why condos located busy pedestrian and transit-friendly streets like King or Queen tend to out perform those located on one-way, transit-less streets like Richmond or Adelaide.

2) Highly visited. Just because a condo is located in a highly visible location, does not mean it will be a highly visited location. A great example of this is Cityplace. Everyone knows where Cityplace is, and the towers dominate the skyline when you are coming in from the west on the Gardiner, however, no one except the people who live in Cityplace ever go to Cityplace. This is one reason why prices in this area continue to lag significantly behind that of other nearby neighbourhoods.

Recently a fairly high profile project launched in the heart of the downtown to much fanfare. Many Realtors were pushing this project as a great investment to their clients, however, I quietly told my clients to ‘pass’ on this project even though the building was located a few minutes walk from the multiple subway stations. Why? It was essentially located on a side street of a side street. Most people including Realtors had to Google the address and still didn’t know where it was! The location of this building is neither highly visible or highly visited, thus I advised my clients to hold out for other projects.

Questions or comments? Thinking about buying a condo this fall and want to be sure you pick one with a great location? Contact me.

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Summer is a Great Time to Buy

Summer can be a great time to be a buyer in the resale market. There are a few months a year where the market cools down long enough to actually create the right conditions for a deal to be had. The first is obvious to most people: December and January when everyone is distracted by the Holiday season and then the winter hibernation sets in. But I find many buyers are surprised when I tell them that often great deals are had in July and August too.

The reasons are quite simple:

1. Summer Vacation. Many buyers and their Realtors are not working in the summer and buying property gets pushed to the sidelines. Fewer buyers = less competition.
2. Leftovers. Many of the listings on the market in July are those listings that are ‘left over’ from the spring market of April, May, and June. The longer a property is on the market, the more likely the seller will come down from their list price (generally speaking).

Last summer was a GREAT buyers market. Right after the HST rush was over, July produced some memorable sales across the city that I still scratch my head at when doing market research for my clients and comparing current listings with past sales. Many people thought the sky was falling last year and many buyers who stuck around after June 30th got some amazing deals by today’s pricing standards.

While your friends are out sipping cold beers on a patio somewhere downtown, keep focused and make sure you have a vigilant Realtor working for you and you just may nab yourself a nice find this summer!  You’ll be glad you did when the fall comes and all your beer drinking friends are fighting for condos in bidding wars once again.

Thinking of buying a condo this summer? Let’s talk.

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Temperature Check: Bathurst and Lake Shore Edition

This is the second installment in this new series whereby I am attempting to give my readers a street-level, in the trenches sort of perspective of what the condo market is actually like. “Temperature Check” will help show what it’s like to be a seller in the current market and what you can expect if you sell your property now. I’m sharing with my readers some stats that no one else in the market is sharing.

Last week I listed a unit at one of the well-known buildings located at Bathurst and Lake Shore. It was a 1+den with parking and locker on a medium-height floor facing north/north-west. Here is the activity the listing received:

• On the market for 2 days
• Approximately 20 Realtor showings booked
• 2 email inquiries from buyers who saw the listing on the internet
• 1 bully offer received, which started a bidding war with 4 offers total
• End result: Sold for 5% above the asking price

Interpretation:

The results of this were better than I was expecting, buildings in this area typically are not known for their ability to attract bidding wars, and the sheer volume of activity on the listing in just 48 hours was indicative of a very hot market. We were planning on holding off on offers until about a week after the property was on the market, but we received a bully offer after just 2 days on the market so I had to jump into action, calling and emailing every agent who had booked a showing on the property to let them know the situation. 3 other agents responded and also brought offers to the table, which was surprising to some degree but great news for my seller. It needs to be noted that we did not price the property low to attract a bidding war.

My key takeaway from this is that finding a 1 bedroom and den with parking and locker for around $300K downtown these days is very rare, and buyers that have been priced out of ‘downtown proper’ are now looking to areas like Bathurst and Lakeshore, Liberty Village etc. as the next best thing. Of course it goes without saying that a prerequisite for success like this is understanding how to prepare your condo for sale, and to position it properly in all your marketing efforts to generate maximum activity and results.

If you are thinking about selling in 2011, I don’t see things getting any better for sellers than they are right now. Questions or comments? Please contact me.

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Time to get Creative

The market is hot. Sellers are still driving the bus in this market and so when I’m working with buyers I often have to get very creative to get my clients what they are looking for. After viewing 6-8 condos with my buyer clients, I can usually figure out exactly what condo would be perfect for my buyer client. But what if this condo is not for sale? How do you buy a property that is not for sale?

I’ve been working with one buyer downtown for the past few months. Let’s call him MJ. MJ owns a condo townhouse near Yonge and Eglinton that has appreciated significantly since he bought it and he’s looking to sell and move downtown. After seeing several units in different buildings and in different areas, MJ narrowed it down to 2-3 buildings he liked and was looking for a 2 bedroom unit up to around the mid $500s. Problem was, there was nothing available for sale. We waited. We waited some more. Nothing was coming up in these buildings. Frustration was starting to set in. Time to get creative.

Some agents will solicit listings by  flyering or directly sending letters to specific units in specific buildings. The message being, “I have a buyer who will buy your condo for top dollar!”. I suspect this approach is not very effective as it inherently reeks of ‘spam’ mail. I decided to take a different approach.

There just so happened to be a unit FOR LEASE in the exact building that MJ was very keen on, and this unit’s floor plan was one he had seen before and liked it. I called up the listing agent for this unit that was for lease and asked if the seller had any interest in selling instead of leasing it. He said unlikely since he just bought the unit last year. I let him know MJ was a serious buyer, and low and behold after a few phone calls back and forth, we submitted an offer in writing and that offer was accepted! MJ was thrilled that he found a great condo in a great building and he did not have to go through the pain of a bidding war to get it! He’s now getting his townhouse at Yonge and Eglinton ready for sale.

Thinking of buying or selling a condo this spring? I’d love to help you achieve your real estate goals. Contact me to discuss.

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One Came by Fax

The spring market doesn’t officially start until, well, spring. But anyone who is shopping for a condo (or a house) in Toronto knows that the market is H-O-T right now, and multiple offers are not the exception, but the norm. Over the years of working with buyers and sellers in multiple offer situations, you learn a few tricks. If you are a buyer in a multiple offer situation, there are four sweet words you should love to hear:

“One came by fax”

Sending an offer by fax in a multiple offer situation is the real estate equivalent of ‘mailing it in’. The agent is essentially saying, my clients’ offer is not strong enough to stand a chance of actually being the winning offer, so I’m not going to waste my time by actually showing up for the offer presentation.

At the precise time of bidding, make sure you find out a) how many offers there are on the property and, b) how many are being presented in person vs. by fax/email. If you hear some or all of your competing buyers are submitting their offers by fax, consider your own offer carefully before submitting! You don’t want to be the offer that makes the seller’s say “One offer came in and blew us all away!” (Side note: Sellers-NEVER say this in front of a buyer or buyer’s agent). For example, if there are 3 offers, and you are the only one who shows up in person to present your offer, there is a good chance the other two offers are going to be weak ones, so consider your offer price accordingly. An in-person buyer is a much more motivated and serious buyer than one who is not present (as a general rule).

When I hear an offer was faxed in, I will automatically discount that offer when advising my buyer-clients on an appropriate ‘winning’ offer price. This is more relevant when in an offer situation with 2-4 offers, but it becomes less relevant when there are 5+ offers.

Questions or comments? Please contact me.

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Are 8-Foot Ceilings a Deal Breaker?

Ceiling height is usually one of the last things a first time buyer thinks about, and one of the first things a repeat or move-up buyer thinks about. Why? Well, it’s something that makes a huge impact on the ‘feel’ of an apartment, but most people who have never owned a condo or loft take it for granted that their condo/loft will have high ceilings – not necessarily. When it comes to pre-construction or resale, are 8′ ceilings a deal breaker?

I posed this question on Twitter yesterday and got a couple responses from the Toronto real estate community. @symmetrydevelop said low ceilings are a deal breaker because volume of space is vitally important. @buzzbuzzhome made the point that low ceilings can work in a space that is wide and has floor to ceiling windows. I’d have to agree with both comments. Volume of space, not just floor square footage, makes a very big difference in how a suite feels, but at the same time, so does layout and window placement/height.

The reality is that I would wager to say that the vast majority of downtown buildings have 8′ ceilings today. This is mostly because most of the existing stock was built 10+ years ago. It wasn’t until the past 5 years or so that 9′ ceilings and ‘soft loft’ living has really taken off and now buyers basically EXPECT 9′ ceilings (whether they realize it or not). That being said, the buildings that are the best selling buildings today and have the highest appreciation rates tend to be the ones built in the last 5 years and they tend to have 9′ ceilings (or higher). Some A1 buildings that actually do have units with 8′ ceilings include King’s Court (230 King st E), One City Hall (111 Elizabeth), and The Mosaic (736 Spadina).

I suspect that as the condo market continues to evolve and buyers continue to demand more and more for their money, 9′ ceilings will become standard and 10′ ceilings will be the next obvious step (although it may take some time). Buildings like Theatre Park are already lauding that many suites have 10′ ceilings, and many ‘penthouse’ level units in pre-construction are 10′ ceilings.

Quick tip for buyers, don’t assume because a building has some units with 9′ ceilings that all units have 9′ ceilings. Many buildings have lower ceiling heights on the lower levels and as you rise up the building the heights go up too.

Questions or comments? Please contact me.

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Developers Rolling Out Incentives

There has been such a crush of new condo launches in the past 6 weeks that developers are now actually being forced to compete with each other for buyers! Who’da thunk it! There have been so many launches (or at least soft launches to the Realtor community), representing thousands of units of inventory that even though most of these developments are selling very well (Tableau reportedly received ~1000 worksheets submitted for ~400 units), they are not selling ‘enough’ units in the eyes of the people responsible for selling them. When this happens, incentives start rolling out for buyers (developers are loathe to actually reduce adjust prices.)

Over the past few years, prices have risen dramatically on a per square foot basis. I was just talking to an investor today who bought at the Ritz Carlton for $650 PSF about 5 years ago. Now that is pretty much the going rate for mid-market condos in the same area. But while price on a per square foot basis have been soaring, the actual prices of the average 1 bedroom, 1+den, 2 bedroom etc. have remained somewhat flat. Developers have been shrinking suites and getting creative with their floor plans. A $300K 1 bedroom is a lot easier to sell to the masses than a $450K 1 bedroom is. But we’ve reached a point where suites can’t really get much smaller and so the average investor off the street is starting to get downright scared by the prices that they see: $400K+ for 1 bedrooms, $500K+ for 2 bedrooms, $45K for parking etc.

Incentives are starting to roll out even for projects that are still in the VIP selling stage, which is not something you usually see. Incentives that I have personally seen are something like $5-20K in rebates at final closing, or slightly discounted parking spots, or 15% deposits instead of 20% (up front). Nothing earth shattering, but these did not exist 3 months ago. Still, I don’t see this as a fundamental problem with the market, or a pre-cursor to some sort of market correction, but rather I think it’s due to 3 factors:

1. Timing issue (too many projects launching at the same time all vying for the same investors)
2. Perception problem ($400K 1 bedroom units)
3. Lack of differentiation. So many of the developments that have launched lately are very ‘vanilla’. Nothing about them really ‘stands out’.

Contact me with any questions or to find out which developments are offering the best incentives downtown!

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What Your Lawyer Will Say

So you just bought a pre-construction condo. Well, you haven’t actually bought anything yet, you’ve just signed the paperwork, dropped off a deposit cheque, and your 10-day cooling off period has begun. You hired a good buyer’s agent to represent you, therefore you already know that it is imperative to have a lawyer review your agreement of purchase and sale during the 10 days (if your agent didn’t tell you this, ask yourself why). Here is what you can expect he or she will most likely talk to you about:

• Capped Closing Costs. If you don’t have caps in place for things like development levies and hydro/gas hook-ups, your closing costs could theoretically be in the tens of thousands (not including land transfer taxes and legal fees). The number one thing your lawyer will recommend is having a good cap on these costs. What constitutes a ‘good cap’ is always up for debate. 5 years ago, caps were in the $1-2K range. Now developers are pushing things up into the $8-9K range. Most lawyers push for something in the $2K range for levies, $1K for utility hook ups, but frankly, most lawyers are out of touch with what is normal for pre-construction contracts in 2010.
• “Nickel and Dime” charges. Developers are notorious for trying to sneak in charges for all sorts of things related to the purchase. They can be very creative. Your lawyer will probably point out some of them and recommend you ask them to be waived. Most builders will say no.
• Square Footage. You will get a copy of your floor plan in your agreement but 90% of the time the square footage and dimensions are not listed. Your lawyer will point out that you may get a unit that is 600 sq ft instead of 700 and there is nothing you can do about it! In one sense they are right: there is no protection in the Ontario New Home Warranty Act (provincial legislation) for consumers on this issue. There is a bulletin that Tarion put out in 1989 stating that the size of unit should not be off by more than 2%, but this is just a guideline (not written in law). In reality, variances are usually negligible, but if there was a major discrepancy, it would be a legal issue that you would have pursue through the courts. One option would be to have an amendment added to the agreement that explicitly states variance will be in accordance with the Tarion Bulletin, however, be prepared that most builders will not agree to this. Proceed with caution and understand this is part of the risk of buying pre-construction.
• Rent During Occupancy. Make sure you tell your lawyer if you are planning on using the property as your principal residence or as investment. If investment, they will probably tell you the contract says you cannot rent during the occupancy period. You may want to request a clause which allows you to do this.
• HST Rebate. There is an HST rebate (formerly GST rebate) for end-user buyers that is built into the purchase price of condos in Ontario. If you are not planning on living in the unit, you might have to pay this amount back to the developer on closing. You may apply to the government to receive the exact same rebate given back to you after final closing. Your lawyer should advise you of this reality of buying for investment.
• Assignment. If your lawyer is really sharp, and he or she knows you are buying for investment, he or she will recommend you get an assignment clause that allows you sell prior to occupancy.

There may be other issues that come up like mistakes in the contract or inaccuracies that will need to be changed, but most of the time these contracts are 95% the same from one to the next. Questions or comments? Please contact me.

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5 Things Every Buyer Should Know about Model Suites

The model suite is built and designed to entice the senses and ignite the imagination. Developers know that they only have a few seconds to grab a potential buyer’s attention and make them feel like they want to move into the condo immediately. In order to achieve this result, developers have long been using several ‘tricks of the trade’ to make their model suites appear as appealing as possible. Here are 5 things every buyer should know about model suites before walking into any condo sales centre:

1. Ceiling Height. Often model suites are in loft or commercial space where the ceiling heights are far higher than what you will actually receive. Side note, The Berczy‘s model suite has 8′ ceilings whereas the suites will have a minimum of 9′ ceilings – first time I’ve actually seen this!
2. Doors. Many model suites don’t have doors between rooms, this creates the illusion of more space.
3. Upgrades. Every model suite has some sort of upgrade. Counter tops, appliances, hardwood in the bedrooms, the type of hardwood used, bathroom tiles used, etc. Ask yourself why is this? It can only mean that the standard finishes will not effectively ‘sell’ the building which means you will likely be paying more for your unit than you originally planned to! Quick tip: if a sales person can’t tell you exactly what is an upgrade and what isn’t an upgrade in the model suite – RUN the other way!
4. Custom wood work. I’m seeing this more and more in model suites – custom mill work on walls, built-in storage, built-in desks, etc. This is a design trend that developers are adopting in their model suites but remember, when you move it it’s nothing but concrete and drywall painted in “Egg Shell White”!
5. Furniture and Lighting. The furniture and light fixtures being used in most sales centres are top of the line, high-end pieces.  The average person would be shocked to hear how much money was spent on the furniture and lighting in a typical model suite. Look past the $10,000 couch and $2,500 chandelier and see if you still fall in love with the unit itself before signing on the dotted line.

If you are thinking about buying a pre-construction condo, educate yourself first and never register with a developer without representation. Questions or comments? Contact me.

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