Buyers and sellers in the real estate market are finding quiet and creative ways to swap properties in Toronto and surrounding Ontario cities.
More houses are selling without reaching the public marketplace. Some buyers are brave enough to purchase a house before they’ve set foot inside. Unique conditions are popping up in written offers.
“Without question” more houses than usual have traded on an exclusive basis since the coronavirus pandemic brought the market to a halt in March, says Jimmy Molloy of Chestnut Park Real Estate Ltd.
In an exclusive arrangement, a real estate agent takes on the listing but doesn’t launch it for all to see on the Multiple Listing Service of the Canadian Real Estate Association. That differs from a private transaction, which generally involves a buyer, a seller and their lawyers.
Mr. Molloy is part of a WhatsApp group of agents who share information about properties which are quietly available.
“It allows the seller to have more control of who comes into their house,” he says. “Exclusivity allows a little more peace of mind.”
Andre Kutyan of Harvey Kalles Real Estate Ltd. sold a grand stone house in Forest Hill listed exclusively for $12.95-million. The four-bedroom home at 107 Dunvegan Rd. has nearly 10,000 square feet of living space, underground parking for seven cars and a waterfall in the secluded garden.
The owner planned to sell in March but postponed the launch when the city went into lockdown.
Earlier this month, Mr. Kutyan spread the word to the handful of agents who work in that bracket in Forest Hill, but it was a move-up buyer in his own network who decided to bring an offer after five days on the market.
“We actually sold it the day before we were going to go to MLS,” he says.
In another deal on Dunvegan Road, Mr. Kutyan represented the buyers who paid $4.1-million for an older home.
“They didn’t see the interior,” he says. “Their plan is to tear it down or do a major renovation.”
In that case, the homeowners were concerned about where they would go if they sold. They had their eye on a condo but they weren’t sure if they could come to an agreement in time.
Mr. Kutyan advised his buyers to submit an offer with an unusual condition: They gave the homeowners five days to negotiate the purchase of the condo. All of the pieces came together when they were successful.
“We were able to secure a good deal for our clients because we gave the sellers peace of mind,” he says. “Sometimes you have to get creative.”
Mr. Molloy says agents are being especially thorough in making sure that prospective buyers have the financial means to purchase a property.
"I think that trend was very helpful in keeping the market open,” he says.
One topic that’s on the lips of all the industry players these days is liquidity, Mr. Molloy says, as banks adopt very conservative lending practices.
“You have to work hard at financing.”
Matthew Regan, a real estate agent with Royal LePage Real Estate Services, says his inventory usually includes a handful of exclusives.
He also keeps a roster of clients who are willing to pay fair market value for a property that doesn’t go the MLS.
Today, he says, 20 per cent of the deals his office does are happening off-market. In the past, the proportion of exclusive deals was typically between 5 per cent and 10 per cent.
“More people are going for it,” he says of the homeowners who prefer to keep showings to a minimum.
Mr. Regan, who specializes in Mississauga, Oakville and Burlington, says the $4-million-and-up price segments remains a bit sluggish.
“They have to be a little bit patient,” he says of those sellers.
But in lower-priced segments, Mr. Regan has noticed an increase in interest from Toronto buyers looking for more space.
His office recently listed a townhouse for sale about 45 minutes west, in the city of Burlington. A similar, renovated townhouse had sold for $680,000, so he set the asking price of the new listing – which was unrenovated – at $650,000.
“It had three competing offers – all from Toronto,” Mr. Regan says.
Two of the bidders toured the interior, but the sellers accepted the offer of the third buyer – who had not set foot inside the home.
Mr. Regan has also seen signs that the banks are tightening up their lending standards.
“They are really cracking down on making sure people have income.”
In the past, it was common practice among buyers who were competing for a property to attach a letter to their offer, hoping that pleading for a family home would give them an edge with sentimental sellers.
A better strategy today is to provide information about the buyer’s financial circumstances, Mr. Regan says. When agents on Mr. Regan’s team represent a buyer, he advises them to add details about whether the buyer has iron-clad income security, for example. If they own an existing house, throw that in detail in too.
With banks scrutinizing incomes, many sellers will favour the buyer who clearly has the means to close the deal.
“That stability is worth something,” he says. “If the buyer is a good, sound fundamental buyer, let it be known upfront.”
Mr. Regan feels optimistic about the outlook for the market because prices are holding so far. He figures that sales that normally would have happened in the spring will bump into the summer months.
While forecasters expect interest rates to stay low after the Bank of Canada cut its benchmark rate close to zero in response to the lockdown, the pandemic has brought fears of a deep global recession and a rise in long-term unemployment even as economies reopen.
Mr. Regan says it’s hard to predict whether job losses will shrink the buyer pool in the future. He will also be keeping an eye on immigration to see if it continues at past levels.
Many market watchers are also cautioning that dynamics could change if property owners who are currently taking advantage of mortgage payment deferrals are not able to make their monthly payments when those schemes end.
Mr. Regan will also be watching to see how that scenario unfolds in the fall.
“I don’t know how it couldn’t affect the real estate market.”
Mr. Regan also figures that Canada Mortgage and Housing Corp.’s recent move to place stricter standards on qualifying for an insured mortgage will present a challenge for one in five – mostly first-time – buyers.
He thinks the tighter controls are a good thing.
“Basically, CMHC is saying, ‘If you can’t afford to buy it – don’t buy it,' ” he says. “It’s in nobody’s best interests to have the banks foreclose.”
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