Desmond Brown

Open to Negotiation: How the Toronto market has changed this spring

06 July 2017
Desmond Brown
About six weeks ago I encountered something I hadn't experienced while trading real estate for some time.  It was for a bungalow in the Cliffside Village area of Scarborough. We went in with an offer significantly under the asking price, and with a condition on a home inspection. I was expecting the Sellers to either sign back the offer closer to the asking price, and/or to remove the condition. I was completely surprised when Sellers accepted the offer, price and all, without changing a thing.  I was so excited for my clients. However it was also a telling sign to me that the market was changing.

As I mentioned previously, I saw that the market was cooling before the Wynne government announced new regulations on foreign buyers, investors, and landlords. The first quarter of 2017 was absolutely crazy and not sustainable. With the spring market, we've seen a huge increase in the number of listings on the market and as a result, prices have shifted downward slightly, but are still higher than they were a year ago at this time. 

These new market conditions have led to old style real estate where buyers and sellers are actually negotiating again. Yes, remember those good old days when a real estate agent would actually research neighbourhood selling prices then list the property just above the market value. A purchaser interested in the property puts in an offer at a number that doesn't insult the seller and agents go back and forth until a deal is reached. In the end, buyer and seller feel good about the process and outcome. 

Here are some other things I'm seeing:
  • Agents and sellers in denial of new market conditions as they price the properties low, hoping to still get well over asking, then re-listing with a higher price when they didn't receive multiple offers.
  • Conditions on financing, home inspections, sale of the purchaser's property, and reviewing status certificates (financials) on condos are being accepted again.
  • Sale prices of up to $150,000 under asking, NOT over. Actually, a Yorkville condo that was on the market for almost one year,  sold last week for $11,750,000 - $2-million UNDER asking - but that's a little out of my snack bracket anyway.
  • When multiple offers do come in, the selling price is usually close to the asking price.
  • And unfortunately, there are many people who bought firm at the height of the frenzy who are in a panic now because they can't sell their houses to close the deals. 
Getting back to my bungalow story, the home inspection showed that the house was in fantastic condition and my buyers waived the condition. They moved into their new home last week.