By Aleksandra Oleksak
I am sure you have all heard this story by now; the one about fixer upper just north of Toronto that received 72 offers, 1000 showings and sold for 195% of asking price. It was all over the news and everyone was talking about it. Not to mention I even had friends and clients calling to ask what my thoughts were on the matter. My first thought was that this was pure ridiculousness. The first person to blame is always the listing agent and although there is some fault there, we also have to look at what else went haywire.
The listing agent was quoted saying he listed it so low not only to create a buzz, but to make realtors realize this home needed renovations. Wouldn’t a few pictures have sufficed to illustrate that the home needed extensive renovations? How about the description on MLS? It was not necessary to list it so low to sensationalize it for a story in an attempt to grab 15 minutes of fame.
Did I mention the agent double ended this sale? Double ending means when an agent represents the buyer and the seller in a real estate transaction. Legally, this is allowed; however, in this case is it fair? Imagine if a lawyer was representing a murderer and the family prosecuting the accused. Does that make sense to you? This agent could have cut his commission with the seller in order for his buyer’s offer to look more enticing and that may have won him the deal.
The duty of a buyer agent is to educate their buyers on current market conditions, as well as market value in a particular neighbourhood and on a property. Thinking you can buy a property at Yonge and Lawrence for under $1 million is foolish. Not relaying that information to your clients and allowing them to participate in this frenzy is definitely not in their best interest. If anything, the buyer agent and their clients end up adding to the hype and giving Toronto real estate a bad rap.
Toronto real estate has and continues to be a daily hot topic whether it is in the media or amongst the public. Adding to that and creating artificial inflation does a disservice to everyone. It gives the illusion that we are in a housing bubble, which we are not, sellers start demanding unrealistic prices for their homes and some buyers are forking out the cash. This raises eyebrows among our policy makers who will try to step in and cool the market down, when in fact it only ends up adding heat to the fire. Look at what happened when CMHC stopped insuring mortgages over $1 million dollars. It forced some of those buyers into a lower price point, creating intense competition for homes in the $600,000-$800,000 range.
So if you are an agent listing a home for sale or a seller wanting to sell your property, do not get caught up in severe under pricing. Well informed buyers will still show up on offer night and pay market value if not more for your home. This will bring more qualified buyers to the table and weed out the fluff that is wasting their time anyway!
Aleksandra Oleksak is Her City Lifestyle’s “Real Estate Chick,” and a Toronto real estate professional with Sage Real Estate. As @RealtyQueenTO, her real estate blog has been named one of the top 50 real estate blogs in Canada.