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After years of price gains, it’s no surprise that so many people felt the Toronto real estate market had no way to go but up. We weathered the 2008 recession, the mortgage stress test, the foreign buyer tax, lockdowns and COVID….and the real estate market just kept marching forwards. Our appetite for homes (and bidding wars) seemed insatiable.
But then, as the worst of COVID receded, inflation took hold, and with it, higher interest rates. The real estate market changed seemingly overnight. Buyer purchasing power decreased, mortgage payments increased, bidding wars evaporated, and sales fell dramatically. Six months into the market shift, average prices in the City of Toronto are down 14.8% from their February 2022 peak.
It’s been a heck of a ride.
But what happens if you have a home to sell and it isn’t selling in this new real estate market? What can you do?
Be Honest: Are You Really Motivated to Sell?
There are 3 types of sellers: those who are willing to sell, those who are motivated to sell and those who are desperate to sell. [Related: You can read more about what we wrote about seller motivation here.]
To sell your home in a shifting market, you need to be motivated (or desperate). If you’re just testing the market or hoping for February prices in September, you aren’t likely going to be successful.
Is Your Home Really “Not Selling”?
As of writing (September 2022), it’s taking, on average, 34 days to sell a home in Toronto. So if you’re on Day 11 and frustrated, you might need to readjust your expectations. Like everything in real estate, what’s happening in your immediate neighbourhood is the most important factor to consider…are your neighbours selling in 15, 34 or 60 days? Have you been on the market for a comparable amount of time as them?
Rule Out The Reasons (Other Than Price) That Your Home Might Not Be Selling:
Do you have a marketing problem? If you don’t have gorgeous photos, floor plans and digital marketing beyond the MLS, your listing might not be getting seen or appreciated by the right people.
Is it easy for REALTORS and their clients to see your home? If you’re restricting showing times, interested buyers who don’t fit into your schedule might just move on to the next home.
Is your home staged? Is the staging connecting with the right buyers? Staging is expensive, but it’s something that most Toronto buyers have come to expect. Can potential buyers see themselves living in your home or are they spending time instead commenting on your decor? Many real estate teams (including us!) include staging in their commission – it’s THAT important.
Do you have a timing problem? While we can’t control what’s happening in the market right now or in the future, we can control some things when it comes to timing. Pay attention to what’s being listed for sale, selling and not selling in your neighbourhood; consider the dates that interest rate announcements are made, and real estate statistics are released; don’t forget about long weekends, extreme weather events and holidays.
Do you have a strategy problem? Not enough real estate agents talk about strategy, but it really is the foundation of a successful sale. Successfully selling in a difficult market requires having the right marketing, staging, showings and pricing strategies.
Are you working with the wrong agent? It’s easy to blame your agent when your house isn’t selling – sometimes it’s their fault, and sometimes it isn’t. We wrote a whole blog about that here: My House Isn’t Selling: Is it My Agent’s Fault?
Related: Click here to read more ideas about diagnosing why your home isn’t selling.
Price, Price, Price
If you’re a Motivated or Desperate Seller and you’ve ruled out all the other reasons your home isn’t selling…you’ve got a PRICING problem. That’s true in almost any market conditions, but it’s especially true during a market shift. An outdated or overly ambitious asking price is almost always the reason a home isn’t selling.
September 2022 buyers aren’t going to pay February 2022 prices, no matter how much you want them to. And unfortunately, it’s not the buyers’ job to overpay for your home to help you meet your retirement goals or fund your next property purchase.
The Truth About Overpriced Homes
Toronto homebuyers are SMART. They know how to identify an overpriced property just as quickly as they know how to identify an underpriced one…and in a shifting market, they’re even more nervous and cautious.
The most important thing to know is that selling your home does not get easier or more profitable the longer it is listed for sale – that was true during the crazy bidding war days of the past, and it’s true now.
When the market is in a state of flux, it can be challenging to get your initial asking price right – so it’s critical that you be ready to adjust and respond quickly.
The last thing you want to do is chase the market down and end up selling for less than you could have if you’d priced right initially or responded quickly to the market. [Related: True Story: Chasing the Market Down]
REALTORS refer to homes that are listed for longer than average as ‘stale listings’, and we know that buyers react to stale listings with boredom, suspicion or both – and that’s not good for you, the seller. The length of time a home is listed for sale is inversely correlated to how much it sells for.
If your home is listed for sale and languishing on the market during a market shift, you’ve got bigger problems than just a ‘stale’ listing. You’re losing money every week you’re listed for sale.
Example: An average house in east Toronto was listed for sale on August 1st, 2022 and was priced $50,000 more than market value. On September 1st, 2022, that same house was now overpriced by $130,000 – the initial $50K + $80K of lost value because of the changes in the market.
While it might be tempting to keep your overpriced home on the market for months and hope it’ll sell eventually, that’s just not what the data shows will happen.
Proactive Price Reductions
If you are struggling to sell your home, the best way to get it sold is to proactively reduce your price. Don’t keep it overpriced and hope someone will bring you an offer that you can negotiate – that doesn’t often happen in Toronto. Your home needs to stand out among all the homes for sale; you need to signal to buyers that you are motivated to sell. You need to price to where the market is going – not where it’s been – and in a declining market, that means pricing under the last sale.
If your home is listed for sale and not selling, you have options. Be honest with yourself, try to be objective and most importantly, talk to your REALTOR.