Why are some Toronto homes being relisted - at a higher price?
In a fickle summer, buyers are noticing a trend
It seems some Toronto homeowners aren't getting the bidding wars they hope for when they list their houses for sale. But in a move that irks many market watchers, the owner pulls the listing, then relist a week or two later at a higher price.
Just this week, real estate agent Chander Chaddah glimpsed an opportunity as a similar scenario unfolded. He was heading off to the Danforth with two of his buyers to make an offer on a house that hadn't sold on the designated offer night.
The sellers listed their semi-detached house with an asking price of $629,000, then set a date for offers. Their neighbour's house had sold for $715,000 in May.
But July isn't May. It's especially not February. Summer is fickle. Bidding wars still erupt spontaneously, but for some sellers the strategy of underpricing fizzles. Buyers who've been through a few rounds of bidding and lost out are fried.
"Even the weather makes people a little less intense," says Mr. Chaddah of Sutton Group Associates Realty Inc.
So for the unfortunate east-end sellers, offer night came and went with only one bid. It was higher than the asking price but not as high as they were hoping for. They cancelled the listing and came out again with a new asking price $60,000 higher at $689,000. Offers welcome any time, they said.
That tactic of increasing the price when a house doesn't sell alienates a lot of potential buyers, agents say. It particularly annoys those who submitted an offer on the scheduled evening.
In the case of Mr. Chaddah's clients, they had seen the property at the first open house but they didn't think it was for them so they didn't submit a bid. They went back with him for a second look and reconsidered. To Mr. Chaddah, the situation seemed like a chance to cut a deal. He was heading off this week in the hope of negotiating the sellers down from $689,000.
Mr. Chaddah says the Toronto market is still robust and continues to suffer the perennial problem of too few listings to meet demand. As a result, desirable houses on good streets are still causing a commotion.
In Roncesvalles Village, a renovated semi with a basement apartment set the neighbours abuzz when it sold for $1.01-million. Mr. Chaddah believes it's a high-water mark for a two-storey semi in the neighbourhood.
The Toronto Real Estate Board is seeing some signs that the supply of listings is beginning to rise.
In the first half of July, sales through the multiple listing service rose 11.6 per cent in the Greater Toronto Area compared with the same two weeks last year. Listings jumped 9.7 per cent in the same period compared with the first half of July in 2013. The average selling price in the GTA increased 8 per cent in the first two weeks of July from a year earlier.
TREB's senior manager of market analysis, Jason Mercer, says it's possible the number of new listings will continue to swell in the second half of the year. If so, he adds, the increased choice for buyers could tame some of the price growth in certain segments.
Mr. Chaddah says that the strange thing about competition is that it seems to give buyers needed affirmation that others see the same qualities as they do in a house. "It's the multiple offers that make people confident. It's perverse."
The condo market in Toronto, meanwhile, is still largely disconnected from the single-family segment.
Christopher Bibby of Sutton Group Associates Realty Inc. says detached houses are in such high demand and sell so effortlessly that he has seen some agents who previously specialized in condos switch camps.
Mr. Bibby is sticking with a focus on condo sales because that is where he has built his business. But he turns down listings when the owner wants to set a lofty asking price for a basic condo surrounded by competing units.
He's working longer hours these days because when he does list a condo unit in a busy building he looks for an edge. "We need a different approach to the whole selling strategy."
If the owner wants to set an asking price based on what they "need" to turn a profit on their investment, Mr. Bibby doesn't take the listing. "It's a very touchy subject when they're going to break even or have a loss."
But in an area with a cluster of towers, the market is diluted.
"When I have a vendor that wants to overprice their place by $50,000 and doesn't understand there are 50 others in the area ... if we don't see eye-to-eye, it can just be a frustrating process for everyone."
In a building with 500 units, surrounded by 10 other buildings with 500 units each, it's very difficult for an agent to make one listing stand out, he explains; price is typically the only real factor.
Ideally, Mr. Bibby prefers to sell one-of-a-kind lofts. They go quickly because buyers are just waiting to pounce.
He listed a unit in the Vinegar Lofts near Queen and River street for $689 a square foot. It was aggressive for a neighbourhood that's out of the core and still a bit sketchy, he acknowledges.
"Colleagues said: 'You're priced on the high side.' I said: 'Yeah, but I'm going to get it.' "
He succeeded, he says, because there was nothing comparable anywhere nearby. A potential buyer couldn't claim to be considering a competing unit because competition didn't exist.
Mr. Bibby says many condo owners have sold their units in order to free up cash. Some are renting for now because they can't find a single-family house to buy. Competition is so intense, he says, that the leap in price can be too great.
Loft owners, on the other hand are hard-core.
"The loft people don't care," Mr. Bibby says. "It's a lifestyle for them."