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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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How to make $100K in 3 Months

There are dozens and dozens of units available for sale at Festival Tower. Most have been sitting on MLS for months as assignments (tricky to sell at the best of times), but now that the building is registering in a matter of days I expect these units will start moving quickly. I noticed something quite interesting looking through the sales data for a client – one of the bigger 2 bedroom units on a high floor sold in March as an assignment for $945K. Another one of the same floor plan also sold around the same time for about $1.03M, and just this week another one of this floor plan came up as sold for $1.05M (interestingly as I am writing this blog post I noticed the sales price has been removed and it now says ‘sold conditionally’).

So what happened? Seems to me the person who bought for $945K in March is up at least $100K in just 3 months time. Also it occurs to me that selling by assignment is a crap shoot at best – buyers and sellers alike are dealing with very limited an imperfect information and ‘fair market value’ is a very hard thing to determine.

This blog post is really designed as an illustration to show why I preach to my investor clients that the best time to sell your pre-construction purchased condo is 6-12 months after registration.

Reasons:

1. 1 year is the length of a typical lease. Assuming a 3-6 month occupancy period for most condos, selling 6-12 months after building registration will align perfectly with the end of that lease.
2. 6-12 months gives time for the dust to settle in the building (literally), and for the common areas to be completed. Common areas do add value to your property, make no mistake!
3. Allows time for the resale values of a building to get established. Much of this is driven by supply and demand principles – many investors selling at first, and few buyers aware of the building because it’s brand new.
4. To qualify for the HST/GST rebate as an investor, most lawyers will tell you you need a 12 month lease signed.

We see this pattern time and time again with new buildings when they first are finished – those who sell first tend to undersell. Those who are patient and wait reap the rewards.

Questions or comments? Thinking about selling your investment condo this year? Contact me.

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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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Selling Your Condo: MLS Listing or Exclusive?

When listing your condo for sale with a Realtor, there are two main options for what type of listing your property will be: MLS Listing or Exclusive Listing. That’s right, you can sell your condo using a Realtor without using the MLS system. Selling exclusively means you list with one brokerage and give one brokerage the exclusive right to market, show, and sell your property. MLS listing means any Realtor from any brokerage can show and sell your property (and in some cases advertise it as well).

As a seller, you might think, why would I ever not want to take advantage of the MLS system with its massive exposure to buyers and Realtors across the GTA, by listing my property exclusively with one brokerage? There may in fact be several reasons, for example:

1. Individual privacy. Your name is published on MLS listings (at least in the ‘back end’ system that all Realtors have access to). If you are a public figure you may not want 30,000 Realtors in the GTA seeing that your house is up for sale and booking a visit ‘just to look around’.
2. Shhh…Don’t tell the neighbours. For a variety of reasons, sometimes you just don’t want to announce to your neighbours that you are moving. Putting your property on the MLS is a sure fire way to let them know. An exclusive listing
3. Pre-arranged transactions. Many exclusive listings are sold before they are actually listed. These are cases where a Realtor connects a buyer with a seller behind the scenes, puts together a deal, then simply ‘lists’ and reports the sale on the same day.
4. Limited showings. Listing exclusively likely means you will not get as many showings as you might with an MLS listing, but it also means the showings you do get are likely very serious buyers and targeted buyers. These are people who have received personal invitations from your Realtor to view the property, or they are likely clients of your Realtors’ brokerage. It also means you won’t have any looky-loo neighbours coming by to see how you’ve arranged your furniture and how your bathroom reno turned out.

Listing exclusively is not for everyone, in reality it is a solution for a very small percentage of sellers, but there are clearly valid reasons for this option. If you are interested in listing your condo exclusively, contact me today to discuss this option. My brokerage, Re/Max Condos Plus, is one of the few brokerages in the city that has the size, specialization, and enough ‘top-gun’ agents on the roster to get exclusive deals done quickly and efficiently.

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Defence

We are bordering on a buyer’s market right now. I wouldn’t say we are quite there yet, but with the Sales:Active Listings ratio hovering around 35% for downtown condos, buyers certainly have choices when they go out looking for condos this summer. But I don’t want to talk about buying for a change, I want to talk about selling. Specifically, as a seller in this market, you better be able to defend your asking price.

In a seller’s market, where a monkey could sell a condo, agents and sellers will quite often pull a price out of the air without giving it any thought. In a buyer’s market, it’s back to the fundamentals of marketing: Product, Place, Promotion, and PRICE! Yes, choosing the correct asking price is a very important piece of the marketing mix for selling your property.

If you over-price your property, you are shooting yourself in the foot. You will get less potential buyers through your property, less offers, and potentially no offers at all. Inevitably you will have to reduce your price but by then your listing will be ‘stale’ and most potential buyers will have moved on.

You might think there are no risks associated with under-pricing, but there are. Underpricing a listing in a seller’s market results in multiple offers and potentially an artificially inflated selling price. Underpricing in a buyer’s market when there are less active buyers and more listings means you could end up selling your property for less than it is actually worth, but you would never even know it because there just isn’t the same critical mass of buyers out there.

Bottom line, you (and more importantly your agent) need to be able to defend your asking price when a buyer’s agent comes a calling and says, “How flexible is the seller on the price? It is a buyer’s market after all…”. Questions or comments? Thinking of selling? Contact me.

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Why No One is Buying Your Assignment

Around this time last year I predicted 2009 was going to be the year of the assignment. I was wrong. While assignments did begin to take a greater role in the overall Toronto condo market, they still have not gone ‘mainstream’. Quite frankly, this method of buying and selling real estate will probably never go mainstream, however, in 2010 it looks like assignments will be seen as a “Third Way” of buying condos in Toronto (the traditional two ways being pre-sale or resale).

People contact me just about every day and ask me about assignments - I want to buy an assignment! I want to sell my condo by assignment! The truth is, most people have no idea what is involved when buying and selling an assignment. When the Average Joe learns just a fraction of what there is to know about assignments, 95% of the time Average Joe ends up returning to the comparatively simple world of pre-sales and resales.

So for all the sellers of assignments, as well as those who may be thinking about buying a condo by assignment, I’d like to introduce to the the top-5 reasons why many assignment listings never sell:

1. No Market Exposure. You are not allowed to advertise assignments on the MLS. Many assignment listings don’t sell because no one knows about them!
2. Lawyers. Most lawyers hate assignment deals. They often look for reasons to kill the deal – and with assignments, you don’t have to look to hard.
3. Price. This is probably the #1 reason why many assignment listings don’t sell. You can’t price an assignment like a resale property. Investors buy assignments and investors don’t pay current market value for property!
4. Closing Day Too Far Away. Buying a pre-sale condo then trying to flip it a month later is a fool’s game. The unit must be at or very close to occupancy so that market value can be accurately predicted and the investor can safely determine if they are getting a deal.
5. Closing Costs. Did you get your closing costs capped by the developer when you first bought your condo? If not, there is no way to tell exactly what they might be. Buyers of assignments need some degree of certainty as to what closing costs they will incur, otherwise they will move on.

Bottom line, assignments are not for everyone, but for the right buyer and seller, working with a good Realtor and co-operative lawyers, they can be a fantastic way to transact in real estate. Questions about assignments? Contact me.

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Selling Your Condo: The Truth About Open Houses

They don’t work. There, I said it.

Some of my fellow Realtors may not appreciate me posting this, but the truth is, open houses add little to no value to a successful marketing plan for selling a property.

What many agents tell their clients is open houses are a great way to ‘expose’ your property to the largest number of potential buyers and therefore help you get the highest possible selling price.  Some clients even insist that their agents do open houses. But statistics show only a small percentage of all properties are sold through open houses.

Who goes to open houses? Neighbours and people without agents. If you like the idea of having your neighbours and complete strangers off the street looking in your closets, then by all means, have an open house. But the serious buyers, those actively looking with intent to buy, are working with a Realtor. They will book an appointment to see your property through their agent because they want to buy your property, not to see what condiments are in your fridge.

Why do agents do open houses? Some agents are either dumb or naive and actually do think they sell properties, but most use them strictly as a prospecting and networking tool to meet potential new clients.  This is why you almost never see seasoned and successful agents hosting open houses. We have better things to do!

[The exception to this is perhaps in a down market where the number of agent-showings are dramatically reduced (as was the case from about Oct 2008-March 2009 most recently). In this type of market, an argument could be made that any potential increase in exposure could help sell your property and should be pursued.]

What are your thoughts? Leave me a comment or drop me an email.

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Can’t Sell Your Condo? In this Market, Consider Renting

If you have have tried to sell your condo anytime in the last few months, you know what the Toronto real estate market is like better than anyone. 

Condos in ‘hot’ buildings that a year ago would sell over asking in week are now languishing on the market for weeks. Price reductions are happening every day. Conditional offers are welcomed with open arms as opposed to being laughed at in the heady days of 2007 and early 2008.

The bottom line is that it is a tough market to be a seller. The pressure is on you to have an immaculate unit in a great location at an irresistible price. And even then, that is no guarantee of success. 

One option that you might want to consider if you find that you can’t sell your condo, is to rent it. The rental market is not that bad right now. Leases are being signed every day as some would-be buyers are deciding to rent for another year. After you rent out your condo, you’ve got to live somewhere, so what do you do?

If you are fortunate enough to be in a financial position to carry two mortgages, then you buy somewhere else and take advantage of the market. But if you are like most sellers, that is not an option, so might I suggest renting yourself. That’s right, a real estate agent is telling you to rent and not buy (queue the dropping of jaws).

This is just what one of my clients did recently. Their condo unfortunately did not sell in a timely manner and due to personal constraints, they had to move, they could not wait for the market. So they rented out their 1 bedroom condo for about $1600 per month and then found a suitable place themselves in another part of the city for about $1200 per month. So they are actually ‘clearing’ about $400 a month while still paying down their mortgage. Their plan is to wait a year, see if the market has improved, and then either sell, or continue to rent. Not bad option if you can make it work.

I always love to hear your feedback. Leave me a comment or contact me any time.

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The Met at Yonge and Carlton: Registration Date is Here

Good news for buyers and sellers at The Met at Yonge and Carlton: Phase 1 has finally registered! What this means is that the occupancy period is over and unit owners will be receiving their deeds for their units. You are officially owners! You can now sell your suites however you like. The ban on advertising your unit for sale on MLS is now lifted. The builder, Edilcan, is now totally out of the picture and you are free to market your condo at The Met however you like.

No more messy assignment agreements or trying to find a buyer on classified ad sites like Craigslist. The full power of the MLS is a very good thing for sellers and also for buyers who have been waiting to purchase a condo at The Met but perhaps they have not even known which suites were available for sale.

There are some great units already on the open market at The Met right now. Contact me for the up to the minute list of condos currently available at The Met.

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Selling Your Toronto Condo

Thinking of selling your Toronto Condo? Contact me now to discuss your options and learn more about my services, or just to find out how much your condo might be worth should you decide to put it on the market. I handle both traditional resale properties and assignment sales.

Selling your condo can be a stressful experience, especially if it is your first time selling property. The dollars and cents seem to take on a whole different meaning when you are selling compared to when you are buying. Getting that extra $5000 or $10,000 when you are selling can make a huge difference while an extra $5000 or $10,000 on a mortgage doesn’t seem like much.

Here are just a few things to consider when selling your condo:

1. Hire an agent or go it alone? The vast majority of sellers in Canada use a real estate agent to sell their home. But that doesn’t mean that you must use an agent. Technically you don’t even need a lawyer to handle a real estate transaction-if you are up for the challenge of negotiating the land registry system on your own. Some sellers would rather do it without an agent and there are many options available to them if they do. Of course I would never advocate selling your property without an agent [this is what I do for a living, after all ], but I certainly understand why many people do try to go it alone. Reality is though, that most sellers who try to sell without an agent eventually do hire an agent.

2. Price it low and hope for multiple offers or price it higher and wait for an offer? Pricing your property is never an exact science. My philosophy when it comes to pricing is: provide my clients with the absolute best information available, and allow them to make the decision. My underlying assumption is that my clients are intelligent, thoughtful people who will make great decisions when given great information. Pricing your property low and hoping for multiple offers can be a great strategy, but it can also backfire if you don’t get any offers and you are stuck at that price or you increase the price. Pricing your property too high at the start can also be shooting yourself in the foot. Before settling on a price, ask yourself, would you be happy to accept this price, and also, if you were a buyer, would you be willing to pay this price? If there is any hesitation on either front, you may have to rethink your pricing strategy.

3. Hire your friend or hire an expert? Many sellers often hire the agent that they bought their property with, or that they have some personal relationship with. While working with someone you already know and trust isn’t necessarily a bad thing, your home is often the largest single investment that you own, so make sure you handle it with expert care. If the person you have used before or your friend is not an expert in your condo building or neighbourhood, consider hiring someone who is. Many a friendship has been lost through a negative experience in a real estate transaction.

If you have any questions about selling your Toronto condo or home, feel free to contact me any time.

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