June 14, 2018 | buyers sellers
With almost every client I have, whether it’s a buyer or a seller, there is often an adjustment in expectations at some point – especially when it comes to the Toronto real estate market. I’m cautious to use the term “adjusting your expectations”. It sounds like you must be disappointed, and “suck it up” with the reality before you. I think of it more as “improving your reality.” A term that suggests you need to exercise your real estate muscles so you’re in top shape.
To be fair, buyers and sellers are often starting their process of buying and/or selling without any guidance from an informed real estate consultant. It seems a natural starting point would be to just do a little early research on their own. They also speak to friends, family, go on realtor.ca and read articles online or in the newspaper. They begin to form an idea of what they can afford to buy or what the price of a property they like may be worth. Often a disconnect from reality forms because real estate reality moves very quickly from the spot these buyer and sellers think they are sitting.
So, let’s look at how “improving your reality” for a buyer and seller may differ.
Some sellers come up with a price in their head based on one neighbourhood sale. The truth is you won’t sell at the same price as your neighbour. Here are 3 reasons why:
- YOUR NEIGHBOUR’S HOUSE CAN BE VERY DIFFERENT If your neighbour’s house is completely renovated and is twice the size of your property, it is not a good comparable. Those two houses will attract very different buyers with different budgets, wants and needs.
- IF YOUR NEIGHBOUR’S HOUSE SOLD LAST YEAR I see this often, where someone will pick a knock-out sale and use that as a comparable. But a year ago, or even a week ago, the market was different. The market is in constant movement. Even if you have the exact same condo unit with the same layout as the sold neighbhour, time will change that. You may even do better with the right marketing plan!
- YOUR MARKETING PLAN COULD YIELD DIFFERENT RESULTS THAN YOUR NEIGHBOUR In my many years of real estate, I have learned that you have to spend money to make money. In other words, you need to invest in preparing your house for sale with someone who knows what buyers in your neighbourhood would like to find. That will help to land you the best price.
Adjusting your expectations as a buyer can be tough, because the market does not stay the same for long. It can even change during the time you are out looking to buy a property. Here’s my suggestion for buyers.
- DON’T BELIEVE REALTOR.CA It’s not that realtor.ca is doing anything wrong. Far from it. Still, so many buyers, when they begin their search, believe the list price is the sold price. It is not. And it rarely is. In some cases it is lower, but it certainly can be much higher. Not only that, but you need to see the properties. Online a property may sell for very little but it may be right over 30 garbage bins for a huge condo that are not in the photos. It may be 3 feet away from the loudest outdoor, late night patio in Toronto.
- DON’T COMPARE YOURSELF TO YOUR FRIENDS If your friends bought in Leslieville 5 years ago, don’t expect you can do the same thing for the same price. Neighbourhoods that were more attainable even a year ago, may go out of range financially for some buyers the next year. Don’t fret too much. There are more Leslievilles out there, but you may have to adjust on location and distance to work
- DON’T BUY NEW CONSTRUCTION Unless you are an investor who thinks a certain project or location cannot be duplicated with a resale condo, I wouldn’t suggest you buy new construction. It is currently much more expensive on price/sq foot basis when comparing new construction to resale. On another note, new construction deadlines are never done on time. You may have two more children, a new dog and spouse by then, and this condo may have little relevance to your future life.
Perhaps you heard of the expression “Expectation is the route of all heartache”? I’m not sure I agree with that. We don’t want to have no expectations, but I like to think we can have informed expectations. By better understanding the market, you will be able to make better property decisions.