Let’s look at a recent sale in Riverdale and what it means. List price: $1,090. Sale price $1,345 Previously sold in 2006 for $952,000 This raises a lot of questions.
- Under pricing: The property sold almost 6 years ago for close to a 1 million. Without any improvements, just based on the market growth over these past years, it should have been listed near 1.3 mil-1.350 range
- Why would an agent knowingly and deliberately under price a property to create a crazy bidding war and a feeding frenzy? Does it always benefit the Seller? Sure, it results in a sale substantially above the asking price, (and making the agent look like a hero) but does it always mean full market value? Is there any benefit to the Buyer? Who actually wins and benefits from it? This could be a long discussion. For my thoughts on under pricing strategies, you can check my article at /www.vladbregman.com/price-it-right-for-all-its-worth
- Market separation: The talk about median or average prices of Canadian or Toronto real estate is totally irrelevant: one listing in a high demand neighbourhood attracts multiple bids and sells way over the asking price, while another, well-priced property (for example, at Keele and Sheppard or Scarborough) is generating a lukewarm amount of showings and no offers. What does this mean and why?
- There is an enormous demand for homes with character, in older Toronto neighbourhoods near the subway, which by far outweighs the supply. And that is not about to change, regardless of what the market does now or in the future. The demand will always be greater while the shortage of good listings in those neighbourhoods will continue.
- Not only do these properties provide the best enjoyment in urban living, but they also constitute a greater long term investment by far. The higher price paid to get into a high demand neighbourhood is well worth it: not only will you enjoy a great living for years to come, but your return will significantly outstrip the growth of an average neighbourhood. Oddly enough, this creates a challenge for people already living in those areas who are looking to move up to larger homes: it has become a stretch as money is flowing freely into these neighbourhoods making a move up in the same area almost unaffordable. In order to get a bigger home, they are now forced to consider other neighbourhoods. For example, I am working with several people who now live in Riverdale and who can no longer afford to upgrade to a larger home in the same area. They are considering other options in Central neighbourhoods which amazingly enough, provide better value.
- How does one secure a good home in these sorts of situations: there are several strategies in dealing with it but the fundamentals are this: older homes in good neighbourhoods are always in demand and when offers are not being held back, these will sell on the spot. So timing becomes a critical issue: being at the right place at the right time is crucial. Good homes don’t wait for anyone. What to do when the offer presentations are being delayed which in 90% of all cases they are? Well, that is a whole different discussion requiring a lot of sharp skills, preparation, market knowledge, a good set of nerves, quick confident decision making, a healthy dose of good luck…and of course expert guidance.
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