The Toronto area is full of motivated real estate buyers. The challenge for one couple was to find a way to outrun them.
Shane Little, a real estate agent with Re/Max Hallmark Richards Group Realty, describes one pair of move-up buyers as “very motivated” after they lost out on a few properties.
Their vexation came to an end last month when the couple purchased a four-bedroom house in Riverdale long before it hit the market, after a virtual walk-through over Zoom.
COVID-19 protocols prevented them from visiting the property in person because the residents were isolating, Mr. Little was told.
“It was a very unique 2022 real estate story,” he says of the way the Omicron lockdown, Zoom and house hunting came together.
Mr. Little had been working with the couple since October, after they decided to move up from a semi-detached house in the city’s Little India area to a larger house in nearby Riverdale.
The couple bid on a few houses but they were crushed by rivals paying way above what made financial sense, he says. In some cases, properties were selling more than $500,000 above an asking price in the $1.2-million range.
“It’s definitely tough for buyers,” he says. “We had our teeth kicked in by the market a little bit.”
By January, active listings in the Greater Toronto Area were at their lowest level in more than two decades, according to the Toronto Regional Real Estate Board, while the average price hit a new milestone of $1,242,793.
Sales in January dropped 18.2 per cent from the same month last year – partly because it was hard for house hunters to find a property to buy.
Against that backdrop, Mr. Little decided to shake the trees a bit. It’s common practice for agents to place letters in mailboxes in an effort to find homeowners who might be willing to sell, but Mr. Little took a more strategic approach.
He set up a data search south of Danforth, between Broadview and Pape avenues, and looked for all of the houses that had changed hands in the past five to seven years. He then started contacting agents who had been involved in the previous sale.
Mr. Little figured that any homeowners willing to forgo the auction process would set a high asking price.
“They would attach a very big premium, which is fair enough – that’s their prerogative.”
One agent replied that he was in touch with a client who was getting ready to move out of town.
If the two sides could strike a deal, it would save the homeowners the time and expense it would take to prepare the house.
Mr. Little and his clients drove by the four-bedroom, semi-detached house at 94 Withrow Ave., and liked what they could see from the exterior.
During the livestreamed tour, they saw a spacious interior with the original character preserved. They submitted an offer for the full asking price around the $1.6-million mark. The buyers attached conditions: they wanted a home inspection and a chance to walk through in person.
The sellers accepted and the buyers arranged a visit. A few days later, the deal was done.
“We just caught them very, very early and we got lucky,” Mr. Little says.
He figures the buyers might have had to compete with 20 or so bidders if the house had been listed with a low asking price and an offer date.
Mr. Little says he was trying his method for the first time. The fact that the homeowners were already in touch with an agent who could represent them made the process go more smoothly, he adds.
“The seller wants to make sure that they’re getting the right advice.”
Mr. Little’s clients then had the task of selling their own semi-detached three-bedroom house. Mr. Little listed the property at 211 Woodfield Rd., with an asking price of $1,179,000 and the house sold for $1,731,000.
Scott Russell, broker with Engel & Volkers in Oakville, Ont., has been working with one pair of disheartened first-time buyers who have lost out on a series of homes, despite their healthy budget of about $1.4-million.
In Georgetown, Ont., one property was listed with an asking price of $999,999. Mr. Russell estimated the house would sell for about $1.5-million. The house would also need a thorough renovation, he says, because the fixtures and finishes were about 45 years old.
His clients were dismayed when 58 buyers entered the fray and the house sold for $1.76-million.
The couple started their search a little bit west of Toronto in Etobicoke and Mississauga, he says, but kept pushing farther away from the core in an effort to find a detached house.
The two are now considering townhouses and semis, he says.
Mr. Russell says some house hunters take a break from the market after bidding and losing on multiple properties.
“It takes an emotional toll on people. It just gets to be too much.”
But he recommends that buyers persist because often that move to the sidelines comes just as more supply comes on. It’s during that shift that buyers can sometimes find they are the only bidder on offer night. He advises buyers to submit an offer if they see a house they like – even when the competition seems overwhelming.
“At some point when the market starts to change – and it will – you don’t want to miss an opportunity,” he says. “At some time there’s going to be a retraction in prices.”
One factor that could lead to a correction is that many people have suffered financially during the pandemic, he says. If interest rates rise, a number may be forced to sell, and inventory may swell.
“They may take an offer that’s less than what they hoped for,” he says. “If that does happen, that does put buyers into a bit of a tailspin.”
Halfway through February, agents are seeing listings stream onto the market.
“There are more listings in February every day compared with January,” Mr. Russell says.
The Canadian Real Estate Association is watching for a rush of new inventory in the national market.
CREA senior economist Shaun Cathcart says the ideal situation between now and the summer would be for a huge surge of sellers to come forward looking to sell in the spring, 2022 market. That scenario would get a lot of frustrated buyers into home ownership, he says.
“We’d likely see some cooling off on the price growth side if those offers are spread across more listings,” he says. “Those are all things this market needs.”
Your house is your most valuable asset. We have a weekly Real Estate newsletter to help you stay on top of news on the housing market, mortgages, the latest closings and more. Sign up today.