TrueCondos.com – The Best Source for Toronto Condos

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.

Continue reading...

Temperature Check: Yonge and Eglinton Edition

Listings are a great way to check the temperature of the market. In a perpetual seller’s market like we have in Toronto, tracking the amount of ‘activity’ on a listing can be a powerful tool to get an overall ‘temperature’ of the market. In a red hot market you will get a lot of activity on a listing in the first 2 weeks. In a cold market, the amount of activity can drop of substantially.

“Temperature Check” is a new feature on the blog where I will share with my readers (most of whom are buyers and investors) what it’s like on the other side of the fence. That is, what it’s like to be a seller in the current market and what you can expect if you sell your property now.

I recently listed and sold a 2 bedroom condo townhouse at a popular complex located near Yonge and Eglinton. Here’s what activity the listing received:

• On the market for 7 days
• Approximately 22 Realtor showings booked
• Approximately 24 visitors to the one-day only open house
• Approximately 8 email inquiries from buyers who saw the listing on the Internet
• 2 offers
• End Result: property sold for 1.4% over the asking price

Interpretation:

I would say that the numbers were in line with what I was expecting for a listing like this in the current market. The property was priced for a quick sale, but not necessarily for a bidding war, therefore I was not surprised that it sold within 1% of asking price. I would say that based on this listing there is still a lot of heat in the market, with very low inventory for buyers to choose from (especially quality inventory). However, I would not say that things are at a boiling point.

Another interesting comment I received from more than one Realtor who had showed the property was that their clients were interested in the property but they were not interested in getting into a bidding war. Buyer fatigue is high this time of year as those who have been shopping since February or March have likely been in multiple bidding wars and are highly reluctant to enter into more.

I hope you enjoy this new blog feature. I plan on including more of these in the future. Questions or comments? Contact me.

Continue reading...

Sell the Condo, Buy a House

Tell me if this sounds familiar: get out of school, get your first ‘real’ job, work for a couple years, save your money, buy a small condo. Meet someone, someone moves in. Condo starts to feel smaller. Buy a car. Realize that cars are freakin’ expensive! Have a kid, condo feels even smaller. Realize kids are freakin’ expensive! Realize that you’ve outgrown your condo, so you sell the condo, buy a house in a hip neighbourhood (Leslieville, Little Italy, Bloor West, Riverdale, Beaches etc) and live happily ever after.

As clichéd as it sounds, this is a pretty common pattern for many young professionals, artists, entrepreneurs, health workers, and ‘professional students’ in this city. As much as we all love condo living (especially downtown), the reality for most is when the family unit of 1 turns into 2 or even 3, suddenly 642 square feet just ain’t gonna cut it! It’s time to move.

Selling your first property can be a daunting and stressful task (more on this in a future post). Buying a house when you are used to condo living is a little like learning to drive standard when you’ve only ever driven automatic – it’s hard to know where to begin and feels a little strange at first.

Selling your first condo and buying your first house for most people is a major step, and I love being able to walk my clients through the process and help them meet their goals along the way. In fact, helping people who are making these sorts of BIG life moves is probably the most rewarding part of my job and what gets me out of bed each morning. I love meeting new people and helping them reach their goals!

If 2011 is looking like the year your condo finally feels too small and you are thinking about making an upgrade to a house in the city or possibly just a larger condo, let’s talk.

Continue reading...

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.

Continue reading...

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.

Continue reading...

Selling Your Condo: The Truth About Staging

Combined with cleaning your condo, staging it for sale is probably the most important thing you can do to prepare your condo for sale. Staging is simply the process of making your condo appear as attractive as possible to as many potential buyers as possible.

Condos that are staged properly sell faster and for more money than those that are not.  I am always baffled when I walk into a condo and discover that it has not been prepped for sale, or worse, is filthy and cluttered. Sometimes I can even see the vendor’s money flying out the windows…

(more…)

Continue reading...

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.

Continue reading...

Assignment Advantages For Sellers

In this installment of the Toronto Condo Assignment series, I want to talk about some assignment advantages from the seller’s perspective. It may seem that all the advantages in assignments are owned by the buyer, but this is not true. Some things to consider:

• Get your money back! Let’s face it, 20-25% of the average condo in Toronto is a lot of money. If you bought a new condo in the past few years in Toronto, that’s the amount in cash you would have had to put down to the developer. Your plans have changed and you want that money for something else. Selling by assignment is a way to get that deposit money back into your hands.
• Avoid occupancy fees. There has been a lot of talk about occupancy fees (or phantom mortgage) lately as horror stories have emerged of some buyers paying fees to the developer for up to 2 years to live in their condo without ever putting a single cent towards the principle on their mortgage. If you have no intention of living in the unit, why pay occupancy fees?
• Avoid closing costs. Closing costs on a new condo can be significantly more than the closing costs on a typical resale. Always consult your lawyer and your accountant for what you can expect in terms of closing costs, especially if you are purchasing a condo that will not be your primary residence. Selling by way of assignment means you pass all these closing costs on to the buyer.
• Take advantage of the market without getting greedy. The market has been great for the past few years. If you were fortunate enough to have bought a pre-sale condo in 2007 or before, then your investment has probably appreciated significantly. For some, selling their contract is a great way to take your profit and move on.

Questions? Leave a comment or contact me.

Continue reading...

Losing Money on Your Toronto Condo?

Over the past 10 years, the idea of losing money on Toronto Real Estate was thought to be an impossibility. Prices were increasing at a nice 5-6% per year, and that translated into thousands of dollars per month in ‘paper gains’. Not so any more. If you bought a condo in the past 18 months and you are trying to sell today, there is a high probability that you will lose money on the transaction.

I have been working with a buyer the past few days who is looking for a 2 bedroom condo downtown in the resale market. Our search took to the East Side, then to the West, and eventually we have settled on Cityplace as the buildings and the location is appealing to my client.

Researching some of the properties that are currently on the market quickly reveals that many sellers at Cityplace are currently looking at losing propositions on their investments. 

Couple examples:

• A 2 bed+den/2 bath unit is currently on the market for $410,000, original list $429,900. The seller paid $375,000 for the unit in June 2007. The seller spent probably around $15,000 in renovations. This one will sell for around $385,000. Assume closing costs of around $20,000 and these sellers are looking at a $25,000 ‘on paper’ loss.
• Another 2 bed+den/2 bath unit is currently on the market for $360,000. Original list price was $399,900. The seller paid $379,000 for the unit in December 2007. Let’s say the unit sells for $350,000-if so, the seller would be looking at a $29,000 hit + closing costs of roughly $20,000. $50,000 loss in 1 year of ownership. Ouch.

I always appreciate your feedback. Leave a comment or send me an email via my contact page.

Photo by Wyliepoon

Continue reading...

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.

Continue reading...