It’s a weird time in Toronto’s real estate market. It’s almost December, there are a lot of properties on the market and there’s no denying it’s taking longer to sell. While the house and condo market continue to move in different directions, we’re also starting to see 2 kinds of Sellers: Sellers who are willing to sell and Sellers who are desperate to sell.
Willing Sellers have listed their properties on the market and are willing to sell at the right price. They aren’t looking to greatly negotiate their price down and they aren’t looking for low-ball offers from vultures. Some willing Sellers are testing the market, nervous about what they’re reading in the media and wondering if they should get out of the market.
Desperate Sellers need to sell. They may have already bought another property, they may be going through a divorce or relocation or perhaps it’s an estate sale. Desperate Sellers are more apt to lower their asking price and negotiate.
In the last few weeks, we’ve seen plenty of willing Sellers take their properties off the market – heck with a 1.2% rental vacancy rate, it’s relatively easy to be cash flow positive with a tenant. We’ve also seen desperate Sellers slash their asking prices after just a few weeks on the market (and hurt themselves and their neighbours in the process).
So what’s a Seller to do?
1. Be honest with yourself (and your REALTOR) about your motivations. Why are you selling? Do you need the equity for something else? What’s your bottom line? Are you just testing the market or do you need to sell?
2. Recognize that the Toronto real estate market is more balanced these days and you aren’t in a power position anymore. If someone doesn’t want to pay you the $700K you want for your house today, you might not get $700K for your house next year either. Your house is worth what someone is prepared to pay for it – and not a penny more. If you need to sell, listen to the market.
3. Greed never pays. Sure, your neighbour may have sold their house for $200K over asking in March 2012, but that doesn’t mean there’s a Buyer prepared to pay that for your house today. If you need to sell, waiting for an arbitrary magic number may hurt you in the long run. If you’re just willing to sell, then it might make sense to wait – but there’s absolutely zero guarantee that you will get your magic price in the future. The days of the 12-person bidding war may be gone for the foreseeable future (and that’s not necessarily a bad thing).
4. If you need to sell, don’t discount your price too low and too fast. The Toronto real estate market is still healthy. But listen to the market.
5. No matter if you’re willing or desperate to sell, make sure you know what’s really going on in your segment of the market and in your neighbourhood. There isn’t a one-size-fits-all market or strategy and you need to price accordingly.
6. Don’t forget that real estate is a seasonal business December is generally the slowest month for sales. There’s nothing wrong with pulling your listing from the market for December and re-listing in the busier spring market.
What’s a Buyer to do?
There are some good deals to be had out there. While I’m not a fan of the vulture mentality, the truth of the matter is that if a Seller needs to sell, they do actually want a Buyer to bring them an offer. So if you’ve been having a hard time getting into the market, this may be your opportunity. With more properties on the market, you have more options and more ability to negotiate. Some of the best deals we’ve negotiated for our clients happened in December.
My best advice to everyone?
Trying to time the market is dangerous (and near impossible). Be honest about what you want – for your lifestyle AND for your financial situation. Sell your home before buying another and don’t put yourself in the situation where you need to sell. Take a deep breath. Hire a REALTOR who knows how to negotiate (and not just one who knows how to put paperwork together).
As always, we’d be happy to help you work through your options. Just send us an e-mail or give us a call!