TorontoRealtyBlog

It may come as no surprise to you that I receive a lot of feedback on these blog posts.

In fact, this morning I received a personally-addressed envelope, containing a hand-written note that said, “Thank you for keeping me entertained all these years with your Pick5 videos, please have a cup of disgusting coffee on me,” and inside the envelope was a Tim Horton’s gift card!

The feedback is everything good, bad, and in between.

Then there are lots of questions as well.

I just received this email:

Hey David,

A long time lurker on your blog and audience to your Pick5 videos. Perhaps that qualifies me as a fan?

Anyhow, I just watched your recent Pick5 video on properties not selling on offer night and that drove me straight to House Sigma. It appears that Pape Ave properties do not get much love. Wonder why? I’d love to hear your thoughts on this. Also, what do you think of the Ontario Line connecting this part of the City to downtown directly?

Thanks
(Name)

Keep them coming!

I respond to every email, save for those that say, “Hi David, I just bought my house through So-and-So from Century 21 and I was wondering if you think I paid a good price…”

Seriously, I get those.  I also get phone calls from people who think I run a free public service and who need advice on how to get somebody they don’t like kicked off their condo board…

Recently, I’ve noticed there’s been very good feedback on, and requests for, two things:

1) Examples of properties Listed over and over
2) Examples of sellers who lost money

The latter can simply be explained by the never-ending and always-increasing thirst for blood among society.

Or more politely: our happiness at the misfortune of others.

More simply: Schadenfreude

Where did this start?

Gee.

I look back at the history of cinema as a good example.

What must it have been like, back in 1971, to see A Clockwork Orange in the theatre?

At the time, it was so violent that countries banned it, and the film had to be edited to be shown in theatres.  Society erupted at a level of violence that we had never seen before.

Only one year later Deliverance hit theatres.

Oh, boy…

Like A Clockwork Orange, both were violent but it was the psychological torment that really took the violence to the next level.

Fast forward a half-century, and I absolutely, positively cannot believe how desensitized to violence we all became when we all watched Squid Game.

Imagine curling up on the couch with your hunny bunny, sharing a bowl of popcorn, pulling the cozy blanket up over the two of you……….and watching fictional contestants on a South Korean game show getting their brains blown out and blood splatter so furiously that you thought it might go through your screen.

If Squid Game isn’t a testament to society’s desensitization to violence, then I don’t know what is.

Meanwhile, society has never been more perpetually offended than ever before, to the point where “feedback” is being changed to “feedforward” because back has a negative connotation.

My point?

There’s nothing quite as exhilarating as witnessing the misery of others.

And one of the requests that I receive more than any other these days is for examples of properties where the seller lost money.

As I said at the onset, people also like the blogs about properties listed over and over, so today, we’ll look at both.

I don’t want to spoil the ending of this one, but the protagonist in this story is not a happy camper.

Let’s look at the very first Listing from October of 2021:

Listed for $999,000, the Property sold after 17 days on the market for $968,000.

The property sold on November 7th 2021.

The sale closed on January 5th, 2022.

I haven’t been inside the house, so suffice it to say, I cannot tell you what work, if any, was done on this house in between January 5th, 2022 and February 10th, 2022.

That time period represents the date of the closing of the $968,000 purchase and the subsequent new listing.

That’s 36 days.  Who knows what work could be done in 36 days, but regardless, the property was listed on February 10th, 2022.

Here’s that listing:

As you can see, the property sold for 52% over list.

$1,370,000.

That must have been one hell of a thirty-six day renovation!

The sale date was February 12th, 2022.

For those who haven’t memorized their market stats, February of 2022 represented the “peak” average home price in the GTA.

Ten months later, the seller put the property on the market as follows:

The date of this listing was December 12th, 2022.

Now, once again, I don’t expect people to know their “average home price” stats off-by-heart, however, the average home price of $1,334,554 in February of 2022 had declined to $1,051,216 by December of 2022.

That’s a decline of 21.2%.

And yet, this property owner listed the house for sale at $1,499,999, having purchased for $1,370,000; an increase of 9.5%.

That didn’t make much sense at all.

Had the property been listed for $1,370,000, instead of $1,499,999, it still would likely have received no interest, based on the market conditions.

This listing lasted for six days.

And then on December 21st, 2022, the property was re-listed as follows:

Yup.

The same price.

Why somebody would list this property four days before Christmas is beyond me.  But listing for a price that’s 21.2% above peak pricing after a 9.5% decline probably is destined to result in a lump of coal in the seller’s red stocking…

This listing remained active through the Christmas holidays, past the new year, and was finally terminated on January 6th, 2023.

Also on January 6th, 2023, we got this “new” listing:

Oh, wait, it’s not new.  It’s just the same property for the third time in less than a month.

It actually came out at $1,399,999 and was then reduced to $1,369,999, but the point is moot.

“If a tree falls in the woods, and nobody is around to hear it, does it make a sound?”

If a property is listed on the market, and nobody has any interest because it’s priced 30% too high, does it really matter if it’s reduced by 3%?

The crazy thing is, the property is now priced below the purchase price.  This owner paid $1,370,000 only a few months earlier, and thus she stood to lose land transfer tax in the amount of $47,750 and real estate fees likely in the 4% range.

This listing was terminated on January 27th, 2023.

Then it was re-listed on January 27th, 2023 for $999,999:

Is that a typo?

I said $999,999, right?

Yeah, it was listed on January 27th, 2023 for $999,999 with an offer date for February 2nd, 2023, but that strategy did not work out.

The list price was then increased to $1,369,999, rather than re-listing again.

As this was happening, the property was listed for lease for $5,000/month on January 30th, 2023:

Both the lease listing for $5,000/month and the sale listing for $1,369,999 were terminated on February 8th, 2023.

Here’s where things get really, really interesting.

On March 9th, 2023, the property was listed again for $999,000, and again with an offer date!

“Offer Presentation On March 14th @ 6:00pm.”

But they just did this!

They just tried this in January.

They listed for $999,000 with an offer date, and that failed, so they increased the price to $1,369,999.

So now they were trying this again?

Did it work?

Nope!

That’s the listing after the failed offer date and a subsequent price increase to $1,349,999.

This listing was terminated on April 14th, 2023.

And here’s the new listing on April 14th, 2023:

Fresh, new price: $1,299,999.

We’re now $70,000 below the price paid only five months earlier.  The land transfer tax on the purchase was $47,750, and the seller has to pay real estate fees on the sale price.

Five months into this venture, and the seller is looking at a loss well into the six-figure range.

This listing at $1,299,999 was active for 20 days and terminated on May 4th, 2023.

Later that day, the property was re-listed for $1,099,000 with an offer date:

For those playing along, that’s the third attempt at “listing low with an offer date,” when two attempts is too many.

Suffice to to say, the May 11th offer date didn’t work and that listing was terminated.

The property was re-listed on June 2nd, 2023:

Wait……..what?

Wasn’t the property listed for $1,299,999 in April, with no sale?

Why in the world was the price now $1,349,999?

This made absolutely no sense.

It’s like “compounding mistakes in golf.”

When you hit your driver into the woods and you find it, use your five-iron and softly smack the ball along the ground, back into the fairway, twenty feet from where you went in.  “Take your medicine,” as the saying goes.  But we all have that friend who says, “I don’t want to waste a stroke, so I’m gonna hit it between those trees in that opening up ahead,” only to hit it off the tree, backward, and into a worse spot.  But then that friend, instead of saying, “Crap, that didn’t work, let me just take my medicine,” decides that now is the time to get really aggressive, as he or she needs to make up the lost strokes, and does something even dumber.

The market had declined from April to June, so why did this seller, on her ninth listing, decide to raise the asking price?

Eighteen days later, on June 20th, 2023, the listing was terminated.

On July 4th, 2023, the property was re-listed for $1,350,000 with the note “Sellers Willing To Stay As Tenants,” and that list price was eventually reduced to $1,288,888:

On August 27th, that listing was terminated.

And after Labour Day, on September 6th, 2023, the property was re-listed for $999,999………….with an offer date.

Only this time, it worked!

Here is, unmercifully, the last listing:

So let’s review:

The property was purchased on February 12th, 2023, for $1,370,000.

$47,750 in land transfer tax was paid.

The property was re-sold in September of 2023 for $1,200,000.

That’s a loss of $170,000 plus $47,750 in land transfer tax, for a loss of $217,750.

But what about real estate fees?

Surely the going rate up here, and with this type of house, was around 4%.  Should we be adding $48,000 to the losses?

Nope.

No real estate fees were paid.

Why?

Oh, here’s the most interesting part.

The seller is a real estate broker!

That means the seller doens’t have to pay a listing fee of 2.5% to herself.

But wait!

What about the buyer-broker commission?  Surely 2.5% was paid to the buyer broker who sold this property, for $200,000 above the asking price, on offer night, right?

Nope.

No real estate fees were paid.

Why?

Because the listing agent, who is also the seller, also represented the buyer!

You can’t make this up.

A real estate agent on her tenth listing, of her own house, under-prices the property and receives mulitple offers – then “beats” every other agent and buyer, while representing a buyer-client in multiple representation.

Regardless of the process and result, the optics don’t look great.

But perhaps in this situation, the optics mattered less than the financial loss, which was in excess of $200,000.

So for all of you out there that want to know, “Have people really lost money in this market,” this is a very good example.

If you’ve seen others, feel free to send them my way!

The post What Does A “Loss” Look Like In This Market? appeared first on Toronto Realty Blog.