In Toronto, crazy deals mask a saner underlying market
Posted on 05-06-2014 03:05
Summary: Toronto’s spring real estate market is not for the faint of heart in the best of years but perhaps never has it been so hair-raising as in the spring of 2014.
Toronto’s spring real estate market is not for the faint of heart in the best of years but perhaps never has it been so hair-raising as in the spring of 2014.
Part of the reason it’s all so stressful is that parties in nearly every camp seem to be deeply frustrated.
Just this week a Lawrence Park house lit up Twitter when it drew a mind-boggling 72 offers and sold for 195 per cent of the asking price. One can only imagine how nerve-wracking that deal was for literally hundreds of people.
The scarcity of listings has thwarted buyers – if what they’re looking for is a renovated family home in a walkable downtown neighbourhood near a coveted school. Those are in short supply compared with the number of buyers trying to get their hands on one. But it’s important to remember that the majority of properties in the Greater Toronto Area don’t attract mobs of bidders.
Nadine Itiniant of Royal LePage Real Estate Services Ltd. recently sold one of those houses that is bound to have more than one buyer vying for it.
The detached four-bedroom house at 308 Kennedy Ave., in Bloor West Village has a driveway and garage on a lot 33 feet wide. The home is renovated but still has traditional elements such as hardwood floors and ornate fireplace surrounds.
Ms. Itiniant was not suprised that the house sold for more than the asking price of $999,900, but she was surprised when the top bid came in at $1.27-million, or $270,000 above asking.
Ms. Itiniant deliberately listed the house for sale just before the Easter weekend in order to beat the rush of listings that usually comes after the holiday. With so many buyers circulating in the area, she had lots of showings before offer night.
“We expected that we would have a lot of activity and we did.”
Homeowners Pam and Steve Ferguson were extremely pleased, she adds.
There were six offers, which is a relatively tame number compared with some previous bidding wars, but not uncommon at this time of year.
“It wasn’t daunting,” says Ms. Itiniant, who says some sellers become overwhelmed by a stack of offers.
The buyers, meanwhile, we’re relieved to land a deal.
“They’ve been looking for a while and they’re thrilled.”
But those eye-popping bidding wars that garner so much attention are the exception. Those contests often irk real estate agents who have to manage the expectations of their buyers or console the clients who lose out on one house after another.
Ms. Itiniant finds that some buyers have given up on looking for a detached house and they’re looking at semis now. Others are looking at spacious, older condo units with two or three bedrooms. As more people are priced out of the single-family home market, older condos have seen an uptick in sales.
“Some people have been looking for a very long time and they’re finding it a bit of a challenge to buy.”
And then there are the listings that don’t fit neatly into the mould. Houses that don’t have three bedrooms, main-floor family rooms or a stellar walk score may wait for one offer – let alone 30. Condos occasionally have two buyers vying for one unit – but rarely more than that. Some houses are located in the suburbs where sellers are more likely to be the ones competing. Some houses are listed for the amount that the seller actually hopes to receive.
Boris Kholodov, an agent with Royal LePage, Johnston and Daniel division, points out that spirited contests are not all that common.
He recently sold a house in the million-dollar range on Belmont Street in the Summerhill area. The historic rowhouse backs onto Ramsden Park and sits close to the intersection of Davenport and Yonge, between Yorkville and Rosedale. But the house had lingered on the market for close to a year when it was listed with another agent. Two price cuts hadn’t drawn the right buyer.
When owner Lorraine McFarland decided to try again, she brought in Mr. Kholodov.
“Boris looked at it and we advertised it to a different audience. We appealed to a different crowd,” she says.
Ms. McFarland says the potential buyers who were drawn to the house tended to be people in the arts and creative fields. She herself had a career in advertising and decorated the house with antiques, modern classics and art and artifacts from around the world.
But the people who appreciated it most couldn’t always afford the million-dollar price tag, says the agent. The people who could afford it were often looking for a larger, modern house with bedrooms upstairs and a large kitchen and family room on the main.
“Unfortunately most people are addicted to a conventional Toronto layout,” says Mr. Kholodov.
Ms. McFarland’s house was built in the 1890s and renovated in the 1960s by the architect Joan Burt, who bought the historic row of 12 brick layers’ cottages and refurbished them all.
What gives some people pause is that the kitchen and dining room are on the lower level. Still, that level has floor-to-ceiling glass looking out on the back garden.
Ms. McFarland points out that the layout is typical for an English backsplit. But Mr. Kholodov knew that some buyers would find it quirky. Also, there’s only one bedroom on the second floor. The second bedroom is on the main floor. That arrangement doesn’t appeal to most families.
The property also didn’t work for builders who wanted to flip it because it wasn’t suitable for the type of quick facelift that would allow them to make a sizable profit.
They received a couple of lowball offers but Mr. Kholodov assured Ms. McFarland they could do better.
He knew that plenty of people want an urban townhome. He didn’t think the listing was reaching the right ones.
“It’s an unbelievable location with a beautiful facade and two-car parking,” says Mr. Kholodov. “I think the big change is the way we positioned it to the marketplace.”
Mr. Kholodov revamped the marketing to aim the property at people who would want to live in it but make some changes to make it their own. Ms. McFarland had updated and improved the house over the years but not with an eye to readying it for resale. The living room, for example, has walls covered in a deep shade of charcoal. The envelope provides a sophisticated backdrop for modern classics and a grand piano, but it’s not the beige backdrop many real estate agents recommend.
“Who’s going to want grey flannel on the walls,” Ms. McFarland says with a laugh. “Boris was quite harsh with me.”
Instead of saying the house was move-in ready, he emphasized the potential. The location and provenance added to the cachet.
“It’s not appropriate for the typical central Toronto marketing strategy.”
With a slight reduction in the price, a fresh set of photographs and a revised message, the house sold.
In another case, a house on coveted Tranby Avenue in the Annex had languished for almost a year. The large house had an asking price of $1.4-million and no parking. It also needed updating. Mr. Kholodov reduced the price by $20,000 and again switched up the marketing strategy. It sold quickly, under the asking price.
“Not everything goes over asking,” he says. “And not everything sells. You can’t overprice. You have to position properly.”